Apollo Tyres Ltd Directors Report.

Dear Member,

Your Directors have pleasure in presenting the 49th Annual Report on the business and operations of Apollo Tyres Ltd. ("the Company"), together with the audited financial statements for the financial year ended March 31, 2022.

FINANCIAL PERFORMANCE

The financial performance of the Company for the financial year ended March 31, 2022 is summarised below:

(Rs Million)
Year Ended Year Ended
Particulars March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
Standalone Consolidated
Sales 143,068 113,545 205,808 169,546
Other operating income 3,426 3,789 3,668 4,424
Revenue from operations 146,494 117,334 209,476 173,970
Operating profit (EBITDA excluding other income) 14,308 20,343 25,741 27,975
Other income 1,269 1,215 1,235 1,294
Less: Finance costs 3,822 3,794 4,444 4,430
Less: Depreciation & amortization expenses 8,239 7,134 13,997 13,150
Profit before share of profit/ (loss) in associates / 3,517 10,630 8,535 11,689
joint venture, exceptional items & tax
Share of profit / (loss) in associates / joint venture 0 - 1 0
Exceptional items (13) (110) (59) (6,077)
Profit before tax 3,504 10,520 8,477 5,612
Less: Provision for tax 893 3,292 2,091 2,110
Profit after tax 2,611 7,228 6,386 3,502

OPERATIONS

The tyre industry is dependent on the business from the OEMs and the Replacement market. According to the data from Automotive Tyre Manufacturers Association (ATMA), in the past decade, only twice has the industry seen double digit growth (13% in FY15 and 10% in FY17). However, FY22 might be a year where the growth might surpass the previous growth numbers. According to the data released by ATMA for 9 months, the industry has grown at a robust 23%. In the European market, given the contraction in the auto industry and especially in the PV segment, it directly impacted the tyres supply to the OEM segment which recorded a decline of 8%, as per data from the European Tyre & Rubber Manufacturers Association. However, this was offset by the gains made by the industry in the Replacement market which grew by 14%, led largely by a 35% growth in all-season segment and single digit growth in the other segments – summer and winter tyres. The industry also saw solid growth coming in from the OEM Truck segment which grew by 25%. Even the replacement Truck tyres segment registered an increase of 12%. The standalone revenue from operations of your Company was D 146,494 million during FY22 as against D 117,334 million during the previous financial year. EBITDA (excluding other income) was at D 14,308 million as compared to D 20,343 million during the previous financial year. The Net Profit for the year under review was D 2,611 million, as against D 7,228 million in the previous fiscal.

The consolidated revenue from operations of your Company was D 209,476 million during FY22, as compared to D 173,970 million in FY21. The consolidated EBITDA (excluding other income) was D 25,741 million for FY22 as compared to D 27,975 million for the previous financial year. On consolidated basis, Apollo Tyres earned a Net Profit of D 6,386 million for FY22 as against D 3,502 million for the previous financial year.

RAW MATERIALS

The year under review witnessed a sharp ~ 30% increase in the raw material cost. The year began with the COVID-19 Delta variant subduing demand followed by successful vaccination program in the country which helped mitigate the Omicron wave towards end of the year. The supply chains reeling under COVID-19 were subjected to unprecedented disruptions on account of global port congestions, container shortages and blank sailings. The ocean freight rates rose by over 5 times on most shipping routes during the year. FY22 had multi-year highs in most commodities in the Energy, Metals and the Agriculture space. The Bloomberg

Commodity Index rose by 45% while the S&P Goldman Sachs Commodity Index increased by 54% in FY22.

The Rupee started the year at a level of 74 against the US Dollar and weakened to a level of 76 by the end of the year. Oil prices continued their northward ascent during the year scaling a peak of USD 140/bbl on account of geo-political factors, supply disruptions, inability of OPEC members to increase oil supply as per agreement and rise in Natural Gas prices. Brent Crude Oil started the year in the range of USD 65/bbl rising steadily to USD 80/bbl by Q3. This was followed by Crude breaching the level of USD 100/bbl in Q4. The prices rose by 75% during the year.

