BSE: 500878 | NSE: CEAT LIMITED | ISIN: INE482A01020 
Market Cap: [Rs.Cr.] 2,112.29 | Face Value: [Rs.] 10
Industry: Tyres

Director's Report


The Members of CEAT Limited

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

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


(Rs. in crores)

For the year ended March 31, 2013 For the year ended March 31, 2012
Turnover 4,836.7 4,435.4
Profit before Taxation 145.7 9.7
Provision for:
- Current Tax 31.7 3.8
Less: MAT Credit Entitlement (31.7) (3.8)
- Short/(Excess) Provision for earlier years (1.7) -
- Deferred Tax 41.0 2.2
Net Profit 106.4 7.5
Surplus brought forward from previous year 253.5 250.0
Sum available for Appropriation 359.9 257.5
- Proposed Dividend on Equity Shares 13.7 3.4
- Corporate Tax on Proposed Dividend 2.3 0.6
- Transfer to General Reserve 11.0 -
Balance carried forward 332.9 253.5



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


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

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

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

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


The Company registered a growth of 9.1 per cent in turnover from Rs. 4,435.4 crores inthe year 2011-12 to Rs. 4,836.7 crores in 2012-13. Manufacturing operations at the radialplant at Halol, near Baroda in Gujarat ramped up to 80 per cent capacity utilisation by Q4of the year under review thereby improving the financial performance of the Company.

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

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

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

The operating margins of the Company improved by 3.2 per cent with the operating profitincreasing from Rs. 246.8 crores in the year 2011-12 to Rs. 424.5 crores in the year2012-13. Net Profit increased from Rs. 7.5 crores in 2011-12 to Rs. 106.4 crores in2012-13. The Company also expanded its product portfolio with the ‘CZAR’ rangeof Utility Vehicle tyres being a key development. An advertising campaign was launched forthis new product range while the successful motorcycle tyre ‘Be Idiotsafe’campaign also continued.


The tyre industry in India is passing through a challenging phase much like the overalleconomy. Such a drastic fall in the sales of commercial vehicles during the year underreview has not been witnessed in a long time. In the short term, therefore, the outlookfor tyre industry is not a very optimistic one. The tyre industry’s growth isexpected to be in sync with the GDP growth. However, replacement demand from vehicle salesover the past two years can provide an opportunity.

The Company expects tyre demand to revive over medium term.

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


Associated CEAT Holdings Company Private Limited (ACHL), the Company’s investmentarm in Sri Lanka, operates 3 (three) manufacturing plants owned by its joint venturecompany CEAT-Kelani Holding Company Private Limited.

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

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

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


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

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

Annexure to the Directors’ Report

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

The JV Company has already commenced seed marketing of the ‘CEAT’ brandedtyres in the domestic market.


A statement giving details of conservation of energy, technology absorption, foreignexchange earnings and outgo, in accordance with the Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988, is annexed hereto and forms part ofthis report.


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

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


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


The Ministry of Corporate Affairs has vide General Circular No. 2/2011 dated February8, 2011 granted general exemption from attaching the accounts and financial statements ofsubsidiary companies as provided under Section 212 (8) of the Act, provided conditionsspecified in the said circular are fulfilled. The Company has fully complied with all theconditions mentioned in the above circular. Therefore, the Annual Accounts of the whollyowned subsidiary of the Company i.e. Associated CEAT Holdings Company (Private) Limited(ACHL) and those of the subsidiary company i.e. CEAT Bangladesh Limited (CBL) have notbeen annexed to this Report. However, the same are available for inspection at theRegistered Office of the Company and also at the Registered Office of ACHL and CBL. Anymember desirous of obtaining the same may request the Company in writing.


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


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

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

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

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


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

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

ii) such accounting policies have been selected and applied consistently and suchjudgements and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company in the Balance Sheet as at March31, 2013 and of the Statement of Profit and Loss for the said financial year viz. April 1,2012 to March 31, 2013.

iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

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


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


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

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


Your Directors place on record their appreciation for the continued support andco-operation received from the employees, customers, suppliers, dealers, financialinstitutions, banks and members towards conducting the business of the Company during theyear under review.

