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August 18, 2020

BSE Limited

Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001 Security Code: 500878

National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 Symbol: CEATLTD CP Listing ISIN INE482A14981 and INE482A14999

Dear Sirs /Madam,

Sub: Notice of 61[st] Annual General Meeting and Integrated Annual Report for FY 2019-20

This is to inform you that the Sixty-First Annual General Meeting (“AGM”) of the Company will be held on Thursday, September 10, 2020 at 3.00 pm (IST) through Video Conferencing (VC) / Other Audio-Visual Means (OAVM), in accordance with the relevant circulars issued by the Ministry of Corporate Affairs and Securities and Exchange Board of India in this regard.

Pursuant to Regulation 34(1) and Regulation 30(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are submitting herewith the Integrated Annual Report of the Company for the financial year 2019-20 including the Business Responsibility Report, together with the Notice of AGM, which is being sent through electronic mode to the Members whose e-mail IDs are available with the Company.

The Integrated Annual Report and Notice of AGM are also available on the website of the Company at www.ceat.com.

The Notice of the AGM of the Company inter alia provides the process and manner of remote e-Voting / e- voting at the AGM and instructions for participation at the AGM through VC/OAVM.

You are requested to kindly take the above on record and disseminate appropriately.

Thanking you,

Sincerely,

For CEAT Limited

Vallari Gupte

Company Secretary & Compliance Officer

Encl: As above

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notice

NOTICE is hereby given that the Sixty-First Annual General Meeting of CEAT Limited will be held on Thursday, September 10, 2020 at 3.00 p.m. Indian Standard Time (‘IST’) through Video Conferencing (‘VC’) / Other Audio Visual Means (‘OAVM’) to transact the following business:

Ordinary Business

To receive, consider and adopt:
a. the Audited Standalone Financial Statements of the Company for the Financial Year ended March 31, 2020, together with the Reports of the Board of Directors and the Auditors thereon; and
b. the Audited Consolidated Financial Statements of the Company for the Financial Year ended March 31, 2020, together with the Report of the Auditors thereon.
To confirm the interim dividend of H 12 per equity share of face value of H 10 each paid during the financial year,

as final dividend for the year ended March 31, 2020.

To appoint a Director in place of Mr. Pierre E. Cohade (DIN: 00468035), who retires by rotation in terms of Section 152(6) of the Companies Act, 2013 and being eligible, offers himself for re-appointment.

Special Business

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made thereunder, the remuneration of H 3,00,000/- (Rupees Three Lacs only) and reimbursement of out-of-pocket expenses at actual plus applicable taxes, be paid to M/s D. C. Dave & Co., Cost Accountants (Firm Registration No. 000611) appointed by the Board of Directors of the Company as Cost Auditors for conducting the audit of the cost records of the Company for the Financial Year ending March 31, 2021, be and is hereby ratified and confirmed.”

To consider and if thought fit, to pass the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and any other applicable provisions of the Companies Act, 2013 and the Rules made thereunder read with Schedule IV to the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and as recommended by the Nomination and Remuneration Committee, taking into consideration the performance evaluation report, Mr. Ranjit V. Pandit (DIN: 00782296), being eligible for re-appointment and in respect of whom a notice in writing pursuant to Section 160 of

the Companies Act, 2013 having been received in the prescribed manner, be and is hereby re-appointed as a Non-executive Independent Director of the Company to hold office for the second term of 5 (five) consecutive years with effect from August 12, 2020 up to August 11, 2025, who shall not be liable to retire by rotation.

RESOLVED FURTHER THAT pursuant to the provisions of Sections 149, 197 and any other applicable provisions of the Companies Act, 2013 and Rules made thereunder, Mr. Ranjit V. Pandit be paid such fees and commission as the Board may approve from time to time and subject to such limits, prescribed or as may be prescribed from time to time.”

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

"RESOLVED THAT in accordance with the provisions of Regulation 31A(3)(a)(iii) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, and subject to necessary approvals from the Stock Exchanges (or such other authorities as may be empowered in this regard by the SEBI) where the equity shares of the Company are listed, namely, BSE Limited and National Stock Exchange of India Limited, and / or such other approval, if any, as may be required in this regard, approval of the Members of the Company be and is hereby accorded to re-classify Societe CEAT D’Investissements En Asie S. A., SPF (‘SCIA’), a foreign body corporate, one of the Promoters of the Company from the ‘Promoter and Promoter Group’ category to the ’Public’ category in accordance with Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended ('Reclassification').

RESOLVED FURTHER THAT on approval of the Stock Exchanges (or such other authorities as may be empowered in this regard by the SEBI) upon application for Re-classification of SCIA from promoter category to public category, the Company shall effect such reclassification in the Statement of Shareholding Pattern from immediate succeeding quarter under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended and SCIA shall ensure necessary compliance under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, SEBI (Prohibition of Insider Trading) Regulations, 2015 or other SEBI Regulations, as may be applicable.

RESOLVED FURTHER THAT for the purpose of giving effect to the said resolution, any one of the Directors, Mr. Kumar Subbiah, Chief Financial Officer and Ms. Vallari Gupte, Company Secretary be and are hereby authorised severally to take all such actions and to do all such acts, deeds, matters and things as it may in its absolute discretion deem necessary, proper or desirable and to settle any questions or difficulties or doubt that may arise in this regard.”

NOTICE

To consider and if thought fit, to pass the following resolution as a Special Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 23, 42, 71 and any other applicable provisions of the Companies Act, 2013 and the Rules made thereunder and applicable provisions of any other laws, rules, regulations, guidelines, circulars, if any, prescribed by the Government of India, Reserve Bank of India, Securities and Exchange Board of India, as amended from time to time and subject to the provisions of the Memorandum and Articles of Association of the Company and such sanctions, approvals or permissions as may be required from regulatory authorities from time to time, approval of the Members be and is hereby accorded to the Board of Directors of the Company (‘the Board’ which expression shall also include a Committee thereof, for the time being exercising the powers conferred on it by the Board by this resolution) for making offer(s) or invitation(s) to subscribe secured / unsecured, non-convertible debentures / bonds or such other securities (‘debt securities’) through private placement basis in one or more series / tranches, for an amount not exceeding H 5,00,00,00,000 (Rupees Five Hundred Crores only) at such price or on such terms and conditions as the Board may from time to time determine and consider proper and beneficial to the Company including listing of such debt securities with

NOTES:

In view of the continuing COVID-19 pandemic and consequently social distancing norms to be followed, the Ministry of Corporate Affairs (‘MCA’) vide its Circular No. 14/2020 dated April 8, 2020, Circular No.17/2020 dated April 13, 2020 and Circular No. 20/2020 dated May 5, 2020 (collectively referred to as ‘MCA Circulars’) and Securities and Exchange Board of India (‘SEBI’) vide its Circular dated May 12, 2020 permitted conducting the Annual General Meeting (‘AGM’) of the companies to be held during the calendar year 2020 through Video Conferencing (‘VC’) or Other Audio Visual Means (‘OAVM’), and dispensed physical presence of the Members at the meeting venue. Accordingly, in terms of the said MCA Circulars, the 61[st] AGM of the Company is being held through VC/OAVM and the proceedings of which shall be deemed to be conducted at the Registered Office of the Company at 463, Dr. Annie Besant Road, Worli, Mumbai 400 030. The detailed procedure for participating in the meeting through VC/ OAVM is annexed herewith and also available at the Company’s website www.ceat.com
As this AGM is being held through VC / OAVM pursuant to the MCA Circulars, physical attendance of Members has been dispensed with and the attendance of the Members attending the AGM through VC / OAVM shall be counted for the purpose of reckoning the quorum under Section 103 of the Companies Act, 2013. As such, the facility for the appointment of proxies by the Members will not be available for the AGM and hence the Proxy Form and Attendance Slip including route map are not annexed to this Notice.

Stock Exchange(s), size and time of issue, issue price, tenure, interest rate, premium / discount, consideration, utilisation of the issue proceeds, and all matters connected with or incidental thereto.

RESOLVED FURTHER THAT for the purpose of giving effect to the said resolution, the Board be and is hereby authorised to take all such actions and to do all such acts, deeds, matters and things as it may in its absolute discretion deem necessary, proper or desirable and to settle any question or doubt that may arise in this regard.”

Under the Authority of the Board of Directors

Vallari Gupte Company Secretary (M. No. FCS-5770) Place: Mumbai Date: May 28, 2020

CEAT Limited

CIN: L25100MH1958PLC011041 Registered Office: 463, Dr. Annie Besant Road, Worli, Mumbai 400 030

An interim dividend of H 12 per equity share of H 10 each declared by the Board at its meeting held on March 12, 2020 has been paid to all the eligible Members on March 20, 2020, being the record date for the purpose of dividend. The Directors recommend for consideration of the Members the above referred interim dividend as final dividend for the Financial Year ended March 31, 2020.
The Company at its AGM held on August 8, 2017 appointed M/s S R B C & CO LLP as the Statutory Auditors for the second term of 5 (five) consecutive years from the conclusion of the 58[th] AGM to the conclusion of the 63[rd] AGM to be held in the year 2022 subject to ratification of their appointment every year, if so required under the Companies Act, 2013. The requirement to place the matter relating to the appointment of auditors for ratification by the Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 8, 2018. Accordingly, no resolution is being proposed for ratification of the appointment of the Statutory Auditors at this AGM.
Brief Details of the directors, who are seeking appointment / re-appointment, are provided in the Notice as provided under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Explanatory Statement setting out material facts, pursuant to Section 102 of the Companies Act, 2013, which sets out details relating to the special business at the AGM is annexed hereto.

CEAT LIMITED | ANNUAL REPORT 2019-20

The Register of Directors and Key Managerial Personnel and their shareholding, maintained under Section 170 of the Companies Act, 2013 and the Register of Contracts or Arrangements in which the directors are interested, maintained under Section 189 of the Companies Act, 2013, will be available electronically for inspection by the Members during the AGM. All the documents referred to in the accompanying Notice and Explanatory Statements, shall be available for inspection through electronic mode by the Members, without any fee, on all working days, except weekends, from 11:00 a.m. to 1:00 p.m. up to the date of AGM, basis the request being sent on [email protected]
In view of the Regulation 40 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended with effect from April 1, 2019, securities of listed companies can now be transferred only in the dematerialised form, except in case of request received for transmission or transposition of securities. Members holding shares in physical form are therefore requested to convert their holdings into the dematerialised mode to avoid loss of shares and fraudulent transactions and better investor servicing.
In any case, Members holding shares in the same name or in the same order of names, under different folios are requested to consolidate their shareholding into single folio by submitting the original share certificate along with the Amalgamation Form to the Company’s Registrar and Transfer Agent (‘RTA’) viz. TSR Darashaw Consultants Private Limited at 6, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011 to help us serve you better.
SEBI vide its Circular dated April 20, 2018 has mandated that for making dividend payments, companies whose securities are listed on the Stock Exchanges shall use permissible modes for electronic remittance of dividend. Further, pursuant to MCA General Circular 20/2020 dated May 5, 2020, companies are directed to credit the dividend directly to the bank accounts of the Members using Electronic Clearing Services. Therefore:
a. Members holding shares in the dematerialised form are requested to intimate all changes pertaining to their bank details such as bank account number, name of the bank and branch details, MICR code and IFSC code, mandates, nominations, power of attorney, change of address, change of name, email ID, contact numbers, etc., to their depository participant (‘DP’). Changes intimated to the DP will then be automatically reflected in the Company’s records.
b. Members holding shares in physical form are requested to intimate such changes to the Company’s RTA.
SEBI has mandated the submission of Permanent Account Number (PAN) by every participant in the securities market. Members holding shares in electronic form are therefore requested to submit the PAN to their depository participants with whom they are maintaining their demat accounts. Members holding

shares in physical form can submit their PAN details to the Company’s RTA.

Pursuant to Section 72 of the Companies Act, 2013, Members holding shares in physical form are advised to file nomination in the prescribed Form SH-13 with the Company’s RTA. In respect of shares held in electronic form, the Members may please contact their respective DP.
In terms of Section 124(5) of the Companies Act, 2013, dividend amount for the year ended March 31, 2013, remaining unclaimed for a period of 7 (seven) years shall become due for transfer in October 2020 to the Investor Education and Protection Fund (‘IEPF’) established by the Central Government.

Further in terms of Section 124(6) of the Companies Act, 2013, in case of such Members whose dividends are unpaid for a continuous period of 7 (seven) years, the corresponding shares shall be transferred to the IEPF demat account.

Members who have not claimed dividends in respect of the Financial Year 2012-13 and onwards are requested to approach the Company / Company’s RTA for claiming the same as early as possible, to avoid the transfer of the relevant shares to the demat account of the IEPF authority.

The shares once transferred to IEPF Account including dividends and other benefits accruing thereon can be claimed from IEPF Authority after following the procedure prescribed under the IEPF Rules and no claim shall lie against the Company. For the purpose of claiming transferred shares, a separate application can be made to the IEPF Authority by following the Refund Procedure as detailed on the website of IEPF Authority viz. http://iepf.gov.in/IEPF/refund.html

ELECTRONIC DISPATCH OF ANNUAL REPORT AND PROCEDURE FOR REGISTRATION OF EMAIL ID FOR OBTAINING COPY OF ANNUAL REPORT AND FUTURE CORRESPONDENCE:

In compliance with the aforesaid MCA Circulars and SEBI Circular dated May 12, 2020, Notice of the AGM along with the Annual Report of FY 2019-20 is being sent only through electronic mode to those Members whose email IDs are registered with the Company / Depositories. Members may note that the Notice and Annual Report of FY 2019-20 will also be available on the Company’s website www.ceat.com under ‘Investors’ tab, websites of the Stock Exchanges i.e. BSE Limited and National Stock Exchange of India Limited at www. bseindia.com and www.nseindia.com respectively and also on the website of National Securities Depository Limited (‘NSDL’) i.e. www.evoting.nsdl.com.

REGISTRATION OF EMAIL ID:

i) FOR MEMBERS HOLDING PHYSICAL SHARES:

The Members of the Company holding Equity Shares of the Company in physical form and who have not registered their email may get their

NOTICE

email IDs registered with the Company’s RTA TSR Darashaw Consultants Private Limited at Csg-KYC@ tsrdarashaw.com by providing a request letter duly signed by the first holder thereby providing details such as Name, folio number, Certificate number, self-attested PAN, mobile number and email ID and also upload the image of share certificate in PDF or JPEG format (up to 1 MB).

ii) FOR MEMBERS HOLDING SHARES IN DEMAT MODE:

The Members holding shares in demat mode are requested to register their email IDs, with the respective DP by following the procedure prescribed by the concerned DP.

For more details on Members’ matters, please refer to the General Shareholder Information section included in the Corporate Governance Report.

PARTICIPATION AT THE AGM AND VOTING

A) The details of the process and manner for participating in the Annual General Meeting (‘AGM’) through VC / OAVM are explained herein below:
i. Members will be provided with a facility to attend the AGM through VC / OAVM through the NSDL e-voting system. Members may access the same at https://www.evoting.nsdl. com under Shareholders / Members login by using the remote e-voting credentials. The link for VC / OAVM will be available in Shareholders / Members login where the EVEN of Company will be displayed. Please note that the Members who do not have the User ID and Password for e-voting or have forgotten the User ID and / or Password may retrieve the same by following the remote e-voting instructions mentioned in the Notice to avoid the last-minute rush. Further, Members can also use the OTP based login for logging into the e-voting system of National Securities Depositories Limited (‘NSDL’).
ii. The Members can join the AGM in the VC / OAVM mode 30 (thirty) minutes before the scheduled commencement time of the Meeting and window for joining the Meeting shall be kept open throughout the proceedings of the AGM.
iii. Members are encouraged to join the Meeting through Laptops / IPads connected through broadband for a better experience. Please note that Participants connecting from mobile devices or tablets or through Laptop via mobile hotspot may experience Audio / Video loss due to fluctuation in their respective network connections. It is therefore recommended to use stable Wi-Fi or LAN connection to mitigate any kind of aforesaid glitches.
iv. Members who would like to express their views / ask questions during the AGM may

register themselves as a speaker by sending the request from their registered email mentioning their name, DP ID and Client ID / folio number, PAN, mobile number at [email protected] between 9.00 a.m. (IST) on Friday, September 4, 2020 and 5.00 p.m. (IST) on Sunday, September 6, 2020. Those Members who have registered themselves as a speaker will only be allowed to express their views / ask questions during the AGM. The Company reserves the right to restrict the number of speakers depending on the availability of time for the AGM.

v. The Members who do not wish to speak during the AGM but have queries on accounts or any other matter to be placed at the AGM may send the same latest by Monday, September 7, 2020 mentioning their name, DP ID and Client ID / folio number, PAN, mobile number at [email protected]. These queries will be replied suitably either at the AGM or by an email.
vi. Institutional / Corporate Members are required to send scanned copy (PDF / JPG Format) of the relevant Board Resolution, whereby their Authorised Representative has been appointed to attend and vote at the AGM on their behalf pursuant to Section 113 of the Companies Act, 2013, to the Scrutinizer’s email ID at [email protected] with a copy marked to [email protected].
vii. Members who need assistance before or during the AGM with the use of technology can:
Send a request at [email protected] or use Toll free no.: 1800-222-990; or
Contact Ms. Pallavi Mhatre, Manager, NSDL at the designated email ID: [email protected] or [email protected] or at telephone number + 91 22 2499 4545; or
Contact Ms. Sarita Mote, Assistant Manager, NSDL at the designated email ID: [email protected] or SaritaM@nsdl. co.in or at telephone number + 91 22 2499 4890.
viii. Members attending the AGM through VC / OAVM shall be counted for the purpose of reckoning the quorum under Section 103 of the Companies Act, 2013.

B) Remote e-voting and Voting at AGM:

i. Pursuant to the provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014, as amended from time to time and Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,

CEAT LIMITED | ANNUAL REPORT 2019-20

2015 and the Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India (‘ICSI’), the Company is pleased to provide to the Members, facility to exercise their right to vote on resolutions proposed to be considered at the AGM by electronic means and the business may be transacted through e-voting facility. Members are provided with a facility of casting their votes electronically, through the e-voting system provided by NSDL.

ii. The Members, who have cast their vote by remote e-voting prior to the AGM, may also attend the AGM but shall not be entitled to cast their vote again at the AGM.
iii. A person whose name is recorded in the Register of Members or in the Register of Beneficial Owners maintained by the depositories as on the cut-off date i.e. Thursday, September 3, 2020 only shall be entitled to avail the facility of remote e-voting, as well as voting at the meeting. The voting rights of Members shall be in proportion to their shares in the paid-up equity share capital of the Company as on the cut-off date i.e. Thursday, September 3, 2020.

Any person, who acquires the share(s) of the Company and becomes a Member of the Company after the dispatch of this Notice of AGM and holds the share(s) as on the cut-off date, can also cast his vote through remote e-voting facility on the website of NSDL e-voting i.e. www.evoting.nsdl.com

iv. The Company has appointed Mr. P. N. Parikh (FCS 327, CP 1228), or failing him Mr. Mitesh Dhabliwala (FCS 8331, CP 9511) of M/s Parikh & Associates, Practising Company Secretaries, to act as the Scrutinizer, to the remote e-voting process and e-voting at the AGM in a fair and transparent manner.
v. The Results will be declared within 48 (fortyeight) hours from the conclusion of the AGM. The results declared along with the Scrutinizer’s Report shall be uploaded on the website of the Company www.ceat.com and the website of NSDL e-voting i.e. www.evoting.nsdl.com and communicated to the Stock Exchanges where the shares of the Company are listed. The resolutions shall be deemed to be passed at the AGM of the Company.

The instructions for Members voting electronically are as under:

The remote e-voting period commences on Monday, September 7, 2020 (9.00 a.m. IST) and ends on Wednesday, September 9, 2020 (5.00 p.m. IST). During this period, Members holding shares either in physical form or in dematerialised form, as on the cut-off date may

cast their vote by remote e-voting. The remote e-voting module shall be disabled by NSDL for voting thereafter. Once vote on a resolution is cast by the Member, the Member shall not be allowed to change it subsequently.

REMOTE E-VOTING PRIOR TO AGM:

The way to vote electronically on NSDL e-voting system consists of ‘Two Steps’ which are mentioned below:

Step-1: Log-in to NSDL e-voting system at https://www. evoting.nsdl.com/

How to Log-in to the NSDL e-voting website?

Visit the e-voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl. com/ either on a Personal Computer or on a handheld mobile phone.
Once the home page of the e-voting system is launched, click on the icon ‘Login’ which is available under ‘Shareholders’ section.
A new screen will open. You will have to enter your User ID, your Password and a Verification Code (captcha) as shown on the screen.

Alternatively, if you are registered for NSDL eservices i.e. IDEAS, you can log-in at https://eservices.nsdl.com/ with your existing IDEAS login. Once you log-in to NSDL eservices after using your log-in credentials, click on e-voting and you can proceed to Step 2 i.e. cast your vote electronically.

Your User ID details are given below:

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----- Start of picture text -----

Manner of holding Your User ID is:
shares i.e. Demat
(NSDL or CDSL)
or Physical
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a) For Members who hold shares in demat account with NSDL.	8 Character DP ID followed by 8 Digit Client ID For Example: If your DP ID is IN300 and Client ID is 12 then your user ID is IN30012**
b) For Members who hold shares in demat account with CDSL.	16 Digit Benefciary Id of demat account held with CDSL. For example: If your Benefciary ID is 12 then user user ID Is 12
c) For Members holding shares in Physical form.	EVEN number followed by folio number registered with the Company. For Example: If you folio number is ZV* and EVEN is _ then user ID is _____ ZV*

NOTICE

Your password details are given below:
a. If you are already registered for e-voting, then you can use your existing password to login and cast your vote.
b. If you are using NSDL e-voting system for the first time, you will need to retrieve the ‘initial password’ which was communicated to you. Once you retrieve your ‘initial password’, you need to enter the ‘initial password’ and the system will force you to change your password.
c. How to retrieve your ‘initial password’?
- i. If your email ID is registered in your demat account or with the Company, your ‘initial password’ is communicated to you on your email ID. You will be required to trace the email sent to you from NSDL from your mailbox. You can open the email and open the attachment i.e. a PDF file. The password to open the PDF file is your 8 digit client ID for NSDL account, last 8 digits of client ID for CDSL account or folio number for shares held in physical form. The PDF file contains your ‘User ID’ and your ‘initial password’.
- ii. If your email ID is not registered, please follow steps mentioned below for procuring the User ID and password and registration of email IDs for e-voting for the resolutions set out in this notice:

Member may send an email request to [email protected] for obtaining User ID and Password by proving the details mentioned in Point (a) or (b) as the case may be:

  - (a) In case shares are held in physical mode please provide folio number, Name of shareholder, scanned copy of the share certificate (front and back), PAN (self-attested scanned copy of PAN card), AADHAR (selfattested scanned copy of Aadhar Card) ;

  - (b) In case shares are held in demat mode, please provide DPID-CLID (16 digit DPID + CLID or 16 digit Beneficiary ID), Name, client master or copy of Consolidated Account Statement, PAN (self-attested scanned copy of PAN card), AADHAR (self-attested scanned copy of Aadhar Card).

If you are unable to retrieve or have not received the ‘Initial password’ or you have forgotten your password:
a. If you are holding shares in your demat account with NSDL or CDSL: Click on ‘Forgot User Details / Password’ option available on www.evoting.nsdl. com
b. If you are holding shares in physical mode: Physical User Reset Password option available on www.evoting.nsdl.com
c. If you are still unable to get the password by aforesaid two options, you can send a request at [email protected] mentioning your demat account number / folio number, your PAN, your name and your registered address.
d. Members can also use the OTP (One Time Password) based login for casting the votes on the e-voting system of NSDL.
1. After entering your password, tick on Agree to ‘Terms and Conditions’ by selecting on the check box.
Now, you will have to click on ‘Login’ button.
After you click on the ‘Login’ button, home page of e-voting will open.
It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Login to the e-voting website will be disabled upon 5 (five) unsuccessful attempts to key in the correct password. In such an event, you will need to go through the ‘Forgot User Details / Password’ or ‘Physical User Reset Password’ option available on www.evoting.nsdl.com to reset the password.

Step-2: Cast your vote electronically on NSDL e-voting system.

How to cast your vote electronically on NSDL e-voting system?

After successful login at Step 1, you will be able to see the Home page of e-voting. Click on ‘e-voting’. Then, click on ‘Active Voting Cycles’.
After clicking on ‘Active Voting Cycles’, you will be able to see all the companies ‘EVEN’ in which you are holding shares and whose voting cycle is in the active status.
Select ‘EVEN’ of CEAT Limited which is 113391.
Now you are ready for e-voting as the Voting page opens.
Cast your vote by selecting appropriate options i.e. Assent or Dissent, verify / modify the number of shares for which you wish to cast your vote and click on ‘Submit’ and also ‘Confirm’ when prompted.
Upon confirmation, the message ‘Vote cast successfully’ will be displayed.
You can also take the printout of the votes cast by you by clicking on the ‘print’ option on the confirmation page.
Once you confirm your vote on the resolution, you will not be allowed to modify your vote.

CEAT LIMITED | ANNUAL REPORT 2019-20

In case of any queries, with respect to remote e-voting or e-voting at the AGM, you may refer the Frequently Asked Questions (FAQs) for Shareholders and e-voting user manual for Shareholders available at the download section of www.evoting.nsdl.com or call on toll free no.: 1800-222-990 or can contact NSDL on evoting@ nsdl.co.in or contact Ms. Pallavi Mhatre, Manager, NSDL at the designated email ID: evoting@nsdl. co.in or [email protected] or at telephone number + 91 22 2499 4545 or Ms. Sarita Mote, Assistant Manager, NSDL at the designated email ID: evoting@ nsdl.co.in or [email protected] or at telephone number + 91 22 2499 4890.

Annexure to the Notice

Item No. 3 of the Notice:

Mr. Pierre E. Cohade (DIN: 00468035)

As regards the re-appointment of Mr. Pierre E. Cohade referred to in Item No. 3 of the Notice, following necessary disclosures are made for the information of the Members.

Mr. Pierre E. Cohade, 58, a native of Barcelonnette, France, has lived and worked globally in four continents, building and leading multi-billion dollar businesses, in many cases after turning them around. He currently serves as Non-executive Director on the boards of Johnson Control International (NYSE: JCI), Deutsche Bank China, Acorn International (NYSE: ATV) and CEAT India (NSE: CEATLTD). He is a Senior Advisor to Roche Enterprises, CCL (Center for Creative Leadership) China and a few start-ups. He also serves as Chairman of the International Market Assessment (‘IMA’) CEO forum. Most recently, Mr. Cohade was the CEO of Triangle Tyre, China’s largest private tyre manufacturer. Mr. Cohade was also the President of Goodyear Asia Pacific. Under his leadership, Goodyear Asia Pacific earned recognition beyond its financial success, receiving numerous third-party awards for its product innovation, brand building, branded retailing network and was named China’s ‘Employer of the Year’ in 2010 and 2011. He has a Degree in business management from the SKEMA Business School in Sophia-Antipolis, France in 1984 and MBA from Penn State University in 1985.

Mr. Cohade has been on the Board of CEAT since February 1, 2018 and currently holds no other directorships in any Company registered in India. Mr. Cohade is not disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013.

Mr. Cohade is not related to any of the Directors on the Board or any Key Managerial Personnel of the Company; nor he holds any shares in the Company. Other details including the nature of expertise in specific functional areas and the number of Board Meetings attended by him are given in the Corporate Governance Report.

None of the Directors, Key Managerial Personnel of the Company or their relatives except Mr. Cohade is, in any way, concerned or interested in the resolution set out in Item No. 3 of the Notice.

E-VOTING AT THE AGM:

i) The procedure for e-voting on the day of the AGM is same as the instructions mentioned above for remote e-voting.
ii) Only those Members, who will be present in the meeting through VC / OAVM facility and have not cast their vote on the resolutions through remote e-voting and are otherwise not barred from doing so, shall be eligible to vote through e-voting system in the AGM.
iii) The details of the person who may be contacted for any grievances connected with the facility for e-voting on the day of the AGM shall be the same person mentioned for remote e-voting.

The Board recommends the Ordinary Resolution as set out in Item No. 3 of the Notice for approval of the Members.

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 IN RESPECT OF THE SPECIAL BUSINESS IN THE NOTICE:

The following Explanatory Statement sets out all material facts relating to the business mentioned under Item Nos. 4 to 7 of the accompanying Notice:

Item No. 4 of the Notice:

The Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, mandate audit of the cost accounting records of the Company in respect of certain products. Accordingly, the Board of Directors, based on the recommendation of the Audit Committee, at its meeting held on May 28, 2020, appointed M/s D. C. Dave & Co., Cost Accountants, (Firm Registration No. 000611) as the Cost Auditor of the Company for the financial year ending March 31, 2021 at a remuneration of H 3,00,000/- (Rupees Three Lacs Only) plus applicable taxes and out- of- pocket expenses at actuals, if any, incurred in connection with the audit. In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor should be ratified by the Members of the Company. Accordingly, approval of the Members is sought for ratification of the remuneration payable to the Cost Auditor for the Financial Year ending March 31, 2021, as stated above.

None of the Directors, Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution set out in Item No. 4 of the Notice.

The Board recommends the Ordinary Resolution as set out in Item No. 4 of the Notice for approval of the Members.

Item No. 5 of the Notice:

Pursuant to the Section 149 of the Companies Act, 2013 and the erstwhile Clause 49 of the Listing Agreement, Mr. Ranjit V. Pandit, Director (DIN: 00782296) of the Company qualifying to be ‘Independent Director’ was

NOTICE

appointed as an Independent Director of the Company for a term of 5 (five) consecutive years with effect from August 12, 2015 to August 11, 2020.

In accordance with the Section 149(10) and (11) of the Companies Act, 2013, an Independent Director shall hold office for a term up to 5 (five) consecutive years on the Board of a company, but shall be eligible for re-appointment on passing of a Special Resolution by the Company and disclosure of such appointment in the Board’s Report.

Mr. Pandit has submitted the declaration of independence, as required pursuant to Section 149(7) of the Companies Act, 2013 stating that he meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has also received his consent to act as an Independent Director and declaration that he is not disqualified or debarred from being appointed as a Director in terms of Section 164 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In the opinion of the Board, Mr. Pandit fulfills the conditions specified in the Companies Act, 2013 read with the Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for being appointed as an Independent Director of the Company and is independent of the management. Mr. Pandit possesses requisite skills, experience and knowledge relevant to the Company’s business and therefore, it would be in the interest of the Company to have his association with the Company as an Independent Director.

Based on the performance evaluation and recommendation of the Nomination and Remuneration Committee and in terms of the provisions of Sections 149, 152 read with Schedule IV and any other applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board at its meeting held on May 28, 2020 recommended for the approval of the Members, the re-appointment of Mr. Pandit for a second term of consecutive 5 (five) years from August 12, 2020 to August 11, 2025, in terms of Section 149 read with Schedule IV to the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any amendment thereto or modification thereof.

In respect of the re-appointment of Mr. Pandit, notice in writing in the prescribed manner as required pursuant to Section 160 of the Companies Act, 2013 as amended and the Rules made thereunder has been received by the Company, regarding his candidature for the office of the Director.

Details as required pursuant to Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Secretarial Standard on General Meetings (SS-2), on General Meetings, as applicable are provided hereinabove. Copy of the draft Letter of Appointment of the Independent Director setting out the terms and conditions of his appointment is available for inspection electronically, basis the request being sent on [email protected].

Information about the appointee:

Brief resume

Mr. Ranjit V. Pandit, 66, earlier served as Managing Director at General Atlantic LLC - a leading private equity firm. Prior to this, he was Managing Director and Chairman of McKinsey & Company in India. He also served on a variety of Governments and Regulatory Bodies on policy. Mr. Pandit has done B.E. in Electrical Engineering from VJTI, University of Bombay, India and MBA from Wharton School, University of Pennsylvania.

Other Directorships:

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Sr Name of the Company Category of the
No Directorship
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1.	Reliance Jio Infocomm Limited	Independent Director
2.	Reliance Retail Limited	Independent Director
3.	Genesis Colors Limited	Independent Director
4.	Reliance Retail Ventures Limited	Independent Director
5.	The Indian Film Combine Pvt Ltd	Independent Director
6.	The Great Eastern Shipping Company Limited	Independent Director
7.	PratapPandit Limited	Non-executive Director
8.	Bombay Footware Private Limited	Non-executive Director
9.	The Industrial Leather Company Private Limited	Non-executive Director

Memberships / Chairmanships in Committees:

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Sr Name of the As a Member of the
No Company Committee
1. Reliance Jio Audit Committee
Infocomm Nomination and Remuneration
Limited Committee
2. Reliance Retail Audit Committee
Limited CSR Committee
Nomination and Remuneration
Committee
3. Genesis Colors Audit Committee
Limited Nomination and Remuneration
Committee
4. Reliance Retail Audit Committee
Ventures Nomination and Remuneration
Limited Committee
5. The Indian Film Audit Committee
Combine Pvt CSR Committee
Ltd Nomination and Remuneration
Committee
----- End of picture text -----

*Positions held as Chairman of the Committee

CEAT LIMITED | ANNUAL REPORT 2019-20

Mr. Pandit is not related to any of the Directors on the Board or any Key Managerial Personnel of the Company; nor he holds any shares in the Company. Mr. Pandit is eligible for receipt of sitting fees and commission, as payable to other Non-executive Directors of the Company. However, currently he has voluntarily waived off his right to receive remuneration including sitting fees and commission from the Company. Other details including the nature of expertise in specific functional areas and the number of Board Meetings attended by him are given in the Corporate Governance Report.

None of the Directors, Key Managerial Personnel of the Company or their relatives except Mr. Ranjit V. Pandit is, in any way, concerned with or interested in the resolution as set out in Item No. 5 of the Notice, in so far as it concerns his appointment and payment of remuneration as a Nonexecutive Director.

The Board recommends the Special Resolution as set out in Item No. 5 of the Notice for approval of the Members.

Item No. 6 of Notice:

Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended effective November 16, 2018, provides a regulatory mechanism for re-classification of promoters as public shareholders subject to fulfillment of conditions as provided therein.

In this regard, the Company has received an application from Societe CEAT D’Investissements En Asie S. A., SPF (‘SCIA’), a Foreign Body Corporate, one of the promoters of the Company, requesting the Company to re-classify it from ‘Promoter and Promoter Group’ category to ’Public’ category in accordance with Regulation 31A of the Listing Regulations.

SCIA has been a foreign promoter entity close to about 4 decades, as such having no participation in the day to day management of the Company. As of June 30, 2019, SCIA held 17,82,348 equity shares (4.41%) of the Company and thereafter sold their entire holding during the period from August 2019 to December 2019. Consequently, its shareholding became NIL as on December 31, 2019 having no voting rights in the Company.

SCIA in its request letter has informed the Company that owing to the following reasons, they have decided that it would be prudent for it to seek re-classification:

a) It does not hold any equity shares of the Company;

b) It does not exercise any control over the affairs of the Company, directly or indirectly. At any given point of time, it has not been engaged in the Management or day to day affairs of the Company;
c) It has not nominated any directors at the Board of Directors of the Company; and
d) It has no special rights, through formal or informal arrangements, and was not privy to any price sensitive information relating to the Company and its securities.

SCIA vide its request letter has also informed the Company that it:

i. satisfies all conditions specified in Regulation 31A(3) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; and
ii. undertakes to comply with the requirements specified in Regulation 31A(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 at all times.

In view of the above and on the basis of the rationale and the confirmations received from SCIA, the Board analysed the said request made by SCIA and in consideration with the proper compliance of Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company at its meeting held on March 12, 2020, has considered the application received by the Company for re-classification from Promoter category to Public category, subject to approval by the Members, SEBI Board, Stock Exchanges wherein the equity shares of the Company are listed, namely, BSE Limited and National Stock Exchange of India Limited or any other regulatory body as may be required.

As required under Regulation 31A(8)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has intimated the Stock Exchanges of receipt of SCIA application for re-classification from the ‘Promoter and Promoter Group’ category to ‘Public’ category on March 9, 2020 and accordingly the extract of the minutes of the meeting of the Board of Directors of the Company approving the re-classification was submitted to the Stock Exchanges on March 12, 2020.