Natural Rubber availability in India was severely constrained during the period April to December 2021 on account of weather related challenges, COVID-19 restrictions in Kerala, etc. The Port Restriction on imports of Natural Rubber continues with imports allowed only at Nhava Sheva and Chennai ports. The inverted duty structure on Natural Rubber @ 25% or D 30/kg whichever is lower continued during the year. The domestic Natural Rubber prices rose to 7 year highs during the year. The shortfall in domestic availability had to be met through imports from major producing countries such as Thailand and Indonesia.

The Company has partnered with the Government of India in developing new Natural Rubber plantations in the North East of India under the Prime Ministers Atma Nirbhar Bharat Scheme. The project is designed to implement the scheme for developing 200,000 hectares of rubber plantations financially supported by major tyre companies with technical support and coordination by the Rubber Board under the Ministry of Commerce.

The Crude based raw materials – Carbon Black, Synthetic Rubber, Nylon and Polyester Fabric, Chemicals also experienced high input cost increase. The Customs duty on Polyester Fabric was increased from 5% to 20% in February 2022.

The Company taking forward the Sustainability initiative in the Raw Material Supply Chain organized a virtual Global Partners Summit 2021 under the theme "Sustainability in Uncertainty – the Challenges Ahead". The Vision 2025 together with the Sustainable Procurement Roadmap was shared with over 600 representatives of Raw Material Business Partners.

The Company successfully managed the Global Supply Chain disruptions through focus on building Resilience in the Supply Chain, increasing near Sourcing, Inventory Management and leveraging Raw Material Business Partner relationships.

DIVIDEND

Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of D 3.25 (325%) per share of D 1/- each on Equity Share Capital of the Company for FY22 for your approval.

The dividend, if approved, shall be payable to the Members holding shares as on cut-off date i.e. June 17, 2022.

RESERVES

The amount available for appropriations, including surplus from previous year amounted to D 44,699.87 million. Surplus of D 42,635.79 million has been carried forward to the balance sheet. A general reserve of D 1,000 million has been provided.

BOARD OF DIRECTORS

A) Appointment/ Re-appointment of Directors

Ms. Lakshmi Puri (DIN: 09329003) was appointed as an Independent Director of the Company, not liable to retire by rotation, to hold office for a term of 5 consecutive years with effect from October 29, 2021 to October 28, 2026 by the Members through Postal Ballot dated December 19, 2021.

In line with the succession planning of the Company and to separate the roles of Chairman and Managing Director, Mr. Onkar Kanwar (DIN:00058921) has desired to step down from his current position of Managing Director with effect from January 31, 2023 and will continue to act as Non-Executive Director designated as "Chairman" with effect from February 1, 2023 subject to your approval at the ensuing Annual General Meeting. Pursuant to the provisions of Section 152(6) of the Companies Act, 2013, Mr. Robert Steinmetz (DIN: 00178792) and Mr. Sunam Sarkar (DIN: 00058859), Directors of the Company, are liable to retire by rotation and being eligible offers themselves for re-appointment. The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and hold highest standards of integrity. None of the aforesaid Directors are disqualified under Section 164(2) of the Companies Act, 2013. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.

B) Changes in Directors and Key Managerial Personnel

During the year under review and between the end of the financial year and on the date of this report, apart from aforementioned appointment/ re-appointment of Directors, Ms. Anjali Bansal (DIN: 00207746), Independent Director had tendered her resignation as an Independent Director of the Company with effect from end of the business hours of September 13, 2021, due to other preoccupations. She has also confirmed that there is no material reason for her resignation. There are no changes in Key Managerial Personnel of the Company.

C) Declaration by Independent Directors

In terms with Section 149(7) of the Companies Act, 2013, Independent Directors of the Company have submitted declarations that they meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(I)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Independent Directors have also complied with the Code for Independent Directors as per Schedule IV of the Companies Act, 2013. All our Independent Directors are registered on the Independent Directors Databank.

D) Formal Annual Evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board is required to carry out annual evaluation of its own performance and that of its Committees and individual Directors. The Nomination and Remuneration Committee (NRC) of the Board also carries out evaluation of every Directors performance. Accordingly, the Board and NRC of your Company have carried out the performance evaluation during the year under review.