On behalf of the Board of Directors
H. V. Goenka
Place: Mumbai
Date: July 18, 2013


CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO(Pursuant to the Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988)


(a) The Company continued to give major emphasis on conservation of energy and themeasures taken during the previous years were continued. The efficiency of energyutilisation in each manufacturing unit is monitored at the corporate level every quarter,in order to achieve effective conservation of energy. The significant energy conservationmeasures during the year were:

• Horizontal replacement of energy efficient screw compressor in place ofreciprocating compressors.

• VFD fixed for duplex hold mill for main motor, blender and mill to millconveyor.

• Idle run interlock put for master mixer, final mixer, triplex blowers, duplexblowers, triplex spray pumps.

• Lighting timer based switch off put in the areas of Stock 1, Stock 2, TyreBuilding, Tyre Curing, Final Finish, FGS, RMS.

• PCR batches mixing ratio reduced from 1.7 to 1.47 by various activities.

• Line speeds increased on Duplex, PCR Inner Liner, PCR Body Ply Cutter.

• Trench pipe line insulation.

• Stainless Steel pipe lines for few trenches.

• Replacement of existing BOM water motor pump with energy efficient motor pumpand AC Drive.

• Installation of lighting controller to control voltage supply for illumination.

• Installation of VFD for Calendar warm up and feed mills to optimise Calendarpower consumption.

• Conversion of bull gear drive to uni-drive in mixing mills to eliminatetransmission losses.

• Replacement of Boiler economiser to increase boiler efficiency.

• Replacement of old underground pipe lines with new overhead pipelines.

• Insulation of hot pipelines.

• Insulation of Curing Press pipe module with ceramic insulation tape.

• Replacement of old Boiler with energy efficient Boiler to reduce exhaust fluegas temperature from 200 degree centigrade to 100 degree centigrade.

• Replacement of existing supply recovery pumps in mixing and utility by energyefficient pumps.

• Improved steam to production (specific steam consumption) over FY 2012.

(b) Additional investments / proposals for reduction of consumption of energy.

• Replacement of existing obsolete Voltas chiller with new chiller to save thermalenergy.

• Replacement of existing hot water and industrial cooling pumps with energyefficient pumps and motors.

• Replacement of conventional tube lights with energy efficient induction lamps.

• Installation of DM Plant to reduce Boiler blow down heat losses.

• Horizontal deployment of non-conventional insulation of dome.

• Horizontal deployment bottom dome thermoplate insulation.

• Horizontal replacement of 59J Hot Water Recovery line from utility to SS fromMS.

• Press module change in 20 presses.

• Revamping of condensate return headers MS to SS.

• Horizontal replacement of Drain Header in Main curing of all trenches from MS toSS.

• Replacement of florescent tube rod of 36W by LED 16W.

• Replacement of old package AC by energy efficient AC.

• Stopping of existing 60" mill by introducing slitter m/c in mixing.

• VFD’s for dust collector blowers of master and final mixers, processcooling tower motor, HVAC cooling tower motor.

• Energy efficient pumps / motors EEF1 for process cooling supply water pumps,HVAC cooling water pumps, mixer cooling supply water pumps, chilled water supply pumps.

• Insulation on PCR bead apex TCU, 4 roll calendar poke chop extruder TCU, PCR ILextruder TCU pipe line.