Further, as per Rule 19A of the Securities Contracts (Regulation) Rules, 1957, the public shareholding as on date of the notice fulfills the minimum public shareholding requirement of at least 25% shareholding and the proposed re-classification is not intended to increase the Public Shareholding to achieve compliance with the minimum public shareholding requirement.

None of the Directors, Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution set out in Item No. 6 of the Notice.

Pursuant to Regulation 31A(3)(a)(iii) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the aforesaid request for re-classification of the promoter is being put up for the approval by way of an Ordinary Resolution. However, in view of SCIA not holding any shares in the Company, the requirement of the promoter(s) seeking re-classification and persons related to the promoter(s) seeking re-classification not to vote to approve such re-classification request is not applicable.

The Board recommends the Ordinary Resolution as set out in Item No. 6 of the Notice for approval of the Members.

NOTICE

Item No 7 of Notice:

Pursuant to the Sections 23, 42, 71 and other applicable provisions of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 and Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014, the Company is required to obtain the prior approval of its Members by means of a Special Resolution for any offer or invitation to subscribe to non-convertible debentures is made by the Company on a private placement basis. Special Resolution can be obtained once in a year for all the offer(s) or invitation(s) for such debentures during that year.

August 1, 2019, granted approval to the Board to offer and issue Non-convertible Debentures on private placement basis for an aggregate amount up to H 5,00,00,00,000 (Rupees Five Hundred Crores only) in one or more tranches, valid to be until July 31, 2020.

None of the Directors, Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution set out in Item No. 7 of the Notice.

The Board recommends the Special Resolution as set out in Item No. 7 of the Notice for approval of the Members.

Under the Authority of the Board of Directors

In order to augment long term resources and for general corporate purposes inter alia , financing of the on-going capital expenditure for expansion of capacity, reduction of overall interest and finance cost as well as for general purposes including the restructuring / replacement of high cost debt, the Company intends to offer an invitation for the subscription for secured / unsecured, non-convertible debentures / bonds or such other debt securities, in one or more series / tranches on private placement basis, not exceeding H 5,00,00,00,000 (Rupees Five Hundred Crores only).

The Members of the Company had by passing a Special Resolution at the Annual General Meeting held on

Vallari Gupte Company Secretary (M. No. FCS-5770)

Place: Mumbai Date: May 28, 2020

CEAT Limited

CIN: L25100MH1958PLC011041 Registered Office: 463, Dr. Annie Besant Road, Worli, Mumbai 400 030

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Safer. Smarter. Sustainable.

CEAT LIMITED Integrated Annual Report 2019-20

Safer. Smarter. Sustainable. 02 CEAT at a Glance 04 Prudent Performance 08 Chairman’s Message 10 MD’s Message 12 Board of Directors 14 Corporate Information 15 Memorable Milestones 16

Value Creation Model 18

of AGM 308

About RPG Group

Established in 1979, the RPG Group is a diversified conglomerate with interests in the areas of tyres, infrastructure, information technology, pharmaceuticals, energy and plantations. Founded by Dr. R. P. Goenka, the Group’s lineage dates back to the early 19[th] century. Today, the group has several companies in diverse sectors and the most prominent among them being CEAT, KEC International, Zensar Technologies, and RPG Life Sciences. Built on a solid foundation of trust and tradition, the RPG name is synonymous with steady growth and high standards of transparency, ethics and governance.

‘Making Mobility Safer & Smarter. Every Day.’ is the ethos the Company lives by to create a sustainable future.

From its products to its processes, CEAT has constantly evolved to adapt to a dynamic environment, while remaining committed to its endeavour of making mobility safer and smarter. CEAT has continued to focus on leveraging technology to invent for the future, build a vibrant workplace for its people and uplift the communities in which it operates. This has helped the Company deliver value to its investors and thrive in a competitive business landscape.

The safety of its customers and employees is of paramount importance to CEAT and is reflected in its product offerings and safe workplace. Embracing digitisation has been the driving force behind the Company’s efforts to optimise its operations. The Company believes in sustainable conduct of operations. The increased focus in areas of Environment, Social and Governance (ESG) norms and all efforts in this direction are helping the brand minimise its environmental impact and propel positive change with the community interventions towards making communities self-sufficient, healthy and prosperous.

CEAT is happy to commence its journey of Integrated Reporting highlighting the Company’s ESG performance, which is the first step towards enhancing the value it generates for all its stakeholders. The Company believes that this will offer deeper insight that will help create greater shared value, getting one step closer towards a world that is Safer , Smarter and Sustainable .

Index

Corporate Overview

Value Creation

Stakeholder Engagement and Materiality Analysis 24 Financial Capital 28 Manufactured Capital 32 Intellectual Capital 36 Human Capital 42 Natural Capital 50 Social and Relationship Capital 56 COVID-19 Response 64

Statutory Reports

Management Discussion and Analysis 68

hello happiness

Happiness is intrinsic to life at RPG. Be it in our product innovations, people policies, business practices or in our community outreach programmes. Our Vision tenets clearly outline the path we traverse – to be an organisation where imagination creates a new future and happiness drives us to achieve more.

“hello happiness”, is a bold statement that helps us open our doors to a world of opportunities and possibilities; a statement that signifies our intent to touch and enrich the lives of others, and work collectively towards a common goal that makes each of us rise beyond our limitations.

Safer Smarter Sustainable

CEAT on Social Media:

@ceattyresindia @CEATtyres @ceat_tyresindia Ceattyres2010 ceat-tyres-limited

Scan this code with a QR reader app on your smartphones or tablets to access this Integrated Annual Report. For more details, please visit www.ceat.com

Discussion on Financial Performance and Key Financial Ratios 80 Board’s Report 89 Corporate Governance Report 116 Business Responsibility Report 139

Financial Statements

Standalone Financial Statements 145 AOC-1 222

Consolidated Financial Statements 224

Notice

Appendix

318

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Safer. Smarter. Sustainable.

From its products to its processes, an unwavering commitment to safer and smarter mobility defines the strength of CEAT. It propels the company to define new ways of working, create innovative products and ensure sustained value creation for its diverse stakeholders.

focus on the natural environment as well the surrounding communities, encouraging it to nurture a safer and sustainable world.

CEAT has constantly evolved to adapt to a dynamic environment, which has not only translated into enhanced product offerings, but also digital adoption, which has been the driving force behind the Company’s efforts to optimise its operations, To create a distinctive identity, CEAT understands the need to resort to smarter solutions.

emphasis on the health and safety of its employees.

As the world continues to recover amidst chaos, CEAT is adopting disruptive solutions recognising the formidable future, with the need to be productive, proactive and proficient. CEAT’s persistent efforts to seek innovative outcomes is reflected in its endeavour to embrace technological interventions and advanced manufacturing capacities, coupled with a growing acceptance of digital tools. It allows the Company to successfully thrive in a competitive environment while increasing its

Integrated Reporting offers a chance

to highlight CEAT’s ESG performance, and is yet another step by the Company to enhance the value it generates for all its stakeholders. Never one to rest on its laurels, CEAT believes that this journey will offer deeper insight that will help it create greater shared value, taking us one step closer towards a world that is Safer , Smarter and Sustainable .

The safety of its end users remains a prime concern for CEAT which has been a driving force behind the Company’s efforts to optimise operations. It is also motivating the company to tirelessly lay the foundations for a secure working environment, with a greater

ABOUT THE REPORT

CEAT is a leading tyre manufacturer in India, having market presence across the world. It has been publishing annual reports since its inception and this is its 61[st] report. For the Financial Year 2019-20 (FY 20), the Company has developed its first Integrated Annual Report, based on the International Integrated Reporting Council’s (IIRC) Framework. The IIRC is an international coalition of various industry stakeholders that encourages organisations to communicate their value creation over time. CEAT has embarked on this journey to communicate its integrated thinking and how its business creates sustained value for stakeholders.

Approach to Reporting

This maiden integrated report covers qualitative and quantitative disclosures of CEAT’s performance across the six capitals that form the Framework. It summarises the Company’s business strategy, risk management framework, corporate governance and information as per relevant statutory requirements. The report also showcases how the organisation efficiently manages its resource allocation across all six capitals, which has also been captured in its business model. It reflects the importance given to long-term value creation by the Company through its stakeholder relationships, organisational culture and risk management in the face of a dynamic external environment. The contents of this report are based on important Environmental, Social and Governance (ESG) aspects, which have been identified through a stakeholder engagement and materiality assessment exercise. Through this report, CEAT aims to communicate its approach to value creation and performance in FY 20.

This report has been prepared in accordance with the GRI Standards: Core option. In addition to the Framework, it is also aligned with:

National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business

UN Sustainable Development Goals (SDGs)

UN Global Compact (UNGC) Principles

Report Scope and Boundary

This report covers information on the financial and non-financial performance of CEAT’s business operations in India for the period April 1, 2019 to March 31, 2020.

Responsibility Statement

The Management of CEAT has reviewed and approved the contents of this report, based on robust data management systems and interactions with key internal business functions. Therefore, the Management believes that this report reasonably represents the Company’s ESG performance for the reporting period.

In this Annual Report, CEAT has disclosed forward-looking information to enable investors to comprehend its prospects and make investment decisions. This Report and other statements - written and oral - that are periodically made contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. The Company has tried, wherever possible, to identify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’,

‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. CEAT cannot guarantee that these forward-looking statements will be realised, although it believes that it has been prudent in its assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should keep this in mind. CEAT undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Statutory Audit

Financial information of statutory nature contained in this report has been externally audited as per the regulatory requirements of India by S R B C & CO LLP. The audit statement can be found in the sections Standalone Financial Statements with Auditor’s Report and Consolidated Financial Statements with Auditor’s Report of this report.

Feedback

Feedback from the stakeholders is sought to help address their challenges and report on material topics that encapsulate their key concerns. Any feedback or suggestions or any stakeholder concerns can be communicated to the Company Secretary, Ms. Vallari Gupte on [email protected] .

CORPORATE OVERVIEW VALUE CREATION

STATUTORY REPORTS

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

CEAT at a Glance

Headquartered in Mumbai, CEAT was founded in 1958, and is one of India’s leading tyre manufacturers. It has six manufacturing locations across India and a strong reach in global markets, with exports to more than 100 countries. This year CEAT produced more than 35 Million high-performance tyres, catering to various segments like 2/3 Wheelers, Passenger and Utility Vehicles, Commercial Vehicles and Off-Highway Vehicles.

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CEAT’s customer-centric culture
is governed by its core values.
[Aspiration-Led]
A
[Challenger] Purpose-led, passion for
C
Innovative and agile superior performance and
walking the extra mile
VALUES
Integrity
[Openness] I
O Being authentic,
Approachable, open
transparent and
and boundary-less
keeping commitments
[Result Obsession]
I
Passion, high energy, speed and collaboration
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TOUCHING SHORES BEYOND BORDERS
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----- Start of picture text -----

India
United States
Europe
South-East Asia
Africa
Latin America Middle East
Map not to scale
LEAVING A TRAIL
2009
Halol,
Passenger Car Radial, Truck Bus Radial Tyres
1958
Bhandup, Mumbai 2017
Truck Bus Bias, Ambernath, (CSTL)
Off-Highway Tyres Off-Highway Radial Tyres
1973
Nashik,
Light Truck Bias, Truck
Bus Bias and Off-
Highway Tyres
2016 2020
Nagpur, Chennai,
2-Wheeler Tyres Passenger Car Radial Tyres
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FINANCIAL STATEMENTS

CORPORATE OVERVIEW VALUE CREATION STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

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IN THE SPOTLIGHT
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Intellectual capital Financial capital Manufactured capital J 6,581 Cr. 35 Mn.+ 76 Standalone revenue Tyres produced Cumulative patent applications filed 10.72% 120+ 1.77% Standalone EBITDA margin New products lauched R&D spend as a percentage of sales (by CEAT & CSTL)

Human capital

6,474 Permanent employees

9.1%

Permanent women employees

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Social and relationship capital

Natural capital

GJ 1,427 38,000+ Renewable energy Lives impacted under various consumed CSR activities 6,906 tCOtCO2e 906 tCOtCO2e e 99%

6,906 tCOtCO2e Emissions avoided

Customer complaints resolved

CEAT ranked 35[th] amongst India's 100 best companies to work for

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CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Prudent Performance (Consolidated)

Net Sales

Gross Profit and Gross Margin (%)

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45.82 41.62 42.25
39.36 40.13
FY 16 FY 17 FY 18 FY 19 FY 20 FY 16 FY 17 FY 18 FY 19 FY 20
Net Sales ( H in Lacs) Gross Profit ( H in Lacs) Gross Margin
5,51,527 5,77,949 6,21,458 6,91,337 6,66,833 2,61,392 2,42,390 2,47,342 2,80,270 2,86,375
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PAT[2] and PAT Margin (%)

EBITDA[1] and EBITDA Margin (%)

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----- Start of picture text -----

14.19
7.93
11.76 6.25
10.15 10.93 3.83 3.65 3.47
9.49
FY 16 FY 17 FY 18 FY 19 FY 20 FY 16 FY 17 FY 18 FY 19 FY 20
EBITDA ( H in Lacs) EBITDA Margin PAT ( H in Lacs) PAT Margin
80,937 68,515 63,778 66,274 74,106 43,754 36,115 23,798 25,222 23,125
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Book Value per Share and Earnings per Share

Dividend per Share

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108.17
89.28
62.35
58.83 57.17
FY 16 FY 17 FY 18 FY 19 FY 20 FY 16 FY 17 FY 18 FY 19 FY 20
Book Value per Share ( H per share) Dividend per Share ( H per share)
Earnings per Share ( H per share)
508 597 644 684 719 11.50 11.50 11.50 12.00 12.00
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1EBITDA excludes Non-Operating income. | 2PAT is considered after minority interest

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ROCE
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Net Debt/Equity and Net Debt/EBITDA

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2.57x
2.16x
1.31x 1.24x
0.80x
FY 16 FY 17 FY 18 FY 19 FY 20 FY 16 FY 17 FY 18 FY 19 FY 20
Net Debt / Equity (times) Net Debt / EBITDA (times) ROCE (%)
0.32x 0.37x 0.30x 0.52x 0.65x 26.83 16.79 14.34 11.94 10.03
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EBITDA/Interest [1]
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ROE

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FY 16 FY 17 FY 18 FY 19 FY 20 FY 16 FY 17 FY 18 FY 19 FY 20
ROE (%) EBITDA/Interest (times)
R&D Expenditure Cash Flow from Operations
2.30
1.85
1.62
1.43
0.97
FY 16 FY 17 FY 18 FY 19 FY 20
FY 16 FY 17 FY 18 FY 19 FY 20
R&D Expenditure ( H in Lacs) % to Sales
Cash Flow from Operations ( H in Lacs)
21.29 14.95 9.13 9.12 7.95 8.12 7.05 5.75 5.51 3.69
5,328 13,316 10,080 9,880 12,307
70,205 33,467 67,239 56,140 95,633
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1 Interest amount includes interest capitalised during the year

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Chairman’s Message

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CEAT has looked beyond business and has been a strong force in the fight against COVID-19, lending support to frontline workers, migrant labour and also strengthening sanitisation and healthcare infrastructure in India.

Dear Shareholders,

The automobile sector has seen considerable amount of turbulence over the past several months due to a series of events, the most recent being the global pandemic. These are testing times not only for businesses around the world, but also for humanity in general and we believe that in this adversity, reside numerous opportunities to innovate and serve our customers better. Besides improvements to its core processes, CEAT is exploring new business models with a sharp focus on efficiency and sustainability. CEAT’s Purpose of ‘Making Mobility Safer & Smarter. Every Day.’ is closely aligned with all initiatives.

We are leveraging our strong R&D capabilities to reduce fuel consumption, enhance safety and durability of our products, and are reimagining processes to ensure seamless delivery during challenging times such as the present. During the year, we started production at our newest greenfield plant in Chennai and enhanced capacities in some of our other facilities. In keeping with our ESG goals, CEAT is integrating sound environmental practices into its business, which already comprises of a robust governance framework and socially responsible policies and initiatives. We are also harnessing technology and digital capabilities to change the way we do business. We have taken significant steps to ensure the wellbeing of our personnel, dealers, customers and communities during these difficult times.

As India grapples with an unprecedented pandemic, CEAT has looked beyond business and has been a strong force in the fight against COVID-19, lending support to frontline workers, migrant labour and also strengthening sanitisation and healthcare infrastructure in India. With distinguished strengths, a growth mindset and aspiration to touch lives of all our stakeholders, we move forward with confidence as the world adapts to a new normal.

H. V. Goenka

Chairman

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

MD’s Message

Embarking on the Integrated Reporting journey, CEAT not only hopes to showcase our Environmental, Social and Governance (ESG) performance, but also work on these aspects in earnest.

Dear Shareholders,

Mobility’s role in supporting the economy – and arguably, life itself – cannot be overstated. Whether it is delivering life-saving products and services where they are most needed or taking people closer to their loved ones, CEAT is proud to shoulder this responsibility. In today’s post-pandemic world, our purpose of ‘Making Mobility Safer & Smarter. Every Day.’, is more relevant than ever. Through this report, titled ‘ Safer. Smarter. Sustainable. ’, we hope to demonstrate concerted efforts to leverage our unique strengths and capabilities to create value for all our stakeholders.

One of the key tenets upon which our business is built is a commitment to ensuring safety. Our top priority during the pandemic is the safety of our people and partners. We have equipped all our factories to be ‘COVID-19 safe’ through social distancing and sanitisation of our facilities. In keeping with our commitment to safety, our products also include tailor-made solutions to address the unique safety concerns of the different markets we operate in. In the 2 Wheeler segment, for instance, the most pressing need for the Indian consumer is strong grip on the road for the purpose of safety. We fulfil this need by ensuring the best-in-class braking distance and

cornering on wet and dry road conditions. Another one of our key roles is to continuously invent for our customers. We recently launched Puncture-Safe Motorcycle Tyres for the Indian market, where puncture resistance is becoming ever more important as one of the biggest worries of the bike riders is getting stranded on the road. We continue to invest in Research and Development (R&D) in areas such as green technology, nanotechnology, advanced material and novel processing. Moreover, our safety-first approach extends to our operations, which ensure occupational health and safety through a robust framework comprising of risk identification and mitigation, trainings and certifications. As a recognition of our safety efforts, the British Safety Council conferred the ‘Sword of Honour’, one of the highest safety awards, upon us.

Our people are our most important asset. We truly believe that people excel when given freedom and a purpose beyond making money. Our policies are amongst the most liberal in the corporate world, with no formal working hours, options of working from home even before the pandemic hit us, and care for our people’s health and their families. We recently appointed a Chief Fitness Officer, who helps ensure the physical wellbeing of our people. We have also tied up with mental health specialists in light of the pandemic. Diversity and inclusion in CEAT goes well beyond gender diversity to include people with disabilities and those from different educational backgrounds. All this has helped strengthen CEAT’s position as an employer of choice, boosting our Great Place to Work[®] rank to 35, up from 67 in the previous year.

Today, all companies have been impacted by digitisation and we would like to be at the forefront of digital adoption. In our factories, we have been able to supplement our TQM (Total Quality Management) thinking with digital solutions to be even more efficient and consistent. Partnerships and learning from the outside are extremely important, and to do the same, we launched a start-up competition ‘Excellerator’ to boost innovation in the areas of connected, shared and tech-enabled fleet management. The initiative provided winners with funding and mentorship, along with access to CEAT’s wide-reaching business network.

The work that I feel most proud about is the work we do for society. In the reporting year, we continued to impact people’s lives through efforts in areas like health, hygiene, providing clean drinking water, road safety, women’s empowerment, and skills training for employability. As the country came to a grinding halt due to the COVID-19 pandemic and ensuing lockdown, CEAT focussed its efforts on various fronts that demanded immediate attention. This included the provision of Personal Protective Equipment (PPE) kits, gloves and

masks, and dry rations and hot meals to those in need. The Company also undertook truck sanitation drives to ensure the seamless delivery of essential goods in these uncertain times. Recognising the need for strengthening healthcare infrastructure, CEAT funded a start-up to develop a low-cost prototype of a ventilator and leveraged its own prowess to build COVID-19 testing booths for hospitals. In line with the Company’s commitment to safety, July 2020 also saw the launch of the GoSafe S95 face mask to help bridge the PPE gap.

Climate change is one of the most serious issues that we face and we believe it is our responsibility to play an essential role in this space, especially considering the sector that we operate in. Therefore, as part of a concerted effort to make the shift to renewable energy, CEAT has collaborated with Greenzest Solar for a captive solar power for its plant in Nashik. We are also launching tyres for electric vehicles, utilising sustainable raw materials like re-used rubber and silica, and optimising packaging and processes to reduce the overall environmental impacts of mobility.

The near future is not devoid of challenges. However, the changing mobility landscape, a global supply chain shift and growth in Indian rural and semi-urban markets present a wealth of opportunity for the Company. We are confident that our commitment to safety and digitisation, culture of freedom and transparency, R&D expertise and strong alliances have positioned us to win the marketplace. Embarking on the Integrated Reporting journey, CEAT not only hopes to showcase our Environmental, Social and Governance (ESG) performance, but also work on these aspects in earnest. We believe that this will take us further on our journey towards excellence and allow us to channel our extensive reach to create a world that is inclusive, sustainable and prosperous.

Anant Goenka

Managing Director

CORPORATE OVERVIEW

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CEAT LIMITED | ANNUAL REPORT 2019-20

Board of Directors

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COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee Finance and Banking Committee Risk Management Committee Corporate Social Responsibility Committee Nomination and Remuneration Committee Stakeholders’ Relationship Committee

Chairman

Corporate Information

BANKERS

EXECUTIVE COMMITTEE

COMPANY SECRETARY AND COMPLIANCE OFFICER

Axis Bank Limited

Mr. Anant Goenka Managing Director

Ms. Vallari Gupte

Bank of Baroda

Mr. Arnab Banerjee Chief Operating Officer

AUDITORS

Bank of India

S R B C & CO LLP

Citibank N.A.

Mr. Dilip Modak Sr. Vice President- Manufacturing

SECRETARIAL AUDITORS

Citicorp Finance India Limited

Mr. Kumar Subbiah Chief Financial Officer

Parikh & Associates

HDFC Bank Limited

ICICI Bank Limited

COST AUDITORS

Mr. Milind Apte Sr. Vice President- Human Resources

Kotak Mahindra Bank Limited

D.C. Dave & CO.

RBL Bank Limited

Mr. Peter Becker Sr. Vice President- R&D and Technology

REGISTRAR AND TRANSFER AGENTS

State Bank of India

TSR Darashaw Consultants Private Limited

The Hongkong and Shanghai Banking Corporation Limited

Mr. Saurav Mukherjee Sr. Vice President – Global Sales

6, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011

Yes Bank Limited

Mr. Vijay Gambhire Managing Director - CSTL

Plants:

CEAT LIMITED

Subhash Nagar Road, Bhandup (West), Mumbai, Maharashtra - 400 078

CIN: L25100MH1958PLC011041

82, MIDC, Satpur, Nashik, Maharashtra - 422 007

Registered Office:

Village Getmuvala, Taluka Halol, Dist. Panchmahal, Gujarat - 389 350

463, Dr. Annie Besant Road, Worli, Mumbai 400 030

Plot No.SZ-39, MIDC, Butibori, Nagpur, Maharashtra - 441 108

Website: www.ceat.com

1. Mr. H. V. Goenka Chairman

2. Mr. Anant Goenka Managing Director

5. Mr. Haigreve Khaitan 9. Ms. Punita Lal Independent Director Independent Director

6. Mr. Mahesh S. Gupta 10.Mr. Ranjit V. Pandit Independent Director Independent Director

Email: [email protected]

Village Sriperumbudur, Kannanthangal, Maduramangalam, District Kancheepuram, Tamil Nadu - 602 108

Plot No G-2, Village - Bohonoli, Ambernath MIDC, Ambernath East, Maharashtra - 421 506 (CSTL)

3. Mr. Arnab Banerjee 7.Mr. Paras K. Chowdhary 11.Mr. Vinay Bansal Chief Operating Officer Independent Director Independent Director

4. Mr. Atul C. Choksey 8. Mr. Pierre E. Cohade Independent Director Non-executive Director

CORPORATE OVERVIEW

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CEAT LIMITED | ANNUAL REPORT 2019-20

Memorable Milestones

Ranked 35th amongst India’s 100 best companies to work for by the Great Place to Work[® ] Institute

Ranked among top 20 companies having innovative diversity policies and practices by DivHERsity Award 2020

Awarded for Best Risk Management Framework and Systems in Auto Ancillary segment from CNBC-TV18

Awarded as the Best Investor Relations Team for the second year in a row by IR Magazine and Forum

Awarded for Best Innovation in Employee Engagement and Best Use of Technology and Employee Engagement at Employee Engagement Summit and Awards 2020

Awarded Gold in Best Use of AI/ML category and Silver in Best Use of Technology category at the ET DigiPlus Awards

Bagged TISS Leapvault CLO Award for Learning & Development (L&D) Team of the Year and Best Diversity & Inclusion Training Programme

Awarded Silver for the Bachao Tyre Exchange Offer campaign in exchange4media Prime Time Awards

Top Export Award by All India Rubber Industries Association for Excellence in Export for FY 2018-19

Won prestigious CII Award for the Most Innovative Business Practice in Customer Experience for e-Claim

Bagged Campaign India Digital Crest Award 2019 for Leveraging Recognised amongst the top 30 manufacturing workplaces in India Blockchain Technology to Reduce by Great Place to Work[®] institute Ad Fraud

VALUE CREATION

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CEAT LIMITED | ANNUAL REPORT 2019-20

Value Creation Model

As one of India’s leading tyre manufacturers, CEAT is committed to managing its environmental footprint and creating sustained value for its stakeholders. The Company’s approach to value creation centres around creating safer, smarter and sustainable products, and can be tailored to meet future challenges and opportunities.

The business model forms the foundation of CEAT’s value creation story. It represents how the six capitals are managed to transform inputs to outcomes, in line with the organisation’s strategic goals and purpose of ‘Making Mobility Safer & Smarter. Every Day’. This model also illustrates how it conducts business to create value for all stakeholders in a responsible and sustainable manner.

products and value-added services. These outputs eventually lead to internal and external outcomes, such as a wider range of products, greater customer satisfaction and an effective supply chain.

The intent is to provide insight into the overall strategy, which is the driving force behind CEAT’s ability to create short, medium and long-term value.

The Company’s differentiators, like its talent pool and strong R&D, are the inputs that are fed into the system. Coupled with strategic pillars, its business activities help convert these inputs to outputs in the form of

The interlinkages between the capitals demonstrate how different elements come together to meet stakeholder requirements.

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Manufactured Human Social and
Capital Capital Relationship Capital
Financial Intellectual Natural
Capital Capital Capital
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STRATEGY, RISKS AND OPPORTUNITIES

CEAT is one of the most respected and renowned tyre brands in India and across the globe. The Company’s strength lies in its deep distribution, ability to convert customer insights into innovative products and brand strength. The passenger segment in India is ripe for growth, as increasing wealth is leading to people opting for personal mobility. Resounding success in the 2W segment, combined with investment in service and value addition for fleet owners, is expected to translate into success in the passenger and utility vehicle segments as well.

CEAT’s strategic framework consists of six pillars:

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The Risk Management Committee is one of the important component of internal control systems at CEAT. The committee is responsible for review of business risks, including strategic, operational, financial, cyber security and compliance risks. The Committee also approves the mitigation plans and monitors the implementation and progress at a regular interval.

CEAT operates in a business environment involving dynamic customer demands. Given the scale and geographic spread of operations, it is imperative for the Company to mitigate inherent risks and identify possible opportunities while accomplishing growth plans with the help of a resilient strategic framework.

framework have helped it deal with this challenging landscape.

CEAT has adopted a robust Enterprise Risk Management framework. It is designed keeping in mind the external challenges and appropriate internal decision-making processes to mitigate those challenges. The risk management process begins with identification of risks followed by assessment of their impact with the help of past trends and future projections. The impacts of identified risks are analysed to develop suitable mitigation measures. Mitigation measures are implemented and the impact of risks are monitored at a regular interval. In addition to the identified risks, the risk management process also involves monitoring of emerging risks.

FY 20 was a challenging year for the automobile sector at large. This was due to a decline in customer demand of automobiles, resulting in production shutdowns by various original equipment manufacturers (OEMs). The end of the year also saw the COVID-19 pandemic, which led to various countries going into lockdown, and a consequent global economic slowdown. CEAT’s values and strategic

Key risks identified during the reporting period, along with respective mitigation measures, are as stated in the table below. A detailed explanation of our risk management approach is provided in the Management Discussion and Analysis section of this report.

VALUE CREATION

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CEAT LIMITED | ANNUAL REPORT 2019-20

Value Creation Model

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efforts, the Company has become a market leader in Sri Lanka, with more than 50% market share during the reporting period. Meanwhile, strategic associations with the likes of the Indian Premier League and ‘Dadagiri’ have helped improve the Company’s brand equity, which is further strengthened by its efforts towards improving its social and relationship capital. In addition to this, the Company has a structured stakeholder engagement framework, which helps them understand concerns from respective stakeholder groups and address them appropriately.

Risks Identified

Cyber 05 Security Risk

01 Competition

Mitigation Measures

Channel expansion. Periodic cyber risk assessment. Enhanced after-sales service. Preventive and detective measures Superior quality of products along to mitigate cyber risks. with warranty. Improving robustness of systems

Improving robustness of systems and IT platforms. Business continuity plan for IT platforms.

Technology, branding and reach, coupled with deep domain knowledge.

Strong and long-standing relationships with OEMs.

Risks Identified

Developing new products. Entry into new market segments.

During the reporting period, the Company developed products specific to new entrants in the market. It was also able to strengthen its foothold across OEMs by developing tyres suitable for existing models. Stressing on innovation as part of its intellectual capital has played an invaluable role in the Company differentiating its key products.

06 Business Disruption, due to external factors such as COVID-19

Risks Identified

Mitigation Measures

02 Radialisation

Impact analysis of disruption caused.

Mitigation Measures

Re-assessment of revenue and expenditure projections.

Conversion of truck and bus bias tyre capacities into non-truck segments.

CEAT has a state-of-the-art R&D facility in Halol, Gujarat. Moreover, its R&D center in Germany has helped combine the Company’s own expertise and experience with a global technology capabilities for best results.

Foreign market penetration to fully utilise bias tyre capacity.
Increasing radial tyre manufacturing capacity.

CEAT has also adopted a process its R&D center in Germany has to continuously monitor the dynamic helped combine the Company’s own business environment and leverage expertise and experience with a business opportunities. The Company global technology capabilities for best has developed long-standing and results. strong relationships with its distributors across the domestic and international With the help of upgrades in markets. These relationships are technology, improvement in processes instrumental in understanding latest and digitisation, the Company focuses developments in respective markets on developing products for new and and identifying business opportunities. premium market segments. The product design is carried out with CEAT’s extensive distribution network focus on quality and performance of more than 3,000 dealers and more parameters. As a result, the product than 250 two-wheeler distributors series launched in Europe have been has been instrumental in reaching a able to meet the stringent performance wide consumer base. The Company requirements of European markets. exports its products to more than 100 This approach has helped CEAT countries across the globe. These leverage its capabilities to become countries are segmented into seven one of the leading players in global clusters for ease of operations and market.

Risks Identified

High Investment Risk

Mitigation Measures

Periodic sensitivity analysis. Phased investment planning.

CEAT’s extensive distribution network of more than 3,000 dealers and more than 250 two-wheeler distributors has been instrumental in reaching a wide consumer base. The Company exports its products to more than 100 countries across the globe. These countries are segmented into seven clusters for ease of operations and to gain customer-centric strategic inputs, which are used to devise focussed product and distribution strategies. As a result of its concerted

Risks Identified

Raw Material Price Volatility

04 Mitigation Measures

Strengthening relationships with suppliers.
Exploring wider supplier base.

VALUE CREATION

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CEAT LIMITED | ANNUAL REPORT 2019-20

Value Creation Model

The business model clearly outlines how CEAT’s strategic objectives are aligned with the six capitals of the framework. These capitals – along with the inputs, outputs and outcomes associated with them - are as presented below.

The business model forms the basis for the entire report, and is aligned with our strategy, risks and opportunities, and performance. Other factors that impact the functioning of the business model are the organisation’s key stakeholders and external environment.

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External Environment Risks and Opportunities
INPUTS BUSINESS ACTIVITIES OUTPUTS OUTCOMES
Financial Capital Financial Capital • Shareholder value creation
• Improved credit rating
• Equity PURPOSE • Revenue • Efficient working capital
• Cash flow from operations • EBITDA management
• Gross debt MAKING MOBILITY • PAT • Optimal capital structure
SAFER & SMARTER. •• Dividend payout ratio Capital expenditure • Capacity expansion
Manufactured Capital EVERY DAY.
• Installed capacities Manufactured Capital • Planned and timely expansion to
• Smart facilities Product innovation • Key category production meet economies of scale
• Safe, reliable and lean process and development • Wide product range • Consistently safe and high
quality products
• Reduction in rejection of
products
Intellectual Capital
• R&D facilities Great Place
• R&D spend to Work Intellectual Capital • Customer satisfaction
•• Digital initiatives Strong Brand Equity • Patent applications filed • Business excellence
• Skilled resource pool Process excellence • New products developed • Strong OEM relationships
• Intangible assets worth • Leader in innovation
Extensive Distribution Network Technology and Suppliers Strategic and •• Quality innovations New OEM entries • Diversified product portfolio
Human Capital Innovation
responsible
• Diverse talent pool Breakthrough Products and Services sourcing
• Employee engagement
• Employee health, safety and Strong Stakeholder Relationships Communities / Human Capital • High performance culture
• Capability building wellbeing Outstanding Customer Experience NGOs •• Employee productivity Strong succession •• Aspirational employer brand Quality of Life
• Employee wellbeing /
Employees Investors
safe workplace
Natural Capital Smart / flexible
• Green procurement Customer Business manufacturing Natural Capital • Reduced environmental footprint
•••• Energy management Water management Environment management system Waste management connect and partneringbusiness Partners Customers AssociationsIndustry ••• Total material recycled Specific energy consumption Waste generated and •• Improved relationships with Proactive environmental communities and neighbouring industries
recycled sustainability plan
• Specific water consumption • Cost saving due to sustainability
Social and Product segment and • GHG emission reduction initiatives
Distribution market identification
Relationship Capital
and logistics
• Social and • Brand recognition
Community initiatives
•
• Customer centricity Relationship Capital Deep relationships with partners
• Branding and • Stronger community relationships
Sports partnerships • Lives impacted •
• Collaboration with channel partners marketing • Wider customer base • Improved industrial relations Better NPS
/ vendors / suppliers • Effective supply chain •
• Community satisfaction score
Employee engagement
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I
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IR
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VALUE CREATION

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CEAT LIMITED | ANNUAL REPORT 2019-20

Stakeholder Engagement and Materiality Analysis

CEAT recognises the importance of engaging with stakeholders on a regular basis, and the need to understand their concerns, for long-term business sustainability.

As a result, the Company takes an inclusive approach towards stakeholders by engaging with them through meaningful dialogue and then identifying the topics that are of high priority. The resultant outcome is used to develop Key Performance Indicators (KPIs), align them with the Company’s business model, and communicate their performance across each of the capitals.