For annual performance evaluation of the Board as a whole, its Committee(s) and individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. Every Director has to fill the questionnaire related to the performance of the Board, its Committees and individual Directors except himself by rating the performance on each question on the scale of 1 to 5, 1 being Unacceptable and 5 being Exceptionally Good. On the basis of the response to the questionnaire, a matrix reflecting the ratings was formulated and placed before the Board for formal annual evaluation by the Board of its own performance and that of its Committees and individual Directors. The Board was satisfied with the evaluation results.

E) Separate Meeting of Independent Directors

In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on February 15, 2022. The Independent Directors at the meeting, inter alia, reviewed the following:-

• Performance of Non- Independent Directors and Board as a whole.

• Performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors.

• Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

F) Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, laid down a Nomination & Remuneration Policy for selection and appointment of the Directors, Key Managerial Personnel and Senior Management and their remuneration. The extract of the Nomination and Remuneration Policy covering the salient features are provided in the Corporate Governance Report forming part of Boards Report.

The Nomination & Remuneration Policy of the Company is available on the website of the Company and the web link is: https://corporate.apollotyres.com/investors/ corporate-governance/?filter=CodesPolicies

G) Code of Conduct for Directors and Senior Management

The Company has formulated a Code of Conduct for Directors and Senior Management Personnel and has complied with all the requirements mentioned in the aforesaid code. For further details, please refer the Corporate Governance Report.

NEW CORPORATE IDENTITY AND VISION 2025

The Company, on June 18, 2021, had unveiled its new corporate identity and vision ‘Driving Progress, Together setting the path for the next 5 (five) years. As a parent Company for both the Apollo and Vredestein tyres product brands, the Company is committed to bringing together a global community and fostering a diverse and inclusive culture, that powers innovation to transport, both its business and society forward.

This vision is supported by the organisations purpose, ‘Enabling Excellence, a belief that excellence should be universally accessible, and the Companys role is to connect people globally to the tyres, tools and support they need to reach their potential.

With this corporate identity, the Company has built a new purpose and vision for the whole organisation that everyone can identify with. The current Apollo Tyres logo will continue as the identity for the product brand – retaining the strength of the brand equity already established over many years. The exciting new identity unveiled last year for the Vredestein Tyres brand, building on its European heritage, will continue as well.

The five key pillars to realise the Companys 5-year vision are Digitalisation, Technology & Innovation, People, Brand and Sustainability.

PRODUCT & MARKETING

The Company continued to focus on its key regions – India and Europe. Also, it continued to build its presence in North America with product releases. In FY22, the APMEA operation continued its focus on key themes for the Indian market - consolidating its leadership position and expanding market share by introducing new products across segments. Apollo Tyres maintained its overall leadership across the radial segments in the M&HCV category. This was supported due to the strategy of new launches or refreshing the range, investing in expanding the distribution network, investing in dealer relationship and multiple initiatives. In the LCV segment, the Company continued to play on its strength of radial technology, strong brand and a segmental approach to the market. It dominated the market with a high replacement market share. In Pickup and SCV radials, the top selling ENDUMAXX LT continued to show a consistent gain in volume and market share throughout the year. The Company also strengthened its Bias portfolio for the SCV segment with the launch of ‘BHIM. The product has been appreciated by the customers and business partners alike.

In the PV tyres segment, the Company continued to strengthen its market leadership position in India driven by new product launches, a sharp focus on building brand salience with effective campaigns, expansion of distribution footprint and adding new OEM customers to the Companys portfolio. Even as the year began under the shadows of the second wave of the COVID-19 pandemic, the Company, with its focus on the above initiatives managed to successfully thwart the headwinds and close the year with a double-digit growth for the overall PV category. Like its overall strategy of bringing in top class products, focus on brand campaigns and increasing distribution footprint, the Companys two-wheeler category followed a similar strategy and made significant inroads in the high-value, highly profitable premium motorcycle tyre market, increasing market share to reach double digits. The Companys full range strategy supported it to cross sell the two-wheeler products to customers of agriculture and car category, both in the rural and urban markets.

In Europe, the Company largely operates in the replacement market in PV, agriculture, industrial, truck and bicycle segments, even as it continues to make inroads into the OEM segment in PV and agriculture. During FY22, the Company focussed on adding new sizes to its product lines introduced in FY21 and consolidate the market offering. The year saw the product launches and marketing initiatives in line with this strategy as it added 24 sizes in the UUHP segment (19 inches and above) among its All-Season and Winter offering – Vredestein Quatrac Pro and Vredestein Wintrac Pro respectively. Further, it expanded its offering for the family and executive car segment – 18 sizes in the new summer product Vredestein Ultrac and 11 sizes in the new winter tyre, Vredetstein Wintrac.

