BSE: 500878 | NSE: CEATLTD | ISIN: INE482A01020 
Market Cap: [Rs.Cr.] 2,957.10 | Face Value: [Rs.] 10
Industry: Tyres

Director's Report


The Members of CEAT Limited

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


For the year ended March 31, 2014 For the year ended March 31, 2013
Turnover 5,304.1 4,836.7
Profit before Taxation 377.1 145.7
Provision for:
- Current Tax 88.8 -
- Short/(Excess ) Provision for earlier years - (1.7)
- Deferred Tax 34.5 41.0
Net Profit 253.8 106.4
Surplus brought forward from previous year 332.9 253.5
Sum available for Appropriation 586.7 359.9
- Proposed Dividend on Equity Shares 36.6 13.7
- Corporate Tax on Proposed Dividend 5.3 2.3
- Transfer to General Reserve 25.4 11.0
Balance carried forward 519.4 332.9


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


The challenges faced by the Indian economy during the last fiscal continued during FY2013-14 as well. India continued to grapple with problems like slowdown in industrial andeconomic activity, increasedinflation . and fiscal imbalances However, the second half ofthe year under review witnessed some positive developments in the form of policyannouncements and global economic recovery.

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

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

The Indian tyre industry, following the trends of the automotive industry, has notregistered any significant growth. The total tyre volume growth during the year underreview has been 2 to 4 percent due to higher than anticipated weakness in the passengercar and truck and bus segments.

The domestic tyre demand from the Original Equipment Manufacturers (OEM) segment islargely flat for the second consecutive year during FY 2013-14, with contraction acrossall segments, barring scooters and tractors. Replacement tyre volume demand during FY2013-14 grew by 5-6 percent. The continued decline in the Medium and Heavy CommercialVehicles (M&HCV) industry and delayed replacement of vehicles by fleet ownerstranslated into higher replacement demand for tyres in this segment.


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

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

CEAT has continuously focussed on new product launches and has launched over a 100 newproducts in FY 2013-14. Product ranges like ‘Gripp LN (low noise)’ for passengercar radials and ‘Zoom’ for motorcycle tyres have been very successful. TheCompany will continue to invest steadily in new product development to cater to the everchanging needs of the modern consumer.

Over the last few years, CEAT has focussed on changing its product portfolio byincreasing volumes in non-truck segment like two wheelers and passenger cars which havebetter margins. A favourable product mix has contributed positively to the bottom line ofthe Company.

The Company has strategically enhanced its OEM network, which significantly contributedto its growth. It has also entered into new partnerships with companies likeRenault-Nissan.

CEAT is looking at expanding its rural presence and its operations in the two-wheelerand Passanger Car Radial (PCR) replacement market. Expansion of CEAT Shoppe is a keyinitiative taken by the Company to develop an exclusive retail channel to improve servicelevels and reach in the market. At present, the Company has more than 135 CEAT Shoppes ascompared to 100 as on March 31, 2013. CEAT Shoppe has positively contributed to thecompany’s sales, especially in the passenger car tyre segment accounting for 32percent of passenger car radials/utility vehicle radials sales.

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

During the year under review, the Company launched the Dhoom 3 branded, high-speed,special-edition tyres and also released video games based on the box-office monster. Itsnew Dhoom 3 tyre is targeted at the younger segment and has provided a boost to theCompany’s image as a quality tyre manufacturer. The Company’s advertisementcampaigns have garnered the award under the “Best Ongoing Campaign” at theEffies, a prestigious advertising award.


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

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


Pursuant to the special resolution passed by the members through Postal Ballot on March7, 2012, the Company had on March 12, 2012 issued and allotted 17,12,176 Warrants to oneof the Promoter Group Companies viz

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


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 Holdings Company Private Limited.

During the year under review, ACHL has registered a revenue of LKR 4,889.2 million ( Rs227.2 crores) as compared to LKR 4,569.3 million ( Rs 191.9 crores) in FY 2012-13, agrowth of 7 per cent. Profit after tax has grown by 47.5 per cent to LKR 687.4 million (Rs 33.7 crores) as compared to LKR 469.0 million ( Rs 20.6 crores) in FY 2012-13. Thejoint venture continues to enjoy the overall market leadership in all categories of tyresin Sri Lanka.

ACHL has been consistently paying dividends and for FY 2013-14 the Company received Rs8.4 crores as dividend from ACHL.


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

Once the plant becomes operational, the JV Company will be in a position to cater tothe 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 read with Companies(Particulars of Employees) Rules, 1975, as amended, the names and other particulars ofemployees of the Company, are required to be set out in this report. However, as perprovisions of Section 219 (1) (b) (iv) of the said Act, the Annual Report excluding theaforesaid information is being sent to all the members of the Company. Those members whoare desirous of obtaining full information are requested to write to the Company.