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STAKEHOLDER ENGAGEMENT
CEAT’s stakeholders include
individuals or groups that can
influence or are impacted by its
business. It has a robust stakeholder
engagement process to assess and
cater to their specific needs.
The Company identified its key
stakeholders by developing an initial
list of interested parties, considering
historical concerns and relationships,
and having discussions, where
required. This identification was
followed by the development of an
engagement plan, proportionate to the
nature and scale of each stakeholder
group. During this engagement,
the Company disclosed information
to each of the stakeholder groups
in order to maximise participation.
CEAT then undertook meaningful
consultations with each stakeholder
group by offering them platforms
to freely express their views and
opinions, which were addressed
appropriately.
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Stakeholder Group

02 Customers 03 (Tyre Dealerships) Reason for Importanceportanceortance Support CEAT in reaching end-users

01 Investors and Shareholders

Employees

Reason for Importance

Reason for Importanceportanceortance

Reason for Importance

Serve as drivers for all business activities

Provide financial capital

Mode(s) of Engagement

Annual general meetings Quarterly briefings Concerns High ROI

Net Promoter Score (NPS) survey Online feedback surveys

Employee engagement survey Email / newsletter Townhall

Concerns

Product quality Product price Product maintenance Loyalty programmes

Concerns

Career progression Employee benefits Safe working environment Corporate collaboration

Stakeholder Group

Collaborators / 04 Business Partners 05 Reason for Importanceportanceortance Enable strategic alliances Mode(s) of Engagement(s) of Engagements) of Engagement) of Engagement of Engagementgagementagementgementement Mode(s) of Engagement In-person meetings Partnership portals

Industry 05 Associations Reason for Importanceportanceortance Provide insight into industry trends

Suppliers

Reason for Importanceportanceortance

Reason for Importance

Provide materials / services for business operations

Mode(s) of Engagement(s) of Engagements) of Engagement) of Engagement of Engagementgagementagementgementement

Mode(s) of Engagement

Industry conferences Media releases Regional industry events Memberships in associations

Supplier management portals Supplier audits

Concerns

Long-term partnerships Fair revenue distribution

Concerns

Reliable payment schedules Robust procurement policies

Compliance with regulations Business collaborations

Stakeholder Group

Communities / NGOs

Reason for Importance

Help in creating shared value

Mode(s) of Engagement

CSR initiatives Community grievance mechanisms Public hearings

Concerns

Contribution to society

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CEAT LIMITED | ANNUAL REPORT 2019-20

Stakeholder Engagement and Materiality Analysis

MATERIALITY ANALYSIS

A materiality analysis activity was conducted by CEAT to determine the reporting needs of various stakeholder groups, in accordance with the requirements of the Framework. This activity included the following six steps:

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CEAT’s materiality matrix
01
Corporate
governance /
Sector-Specific Material Topics: Ethics Customer satisfaction
Literature review and peer analysis
were performed to arrive at a broad list
Employee wellbeing
of material topics relevant to the tyre Economic
manufacturing sector performance
Digitisation
02 Product innovation /
Smart mobility
Business Impact: Energy and
emissions
A list of important business impact management Occupational
associated with these material topics was health and safety
prepared
03
Value Chain Impact:
These were classified as economic,
environmental, social and governance-
related
04
Stakeholder Responses: Importance to business
Both internal and external stakeholder
groups were consulted to determine their Material Topic Material Topic
inputs on material topics
Customer Economic
01 Satisfaction 02 Performance
05
CEAT’s Response CEAT’s Response
Materiality Matrix:
Produce a wide product range while Effective management of costs
Based on inputs received from various
maintaining quality
stakeholder groups and a robust
materiality assessment tool, CEAT’s KPIs KPIs
materiality matrix was developed
Assessment of the health and safety Revenue
impacts of products Profit
Incidents of non-compliance
06 concerning the health and safety
Report Content: impacts of products
The material topics in the ‘high-high’ Linkage to Sections Linkage to Sections
section of the materiality matrix were
mapped onto various sections in this
Social and Relationship Capital Financial Capital
report
Importance to stakeholders
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The material topics in the ‘high-high’ section of the materiality matrix were mapped onto various sections in this report

Material Topic

Employee Energy and Emissions Occupational 03 Wellbeing 04 Management 05 Health and Safety CEAT’s Response CEAT’s Response CEAT’s Response Boost employee morale Effective management of costs Ensure safety at the workplace KPIs KPIs KPIs Employee attrition Energy consumption within the Work-related injuries % of women employees organisation Work-related ill health Engagement score Reduction of energy consumption Scope 1 / 2 / 3 GHG emissions Reduction of GHG emissions Linkage to Sections Linkage to Sections Linkage to Sections Human Capital Natural Capital Human Capital Material Topic Material Topic Material Topic Digitisation Product Innovation / Corporate Governance 06 07 Smart Mobility 08 / Ethics CEAT’s Response CEAT’s Response CEAT’s Response Invest in high-quality digital technology Enhance product portfolio Conducting business ethically KPIs KPIs KPIs Total monetary value of company No. of patents No. of legal non-compliances assets No. of new products launched No. of employee grievances Linkage to Sections Linkage to Sections Linkage to Sections Manufactured Capital Intellectual Capital Corporate Governance Report

CORPORATE OVERVIEW VALUE CREATION

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CEAT LIMITED | ANNUAL REPORT 2019-20

Financial Capital

CEAT’s capital allocation strategy focuses on maintaining optimum and healthy balance between borrowed capital and internal accruals for the purpose of business requirements, including investments required for manufacturing capacities, brands, R&D and working capital. This serves to enhance revenue, increase market share, and improve operating margin and profitability, thereby creating value for shareholders. The Company’s capital allocation is aligned with its broader strategy and intent of conducting business in a responsible and sustainable manner.

INPUTS

Equity: J 2,927 Crores Gross debt: J 1,597 Crores Cash flow from

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operations: J 929 Crores

OUTPUTS

Revenue: J 6,581 Crores EBITDA: J 705 Crores PAT: J 271 Crores Dividend payout ratio: 18% Capital expenditure: J 1,028 Crores

OUTCOMES

Shareholder value creation Improved credit rating Efficient working capital management Optimal capital structure Capacity expansion

Interlinkages with other capitals:

Intellectual

Natural

Human

Manufactured

Social and Relationship Capital

Areas of focus in FY 20:

Improving operating efficiency

Stakeholder value creation

FINANCIAL CAPITAL MANAGEMENT AND VALUE CREATION APPROACH

K 6,581 Cr. Standalone revenue in FY 20

J 1,028 Cr. Capex in FY 20

J 929 Cr.

Cash flow from operations in FY 20

10.72% EBITDA Margin

18% Dividend payout ratio in FY 20

J 705 Cr.

EBITDA

CEAT is currently in a growth phase, focusing on adding capacities to capitalise on opportunities across segments including PCR, OHT, TBR and 2W radials for domestic and export markets. In this evolving scenario, CEAT continues to strengthen its value-added offerings through effective customer service, thereby widening cash-generating and profitable opportunities.

The investments made towards expanding capacities, R&D and brands over the next few years will optimally set the Company up to increase its global market share in the long term.

Over the past few years, CEAT has gradually increased the rate of dividend declared to 120% of face value. It endeavours to share the Company’s earnings with the providers of equity capital appropriately.

CEAT’s constant endeavour is to

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ensure zero defaults in periodic payments to lenders and maintain a stable credit rating. CEAT is comfortably placed with respect to its liquidity position and is adequately equipped to manage uncertainties associated with crisis situations such as COVID-19 and others.

CEAT has ensured maximum utilisation of internal accruals to Expanded finance the capacity expansion projects along with long-term capacities will borrowings, which have increased over the past two years. While the optimally set incremental borrowings have resulted in higher interest payments in the the Company concerned financial years, the higher proportion of low-cost capital in the up to increase financial mix is expected to have a positive impact on the business’ its global capital structure. market share.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Financial Capital

ECONOMIC VALUE CREATION

ECONOMIC VALUE CREATION
		In`H`Crores
Particulars	FY 20	FY 19
Direct economic value generated	6,622.4	6,886.6
Revenues	6,581.1	6,831.3
Other Income	41.3	55.3
Economic value distributed	6,217.4	6,417.4
Operating costs	5,378.5	5,691.6
Employee benefits	514.4	503.9
Payment to providers of capital	221.1	111.0
Payments to governments (incl. taxes)	94.3	100.4
Community investments	9.1	10.5
Economic value retained*	405.0	469.2

Economic value retained = Direct economic value generated - Economic value distributed

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Manufacturing Plant at Halol

CAPITAL EXPENDITURE

help the Company diversify its product portfolio and customise offerings, bearing in mind the local and global market’s requirements.

share, CEAT will continue to make investments towards increasing capacities across two-wheeler, PCR, TBR and Off-Highway Tyres segments, including the recently commissioned greenfield facility in Chennai for PCRs. The additional production lines will

CEAT has invested H 3,561 Crores in additional capacities from FY 16 till FY 20, which has contributed towards revenue growth.

With a defined strategy to increase domestic and export market

SHAREHOLDER VALUE CREATION

The market capitalisation of the Company has grown at a robust CAGR of 22 %, since listing on the bourses on April 1, 2002 at a capitalisation of H 89 Crores to H 3,184 Crores, as on March 31, 2020.

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----- Start of picture text -----

1-Apr-2002 31-Mar-2005 31-Mar-2010 31-Mar-2015 31-Mar-2020
89 346 511 3,255 3,184
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An investment of H 1,000 on listing day would be valued at H 35,667 on March 31, 2020, excluding the dividend payouts. With dividend payout ratio in the range of 17% to 18% of profits since FY 18. CEAT continues to work towards one of its core objectives of creating value for shareholders.

Market Capitalisation ( H in Crores)

EFFICIENT WORKING CAPITAL MANAGEMENT

Outlook

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additional surveillance is facilitated by frequent and granular analysis of cash inflows and outflows. CEAT’s efficacious utilisation of cash in FY 20 is highlighted by the availability of unutilised bank lines that can be drawn in case of exigencies arising out of leveraging internal accruals.

In FY 20, CEAT’s working capital cycle stood at 14 days vis-à-vis 29 days in FY 19. This improvement was facilitated by a stable accounts receivables level, reduction in inventory and an increase in accounts payables. CEAT has established lasting partnerships with its vendors based on the core foundation of mutual trust and the concrete relationships facilitated by favourable credit term renegotiations.

Ensuring timely payments to all concerned stakeholders, including employees and vendors, remains a top priority. CEAT will also continue to focus on cost rationalisation and efficient working capital management and will witness deferment of a portion of capital expenditure scheduled for FY 21, with the intent of conserving cash.”

Kumar Subbiah Chief Financial Officer

“Considering the challenging times ahead, it is imperative that CEAT continues to effectively monitor its cash and liquidity position. This

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Product Display at R&D Centre, Halol

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CEAT LIMITED | ANNUAL REPORT 2019-20

Manufactured Capital

CEAT endeavours to build its manufacturing capabilities in ways that maximise its output, while simultaneously minimising environmental impacts. The Company adapts to keep up with the ever-evolving regulatory landscape by enhancing its tyre manufacturing processes. It is also continuously investing in bestin-class technology and robust monitoring mechanisms across its operations. This has not only helped enhance the safety of its operations, but also that of its product range. Moreover, leveraging smart technologies has helped the brand make strides on its sustainability journey, in line with its overarching strategy.

INPUTS

Installed capacities Smart facilities Safe, reliable and lean process OUTCOMES Planned and timely expansion to meet economies of scale Consistently safe and high quality products Reduction in rejection of OUTPUTS products Key category production: ~35 Million tyres Wide product range 380+ SKUs

Interlinkages with other capitals:

Intellectual

Natural

Areas of focus in FY 20:

Digitisation of operations Tyre manufacturing

MANUFACTURING PLANTS

35 Million+

Tyres produced

3 lines

of defense in digitised operations

Modernised

tyre manufacturing

CEAT’s commitment to safety, digitisation and sustainability is not only reflected in its products, but also its manufacturing plants. Cuttingedge technology is leveraged at the Company’s plants in Nashik, Mumbai, Halol, Nagpur and Chennai, to ensure the sustainability of operations and the safety of its personnel and customers. This is translating into reliable and sturdy products for its customers, helping millions of vehicles travel

safely.

It is the first company to deploy female operators on the shop floor. Moreover, the Bhandup, Nashik, Halol and Nagpur plants are among the most energy efficient in their respective categories. The plants in Halol and Nagpur have also received the Sword of Honour for Safety and Health, making CEAT the first Indian tyre company to receive it.

The Company has invested heavily in cutting-edge technology in its plants, the newest of which is the one near Chennai.

In early 2020, CEAT unveiled its 163- CEAT has acre greenfield manufacturing plant in Kanchipuram near Chennai. The invested heavily plant, with an installed capacity

of approximately 96 Lac tyres per in cutting-edge annum. It is CEAT's sixth plant within

the country and will initially have a staff of 350, which is expected to ramp up technology

in the near future to create over 1,000 new jobs. Within India, the plant will at its plants,

cater to the requirements of brands the newest such as Hyundai and Nissan-Renault.

It also envisages supplying to other automotive manufacturers in South of which is

Asia, Europe and North America. the one near Chennai.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Manufactured Capital

DIGITISATION OF OPERATIONS

TYRE MANUFACTURING

Tyre is a composite product made of rubber, steel, fabric and chemicals. From expertise garnered through years of experience, CEAT has divided its tyre manufacturing process into five steps:

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----- Start of picture text -----

Textiles Fabric Fabric bias cutter Tyre-building Curing
and sheet calender machine press
Natural rubber
Uniformity
measurement
Banbury Extruders
mixture
Chemicals Wire treatment
cutter
X-ray
Wire calender
Steel
Bead, belt, carcass wire Bead construction
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----- Start of picture text -----

Tyre-building Curing Visual
machine press inspection
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----- Start of picture text -----

Finished
tyre
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Rubber Compound Mixing

Tyre Component Preparation

Tyre Assembly

Rubber is mixed with chemicals The various components required such as carbon black, silica, for the specific tyre product stearic acid and metallic oxides category are prepared according to and fed into a Banbury mixer specifications. to produce rubber compounds. These compounds are used to make various tyre components.

The components are assembled using the ‘tyre-building’ machine. At this stage, the tyre is referred to as a ‘green tyre’.

Tyre Curing

Tyre Inspection

The final step comprises of three types of inspections: visual, x-ray and uniformity. The first of these aims to identify any significant visual defects, while x-ray inspection detects abnormalities in the tyre’s steel belt. Uniformity

tests determine mass distribution across the dimensions of balance, force and movement. Tyres that pass all three quality checks are sent to a warehouse, from where they are eventually dispatched to the market.

A moulding operation is performed using the curing press on the green tyre. At this stage, heat from boilers is used to reach the high temperatures required for curing.

CEAT’s technological capabilities revolve around green technology, nanotechnology, and advanced material and novel processing. Through capability enhancement in simulation, the lead time in original equipment and new product development projects was considerably lowered. The organisation is developing multi-site manufacturing plant support systems, with upgraded modules in product lifecycle management software. Big data is also being leveraged to uncover valuable on-field insights.

Internal Control Systems

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----- Start of picture text -----

Line of Defense
management control of operations
Line of Defense
management control of business performance
Line of Control
corporate governance and risk management
----- End of picture text -----

The Company has installed robust cybersecurity systems to take preventive measures against new-age risks. All IT systems will soon be linked to its business continuity plan.

CEAT’s internal control systems are proportionate to its scale and operational complexity, and are divided into three parts:

Digital Solutions for Early Warning Signals

Automation in Green Tyre (GT) Manufacturing

Design Review Using Virtual Reality (VR)

Action: In its GT manufacturing Action: To reduce its iterative process, a 15 kg paddle design review process, CEAT assembly must be lifted manually integrated design thinking with to a height of about 2 m to apply new digital platforms by involving the belts on carcass in every customers into the review manufacturing cycle. CEAT process to make it more agile. implemented automation in this Now, product design review is tyre lifting process by developing possible at the OEM site. the first-of-its-kind strip winding machine and integrating Outcome: This has enabled pneumatic technology in a instant user feedback on virtual telescopic cylinder. tyre designs without the need to make 3D-printed models. Outcome: Muri (overburden) The prototype development involved in the tyre lifting time has reduced by over 90%. process was completely This is the first time an Indian eliminated, leading to zero tyre manufacturer has made breakdowns in the foot paddle use of VR. assembly. Furthermore, all non-value adding activities were eliminated.

Action: To get early warning signals, CEAT developed inhouse digital solutions such as Cleaning, Lubrication, Inspection and Tightening (CLIT) checksheets, predictive maintenance, machine component life monitoring and IOT conditionbased maintenance.

Outcome: With these solutions, CEAT successfully eliminated paper check-sheets, reduced downtime of component failure and enhanced the skills of shop-floor executives. Consequently, Overall Equipment Effectiveness (OEE) improved.

SAFETY CERTIFICATIONS

All of the Company’s manufacturing plants are ISO 45001:2018 certified. Additionally, CEAT has adopted the British Safety Council’s Health and Safety Management System at all plants, and achieved the ‘Sword of Honour’ for its Nagpur Plant in the year 2018 and Halol plant in the year 2016.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Intellectual Capital

CEAT’s Intellectual Capital supports its purpose of ‘Making Mobility Safer & Smarter. Every Day.’ The aim is to continuously innovate and stay agile to create products that cater to dynamic consumer needs. The Company strives to stay relevant in the competitive market by leveraging digital technology to improve research and efficiency, as well as to enhance customer experience. It continues to strengthen its Intellectual Capital, with focus on innovation, sustainability, digitisation and smart mobility to deliver safer, smarter and sustainable products and services.

INPUTS

R&D facilities ( Halol and Germany )

R&D spend: J 114.27 Crores Skilled resource pool:

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185-member R&D team

Digital initiatives Process excellence

OUTPUTS

Patent applications filed: 76 (cumulative) New products developed: 63 Intangible assets worth Quality Innovations: 41 projects New OEM entries: 40

OUTCOMES

Customer satisfaction Business excellence Strong OEM relationships Leader in innovation Diversified product portfolio

Interlinkages with other capitals:

Financial

Human

Manufactured

Natural

Areas of focus in FY 20:

Creating sustainable products

Product innovation / smart mobility

RESEARCH AND DEVELOPMENT

~20% Revenue generated from new products

25 1.77% New design registrations R&D spend as a percentage of sales

Patent applications filed as on New products developed March 31, 2020

CEAT’s R&D activities are focused on developing innovative materials and processes to achieve breakthroughs in product development. All research initiatives are customer-centric and begin with understanding customer requirements. Depending on the requirement, development is done either in-house or in collaboration with other institutions.

The R&D team has a skilled talent pool consisting of 185 researchers. Research and development facilities are located in Halol in India. There is also a dedicated team to cater to the European markets, based out of the CEAT European Technical Centre (CETC) in Frankfurt, Germany. Further, CEAT collaborates with IITs in India and some German universities for advanced research projects and PhD programmes. This year, an investment of H 114.27 Crores was made towards research and development.

CEAT’s research efforts and investment have translated into a cumulative of 76 patent applications filed as on March 31, 2020. 27 patent applications and 25 design registrations were filed in FY 20. The patent portfolio has increased by 8 times in the last three years. The patent portfolio is a testament to the organisation’s efforts towards innovation and development.

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The R&D function adheres to the CEA ~~T is the~~ Total Quality Management (TQM) approach adopted by CEAT. Its first tyre activities are carried out as per a fiveyear rolling roadmap, aligned with a vision that ensures the forecasting and company in the development of emerging technologies in mobility, keeping in mind future world (outside requirements in the areas of rolling resistance, mileage, noise and grip. Japan) to win the Deming Prize.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Intellectual Capital

QUALITY-BASED MANAGEMENT (QBM) - CEAT’S WAY OF BUSINESS EXCELLENCE

in living our ‘Purpose’. The journey approach being followed in CEAT with continues every day. 12 steps of problem-solving. Under this programme, associates / workmen Fundamental processes such as policy form a team of 5 to 6 members called a management, daily management and SPARSH circle and identify key areas of cross-functional management have improvement in their own areas. There been further strengthened to support are more than 450 SPARSH circle performance improvement across all active teams across the manufacturing functions. In FY 20, 52,620 continuous plants, and 519 projects have been improvement projects, called Kaizens, completed under this programme in FY have been implemented. As a part 20. CEAT teams have also participated of Lean Management, value stream in external forums and won 7 Super mapping has been done, eliminating Gold, 37 Gold and 15 Silver awards 181 Muda (waste) and 4000 plus in Chapter Convention on Quality Muri (overburden) from various Concepts, and 4 Par Excellence, processes. 22 Excellence awards in National Convention on Quality Concepts held Systematic problem-solving and by the Quality Circle Forum of India at involvement of everyone is one of the state and national level.

Winning the Deming Prize in 2017 was a significant milestone and testimony to CEAT’s journey of Total Quality Management and customer-centricity. The Deming Prize is a global quality award that recognises organisations, for their contributions to the field of Total Quality Management (TQM). CEAT’s capability as an organisation has improved significantly by further widening and deepening of TQM adoption and implementation. The Company has experienced a paradigm shift in its thinking towards being vision-driven, on both the operational as well as strategic fronts. At CEAT, all activities and processes are geared towards enhancing end-to-end quality to achieve customer delight.

Systematic problem-solving and involvement of everyone is one of the key areas of focus. Towards this, CEAT has completed 272 QIPs (Quality Improvement Projects) to solve problems in line with business objectives. An internal competition, QIP Mahasangram 2.0, was held covering themes on Customer Focus, Operational Excellence and People Power, where 21 teams across functions participated. SPARSH (Sustainable, Productive, Accurate, Reliable, Safe and Healing) is a unique

QBM (Quality-Based Management) is CEAT way of implementing TQM/ Business Excellence. It enables systematic operations to achieve business objectives effectively and efficiently. It consists of a philosophy, systems, tools and technique from Total Quality Management, Total Productive Maintenance (TPM) and Toyota Production System (TPS). The end-to-end quality is also reflected

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CREATING SUSTAINABLE PRODUCTS

CEAT endeavours to incorporate sustainability considerations in all business activities, starting from the designing of products to endof-life tyres. Measures are taken to ensure that raw materials used in the production process have a minimal environmental and social footprint.

In FY 2019-20, there have been no incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of CEAT’s products.

Recycled rubber, which is either devulcanized or reclaimed, is used in tyres to reduce virgin resource consumption. CEAT’s tyres are also designed to have a higher mileage and fuel efficiency, in addition to lower rolling resistance and a longer life, making them sustainable.

**A tread life that lasts upto 1 Lac km[*]**

The flagship CEAT Milaze X3 tyre is a unique product, offering multiple benefits, making it a stronger value proposition than its rivals. It provides a longer life and ensures safety on road. A regular tyre has a life span of 50,000 km, after which it requires replacement. The CEAT Milaze X3 provides twice the tread life, lasting up to 1 Lac km. Owing to its long life, it cuts cost for customers and reduces the carbon footprint in its lifecycle.

The tyre has been designed using a special abrasion-resistant compound which, along with rigid shoulders and high rubber content, ensures long tread life and uncompromised safety. The CEAT Milaze X3 range of tyres are available for 82 vehicles.

*Projected mileage based on controled-tests on Indian roads. Actual performance may vary basis road, terrain, vehicle and driving conditions

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CEAT leverages its R&D prowess in continuing to develop technologies in the realms of green technology, nanotechnology, advanced material and novel processing, while offering innovative products and services in light of the COVID-19 pandemic. For instance, the avenues of no-touch tyre service and car disinfection are being explored to ensure a superior customer experience irrespective of what the future holds. CEAT recognises the widereaching social and environmental impacts it can have due to its intrinsic nature of facilitating mobility and is mindful in its operations to ensure a positive impact it could leave on the planet.

Arnab Banerjee COO on Innovation at CEAT

QIP Mahasangram 2.0- External Jury Members addressing the participants

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CEAT LIMITED | ANNUAL REPORT 2019-20

Intellectual Capital

PRODUCT INNOVATION AND SMART MOBILITY

The global product portfolio has been expanded by developing new SportDrive SUV tyres for premium SUVs.

Product innovation and smart mobility lie at the core of CEAT’s business. The revenue generated is directly impacted by how CEAT evolves with changing customer needs. It is essential to continue to focus on innovation and smart mobility to push the envelope. The Company taps into digitisation, analytics and design thinking to make development efficient and agile, towards this end.

Other successful launches include:

New truck-bus radial tyres WIN X3 Series for domestic market

Super heavy load truck bus tyre to cater to heavy load markets

In FY 20, CEAT has developed 63 new products across various categories and geographies globally. These developments had a considerable impact on profitability and growth, resulting in 20% of the revenue being generated from new products.

Premium rib tyre for high mileage in the bias segment

New directional pattern in the motorcycle category “ZOOM-X3” in 90/90-17 (Front) and 120/80-17 (Rear) size

Best Rolling Resistance in PCR category

Zoom RAD Tubeless Tyres in Three Sidewall Colours

In the Passenger Car Radial Limited-edition Zoom RAD (PCR) category, CEAT has once tubeless tyres in three sidewall again proved its technological colours (blue, orange, blue and competence by achieving the orange) was launched on the best rolling resistance levels for occasion of Holi. The tyres are fuel economy of the vehicles compatible with and available ahead of the annual target. This for sports bikes such as the was achieved using the Taguchi Yamaha FZ, Yamaha Fazer, method of statistical design of Suzuki Gixxer and Suzuki experiments technique, finite Intruder. The tyres proved to be element simulation, advanced more exciting and engaging for materials, construction and consumers. Their unique design design combinations. The boasts of wide shoulder grooves learnings from this project can and high rubber content, be used for future products providing excellent cornering meeting new EU label ability, good grip, smoothness regulations and Global Original and stability, along with a long Equipment requirements. CEAT tyre life. is gearing up for the Automotive Industry Standard 142 norms star labelling concept for India, which is expected to be implemented in FY 21.

Colour Sidewall Tyres

In the twoand three-wheeler categories, development programmes with OEMs resulted in product approvals and continuous supplies to many leading OEMs, including Honda, Suzuki, Yamaha, Bajaj and Royal Enfield. In FY 20, 10 key OEM approvals were secured like Jawa Perak, Aprilia SR 150cc, Hero Glamour upgrade and Xpulse exclusive supply. First-time entry was achieved in Kawasaki (911 model). 16 OEM approvals – including small and major electric vehicle (EV) manufacturers – helped CEAT achieve leadership in the EV segment.

All season tyres, suitable for usage all year round for Central Europe, were also key additions. These products are safe in normal driving conditions and moderate snow, and are gaining popularity in Europe.

CEAT is also prepared for the inevitable EV revolution, with the development of a new EV tyre platform for passenger cars and its evaluation, for the Indian and European markets. EV tyres are being developed for two-wheelers and other commercial categories, using various technologies developed in the last few years, in the areas of reducing rolling resistance, reducing noise, improving grip and tyre life. These products are also specifically designed to meet high torque requirements, along with improving battery life of EVs.

Additionally, the Company is working on developing intelligent tyres. There is active development of technologies, along with a technology roadmap for each of the following categories to create products of superior quality in FY 21:

Ultra-low fuel efficient tyres

Low noise tyres Fossil-free tyres Virtual prototyping

Process simulations

Tandem mixers for silica mixing for ultra-high performance tyres and EV tyres

DIGITAL INNOVATION

In order to keep pace in the everevolving digital landscape, CEAT periodically updates its systems and processes with new technological integrations. The use of new technologies like automation, virtual reality, laser carving and finite element simulation has helped reduce product development time. The capability of virtual development has been augmented to all product ranges including adoption of virtual reality for design reviews.

New technologies have been developed in the spheres of green technology, nanotechnology, advanced material and novel processing. Basic research has developed new technologies like new epoxy resin, new accelerator, and nano materials for tyre compounds, which are meeting requirements related to grip, rolling resistance and noise. Developments have also been made in biomaterials and biodegradable wraps for packaging, instead of plastic packaging, which will contribute to environmental sustainability.

New investments in the areas of predictive testing and advanced raw material characterisation have resulted in significant technological edge over competition. A new, single-step, continuous, simple, quick, and costeffective method of manufacturing latex-carbon black master batch has been developed to improve production efficiency going forward.

CEAT has also digitised its claims management system, making the system efficient and reducing human error.

The Product Lifecycle Management (PLM) software has also been updated this year to a web-based version, enabling better collaborations between stakeholders, thus improving overall efficiency.

Considering the likely impacts of the COVID-19 pandemic, consumers are expected to shift from buying in-store to online purchases. Going forward,

CEAT is exploring new business models like online buying and doorstep

Annual Festival on Innovation

fitment and fleet advisory services.

CEAT organised the second RPG Innovation Festival in FY 2019- 20, to foster a culture of innovation across the organisation. This year, the festival received 57 entries. Some of the top ideas generated were in the areas of virtual reality, intelligent tyres, continuous process of manufacturing, among others.

Won the CII Award for Digital Transformation for the e-Claim initiative

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CEAT LIMITED | ANNUAL REPORT 2019-20

Human Capital

CEAT is cognizant of the fact that an organisation is only as good as its people. Its employees and their varied life and work experiences, technical prowess, soft skills and dedication have set the Company apart from its peers. It has, therefore, actively worked to cultivate a diverse workforce that reflects the world within which it functions. This, combined with a culture centred on learning, wellbeing and openness, has brought out the best in its employees. This increase in their Professional Net Worth has been instrumental in helping CEAT work towards its goal of making the organisation and its offerings safer, smarter and more sustainable.

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----- Start of picture text -----

INPUTS
Diverse talent pool: 9.1%
permanent women
employees
Employee engagement
Employee health, safety
and wellbeing
Capability building
OUTCOMES
High performance
culture
Aspirational employer
brand
OUTPUTS Quality of Life
Employee productivity
Strong succession
Employee wellbeing /
safe workplace
----- End of picture text -----

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----- Start of picture text -----

Interlinkages with other capitals:
Intellectual
Financial
Manufactured
----- End of picture text -----

Areas of focus in FY 20:

Aspirational Employer Brand Diversity and Equal opportunity Capability Building Employee Wellbeing, Health and Safety Community and Employee Engagement

ASPIRATIONAL EMPLOYER BRAND

35[th]

6,474 33 Permanent employees

Great Place to Work[®] ranking in 2020 9.1%.1%%

Average employee age (in years)

44% Share of millennials in CEAT’s workforce

100% 9.1%.1%% Employees returned to work after Permanent Women Employees parental leave

CEAT strives to become an aspirational employer, and has accordingly undertaken a number of initiatives in the reporting period. CEAT believe in creating ‘Professional Net Worth’ of its employees by focusing on their physical and mental health, enabling them to build meaningful relationships at work, providing them with the flexibility to hone their ‘whole self’ and equipping them with ample learning opportunities. Moreover, the Company has put forth a number of initiatives to improve the physical, mental and emotional wellbeing of its personnel. Measures like providing

flexible hours, the ability to work from home, and enhancing infrastructure availability at offshore satellite offices have also contributed towards this end. CEAT is also leveraging technology through platforms like PULSE, which facilitates better communication 91% of all between employees and their managers. All this is combined with effective employer branding by new recruits tracing mapping them to template personas. employees’ journeys and this year were This is helping the Company chart a trajectory of employees’ foreseeable under the age future at CEAT, allowing it to customise policies and plans for each segment. of 30.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Human Capital

DIVERSITY AND EQUAL OPPORTUNITY

CEAT recognises the value that a Beyond just providing gainful diverse workforce and the unique employment to marginalised perspectives that come with it can communities, the Company is add to an organisation. The Company fostering a culture that recognises has, therefore, taken a concerted the different needs of each group. It effort to foster gender diversity in the is embracing digital transformation workplace. to provide its staff with the freedom and flexibility they need to maximise their efficiency. It is also one of the Age-Wise Breakdown of CEAT’s few players in the sector to extend Staff in FY 20 its 5-day working policy across manufacturing locations. This, in turn, has been instrumental for the retention 39.1% of millennial and Gen Z workers. 44% of CEAT’s workforce is comprised of millennials, with an average employee 50.4% 10.5% age of 33 years. The Company also employs seven people with disabilities on a permanent basis.

Meeting the demands of an increasingly diverse, global clientele is nearly impossible without a workforce that mirrors its customer base. Diversity is the pillar that CEAT’s people practices are built upon, and it is continuously striving to make the organisation as inclusive as possible. To this end, the company has broadened its definition of the term ‘diversity’ to include the differently abled, and people from different generations.

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----- Start of picture text -----

39.1%
An Overview of CEAT’s Workforce
Management Non-Management 50.4% 10.5%
FY 18 FY 18
1,150 4,067
62 333
FY 19 FY 19
<30 years old >50 years old
1,192 4,179
30-50 years old
68 376
FY 20 FY 20
91.2% of all new recruits this year
1,317 4,566 were under the age of 30, whereas
women accounted for 18.6% of all
84 507
new hires.
Male
Female
----- End of picture text -----

As part of its efforts to retain the talented women on its workforce, CEAT has introduced the option of flexi-working for new mothers. This gives them the freedom of half-day working until their child is one year old, in addition to 26 weeks of maternity leave. The Company has also extended its parental leave to both adoptive mothers and fathers. In FY 20, 162 employees availed of parental leave and returned to work after it. Less than 12 months have passed since their return to work; however, 100% were still employed with the Company as on March 31, 2020.

958 employees, 11% of whom were women, separated from the Company in the reporting period.

Employee Hires in FY 20

to find jobs began after completing my education. I tried in Bengaluru, Hyderabad and Pune for three long years, but was not able to get a permanent job because of my condition, until CEAT gave me an opportunity. I am confident that I will put 100% effort into this job, and aim for organisational growth, always!

For the first three years of my No. of New life, I was a ‘normal’ active child. Recruits One day, I was diagnosed with meningitis, and the doctor said <30 years 30-50 years there were zero chances of 852 95 recovery. Fortunately, I started responding to the treatment but not 209 8 before it led to a permanent loss of my ability to hear and speak. However, I studied and the struggle Male Female Vidyadhar , Associate, Nagpur Plant

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Female workforce at Chennai Plant

CAPABILITY BUILDING

CAPABILITY BUILDING Average Training Hours Per Year Per Employee in FY 20, by The technical prowess and skills Employee Category of CEAT’s employees form the Milind Apte cornerstone of its success. The CHRO on Company endeavours to provide Management Diversity at its people with all the support, CEAT resources and incentives to build their Professional Net Worth. One of the key pillars of this is constant learning, 9.5 which has allowed both CEAT and its workforce to keep pace with a At CEAT, ‘diversity’ goes beyond changing world, and stand out from its just gender. The Company contemporaries. Non-Management has taken concerted efforts to provide members of different marginalised groups with gainful employment as well. It has also 8.3 expanded the scope of its hiring to include people from varied educational backgrounds. This Permanent Female Employees diversity of skillsets, coupled with a laser-sharp focus on training and development, has proven invaluable in boosting 7.6 creativity and innovation within the organisation. Understanding and catering to the unique needs of CEAT’s employees through wellbeing and engagement initiatives has further allowed the Company to thrive in the volatile and competitive business landscape of the 21[st] century.

9.5

Permanent Female Employees

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CEAT LIMITED | ANNUAL REPORT 2019-20

Human Capital

Key Initiatives

Percipio

trainings undertaken as part of Zero Hour include:

This online learning platform caters to the unique learning needs of each of CEAT’s employees. In FY 20, 1,077 employees undertook courses in communication, presentation, quality management and Six Sigma, among others, through Percipio.

Behavioural training

Technical training General knowledge Financial knowledge

Book reviews

Understanding of new technologies TED Talks

Zero Hour

CEAT recognises that learning is most effective when it is continuous. To help its employees make learning a habit, despite their demanding lifestyles, it launched the online learning platform, Zero Hour. This facilitates the ease and effectiveness of learning by encouraging employees to invest one hour each month towards their personal learning and development. Different groups, formed at each location, receive content support from the Learning Team. To further build upon this culture of learning, CEAT also subsidised the cost of books related to these courses for its employees by 50%. Different types of

Podcasts

Leadership Development

CEAT has undertaken various initiatives to ensure the growth and development of its workforce. Employees have access to management development programmes and certifications at premiere educational institutions.

Employees are also encouraged to take up new assignments every four years, to build cross-functional capacity. Furthermore, senior leaders engage with team members on a regular basis, with 78% of the

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Female Associate working at Shop Floor

workforce participating in these dialogues with their superiors in the last financial year.

CEAT also seeks to groom its people to fine-tune their leadership skills, and consequently, help them achieve career growth. As part of INSPIRE, its people leadership intervention, senior managers and general managers in the sales and manufacturing functions were offered blended learning over a period of 6-8 months, to aid their professional development.

Future Leader Board (FLB)

Formerly known as Young Executive Board, the Future Leader Board is an aspirational forum, which gives young managers a chance to work closely with top management on projects pertaining to business excellence. This platform facilitates access to interaction with industry experts, mentorship, and a glimpse into management meetings, to hone their skills.

FLB was a great experience for me, as I got to work on multiple cross- functional projects that helped me understand, in depth, how different functions work and enabled me to work on current and future business challenges

Ankur Arora, Senior Manager - Business Development

HUMAN RIGHTS AND LABOUR RELATIONS

Protecting the fundamental rights of its employees is crucial to fostering a sense of security among them. This is integral to ensuring that they can perform to the best of their abilities, lending a much-needed impetus to both their careers and the Company’s performance.