A detailed analysis of the Companys key initiatives for both regions have been shared in the Management Discussion and Analysis section of the annual report.

FUTURE OUTLOOK

According to the World Economic Outlook (WEO) update in April 2022, "Economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest." Supply disruptions have become the norm and will result in higher and more broad-based inflation. Private consumption is expected to recover much slowly leading to restrained consumer demand. Against such see-sawing outlook, Apollo Tyres continues with its cautious approach. The focus continues to be on investing in good costs and cutting down bad costs, employee safety and conserving cash. The Company is cutting down on all avoidable costs and focusing on good costs – R&D, eTraining, brand building, etc. To tap the new demand coming in the Indian and APMEA markets, the APMEA region will continue to focus on bringing in new products in all its key segments. Some key launches are planned in the coming year in both TBB and TBR categories including some future flagship products. The products are made to undergo a rigorous testing phase after understanding the customer and the application requirements. The Europe region has been working on refreshing its entire portfolio in last two years. The results of this strategy have been evident given the strong growth and market share gain in FY22. The region is confident that these refreshed products and a focus on brand spend on both the Companys global brands ‘Vredestein and Apollo will help the region to further its position in the market.

MATERIAL CHANGES AND COMMITMENTS

Except the impact of COVID-19 as mentioned in this report, no material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

The Competition Commission of India (CCI) has issued an order on February 2, 2022 mentioning that it has held five tyre manufacturers and Automotive Tyre Manufactures Association (ATMA) guilty of contravention of the provisions of Section 3 of the Competition Act, 2002 and imposed a penalty of D 425.53 Crores on the Company.

The Company does not agree with the findings of the Commission. The Company has proceeded with an appeal against the judgement and sought stay on the order before the National Company Law Appellate Tribunal (NCLAT).

We would like to reiterate that the Company follows the highest level of governance practices and operates within the letter and spirit of the law.

Other than the aforesaid, no significant and material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

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.

INTERNAL FINANCIAL CONTROLS

Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The Company has identified and documented key internal financial controls as part of standard operating procedures (SOPs). The SOPs are designed for critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The SOPs cover the standard processes, risks, key controls and each process is identified to a process owner. In addition, the Company has a well-defined Financial Delegation of Authority (FDoA), which ensures approval of financial transactions by appropriate personnel.

The Company uses SAP-ERP to process financial transactions and maintain its books of accounts. The SAP has been setup to ensure adequacy of financial transactions and integrity & reliability of financial reporting. SAP was implemented in the European operations in year 2016. SAP was also implemented at Companys Greenfield plants in Hungary and Andhra Pradesh.

The financial controls are evaluated for operating effectiveness through managements ongoing monitoring and review process, and independently by Internal Audit. The testing of controls by Internal Audit are divided into three separate categories viz. a) automated controls within SAP, b) segregation of duties within SAP and restricted access to key transactions, c) manual process controls.

In our view, the SOPs, FDoA, SAP-ERP and independent reviews by the Internal Audit help in establishing adequate internal financial controls with reference to the financial statements and such internal financial controls are operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

SUBSIDIARY/ ASSOCIATE COMPANIES

As the Company follows its vision to become a global tyre brand of choice, it has multiple Subsidiaries for facilitating these operations in various countries. As on March 31, 2022, your Company had 34 Overseas Subsidiary Companies (including step subsidiaries), 1 wholly owned Subsidiary in India, 2 Associate Companies and 1 Joint Venture.

During the year under review the Company had made an investment of — 49 million in the equity share capital of Apollo Tyres Centre of Excellence Ltd, a wholly owned Subsidiary of the company. The Company had also made an investment of — 93 million by purchasing 11,66,250 Equity Shares (27.2%) of CSE Deccan Solar Private Limited on January 14, 2022, to get a guaranteed supply of 40 million units of electricity per annum for its Chennai Plant. Consequent to this investment, CSE Deccan Solar Private Limited has become an Associate Company.