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

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 Companies Act, 1956,provided conditions specified in the said Circular are fulfilled. The Company has fullycomplied with all the conditions mentioned in the above circular. Therefore, the AnnualAccounts of the wholly owned subsidiary of the

Company i.e. Associated CEAT Holdings Company (Private) Limited (ACHL) and those of thesubsidiary companies i.e. CEAT Bangladesh Limited (CBL) and Rado Tyres Limited (RTL) havenot been 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, CBL and RTL.Any member desirous of obtaining the same may request the Company in writing.


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


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

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

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


Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors, to the bestof their knowledge 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, 2014 and the Statement of Profit and Loss for the said financial year viz. April 1,2013 to March 31, 2014.

iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

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


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
Place: Mumbai H. V. Goenka
Date: July 22, 2014 Chairman


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:

• Replacement of existing obsolete voltas chillers with new chillers to savethermal energy.

• Replacement of existing hot water and industrial cooling pumps with energyefficient pumps and motors to save electrical energy.

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

• Replacement of BOM water heat exchanger to save thermal energy.

• Replacement of briquette boiler pulsating grate to travelling grate to improvethermal efficiency of boiler.

• Fuel additive added with briquette to save thermal energy and improve thecombustion efficiency.

• Replacement of old PCI reciprocating compressor with new screw compressor tosave electrical energy.

• Replacement of BOM cold water cooling tower with new efficient cooling tower tosave electrical energy.

• Non-conventional insulation of dome.

• Replacement of 59J hot water recovery line from utility to SS from MS.

• Press module change in 20 curing presses.

• Revamping of condensate return headers MS to SS to save thermal energy.

• Replacement of drain header in main curing of all trenches from MS to SS to savethermal energy.

• Replacement of 600HP slip ring motor with energy efficient induction motor tosave electrical energy.

• Replacement of tube light fitting with energy efficient magnetic induction lampfor saving electrical energy.

• Modification project completed for overall plant condensate recovery from theplant in order to increase the maximum possible recovery to save the fuel energy.

• Modification job completed for the flash steam utilisation at boiler feed waterheating, tank farm oil heating, dehumidifier operation in order to save fuel energy.

• Heat exchangers installed for pre-heating the feed water from boiler blow downheat energy.

• Installed the vertical multi stage EEF feed pumps at boiler in place ofhorizontal feed pumps to save the electrical energy.

• Steam leakages and air leakages controlled to reduce/kill the energy losses.

• VFD installation for the duplex warm up mill.

• Triplex cushion colander stoppage when side wall runs.

• VFD installed for master and final mixer dust collectors.

• X-Ray machine exit conveyor stopping when not required.

• Replacement of machine lighting with LED lights.

• Trench pipe line insulation.

• Stainless steel pipe lines for few trenches.

• Installation of ventury type steam traps in curing area.

• Insulation to dome in truck curing presses.

• Replacement of fluorescent tube rod of 36w by induction lamp.

• APFC panel for 4 roll calendar.

• Replacement of existing old package AC by energy efficient.

(b) Additional investments / Proposals for reduction of Consumption of energy.

• Replacement of VAM chillers with new energy efficient refrigerant chillers tosave thermal energy.

• Replacement of existing hot water recovery, Kobelco and 59J hot water recoverypumps with energy efficient pumps and motors to electrical energy.

• Increase heating surface area of briquette boiler economiser to save thermalenergy.

• Replacement of briquette boiler ID fan with new VFD operated higher capacity fanto save thermal energy.

• Replacement of cooling tower existing PVC fills with new fills to saveelectrical energy.

• Installation of new cooling tower for speciality extruder to save electricalenergy.

• Installation of additional vacuum system in main curing to save thermal energy.

• Non-conventional insulation of dome for 50 presses to save thermal energy.

• 59J Main drain header replacement with SS to save thermal energy.

• Truck press bottom dome thermoplate insulation change in 30 presses to savethermal energy.

• Press header change in 30 presses to save thermal energy.

• Press header insulation with ceramic tapes for 50 presses to save thermalenergy.

• Replacement of POP insulation with new rock wool insulation of major pipe lines(HP & HWS) and insulation of bag filter to save thermal energy.

• Replacement of obsolete hot water pumps with new energy efficient pump to saveelectrical energy.

• Installation of new economiser with SS stack and ducting for boiler no. 2 tosave thermal energy. save

• Replacement of 2 nos. 600 HP slip ring motors with energy efficient inductionmotors to save electrical energy.

• Replacement of 2 nos. 225HP slip ring motors with energy efficient inductionmotors to save electrical energy.

• Replacement of 350HP slip ring motor of mill with energy efficient inductionmotor to save electrical energy.

• Fixing of timers on tea tables for auto stop to save electrical energy.

• Replacement of existing cooling tower pumps by energy efficient pumps to saveelectrical energy.

• DM plant installation in order to improve boiler life and blow down losses.

• Replacement of existing burners with efficient burners (WEISHAUPT make burners).

• Replacement of energy efficient pumps in cooling tower and utility.

• Duplex cushion colander stoppage when side wall runs.