The freedom of association is the foundation upon which workers’ rights are built. It allows for seamless, two-way dialogue between the management and staff, which provides them with the requisite social security. 32.89% of CEAT’s total permanent workforce is part of a recognised union. Further, there have been no complaints alleging child labour, forced involuntary labour or discriminatory employment at CEAT during the reporting period.

OCCUPATIONAL HEALTH AND SAFETY

The provision of a safe working environment is one of CEAT’s key priorities. The Company has put a number of identification and mitigation measures in place to reduce accidents at the worksite and occupational illnesses.

Risk Identification and Mitigation

CEAT identifies work-related hazards through job safety analyses, job hazard analyses, hazard and operability studies, and occupational health and safety inspections. Additionally, workrelated risks are gauged through assessments of activity risk, control of substances hazardous to health, manual material handling, display screen equipment, and fire and traffic risks. The Company also conducts ergonomic assessments and task hazard analyses through work permits to assess risks on a routine and nonroutine basis.

The Company’s risk mitigation plan has been prepared considering hierarchy of controls. First priority

is, therefore, given to elimination or substitution, and engineering controls. This includes measures like the elimination of manual material handling by providing conveyors for green tyre handling, provision of automatic carbon charging system in the mixing section, and setting up a ventilation system on the shop floor.

The risk control plan is reviewed by the Vice President – Operations and Senior Vice President – Manufacturing on a monthly basis. Periodic workplace and personal monitoring is carried out through industrial hygienists on heat stress and ventilation, noise levels, illumination and Respirable Suspended Particulate Matter (RSPM). An action plan is prepared on the basis of their findings, and reviewed in monthly operations review and safety committee meetings.

Commitment to ‘Zero Accidents’

The Company has established, implemented and maintained a health and safety management process that factors in legal requirements as well the recommendations of the ISO 31000 standard for risk management. This system covers 8,146 permanent and contractual workers. This includes workers at the Bhandup, Nashik, Halol and Nagpur plants, which are engaged in the activities of manufacturing tyres, tubes and flaps, as well as the R&D facility at Halol that looks into product design and development. CEAT’s safety management system, which has been internally and externally audited, also covers truck drivers, cleaners,

contractual annual maintenance employees, visitors, transporters, vendors and suppliers. The scope of the system does not cover CEAT’s sales offices, DC warehouses, CFA and RPG House.

This commitment to ‘Zero Accidents’ has also translated into a bespoke mobile application, which allows workers to report hazards and hazardous situations, in addition to

the provision of registers and forms on the shop floor. Each accident, incident and near miss is investigated, and the ‘5 Why’ method is used to conduct a root cause analysis.

The work-related injuries in FY 20, which saw a total of 2,12,17,382 manhours worked, are detailed below:

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----- Start of picture text -----

Particulars Total for
FY 20
----- End of picture text -----

	Work-Related Injuries Lost Time Injuries	19 1
	Rate of Recordable	0.9
	Work-Related Injuries1 Lost Time Injury Frequency Rate1 Fatalities	0.05 0
	Fatality Rate	0

1The rate of recordable work-related injuries and lost time injury frequency rate has been calculated based on 1,000,000 hours worked.

Safety Training

Safety training is another key tenet of CEAT’s commitment to eliminating accidents at its worksites. New recruits are put through mandatory sessions, in addition to periodic training sessions for all permanent and contractual employees. Each of the 5,073 staff members working in manufacturing went through safety training in FY 20.

In the reporting period, CEAT conducted the following work-related health and safety trainings:

IMS (ISO 14001:2015 and ISO 45001:2018) Internal Auditors training Lock Out, Tag Out (LOTO) Machine guarding Work permit system Electrical safety Fire safety Noise and vibration hazard Chemical safety Ergonomics

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Human Capital

Control of substances hazardous to health

Hazard identification and risk assessment

Accident reporting and investigation

Emergency preparedness Environment aspect impact analysis Environment, health and safety laws Safety in manual material handling

PPE

Material safety data sheets Waste management Work at height safety

Safety Committees

CEAT has a central safety committee, which meets on a quarterly basis, as well as a departmental safety committee that convenes on a monthly basis. These are chaired by the Plant Head and Department Head, respectively, and constitute of permanent as well as contractual employees. These committees are entrusted with the responsibilities of assisting and co-operating with the management to achieve the objectives of the Company’s Health and Safety Policy. They also deal with matters concerning health, safety and environment to arrive at practical solutions, and undertake educational, training and promotional activities. The Committees investigate the cause behind any incidents that take place and look into complaints, to suggest corrective measures. They also deliberate upon the findings of relevant surveys, audits and assessments, and oversee the implementation of their recommendations.

However, safety does not function in silo at CEAT. All employees are given an open forum to discuss issues related to health and safety performance at an Open House. Further, anyone can raise health and safety issues through the mobile application ‘BolBindas’ or the messaging application,

WhatsApp. Safety is also a key topic of discussion at shift assembly meetings and daily work management meetings. Communication is also encouraged through informal channels such as safety circles, which allow employees to discuss any relevant issues in as open a manner as possible.

The respective teams organise biweekly runs that end with a healthy breakfast. Apart from these runs, they will be organising a mini marathon that will finally culminate in a nationallevel CEAT Marathon. The national marathon will see top runners from all locations competing for the title at the central level. Also, winners of the national-level marathon will be sponsored for other renowned national and international marathons.

EMPLOYEE WELLBEING

For the last two years, CEAT has worked extensively to improve the work-life balance of its employees. The Company has rolled out relevant policies, and instituted a five-day work week in the manufacturing and satellite offices, towards this end. This year, CEAT extended the concept of employee wellness and added another dimension called ‘Quality of Life’. The concept stands firm on the belief that quality of life has a direct correlation to an employee’s productivity, and focussing only on the quality of work will not suffice. CEAT has defined quality of life as a component of physical as well as mental health and has, thus, started its journey to make its employees physically and mentally

Nutrition Counselling

policies, and instituted a five-day The CFitO provided group as well work week in the manufacturing and as one-on-one health counselling to satellite offices, towards this end. This employees. The CFitO extensively year, CEAT extended the concept of travelled to all the plants to conduct employee wellness and added another group counselling sessions, with a dimension called ‘Quality of Life’. The special focus on female employees concept stands firm on the belief that who work on the shop floor. During quality of life has a direct correlation visits, she also conducted a detailed to an employee’s productivity, and audit of the canteen facilities and focussing only on the quality of work recommended the changes to will not suffice. CEAT has defined the menu. In order to extend her quality of life as a component of reach to sales personnel, who are physical as well as mental health and present across the country, the has, thus, started its journey to make CFitO addressed their doubts and its employees physically and mentally concerns through conference calls fit. and webinars. Employees also have the option of blocking her time for a Onboarding of Chief Fitness dedicated one-on-one counselling Officer sessions, which are duly backed by follow-up sessions. In these sessions, In FY 20, the Company onboarded the CFitO goes deeper into the issues its Chief Fitness Officer (CFitO), to of an employee and provides a holistic oversee the health of its employees. and tailor-made approach to tackle Under her guidance, a number of them.

Onboarding of Chief Fitness Officer

In FY 20, the Company onboarded its Chief Fitness Officer (CFitO), to oversee the health of its employees. Under her guidance, a number of initiatives have been undertaken, to boost the quality of employees’ lives.

Mental Health

Physical Health

CARE

Running Cohorts

This is CEAT’s flagship Employee Assistance Programme, which seeks to support its staff and their friends and family in matters related to their personal and professional lives. This includes extending counselling services, and providing references to services related to travel, dependent care, relocation, fitness, and financial and legal services.

The need for having a group for like-minded people was sensed in the organisation, which is how the thought of launching various Passion Cohorts came to the table. Focusing on the physical health aspect of the employees, Running Cohorts were launched across the company. The cohorts have been formed at the plant, sales and corporate locations.

EMPLOYEE ENGAGEMENT

Keeping employees motivated is of paramount importance when it comes to personal and organisational growth. CEAT is acutely aware of this, and strives to make its staff feel at home, while at work. A culture characterised by transparency and togetherness, supplemented by a host of initiatives, has helped it attract and retain highperforming talent, and become a household name.

Great Place to Work[®]

CEAT adheres to global best practices in the people management realm, which earned it the Great Place to Work[®] certification. Assessed on the Trust Index[©] and Culture Audit[©] , the organisation’s performance was deemed to be superlative on the five parameters of credibility, respect, fairness, pride and camaraderie. Efforts in these areas have been instrumental in CEAT’s improved ranking on the list of India’s best companies to work for, earning it the 35[th] rank in FY 20, up from 67 in FY 19.

CV of Your Kid

At CEAT, employee engagement extends to personnel’s families as well. As part of this initiative, the Company asked staff members to provide fun details about their children, such

as their hobbies, talents and cocurricular activities. These were modelled into CVs for the kids, which were then framed and mailed to them as a surprise. The initiative received an overwhelming response as well as appreciation from employees across locations.

Women’s Empowerment

CEAT instituted a special forum to engage with its female workforce on the unique issues faced by them. It served as a platform for the women to share their suggestions and feedback, to help make the Company a better place for them. This resulted in several health, safety and wellbeing interventions, such as the installation of a CCTV camera on the shop floor, self-defence training for women, and

the provision of childcare facilities.

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Sherlock

Equipped to address queries related to company policies and employee grievances, this chatbot has been instrumental in reducing query resolution time. In cases that are beyond the bot’s scope, a ticket mapped to the relevant process owner is automatically raised. These queries are then escalated to the management, if they are not resolved in the stipulated time, bringing transparency to grievance redressal. Sherlock handled 324 queries during the reporting period.

CHAMP

Launched in April 2019, this digital rewards and recognition platform aims to celebrate the accomplishments of CEAT’s workforce. It consists of three modules, each of which recognises achievements at a different level. SPOT awards and e-cards are used for immediate gratification, whereas quarterly and annual awards are given out as scheduled. A total of 1,212 unique employees were awarded in FY 20, with 12,923 SPOT awards and 3,542 e-cards being given out.

PULSE

This initiative aims to strengthen the connection between skip-level managers and frontline employees, by leveraging technology. The web portal and mobile app ensure that management interaction with frontline staff is in the right context by recording conversations, and making them visible to the relevant stakeholders. This allows management to pick up where they left off, ensuring continuity, and making sure that no crucial information is left out in their communication. The application also has an option to assign action items on the basis of the conversation, ensuring that there are no loose ends. In the reporting period, close to 7,000 such conversations and managers’ feedback were recorded in the system.

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Natural Capital

CEAT recognises the responsibility towards people and the planet that accompanies its wide reach. The Company’s environmental vision is centered on minimising its impacts on the planet and geographies that it exists and works in, and sources from. It has, therefore, prioritised the preservation and efficient management of natural resources while conducting its business, in addition to undertaking interventions related to waste management and the streamlining of business operations. The Company is leveraging its R&D capabilities to take it one step further in the journey towards a safer, smarter and more sustainable future. It has defined strategic priorities such as management of compliances, risks and sustainability in operations.

INPUTS

Green procurement Energy management Water management Environment management system Waste management

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OUTPUTS

Total material recycled Specific energy consumption: 0.21 GJ per tyre produced Waste generated and recycled: 15,634 MT waste disposed

Specific water consumption: 0.26 m[3] per tyre produced GHG emission reduction: 7% (Scope 1 + Scope 2)

OUTCOMES

Reduced environmental footprint

Proactive environmental sustainability plan Cost saving due to sustainability initiatives Improved relationships with communities and neighbouring industries

Interlinkages with other capitals:

Financial

Manufactured

Areas of focus in FY 20:

Materials management

Environmental impacts Energy and emissions management

MATERIALS MANAGEMENT

1 427 GJ , Renewable energy consumed

~744 TJ

Total energy consumption

J 4.18 Cr.

6,906 tCO2e

Spend on energy-saving equipment

Emissions avoided

8,92,886 m[3] 19,413 m[3] Water consumption Wastewater discharge

CEAT’s material procurement process is carefully designed to provide a high value, cost-optimised proposition to its customers. This is done by continuously engaging with key vendors through joint developments and the use of advanced characterisation techniques. The continuous focus on sustainability resulted in increased usage of green materials like silica and recycled materials. Introduction of new products optimised with advanced engineering tools like simulation, design of experiments and Taguchi Robust Design approach led to the conservation of materials while improving product performance.

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----- Start of picture text -----

Material Consumption (MT)
All of CEAT ’s
rational
ope
plants are ISO
14001:2015
(Environmental
management
FY 18 FY 19 FY 20 systems)
Non-renewable materials
Renewable materials certified
4,28,345 5,14,710 5,17,083
14,952 43,382 40,102
----- End of picture text -----

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Natural Capital

ENERGY AND EMISSIONS MANAGEMENT

In line with global agreements such as the Paris Accord, CEAT endeavours to contribute to the mitigation of climate change through a combination of initiatives on renewable energy usage and energy efficiency. Owing to the nature of its operations, energy costs contribute to business expenses. Hence, energy management is vital to the Company. It is also putting in dedicated efforts to move to less carbon-intensive energy sources.

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GHG Emissions

Energy Performance

Energy consumed within CEAT governs its Scope 1 and Scope 2 GHG emissions. As seen in the graph, these two trends follow each other. The emissions factors and Global Warming Potentials used in these calculations were taken from the 2006 IPCC Guidelines for National Greenhouse Gas Inventories. Electricity emissions factor was assumed to be 0.82 tCO2e/MWh, as per the CO2 Baseline Database for the Indian Power Sector User Guide – June 2018, developed by the Central Electricity Authority, Government of India.

Energy consumption is primarily governed by production, which is directly related to materials consumed. As seen in the graph below, the energy consumption trend follows that of materials consumption. While calculating energy consumed, CEAT made use of the calorific values for various fuels, as mentioned in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories. Additionally, CEAT made use of energy from biomass and solar energy to reduce its non-renewable energy consumption. It plans to expand activities in this domain in the near future.

CEAT used The Greenhouse Gas Protocol – A Corporate Accounting and Reporting Standard to calculate its Scope 3 GHG emissions. Components of Scope 3 emissions included employee commute, business travel, inbound logistics, outbound logistics and electricity sold to distribution centres. Of these, inbound logistics form the most significant component (>95%). The Company’s Scope 3 GHG emissions over the last three years can be found below:

Since electricity accounts for a majority of the Company’s nonrenewable energy consumption, its Scope 2 emissions are consistently high. Natural gas consumption is the most significant component of Scope 1 GHG emissions.

The organisation is largely dependent on electricity (~60%) and natural gas (~25%) to meet its annual energy requirements. A breakdown of energy consumption for the last three years can be found below:

GHG Emissions Scope (Mn. tCO2e)

Energy Component (GJ)

GHG Emissions Scope (tCO2e)

Scope 3 GHG Emissions

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----- Start of picture text -----

7,62,835 7,99,982 7,44,169 2,20,684 2,84,328 2,63,539
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
Non-renewable energy Scope 2 GHG emissions
Renewable energy Scope 1 GHG emissions
7,61,852 7,98,456 7,42,742 1,36,224 1,44,329 1,42,058
983 1,526 1,427 84,460 1,39,999 1,21,481 1,303 2,048 1,680
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Energy Savings and Emissions Avoided

During the year, CEAT invested in and implemented a range of energy conservation initiatives. This comprised of retrofitting of old equipment, in addition to the utilisation of energyefficient equipment and lighting, and alternate fuels (such as piped natural gas). Through such stewardship, the Company has nearly doubled its Y-o-Y energy savings, over the last three years. The base for energy savings calculation for any given year is the corresponding energy consumption of the previous year. Owing to these efforts, the avoided emissions have also seen a proportional rise. It was assumed that all initiatives would have run on grid electricity, and the corresponding emissions factor was considered.

Energy Savings (GJ)

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----- Start of picture text -----

FY 18 FY 19 FY 20
4,350
12,355 24,479
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Emissions Avoided (tCO2e)

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----- Start of picture text -----

FY 18 FY 19 FY 20
1,143
3,388 6,906
----- End of picture text -----

Steam-Saving Initiatives at Halol Plant

Action: To reduce the utilisation of HP and LP steam, the Halol plant increased insulation applied, installed a steam flow meter, removed an extra HPS steam header from the curing process, and replaced a steam-VAM with an electric chiller. The plant also set up steam traps and leakage correction systems.

Outcome: The total steam savings achieved was 13 MT/ day.

Other Emissions

Over many years, CEAT has installed, maintained and upgraded air pollution control equipment at all its manufacturing plants. Last year, six upgrades were implemented across various locations. These included electrostatic precipitators, dry scrubbers, enhancements in briquette boilers, catalytic converters and advanced air filters. Consequently, there has been a downward trend in its emissions over the years.

Other emissions for CEAT constitute SOx, NOx and Particulate Matter (PM). The monitoring of these is based on third-party stack emissions reports. Based on the flow rates from these, the total values for the entire year are arrived at. The figures for the last three years are:

Other Emissions Component

FY 18 (MT)

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----- Start of picture text -----

207 13 241
FY 19 (MT)
167 18 211
FY 20 (MT)
197 16 168
SPM NOx SOx
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Ozone-Depleting Substances

As a policy, CEAT does not use Ozone-Depleting Substances (ODS) in any of its manufacturing processes. However, ODS is used for refilling during maintenance of cooling equipment, such as air-conditioners, refrigerators, water coolers and other cooling units. The Company has gradually phased out ODS in favour of new coolants that do not damage the ozone layer. Hence, there has been a Y-o-Y decrease in ODS consumption.

ODS Consumption (kgCFC-11eq)

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FY 18 FY 19 FY 20
57 53 49
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Natural Capital

ENVIRONMENTAL IMPACTS

Aside from impacts related to Water Consumption (m[3] ) materials, energy and emissions, as captured in the previous sections, CEAT acknowledges environmental impacts arising from its water consumption and waste generation. The Company has deployed modern technology to reduce its water and waste burdens.

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----- Start of picture text -----

FY 18 FY 19 FY 20
904,171 939,016 892,886
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It did not identify any non-compliance with relevant environmental laws and regulations during the reporting period.

Wastewater Discharge (m[3] )

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----- Start of picture text -----

FY 18 FY 19 FY 20
31,150 26,170 19,413
----- End of picture text -----

Water Management

The organisation understands the criticality of water, which is used in all its operations and manufacturing processes, as a natural resource. To maximise its water-use efficiency, CEAT employs best-in-class technology. Its main source of water is the direct supply received from the Maharashtra Industrial Development Corporation (MIDC). Like energy, water also follows the consumption trend of materials.

Reduction in Water Consumption at Bhandup Plant

Action: To reduce overall water consumption for domestic purposes and sanitation, the Bhandup plant undertook activities such as replacement of old water storage containers, installation of level transmitter and retrofitting of stop-jacket cooling system.

Except for the Bhandup plant, all plants do not discharge any wastewater. The water is treated and used for domestic purposes such as horticulture. As a policy, the Bhandup plant has set its discharge limits to 50% of permissible legal limits. Care is also taken to ensure that the water discharge does not significantly affect the surrounding environment.

Outcome: Water consumption of the plant reduced from 737 kL/day in FY 18 to 562 kL/day in FY 20, and treated effluent discharged reduced from 89 kL/day in FY 18 to 64 kL/day in FY 20.

CEAT has set a 10% Y-o-Y reduction target for its water consumption. Targets are set as per the Company’s Integrated Management System Manual. Emphasis is given to set quantitative targets for reduction or improvement, and corresponding monitoring protocols are developed.

Waste Management

In line with the 3Rs of waste management, CEAT strives to minimise waste at the source by stringently monitoring processes that lead to its generation. A small proportion of the annual waste generated is hazardous in nature, while the rest is non-hazardous. During the year, initiatives such as reduction in naphtha consumption and recycling of packaging materials brought down overall waste generation. The trend of non-hazardous waste generation has largely been in sync with material consumption.

Zero Liquid Discharge (ZLD) System at Nagpur Plant

Action: To eliminate water discharge, the Nagpur plant installed a state-of-the-art ZLD system with a 20 kL/day capacity. To maximise efficiency, this system was designed to separately process effluents and sewage.

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----- Start of picture text -----

is non-hazardous. During the year, Hazardous Waste Disposed (MT) Non-Hazardous Waste Disposed (MT)
initiatives such as reduction in
naphtha consumption and recycling
of packaging materials brought down
overall waste generation. The trend
of non-hazardous waste generation
has largely been in sync with material
consumption.
All hazardous waste is handled as
per relevant government guidelines
and regulations. Hazardous waste is
only disposed of through government-
authorised recyclers or agencies. FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
978 578 809 11,187 15,254 14,825
----- End of picture text -----

Outcome: The specific water consumption of the plant reduced from 5.4 kL/Ton in FY 18 to 4.03 kL/Ton in FY 20.

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Zero Liquid Discharge (ZLD) Effluent Treatment Plant

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Social and Relationship Capital

The performance of a business is inextricably linked to the prosperity of its customers and the communities within which it operates. As a responsible corporate citizen, CEAT endeavours to leverage its strengths to create smarter products that make the world a safer place. In addition to a host of community development initiatives, the Company is constantly working towards reducing the environmental impact of its offerings and operations. Together, these have helped strengthen its relationships with its customers and surrounding communities, and driven progress towards a future that is safer, smarter and sustainable.

INPUTS Community initiatives Customer centricity Sports partnerships Collaboration with channel partners / vendors / OUTCOMES suppliers Brand recognition Employee engagement Deep relationships with partners Stronger community relationships Improved industrial OUTPUTS relations Better NPS Lives impacted : Community satisfaction 38,000+ score Wider customer base Effective supply chain

Interlinkages with other capitals: Human Financial Natural

Areas of focus in FY 20:

Customer satisfaction Community engagement Responsible procurement

CUSTOMER SATISFACTION

J 9.13 Cr.

99%

CEAT’s contribution to the RPG Foundation in FY 20

Customer complaints resolved in FY 20

2,395 4,949 Women and youth trained under Students benefitted from the various Skill Development Programmes programme ‘Pehlay Akshar’

17 + ,000

Beneficiaries impacted by the eye care programme, ‘Netranjali’

Customer centricity is the foundation upon which CEAT’s operations have been built. The Company strives to provide its distributors, clearing and forwarding agents, OEMs, dealers, fleet operators and end users with a superlative sales and after-sales experience.

It is also working to improve its distribution channels to ensure product and service availability in remote areas. To this end, the Company is constantly fine-tuning its distribution network, and has launched initiatives like CEAT Shoppes and CEAT TSH to provide superior customer experience.

However, at CEAT, the customer satisfaction journey doesn’t end at An industry the closing of a sale. The brand has undertaken a number of initiatives first, the

to ensure that its customers get the maximum value for their money. This e-Claim includes, but is not limited to, the

establishment of call centers, and application providing value-added services like

fleet advisory. It has also reinvented has reduced the replacement claim process through the launch of an e-Claim replacement mobile app for on-spot resolution.

An industry first, this application has claim resolution reduced resolution time to less than

an hour. The Company exited FY 20 time to less with a spot resolution of 56% in dealer

channel, up from 35% in April 2019. than an hour.

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Social and Relationship Capital

COMMUNITY ENGAGEMENT

CEAT Customer Day

RESPONSIBLE PROCUREMENT

An organisation’s social and environmental impact extends far beyond its own activities. This is especially true for a company like CEAT, which works closely with a wide-ranging network of distributors, clearing and forwarding agents, OEMs, dealers, fleet operators and suppliers, among others.

Given its wide reach, the Company is acutely aware of the responsibility it has towards people and the planet as well as the influence it exerts over partners. It has, therefore, put into place a number of controls to ensure sustainability throughout its value chain. 92% of CEAT’s new suppliers in the period were screened for their environmental performance. Meanwhile, efforts have also been dedicated towards working with local suppliers, who account for 61% of its overall supply chain spend.

Taking cognizance of its own role as a tyre supplier, the brand also engages with dealers and OEMs on a regular basis. These interactions have proved invaluable in gaining a more in-depth understanding of its own strengths and weaknesses, and improving the quality of CEAT’s products.

The Company hosted the first edition of ‘CEAT Customer Day’ in October 2019. This first-of-its-kind customer engagement initiative saw nearly 400 personnel, including top management, visit 162 CEAT Shoppes to interact with channel partners in 28 Indian cities. The initiative was undertaken to reinforce the customer-centric culture of the organisation and understand the evolving needs of the market.

MD Anant Goenka noted, “With Customer Day, we wanted to drive

SPORTS PARTNERSHIPS

CEAT has been unwavering in its commitment to supporting the growth of sport in India. The Company continues to be the Official Strategic Time Out Partner for the Indian Premier League, and is making its presence felt with football and table tennis associations. In FY 20, the brand continued to celebrate achievers in the sporting world, as well as support up-and-coming stars.

The Company has partnered with top-order batsman Shreyas Iyer, whose style of play has earned him comparisons to the legendary Virender Sehwag. The rising star joins the likes of Rohit Sharma, Ajinkya Rahane, Shubman Gill, Mayank Agarwal and Harmanpreet Kaur, who are all part of the CEAT family.

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customer centricity across the company through meaningful engagement and inclusive participation. It has acted as a great opportunity for us to interact with our customers and understand their needs, while including our channel partners in the journey with us. The knowledge we have gained from this initiative will help us get closer to our purpose of making mobility safer and smarter every day.”

Celebrating the Best of Cricket

CEAT has been unwavering in its commitment to celebrating and encouraging India’s most beloved sport, cricket. The brand honoured some of the most exemplary players at the CEAT Cricket Rating (CCR) International Awards, held in May 2019. In line with the CCR’s recognition of the sport at both a domestic and international level, the awards honoured performances across the gamut. Virat Kohli was awarded the prestigious title of CEAT International Cricketer and Batsman of the Year, whereas Jasprit Bumrah, Rohit Sharma and Aaron Finch also took home awards. The ceremony also celebrated junior cricketer Yashasvi Jaiswal, and Smriti Mandhana from the Indian women’s national team.

initiatives, formulating and reviewing In 2014, CEAT engaged the Tata programmes and recommending the Institute of Social Sciences to conduct expenditure on various activities. It a need assessment in and around also oversees the implementation of the areas where it operates. The various initiatives through programme findings were used to determine the planning, implementation schedules key focus areas around which its and plans, and situational and other activities are built – eye health care, assessment tools. In the reporting education, women’s empowerment period, the CSR committee met twice and community development . to ensure effective implementation Subsequent exercises have since and compliance with the Company’s been undertaken to make sure that CSR objectives and policy. the brand’s initiatives evolve along with the communities’ needs. Based To maximise the impact of CSR on this, the scope of CEAT’s CSR initiatives, it is essential to understand activities has been aligned to focus the unique needs of and problems on employability and livelihoods, faced by the communities within including provision of clean water. which a business functions. Working All of CEAT’s operational locations with the relevant agencies to conduct had community engagement, impact an in-depth need assessment helps assessment and/or development organisations design and implement programmes in the financial year. effective interventions, and monitor and maximise their outcomes.

CEAT aims to help communities lead purposeful, healthy and dignified lives, thereby driving their holistic empowerment and wellbeing. It has partnered with several NGOs, local governance bodies and other private entities through the implementation agency RPG Foundation to ensure maximum social impact. Its Corporate Social Responsibility (CSR) initiatives are also aligned with the Sustainable Development Goals (SDGs) put forth by the United Nations (UN) to bring about peace and prosperity for people and the planet. These initiatives leverage the strength of CEAT and its partnerships to drive progress towards ensuring a safer, smarter and more sustainable future.

The CSR Committee, constituted by the Board of Directors, is responsible for giving strategic direction to the

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Programme/Vertical Spend in FY 20 ( J in Lacs)
60.64 135.92 203.21
Netranjali Pehlay Akshar Swayam and
Sanjeevani
352.64 20.92
Jeevan and Heritage
Saksham Conservation
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Social and Relationship Capital

Eye Health Care

Netranjali

to ensuring road safety and a sustainable livelihood.

followed by promotive, preventive, to ensuring road safety and a rehabilitative and curative care to sustainable livelihood. the underprivileged. The range of interventions includes free eye In FY 20, 17,286 bus drivers screenings, hospital referrals and were screened as part of this the provision of free spectacles project. 7,877 pairs of glasses to those in need. These activities were distributed, and 454 are conducted in schools and hospital referrals provided for communities, with special emphasis severe cases. on drivers, whose vision is crucial

According to the National Blindness and Visually Impaired Survey, India was home to around 4.8 Million blind people, as of October 2019. This initiative by the RPG Foundation, powered by CEAT, seeks to help prevent avoidable blindness, which is estimated to account for over 75% of all cases globally. It conducts comprehensive eye check-ups,

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Eye camp conducted as part of 'Netranjali'.

Road Safety

City Road Runners

Road Smarrt

CEAT organised the third edition of ‘City Road Runners’ in Vadodara in September 2019, to raise awareness about the menace of child trafficking. This run sought to show solidarity with victims of the crime and their families, and signify India’s will to fight against it and create a safer future. Funds were also mobilised to provide assistance to the victims and their families,

choices. Through fun-filled interactive sessions, the programme teaches children about road safety and the consequences of accidents.

Making mobility safer and smarter is the ethos upon which CEAT has been built. This is even more imperative now that road accidents result in 1.35 Million fatalities annually, making them the leading cause of death of people between the ages of 5 and 29 years. Road Smarrt was launched with the aim of raising awareness about the need for road safety from an early age. The initiative works closely with schools to engage with students from class 7 to 9, who will soon have a say in influencing their own mobility

In addition to telling attendees about dos and don’ts, and imparting values for responsible behaviour, the sessions include Q&As, quizzes and games to maximise their impact.

1 5th UN Global Road Safety Week highlights need for strong leadership 6-12 May 2019, WHO: https://www.who.int/roadsafety/ week/2019/en/ (Accessed on May 16, 2020)

further aiding their rehabilitation.

Education

Pehlay Akshar

Education is a fundamental right, and the foundation upon which a life of prosperity can be built. This initiative by CEAT takes a two-pronged approach to improving the quality of education.

The Pehlay Akshar programme seeks to address the education gap. This project works with children from government schools for six continuous years, with the intervention beginning from the fourth standard and continuing till the ninth standard. Its goal is to impart English language proficiency, both spoken and read, thereby increasing the students’ future employability. Improving spoken English makes a plethora of career options accessible to them, while practical reading skills help them participate in the online revolution and make them future-ready. In the reporting period, the programme had impacted 4,949 students across 40 schools in Mumbai, Halol and Nashik. The interventions undertaken ranged from the development of a virtual classroom – including the donation of

Employability

Gainful employment is the foundation upon which peace and prosperity of communities is built. This will be especially true in a post-COVID-19 landscape that will present a whole new set of challenges and opportunities when it comes to employment. CEAT is acutely aware of the economic benefits it stands to reap if the communities within which it operates have access to sustainable livelihoods. Additionally, working towards this end also gives it access to a higher quality talent pool, further driving the Company’s success. This, combined with the social benefits of peace and harmony, have made skilling and employment key focus areas for the Company, within which it

a projector, screen, educational games and books – to the painting of murals.

Pehlay Akshar. Out of these, 481 teachers were trained as a part of a partnership with the Brihanmumbai Municipal Corporation (BMC) to train teachers from BMC-run schools across Mumbai. This included three training sessions spread across the academic year, with weekly group coaching sessions focussed on implementing the ‘Magic Classroom’ principles.

This initiative also works with teachers from government-run schools to help them create ‘Magic Classrooms’, where children feel safe and motivated to learn. In FY 20, 1,260 teachers from government and municipal schools were trained under

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‘Pehlay Akshar’ seeks to make children feel safe and motivated to learn.

there is one nurse for every 1,200 people, in stark contrast to the WHO’s recommendation of one for every 100150 people. RPG Foundation has, therefore, implemented Sanjeevani, a programme that trains youth and women to pursue careers such as general duty assistants, bedside assistants and patient care assistants.

operates have access to sustainable livelihoods. Additionally, working towards this end also gives it access to a higher quality talent pool, further driving the Company’s success. This, combined with the social benefits of peace and harmony, have made skilling and employment key focus areas for the Company.

In FY 20, 783 women were trained as general duty assistants, bedside assistants and patient care assistants under this programme. 310 women have been employed at hospitals and medical facilities across locations.

Sanjeevani (Skilling Women in Healthcare)

Skilling healthcare workers serves the dual purpose of providing gainful employment as well as ensuring good health and wellbeing for all. This is especially necessary in India, where

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Women being trained as healthcare workers, as part of ‘Sanjeevani’.

We are four members in the family, who were finding it difficult to meet our basic needs through my father’s salary of H 9000 per month. I came to know about and signed up for the Solar PV technician course run by the RPG Foundation. After completing my training, I got a job in a leading solar PV manufacturing company in Gujarat. My monthly salary of H 10,500 is helping me support my family. I am very happy and thankful to the RPG Foundation and CEAT Tyres.

My father runs a tea stall, while my mother works as domestic help, and my sister is in the sixth standard. I was studying part-time and looking for a job to manage my expenses. I took admission in the 2/3-wheeler course, after the completion of which I was awarded a government certificate that helped me land a job at a two-wheeler dealer. I now earn a monthly salary of H 7000, and am grateful to the RPG Foundation and CEAT Tyres. Shubham Ghode

I had completed my education till class 10 and wanted to continue on, but had to drop out because of my family’s financial condition. Then, I found out about the bedside assistant course and enrolled in it. I earn H 8000 per month, and used my first salary to buy a mobile, and a bike with the second. I am thankful to RPG Foundation and CEAT for giving me this opportunity.

Arfia Shaikh

Vikas Chandekar

Community Development

Jeevan (Plant-Level Development Initiatives)

Swayam (Skilling Women in Driving)

CEAT’s community development efforts focus on elevating the quality of people’s lives through interventions in the areas of clean drinking water, sanitation, health and nutrition, skilling and employability.

This women’s empowerment programme goes beyond conventional livelihood training initiatives to encourage women to pursue a career in the male-dominated driving industry. It imparts driving training to women, and helps them find employment as taxi, school van, auto rickshaw and delivery drivers. The initiative also supports these women in securing their licenses, and provides placement support.

Initiatives in FY 20:

As a part of the Bal Vikas programme, 100 children attended workshops on topics such as yoga, art and craft and storytelling in Bhandup.

Understanding the unique set of challenges that women face in situations like these, Swayam also includes selfdefence training. Allied skills like spoken English, first aid, mechanics and grooming are also included in the programme to boost their employability.

Installation of four clean drinking water units was completed in FY 20, with one each in Nashik and Chennai, and two in Nagpur. These are expected to impact over 8,764 beneficiaries.

3 rainwater harvesting systems were installed in Zilla Parishad schools in Nashik.

Swayam has garnered immense support from the transport sector, As part of the POTALI programme, with beneficiaries being employed as 1,220 sessions on healthcare valets, forklift operators, on-call drivers awareness for children and their and instructors, in addition to the parents were conducted in the aforementioned roles. In this reporting Bhandup area. period, 600 women enrolled in the programme across Mumbai, Chennai, 1,302 saplings – 450 in Nashik Nashik, Nagpur and Delhi. 395 of and 852 in Nagpur – were planted, them trained as two-wheeler riders, benefitting more than 4,000 whereas 205 beneficiaries completed community members. the four-wheeler driving course. 347 candidates were successfully placed CEAT provided training support in FY 20. to five athletes, including one para-athlete and two female shooters, along with the Abhinav Bindra Foundation. The Company supported them with world-class equipment and coaching, which helped them hone their skills. The two swimmers, Virdhawal Khade and Harsh Saroha, have gone on to win medals at the South Asian Games in Nepal and the National School Games, respectively.

'Swayam' imparts driving training to women.

Saksham (Skill Development for Youth)

This initiative trains youth and women in skills necessary for employment in industries like textile, technology, and food and beverages. It works in close conjunction with training partners to equip workers with the skills they need to boost employability and income generation capabilities.

Its enterprise development initiatives also provide newly skilled workers with the know-how they need to transition into small business owners. Further, the programme is tailored based on the findings of the need assessment activity, to make it as impactful as possible. In Halol, for instance, capacity-building was expanded to include skills such as welding, mobile and refrigerator repairing, air-conditioner repairing, and electrical wiring. Meanwhile, participants in Nagpur were trained in the skills needed for careers as two- and three-wheeler mechanics and solar PV technicians.