Apollo Tyres (Malaysia) Sdn. Bhd. (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) had initiated for striking off its name from the Companies Commission of Malaysia and is in the process of liquidation as the company has changed its business model in Malaysia from multiple dealer network to Distributor model. During the year under review, ATL Singapore Pte Ltd., (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) had also initiated for striking off its name from the Registrar and Accounting and Corporate Regulatory Authority (ACRA) and is in the process of liquidation, as the Company had ceased its business operations completely since February 28, 2022 and Company does not have any intention of carrying on business in the future.

Apart from the above, no other Company has become or ceased to be Subsidiary, Associate or Joint Venture of the Company during the financial year.

In order to distinguish between a Corporate and a Brand image of the overall Apollo Group, the Management had decided to change the name of few of its European Subsidiaries as a move towards Corporate Restructuring, Simplification and Operational Convenience. In view of the same, the names of following step-down Subsidiaries were changed during the year under review:

Old Name New Name
1. Apollo Vredestein B.V. Apollo Tyres (NL) B.V.
2. Apollo Tyres B.V Apollo Tyres (Europe) B.V.
3. Apollo Tyres (UK) Pvt Limited Apollo Tyres (UK) Holdings Ltd.
4. Apollo Vredestein SAS Apollo Tyres (France) SAS
5. Apollo Vredestein Tires Inc. Apollo Tires (US) Inc.
6. Apollo Vredestein (UK) Ltd Apollo Tyres (UK) Sales Ltd.
7. Apollo Tyres (Germany) GmbH Apollo Tyres (R&D) GmbH
8. Apollo Vredestein Kft Apollo Tyres (Hungary) Sales Kft.
9. Apollo Vredestein Belux Apollo Tyres (Belux) SA
10. Apollo Vredestein Schweiz AG Apollo Tyres (Schweiz) AG
11. Apollo Vredestein GmbH Apollo Tyres (Germany) GmbH
12. Apollo Vredestein Nordic AB Apollo Tyres (Nordic) AB
13. Apollo Vredestein Gesellschaft m.b.H. Apollo Tyres (Austria) Gesellschaft m.b.H.
14. Apollo Vredestein Opony Polska Sp. Zo.o. Apollo Tyres (Polska) Sp. Z o.o
15. Apollo Vredestein Iberica S.A.U. Apollo Tyres Iberica S.A.

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Regulation 33 of the Listing Regulations, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements, together with Auditors Report, form part of the Annual Report. As per the provisions of Section 129 of the Companies Act, 2013, the consolidated financial statements of the Company, its Subsidiaries and Associates are attached in the Annual Report. The annual accounts of Subsidiaries and Associates will be made available to shareholders on request and will also be kept for inspection by any shareholder at the Registered Office and Corporate Office of your Company. A statement in Form AOC-1 containing the salient features of the financial statements of the Companys Subsidiaries, Associates and Joint Venture for the year ended March 31, 2022 is also attached with financial statements.

MATERIAL SUBSIDIARIES

Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 defines a ‘material Subsidiary to mean a Subsidiary whose income or net worth exceeds ten percent of the consolidated income or net worth respectively, of the listed Company and its subsidiaries in the immediately preceding financial year. In addition to the above, Regulation 24(1) of the abovementioned regulations requires that at least one Independent Director on the Board of Directors of the listed Company to be a Director on the Board of Directors of unlisted material Subsidiary, whether incorporated in India or not. For this provision, material Subsidiary means a Subsidiary whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its Subsidiaries in the immediately preceding financial year. Basis this definition, your Company has following five material unlisted Subsidiaries viz. Apollo Tyres (NL) B.V. (Formerly Apollo Vredestein B.V.), Apollo Tyres (Hungary) Kft., Apollo Tyres (Europe) B.V. (Formerly Apollo Tyres B.V.), Apollo Tyres Cooperatief U.A. and Apollo Tyres Holdings (Singapore) Pte Ltd. as on March 31, 2022.

Pursuant to this, Mr. Akshay Chudasama, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (NL) B.V, Apollo Tyres (Hungary) Kft., Apollo Tyres Holdings (Singapore) Pte Ltd. and Ms. Pallavi Shroff, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (Europe) B.V. & Apollo Tyres Cooperatief U.A, with effect from April 01, 2019.

