Birla Tyres Director Discussions


FOR THE YEAR ENDED MARCH 31, 2022

Dear Members,

The Board presents the Companys Fourth Annual Report together with the Audited Financial Statements for the year ended March 31, 2022.

FINANCIAL RESULTS

Rs/ Lakh

Particulars March 31, 2022 March 31, 2021
Total Income 2,244.28 15,310.02
Profit / (Loss) before Interest, Depreciation, Tax and other Amortizations ("EBIDTA") * (1,439.83) (9,197.76)
Less : Depreciation and Amortization Expenses (Net of transfer from Revaluation Reserve) 2,960.54 3,329.07
Finance Costs 17,614.97 16,235.85
Profit / (Loss) before Exceptional Items and Tax (22,015.34) (28,762.68)
Exceptional Items (43,551.70) -
Profit / (Loss) before Tax (65,567.04) (28,762.68)
Tax Expenses - Net - -
Profit / (Loss) for the year from continuing operations (65,567.04) (28,762.68)
Profit / (Loss) before tax from discontinued operations - -
Total Profit / (Loss) for the year (65,567.04) (28,762.68)
Other Comprehensive Income (net of tax expense)
Re-measurement of Post-employment Benefit Obligations 115.06 384.89
Fair valuation of Equity Investments - -
Total Other Comprehensive Income / (Loss) 115.06 384.89
Total Comprehensive Income / (Loss) for the year (65,451.98) (28,377.79)

*EBIDTA before Other Comprehensive Income

DIVIDEND

No dividend is recommended in view of the loss during the year and non-availability of any carry forward surplus.

AMOUNT TRANSFER TO RESERVE

In view of losses incurred, no amount has been transferred to Reserve for the year ended March 31, 2022.

SHARE CAPITAL

The Companys paid-up Equity Share Capital stood at RS 14,259.01 Lakh as on March 31,2022.

During the year under review, the Company has not issued any shares or convertible securities with or without differential voting rights, granted stock options or issued sweat equity shares.

DEPOSITS

The Company has not accepted any deposits from the public falling under the ambit of Section 73 of the Companies Act, 2013 ("the Act") read with Chapter V - Acceptance of Deposits by Companies, during the year under review.

GENERAL REVIEW OF BUSINESS PERFORMANCE AND BUSINESS IMPACT DUE TO COVID-19 PANDEMIC

The main objective of the Company is to carry on the business of manufacturing and dealing in automotive tyres.

During the year under review the operations at factory were halted. This was on account of the impact of Covid-19 pandemic and unavailability of working capital. Total Income, comprising Revenue from Operations and other income, for the year was RS 2,244.28 Lakh and the loss for the year was RS 65,451.98 Lakh.

PROPOSED SCHEME OF ARRANGEMENT WITH CREDITORS, SHAREHOLDERS & DEMERGER OF THE PASSENGER CAR RADIALS BUSINESS WITH BIRLA TYRE RADIALS LTD.

The Board, with a view to re-organising the Companys Businesses, has proposed a "spin off" of the Companys yet to operate Passenger Car Radial Business ("PCR") into a separate Company i.e. Birla Tyre Radials Limited ("BTRL") and other Internal Reconstructions through National Company Law Tribunal ("NCLT"), approved Scheme of Arrangement ("the Scheme") at their Meeting held on January 28, 2022.

The Scheme envisages -

1) bifurcating the PCR business from the commercial tyre business with C 758 Crore of existing debt of the lenders moving along with the assets of the PCR business into a new company, BTRL which has been specifically incorporated for the purpose so that the lenders have sufficient asset cover for the debt moving out; and

2) debt resolution and restructuring thereof in the manner such that for the debt of the secured creditors being the lenders remaining in the Company, a part will be paid upfront, part will be converted into equity and the rest would be converted into a long-term instrument; and

3) reduction of face value of equity share of the Company from C 10 each to C 5 each by reason of the demerger; and

4) restructuring of the unsecured financial and operational dues (including worker and employee dues) for its resolution, such that the operating expenses of the Company curtailed and it can soon be brought back on the rails; and

5) infusion of working capital into the Company.

The Company has filed the Scheme with the Stock Exchanges and is in the process of filing the same with the other necessary authorities. Accordingly, the implementation of the Scheme is subject to the necessary approvals, sanctions and consents being obtained.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations"), the Management Discussion and Analysis Report for the year under review, is enclosed as Annexure-I to this Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with the Auditors Certificate on compliance with the provisions of Corporate Governance under SEBI - LODR Regulations is enclosed as Annexure-II to this Annual Report.