In FY 20, 1,012 youth were trained under various trades and 532 have been placed in different sectors.

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Skills training being imparted to youth as part of ‘Saksham’.

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COVID-19 Response

The highly infectious novel coronavirus has rapidly spread across the globe since it was detected in December 2019 - January 2020. Aside from the public health implications of the pandemic, subsequent lockdowns have also led to socioeconomic fallout in many parts of the world, including India.

CEAT’s culture is built on an ethos of safety, and protecting and serving the interests of its customers, employees and communities has always been of paramount importance to it. This has taken on even more importance in the wake of the COVID-19 pandemic, and the Company is working to ensure the wellbeing of its personnel, while exploring new avenues to best serve its customers. It is also leveraging its innovative prowess and wide network to manage and mitigate the aftermath of the crisis on society’s most vulnerable sections. Some of CEAT’s initiatives undertaken until this reporting have been outlined in this section.

Wall of Gratitude -

Words fall short to express our gratitude to the COVID-19 warriors in our country. RPG’s token of appreciation for the doctors, nurses, policemen, media persons, delivery executives and our very own COVID-19 warriors for braving the situation and undertaking their duty. This artwork was created by Mumbai-based graphic designer and illustrator, Sameer Kulavoor at our head office, RPG House.

EMPLOYEE WELLBEING PLANT HEALTH AND ENGAGEMENT AND SAFETY

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COVID-19 Response

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COMMUNITY OUTREACH

Ventilators, Masks, Sanitisers

COVID-19 testing booths developed in collaboration with RPG Foundation provided to 75 hospitals across Maharashtra, Andhra Pradesh, Tamil Nadu, Gujarat and Kerala
Funded a start-up, Promethean Energy, to develop low-cost prototype of a ventilator, to distribute about 25 ventilators to hospitals and medical facilities across India
Around 2,500 masks contributed to the Bhandup police station in Mumbai
Around 1.25 Lac pairs of gloves, 10,000 PPE kits, 50,000 N95 masks and 500 litres of sanitiser donated to frontline workers in Mumbai

Distribution of Food and Meals

CEAT distributed over 3.7 Lac cooked hot meals from its plants in Nashik, Bhandup, Ambernath, Chennai, Halol and the head office in Worli

Donated dry rations worth J 4,00,000 to migrant labourers in Mumbai, and worth J 10,00,000 to 2,270 families in Tamil Nadu

Truck Sanitisation

The Company undertook sanitisation of close to 200 trucks in FY 20, towards the goal of sanitising over 8,000 trucks, which had already been surpassed with over 9,000 trucks as of July 2020, at various locations across India

Face masks, sanitisers and food packets were distributed to truck drivers and other daily-wage workers; over 4,670 food packets were distributed in FY 20 alone

Donations

Donated J 10,00,000 to the COVID-19 response fund in Tamil Nadu

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Other Initiatives

CEAT’s employees and their family members supported the RPG Foundation’s ‘A Story A Day' initiative by reading simple English stories to children

CEAT contributed J 25,00,000 to Milkar, a collaborative platform that distributes food kits to underserved communities in Mumbai

EMPLOYEE WELLBEING AND ENGAGEMENT

CEAT onboarded a physical trainer Training and development content to conduct virtual workout sessions is being delivered to employees for its employees under the series in formats such as case studies, ‘CoFit 20’ e-books, TED Talks, online courses and articles

A weekly podcast hosted by the Chief Fitness Officer (CFitO) guides employees on staying healthy while working from home, boosting immunity and other relevant subjects

A different health-related contest, such as the ‘Push-Up Challenge’ 6[th] July was announced as or ‘Exercise Selfie with Family’ is Wellbeing Day for the employees rolled out each week to motivate to take a break from the ‘Work from employees Home’ monotony and connect with their families

The CFitO connects with employees’ families to answer queries and guide them on the precautions to be taken to prevent COVID-19

The CFitO, along with an Employee Assistance Programme A photography cohort has been psychologist, are extending formed for employees to learn new counselling services to employees, techniques and follow their passion in addition to hosting webinars on mental health-related topics

Two slots of two-hours each are available for employees to reach out to the Chief Fitness Officer directly

SUPERIOR CUSTOMER EXPERIENCE

PLANT HEALTH AND SAFETY

Risk-based approach to prevent safety incidents during plant shutdown and start-up

The avenues of no-touch tyre service and car disinfection are being explored to provide a hasslefree customer experience

Prepared Plant Start-up Manual comprising of Safe Start-up SOP, government orders, Pandemic Checklist and COVID-19 suspect handling and contact tracing procedure, and ensured compliance through daily inspections

CEAT is exploring new business models like online buying and doorstep fitment and fleet advisory services
Introduced the GoSafe S95 inspections masks with formidable six-layer filter protection, having soft antiAudio-visual training module bacterial fabric, microbe protection prepared on precautions to be and consisting of small particle taken at home and the workplace filters for added safety

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CEAT LIMITED | ANNUAL REPORT 2019-20

Management Discussion and Analysis

CEAT, established in 1958, is one of the largest tyre manufacturers and is one of the fastest growing tyre companies in India. For the year 2020, CEAT ranked 35[th] amongst India’s 100 best companies to work for by the Great Place to Work[®] Institute and was recognised as one of the best companies amongst the auto and auto component industry category.

has 6 (six) plants in India. CEAT also has a manufacturing facility in Sri Lanka through its overseas joint ventures. The Company is working on expanding its manufacturing capacities across product categories for 2-Wheeler tyres in Nagpur, Commercial Vehicles Radial tyre plant in Halol and Off-Highway tyres in Ambernath.

CEAT produces best-in-class, high performance tyres for a wide range of vehicles, including tyres for 2 / 3 Wheelers, Passenger Vehicles and Utility Vehicles, Commercial Vehicles and Off-Highway Vehicles and produces over 35 Million tyres in a year. Replacement, Original Equipment Manufacturing (OEM) and International Business segments accounted for 61%, 26% and 13% of CEAT’s revenue, respectively, in FY 20.

CEAT has dedicated state-of-the-art R&D centres in Halol, Gujarat and Frankfurt, Germany. Built on the corporate purpose of ‘Making Mobility Safer & Smarter. Every Day.’ CEAT is committed to innovate, rebuild and help millions of vehicles travel safely.

Currently, CEAT’s footprint spans over 100 countries across the world. CEAT has plants in Nashik, Mumbai, Halol, Ambernath, Nagpur and with commencement of operations in the Chennai plant in February 2020, CEAT

6,66,833 Net Sales ( J in Lacs) (Consolidated)

10.93% EBITDA Margin (Consolidated)

Ranked 35[th] amongst India’s 100 best companies to work for by the Great Place to Work[®] Institute

Global Economy

Global economy and trade continued to maintain a slow growth trajectory until mid-January 2020 when China recorded the initial cases of COVID-19 virus. Pre COVID-19, the world GDP grew by 2.9% in 2019. The uncertainties surrounding the US-China trade deal for most part of 2019 had a negative bearing on business sentiment globally. UK continued to hold post-Brexit trade discussions with the EU, in a challenging scenario. Since the onslaught of COVID-19 in China, the cases grew manifold across continents, thereby disrupting operations of thousands of businesses and lives of millions.

The Fed rates, proxy for the US economic outlook, witnessed three downward revisions in 2019, to the tune of 75 bps. This shed light upon the Federal Reserve’s concerns on the global slowdown’s impact on the US Economy, which made them adopt a conservative approach by way consistent cuts which continued in FY 20, witnessing a further downward revision of 150 bps in March 2020.

The COVID-19 pandemic has affected the core fundamentals of global economies with disruptions in global supply chains and international trade. The widespread shutdown in operations across nations and disruption of normal life has led to muted earnings’ visibility for corporates across the spectrum, which in turn has led to hiring freeze, pay cuts and job losses depending upon the sector and the extent of impact. While the Central Banks of most nations have stepped in to provide monetary relief to cushion the impact, this will have to be the first of many measures required to return to business as usual scenario.

Outlook

Economies around the world continue to fight the COVID-19 pandemic by enforcing stringent protective measures and announcing fiscal packages for recovery and revival. Given the layoffs by companies across developed and developing economies, private consumption is expected to witness corresponding decline. According to IMF, the developed markets are expected to witness higher disruption as the GDP decline is slated at 8.0% vis-à-vis decline of 3.0% forecasted for emerging markets, in 2020. The global GDP growth is expected to surpass pre-COVID levels in 2021, with current projection at 5.4%.

Emerging markets are expected to drive recovery at 5.9% with developed markets expected to grow at 4.8% in 2021.

Global Growth

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%
Actual Projections
Particulars 2019 2020 2021
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World	2.9	-4.9	5.4
EmergingMarkets	3.7	-3.0	5.9
Advanced Economies	1.7	-8.0	4.8
Euro Area	1.3	-10.2	6.0
US	2.3	-8.0	4.5
Japan	0.7	-5.8	2.4
UK	1.4	-10.2	6.3
China	6.1	1.0	8.2

Indian Economy

The Indian GDP growth witnessed a declining trend in FY 20. While the GDP grew by 5.2% in Q1 FY 20, the rate declined by 82 bps in the second and a further 34 bps in the third quarter. GDP grew by 3.1% in Q4 FY 20, a further decline of 99 bps over the previous quarter. Slowdown in the manufacturing and construction sectors coupled with muted demand growth from consumers overall, led to the 11-year low GDP growth rate figure in the fourth quarter. Big-ticket discretionary spend i.e. the auto sector also witnessed a challenging year demand-wise across the passenger and commercial vehicle segments, which led to multiple instances of ‘production halts’ during the year.

The Government introduced several initiatives during the year in its efforts to revive the economy and boost market sentiments and global confidence in India as a stable investment destination. These include H 70,000 Crores earmarked for re-capitalising public sector banks as a liquidity enhancement measure. H 1,00,00,000 Crores allocated for infrastructure spend. And more importantly, the reduction in corporate tax rate from 30% to 22%; the benefit of which is yet to reflect in the economy given the natural lag of a few quarters and the COVID-19 impact. Interest rates reduced as the RBI reduced the Repo Rate by 160 bps since April 2019, including the latest revision of 75 bps in March 2020. On the foreign investment front, FY 20 ended with a net H FPI outflow of 27,529 Crores compared to the net outflow of H 38,931 Crores in FY 19. The net negative position in the recently concluded financial year was due to heavy selling by FPIs in the month of March 2020.

CPI inflation maintained an upward trajectory from the beginning of the fiscal year. The rate for the month of March 2020 was 5.84% compared to 2.99% in April 2019. This significant rise in inflation is attributable to the impact of offseason rainfall on agricultural output, leading to spike in prices of essentials.

India GDP Growth Rate (%)

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FY 16 FY 17 FY 18 FY 19 FY 20
GDP Growth
8.0 8.3 7.0 6.1 4.2
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Source: The Ministry of Statistics and Programme Implementation (MOSPI)

5.9%

Emerging markets are expected to drive recovery at 5.9% in 2021.

Source: IMF World Economic Outlook June 2020

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CEAT LIMITED | ANNUAL REPORT 2019-20

Outlook

India entered FY 21 with a projected GDP decline of 4.5% for the year 2020, according to IMF. This factors in the impact of global recession phase the world economy is on the verge of entering, on India. The imposed lockdown on account of COVID-19 pandemic impacted import of key raw materials for manufacturing processes in India and export of finished goods to countries worldwide.

At the ground level, the reduced income in the hands of the mid-to-low income groups is expected to impact their loanrepayment capabilities, which will put pressure on the asset quality of the NBFCs and micro-lenders.

On a positive note, India has further moved up 14 places to the 63[rd] position among 190 nations in World Bank’s ease of doing business ranking. The reduction in corporate taxation is further expected to fuel investments in manufacturing setup, thereby leading to job creation and eventual transgression into increased industrial and retail consumption.

Although the IMF expects the growth rate to assume its normal path in 2021 with an estimated growth rate of 7.4% for India, a lot would depend upon the global and domestic developments.

Global Automobile Industry

The year 2019 was a challenging year for the global automobile industry which witnessed production cuts across facilities to align the inventory level with muted passenger and commercial demand.

Global sales of Passenger and Commercial vehicles declined by 4.0% Y-o-Y in 2019 compared to 0.6% Y-o-Y decline witnessed in 2018. A total of 91,296,738 units were sold in 2019, across classes of vehicles. Over 2010-19, de-growth was witnessed only in 2018 and 2019. This highlights the fact that the slowdown in 2019 was just a continuation of the minor signs of stress which were visible in 2018. This degrowth was primarily driven by Y-o-Y sales decline witnessed in Turkey (-23.3%), Argentina (-47.2%), Australia (-7.8%), China (-8.2%), India (-13.3%), Iran (-31.7%) and Thailand (-7.3%) partially negated by growth in key markets like Germany (5.1%), Brazil (12.9%) and Saudi Arabia (31.0%).

Key Trends in Global Automotive Industry

The R&D think-tank of global OEMs has laid emphasis on technical innovations, in the recent past. The use of Big data, Cloud Computing, Artificial Intelligence (‘AI’) and the Internet of Things (‘IoT’), has enhanced connectivity and automation in a modern vehicle.

In a bid to improve customer engagement and retention, the automobile manufacturers are offering ancillary services like leasing, usage-based vehicle insurance, automation in new finance plans and car health tracker, to complete their basket of offerings.

Connected Vehicles

With the advancement of technology in personal mobility, OEMs are focusing on R&D with respect to aspects or parts

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of the vehicle where the use of sensors will enhance the level of safety while driving, by providing key information to the driver on various parameters. Technologies like lane-assist, parking sensors and blind-spot detection systems have already made way into the passenger vehicle segment.

Autonomous Vehicles

The sales of autonomous vehicles are expected to grow at a CAGR of 43% between 2025 and 2035, from 0.6 Million units to 21 Million units. While the long-term targets in this space should remain in place, the short to medium term targets could witness downward revisions due to the slow-down.

Shared Mobility

The global Robotaxi fleet market is expected to be worth at least USD 2 Trillion by 2030. In 2018, Indian shared mobility market was valued at USD 630.7 Million and with a CAGR of 27.6% over the next 5 years from 2019 to 2024, is expected to attain the USD 3.5 Billion mark. This is expected to be driven by the intent to reduce congestion in urban areas caused due to rise in daily commuters. The cost of shared mobility is expected to be slashed from USD 3 per mile to USD 1 per mile by 2025, with the aid of autonomous driving.

Electric Vehicles

More than 2 Million units of electric vehicles were sold in the year 2018. This figure is expected to attain the 10 Million mark in 2025 and further to 28 Million in 2030. China is expected to account for 48% and 34% of Passenger EV sales market, in the respective years. The European markets are expected to outpace the EV growth rate in US due to stringent fuel economy regulations in the EU. APAC region EV growth will shadow that of the advanced economies due to the slower adoption rate and preference for electrification of two and three wheelers, especially in the context of markets like India.

Outlook

Global auto sales witnessed a downward revision of 160 bps to a degrowth rate of 2.5%, for the year 2020, accounting for the impact of the pandemic. The projections for the Chinese, West Europe and US markets remain negative with the only

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exception of Japan, which is expected to witness a modest growth in 2020 driven by 0.4% growth in Light Vehicle sales. Overall, global auto sales are expected to register a growth rate of 1.5% in 2021.

Sustained efforts are being made by the passenger car makers around the globe to revive demand and strengthen relationship with existing customers by extending warranties and digital fulfillment of orders. While it may take a few more months for markets in Europe, Latin America and Middle East to gain momentum and get back on its usual course, the auto ancillary sector including tyres and auto spareparts should witness faster recovery as any delays in new purchases would be replaced with overhaul of the existing vehicle in terms of necessary upgrades.

Indian Automobile Industry

The FY 20 was a turbulent year for the Indian auto industry as it witnessed production shutdown announcements by leading OEMs between July and September 2019.

In line with the global effort to arrest the spread of COVID-19, all OEMs in India announced suspension of production activities w.e.f. March 22, 2020 in adherence to Government directives, until the end of the month, subject to further extensions.

These shutdowns had a negative impact on the production and the Indian auto industry witnessed a Y-o-Y decline of 14.73% during the period April-March 2020. The number of all vehicles produced during April-March 2020 stood at 2,63,62,284 vis-à-vis 3,09,14,874 produced during the previous year. The Y-o-Y production decline in the month of March 2020 was 33.61%, attributable to the shut-down.

Despite the positive stimulus in terms of reduction in the borrowing rate for end customers along with the deferral of one-time vehicle registration hike, the industry witnessed Y-o-Y decline in sales in FY 20, across classes of vehicles.

In addition to the H 6,000 Lacs farm income support announced in the union budget, which now encompasses all farmers, the reduction in income tax rates is expected the boost availability of funds in the hands of people across

income groups, for discretionary spend, which is expected to benefit the auto sector. The additional tax deduction to the tune of H 1.5 Lacs on loans taken for purchase of Electric Vehicles, should help OEMs manufacturing EVs.

Also, the Government’s announcement as part of the budget to support auto component manufacturers in the areas of technology upgradation and R&D, is expected to benefit CEAT and the auto-ancillary sector overall.

Domestic Sales

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Particulars FY 20 FY 19 % Change
Passenger 27,75,679 33,77,389 -17.82
Vehicles
Commercial 7,17,688 10,07,311 -28.75
Vehicles
2-Wheelers 1,74,17,616 2,11,79,847 -17.76
Tractors 7,81,065 8,78,476 -11.1
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Source: SIAM; *Tractor and Mechanization Association (TMA)

Outlook of Indian Automotive Industry

For the first time in the history of the Indian automobile industry, the major 2W, PV and CV manufacturers have reported nil domestic sales in the month of April 2020. Having said that, the automobile sector including the ancillary suppliers are chalking out blueprints to set operations on the path towards normalcy.

Bharat Stage (BS) VI emission norms which come into effect from April 1, 2020, will bring about some key changes in the Indian automotive landscape. While the higher cost of ownership due to rise in prices of compliant vehicles and fuel is a given the consumers will also have fewer models to pick from as not all models from the OEMs’ product line- up will witness a revamped BS-VI compliant model.

Government’s announcement to support auto component manufacturers in the areas of technology upgradation and R&D, is expected to benefit CEAT.

Global Tyre Industry

The Global Tyre market clocked a volume of 3.2 Billion Units in 2019. The market grew at a CAGR of 4% between 2014 and 2019. The global growth in sales to OEMs was partially driven by the average annual growth rate of 2.7% in global automotive sales from 2014 to 2017 with 2018 and 2019 witnessing degrowth. In value terms, the global tyre Replacement market is slated to grow at a CAGR of 1.8% from USD 101.7 Billion in 2019 to USD 113.1 Billion in 2025. The driving factors behind this expected growth are enhanced average life of vehicles, steady growth in distance covered by vehicles per year and prioritising vehicle maintenance and safety.

The Global Off-the-Road (‘OTR’) Tyre market stood at USD 19 Billion in 2019 and is expected to scale-up to USD 31 Billion by 2025. This growth is expected to be fueled by

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CEAT LIMITED | ANNUAL REPORT 2019-20

enhanced construction and mining activities along with mechanisation of agricultural activities, all of which will boost the sales of off-road vehicles, eventually benefitting (‘OTR’) tyre suppliers.

While Europe overall witnessed 0.5% growth in vehicle sales driven by growth in Germany, the US and Chinese market sales contracted by 1.3% and 8.2%, respectively. While the near-term outlook in these markets have a negative bias due to the on-going pandemic, recovery to healthy growth levels is expected in the medium-term, and tyre sales growth to OEMs in these markets are expected to align with auto sales.

The European green tyre market is expected to grow at a CAGR of 14% between 2019 and 2024, backed by growth in vehicle sales and local government regulations pertaining to tyre energy labelling. The use of renewable light-weight materials in the manufacturing process of green tyres, thereby reducing the overall weight of the vehicle leading to fuel efficiency and lower rolling resistance.

The industry volume is expected to attain the 4.0 Billion mark by 2025, growing at a CAGR of 3.7%. The attainment of this figure would depend on the growth rate recorded by OEMs during the forecast period. Given the production cuts by both tyre manufacturers and OEMs and muted demand witnessed in short term due to negative impact on personal and commercial income, global market expansion is expected to be hampered. Despite the near-term hurdles, demand for passenger vehicles and commercial vehicle movement are poised to maintain upward trajectory in the medium-to-long term in the Chinese, Indian, Japanese and South Korean markets, thereby leading to growth in OEMs and Replacement tyre market sales. Tyre manufacturers will also have to keep investing in R&D, specifically to develop tyres for electric vehicles which tend to be more demanding on their tyres, given the difference in torque profile vis-à-vis an ICE powered vehicle.

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Outlook

COVID-19 has impacted the demand for tyres by OEMs as they work on an inventory-based model. In the Replacement market, while the passenger segment has witnessed maximum impact, gradual demand recovery has been witnessed in the global markets especially in the Truck Logistics and Agriculture segment, as they are linked to the essential services.

CEAT continues to work closely with distributors in international markets to understand the latest developments and act on business opportunities, when presented. As of May 2020, most of the vital markets are witnessing a decline in COVID-19 cases and community spread is stabilising, resulting in gradual re-opening of the economies worldwide.

Indian Tyre Industry

The decline in demand from OEMs in FY 20 can be attributed to the average decline of 14.7% Y-o-Y in the production of motor vehicles and trailers between April and March 2020, especially in the months of August, September and October 2019 which witnessed Y-o-Y declines of 25%, 26% and 30%, respectively. The reduced output from OEMs was an outcome of muted market demand scenario for automobiles and resulting drop in tyre requirements of OEMs. The month of March 2020 witnessed complete production shut down for a period of 10 days on account of nationwide lockdown due to COVID-19 pandemic.

While the launch of high-demand SUVs managed to partially off-set the declining sales figures in the Passenger Vehicle segment, sales of commercial vehicles declined by 28.8% Y-o-Y in FY 20, leading to industry level decline in TBR segment tyres sales. While the 8% increase in rubber prices between April 2019 and January 2020 exerted some pressure on operating margins during the year, downward correction in NR price over the next two months, partially offset the negative impact on margins.

Although there were industry level headwinds in FY 20 in terms of rise in inputs costs and muted demand, all the major manufacturers continued to invest in R&D with the sole intent of making available the best quality product with the latest cost-saving technology to its commercial partners and endconsumers.

Production

While tyre production witnessed steady growth over the past few years mirrored the growth drivers in the auto sector with OEMs focusing on new launches and Replacement market growing at a healthy rate, the headwinds in terms of demand slowdown leading the production cuts in the first half of FY 20 coupled with COVID-19 impact towards the end of the fiscal year, have stalled the steady progress. Although FY 21 has begun with a negative outlook, the Company remains optimistic about production activity recovering to desired levels from FY 22 onwards.

Type Production (in Mn units)

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FY 16 FY 17 FY 18 FY 19 FY 20
Source: ATMA (FY 20) - Indian Tyre Industry: Production & Export Statistics
Exports
The revenues from exports have increased steadily over the
past few years. The Indian tyre manufacturers continued
to benefit from the anti-dumping duties imposed by US on
China-manufactured tyres along with the European Union
which imposed the same in October 2018.
Revenues from Exports ( H in Crores)
FY 16 FY 17 FY 18 FY 19 FY 20
152 167 178 192 177
3,408 3,659 3,512 3,944 4,896
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The revenues from exports have increased steadily over the past few years. The Indian tyre manufacturers continued to benefit from the anti-dumping duties imposed by US on China-manufactured tyres along with the European Union which imposed the same in October 2018.

Source: ATMA (FY 20) - Indian Tyre Industry: Production & Export Statistics

Imports

Further duties were imposed on TBR imports from China in June 2019, over and above the ones made effective from September 2017. As highlighted earlier, any favourable outcome from the probe into the imports from South-East Asian markets, will further reduce overall imports which have steadily declined over the past few years.

Tyre Imports ( H in Crores)

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FY 16 FY 17 FY 18 FY 19 FY 20
3,250 3,282 3,098 2,995 2,612
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Source: ATMA (FY 20) - Tyre Imports into India

Raw Material Trends

Natural Rubber

Global production of Natural Rubber (‘NR’) marginally declined by 1% between January and December 2019 vis-à-vis corresponding period in 2018. NR production by Association of Natural Rubber Producing Countries (ANRPC) stood at 13.76 Million MT in 2019 as against 13.86 Million MT in 2018. Global consumption in 2019 was 13.7 Million MT in 2019, mirroring the global output.

Natural rubber production in India increased by 9% in FY 20 compared to the previous season. Consumption, however, dropped by 6% for the said period. Imports in India during this period declined by 20% compared to corresponding period of previous fiscal due to subdued demand in the automobile sector. The price of NR (RSS 4 grade) in India averaged H 135 / Kg in FY 20 as against H 125 / Kg registered during the previous fiscal.

NR price ( H per kg)

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FY 16 FY 17 FY 18 FY 19 FY 20
113 135 130 126 135
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Source: ATMA, NR Bulletin

Carbon Black

Carbon black is one of the key raw materials in the manufacturing process and is used as a filler in rubber products, constituting 25% of the product weight. The global carbon black market stood at USD 12.1 Billion in 2019 and it expected to grow at a CAGR of 3.5% from 2020 to attain the level of USD 14.9 Billion in 2025.

Like natural rubber, demand for carbon black declined in FY 20 due to Y-o-Y decline in tyre production. Although capacity expansion projects by domestic suppliers are underway, further investments are expected to be delayed and work on existing expansion projects will progress at a slow pace until industry demand revives. While FY 21 will be a challenging year, the demand for key raw materials for tyre manufacturing is expected to recover in FY 22, in line with the demand for the end-product.

Indian Budget impact on - Budget 2020 Highlights

The Government announced allocation of H 1,70,000 Crores for investments in transportation infrastructure in FY 21. This move is expected to improve road network, eventually benefitting automobile manufacturers and tyre suppliers.

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Outlook

Indian Tyre Demand is expected to grow by 6-8% between FY 20 and FY 24. On the volume growth front, the tyre industry is expected to witness a CAGR of 4.8% between 2020 and 2025, to attain the level of 245 Million units in 2025. One of the factors backing this growth would be the countervailing duty imposed in June 2019 on the import of new pneumatic radial tyres above 16 inches from China, for a period of five years. If the ongoing investigation by the Directorate General of Trade Remedies (DGTR) on low-cost tyre imports from south-east Asian region yields desired results, it will further boost demand for tyres manufactured by domestic suppliers.

In the short term, there will be reduced number of new launches by OEMs across classes of vehicles which will impact sales to OEMs and with lesser Commercial and Passenger Vehicles on road due to production slowdown and changing work environment respectively, the Replacement market growth will be negatively impacted. CEAT remains optimistic about demand growth recovering to earlier levels in the medium-to-long term, but much depends on the macro level scenario and outlook as the tyre industry demand mirrors economic growth and recovery. With CEAT’s production and supplies put in place to cater to the resurgence in tyre demand, the Company may start witnessing signs of normalcy in the second half of FY 20.

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Business Review

CEAT is one of the most respected and widely renowned brands in the Indian tyre market. In FY 20, it reported a consolidated net revenue from operations of H 6,77,883 Lacs, degrowth by 2.94% Y-o-Y. Revenue contribution from 2-Wheeler, Passenger Vehicles and Off-Highway tyre has increased significantly over the years, from 20% in FY 10 to 52% in FY 20.

CEAT has expanded its production capacity in key focus categories of Two-wheeler, Passenger Vehicle and Truck & Bus Radial (TBR). During the year, production commenced at a greenfield capacity commissioned in Chennai for Passenger Vehicle tyres and at the expanded 2W tyre and TBR facilities in Nagpur and Halol, respectively. The scalingup of operations to attain the optimal production level will be

aligned with the market demand for our product portfolio in the forthcoming time periods.

With the advent of digital technology, CEAT intends to be at the forefront to blend digital advancements with its product innovation and systems. CEAT strives to be a pioneer in the digital space and introduce smart products. CEAT continues to strengthen its relationship with key OEM customers and these sustained efforts have culminated in higher wallet share from OEM customers. CEAT has invested heavily in its R&D capabilities, enabling the Company to reduce its development cycle time frame and customise offerings based on multitude and unique requirements of every target market.

Capacity Expansion

During the year FY 20, CEAT commissioned the initial phase of its greenfield project in Chennai, which has capacity to produce approximately up to 96 lacs tyres per annum of Passenger Car Radial Tyres when all the phases of the project is fully completed. CEAT’s brownfield project in Nagpur is nearing completion of its first phase and the plant is likely to be commissioned in the coming financial year depending on supply and demand conditions. The capacity of the CEAT’s 2-Wheeler Tyre capacity would be approximately 1.7 Crore tyres per annum when the project

CEAT commissioned its greenfield project in Chennai, which has capacity to produce up to 96 Lacs tyres / annum Passenger Car / Utility Vehicle Radial Tyre.

is fully completed. To date, CEAT has made investments in excess of H 2,000 Crore across its expansion projects in Chennai, Halol and Nagpur.

More than H 3,500 Crores has been earmarked for capacity expansion projects and this includes investments made in Halol, Nagpur and Chennai capacity expansion. The remaining investments will be made in a staggered manner over the next 3 years. These projects are being funded through internal accruals and external borrowings. Once commissioned, these capacity enhancement projects will enable CEAT to supply Tyres to meet its growth requirements.

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SWOT Analysis

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Strengths
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Weaknesses
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Strong distribution network Strong R&D team / Best in Class Products

Cost structure

Low OEM share of business in TBR segment and premium PC segment

Strong OEM presence in 2-Wheeler

Strong brand association with safety

Culture of collaboration and transparency

New capacities to capture growth

Process excellence – high level adoption of Total Quality Management

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Opportunity
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Threats
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India growth in rural and semi urban markets Emerging Digital Business Models Changing mobility landscape Global supply chain shift from China

Demand disruption due to global pandemic

Competitive intensity in 2-Wheeler

Commodity price fluctuations

Margin squeeze due to oversupply

Currency fluctuation and non-tariff barriers destabilising International business

existing markets in FY 20, CEAT has entered the markets of Australia, UK, Belgium, Brazil, Chile and Nicaragua with its passenger car products. CEAT has also entered the US market with the products in Truck Radial segment. CEAT launched its 2-Wheeler products in Nigeria which is the world’s largest consumption market for 2-Wheeler.

International Business

CEAT is one of the major exporters among India’s tyre manufacturers with sales to 100+ countries worldwide. CEAT has a stratified export market divided in seven clusters. This identification of clusters has helped CEAT better understand customer requirements and accordingly invest in R&D to develop market-specific products. CEAT continues to consolidate its position in Bangladesh and Sri Lanka through Joint Ventures (JVs) with strategic partners.

CEAT’s product series in the Passenger Car, Winter, Summer, All-Season, Ultra High Performance (UHP) and Van categories launched in Europe have met the stringent performance requirements of European markets. CEAT is well-placed to maximise available opportunities to become one of the leading players in the global market with its highrange of premium products.

CEAT’s core focus areas and growth drivers are the Twowheeler, Passenger Car Radial and TBR tyre segments. CEAT continues to focus on European markets to expand its footprint. In addition to enabling deeper penetration in the

Replacement Business

3,400+ Dealers 580+

300+ 311 Distributors servicing over Exclusive CEAT Shoppes and 12 35,000 sub-dealers CEAT tyre service hubs 400+ Multi-brand outlets and shop-inshop concepts

Districts covered

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Digital Initiatives to improve consumer experience

Distribution 2.0

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Initiatives for
expansion of
Replacement
Market
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CEAT adopted a 360-degree approach to take distribution to the next level. To retain competitive advantage, CEAT leveraged technology to monitor and ensure service at the sub-dealer level.

Online warranty registration and complaint resolution for consumers have been enabled through the dealer portal, resulting in higher level of engagement with end consumers and reducing the time required to service consumer complaints.

Expansion of CEAT Shoppe in major geographies

Digital Initiatives to improve engagement with channel

CEAT undertook a focused approach towards improving the footprint of exclusive stores in key geographies that accounts for a bulk of Passenger car tyre sales.

Adoption of the dealer portal was driven to develop a higher level of engagement with the channel partners. Bulk of the transactions have now shifted to this medium and most of the orders received are online through the dealer portal.

workers having moved back to their native homes, and fear of virus spread being there, production for Q1 is likely to operate with lesser people available. There will be significant changes in factories’ way of working to prevent any virus infection.

Technology and R&D

CEAT has developed technologies in the areas of Green Technology, Nano Technology, Advanced Material and Novel Processing. Basic research has developed new technologies like new epoxy resin, new accelerator and nano materials for tyre compounds which adhere to enhanced grip requirement and standards, Rolling Resistance (‘RR’) and noise. Development of advanced biomaterials and biodegradable wrap for packaging, aligns with our intent of operating in a sustainable manner.

CEAT has brought renewed focus on efficiencies, cost, innovation and market share gain in categories that are expected to witness demand growth.

Quality Assurance System

Quality Assurance (QA) in CEAT encompasses the entire spectrum of the value chain, starting from raw material suppliers, product development to manufacturing operations, sales and customer quality. The QA function’s role is to establish a QA system and process to ensure heightened customer service by meeting their requirements. The management is made aware of the critical quality indicators across the business units, by the QA function.

Please refer to the Intellectual Capital section for a detailed explanation of the product development initiatives across business segments, CEAT’s emphasis on digitisation and sustainable approach adopted by the core team.

Business Outlook

FY 21 started amid COVID-19 pandemic which disrupted economic activities across continents. The lockdown impacted movement of people and goods (other than essential goods). Consumers continue to avoid large, discretionary purchases because of looming uncertainties. Demand situation post COVID-19 lockdown continued to be uncertain. In short to medium term, global automotive sales may decline substantially. The impact is particularly fierce for automotive sector, given China’s importance as a leading source for both components and vehicle sales.

A cross-functional Quality Council has been setup to cater to the following customer requirements:

To have an outside-in view of the stated and unstated customer needs and provide strategic direction to proactively develop products and services.

To review adequacy of systems and processes related to critical and major customer complaints and further enhance its efficiency to enable early detection and prevention of causal factors.

For the tyre sector, the after-market segment sales would see a gradual uptick as regions which are less impacted start opening. Export sales is likely to improve from Q2 onwards as countries start opening post lockdown and demand picks up. In near term, customers are likely to prefer personal vehicles over Public Transport, however, the average distance travelled per day, specifically in metros, could come down as new trends like work from home and remote meetings will become a norm.

To ensure functional alignment with an intent to achieve the stated objectives of CEAT Quality Assurance.

The cross-functional approach of QA function establishes proactive quality control through implementation of zerodefect workstation, Statistical Process Control (SPC) and Critical-to-Quality (CTQ) audit systems.

The QA department prepares the organisation for OEM audits and approvals and interactions with all OEM customers pertaining to current and future projects. With the backing

On the manufacturing side, factories will start off with social distancing norms and attendance rules. Capacity utilisations are likely to pick-up only over a time. With associates and

of CEAT’s robust QA infrastructure, the Company continues to engage with domestic and international OEMs and facilitate approvals, thereby strengthening our market position.

CEAT builds upon the inputs and opinions shared by the customers and dealers in its product development and testing process. Extensive and comprehensive benchmarking activities are undertaken to understand the competitors’ offerings and subsequently, actions are set in motion to analyse and act upon the findings. Constant improvements in the processes and systems, are at the core of our effective QA system.

Risk Management

The risk management process at CEAT begins with the identification of risks and an assessment of their impact. The assessment is based on past trends and future projection. Thereafter, ways to mitigate these risks are identified and implemented when necessary. Risks, once identified, are periodically monitored, along with emerging risks.

Risks and their mitigation

Mitigation

Business Disruption due to external factors – COVID-19

Impact analysis is being done to evaluate the impact on plans. Revenue and expenditure is being re-worked to ensure minimum possible impact on the business due to the Lockdown and continued disruption. The Company is focussing on Safety of People, Cash and Cost Management and also engaging with Customers.

Business plans are getting negatively impacted due to disruption arising out of COVID-19.

Competition

Mitigation

Rising competition from domestic players and Chinese imports are impacting profitability.