Other requirements of Regulation 24 of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 with regard to Corporate Governance for Subsidiary Companies have been complied with.

a) Apollo Tyres (NL) B.V. (Formerly Apollo Vredestein B.V.)

Apollo Tyres (NL) B.V. is a 100% subsidiary of Apollo Tyres (Europe) B.V. and ultimately held by Apollo Tyres Ltd, India, a listed multinational organisation, and a global tyre manufacturer. The Company focuses on developing, manufacturing, marketing, sales and distribution of tyres across various categories including passenger car, truck & bus, agriculture, industrial vehicles and bicycles. The group sells passenger vehicle tyres under two brands, Vredestein and Apollo. The Company has its headquarters based at Amsterdam, Netherlands and production facility based in Enschede, Netherlands. Sales operations are managed by various subsidiary companies across Europe. The groups distribution network covers Europe, its products are also exported to various other countries.

b) Apollo Tyres (Hungary) Kft.

Apollo Tyres (Hungary) Kft. is one of the latest manufacturing facility within Apollo Tyres group. The Company continued to ramp up its production capacity during the year for both passenger & commercial tyres production line.

During the FY22, the Company has made an additional investment in passenger vehicle tyres production line for debottlenecking and line balancing the capacity.

c) Apollo Tyres Holdings (Singapore) Pte. Ltd.

The principal activities of the Company are of sourcing raw materials for Apollo Tyres manufacturing plants in India and Europe besides the provision of other strategic services to the group. 53% of the raw material procurement is for Natural Rubber for the year FY22. Major sourcing countries are Thailand, Indonesia. Company is also outsourcing finished goods for APMEA and Europe regions for certain specific tyre categories. Global Supply Chain team based out of Singapore consolidates and manages Global Ocean Freight, Transport Optimization, Offtake activities, Supply Chain Cost Analysis, Mould Management and Certification Projects.

In addition, Corporate HR team, based out of Singapore, is managing and facilitating the effective deployment of HR systems and policies, in key areas such as Talent Acquisition, Rewards & Mobility, Talent Management and core HR processes, which are aligned to the business objectives of Apollo Tyres with the mandate of enhancing organizational effectiveness and human capital utilization.

d) Apollo Tyres (Europe) B.V. (Formerly Apollo Tyres B.V.)

Apollo Tyres (Europe) B.V. incorporated in Netherlands is a Holding Company with two Subsidiaries, Apollo Tyres (NL) B.V. and Apollo Tyres (Hungary) Kft. e) Apollo Tyres Cooperatief U.A.

Apollo Tyres Cooperatief U.A., a direct Subsidiary of the Company, was incorporated in the Netherlands. The Company is primarily acting as a Holding Company for all overseas operations.

DEPOSITS

During the year under review, your Company did not accept deposits covered under Chapter V of the Companies Act, 2013.

AUDITORS

M/s. Walker Chandiok & Co LLP, Chartered Accountants, Firm Registration No. 001076N/N500013 (the firm licenses audit software as well as audit methodology from Grant Thornton International Ltd), had been appointed as Statutory Auditors of your Company for a period of 5 years from FY18 to FY22 at the Annual General Meeting held on July 5, 2017. The present term of M/s. Walker Chandiok & Co LLP, Chartered Accountants, would expire at the conclusion of the ensuing AGM. The Board of Directors of your Company has proposed the appointment of M/s. S.R. Batliboi & Co. LLP (Firm Registration No. 301003E/E300005), Chartered Accountants (Member firm of Ernst & Young Global) as the Statutory Auditors of the Company to hold office from the conclusion of this 49th AGM until the conclusion of the 54th AGM.

The Company has received a letter from the Auditors confirming that they are eligible for appointment as Statutory Auditors of the Company under Section 139 of Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the Companies Act, 2013. Further, they have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI).

AUDITORS REPORT

The report given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors on financial statements of the Company for FY22 is part of the Annual

Report. The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditors Report does not contain any qualification, reservation or adverse remark. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.