RISK MANAGEMENT

The Company has a Business Risk Management framework designed to identify and mitigate risks that has the potential to materially impact its business objectives and maintains a balance between managing risk and exploiting the opportunities. The approach of Risk Management is defined across the Company at various levels, including documentation and reporting, interspersed with diverse risk models to help identify risk trends, exposure and potential impact analysis at the corporate level.

DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS

During the year under review, there were no significant or material Orders passed by Regulators / Courts / Tribunals impacting or influencing the Companys going concern status and / or its future operations.

However, the Company has received an Order of Competition Commission of India ("the CCI") under Section 3 of the Competition Act, 2002 on February 11, 2022 dated August 31, 2018 imposing a penalty of RS 17,833 Lakh.

The Company, backed by Legal opinions, is of the view that the Order is fit for an appeal with NCLAT and the same has been filed with. Accordingly no provision has been made in the books of accounts.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

In order to ensure orderly and efficient conduct of business, the Companys Management has put in place adequate Internal Financial Control Systems which commensurate with the nature, size and complexity of its business for safeguarding the assets of the Company, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

An external independent firm carries out the Internal Audit of the Company and reports its findings to the Audit Committee on a regular basis. Internal Audit provides assurance on functioning and quality of internal controls along with adequacy and effectiveness through periodic reporting.

During the year under review, the Internal Financial Control Audit was carried out by the Statutory Auditors, the Report of which is forming part of the Annual Report.

ANNUAL EVALUATION OF BOARD PERFORMANCE

The Board of Directors has carried out an annual evaluation of its own performance, and that of its Committees and individual Directors in line with the provisions of Section 178(2) of the Act and the SEBI - LODR Regulations, as amended from time to time. The methodology adopted in the evaluation process are explained in the Report on Corporate Governance.

NUMBER OF BOARD MEETINGS

Seven Meetings of the Board of Directors of the Company were convened and held during the year under review, the details of which appears in the Report on Corporate Governance which forms part of this Annual Report. The schedule of the Board/ Committee Meetings to be held in the forthcoming financial year is prepared and circulated amongst the Directors and Key Management Personnel well in advance to enable them to plan their schedule for effective participation in the Meetings.

NOMINATION AND REMUNERATION POLICY

The Companys Nomination and Remuneration Policy is prepared in conformity with the requirements of Section 178(3) of the Act and is available on the website of the Company at https://www.birlatyre.com/investors/corporate-codes and, as a result, does not form part of this Annual Report.

All recommendations of the Nomination and Remuneration Committee made during the year under review were accepted by the Board and there were no instances of any disagreement between the Committee and the Board.

AUDIT COMMITTEE

The Audit Committee comprises of five (5) members. The Committee is chaired by Kashi Prasad Khandelwal, an eminent Chartered Accountant and a former Chairman of the Eastern India Regional Council of The Institute of Chartered Accountants of India ("ICAI"). The other Members of the Committee are Rashmi Bihani, Uma Shankar Asopa, Abhijit Ghosh and Anil Goenka. The Committee comprises of majority of Independent Directors.

Details of the role and responsibilities of the Audit Committee, the particulars of Meetings held and attendance of each Member at such Meetings are given in the Report on Corporate Governance, which forms part of this Annual Report.

There were no instances of any disagreement between the Committee and the Board and all recommendations of the Audit Committee made during the year under review were accepted by the Board.

CORPORATE SOCIAL RESPONSIBILITY

The Company does not meet the criteria specified under Section 135 of the Act and applicable Rules thereto requiring to constitute a Corporate Social Responsibility Committee and formulate a Policy for this purpose.

RELATED PARTY TRANSACTIONS

As required under the SEBI - LODR Regulations, all Related Party Transactions are placed before the Audit Committee for approval. Wherever required, prior approval of the Audit Committee is obtained on an omnibus basis for continuous transactions and the corresponding actual transactions become a subject of review at subsequent Audit Committee Meetings on a quarterly basis.

All Related Party Transactions / Arrangements entered into by the Company during the year under review were on an arms length basis and in the ordinary course of business.

There were no materially significant Related Party Transactions entered into by the Company with the Promoters, Directors, Key Management Personnel or other designated persons which could conflict with the interest of the Company as a whole and, as such, disclosure of related party transactions as required under Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 in Form AOC-2 has not been made.

Details of related party transactions entered into by the Company, in terms of Ind AS-24 have been disclosed in the notes to the financial statements forming part of this Annual Report.

The Companys Related Party Transactions Policy appears on its website at https://www.birlatyre.com/investors/corporate- codes.