CEAT is focusing on channel expansion, enhanced after-sales service and superior quality of products and warranty offered on them. CEAT is challenging both domestic and foreign players with its deep domain knowledge, along with technology prowess, branding and reach. Moreover, it has long-standing relations with OEMs, which helps CEAT cut through the competition. CEAT is focusing on sales in profitable segments, developing capacities for new products and entering new markets under premium segments to increase market share.

Mitigation

Radialisation

CEAT is investing in High quality TBR tyres. The Company has recently launched the X3 range. The focus is also on penetrating the overseas markets to fully utilise its bias tyre capacity. CEAT is also increasing its radial capacity to leverage the increasing radial demand.

Increase in the TBR tyre segment may impact volumes and result in a degrowth of the bias segment.

Mitigation

High investment risk

CEAT is regularly carrying out a sensitivity analysis. Investments are being planned in a phased manner based on the market size and our share of business.

Increase in planned capital expenditure and investments may impact profit margins.

Mitigation

Raw material price volatility

Fluctuating raw material prices CEAT has been strengthening supplier relations to build mutually beneficial longcan affect profit margins term associations. Besides, CEAT continues to explore a wider supplier base to considerably. reduce dependency on the current ones.

Cyber security risk

Mitigation

CEAT is periodically doing an assessment of any cyber risks to its system and taking preventive and detective measures to mitigate it. Help from external consultants is also being taken to secure CEAT systems from cyber-attacks. Business Continuity Plan is being developed for all IT platforms.

Increase in threat of attacks on CEAT IT systems and data.

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Environment, Occupational Health and Safety

Internal Control Systems and their adequacy

CEAT’s constant endeavour is to create a safe working environment for all its employees. It continues to remain committed towards reducing worksite accidents and occupational illnesses by following a proactive and systematic approach to identify hazards and risks. CEAT takes appropriate measures by training employees and contractors to follow safety measures. Moreover, it functions on the principle of ‘pollution prevention instead of control and complies with all environmental laws. Select measures on environment conservation front include reduction of carbon emission in mixing area, reduction in power and water consumption, electricity and fuel saving initiatives and tree plantation drives.

CEAT has a well-placed, suitable and adequate internal control environment, commensurate with the size, scale and complexity of its operations. This environment provides:

Assurance on orderly and efficient conduct of operations
Security of assets
Prevention and detection of frauds and errors
Accuracy and completeness of accounting records and timely preparation of reliable financial information

First line

Please refer to the Natural Capital section for a detailed explanation of the ‘Environment Protection’ measures implemented by CEAT the Human Capital section for a detailed explanation of the ‘Occupational Health and Safety’ measures emplaced by CEAT.

Management control: The line managers are directly responsible for ensuring the design and effective implementation of the Internal Controls Framework in CEAT. The line manager carries out day-to-day operations within the boundaries defined by CEAT through its various policies and procedures, including the following:

Human Assets

Employee Code of Conduct

CEAT has been awarded the Deming Award for its Total Quality Management (TQM) workplace philosophy. The concept of ‘employee well-ness’ was further consolidated in FY 20 with the addition of the new dimension of ‘Quality of Life.’

Whistle Blower Policy
Entity Level, Operating Level and IT General Controls
Delegation of Authority Matrix
Policies and Standard Operating Procedures

Please refer to the Human Capital section for a detailed explanation of the initiatives launched to improve human and workplace productivity, workforce learning and development and up-skilling programmes and similar measures.

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Second line

Discussion on Financial Performance and Key Financial Ratios

The second line of defence by the Senior Management of CEAT is achieved through the following:

As required pursuant to the amended Listing Regulations, following are the key ratios having significant changes i.e. change of 25% or more as compared to the previous financial year:

Executive Committee (ExCo) meeting chaired by the Managing Director
Operating Committee (OpCom) meeting chaired by the Chief Operating Officer

Interest Coverage Ratio

Operation Reviews (MOR) by respective functional / business managers
Price Earnings Ratio

Details of key financial ratios including the above and change in return on net worth, as compared to the immediately previous financial year along with detailed explanation thereof forms part of discussion on financial performance, appended to this Report.

Third line

The third line of defence is the Governing Board and the Audit Committee. This independent assurance and oversight of internal controls is achieved through the following governing bodies:

Cautionary Statements

Board of Directors

Statements in the Management Discussion and Analysis describing CEAT’s objectives, projections, estimates and expectations may be ‘forward-looking statements’ within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence CEAT’s operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in government regulations, tax laws and other factors such as litigation and industrial relations.

Audit Committee of the Board of Directors - Their oversight activities mainly include:
Reviewing financial reports and other financial information, and communicating with the regulators
Reviewing CEAT’s established systems and procedures for internal financial controls, Governance and risk management
Reviewing CEAT’s statutory and internal audit activities
Risk Management Committee

The above three lines of defence are further strengthened by independent audits such as statutory audit, tax audit, cost audit and secretarial audit.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Discussion on Financial Performance and Key Financial Ratios

The standalone financial statements, the analysis whereof is presented hereunder and in the following pages pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, have been prepared in accordance with the requirements of the Companies Act, 2013 and applicable Ind AS issued by the Institute of Chartered Accountants of India. The Management of CEAT Limited accepts the integrity and objectivity of these financial statements as well as various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements are reflected in a true and fair manner and also reasonably presents the Company’s state of affairs and profit for the year.

Balance Sheet

Property, plant and equipment, capital work-in-progress, intangible assets, intangible assets under development and right-of-use asset (Net Block) (Note 3, 4 and 5)

( H in Lacs)

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As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Property, plant and equipment 3,63,503 2,78,574 84,929 30%
Capital work-in-progress 91,686 71,889 19,797 28%
Intangible assets 8,359 6,057 2,302 38%
Intangible assets under development 1,692 3,055 (1,363) (45%)
Right-of-use asset 10,185 - 10,185 100%
Total 4,75,425 3,59,575 1,15,850 32%
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Property, plant and equipment has increased due to the following reasons:

During the year, the Company has capitalised property, plant and equipment of H 1,04,965 lacs mainly consisting of Chennai, Halol and Nagpur plants as reduced by depreciation of H 19,727 lacs on property, plant and equipment for the year.

Capital work-in-progress mainly includes the project capital expenditure incurred at Halol, Nagpur and Chennai plants.

The Company has adopted Ind AS 116 “Leases” effectively April 01, 2019 resulting in recognition of right-of-use asset aggregating H 13,085 lacs. Right-of-use assets are arising out of outsourcing arrangements which consists of both buildings and plant machinery used for production of goods under such arrangements.

Investments (Note 6)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Non-current investments
Investments in subsidiaries and associates 31,598 31,299 299 1%
Other non-current investments 424 2 422 20761%
Total 32,022 31,301 721 2%
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The Company has made additional investment in associate viz. TYRESNMORE Online Pvt Ltd – H 299 lacs. It has also invested in E-Fleet Systems Private Limited - H 400 lacs and Greenzest Solar Private Limited - H 22 lacs.

Loans (Note 7 and 14)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Non-current loans 473 408 65 16%
Current loans 5,032 5,800 (768) (13%)
Total 5,505 6,208 (703) (11%)
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Non-current loans mainly comprises of security deposits given for warehouses taken on rent.

Current loans comprises of loan to CEAT Specialty Tyres Limited, a wholly owned subsidiary, intended to finance their working capital requirements.

Other financial assets (Note 8 and 15)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Other non-current financial assets 460 181 279 154%
Other current financial assets 2,161 3,525 (1,364) (39%)
Total 2,621 3,706 (1,085) (29%)
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Other non-current financial assets have increased due to unrealised gain on revaluation of hedge contracts H 332 lacs (previous year loss) offset by reduction in margin money deposits by H 53 lacs.

Other current financial assets have decreased mainly due to receipt of interest from Income tax authorities H 2,594 lacs which is offset by the unrealised gain on revaluation of hedge contracts H 495 lacs (previous year loss) and increase of H 597 lacs mainly in balances due from group companies and rental deposits given for godowns.

Other non-financial assets (Note 9 and 16)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Other non-current non-financial assets 4,856 12,520 (7,664) (61%)
Other current non-financial assets 11,274 11,964 (690) (6%)
Total 16,130 24,484 (8,354) (34%)
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Decrease in non-current non-financial asset is mainly due to adjustment of capitals advances against final supply of assets for Halol, Chennai & Nagpur plant expansion.

Other current non-financial assets comprise advance to vendors, prepaid expenses and balances with government authorities.

Inventories (Note 10)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Raw Materials 31,512 37,287 (5,775) (15%)
Work-In-Progress 3,318 3,273 45 1%
Finished Goods (including stock-in-trade) 49,950 52,580 (2,630) (5%)
Stores and Spares 3,170 3,375 (205) (6%)
Total 87,950 96,515 (8,565) (9%)
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Raw material inventory when compared as a measure of the cost of material consumed is equivalent to 33 days as at March 31, 2020 against 31 days as at March 31, 2019 mainly due to plant shutdown as a result of lockdown owing to COVID-19 in March 2020 resulting in lower consumption.

As a measure of the goods sold, the finished goods inventory (including traded goods stock) is stated at 47 days as at March 31, 2020 against 46 days for as at March 31, 2019 mainly due to reduction in sales as a result of lockdown owing to COVID-19 in March 2020.

Trade receivables (Note 11)

Trade receivables (Note 11)
				(`H`in Lacs)
Particulars	As at March 31, 2020	As at March 31, 2019	Change	Change %
Trade receivables	70,466	72,646	(2,180)	(3%)

The receivables position for the current year is at 32 days sales outstanding as at March 31, 2020 as compared to 31 days sales outstanding as at March 31, 2019 mainly due to reduced collections from customers owing to COVID-19 in March 2020.

Cash and cash equivalents (Note 12)

( H in Lacs)

Particulars	As at March 31, 2020	As at March 31, 2019	Change	Change %
Cash and cash equivalents	2,017	5,426	(3,409)	(63%)

The reduction is mainly because of reduction in cheques awaiting bank clearance.

STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Borrowings (Note 20 and 24)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Non-current borrowings 1,40,199 1,00,272 39,927 40%
Current borrowings 16,559 21,431 (4,872) (23%)
Total 1,56,758 1,21,703 35,055 29%
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Non-current borrowings have gone up due to additional medium / long term loan taken during the year H 41,058 lacs for expansion projects.

Provisions (Note 22)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Non current provisions 3,819 3,683 136 4%
Current provisions 12,165 9,985 2,180 22%
Total 15,984 13,668 2,316 17%
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Increase in current provisions is due to the following reasons:

Provision towards warranty by H 1,110 lacs basis higher claims received during the year.

Current borrowing have reduced due to efficient working capital management.

Lease liabilities (Note 4)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Non-current lease liabilities 6,375 - 6,375 100%
Current lease liabilities 4,226 - 4,226 100%
Total 10,601 - 10,601 100%
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The Company has adopted Ind AS 116 “Leases” effectively April 01, 2019 resulting in recognition of lease liabilities.

Other financial liabilities (Note 21 and 26)

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( H in Lacs)
As at As at
Particulars Change Change %
March 31, 2020 March 31, 2019
Other non-current financial liabilities 10,072 461 9,611 2087%
Other current financial liabilities 57,291 58,099 (808) (1%)
Total 67,363 58,560 8,803 15%
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Other non-current financial liabilities has increased mainly due to retention & higher credit period pertaining to Chennai, Nagpur and Halol project capital vendors aggregating H 9,926 lacs.

Other current financial liabilities has gone up due to the following offsetting reasons:

Decrease due to:

Unrealised loss on revaluation of hedge contracts H 3,136 lacs in the previous year (current year profit).
Repayment of capex buyers credit (current maturities) H 1,448 lacs.

Increase due to:

Payables to capital vendors H 1,683 lacs due to expansion in projects viz. Halol Phase III, Nagpur and Chennai projects.
Deposits from dealers H 1,650 lacs.
Provision for gratuity H 2,491 lacs as at March 31, 2020 as compared to H 1,032 lacs as at March 31, 2019 basis actuarial valuation.

Trade Payables (Note 25)

Trade Payables (Note 25)
			(`H`in Lacs)
Particulars	As at March 31, 2020	As at March 31, 2019	Change Change %
Tradepayables	1,17,137	1,03,393	13,744 13%

Increase is on account of increased credit period attributable to improved negotiations with raw material vendors.

Other current liabilities (Note 27)

Other current liabilities (Note 27)
				(`H`in Lacs)
Particulars	As at March 31, 2020	As at March 31, 2019	Change	Change %
Other current liabilities	6,351	8,610	(2,259)	(26%)

Other current liabilities has decreased mainly due to reduction in statutory dues mainly Goods and Services Tax due to reduced sales owing to COVID-19 in March 2020.

Statement of Profit and Loss

The following table sets forth the breakup of the Company’s expenses as part of the Revenue from operations

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( H in Lacs)
% of % of
Particulars 2019-20 Revenue from 2018-19 Revenue from
operations operations
Revenue from operations 6,58,111 100% 6,83,130 100%
Other income 4,134 1% 5,530 1%
Cost of material consumed 3,81,597 58% 4,27,364 63%
Purchase of stock-in-trade 2,120 0% 6,092 1%
Changes in inventories of finished goods, work-
1,458 0% (19,425) (3%)
in-progress and stock-in-trade
Employee benefit expense 50,054 8% 49,195 7%
Finance costs 12,296 2% 6,451 1%
Depreciation and amortisation expenses 25,540 4% 17,430 3%
Other expenses 1,52,352 23% 1,56,151 23%
Exceptional items 2,975 0% 4,424 1%
Profit before tax 33,853 5% 40,977 6%
Tax expense 6,777 1% 12,086 2%
Profit for the year 27,076 4% 28,891 4%
Other comprehensive income for the year, net
2,055 0% (2,988) (0%)
of tax
Total comprehensive income for the year 29,131 4% 25,903 4%
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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

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( H in Lacs)
Particulars 2019-20 2018-19 Change
Gross Margin 2,72,936 2,69,099 3,837
Gross Margin (%) 41.5% 39.4% 2.1%
EBITDA 70,530 63,752 6,778
EBITDA (%) 10.7% 9.3% 1.4%
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As compared to previous year:

Revenue from operations has decreased by 4% due to unfavourable volume. Further, in line with the global effort to arrest the spread of COVID-19, all Original Equipment Manufacturers in India announced suspension of production activities w.e.f. March 22, 2020 in adherence to Government directives. These shutdowns had a negative impact on the production and the Indian auto industry witnessed a Y-o-Y decline of 14.73%. Refer page no 67 and 69.
Gross margin has increased by 1% (in absolute terms) and 210 bps (in percentage terms) on account of reduction of raw material cost and increase in sales realisation.
EBITDA has increased by 10% (in absolute terms) and 140 bps (in percentage terms) on account of improved gross margins coupled with lower expenses.

Revenue from operations (Note 28)

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( H in Lacs)
Particulars 2019-20 2018-19 Change Change %
Automotive Tyres 5,81,122 6,10,967 (29,845) (5%)
Tubes and others 65,910 64,826 1,084 2%
Royalty income 438 441 (3) (1%)
Sale of scrap 3,262 2,909 353 12%
Other revenues 1,125 863 262 30%
Total revenue from contracts with customers 6,51,857 6,80,006 (28,149) (4%)
Government grants 6,254 3,124 3,130 100%
Revenue from operations 6,58,111 6,83,130 (25,019) (4%)
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BU wise sales composition 2019-20

BU wise sales composition 2018-19

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61% Replacement 59% Replacement
13% Export 12% Export
26% OE 29% OE
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Cost of material consumed / finished goods consumed analysis (Note 30 and 31)

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( H in Lacs)
Particulars 2019-20 2018-19 Change Change %
Cost of material consumed 3,81,597 4,27,364 (45,767) (11%)
Purchase of stock-in-trade 2,120 6,092 (3,972) (65%)
Changes in inventories of finished goods, work- 1,458 (19,425) 20,883 (108%)
in-progress and stock-in-trade
Total 3,85,175 4,14,031 (28,856) (7%)
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The raw material prices have decreased during the year. As a result, the cost of material consumed as a percentage of revenue from operations has decreased to 58% for the year as compared to 63% for the previous year.

Raw material consumed 2019-20

Raw material consumed 2018-19

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1,83,860 (48%) Rubber 2,03,292 (48%) Rubber
52,364 (14%) Fabric 66,000 (15%) Fabric
58,459 (15%) Carbon black 63,716 (15%) Carbon black
44,579 (12%) Chemicals 52,504 (12%) Chemicals
42,334 (11%) Others 41,852 (10%) Others
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Movement of changes in inventory is mainly on account of decrease in finished goods stock as compared to the previous year. Inventory of finished goods is H 49,559 lacs as at March 31, 2020 as compared to H 51,751 lacs as at March 31, 2019.

Employee benefit expense (Note 32)

Employee beneft expense (Note 32)
				(`H`in Lacs)
Particulars	2019-20	2018-19	Change	Change %
Employee beneft expense	50,054	49,195	859	2%

Movement in employee benefit expenses is due to regular annual increments which is partly offset by capitalisation of employee cost (refer note 3 foot note 2 for details).

Finance costs (Note 33)

Finance costs (Note 33)
				(`H`in Lacs)
Particulars	2019-20	2018-19	Change	Change %
Finance costs	12,296	6,451	5,845	91%

Increase in finance cost is attributable to increase in borrowings by H 33,607 lacs as compared to previous year for project expansions as offset by increase in interest capitalised. The Company has adopted Ind AS 116 “Leases” effectively April 01, 2019 resulting in recognition of lease liabilities aggregating H 13,085 lacs and it’s corresponding interest aggregating H 1,050 lacs for the year.

Reduction in sales of goods is attributable to lower sales volume of tyres.

Depreciation and amortisation expense (Note 34)

Increase in government grant is mainly due to subsidy received from Government of Maharashtra towards Memorandum of Understanding signed for investment in Nagpur plant.

Other income (Note 29)

Other income (Note 29)
				(`H`in Lacs)
Particulars	2019-20	2018-19	Change	Change %
Other Income	4,134	5,530	(1,396)	(25%)

Other income has decreased mainly due to reduction in interest income (majorly on income tax refund) by H 2,205 lacs as compared to previous year. This is offset by net gain on property, plant and equipment H 429 lacs.

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( H in Lacs)
Particulars 2019-20 2018-19 Change Change %
Depreciation on property, plant and equipment 19,727 16,171 3,556 22%
Amortisation of intangible assets 1,885 1,259 626 50%
Depreciation on right-of-use asset 3,928 - 3,928 100%
Total 25,540 17,430 8,110 47%
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Depreciation on Property, plant and equipment has increased on account of higher capitalisations mainly in Chennai, Halol and Nagpur plants.

Amortisation of intangible assets has increased due to capitalisation of softwares aggregating H 4,187 lacs during the year.

STATUTORY REPORTS

CORPORATE OVERVIEW

VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

The Company has adopted Ind AS 116 “Leases” effectively April 01, 2019 resulting in recognition of right-of-use asset aggregating H 13,085 lacs and it’s corresponding depreciation aggregating H 3,928 lacs.

Other expenses (Note 35)

Other expenses primarily include the following expenses, constituting 86% (Previous year 88%) thereof:

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( H in Lacs)
Particulars 2019-20 2018-19 Change Change %
Conversion Charges 30,265 40,315 (10,050) (25%)
Stores And Spares Consumed 5,907 5,602 305 5%
Power And Fuel 20,734 21,286 (552) (3%)
Freight And Delivery Charges 32,960 32,415 545 2%
Repairs - Machinery 6,463 5,603 860 15%
Repairs - Building 557 598 (41) (7%)
Travelling And Conveyance 3,480 3,489 (9) (0%)
Advertisement And Sales Promotion Expenses 16,096 16,892 (796) (5%)
Professional And Consultancy Charges 5,661 3,160 2,501 79%
Training And Conference Expenses 1,132 1,271 (139) (11%)
Corporate Social Responsibility Expenses 913 1,051 (138) (13%)
Sales Related Obligations 7,035 6,261 774 12%
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Decrease in conversion charges paid to outsourcing vendors during the year was on account of decrease in outsourced volume by 14%.

Increase in professional and consultancy charges due to digitisation initiatives and SAP upgradations.

Freight and delivery charges has increased due to increase in inventory movements.

Exceptional Items (Note 36)

Exceptional Items (Note 36)
Particulars	2019-20	2018-19	Change	(`H`in Lacs) Change %
Exceptional Items	2,975	4,424	(1,449)	(33%)

Exceptional items has reduced due to provision for indirect tax matters H 3,000 lacs and workmen separation expense H 229 lacs made in the previous year as offset by provision towards expenses / losses attributable to COVID-19 H 1,585 lacs.

Tax expenses (Note 23)

Tax expenses (Note 23)
Particulars	2019-20	2018-19	Change	(`H`in Lacs) Change %
Tax expenses	6,777	12,086	(5,309)	(44%)

Effective income tax rate (‘ETR’) for 2019-20 is 20.02% as compared to 2018-19 is 29.49%. The current year’s ETR is lower due to deduction towards research and development expenditure and income tax refund received (pertaining to earlier years).

Cash Flows *

Cash Flows *
				(`H`in Lacs)
Particulars Net cash fows generated from operating	2019-20 92,900	2018-19 53,275	Change 39,625	Change % 74%
activities

Net cash flow from operating activities has increased due to following reasons:

The cash operating profit before working capital changes has increased by H 8,583 lacs mainly to higher depreciation and finance cost.
Decrease in working capital by H 24,087 lacs in the current year as compared to increase in working capital by H 571 lacs in the previous year which is mainly due to reduction in inventories and trade receivables and an increase in trade payables.
Direct tax paid - (Net of refunds) has reduced by H 6,384 lacs due to refunds received during the year.

				(`H`in Lacs)
Particulars	2019-20	2018-19	Change	Change %
Net cash fows (used in) / generated from	(97,404)	(1,05,208)	7,804	(7%)
investingactivities

Net cash used in investing activities has decreased mainly due to increase in dividend and interest received. Further, investment in subsidiaries and others have reduced by H 3,001 lacs and capex reduction (net) by H 4,262 lacs.

				(`H`in Lacs)
Particulars	2019-20	2018-19	Change	Change %
Net cash fows (used in) / generated from fnancingactivities	1,095	50,395	(49,300)	(98%)

Decrease in net cash flows from financing activities is mainly due to decrease in proceeds from long term as well as short term borrowings (net off repayments done during the year). Further, interest payment, lease liabilities (as per Ind AS 116) and dividends (since interim dividend paid) have also increased.

For details, refer cash flow statement

Ratio Analysis

Debtors turnover ratio (times)

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Particulars 2019-20 2018-19
Debtors turnover ratio 11.24 11.70
Debtors turnover ratio is marginally reduced in the current year as compared to previous year.
Inventory turnover ratio (times)
Particulars 2019-20 2018-19
Inventory turnover ratio 7.71 7.87
Inventory turnover is marginally reduced in the current year as compared to previous year.
Interest coverage ratio (times)
Particulars 2019-20 2018-19
Interest coverage ratio 3.72 5.38
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Interest coverage ratio has decreased in 2019-20 as compared to the previous year mainly on account of increase in interest costs.

Current ratio (times)

Particulars	As at March 31, 2020	As at March 31, 2019
Current ratio	0.83	0.95

The marginal decrease in current ratio is primarily due to increase in trade payables mainly due to increased credit period.

Debt equity ratio (times)

Particulars	As at March 31, 2020	As at March 31, 2019
Debt equityratio	0.55	0.46

Increase is mainly due to higher borrowings for capital expansion projects as compared to the previous year. Borrowings have increased by H 33,607 lacs (mainly long term loans).

CORPORATE OVERVIEW VALUE CREATION STATUTORY REPORTS FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Operating profit margin (%)

	Particulars	2019-20	2018-19
	Operating proft margin	10.72%	9.33%

Increase in operating profit margin is mainly due to classification of certain lease expenditure from operating expenses to depreciation and finance cost and lower raw material costs.

Net profit margin (%)

Particulars	2019-20	2018-19
Netproft margin	4.11%	4.23%

Net profit margin has decreased marginally because of higher depreciation and finance cost as offset by lower raw material cost.

Return on net worth (%)

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Particulars 2019-20 2018-19
Return on net worth 9.25% 10.50%
Return on net worth has reduced due to 6% decrease in profit after tax.
Price earning ratio (times)
Particulars 2019-20 2018-19
Price earning ratio 11.76 15.74
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Earnings per share stood at H 66.94 for the year ended March 31, 2020 registering a decrease by 6% as compared to year ended March 31, 2019. Closing share price was lower by 30% as compared to previous year.

Return on capital employed (%)

	Particulars	2019-20	2018-19
	Return on capital employed	10.86%	12.93%

Return on capital employed has fallen due to a decrease in earnings before interest and tax by 5% against which capital employed has increased by 13% (majorly borrowings).

Board’s Report

To,

The Members of CEAT Limited,

Directors of the Company are pleased to present their Sixty-First report, together with the Standalone and Consolidated Audited Financial Statements of the Company for the year ended March 31, 2020.

FINANCIAL SUMMARY AND HIGHLIGHTS

Standalone

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( H in Lacs)
Particulars FY 2019-20 FY 2018-19
Total Revenue 6,62,245 6,88,660
Total Expenses (excluding exceptional items) 6,25,417 6,43,259
Profit Before Taxation 33,853 40,977
Tax expense:
- Current Tax 7,401 9,009
- Deferred Tax charge / (credit) (624) 3,077
Profit for the period 27,076 28,891
Other Comprehensive Income
Items that will not be reclassified to profit or loss:
– Remeasurement gains / (losses) on defined benefit plans (695) (798)
– Income tax relating to the above 243 279
Items that will be reclassified to profit or loss:
– Net movement in cash flow hedges 3,854 (3,792)
– Income tax effect on net movement in cash flow hedges (1,347) 1,323
Total Comprehensive Income for the year 29,131 25,903
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Consolidated

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( H in Lacs)
Particulars FY 2019-20 FY 2018-19
Total Revenue 6,79,934 7,02,351
Total Expenses (excluding exceptional items) 6,48,243 6,62,272
Profit Before Taxation 30,429 37,620
Tax expense:
- Current Tax 7,932 9,400
- Deferred Tax charge / (credit) (509) 3,112
- MAT credit entitlement - -
Profit after tax, non-controlling interest and share of profit from Joint Venture 23,006 25,108
Other Comprehensive Income
Items that will not be reclassified to profit or loss
– Remeasurement gains / (losses) on defined benefit plans (734) (740)
– Income tax relating to the above 245 278
Items that will be reclassified to profit or loss
– Net movement in cash flow hedges 4,369 (4,656)
– Income tax effect on net movement in cash flow hedges (1,347) 1,323
Total Comprehensive Income for the year 25,539 21,313
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In the preparation of financial statements, no treatment different from that prescribed in the relevant Accounting Standards have been followed.

STATUTORY REPORTS

CORPORATE OVERVIEW

VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

During the year under review, on a standalone basis, the Company recorded net revenue from operations of H 6,58,111 Lacs, lower by 4%, compared to H 6,83,130 Lacs of the last financial year. The Company recorded a net profit of H 27,076 Lacs against a net profit of H 28,891 Lacs of the last financial year. The Company’s EBITDA stood at H 70,530 Lacs, an increase of 10.6% over EBITDA of H 63,753 Lacs of the last financial year.

On a consolidated basis, the Company recorded net revenue from operations of H 6,77,883 Lacs, lower by 3%, compared to H 6,98,451 Lacs for the last financial year. The Company H recorded a net profit of 23,006 Lacs, against a net profit of H 25,108 Lacs of the last financial year. The Company’s EBITDA stood at H 74,106 Lacs, an increase of 11.8% over EBITDA of H 66,274 Lacs of the last financial year.

STATE OF COMPANY’S AFFAIRS

The Company continued its focus on the expansion of manufacturing capacities and growing its reach in local as well as global markets. The Company presently has 5 (five) manufacturing facilities at Mumbai, Nashik, Nagpur, Halol and Chennai.

During the year under review, the Company commenced production at greenfield manufacturing facility near Chennai for Passenger Vehicle tyres and at the expanded manufacturing capacity for Truck & Bus Radial (TBR) tyres at existing facilities at Halol. Expansion of the manufacturing capacity of 2-Wheeler tyres at its existing facility at Nagpur is underway.

The Company has 2 (two) R&D centres at Halol, Gujarat and Frankfurt, Germany. The major focus of R&D has been on new and innovative materials, processing and breakthrough product development. During the year, the Company developed 63 new products.

During the year, the Company expanded its horizons by reaching out to new markets in India as well as globally. The Company’s network extends to more than 4,000 dealers and channel partners and over 35,000 sub-dealers. It has representative offices in Indonesia, Germany and the United Arab Emirates.

The year under review was challenging in terms of revenue growth owing to the impact of fall in demand from automobile manufacturers, dip in consumer sentiment and a drop in the revenue in the second half of March 2020 due to COVID-19. Despite the challenging business environment, the focus on the right product mix, lower raw material cost and cost management helped the Company deliver improvement in EBITDA margins. The Company achieved a reduction in working capital that helped minimise the borrowing for capital expenditure requirements. Further, continued focus on controlling the ongoing capital expenditure and operating cash flow led to healthy debt level and financial leverage ratios.

During the year under review, the Board of Directors of the Company approved the Scheme of Amalgamation of its wholly-owned subsidiary, namely, CEAT Specialty Tyres Limited (‘CSTL’) with the Company (‘Scheme’) to integrate

business carried on by both the companies, achieve economies of scale due to synergies in operations and rationalisation and standardisation of business processes etc. The said Scheme was approved by the NCLT on March 13, 2020. The certified copy of the Order is still awaited.

The Scheme shall be operative from Effective Date i.e. the date of filing of certified copy of the Order of the NCLT with Registrar of Companies, Mumbai, with Appointed Date as April 1, 2019 as prescribed in the Scheme for the purpose of necessary accounting and other retrospective effect.

On the Scheme becoming effective, the entire business and whole of the undertaking of CSTL shall stand transferred to and be vested and / or deemed to have been vested in and amalgamated with the Company, as a going concern, without any further deed or act. Since the entire issued, subscribed and paid-up share capital of CSTL is directly or indirectly held by the Company, no shares are required to be issued by the Company to the members of CSTL, pursuant to the Scheme becoming effective.

More details on the Company’s business vis-à-vis the overall industry, economy, markets and future outlook etc. are given in the Management Discussion and Analysis section which forms part of this Annual Report.

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the close of the Financial Year on March 31, 2020, to which the financial statements relate and the date of this Report.

DIVIDEND

The Board at its meeting held on March 12, 2020, declared an interim dividend of H 12 (i.e. 120%) per equity share of face value H 10 each for the Financial Year 2019-20, which was paid on March 27, 2020. The Board recommends the Members to confirm such interim dividend as final dividend for the Financial Year 2019-20.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations’), the Company has adopted a Dividend Distribution Policy which is annexed to this Report and also available at https://www.ceat.com/corporate/investor/ - corporate governance

TRANSFER TO RESERVE

As permitted under the Companies Act, 2013, the Directors do not propose to transfer any sum to the General Reserve pertaining to Financial Year 2019-20.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

At the end of the year under review, the Company had the following 4 (four) subsidiaries namely CEAT Specialty Tyres Limited, Mumbai, India, Rado Tyres Limited, Cochin, India, Associated CEAT Holdings Company (Private) Limited, Colombo, Sri Lanka, CEAT AKKHAN LTD, Dhaka, Bangladesh and 1 associate company namely Tyresnmore Online Private Limited, Delhi, India.

CEAT Specialty Tyres Limited

CEAT Specialty Tyres Limited (‘CSTL’), a wholly owned subsidiary of the Company, is engaged in manufacturing and sale of tyres for off-the-road vehicles and equipment having application across industries including ports, construction, mining and agriculture.

During the year under review, CSTL on standalone basis, registered a revenue from operations of H 37,715 Lacs, a marginal growth over previous year of H 36,792 Lacs, on account of ramp-up of Ambernath Plant. While there was increase in EBITDA, CSTL recorded a net loss of H 4,744 Lacs in FY 2019-20 (previous year loss of H 4,620 Lacs) due to increase in finance cost and other expenses.

CSTL has set up 2 (two) overseas subsidiaries viz. CEAT Specialty Tires Inc. in USA and CEAT Specialty Tyres B.V. in Netherlands.

During the year under review, CEAT Specialty Tires Inc. registered a revenue of H 733 Lacs (previous year H 509 Lacs) and a profit of H 41.24 lacs (previous year H 32 Lacs).

During the year under review, CEAT Specialty Tyres B.V. registered a revenue of H 247 Lacs (previous year H 299 Lacs) and a profit of H 22.38 lacs (previous year H 18 Lacs).

Rado Tyres Limited

Rado Tyres Limited (‘RTL’) has discontinued its operation after exploring all opportunities to lease-out / sell of its assets. During the year under review, RTL reported a net loss of H 29 Lacs (previous year H 147 Lacs) on account of operating expenses and earned other income of H 3 Lacs (previous year H 14 Lacs) through interest on fixed deposits with bank etc.

Since the Company has no other activity, the accounts of RTL for the financial year under review have not been prepared on a going concern basis.

OVERSEAS SUBSIDIARIES

Details of ACHL and CAL are given below under the heads ‘Joint Venture in Sri Lanka’ and ‘Joint Venture in Bangladesh’.

Joint Venture in Sri Lanka

Associated CEAT Holding Company (Private) Limited (‘ACHL’), the Company’s investment arm in Sri Lanka, has a 50:50 joint venture company viz. CEAT-Kelani Holdings Private Limited, which operates 4 (four) manufacturing plants through its wholly owned subsidiaries in Sri Lanka.

During the year under review, ACHL registered a revenue of LKR 18 Lacs ( H 7 Lacs) lower as compared to LKR 56 Lacs ( H 23 Lacs) in FY 2018-19. The profit after tax for FY 2019-20 has reduced by 7.53% to LKR 4,714 Lacs ( H 1,847 Lacs) as compared to LKR 5,098 Lacs ( H 2,120 Lacs) in FY 2018-19. ACHL’s joint venture continues to enjoy the overall market leadership in all categories of tyres in Sri Lanka.

ACHL has been consistently paying dividends and it has, during the year under review, paid a dividend of H 1,036 Lacs to the Company.

Joint Venture in Bangladesh

CEAT AKKHAN LTD (‘CAL’), is a 70:30 joint venture of the Company in Bangladesh. CAL is setting up a greenfield facility for the manufacture of automotive bias tyres in Bangladesh. CAL is locally selling CEAT branded automotive tyres. For the year under review, the revenue of CAL was BDT 12,254 Lacs ( H 10,073 Lacs) as compared to BDT 10,118 Lacs ( H 8,447 Lacs) in FY 2018-19. The net loss for the year under review was BDT 528 Lacs ( H 359 Lacs) as compared to the net loss of previous year BDT 281 Lacs ( H 176 Lacs).

ASSOCIATE COMPANY

During the year under review, the Company invested a further amount of H 300 Lacs through the subscription of 12,741 Compulsorily Convertible Preference Shares of the face value of H 1 each (Rupee One Only) of Tyresnmore Online Private Limited (‘TNM’), thereby holding 41.30% of the total share capital of TNM.

During the year under review, TNM registered a revenue of H 1,160 Lacs, a growth of 100% over previous year revenue of H 578 Lacs and a net loss of H 335 Lacs in FY 2019-20 (previous year H 254 Lacs).

A statement containing the salient features of the subsidiaries, associates and joint ventures in the prescribed Form AOC-1 is annexed separately.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Section 129(3) of the Companies Act, 2013, and Regulation 34(2) of the Listing Regulations, the Consolidated Financial Statements of the Company, including the financial details of all the subsidiary companies, associate companies and joint ventures of the Company, forms part of this Annual Report. The Consolidated Financial Statements have been prepared as per the applicable Indian Accounting Standards issued by the Institute of Chartered Accountants of India.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Atul C. Choksey (DIN: 00002102), Mr. Haigreve Khaitan (DIN: 00005290), Mr. Mahesh S. Gupta (DIN: 00046810), Ms. Punita Lal (DIN: 03412604) and Mr. Vinay Bansal (DIN: 00383325) were reappointed as Independent Directors of the Company for a further term of 5 (five) years with effect from September 26, 2019.