COST AUDIT

M/s. N.P. Gopalakrishnan & Co., Cost Accountants, were appointed with the approval of the Board to carry out the cost audit in respect of the Companys plants at Perambra (Kerala), Limda (Gujarat), Chennai (Tamil Nadu) and Chinnapandur (Andhra Pradesh) as well as Companys leased operated plant at Kalamassery (Kerala) for FY22. Based on the recommendation of the Audit Committee, M/s. N.P. Gopalakrishnan & Co., Cost Accountants, being eligible, have also been appointed by the Board as the Cost Auditors for FY22 subject to Members approval. The Company has received a letter from them to the effect that their re-appointment would be within the limits prescribed under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013. The remuneration to be paid to M/s. N.P. Gopalakrishnan & Co., for FY23 is subject to ratification of the shareholders at the ensuing AGM.

Cost records as specified by the Central Government under Sub-Section (1) of Section 148 of the Companies Act, 2013 are made and maintained by the Company.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had re-appointed M/s. PI & Associates, Company Secretaries as Secretarial Auditor of the Company for FY22 to undertake secretarial audit of the Company.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure I.

MEETINGS OF THE BOARD OF DIRECTORS

A calendar of meetings is prepared and circulated in advance to the Directors. During the year, 5 (five) Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.

AUDIT COMMITTEE

The details of the Audit Committee including its composition and terms of reference mentioned in the Corporate Governance Report form part of Boards Report. The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.

VIGIL MECHANISM

The Company has formulated a vigil mechanism through Whistle Blower Policy to deal with instances of unethical behaviour, actual or suspected, fraud or violation of Companys code of conduct or ethics policy. The details of the policy are explained in the Corporate Governance Report and also posted on the website of the Company.

COMMITTEES OF BOARD

Pursuant to requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Business Responsibility and Sustainability Committee, Risk Management Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these Committees are mentioned in the Corporate Governance Report.

SHARE CAPITAL

During the year under review the issued, subscribed and paid up Equity Share Capital of the Company was 635,100,946 equity shares of D 1/- each. There was no change in the capital structure of the Company.

a) Issue of equity shares with differential rights

Your Company has not issued any equity shares with differential rights during the year under review. b) Issue of sweat equity shares

Your Company has not issued any sweat equity shares during the year under review.

c) Issue of employee stock options

Your Company has not issued any employee stock options during the year under review.

d) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees

Your Company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investments made during the year are given under notes to the financial statements.

RELATED PARTY TRANSACTIONS

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Suitable disclosures as required by the Indian Accounting Standards have been made in the notes to the financial statements. The policy on related party transactions as approved by the Board is uploaded on the Companys website.

MANAGERIAL REMUNERATION

a) The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Corporate Governance Report. b) During the year under review, Mr. Neeraj Kanwar (DIN: 00058951), Vice Chairman & Managing Director, also received remuneration from Apollo Tyres (UK) Holdings Ltd. (formerly Apollo Tyres (UK) Pvt. Ltd.), wholly owned Subsidiary of the Company.

PARTICULARS OF EMPLOYEES

Particulars of employees as required in terms of the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure A to the Boards Report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace and the Company has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company conduct, from time to time, the awareness sessions on prevention of sexual harassment at workplace for its employees.

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Furthermore, there was no pending compliant/ case at the beginning as well as ending of financial year.

HEALTH, SAFETY & ENVIRONMENT

As a firm commitment to Health, Safety and Environment (HSE), the year saw multiple initiatives to implement and review the HSE plans and achieve the defined KPIs. For details on HSE, please refer to Management Discussion and Analysis Report.

AWARDS AND RECOGNITIONS

In its constant quest for growth and excellence, your Company was honoured and recognised at various forums. The prominent Awards are listed below for your reference.

Name of the Award Category Awarded by
CSR Health Impact Awards 2021 Health CSR Project- Campaign of the Year Category Integrated Health & Wellbeing Council
National Intellectual Property Award for the year 2020 Sustainable Development Goals (SDG) 2021 Top Indian Co for designs & commercialisation Indian Intellectual Property Office and Confederation of Indian Industry (CII) ET SDG Summit
CSR Times Health category CSR Times
All Kerala CSR Award 2020 Environment Sustainability Kerala Chapter of National Institute of Personnel Management (NIPM)
National Convention on Quality Par Excellence award QCFI
Concepts (NCQC) 2021
Good Design Award 2021 The Chicago Athenaeum Museum of Architecture and Design
India Risk Management Awards Masters of Risk CNBC TV18
Pitch CMO Awards CMO Sustainability Award

