Innovative Tyres & Tubes Ltd Management Discussions.

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 the Management Discussion and Analysis Report (MDAR) is structured as follows:

• Industry structure and developments

• Opportunities

• Segment-wise or product-wise performance

• Outlook

• Threats, Risk and Concerns

• Internal Control System

• Financial and operational performance

• Material Development in Human Resources

Some Statements in this discussion may be forward looking. The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements in the management discussion and analysis on account of various factors such as changes in Government regulations, tax regimes, impact of competition, etc.


Incorporated in the year 1995, we are a tyre and tube manufacturing Company, manufacturing & marketing our products under our flagship brand - Innovative. We started our journey with the acquisition of a greenfield manufacturing unit at Halol in auction from Gujarat State Financial Corporation and State Bank of Bikaner & Jaipur vide agreement dated December 15, 1995. Thereafter we revamped the closed company to our tube manufacturing facility at this property and started manufacturing of tubes in the year 1996. Within a short time after our inception, we were able to successfully get our facility approved by CEAT Limited for carrying out job work activities for them.

Today our product range covers all highway sizes, Off The Road (OTR) highway sizes, agriculture and industrial tyres. Your company listed its shares on SME platform of National Stock Exchange of India Limited in the financial year 2017-18 and achieved new growth towards successful journey from incorporation.


Indian Tyre Industry is in modernization phase and is largely driven by demand and supply conditions. Manufacturing has emerged as one of the high growth sectors in India. The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per cent of the countrys Gross Domestic Product (GDP). The Two Wheelers segment with 81 per cent market share is the leader of the Indian Automobile market owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector. Indian tyre industry is highly competitive with the presence of a large number of global and Indian auto-companies. Tyre demand is directly proportional to the automobiles demand. Therefore, demand swings in the automobiles have an impact on the demand for tyres.

The domestic tyre industry is expected to post volumes growth of 7-8 per cent to 1,805 lakh tyres during FY2018, despite the weak volumes during the first quarter and part of second quarter during GST rollout.

The industry volumes prior to July had remained tepid during the first quarter in FY18 due to pre-buying in the fourth quarter in FY17 and fleet operators deferring new vehicle purchases in view of incoming GST regulation from July 2017.


The rapidly globalizing world is opening up newer avenues for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for autocomponent manufacturers. It is estimated that the overall tyre imports into India is estimated to have grown in revenue terms by 10 to 12% in fiscal 2017. With the governments focus on infrastructure growth backed by huge allocations of funds, building and construction activity has gained momentum with big growth seen in road building and construction equipment manufacturers. This bodes well for the growth of the large OTR tyres segment.

Customer centricity and quality consciousness have been our major strengths. We believe in a customer centric business model and endeavour to supply customized products to meet our customers demands. Experienced and dedicated management team is one of the great strength for long term progress of our company.

During the year under review, the Company has successfully commissioned a state of Art Four Roll Calendaring Line which was developed in-house, which enable the Company to produce in larger quantities with better quality. In line with the object of IPO, management is equally focusing on enhancing production capacity and focusing on strengthening the fixed base capital.


Risk and opportunities is an inherent feature of any business. The Companys Directors and management bear this in mind while taking all decisions. The Company has developed a set of processes and systems to asses and minimizes risks without losing opportunities while ensuring enhancement in shareholders value. Some of the risks related to tyre industries are follows:

Deep concession on finished product (tyres) and no concession on key Raw Materials (natural rubber) goes contrary to the objective of domestic value addition/Make in India programme. The proposed

National Rubber Policy is yet to be announced and the concerns of producers and consumers remain unresolved. In light of these market forces, there is extreme pressure on the pricing and bottom line of tyre companies.

Change in regulatory norms in India or else where in exporting countries shall effect the operation of Company.

If the price of energy sources increases, our operating expenses could increase significantly and our results of operations and cash flows could be materially and adversely affected.

We are dependent on our Top 5 suppliers for uninterrupted supply of raw-materials. Any disruption in supply of raw materials from these suppliers will adversely affect our operations.

Our products are subject to continued pricing pressure, which may materially and adversely affect our profits, results of operations and cash flows. Volatility in raw material prices impact the profitability of the industry.

We are subject to foreign currency exchange rate fluctuations which could have a material and adverse effect on our results of operations and financial conditions.


One such major industry in the overall manufacturing sector is Automobile Industry which if further classified into -Auto Components Manufacturing Industry, which in turn encompasses various segments; one of them being - Tyres and Tubes Manufacturing Segment. Currently, our Company caters to all three segments of market viz. exports, domestic/after sales market and OEM like CEAT Limited. During the financial year 2017-18, your Company achieved a turnover of Rs.13,950.35 Lakhs as against Rs. 13,083.69 Lakhs for the previous year ended 31st March 2017.


According to the Automotive Mission Plan (AMP) 2026, Indian automotive industry is targeted to grow 3.5 to 4 times of the current value of USD 74 billion to USD 260 billion or 300 billion in the 2016-2026 periods, which will make India one of the top three automotive industries in the world. The fast development of road infrastructure in India is another factor that would boost the prospects of the domestic automobile and tyre industries.

The issue of raw material cost escalation especially of natural rubber may reduce operational margins for a while in the foreseeable future. Tyres are classified as cross-ply (bias) and radial based on the technology deployed during its manufacturing process. In India, the commercial tyre segment continues to be dominated by cross-ply tyres due to road conditions and the high initial cost of radials. The positive sentiment shown by the infrastructure and rural sectors in recent months will definitely have an impact on the demand in the tyre industry, both in the OE and the Replacement markets


The Company has adequate internal control systems in place, and also has reasonable assurance on authorizing, recording and reporting transactions of its operations. The Company through its own Internal

Audit department carries out periodical Audits at all locations and functions based on the Plan as approved by the Audit Committee.

The Companys internal control environment provides assurance on efficient conduct of operations, security of assets, prevention and detection of frauds/ errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information. The Company has also appointed internal auditor pursuant to applicable provisions of the Companies Act, 2013 in order to submit internal audit report from time to time.


The financial statements have been prepared in accordance with the requirement of the Companies Act 2013, and applicable accounting standards issued by the Institute of Chartered Accountants of India.

Particulars 2017-18 2016-17
Revenue from operations 13,950.35 13,083.69
Other income 58.79 170.23
Total Income 14,009.14 13,253.92
Total expenses 13,385.22 12,635.79
Profit before tax 623.92 618.13
Current tax 206.00 115.51
Deferred Tax (26.44) 19.41
Excess provision of Income Tax 4.52 (5.32)
Profit after tax 439.84 488.53


Your Company firmly believes that its human resources are the key enablers for the growth of the Company and important asset. Hence, the success of the Company is closely aligned to the goals of the human resources of the Company. People - employees, customers, partners, investors etc - form the bedrock for the success of any company. We recognize the importance of having a business -focused and performance- driven team that drives us to achieve growth ambitions.

The Company maintained cordial and harmonious industrial relations in all its manufacturing units. Several HR and industrial relations initiatives implemented by the Company have significantly helped in improving the work culture, enhancing productivity and enriching the quality of life of the workforce and maintaining your Companys supremacy in the market.

The Companys employees strength as at 31st March, 2018 was 347 employees.

The Company also recognizes the importance of providing training and development opportunities to its people to enhance their skills and experiences, which in turn enables the Company to achieve its business objectives.