• Trench pipe line insulation.

• Replacement of piping of hot water system in utility area.

• APFC for Banbury number 5.



2013-14 2012-13
(a) Purchased
Units (KWH) 12,50,69,947 12,34,40,220
Total Amount ( Rs in crores) 85.48 88.71
Rate per unit( Rs ) 6.83 7.19
(b) Own generation
(i) Through diesel generator :
Units (KWH) 1,96,290 1,08,477
Units per Litre of diesel oil (KWH) 2.19 2.10
Cost per unit ( Rs ) 31.31 22.46
2 Briquettes (White Coal)
Quantity (Tonnes) 55,214 58,570
Total Cost ( Rs in crores) 38.34 37.66
Average rate ( Rs per Kg.) 6.94 6.43
3 Furnace Oil
Quantity (K. Ltrs.) 2,009 2,391
Total Amount ( Rs in crores) 9.02 9.46
Average rate ( Rs per Litre) 44.90 39.57
4 L.S.H.S.
Quantity (K. Ltrs.) - -
Total Amount ( Rs in crores) - -
Average rate ( Rs per Litre) - -
5 Coal
Quantity (MT) 938 0
Total Cost ( Rs in crores) 0.69 0.00
Average rate ( Rs per Kg.) 7.34 0.00
6 Other/Internal Generation (PNG and other gases )
Quantity (SCM) 94,69,623 97,62,156
Total Cost ( Rs in crores) 36.91 30.70
Rate per Unit ( Rs per SCM) 38.98 31.45
(i) Electricity (KWH/MT) 718.14 754.32
(ii) Furnance Oil (Ltrs./MT) 11.52 14.60
(iii) Coal/Briquettes (Kg./MT) 316.54 357.60
(iv) Gas (SCM/MT) 54.29 59.60


Form B

Research and Development (R&D)

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

• Introduced tubeless portfolio in scooter and motorcycle in all sizes.

• Premium Zoom XL range introduced in motorcycle with extra grip at high speed.

• 36 new product approvals from leading OEM’s like Yamaha, Piaggio, Bajaj,Hero, LML, Tata Motors, Nissan and M&M.

• W rated (270 km/h) ultra high performance tyres for Mercedes S-class and Audi.

• Following new technologies developed (1) Super Grip technology for two wheelertyres (2) Low rolling resistance technology for PCR, UVR tyres (3) Overload capability fortruck radial tyres.

• Over 100 new products are released annually.

• Time to market cycle time for product development has been further reduced by 25percent and is the best in the industry.

• To ensure first time right R&D adopted the stringent stage gate system withmultiple cross functional reviews.

• Proven TBR performance in extreme overload segment.

• Joint development work with IIT Mumbai and NID for advanced product design.

• Continued focus on increasing earthen filler usage replacing petroleum basedreinforcing fillers.

• Increased usage of renewable and recycled material to reduce the environmentalimpact of products [carbon footprint].

• Joint developments with premium institutes like IIT’s and global vendors infrontier material technologies.

• Enhanced correlation of simulation result with the physical testing result inthe area of tyre footprint contact pressure distribution, rolling resistance and inflateddimensional parameters.

• In de-growing bias market CEAT premium tyres is holding the market share withits performance and cost effectiveness.

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

• Received first tubeless in motorcycle in “Hero Splendor I smart”.Participating in 5 premium tubeless models of Yamaha, Bajaj, Hero and Honda.

• CEAT has become one of the preferred development partner in all OEMs in 2Wheelers.

• Over 20 per cent turnover is contributed by new products.

• Higher market share with overload TBR.

• CEAT won Indian Design Mark Award for Motorcycle Gripp pattern. First IndianTyre Company to win prestigious Indian Design Mark award.

• 12 papers, 2 patents filed, 13 NDA and 8 JDA with long term perspective.

• Capability for making low rolling resistant e years passenger car radialtyres meeting the stringent and challenging requirements of OEMs.

• Superior grip motor cycle tyres.

3. Future plans of action

• Commercial release of motorcycle radial tyres.

• Entry in to high end OEMs.

• Exclusive farm range for U.S.A.

• Proving TBR in extreme load and heat of Middle East market.

• Low RR Series in PCR and UVR.

4. Expenditure on R&D

( Rs in Crores)
2013-14 2012-13
a) Capital 0.38 0.54
b) Recurring 18.32 17.15
c) Total 18.70 17.69
d) R&D expenditure as percent of total turn over 0.32 0.33


1. Efforts, in brief, made towards technology absorption, adaptation and innovation:

• To bring innovation culture using techniques like TRIZ, advance QIPs.

• Semantic based design.

• Advanced simulation capability for design optimisation and process simulation.

2. Benefits of the above are:

• Faster high end product introduction.

• Lower cost of development.

• Reduced carbon footprint.

• Creating impactful products.

3. In case of imported technology

Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

H V Goenka , Vice Chairman

Paras K Chowdhary , 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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