STATUTORY REPORTS

CORPORATE OVERVIEW

VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Pursuant to the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Pierre E. Cohade (DIN: 00468035) retires by rotation and being eligible, offers himself for re-appointment.

Mr. Ranjit V. Pandit (DIN: 00782296), was appointed as an Independent Director of the Company at the 56[th] Annual General Meeting of the Company held on August 12, 2015, to hold office as such for a term of 5 (five) consecutive years with effect from August 12, 2015 up to August 11, 2020. In terms of the provisions of Section 149(10), Mr. Ranjit V. Pandit is eligible for being appointed as an Independent Director for another term of 5 (five) years, subject to the approval of Members by way of a special resolution.

Based on the performance evaluation of Mr. Pandit and considering his professional expertise and core skills, the Nomination and Remuneration Committee and the Board find it appropriate to continue him on the Board as an Independent Director for a further term of 5 (five) years from August 12, 2020 to August 11, 2025, which is being submitted for approval of Members at the ensuing Annual General Meeting. In this regard, necessary details have been annexed to the Notice of the meeting in terms of Section 102(1) of the Companies Act, 2013 and Regulation 36(3) of the Listing Regulations.

Apart from the above, there were no changes in the Directors and the Key Managerial Personnel (‘KMP’) of the Company, during the year.

Remuneration received by Managing / Whole-time Director from holding or subsidiary company

Mr. Anant Goenka, Managing Director and Mr. Arnab Banerjee, Chief Operating Officer do not receive any profit related commission from the Company or any of the subsidiaries of the Company as prescribed under Section 197(14) of the Companies Act, 2013.

Company’s Policy on Directors’ appointment and remuneration

The Board has put in place a policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director as required under Section 178(3) of the Companies Act, 2013.

The Policy, inter alia, is directed to work as guiding principles on qualifications, positive attributes and independence for the appointment of a Director, remuneration for the Directors, KMP and Senior Management Personnel, performance evaluation of all Directors and achieving the benefits of having a diverse Board.

The detailed policy is available at https://www.ceat.com/ corporate/investor#corporate-governance and is also annexed to this Report.

Declaration of independence and statement on compliance of code of conduct

All Independent Directors of the Company have given the declaration of independence as required under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of

the Listing Regulations, stating that they continue to meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations. Further, Independent Directors of the Company have also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

Statement regarding the opinion of the Board concerning integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year

In the opinion of the Board, Mr. Atul C. Choksey (DIN: 00002102), Mr. Haigreve Khaitan (DIN: 00005290), Mr. Mahesh S. Gupta (00046810), Ms. Punita Lal (DIN: 03412604) and Mr. Vinay Bansal (DIN: 00383325), who were re-appointed during the year are persons of integrity and have the relevant expertise and experience as required under the Nomination and Remuneration Policy of the Company. Such expertise and experience help in making informed decisions and guides the Board for the effective functioning of the Company.

Evaluation of Board, its Committees and Directors

As required under the provisions of the Companies Act, 2013 and the Listing Regulations, the Board has carried out an annual evaluation of its own performance and that of its Committees, Chairperson and individual directors.

For the purpose of evaluation for FY 2019-20, the Company engaged an external agency to facilitate the process of an online confidential survey using the questionnaire finalised by the Nomination and Remuneration Committee based on the criteria of evaluation. The results of the survey / feedback were then deliberated and evaluation of the Board, its Committees and the Directors was carried out by the Nomination and Remuneration Committee and the Board at their respective meetings, as prescribed under the law.

Meetings of the Board of Directors

During the year, 6 (six) Board Meetings were convened and held on April 3, 2019, May 7, 2019, August 1, 2019, October 22, 2019, January 22, 2020 and March 12, 2020, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and Regulation 17 of the Listing Regulations.

Board Committees

As required under the Companies Act, 2013 and the Listing Regulations, the Company has formed all the statutory committees namely, the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Stakeholders’ Relationship Committee and the Risk Management Committee. Besides, the Company also has a Finance and Banking Committee. Detailed information about these Committees and relevant information for the year under review are given in the Corporate Governance Report.

There have been no instances where the Board did not accept the recommendations of its Committees including the Audit Committee.

BUSINESS RISK MANAGEMENT

The Company has constituted a Risk Management Committee in compliance with the requirements of Regulation 21 of the Listing Regulations. The details of this Committee and its terms of reference are set out in the Corporate Governance Report, which forms part of this Annual Report.

The Company has in place an Enterprise Risk Management framework to identify risks and minimise their adverse impact on business and strives to create transparency which in turn enhances the Company’s competitive advantage.

According to the aforesaid business risk framework, the Company has identified the business risks associated with its operations and an action plan for mitigation of the same is put in place. The business risks and its mitigation have been dealt with in the Management Discussion and Analysis section of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors has formed a Corporate Social Responsibility (‘CSR’) Committee under the provisions of the Companies Act, 2013.

Detailed information on the Corporate Social Responsibility Policy developed and implemented by the Company and on CSR initiatives taken during the year pursuant to Section 135 of the Companies Act, 2013, is given in the Annual Report on CSR activities, as annexed to this Report.

More details on CSR activities undertaken by the Company through RPG Foundation, its implementing agency are provided in and form part this Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

According to Section 177 of the Companies Act, 2013 and Regulation 22 of the Listing Regulations, the Board has adopted vigil mechanism in the form of Whistle Blower Policy, to deal with instances of fraud or mismanagement, if any. The Policy can be accessed at https://www.ceat.com/ - corporate/investor/corporate governance

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013, are provided in the Financial Statements.

RELATED PARTY TRANSACTIONS

The Company has formulated a policy on Related Party Transactions for the identification and monitoring of such transactions. The said policy on Related Party Transactions as

approved by the Board is uploaded on the Company’s website.

Related Party Transactions were placed before the Audit Committee, as prescribed under Section 177 of the Companies Act, 2013, although no such transactions attracted the provisions of Section 188 of the Companies Act, 2013. As such, there are no particulars to be disclosed in the prescribed Form AOC-2.

SHARE CAPITAL

The paid-up equity capital of the Company as on March 31, 2020 was H 4,045.01 Lacs. The said shares are listed on the BSE Limited and the National Stock Exchange of India Limited. There was no change in the paid-up capital of the Company, during the year under review.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as prescribed under Section 92(3) of the Companies Act, 2013, in the prescribed Form MGT-9 is annexed to this Report.

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

Conservation of Energy

During the year under review, the Company invested in and implemented a range of energy conservation initiatives. These comprised of retrofitting of old equipment, utilisation of energyefficient equipment and lighting and alternate fuels such as piped natural gas. Through such stewardship, the Company has nearly doubled its energy savings, over the last 3 (three) years. Additionally, the Company also made use of energy from biomass and solar energy to reduce its non-renewable energy consumption. During the year under review, the Company has made capital investment of H 418 Lacs, on energy conservation equipment.

More information on conservation of energy are provided under ‘Natural Capital’ section which forms part of this Integrated Annual Report.

Research and Development (R&D) and Technology

Absorption

The Company has dedicated state-of- the-art R&D centres at Halol, Gujarat and Frankfurt, Germany. The Company has always been focusing on innovation, product diversity and technology to create sustainable products and deliver future-ready products and solutions that are safer, smarter and better in every respect.

New technologies have been developed in the spheres of green technology, nano technology, advanced material and novel processing. Several new initiatives were taken up such as developing new epoxy resin, new accelerator, alternative source of natural rubber and nano materials for tyre compounds, which are meeting requirements related to grip, rolling resistance and noise. Developments have also been made in biomaterials and biodegradable wrap for packaging, instead of plastic packaging, which will contribute to environmental sustainability.

STATUTORY REPORTS

CORPORATE OVERVIEW VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

With help of various initiatives in R&D and Technology, the Company has proved its Technological prowess and developed 63 new products across various categories and geographies globally in FY 2019-20, which has contributed well to the Company’s profitability and growth resulting into 20% of revenue from new products. Through continuous thrust on innovation and technology, the Company has also reaped various benefits such as product development and improvements, process efficiency, cost reduction, import substitution and generation of intellectual property.

Details of expenditure on Research and Development are as under:

( H in Lacs)

==> picture [240 x 55] intentionally omitted <==

----- Start of picture text -----

FY 2019-20 FY 2018-19
Capital expenditure 4,644 2,917
Revenue expenditure 6,783 6,159
Total 11,427 9,076
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More information on R&D and technology absorption are provided under ‘Intellectual Capital’ section which forms part of this Integrated Annual Report.

Foreign Exchange Earnings and Outgo

		(`H`in Lacs)
	FY 2019-20	FY 2018-19
Foreign exchange earned	87,240	84,709
Foreign exchange used	1,79,745	2,00,943

PARTICULARS OF EMPLOYEES

The statements required under Section 197 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (‘the Rules’), as amended, form part of this Report and will be made available to any Member on request, as prescribed therein.

The prescribed particulars of employees required under 5(1) of the said Rules are annexed to this Report.

FIXED DEPOSITS

Your Company being eligible to accept deposits from the public, under Section 76 of the Companies Act, 2013 and Rules made thereunder, approved the Fixed Deposit Scheme during the FY 2014-15 for acceptance of deposits from Members and persons other than Members, under the Special Resolution passed by the Members at the Annual General Meeting of the Company held on September 26, 2014. The Company thereafter discontinued its Fixed Deposit Schemes and repaid all the outstanding fixed deposits along with interest accrued up to September 30, 2016, in FY 2016-17.

The Company has not accepted any fresh deposits during the year under review. As on March 31, 2020, the Company has no deposits outstanding, except as required statutorily and which have been unclaimed at the end of the year under review.

As such there were no defaults in respect of repayment of any deposits or payment of interest thereon.

DIRECTORS’ RESPONSIBILITY STATEMENT

According to Section 134(3)(c) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief, states that:

i. The applicable Accounting Standards have been followed in the preparation of the annual accounts along with the proper explanation relating to material departure, if any.

ii. 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 in the Balance Sheet as at March 31, 2020 and the Statement of Profit and Loss for the said Financial Year ended March 31, 2020.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. The annual accounts have been prepared on a going concern basis.
v. The proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively.
vi. The system to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and are operating effectively.

INTEGRATED ANNUAL REPORT

Having won the Deming Award for its processes, the Company has also embarked itself on the journey towards a sustainable future. For the Financial Year 2019-20, the Company has developed its first integrated annual report, based on the International Integrated Reporting Council’s (‘IIRC’) Framework, which encourages organisations to communicate their value creation over time. The Company is attempting on this journey to communicate its integrated thinking and how its business creates sustained value for stakeholders.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

In compliance with Regulation 34 of the Listing Regulations, separate Section on Management Discussion and Analysis, as approved by the Board, which includes details on the state of affairs of the Company, forms part of this Annual Report.

Further, the Corporate Governance Report including the general shareholder information, as prescribed under Schedule V to the Listing Regulations, duly approved by the Board of Directors together with the certificate from the Secretarial Auditor (Practising Company Secretaries) confirming the compliance with the requirements of the Listing Regulations also forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

In compliance with Regulation 34 of the Listing Regulations, a separate section on the Business Responsibility Report, as approved by the Board, which includes principles to assess compliance with environmental, social and governance norms for the year under review forms part of this Annual Report.

AUDITORS

Statutory Auditors

The Company at its Annual General Meeting (‘AGM’) held on August 8, 2017, appointed M/s S R B C & CO LLP as the Statutory Auditors for the second term of 5 (five) consecutive years from the conclusion of the 58[th] AGM to the conclusion of the 63[rd ] AGM subject to ratification of their appointment every year.

However, in terms of the amendment to the provisions of Section 139 of the Companies Act, 2013, notified through the Companies (Amendment) Act, 2017, to come into effect from May 7, 2018, there is no requirement for ratification of the appointment of Auditors every year.

Accordingly, M/s S R B C & CO LLP continue to hold office as Auditors of the Company.

Internal Auditors

As prescribed under Section 138 of the Companies Act, 2013, the Board appointed M/s KPMG for carrying out internal audit of the Company and M/s Moore Stephen Singhi for carrying out internal audit of locations like CFA / DC / RO / Zone and outsourcing units, for FY 2019-20. The internal audit was completed as per the scope defined by the Audit Committee from time to time.

Secretarial Auditors

The Company appointed M/s Parikh & Associates, Practising Company Secretaries, to conduct the Secretarial Audit for the Financial Year ended March 31, 2020, as prescribed under Section 204 of the Companies Act, 2013 and Rules made thereunder. The Secretarial Audit Report in the prescribed Form MR-3 for FY 2019-20 furnished by M/s Parikh & Associates is annexed to this Report.

There are no qualifications, disclaimers, reservations or adverse remarks made either by the Statutory Auditors in the Auditors’ Report or by the Company Secretary in practice (Secretarial Auditor) in the Secretarial Audit Report.

Cost Record and Cost Auditors

During the year under review, in accordance with Section 148(1) of the Companies Act, 2013, the Company has maintained the accounts and cost records, as specified by the Central Government. Such cost accounts and records are subject to audit by M/s D. C. Dave & Co., Cost Auditors of the Company for FY 2019-20.

The Board of Directors re-appointed M/s D. C. Dave & Co., Cost Accountants, (Firm Registration No. 000611) as Cost Auditors of the Company for FY 2020-21 and recommends ratification of their remuneration by the Members at the ensuing AGM, according to the provisions of Section 148 of the Companies Act, 2013.

SECRETARIAL STANDARDS

The Institute of Company Secretaries of India has currently mandated compliance with the Secretarial Standards on board meetings and general meetings, as revised w.e.f. October 1, 2017. During the year under review, the Company has complied with the applicable Secretarial Standards.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OF THE COMPANIES ACT, 2013

During the year under review, no frauds were reported by the auditors to the Audit Committee or the Board under Section 143(12) of the Companies Act, 2013, read with Rule 13 of the Companies (Audit and Auditors) Rules, 2014.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATOR OR COURTS OR TRIBUNAL IMPACTING THE GOING CONCERN STATUS

There are no significant and material orders passed by the Regulators or Courts or Tribunals, Statutory and quasijudicial bodies, impacting the going concern status and Company’s operations in the future.

INTERNAL FINANCIAL CONTROL

Details in respect of adequacy on internal financial controls concerning the Financial Statements are stated in the Management Discussion and Analysis section which forms part of this Annual Report.

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

In accordance with the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has put in place a Policy on Prevention of Sexual Harassment at Workplace and 8 (eight) Internal Complaints Committees (ICC) have been set up to redress complaints. There were no complaints relating to sexual harassment, pending at the beginning of financial year, received during the year and pending as on the end of the Financial Year 2019-20.

ACKNOWLEDGMENT

Your Directors place on record their appreciation for the continued support and co-operation received from its Customers, Suppliers, Dealers, Banks, Financial Institutions and the Members towards conducting the business of the Company.

On behalf of the Board of

Directors

Place: Mumbai H. V. Goenka Date: May 28, 2020 Chairman

STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure to the Board’s Report

Dividend Distribution Policy

Cash flow required to meet contingencies;
I. Introduction and Objective
Outstanding borrowings and total debt-equity ratio;

Regulation 43A of the Securities and Exchange Board of India (‘SEBI’) (Listing Obligations and Disclosure Requirements) Regulations, 2015, (‘the Listing Regulations’) mandates top 500 listed entities, determined on the basis of their market capitalisation calculated on March 31 of every financial year, to formulate a Dividend Distribution Policy.

Past dividend payment trends of the Company and dividend track record;
Total cash outflow including tax payments;
Extra-ordinary income / profits by the Company arising from transactions such as sales of land or undertaking;

In compliance with Regulation 43A of the Listing Regulations, the Company has framed this Dividend Distribution Policy.

Tax impact of the dividend and the cash outflow post tax

This Policy aims to help the investors and stakeholders in their investing decisions and shall be effective from the date of adoption of the same by the Board of Directors (‘the Board’).

The Board shall also consider the following internal factors while declaring an interim dividend or recommending a final dividend to the shareholders:

II. Regulatory Framework

Business Strategy of the Company;

The Dividend, if any, declared by the Company (including Interim Dividend) shall be governed by the provisions of the Companies Act, 2013 read with the Companies (Declaration and Payment of Dividend) Rules, 2014, the Listing Regulations and the provisions of Articles of Association of the Company, as in force from time to time (hereinafter collectively referred as ‘Applicable Laws’).

Expansion plans;
Corporate restructuring;
Scheme of arrangement or any other item which can have a financial impact on the Company; Unforeseen events and contingencies with financial implications

III. Parameters / factors to be considered for declaration of dividend

C. External Parameters

The Board shall also consider inter alia the following external factors i.e. factors on which the Management or the Company has no control, while declaring an interim dividend or recommending a final dividend:

A. General

The Board shall recommend dividend only if it is of the opinion that it is financially prudent to do so.
Business environment;

B. Financial and Internal Parameters

The Board would consider the following financial parameters before declaring interim dividend or recommending a final dividend to shareholders for declaration:

Regulatory restrictions, if any or the prevalent statutory requirements;
Provisions of tax laws governing dividend;
Dividend pay-out ratios of peers;
Standalone net operating profit after tax;
Economic environment and state of the capital markets;
Working capital requirements;
Operating expenditure requirements including loan repayments and interest payments;
Change in government policy, which can have a financial impact on the Company;

Capital expenditure requirements;

Commodity price impact on the business;
Resources required to fund acquisitions and inorganic growth;
Cyclical nature of industry / business;
Need to maintain competitiveness of the Company and its business;
Cash to be retained for business needs;

IV. Circumstances under which the shareholders VII. Procedure with respect to dividend may or may not expect dividend

The Board upon perusing the rational for proposed pay-out, may recommend a final dividend or declare an interim dividend.

The Company has been consistently paying out dividends to its shareholders and can be reasonably expected to continue in future as well, unless the Company is restrained to declare dividend due to insufficient profits or due to any of the external or internal factors listed above.

The final dividend recommended by the Board is subject to declaration by the shareholders in the ensuing Annual General Meeting.

Further, though the Company endeavours to declare the dividend to the shareholders, the Board may propose not to recommend dividend after analysis of various financial parameters including those listed above, cash flow position and funds required for future growth and capital expenditure or in case of a proposal to utilise excess cash for buy-back of existing share capital.

The interim dividend declared by the Board shall be placed for confirmation before the shareholders in the ensuing Annual General Meeting.
The CFO may in consultation with the MD shall also recommend to the Board transfer of such percentage of profits for that financial year as deemed appropriate to the reserves of the Company and the Board may decide on the same.

V. Policy as to how the retained earnings shall be utilised

In case of inadequacy of profits for any financial year, the Board may approve declaration of dividend out of accumulated profits of the previous years as per this Policy and the Regulatory Framework.

The profits being retained in the business shall be continued to be deployed in business for meeting the operating expenses, capital expenditure, augmentation of working capital including servicing of term loans, cash outflow for business growth and potential acquisition, if any, thus contributing to the growth of business and operations of the Company.

VIII. Disclosure

The Company shall make appropriate disclosures as required under the SEBI Regulations and the Companies Act, 2013.

The Company stands committed to deliver sustainable value to all its stakeholders.

IX. Amendments

VI. Parameters that shall be adopted with regard to various classes of shares

The Board reserves the right to amend this Policy in whole or in part, at any point of time, as may be deemed necessary.

The holders of the equity shares of the Company as per the Issued and Paid-up capital, on the record date, are entitled to receive dividends.

It is hereby clarified that provisions of the Applicable Laws shall prevail over the provisions of this Policy to the effect necessary amendments in the Applicable Laws have not been carried out in this Policy.

The other classes of shares e.g. Preference Shares or Shares with differential voting rights will be governed by the terms of issue of such shares.

Any convertible instruments issued by the Company shall be entitled for dividend only upon conversion.

STATUTORY REPORTS

CORPORATE OVERVIEW VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure to the Board’s Report

Nomination and Remuneration Policy

herein but defined in the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as may be amended from time to time, shall have the meaning respectively assigned to them therein.

1. Introduction / Objective

This policy has been formulated in terms of the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 relating to the appointment and remuneration of the Directors, Key Managerial Personnel, Senior Management Personnel and other employees and Board diversity.

3. Diversity in the Board of Directors

Diversity refers to the variety of attributes of diverse nature between people and encompasses acceptance, respect and an understanding that everyone is unique. These aspects include age, gender, ethnicity, physical abilities, marital status, ideologies, background, knowledge and skills. With a view to achieving sustainable development, the Company shall aim to increase diversity at the Board level as an essential element in terms of:

This Policy sets out the guiding principles on:

i. appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management Personnel;
ii. qualifications, positive attributes and independence for appointment of a Director and assessment of independence of Independent Director;
Experience of diverse nature;
iii. performance evaluation of all Directors;
Gender in having the right representation of female members to also ensure statutory compliance as applicable;
iv. core skills / expertise / competencies required of the Board of Directors of the Company;
v. achieving the benefits of having a diverse Board.
Qualifications, knowledge and core skills / expertise / competencies required of the Board of Directors in context of Company’s business / sector.

2. Definitions

  - Diversity at the Board level shall be used as a tool for supporting the attainment of the strategic objectives of the Company and also to drive business results. Accordingly, while designing the composition of the Board, diversity shall be considered on all aspects and all appointments shall be based on meritocracy.

i. ‘Non-executive Directors’ (NED) means a member of a Company’s Board of Directors who is not in whole-time employment of the Company.
ii. ‘Key Managerial Personnel’ (KMP) mean:
the Chief Executive Officer (CEO) or the Managing Director (MD) or Manager;

The Company is committed to meritocracy and shall respect diversity within the Board members and shall have an inclusive culture where all view shall be heard and all opinions respected.

the Company Secretary (CS);
the Whole-time Director (WTD);
the Chief Financial Officer (CFO);

4. Requirements Relating to Directors

Such other officer, designated as key managerial personnel by the Board, who is in whole-time employment at a level not more than one level below the directors;

A. Appointment of Directors

The Company shall appoint those persons who possess requisite qualifications and experience and positive attributes within the overall framework of diversity as described in this Policy.

iii. ‘Senior Management Personnel’ (SMP) for the purpose of this Policy means officers / personnel who are members of the core management team excluding Board of Directors and normally comprising of all members of Management one level below the Chief Executive Officer / Managing Director / Whole-time Director / Managers and shall specifically include Company Secretary and Chief Financial Officer.

B. Qualifications and Experience

i. Any person to be appointed as a Director on the Board of Directors of the Company, including Independent Director shall, in addition to a formal professional qualification should possess appropriate skills, experience and knowledge in one or more fields viz. sciences, actuarial sciences, banking, finance, economics, law, management, sales, human

Unless the context otherwise requires, words and expressions used in this policy and not defined

resource, marketing, administration, research, corporate governance or technical operations.

ii. Any person to be appointed as a Director on the Board of the Company shall be such person who shall be able to provide policy directions to the Company including directions on good corporate governance.

C. Positive Attributes

The person to be appointed as a Director of the Company shall, in addition to the formal qualifications and relevant experience described in this Policy, shall also possess attributes such as integrity, leadership, business orientation, commitment and a proven track record and such other attributes, which in the opinion of the Nomination and Remuneration Committee (‘NRC’) are in the interest of the Company.

D. Disqualification

Any person to be appointed as Director shall not possess any disqualifications as prescribed under the Applicable Laws.

E. Evaluation

i. NRC shall facilitate the Board to undertake evaluation of performance of all Directors on a yearly basis.
ii. The Board shall evaluate, every year, its performance along with that of the individual directors including the Chairman, Independent Directors (‘IDs’), independence of IDs and of its Committees.
iii. The Company may appoint an external agency to conduct the exercise of evaluation and submit the report / outcome to the Company, in the manner desired by the Company.

F. Familiarisation Programme

The Company shall familiarise the Independent Directors of the Company with their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates and business model of the Company through various programmes.

5. Requirement relating to Key Management Personnel and Senior Management Personnel

A. Appointment of KMP and SMP

i. Based on the recommendation of the NRC, the appointment of the MD, CEO, WTD, CFO and the CS shall be approved by the Board of Directors.
ii. KMP and SMP shall be employed by the Company only on a whole-time basis and they will not be permitted to take up employment anywhere else, except in the subsidiary of the

Company with prior approval of the Board of Directors.

iii. The appointments of SMP shall be approved by the MD. Remuneration payable to SMP shall be recommended by the NRC and approved by the Board.

B. Qualifications and Experience

i. Any person to be appointed as KMP or as SMP shall possess relevant educational or professional qualifications, experience and domain knowledge required for performing the job for which they are appointed.
ii. There shall be no discrimination on account of gender, race and religion in terms of appointment as KMP or SMP.

C. Positive Attributes

i. KMP and SMP shall also possess attributes like decision making skills, leadership skills, integrity and proven track record and shall demonstrate commitment to the organisation.
ii. KMP and SMP shall meet the expectations of operational transparency to stakeholders while at the same time maintain confidentiality of information in order to foster a culture for good decision making.

D. Performance Evaluation

i. MD / CEO shall carry out the performance evaluation of all the SMPs and KMPs excluding himself / herself and the WTD.
ii. The evaluation process adopted by the Company shall always consider the appropriate benchmarks set as per industry standards, performance of the industry, the Company and of the individual KMP / SMP.
iii. Evaluation of performance shall be carried out at least once in a year, in accordance with the existing evaluation process of the Company.

E. Remuneration

Guiding Principles

i. The terms of employment and remuneration of MD, WTD, KMPs, Directors and SMPs shall be competitive in order to ensure that the Company can attract and retain competent talent.
ii. The Remuneration Policy shall ensure that:
a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, KMPs and SMPs of the quality required to run the Company successfully.

STATUTORY REPORTS

CORPORATE OVERVIEW VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

b) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
c) Remuneration to Directors, KMPs and SMPs involve a balance between fixed and variable pay reflecting short and long-term performance objectives and goals set by the Company.
d) Remuneration package is linked to the achievement of corporate performance targets and a strong alignment of interest with stakeholders.
iii. While determining the remuneration and incentives for the MD, WTD, KMPs and SMPs, the following shall be considered:
a) Pay and employment conditions with peers / elsewhere in the competitive market.
b) Benchmarking with the industry practices.
c) Performance of the individual.
d) Company Performance
iv. For the benchmarking with industry practice, criteria of size, complexity, data transparency and geographical area shall also be given due consideration.
v. The pay structures shall be appropriately aligned across levels in the Company.

6. Remuneration Policy

A. MD / WTD

i. Remuneration to the MD and WTD at the time of his / her appointment shall be proposed by the NRC and subsequently approved by the Board of Directors and the shareholders of the Company or Central Government, whenever required.
ii. Annual increments / subsequent variation in remuneration to the MD and WTD shall be approved by the NRC / Board of Directors, within the overall limits approved by the shareholders of the Company or Central Government.
iii. Remuneration shall be evaluated annually against performance and a benchmark of international and domestic companies, which are similar in size and complexity. Benchmark information shall be obtained from internationally recognised compensation service consultancies.
iv. Total remuneration for the MD and WTD shall be comprised of the following:
a) Salary (both fixed and variable);

b) Perquisites;

c) Performance linked Bonus;
d) Retirals benefits

It shall be ensured that total remuneration payable to MD and WTD shall not exceed the limits mentioned under the Applicable Laws.

B. NEDs

i. NEDs shall be entitled to such sitting fees as may be decided by the Board from time to time for attending the meeting of the Board and of the Committee thereof.
ii. NEDs shall also be entitled for payment of remuneration / commission as may be recommended by the NRC and subsequently approved by the Board of Directors, up to the limits permitted under the Applicable Laws and wherever required approval of the shareholders of the Company shall be obtained from time to time.
iii. IDs shall not be eligible for any Stock Options, pursuant to any Stock Option Plan adopted by the Company.
iv) NEDs shall be eligible for remuneration of such professional services rendered if in the opinion of the NRC, the NED possesses the requisite qualification for rendering such professional services.

C. SMPs and KMPs (other than MD / WTD)

i. Remuneration packages shall be designed in such manner that:
a) Motivates delivery of key business strategies, creates a strong performanceorientated environment and rewards achievement of the Company’s objectives and goals over the short and long-term.
b) Attracts high-flier executives in a competitive global market and remunerate executives fairly and responsibly.
ii. Remuneration shall be competitive and shall include salary comprising of both fixed and variable components, performance incentives and other benefits as per the policy of the Company, considering relevant qualification, experience and performance of the individual as well as the prevailing market conditions.
iii. The remuneration in whatever form payable to the KMPs and SMPs at the time of his / her appointment shall be recommended by the NRC and approved by the Board.
iv. Remuneration shall be evaluated annually and annual increase shall be decided considering the performance of the individual and also of the Company. Industry practices / trends shall also be given due consideration. Annual increment
/ subsequent variation in remuneration to the KMPs / SMPs shall be approved by the NRC / the Board of Directors.
v. Remuneration can be reset at any time considering the benchmark of international and domestic companies, which are similar in size and complexity to the Company. Benchmark information shall be obtained from internationally recognised compensation service consultancies.
vi. NRC may consider grant of Stock Options to KMPs and SMPs pursuant to any Stock Option Plan adopted by the Company.

7. Directors and Officers Liability Insurance

a. The Company may provide an insurance cover to Directors, KMPs and SMPs for indemnifying them against any liability in respect of any negligence, default, misfeasance, breach of duty or breach of trust and the premium paid on the same shall not be treated as a part of remuneration paid to them.
b. The premium paid by the Company for such insurance cover, called for Directors and Officers

Liability Insurance Policy, taken for the above purpose shall be paid by the Company without any charge to the Directors, KMPs and SMPs.

8. Disclosures

This Policy shall be disclosed on the Company’s website and a weblink thereto shall be provided in its Annual Report.

9. Amendments to the Policy

The Board of Directors may amend this Policy, as and when deemed fit. Any or all provisions of this Policy would be subject to revision / amendment in accordance with the Rules, Regulations, Notifications etc. on the subject as may be issued by relevant statutory authorities, from time to time.

In case of any amendment(s), clarification(s), circular(s) etc. issued by the relevant authorities, not being consistent with the provisions laid down under this Policy, then such amendment(s), clarification(s), circular(s) etc. shall prevail notwithstanding the provisions hereunder from the effective date as laid down under such amendment(s), clarification(s), circular(s) etc.

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Annexure to the Board’s Report

Annual Report on CSR Activities for FY 2019-20

1. A brief outline of the Company’s Corporate Social Responsibility (CSR Policy), including overview of projects or programmes proposed to be undertaken and a reference to the weblink to the CSR Policy and projects or programmes:

As a responsible business corporation, the Company takes pride in taking effective Corporate Social Responsibility (CSR) initiatives which are vital towards fulfilling critical societal needs and gaps on a sustainable basis, not only in the communities it operates in, but also the society at large. Therefore, some CSR initiatives have also been aligned with the Sustainable Development Goals (SDGs) established by the United Nations. The Company’s vision is to drive ‘holistic empowerment’ of the community through implementation of sustainable initiatives and the Company carries out these initiatives through partnerships with individuals, institutions, NGO’s and local Government bodies through following projects in accordance with its CSR Policy read with Schedule VII of the Companies Act, 2013. The Board of Directors of the Company approved the CSR Policy with the aim and object to fight hunger, poverty and malnutrition, promote education, employment, health care, gender equality, rural development and sanitation etc. as embodied in Schedule VII of the Companies Act, 2013.

The CSR Policy is available on the link - : https://www.ceat.com/corporate/investor/corporate governance

2. The Composition of the CSR Committee:

Mr. Anant Goenka, Chairman (Managing Director)

Ms. Punita Lal (Independent Director)

Mr. Vinay Bansal (Independent Director)

H 45,639.39 Lacs
3. Average net profit of the Company for last three financial years:

4. Prescribed CSR Expenditure (2% of the amount as in item 3 above): H 912.79 Lacs

5. Details of CSR spent during the financial year:

Annexure A to the Annual Report on CSR activities

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( H in Lacs)
Sr. CSR project Sector in which Project Location (Area / Amount Outlay Amount Cumulative
No. or activity the project is District and State) (Budget) Project Spent on the Expenditure
identified covered or Programmes project or up to reporting
Wise programme period
(1) (2) (3) (4) (5) (6) (7)
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1.	Pehlay Akshar	Education	Nashik; Ambernath; Mumbai (Maharashtra); Halol, Panchmahal(Gujarat)	295.46	135.92	135.92
2.	Netranjali	Vision - Eye Care	Ambernath; Mumbai; Nashik; Nagpur (Maharashtra); Halol, Panchmahal (Gujarat) Kannanthangal, Kanchipuram (Tamil Nadu);	56.02	60.64	60.64
3.	Swayam and Sanjeevani	Healthcare, Skilling and Driving Training for women	Nashik; Ambernath; Nagpur (Maharashtra); Kannanthangal, Kanchipuram, Chennai (Tamil Nadu); Delhi (Delhi)	218.46	203.21	203.21
4.	Jeevan and Saksham	Health, Water and Sanitation, Entrepreneurship and Skill Development, Environment	Nashik; Ambernath; Nagpur (Maharashtra); Kannanthangal, Kanchipuram (Tamil Nadu)	247.42	352.64	352.64
5	RPG Heritage	Heritage Conservation, Promotion of Art and Culture	Mumbai (Maharashtra)	95.43	20.92	20.92
	Total			912.79	773.33*	773.33*

All the above amounts were spent through implementing agency.

Note: In view of certain factors, including the outbreak of the COVID-19 Pandemic, H 139.46 Lacs could not be disbursed by the Implementing Agency
and are being disbursed in FY 2020-21.

Total amount to be spent for the fnancial year (Amount contributed to RPG Foundation, the implementing agency)	`H`912. 79 Lacs
Amount unspent, if any	Nil
Manner in which the amount is spent in fnancial year	As provided in Annexure A

6. In case the Company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board Report: Not Applicable

7. Responsibility Statement of the CSR Committee: CSR activities are implemented and monitored in compliance with CSR objectives and Policy of the Company.