RISK MANAGEMENT

The Company has constituted a Risk Management Committee (RMC) of the Board comprising of Directors and Senior Executives of the Company. The RMC has a Risk Management Charter and Policy that is intended to ensure that an effective Risk Management framework is established and implemented within the organisation. The Company has also formed Internal Risk Committees (IRCs), which review risk registers for Asia Pacific Middle East Africa (APMEA) Region including India, Europe region and Corporate Functions including United States (US) Region headed by President (APMEA), President (Europe) and Chief Financial Officer as Chairperson of the respective Committees. The IRCs review each risk on a quarterly basis and evaluate its impact and plans for mitigation. Further details about the RMC including its composition are mentioned in the Corporate Governance Report which forms part of the Boards Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company initiated its CSR activities way before the Companies Act, 2013 came in existence. The Company has a well-defined CSR policy which is made as per the requirement of Section 135 of the Companies Act, 2013. All the CSR activities are linked with National Development Goals and globally with the Sustainable Development Goals (SDGs).

The Company has a CSR team, which exclusively works towards achievement of CSR goals of the organisation. All the CSR activities of the Company are routed through a registered trust (Apollo Tyres Foundation) and functions with close monitoring and guidance of the CSR committee. In the reporting year, the Company has undertaken various initiatives related to Healthcare Programme for Trucking Communities, Solid Waste Management and Sanitation Programme for Communities, Livelihood for Underprivileged Women, Biodiversity Conservation and Philanthropy Initiatives; focussing on eradicating hunger and poverty, preventive health and promoting education. Additionally, under Disaster Relief theme, the Company has also undertaken COVID-19 relief activities (mass vaccination, testing and helpline service) for its key stakeholder (trucking community).

Corporate Social Responsibility Report, pursuant to clause (o) of sub section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 including salient features mentioned under outline of Companys CSR policy forms part of this Report as Annexure II. The CSR Policy of the Company is available on the website of the Company and the weblink is: - https:// corporate.apollotyres.com/investors/corporate-governance/?filter=CodesPolicies

BUSINESS RESPONSIBILITY REPORT

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, mandates the top 1000 Listed Companies by market capitalisation to include Business Responsibility Report ("BR Report") in their Annual Report.

Your Company falls under the top 500 Listed Companies by market capitalisation. Accordingly, a BR Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Report as Annexure III.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure IV, forming part of this report.

ANNUAL RETURN

As per Section 134(3)(a) of the Companies Act, 2013, the Annual Return referred to in Section 92(3) has been placed on the website of the Company www.apollotyres.com under the Investors Section (Refer link: https://corporate.apollotyres. com/en-in/investors/corporate-governance/?filter=Others ).

CORPORATE GOVERNANCE REPORT

Your Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisations corporate governance philosophy is directly linked to high performance.

The Company is committed to adopting and adhering to established world-class corporate governance practices. The Company understands and respects its fiduciary role and responsibility towards its stakeholders and society at large, and strives to serve their interests, resulting in creation of value and wealth for all stakeholders.

The compliance report on corporate governance and a certificate from M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure V to this report.

DIRECTORS RESPONSIBILITY STATEMENT

As required by Section 134(3)(c) of the Companies Act, 2013, your Directors state that:

(a) in the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; (c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors had prepared the annual accounts on a going concern basis; (e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and (f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

SECRETARIAL STANDARDS

During the year under review, your Company had complied with all the applicable Secretarial Standards.

ACKNOWLEDGEMENT

Your Companys organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilisation of the Companys resources for sustainable and profitable growth. Your Directors wish to place on record their appreciation to the respective State Governments of Kerala, Gujarat, Haryana, Tamil Nadu and Andhra Pradesh and the National Governments of India, Netherlands and Hungary. We also thank our customers, business partners, members, bankers and other stakeholders for their continued support during the year. We place on record our appreciation for the contribution made by all employees towards the growth of your Company.

For and on behalf of the Board of Directors
ONKAR KANWAR
Place: Gurugram Chairman & Managing Director
Date: May 12, 2022 DIN: 00058921