Form A

A. POWER & FUEL CONSUMPTION 2012-13 2011-12
(a) Purchased
Units (KWH) 12,34,40,220 11,83,12,758
Total amount (Rs. in crores) 88.71 78.29
Rate per unit (Rs.) 7.19 6.62
(b) Own generation
(i) Through diesel generator
Units (KWH) 1,08,477 1,61,447
Units per Litre of diesel oil (KWH) 2.10 2.55
Cost per unit (Rs.) 22.46 16.61
2 Briquettes (White Coal)
Quantity (Tonnes) 58,570 59,630
Total Cost (Rs. in crores ) 37.66 36.32
Average rate (Rs. per Kg.) 6.43 6.09
3 Furnace Oil
Quantity (K.Ltrs.) 2,391 3,514
Total amount (Rs. in crores) 9.46 12.17
Average rate (Rs. per Litre) 39.57 34.64
4 L.S.H.S.
Quantity (K.Ltrs.) 0 156
Total amount (Rs. in crores) 0.00 0.43
Average rate (Rs. per Litre) 0.00 27.81
5 Coal
Quantity (MT) 0 173
Total amount (Rs. in crores) 0.00 0.12
Average rate (Rs. per Kg.) 0.00 7.22
6 Other/Internal Generation (PNG and other gases)
Quantity (SCM) 97,62,156 92,83,312
Total Cost (Rs. in crores) 30.70 23.87
Rate per Unit (Rs. per SCM) 31.45 25.71
(i) Electricity (KWH/MT) 754.32 764.55
(ii) Furnace Oil ( Ltrs./MT) 14.60 22.68
(iii) Coal/Briquettes (Kg./MT) 357.60 385.92
(iv) Gas (SCM/MT) 59.60 59.91
(v) L.S.H.S ( Ltrs./MT) 0.00 1.00


Form B

Research and Development (R&D)

1. Specific areas in which R&D activities were carried out by the Company:

• Design and development of new range of UVR tyres in the upcoming 15" and16" sizes as CZAR series in A/T (All Terrain) and H/T (Highway Terrain) pattern forhigh growth SUV segment.

• Fuel efficient PCR tyres in high volume segments of domestic and OEMs throughoptimised tread design, new generation Polymer /Filler combination in tread compound.

• Development of advanced simulation technique in different domain areas andintegration with new product development, product/process innovations and problem solvingactivities.

• Joint development projects with premium institutes like IIT’s and globalvendors in emerging technologies like Nano-technology, Bio-based materials, hybridmaterials, advanced simulations.

• High end ‘Winter tyres‘ with advanced tread design having multitude ofsipes and high traction, low temperature flexible tread compound.

• PCR design and materials development for summer tyres meeting even the stringentEuropean regulations.

• Improvement of Wet and Dry traction properties of passenger car and SUV radialtread compounds through new generation polymer/filler blends.

• ‘Gripp-LN’ series of passenger car radial tyres for higher grip, lownoise and better ride comfort, higher durability for high end vehicles for Middle East andEuropean market.

• Alternate raw materials and indigenous sources for cost advantage withoutcompromising performance.

• Re-engineered truck radial tyres for the highly demanding - high speed, hightemp, moderate overload - markets of Middle East, South America and Africa have performedvery well.

• Truck radial tyres re-engineering for performing at overloading market byimproving the belt profile, reducing the belt strain, improving the belt to belt adhesionto meet the higher endurance level.

• Truck radials with high cut resistant tread compound developed to ensure treadlife and durability in ‘on-off highway’ operations.

• Development and customisation of the ‘Super Single’ truck radial tyresfor Indian applications with improved fuel efficiency and loadability.

• Design and development of tubeless truck rear/ drive tyre [295/80R22.5 Pro B10]for first time in India with tread pattern having large blocks, higher NSD, optimisedchannel design for effective heat dissipation and low rolling resistance leading toimproved fuel efficiency, compared to tube type drive tyre series.

• Focused research on increased usage of green/ environmental friendly rawmaterials like earthen fillers and recycled and renewable materials.

• Development of 140/70-17 ZOOM XL, the first ‘H’speed rated [210 km/h]motorcycle tyre in India.

• Design and development of a series of the high traction ‘CEAT GRIPP’tyres in all popular motorcycle and scooter sizes.

• Development of complete range of high mileage ‘Milaze’ motorcycletyres for Moped to Bullet models (2.50-16, 3.25-19,100/90-17 etc).

• Development and customisation of motorcycle and scooter tyres especially tomatch the requirement of OEM.

• Development of new directional scooter pattern, 3.50 -10 ZOOM –D tubeless,to meet demanding performance requirements of OEM.

• Development of 10.00-20/16 PR MILE XL SL , 10.00-20/16 PR FM SUPER XL+HD,7.50-16/14 PR Mile XL SL+ HD BULAND tyres for highly overloading Indonesian and Bangladeshmarket.

• Development of tread compound with 15 per cent higher mileage for PORT PROseries OTR tyres.

• Development of ‘Float Max series’, the extra light weight farm tyreseries for Specialty EU market.