SUBSIDIARY AND JOINT VENTURE COMPANY

The Company does not have any Subsidiary, Associate or Joint Venture.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

During the year under review, the Company had not made any investment in any body-corporate or given any guarantee or provided any security stipulated under Section 186 of the Act.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Fraud and corruption free culture has always been at the Companys core. In view of the potential risk of fraud, corruption and unethical behavior that could adversely impact the Companys operation, performance and reputation, the Company has established a robust Whistle Blower Policy and also established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of SEBI - LODR Regulations, to report concerns about unethical behavior. The policy is available on the website of the Company at https://www.birlatyre.com/investors/corporate-codes.

STATUTORY AUDITOR AND THEIR REPORT

Shareholders at the Companys First Annual General Meeting appointed Messrs. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company for a period of five Year from the conclusion of that Annual General Meeting.

In the Report of the Auditors for the year ended March 31, 2022, forming part of this Annual Report, the Auditors have given following observations: -

1) Clause (ii)(b) of the Annexure B to the Independent Auditors Report.

2) Clause (v) of the Annexure B to the Independent Auditors Report.

3) Clause (ix)(d) of the Annexure B to the Independent Auditors Report.

4) Clause (vii), (ix)(a) and (xix) of the Annexure B to the Independent Auditors Report.

In relation to the observations referred above, the point wise submissions are as under:

1. The difference amount of receivable and stocks as reported by the Auditors is on account of the provisions in the accounts.

2. During the year under review, the Company has not accepted any deposits. However, there are some advances received from the customers against supply of materials which are lying unadjusted over one year and the same shall be adjusted in due course. The delay in supplying of materials is on account of the pandemic and halting of operations.

3. Post demerger, the borrowings related to the demerged undertaking was accounted in the books of the Company and lying unpaid as on date. Subsequently, there is no further borrowings by the Company from the banks. Since, the loans are lying unpaid for more than one year, the auditor reported the same stating short term loan used for long term purpose.

4. Due to liquidity issue, the Company has not paid the undisputed statutory dues and the loan liabilities. To come out from the financial issues, the Board of Directors of the Company, at its meeting held on January 28, 2022, has approved the Scheme of Arrangement for Reconstruction of the Company and for Compromise with its Creditors and Members together with Demerger of Passenger Car Radial Business into Birla Tyre Radials Limited ("the Scheme"). The Company has filed the Scheme with the stock exchanges and is in the process of filing the same with the other necessary authorities.

Other observations and opinions of the Statutory Auditors in their report are self-explanatory.

COST AUDITOR

As per Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to prepare, maintain as well as have the audit of its cost records conducted by a Cost Accountant and accordingly, it has made and maintained such cost accounts and records. The Board of Directors of the Company, on the recommendation of Audit Committee, has appointed M/s. Mani & Co., Cost Accountants (Firm Registration No. 000004), to conduct the cost audit of the Company for the Financial Year 2022-23.

An appropriate Resolution has been incorporated in the Notice convening the Companys Fourth Annual General Meeting for ratification of remuneration of the Cost Auditors as approved by the Board of Directors on the recommendation of the Audit Committee.

SECRETARIAL AUDITOR AND SECRETARIAL STANDARDS

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company has appointed M/s. RP & Associates, Company Secretaries, as the Secretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year 2021-22.

The report of the Secretarial Auditor is set out in Annexure III to this Annual Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. However her observations are self-explanatory. The Company is in compliance with the Secretarial Standards, as specified by the Institute of Company Secretaries of India.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure IV and forms part of this Annual Report. None of the employees listed in the said Annexure is related to any Director of the Company.

As per the provisions of Section 136 of the Act read with various circulars issued by MCA and SEBIfrom time to time, the Annual Report and Accounts are being sent through electronic mode, to those Members whose e-mail addresses are registered with the Company / Depositories, excluding the information on employees particulars as per Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended. This information is readily available for inspection by Members at the Companys Registered Office between 3:00 P.M. to 5:00 P.M. on all working days (excluding Saturdays) up to the date of the forthcoming Annual General Meeting. Should any Member be interested in obtaining a copy (including through e-mail), s/he should write to the Company Secretary at the Companys Registered Office or request by e-mail at cs@birlatyre.com.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the Rules made thereunder, the Company has in place the requisite Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of women employees at workplace, if any.

No complaints on the issues covered by the above Act was received during the year under review.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act and, based upon the representations from the Management, the Board of Directors, to the best of its knowledge and belief, states that:

(a) in the preparation of the Annual Accounts, applicable accounting standards have been followed and there were no material departures;

(b) such accounting policies have been selected and applied consistently and such judgments and estimates have been made 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 March 31,2022 and of the loss for that period;

(c) proper and sufficient care were taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Annual Accounts have been prepared on a going concern basis;

(e) proper internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively; and

(f) proper systems have been devised to ensure compliance by the Company with the provisions of applicable laws and that such systems are adequate and working effectively.

