Goodyear India Ltd Management Discussions

1. Industry Structure & Developments

A confluence of factors below-par monsoon, winter crop failure owing to early onset of summers/heatwave, and weak rural demand – led to a decline in the farm industry during Financial Year 2023-24 compared to the previous year. Tractor sales in India also slumped to 874,504 units in Financial Year 2023-24, which shows a decrease ofshift in consumer preference towards 7% from Financial Year 2022-23. Lower agricultural output, a direct consequence of unreliable rainfall, is leading to reduced income for farmers. This financial strain translates to a decline in demand for farm machinery as farmers are hesitant to invest in new equipment, creating a ripple effect that weakens the sector further.

Despite prevailing market conditions, the Company retained its leadership position in the Farm segment through sales and marketing excellence, fostering customer collaboration, agility, and operational efficiency to sustain growth and win in the market.

It has been established that on an average, consumer replacement cycle happens on 4 to 5 years interval. With Covid impacting the country in Financial Year 2020-21, the replacement cycle of passenger vehicles was affected. This was also accentuated by higher inflation impacting discretionary consumption

During Financial Year 2023-24, the Company maintained its emphasis on expanding retail operations and enhancing extraction efforts to stimulate volume growth. Furthermore, the Company strategically repositioned its brand in the premium segment by realigning with a new product portfolio and utilizing technology and analytics to bolster customer engagement and productivity.

2. Strength, Weakness, Opportunities and Threats

Indian tyre Industry is dominated by the Commercial category (Truck & Bus) which contributes more than 50% of the tyre industry revenue. However, the Company has limited presence in the Commercial tyre category which limits its ability for portfolio selling and ability to mitigate risk of the Farm category. Despite these constraints, the outlook of the Company remains positive.

As Indias population, the largest globally at 18% (World

Population Review), continues to rise, the need for agricultural s. Recognizing this, the Government has intensifie products prioritized agriculture sector, accounting for 18% of the countrys GDP. Additionally, more than 50% of Indias population is dependent on agricultural products which is further fueling the growth of this sector. This growth has prompted the farmers to adopt newer and more advanced technologies to deliver higher productivity.

4. Outlook

A positive outlook is emerging for Financial Year 2024-25, fueled by forecasts of a normal monsoon, positive prospects for the rabi crop, increased wheat output compared to last year, and Government support through higher Minimum Support Price (MSP). However, ongoing general elections (April-June), lower water reservoir levels,inflationary pressure, and geopolitical conflicts remain key concern areas.

The Company continues to focus on maintaining leadership position in the Farm category. The Farm OE business will

The Farm industry outlook for mid to long-term (3 to 5 years) continues to remain positive. The Company continues to maintain its leadership position in the Farm category and grow in line with the industry. Capacity enhancement plan is in line with meeting the growing market demand.

The consumer replacement industry is poised for growth due

Luxury, toa significant

SUVs and EV vehicles. This trend translates to increased demand for larger rim sizes, impacting future market demands. Recognizing this shift, the Company is strategically focusing on driving growth in premium segments, leading to improved profitability. The Company is focusing on leveraging its technological superiority and best-in-class products to create differentiation, thereby gaining market share. Despite high competitive intensity, the company remains focused on driving growth through channel expansion and improved service enabled by technology. Additionally, its introducing innovative products in the luxury SUV and EV segments to meet evolving consumer demands.

3. Segment-wise/ Product-wise Performance

The Company manufactures and sells automotive tyres viz.

. farm tyres and commercial truck tyres at its Ballabgarh plant. The Company also markets and sells passenger car tyres which are manufactured by Goodyear South Asia Tyres Private Limited (‘GSATPL), Aurangabad, in the replacement market. Other products which the Company markets and sells include tubes and flaps.

The sales performance during the year is as follows:

(Rs. in Lakhs) continue to focus on delivering excellence in customer service and key account management. In the Farm Replacement business, the Company shall look at prioritizing channel expansion, channel engagement and operational excellence by delivering the right tyre, to the right place, at the right time and cost.

The Consumer Replacement business is expected to see robust sales volume, driven by a shift in the vehicle mix towards larger rim sizes. A notable shift in consumer preference is also underway, with SUVs, EVs, and luxury cars gaining significant traction. This trend can be attributed to several factors, including a growing desire for spaciousness, comfort, and safety features offered by SUVs, increasing environmental consciousness driving interest in EVs, and a rising disposable income fueling the demand for premium vehicles.

To capitalize on this, the Company will continue to display unwavering focus on introduction of innovative products, technology-enabled improvement of service and optimization of distribution channels during Financial Year 2024-25.

5. Risks and Concerns

There are certain key macro events to keep a watch out for in the short term such as volatility in the commodity and raw material prices, continued inflation impacting costs, any new Covid-19 variants/ global developments affecting economic activity, current Geopolitical conditions, liquidity, and availability of skilled workforce.

6. Internal Control Systems and Adequacy

The Company has a proper and adequate system of internal control including internal financial controls. The Company has an Audit Committee headed by a Non-Executive Independent Director, inter-alia, to oversee the Companys financial reporting process, disclosure of financial information, and reviewing the performance of statutory and internal auditors with management. The internal control system, including internal financial controls of the Company, is monitored by an independent internal audit team, which encompasses examination/periodic reviews to ascertain adequacy of internal controls and compliance to the Companys policies. Weaknesses noted, if any, along with agreed upon action plans are shared with the Audit Committee, which is designed to ensure orderly and efficient conduct of the business and effectiveness of internal control system. The audit function also looks into preventive controls, investigations, as well as other areas requiring mandatory review as per applicable laws. The powers of the Audit

The financial performance of the Company has been further explained in the Boards Report of the Company for the Financial Year 2023-24 appearing separately.

The financial with the requirement of the Act and applicable accounting standards issued by the Institute of Chartered Accountant of India.

8. Human Resources

Industrial harmony was maintained during the year through peaceful and productive employee relations, the Collective Bargaining Agreement discussions with the union are concluded. To augment the skills of employees, multiple training sessions were imparted to employees on matters related to ethics and compliance, discipline, safety of the employees and environmental awareness. Wide-ranging employee engagement initiatives e.g., skip level connects, career assessment centers, celebrations of milestone & festivals were organized to sustain the engagement levels of employees, which led to Goodyear India Ltd. being named as one of the best "Organizations to work for women" by Economic Times in September 2022 and getting re-certified as a "Great Place to Work" in March 2023.

Committee, inter-alia, include seeking information from any employee, obtaining outside legal or other professional advice, and investigating any activity of the Company within the Committees term of reference. The internal audit department shares regular updates regarding the work that is done, coverage, weaknesses noted and other relevant issues with appropriate management levels including Audit Committee. Observations/ weaknesses noted from time to time are suitably acted upon and followed up at different levels of management. The internal control is supplemented by an extensive program of audits and periodic review by the management.

7. Discussion on Financial Performance with respect to Operational Performance

The details of the reflected in the Balance Sheet, Statement of Profit & Loss and other Financial Statements, appearing separately. Highlights are provided below:

9. Details of significant changes in key financial ratios along with detailed explanations thereof, include:

Certain statements in the Management Discussion and Analysis describing the Companys views on the industry, expectations/ predictions and objectives etc. may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied in these statements. The Companys operations may, inter-alia, be affected by the supply and demand disruptions due to Geo-political conditions or any other reason, as the case may be, input prices and availability, continued fuel inflation, tax laws, Government or court decisions and other factors such as industry relations, global economic developments, and/or restrictions in certain geographies with the possible risk of new Covid variant etc. Investors should bear this in mind when considering the above statements.