• Providing technical know-how to –

- Associated CEAT (Private) Limited, Sri Lanka

- CEAT Kelani Radials (Private) Limited, Sri Lanka

- CEAT Kelani International Tyres (Private) Limited, Sri Lanka

- ACE Tyres Limited, Hyderabad

- Innovative Tyres & Tubes Project, Baroda

- Zahi Rubbers, Kozhikode, Kerala

2. Benefits derived as a result of above R&D

• Improved customer satisfaction through improvement in quality, cost, deliveryand safety.

• Significant growth in TBR exports to Middle East, South America and Africa.

• Significant growth in 2/3 Wheeler, PCR and UV OEM business.

• Advancement in simulation technique for product design, process design andproduct improvement resulted in reduced iterations and improved success rate.

• Wider product portfolio offering to customers in PCR and TBR tyres for India,Middle East and European markets.

• Improved performance of TBR tyres in overloading markets of India.

• CZAR series products in UVR sizes with broader look and superior performancesuitable for latest SUVs in wide range.

• Approvals by major vehicle manufacturers for original fitment in motorcycle,scooter, car, SUV and truck tyres.

• Higher customer acceptance achieved in replacement as well as in OE markets inmotor cycle and UV category.

• Improved sustainability by reduction of carbon foot print through fuel efficientlow rolling resistant tyres, usage of renewable/recycled/bio materials.

• Better insight on advanced materials and technologies to keep pace with theongoing and future global demands.

• Significant material cost reduction to the tune of 0.5 per cent of materialcost.

3. Future plans of action

• Further joint research work on advanced technology and materials with premiuminstitutes and global vendors.

• Extended range of PCR for global market by meeting stringent labelingrequirements for further foot hold in the export market.

• Reduction of rolling resistance of PCR and UVR tyres further for better fuelefficiency.

• Improvement of grip of motorcycle, PCR and UVR tyres for better safety.

• Focus on green/renewable/recycled and bio raw materials to ensure sustainabledevelopment.

4. Expenditure on R&D

(Rs. in crores)

2012-13 2011-12
a) Capital 0.54 31.51
b) Recurring 17.15 11.09
c) Total 17.69 42.60
d) R&D expenditure as per cent of total turn over 0.33 0.95


1 Efforts, in brief, made towards technology absorption, adaptation andinnovation:

Continuous knowledge upgradation and joint research efforts and study of customerrequirements for different products, markets and application enabled development ofproducts to meet :

• Higher level of performance globally.

• National and international regulations.

• Specifically Indian application conditions.

• Future challenges.

2 Benefits of the above are:

• Improved product performance.

• Improved customer acceptance.

• Product durability.

• Improved ride and handling.

• Entry into new markets – Global and widening the markets in India.

• Reduced carbon foot print.

3. In case of imported technology (imported during the last five years reckonedfrom the beginning of the financial year) following information may be furnished:

a) Technology imported : Nil
b) Year of import : Not Applicable
c) Has the technology been fully absorbed? : Not Applicable
d) If not fully absorbed, areas where this has not taken place, reasons thereof and future plan of action : Not Applicable


(a) Activities relating to exports, initiatives taken to increase exports, developmentof new export markets for products and services and export plans.

Please refer to the main report.

(b) Total foreign exchange used and earned :-

(Rs. in crores)
2012-13 2011-12
i) Foreign exchange earned 1,099.34 1,003.30
ii) Foreign exchange used 1,426.06 1,514.04


On behalf of the Board of Directors
H. V. Goenka
Place: Mumbai
Date: July 18, 2013
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

H V Goenka , Vice Chairman

Paras K Chowdhary , Non Executive Director

Anant Vardhan Goenka , Managing Director

Vinay Bansal , Director

Company Head Office / Quarters:

463 Dr Annie Besant Road,
Phone : Maharashtra-91-22-24930621 / Maharashtra-
Fax : Maharashtra-91-22-66606039 / Maharashtra-
E-mail : investors@ceat.in
Web : http://www.ceattyres.in


TSR Darashaw Ltd
6-10 Haji Moosa,Patrawala Ind.Estate,DrEMoses Rd Mahalaxm,Mumbai - 400 011

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