FRAUD

During the year under review, neither the Statutory Auditors nor the Secretarial Auditor have reported to the Audit Committee, under Section 143(12) of the Act, any instances of fraud committed against the Company by its Officers or Employees, the details of which would need to be mentioned in this Annual Report.

BOARD OF DIRECTORS

In accordance with the provisions of the Act and the Articles of Association of the Company, Manjushree Khaitan (DIN: 00055898), Non-Executive Director of the Company, retires by rotation at the ensuing Annual General Meeting and, being eligible, offers herself for re-appointment. An appropriate Resolution has been incorporated in the Notice convening the Companys Fourth Annual General Meeting for her re-appointment.

The Shareholders had approved appointment of Kashi Prasad Khandelwal (DIN: 00748523) as an Independent Director of the Company at the First Annual General Meeting ("AGM") held on December 02, 2019 for a term of three consecutive Year from the conclusion of the Companys First AGM till the conclusion of the Companys Fourth AGM. The term of Mr. Khandelwal as an Independent Director of the Company will conclude upon the conclusion of the ensuing Annual general Meeting. The Board of Directors, at its Meeting held on April 11, 2022, based on the recommendation of the Nomination and Remuneration Committee and subject to the approval of the Shareholders through Special Resolution, re-appointed him as an Independent Director, for a term of five consecutive Year commencing from the conclusion of Companys Fourth Annual General Meeting to the conclusion of Companys Ninth Annual General Meeting. An appropriate Resolution has been incorporated in the Notice convening the Companys Fourth Annual General Meeting for his re-appointment as an Independent Director of the Company.

In terms of Section 149 of the Act, Kashi Prasad Khandelwal, Rashmi Bihani, Abhijit Ghosh and Anil Goenka are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI - LODR Regulations. In terms of Regulation 25(8) of the SEBI - LODR Regulations, they have confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

The Independent Directors of the Company have confirmed that they have enrolled themselves in the Independent Directors Databank maintained with the Indian Institute of Corporate Affairs (IICA) in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014 and complied with the criteria of online proficiency self-assessment test.

The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and that they hold highest standards of integrity.

Brief profiles of Directors being appointed / re-appointed at the forthcoming Fourth Annual General Meeting have been given in the Report on Corporate Governance.

KEY MANAGERIAL PERSONNEL

The following persons functioned as Key Managerial Personnel during the year under review:

Herve Frederic Richert Chief Executive Officer (till July 10, 2021)
Anant Gupta Chief Financial Officer
Saurabh Mantri Company Secretary

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

There were no foreign exchange earnings during the year under review. However, the foreign exchange outgo during the year was RS 25.24 Lakh. Since the operations at the factory were halted, the particulars relating to conservation of energy and technology absorption, as required to be disclosed pursuant to the provisions of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, are not available.

MATERIAL CHANGES AFFECTING THE COMPANY

There were no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Annual Report. There has been no change in the nature of business of the Company as on the date of this Annual Report.

PROCEEDING PENDING UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

There are no proceedings filed by the Company which is pending under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other Courts during the year under review. However, there are six cases filed against the Company for a total claim of RS 1,841.28 Lakh before the NCLT which are not yet admitted at the Tribunal.

ONE-TIME SETTLEMENT WITH THE BANKS OR FINANCIAL INSTITUTIONS

There were no instances of one-time settlement with any Banks or Financial Institutions during the year under review. CREDIT RATING

The details of credit ratings obtained by the Company are disclosed in the Corporate Governance Report, which forms part of this Annual Report.

ANNUAL RETURN

In terms of the provisions of Section 92 (3) and Section 134 (3) (a) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the draft of the Annual Return of the Company as on March 31, 2022 is available on the website of the Company at https://www.birlatyre.com/investors/notices.

ANNEXURES FORMING PART OF THIS REPORT

Annexure Particulars
I Management Discussion and Analysis Report
II Report on Corporate Governance
III Secretarial Audit Report
IV Remuneration and other particulars as prescribed under Section 197 of the Companies Act, 2013

APPRECIATION

The Board wishes to gratefully acknowledge the understanding and support received by the Company from its employees and workers. The Board also takes this opportunity to thank the Central and State Governments and the local authorities, lenders, customers, dealers, suppliers, advisors, local community for their continued co-operation and support.

This Report will be incomplete without a specific appreciation for the Members of the Company who have shown immense confidence and understanding in the Companys well-being.

For and on behalf of the Board of Directors
Rashmi Bihani Manjushree Khaitan
Director Chairman
Place: Kolkata DIN: 07062288 DIN: 00055898
Date: April 11,2022