For CEAT Limited

Anant Goenka Vinay Bansal Chairman - CSR Committee Member - CSR Committee (Managing Director) (Independent Director) DIN: 02089850 DIN: 00383325

Dated: May 27, 2020

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CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure to the Board’s Report

IV Shareholding (equity share breakup as percentage of total equity)

i) Category-wise Shareholding

Extract of Annual Return

Form No. MGT - 9

as on the Financial Year ended on 31-Mar-2020

[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I Registration and Other Details

I Registration and Other Details
i CIN	L25100MH1958PLC011041
ii Registration Date	10-Mar-1958
iii Name of the Company	CEAT Limited
iv Category/ Sub-Categoryof the Company	CompanyhavingShare Capital / Non-government company
v Address of the Registered offce and contact details	463,Dr. Annie Besant Road,
	Worli,Mumbai 400 030
	Tel No: 91-22-2493 0621
	Email :		[email protected]
	Web:	www.ceat.com
vi Whether listed Company	Yes(National Stock Exchange of India Limited and BSE Limited)
vii Name Address and Contact Details of Registrar and Share Transfer Agent	TSR Darashaw Consultants Private Limited
	6,Haji Moosa Patrawala Industrial Estate,20,Dr. E. Moses Road,
	Mahalaxmi,Mumbai 400 011
	Email:		[email protected]
	Web:	www.tsrdarashaw.com
	Tel.: 022-6617 8484;Fax: 022-6656 8494

Principal Business Activities of The Company

II

All the business activities contributing 10% or more of the total turnover of the company shall be stated

Sr. No. Name and Description of main products / services 1 Manufacturingand sale of automotive tyres,tubes and faps	Sr. No. Name and Description of main products / services 1 Manufacturingand sale of automotive tyres,tubes and faps	Sr. No. Name and Description of main products / services 1 Manufacturingand sale of automotive tyres,tubes and faps	NIC Code of the Product / Service 22111	% to total turnover of the Company	% to total turnover of the Company
					100%
III Particulars of Holding, Subsidiary and Associate Companies Sr. No. Name and address of the Company CIN / GLN 1 Associated CEAT Holdings Company (Private) Limited, 50/2, Sir James Peiris Mawatha, Colombo 2 Foreign Body Corporate 2 CEAT AKKHAN LTD, 802 Shanta Western Tower 186, Tejgaon I/A,Dhaka 1208 Foreign Body Corporate 3 CEAT Specialty Tyres Limited RPG House, 463, Dr. Annie Besant Road,Worli,Mumbai 400 030 U25199MH2012PLC236623 4 Rado Tyres Limited, Building No 39/3B-3B1, Opposite Krishna Hospital, Chittoor Road, Cochin 682 011 U25111KL1986PLC004449 5 Tyresnmore Online Private Limited, S-40, First Floor, Janta Market, Rajouri Garden New Delhi,India 110 027 U25119DL2014PTC267768
	Name and address of the Company	CIN / GLN	Holding / Subsidiary / Associate	% of shares held*	Applicable Section
	Associated CEAT Holdings Company (Private) Limited, 50/2, Sir James Peiris Mawatha, Colombo 2	Foreign Body Corporate	Subsidiary	100%	2(87)
2	CEAT AKKHAN LTD, 802 Shanta Western Tower 186, Tejgaon I/A,Dhaka 1208	Foreign Body Corporate	Subsidiary	70%	2(87)
3	CEAT Specialty Tyres Limited RPG House, 463, Dr. Annie Besant Road,Worli,Mumbai 400 030	U25199MH2012PLC236623	Subsidiary	100%	2(87)
4	Rado Tyres Limited, Building No 39/3B-3B1, Opposite Krishna Hospital, Chittoor Road, Cochin 682 011	U25111KL1986PLC004449	Subsidiary	87.62%	2(87)
5	Tyresnmore Online Private Limited, S-40, First Floor, Janta Market, Rajouri Garden New Delhi,India 110 027	U25119DL2014PTC267768	Associate	41.30%	2(6)

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No.of Shares held at the beginning No.of Shares held at the end %
of the year i.e. 01-Apr-2019 of the year i.e. 31-Mar-2020 Change
Category of Shareholders % of % of during
Total Total the year
Demat Physical Total Shares Demat Physical Total Shares
(A) Promoters
(1) Indian
(a) Individuals / Hindu Undivided Family 1,48,137 - 1,48,137 0.37 1,48,137 - 1,48,137 0.37 -
(b) Central Government / State Governments(s) - - - - - - - - -
(c) Bodies Corporate 1,87,33,200 - 1,87,33,200 46.31 1,87,37,062 - 1,87,37,062 46.32 0.01
(d) Financial Institutions / Banks - - - - - - - - -
(e) Any Other - Trusts 6 - 6 0.00 46 - 46 0.00 0.00
Sub-Total (A) (1) 1,88,81,343 - 1,88,81,343 46.68 1,88,85,245 - 1,88,85,245 46.69 0.01
(2) Foreign
(a) Individuals (Non-Resident Individuals / Foreign - - - - - - - - -
Individuals)
(b) Bodies Corporate 17,82,348 - 17,82,348 4.41 - - - - (4.41)
(c) Institutions - - - - - - - - -
(d) Qualified Foreign Investor - - - - - - - - -
(e) Any Other (specify) - - - - - - - - -
Sub-Total (A) (2) 17,82,348 - 17,82,348 4.41 - - - - (4.41)
Total Shareholding of Promoter and 2,06,63,691 - 2,06,63,691 51.08 1,88,85,245 - 1,88,85,245 46.69 (4.40)
Promoter Group (A)
(B) Public Shareholding
(1) Institutions
(a) Mutual Funds / UTI 20,96,459 9,198 21,05,657 5.21 24,63,528 9,198 24,72,726 6.11 0.91
(b) Financial Institutions / Banks 2,08,705 4,822 2,13,527 0.53 18,867 3,374 22,241 0.05 (0.47)
(c) Central Government / State Governments(s) - 9,700 9,700 0.02 - 67 67 0.00 (0.02)
(d) Venture Capital Funds - - - - - - - - -
(e) Insurance Companies 7,20,140 75 7,20,215 1.78 10,98,742 75 10,98,817 2.72 0.94
(f) Foreign Institutional Investors 1,38,698 2,436 1,41,134 0.35 112 2,436 2,548 0.01 (0.34)
(g) Foreign Venture Capital Investors - - - - - - - - -
(h) Any Other - Foreign Portfolio Investors (Corporate) 98,72,015 - 98,72,015 24.41 1,14,08,062 - 1,14,08,062 28.20 3.80
Sub-Total (B) (1) 1,30,36,017 26,231 1,30,62,248 32.29 1,49,89,311 15,150 1,50,04,461 37.09 4.80
(2) Non-Institutions
(a) Bodies Corporate
i Indian Companies 1,28,266 17,372 1,45,638 0.36 1,31,762 12,769 1,44,531 0.36 (0.00)
ii Foreign Companies 14,21,375 37 14,21,412 3.51 14,21,375 37 14,21,412 3.51 -
(b) Individuals - -
i Individual Shareholders holding nominal share 36,72,763 4,64,146 41,36,909 10.23 36,69,641 4,10,320 40,79,961 10.09 (0.14)
capital up to H 1 lakh
ii Individual Shareholders holding nominal share 40,718 - 40,718 0.10 53,718 - 53,718 0.13 0.03
capital in excess of H 1 lakh
(c) Others:
i Non-Resident Indian 2,18,665 81 2,18,746 0.54 2,31,530 44 2,31,574 0.57 0.03
ii Trusts 28,252 - 28,252 0.07 45,289 - 45,289 0.11 0.04
iii Investor Education and Protection Fund 2,24,210 - 2,24,210 0.55 2,54,474 - 2,54,474 0.63 0.07
iv Hindu Undivided Family 1,05,039 - 1,05,039 0.26 1,15,515 - 1,15,515 0.29 0.03
v Director or Director's Relatives 4,207 - 4,207 0.01 4,207 - 4,207 0.01 -
vi Clearing Members 3,73,004 - 3,73,004 0.92 1,94,623 - 1,94,623 0.48 (0.44)
vii Unclaimed Securities Suspense Account 15,532 - 15,532 0.04 12,706 - 12,706 0.03 (0.01)
viii Limited Liability Partnership 5,370 - 5,370 0.01 2,176 - 2,176 0.01 (0.01)
ix Bodies Corporate-NBFC 5,116 - 5,116 0.01 200 - 200 0.00 (0.01)
Sub-total (B) (2) 62,42,517 4,81,636 67,24,153 16.62 61,37,216 4,23,170 65,60,386 16.22 (0.40)
Total Public Shareholding (B) = (B)(1)+(B)(2) 1,92,78,534 5,07,867 1,97,86,401 48.92 2,11,26,527 4,38,320 2,15,64,847 53.31 4.40
TOTAL (A)+(B) 3,99,42,225 5,07,867 4,04,50,092 100.00 4,00,11,772 4,38,320 4,04,50,092 100.00 -
(C) Shares held by Custodians and against which - - - - - - - - -
Depository Receipts have been issued
GRAND TOTAL (A)+(B)+(C) 3,99,42,225 5,07,867 4,04,50,092 100.00 4,00,11,772 4,38,320 4,04,50,092 100.00 -
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Includes preference shares held by the Company in the respective subsidiary / associate company

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ii) Shareholding of promoters and promoters group

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Shareholding at the beginning of the Shareholding at the end of the year as % change in
year as on 01-Apr-2019 on 31-Mar-2020 shareholding
Sr. No. of % of total % of shares No. of % of total % of shares during the
Shareholder’s name
No. shares shares of pledged / shares shares of pledged / year
the encumbered the encumbered
Company to total shares Company to total shares
1 Instant Holdings Limited 1,18,16,662 29.21 - 1,18,20,524 29.22 - 0.01
2 Swallow Associates LLP 44,84,624 11.09 - 44,84,624 11.09 - -
3 Societe Ceat D'Investissements En Asie S. A, SPF 17,82,348 4.41 - - - - (4.41)
4 STEL Holdings Limited 14,16,757 3.50 - 14,16,757 3.50 - -
5 Summit Securities Limited 10,14,230 2.51 - 10,14,230 2.51 - -
6 Mr. H. V. Goenka 1,33,932 0.33 - 1,33,932 0.33 - -
7 Mr. Anant Goenka 14,185 0.04 - 14,185 0.04 - -
8 Ms. Mala Goenka 10 0.00 - 10 0.00 - -
9 Ms. Radha Goenka 10 0.00 - 10 0.00 - -
10 Sudarshan Electronics And TV Limited 1 0.00 - 1 0.00 - -
11 Chattarpati Apartments LLP 876 0.00 - 876 0.00 - -
12 Atlantus Dwellings and Infrastructure LLP 10 0.00 - 10 0.00 - -
13 Ektara Enterprises LLP 10 0.00 - 10 0.00 - -
14 Malabar Coastal Holdings LLP 10 0.00 - 10 0.00 - -
15 Sofreal Mercantrade Private Limited 10 0.00 - 10 0.00 - -
16 Vayu Udaan Aircraft LLP 10 0.00 - 10 0.00 - -
17 Mr. H. V. Goenka 1 0.00 - 1 0.00 - -
(in the Capacity of Trustee of Secura India Trust)
18 Mr. H. V. Goenka 1 0.00 - 1 0.00 - -
(in the Capacity Trustee of Stellar Energy Trust)
19 Mr. H. V. Goenka 1 0.00 - 1 0.00 - -
(in the Capacity Trustee of Nucleus Life Trust)
20 Mr. H. V. Goenka 1 0.00 - 1 0.00 - -
(in the Capacity Trustee of Crystal India Tech Trust)
21 Mr. H. V. Goenka 1 0.00 - 1 0.00 - -
(in the Capacity Trustee of Monitor Portfolio Trust)
22 Mr. H. V. Goenka 1 0.00 - 1 0.00 - -
(in the Capacity Trustee of Prism Estates Trust)
23 Mr. H. V. Goenka - - - 10 0.00 - 0.00
(in the Capacity Trustee of Ishaan Goenka Trust)
24 Mr. H. V. Goenka - - - 10 0.00 - 0.00
(in the Capacity Trustee of Navya Goenka Trust)
25 Mr. Anant Goenka - - - 10 0.00 - 0.00
(in the Capacity Trustee of RG Family Trust)
26 Mr. Anant Goenka - - - 10 0.00 - 0.00
(in the Capacity of Trustee of AVG Family Trust)
Total 2,06,63,691 51.08 - 1,88,85,245 46.69 - (4.40)
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iii) Change in Promoters’ and promoter group Shareholding

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Shareholding at the beginning of Cumulative shareholding during
the year as on 01-Apr-2019 the year 2019-20
Sr.
Particulars No. of shares % of total No. of shares % of total
No.
shares of the shares of the
Company Company
At the beginning of the year 01-Apr-2019 2,06,63,691.00 51.08
Date wise increase / decrease
1 Instant Holdings Limited
27-Mar-2020 Market Purchase 3,862.00 0.01 2,06,67,553 51.09
2 Mr. H.V. Goenka (in the Capacity of Trustee of Navya Goenka Trust)
22-Nov-2019 Market Purchase 10.00 0.00 2,06,67,563 51.09
3 Mr. H.V. Goenka (in the Capacity of Trustee of Ishaan Goenka Trust)
22-Nov-2019 Market Purchase 10.00 0.00 2,06,67,573 51.09
4 Mr. Anant Goenka (in the Capacity of Trustee of RG Family Trust)
22-Nov-2019 Market Purchase 10.00 0.00 2,06,67,583 51.09
5 Mr. Anant Goenka (in the Capacity of Trustee of AVG Family Trust)
28-Jun-2019 Market Purchase 10.00 0.00 2,06,67,593 51.09
6 Societe Ceat D’Investissements En Asie S. A, SPF
30-Aug-2019 Market Sale (250.00) (0.00) 2,06,67,343 51.09
20-Sep-2019 Market Sale (2,30,000.00) (0.57) 2,04,37,343 50.52
08-Nov-2019 Market Sale (8,00,000.00) (1.98) 1,96,37,343 48.55
06-Dec-2019 Market Sale (7,52,098.00) (1.86) 1,88,85,245 46.69
At the End of the year 31-Mar-2020 1,88,85,245 46.69
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iv) Shareholding pattern of top ten Shareholders as on 31-Mar-2020 (other than Directors, Promoters and Holders of GDRs and ADRs)

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Shareholding at the Cumulative shareholding
beginning of the year as during the year 2019-20
on 01-Apr-2019
Sr.
Name of the Shareholder No. of % of total No. of % of total
No.
shares Shares shares Shares
of the of the
Company Company
1 Amansa Holdings Private Limited
At the beginning of the year 01-Apr-2019 24,09,373 5.96
Date wise increase / (decrease)
12-Apr-2019 Market Purchase 6,477 0.02 24,15,850 5.97
19-Apr-2019 Market Purchase 42,924 0.11 24,58,774 6.08
03-May-2019 Market Purchase 11,877 0.03 24,70,651 6.11
10-May-2019 Market Purchase 1,26,262 0.31 25,96,913 6.42
17-May-2019 Market Purchase 89,592 0.22 26,86,505 6.64
24-May-2019 Market Purchase 47,800 0.12 27,34,305 6.76
14-Jun-2019 Market Purchase 81,513 0.20 28,15,818 6.96
21-Jun-2019 Market Purchase 2,95,792 0.73 31,11,610 7.69
25-Jul-2019 Market Purchase 35,989 0.09 31,47,599 7.78
01-Aug-2019 Market Purchase 27,138 0.07 31,74,737 7.85
02-Aug-2019 Market Purchase 1,280 0.00 31,76,017 7.85
09-Aug-2019 Market Purchase 15,219 0.04 31,91,236 7.89
13-Dec-2019 Market Purchase 20,354 0.05 32,11,590 7.94
20-Dec-2019 Market Purchase 6,925 0.02 32,18,515 7.96
20-Mar-2020 Market Purchase 2,247 0.01 32,20,762 7.96
27-Mar-2020 Market Purchase 1,348 0.00 32,22,110 7.97
At the end of the year 31-Mar-2020 32,22,110 7.97
2 Jwalamukhi Investment Holdings
At the beginning of the year 01-Apr-2019 29,53,366 7.30
Date wise increase / (decrease)
26-Apr-2019 Market Sale (81,408) (0.20) 28,71,958 7.10
03-May-2019 Market Sale (10,776) (0.03) 28,61,182 7.07
10-May-2019 Market Sale (3,08,532) (0.76) 25,52,650 6.31
20-Dec-2019 Market Sale (38,198) (0.09) 25,14,452 6.22
27-Dec-2019 Market Sale (21,704) (0.05) 24,92,748 6.16
10-Jan-2020 Market Sale (46,283) (0.11) 24,46,465 6.05
17-Jan-2020 Market Sale (45,534) (0.11) 24,00,931 5.94
24-Jan-2020 Market Sale (48,181) (0.12) 23,52,750 5.82
13-Mar-2020 Market Sale (18,759) (0.05) 23,33,991 5.77
At the end of the year 31-Mar-2020 23,33,991 5.77
3 India Opportunities Growth Fund Ltd - Pinewood Strategy
At the beginning of the year 01-Apr-2019 - -
Date wise increase / (decrease)
20-Sep-2019 Market Purchase 2,30,000 0.57 2,30,000 0.57
08-Nov-2019 Market Purchase 8,00,000 1.98 10,30,000 2.55
06-Dec-2019 Market Purchase 7,52,098 1.86 17,82,098 4.41
At the end of the year 31-Mar-2020 17,82,098 4.41
4 Mirae Asset - Mutual Fund
At the beginning of the year 01-Apr-2019 8,80,126 2.18
Date wise increase / (decrease)
05-Apr-2019 Market Sale (66,901) (0.17) 8,13,225 2.01
10-May-2019 Market Sale (69,046) (0.17) 7,44,179 1.84
24-May-2019 Market Sale (1,61,500) (0.40) 5,82,679 1.44
31-May-2019 Market Sale (20,000) (0.05) 5,62,679 1.39
14-Jun-2019 Market Sale (70,000) (0.17) 4,92,679 1.22
28-Jun-2019 Market Sale (75,000) (0.19) 4,17,679 1.03
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CEAT LIMITED | ANNUAL REPORT 2019-20

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Shareholding at the Cumulative shareholding
beginning of the year as during the year 2019-20
on 01-Apr-2019
Sr.
Name of the Shareholder No. of % of total No. of % of total
No.
shares Shares shares Shares
of the of the
Company Company
05-Jul-2019 Market Purchase 29,975 0.07 4,47,654 1.11
12-Jul-2019 Market Purchase 25 0.00 4,47,679 1.11
09-Aug-2019 Market Purchase 2,19,674 0.54 6,67,353 1.65
16-Aug-2019 Market Purchase 34,213 0.08 7,01,566 1.73
23-Aug-2019 Market Purchase 47,969 0.12 7,49,535 1.85
30-Aug-2019 Market Purchase 54,510 0.13 8,04,045 1.99
06-Sep-2019 Market Purchase 14,607 0.04 8,18,652 2.02
13-Sep-2019 Market Purchase 30,877 0.08 8,49,529 2.10
20-Sep-2019 Market Purchase 52,378 0.13 9,01,907 2.23
27-Sep-2019 Market Purchase 1,37,635 0.34 10,39,542 2.57
30-Sep-2019 Market Purchase 35,240 0.09 10,74,782 2.66
04-Oct-2019 Market Purchase 47,782 0.12 11,22,564 2.78
11-Oct-2019 Market Purchase 6,090 0.02 11,28,654 2.79
18-Oct-2019 Market Purchase 20,782 0.05 11,49,436 2.84
25-Oct-2019 Market Purchase 27,302 0.07 11,76,738 2.91
01-Nov-2019 Market Purchase 10,574 0.03 11,87,312 2.94
08-Nov-2019 Market Purchase 10,955 0.03 11,98,267 2.96
15-Nov-2019 Market Purchase 18,500 0.05 12,16,767 3.01
22-Nov-2019 Market Purchase 6,000 0.01 12,22,767 3.02
29-Nov-2019 Market Purchase 1,55,042 0.38 13,77,809 3.41
06-Dec-2019 Market Purchase 37,867 0.09 14,15,676 3.50
13-Dec-2019 Market Purchase 9,994 0.02 14,25,670 3.52
20-Dec-2019 Market Purchase 6,500 0.02 14,32,170 3.54
27-Dec-2019 Market Purchase 17,363 0.04 14,49,533 3.58
03-Jan-2020 Market Purchase 6,709 0.02 14,56,242 3.60
10-Jan-2020 Market Purchase 11,666 0.03 14,67,908 3.63
17-Jan-2020 Market Purchase 29,902 0.07 14,97,810 3.70
14-Feb-2020 Market Purchase 14,077 0.03 15,11,887 3.74
21-Feb-2020 Market Purchase 22,260 0.06 15,34,147 3.79
28-Feb-2020 Market Purchase 61,633 0.15 15,95,780 3.95
06-Mar-2020 Market Purchase 45,404 0.11 16,41,184 4.06
13-Mar-2020 Market Purchase 33,650 0.08 16,74,834 4.14
20-Mar-2020 Market Purchase 59,838 0.15 17,34,672 4.29
At the end of the year 31-Mar-2020 17,34,672 4.29
5 Westbridge Crossover Fund, LLC
At the beginning of the year 01-Apr-2019 14,21,375 3.51
No Change - - 14,21,375 3.51
At the end of the year 31-Mar-2020 14,21,375 3.51
6 The New India Assurance Company Limited
At the beginning of the year 01-Apr-2019 3,70,395 0.92
Date wise increase / (decrease)
05-Apr-2019 Market Purchase 21,680 0.05 3,92,075 0.97
12-Apr-2019 Market Purchase 61,645 0.15 4,53,720 1.12
19-Apr-2019 Market Purchase 55,000 0.14 5,08,720 1.26
26-Apr-2019 Market Purchase 11,675 0.03 5,20,395 1.29
13-Dec-2019 Market Purchase 89,296 0.22 6,09,691 1.51
20-Dec-2019 Market Purchase 45,515 0.11 6,55,206 1.62
27-Dec-2019 Market Purchase 65,189 0.16 7,20,395 1.78
10-Jan-2020 Market Purchase 21,676 0.05 7,42,071 1.83
24-Jan-2020 Market Purchase 1,427 0.00 7,43,498 1.84
----- End of picture text -----*

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Shareholding at the Cumulative shareholding
beginning of the year as during the year 2019-20
on 01-Apr-2019
Sr.
Name of the Shareholder No. of % of total No. of % of total
No.
shares Shares shares Shares
of the of the
Company Company
31-Jan-2020 Market Purchase 17,191 0.04 7,60,689 1.88
07-Feb-2020 Market Purchase 18,015 0.04 7,78,704 1.93
At the end of the year 31-Mar-2020 7,78,704 1.93
7 Tata Mutual Fund
At the beginning of the year 01-Apr-2019 11,60,775 2.87
Date wise increase / (decrease)
05-Apr-2019 Market Purchase 15,500 0.04 11,76,275 2.91
12-Apr-2019 Market Sale (30,800) (0.08) 11,45,475 2.83
03-May-2019 Market Sale (800) (0.00) 11,44,675 2.83
10-May-2019 Market Purchase 31,600 0.08 11,76,275 2.91
17-May-2019 Market Sale (29,200) (0.07) 11,47,075 2.84
24-May-2019 Market Sale (1,45,000) (0.36) 10,02,075 2.48
31-May-2019 Market Sale (1,03,475) (0.26) 8,98,600 2.22
07-Jun-2019 Market Sale (57,600) (0.14) 8,41,000 2.08
14-Jun-2019 Market Sale (16,000) (0.04) 8,25,000 2.04
28-Jun-2019 Market Sale (25,000) (0.06) 8,00,000 1.98
09-Aug-2019 Market Purchase 1,00,000 0.25 9,00,000 2.22
27-Sep-2019 Market Sale (65,000) (0.16) 8,35,000 2.06
29-Nov-2019 Market Sale (1,35,000) (0.33) 7,00,000 1.73
10-Jan-2020 Market Purchase 8,000 0.02 7,08,000 1.75
At the end of the year 31-Mar-2020 7,08,000 1.75
8 Mirae Asset India Mid Cap Equity
Fund
At the beginning of the year 01-Apr-2019 5,49,609 1.36
Date wise increase / (decrease)
12-Apr-2019 Market Sale (53,688) (0.13) 4,95,921 1.23
26-Jul-2019 Market Purchase 12,408 0.03 5,08,329 1.26
At the end of the year 31-Mar-2020 5,08,329 1.26
9 Crestwood Capital Master Fund, Ltd.
At the beginning of the year 01-Apr-2019 3,35,000 0.83
Date wise increase / (decrease)
24-May-2019 Market Purchase 20,000 0.05 3,55,000 0.88
12-Jul-2019 Market Purchase 30,000 0.07 3,85,000 0.95
25-Jul-2019 Market Sale (40,000) (0.10) 3,45,000 0.85
13-Sep-2019 Market Sale (80,000) (0.20) 2,65,000 0.66
27-Sep-2019 Market Purchase 80,000 0.20 3,45,000 0.85
17-Jan-2020 Market Purchase 50,000 0.12 3,95,000 0.98
14-Feb-2020 Market Purchase 50,000 0.12 4,45,000 1.10
At the end of the year 31-Mar-2020 4,45,000 1.10
10 Vanguard Total International Stock Index Fund
At the beginning of the year 01-Apr-2019 2,62,110 0.65
Date wise increase / (decrease)
26-Apr-2019 Market Sale (6,828) (0.02) 2,55,282 0.63
17-May-2019 Market Purchase 47,150 0.12 3,02,432 0.75
25-Jul-2019 Market Purchase 22,510 0.06 3,24,942 0.80
At the end of the year 31-Mar-2020 - 0.80 3,24,942 0.80
----- End of picture text -----*

*Note: The shares of the Company are traded on daily basis. Hence the date wise increase / (decrease) in the shareholding of the above Shareholders are consolidated based on the weekly beneficial position and Permanent Account Number (PAN) of the Shareholder.

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FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

v) Shareholding of Directors and Key Managerial Personnel

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Shareholding at the Cumulative shareholding
beginning of the year as during the year 2019-20
Sr. on 01-Apr-2019
Name of Directors and Key Managerial Personnel
No. No. of % of total No. of % of total
shares shares of the shares shares of the
Company Company
1 Mr. H. V. Goenka, Chairman, Non-executive Director
At the beginning of the year 1,33,932 0.33
and at the end of the year-No change during the
year ended 31-Mar-2020 1,33,932 0.33
2 Mr. Anant Goenka, Managing Director
At the beginning of the year 14,185 0.04
and at the end of the year-No change during the
year ended 31-Mar-2020 14,185 0.04
3 Mr. Paras K. Chowdhary, Independent Director
At the beginning of the year 3,000 0.01
and at the end of the year-No change during the
year ended 31-Mar-2020 3,000 0.01
4
Mr. Arnab Banerjee, Chief Operating Officer
At the beginning of the year 1,207 0.00
and at the end of the year-No change during the
year ended 31-Mar-2020 1,207 0.00
5
Mr. Kumar Subbiah, Chief Financial Officer
At the beginning of the year 500 0.00
and at the end of the year-No change during the
year ended 31-Mar-2020 500 0.00
6 Ms. Vallari Gupte, Company Secretary
At the beginning of the year 15 0.00
and at the end of the year-No change during the
year ended 31-Mar-2020 15 0.00
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Notes:

No other Director holds shares in the Company.
Shares held above are in individual capacity and do not include shares held in any other capacity.

V) Indebtedness

Indebtedness of the Company including interest outstanding / accrued but not due for payment

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( H in Lacs)
Secured Loans Unsecured Total
excluding Loans Deposits Indebtedness
Deposits
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Indebtedness at the beginning of the Financialyear
i)Principal Amount	1,03,437.42	22,614.00	0.20	1,26,051.62
ii)Interest due but notpaid	-	-	-	-
iii)Interest accrued but not due	537.92	-	-	537.92
Total(i+ii+iii)	1,03,975.34	22,614.00	0.20	1,26,589.54
Change in Indebtedness during the Financialyear
· Addition(includes only principal)	44,237.70	-	-	44,237.70
· Reduction(includes only principal)	(5,483.00)	(5,148.00)	-	(10,631.00)
Net Changes	38,754.70	(5,148.00)	-	33,606.70
Indebtedness at the end of the Financialyear
i)Principal Amount	1,42,192.12	17,466.00	0.20	1,59,658.32
ii)Interest due but notpaid	-	-	-	-
iii)Interest accrued but not due	739.00	-	-	739.00
Total(i+ii+iii)	1,42,931.12	17,466.00	0.20	1,60,397.32

VI Remuneration of the Directors and Key Managerial Personnel

A. Remuneration to Managing Director, Whole-time Directors and / or Managers

Sr. No. 1								(`H`in Lacs)	(`H`in Lacs)
	Particulars of Remuneration		Mr. Anant Goenka, Managing Director			Mr. Arnab Banerjee, Chief Operating Offcer (COO)		Total Amount
	Gross Salary
	a) Salary as per provision contained in Section 17(1) of Income Tax Act,1961			475.56			276.95	752.50
	b) Value of perquisite under Section 17(2) of Income Tax Act,1961			42.37			0.50	42.87
	c) Proft in lieu of salary under Section 17(3) of Income Tax Act,1961			-			-	-
2	Stock Option			-			-	-
3	Sweat Equity			-			-	-
4	Commission			-			-	-
	* Aspercent ofproft			-			-	-
	* Others,Specify			-			-	-
5	Others(retiral benefts)			40.54			17.82	58.37
	Total(A)			558.47			295.27	853.74
	Ceiling as per the Act (being 10% of net profts of the Companycalculated asper Section 198 of the Act)							3,532.63
B. Remuneration to other Directors Sr. No. Particulars of Remuneration Independent Directors · Fee for attendingBoard / Committee meetings · Commission · Others,please specify Total(1)								(`H`in Lacs)
				Name of Directors					Total Amount
	Particulars of Remuneration	Mr. Mahesh S. Gupta	Mr. Haigreve Khaitan	Mr. Atul C. Choksey	Mr. Vinay Bansal		Mr. Paras K. Chowdhary	Ms. Punita Lal
	Independent Directors
	· Fee for attendingBoard / Committee meetings	9.95	5.00	5.00	10.25		9.95	3.30	43.45
	· Commission	7.00	7.00	7.00	7.00		7.00	7.00	42.00
	· Others,please specify	-	-	-	-		-	-
	Total(1)	16.95	12.00	12.00	17.25		16.95	10.30	85.45
		Mr. H. V Goenka
	Other Non-executive Directors
	· Fee for attendingboard committee meetings	6.30							6.30
	· Commission	40.00							40.00
	· Others,please specify	-		-	-		-	-
	Total(2)	46.30							46.30
	Total(B) =(1+2)								131.75
	Total Managerial Remuneration								131.75
	Overall Ceilingasper the Act*								3,885.89

Notes:

Sitting Fees have not been considered as a component for reckoning of remuneration as per the Companies Act, 2013.
Mr. Pierre E. Cohade, Non-executive Director was not eligible for receipt of remuneration including sitting fees and commission from the Company.
Mr. Ranjit V. Pandit, Independent Director has voluntarily waived off his right to receive remuneration including sitting fees and commission from the Company.

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CORPORATE OVERVIEW

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CEAT LIMITED | ANNUAL REPORT 2019-20

C. Remuneration to Key Managerial Personnel other than MD / Manager / WTD

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----- Start of picture text -----

( H in Lacs)
Sr. Particulars of Remuneration Mr. Kumar Ms. Vallari Gupte Total Amount
No. Subbiah Company
Chief Financial Secretary (CS)
Officer (CFO)
----- End of picture text -----

1	Gross Salary
	a) Salary as per provision contained in section 17(1) of Income Tax Act,1961	190.07	47.15	237.22
	b)Value ofperquisite u / s 17(2)of Income Tax Act,1961	0.51	0.02	0.53
	c) Proft in lieu of salary under section u / s 17(3) of Income Tax Act,1961	-	-	-
2	Stock Option	-	-	-
3	Sweat Equity	-	-	-
4	Commission	-	-	-
	* Aspercent ofproft	-	-	-
	* Others,specify	-	-	-
5	Othersplease specify (retiral benefts)	5.61	3.03	8.64
	Total(A)	196.19	50.20	246.39

VII. Penalties / Punishment / Compounding of offences:

During FY 2019-20 there were no penalties / punishment / compounding of offences under the Companies Act, 2013.

Annexure to the Board’s Report

Particulars of Employees

Remuneration details Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended) for the year ended March 31, 2020

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----- Start of picture text -----

Sr. Particulars Name of the Director Ratio of the Percentage
No. remuneration increase/
of each director decrease in
to the median remuneration
remuneration of of each
the employees of Director [(2)]
the Company [(1)]
----- End of picture text -----

(i)	The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the fnancial year;	Mr. H. V.Goenka	12.63	(87.83)
		Mr. Anant Goenka	152.29	18.04
		Mr. Arnab Banerjee	80.52	1.39
		Mr. Atul C. Choksey	3.28	-
		Mr. Mahesh S. Gupta	4.63	5.61
	The percentage increase / decrease in remuneration of each Director, Chief Financial Offcer (CFO), Chief Executive Offcer, Company Secretary (CS) or manager, if any, in the fnancial year;	Mr. Haigreve Khaitan	3.28	-
		Mr. Paras K. Chowdhary	4.71	23.21
		Ms. Punita Lal	2.81	(20.77)
		Mr. VinayBansal	4.71	9.52
				(2.76)
		Ms. Vallari Gupte,CS		N.A.(3)
(ii)	The percentage increase in the median remuneration of employees in the fnancialyear(1);	24.57
(iii)	The number of permanent employees on the rolls of the Companyas on March 31,2020;	6,474 employees
(iv)	Average percentile increase already made in the salaries of employees other than the managerial personnel in the last fnancial year and its comparison with the percentile increase in the managerial remuneration and justifcation thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;	The average increase in salaries of employees (other than managerial personnel) during the FY 2019-20 was 11.83%, whereas that in salaries of the managerial personnel was 9.71%, in view of the rationalisation done to align the salaries with the external benchmarks. Compensation benchmarking process is followed by the Company to evaluate the individual salaries internally and externally and the increment given to each employee is based on the market benchmark, performance and potential of the individual and performance of the Company duringthe fnancialyear.
(v)	Affrmation that the remuneration is as per the remunerationpolicyof the Company;	Remuneration paid during the FY 2019-20 was as per the Nomination and Remuneration Policyof the Company.

Notes:

(1) Median remuneration of the employees is calculated on the basis of remuneration details of employees including the Managing Director and the Whole-time Director.
(2) Directors’ remuneration includes commission and sitting fees for FY 2019-20. While Commission is determined based on the contribution and tenure served by Non-executive Directors during the year, the sitting fees are paid based on the number of meetings of Board and Committee attended by them respectively. Therefore, variation in the remuneration of the Directors could be attributed to the committee positions held and the number of meetings attended by them during the year.
(3) Ms. Vallari Gupte was appointed as Company Secretary w.e.f. October 25, 2018 and remuneration for FY 2018-19 was paid only for the part of year and hence increase is not comparable between previous year and current financial year.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure to the Board’s Report

Secretarial Audit Report

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):

Form No. MR - 3 FOR THE FINANCIAL YEAR ENDED MARCH 31, 2020

[Pursuant to Section 204 (1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

To,

The Members, CEAT Limited

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and amendments from time to time; (Not applicable to the Company during the audit period)

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by CEAT Limited (hereinafter called ‘the Company’). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing our opinion thereon.

(d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (Not applicable to the Company during the audit period)

Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company, the information to the extent provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, the explanations and clarifications given to us and the representations made by the Management and considering the relaxations granted by the Ministry of Corporate Affairs and the Securities and Exchange Board of India warranted due to the spread of the COVID-19 pandemic, we hereby report that in our opinion, the Company has during the audit period covering the financial year ended on March 31, 2020, generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Not applicable to the Company during the audit period)
(f) The Securities and Exchange Board of India (Registrars to an Issue and Registrar and Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (Not applicable to the Company during the audit period)
(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the audit period) and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018; (Not applicable to the Company during the audit period)

We have examined the books, papers, minute books, forms and returns filed and other records made available to us and maintained by the Company for the financial year ended on March 31, 2020 according to the applicable provisions of:

(vi) Other laws applicable specifically to the Company namely:-
a. The Rubber Act, 1947 and The Rubber Rules, 1955

We have also examined compliance with the applicable clauses of the following:

(i) The Companies Act, 2013 (‘the Act’) and the rules made thereunder;
(i) Secretarial Standards issued by The Institute of Company Secretaries of India with respect to board and general meetings.
(ii) The Securities Contract (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(ii) The Listing Agreements entered into by the Company with National Stock Exchange of India Limited and BSE Limited read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

During the period under review, the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards etc. mentioned above.

amalgamation of CEAT Specialty Tyres Limited (wholly owned subsidiary) with the Company. Digital copy of the same became accessible on the NCLT website on May 25, 2020, however signed Certified copy order of NCLT was awaited till the date of this report.

We further report that:

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Approval by Shareholder at its Annual General Meeting held on August 1, 2019:
a. Under Section 180(1)(c) of the Act for borrowings in excess of the aggregate of the paid-up capital of the Company, subject to the total amount outstanding at any time shall not exceed the limit of H 2,000 Crores (Rupees Two Thousand Crores only) in excess of the aggregate of the paid-up capital of the Company and its free reserves.

Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance for meetings other than those held at shorter notice and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

b. Under Section 180(1)(a) of the Act for creation of mortgage / charge / hypothecation, on the movable or immovable properties of the Company.

Decisions at the Board Meetings were taken unanimously.

We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines etc.

Signature: P. N. Parikh Partner Place: Mumbai FCS No: 327 CP No: 1228 Date: May 28, 2020 UDIN: F000327B000291321

We further report that during the audit period the following events occurred which had bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards etc.

This Report is to be read with our letter of even date which 1. Approval of Scheme of Amalgamation by Honorable is annexed as Annexure A and Forms an integral part of this National Company Law Tribunal (‘NCLT’) for report.

‘Annexure A’

To, The Members, CEAT Limited

Our Report of even date is to be read along with this letter. 5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is
1. Maintenance of secretarial record is the responsibility the responsibility of management. Our examination was of the Management of the Company. Our responsibility limited to the verification of procedure on test basis. is to express an opinion on these secretarial records based on our audit. 6. The Secretarial Audit report is neither an assurance as
The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the Management has conducted the affairs of the Company.
We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion.

For Parikh & Associates Company Secretaries

We have not the correctness and verified

appropriateness of financial records and Books of Accounts of the Company.

Signature: P. N. Parikh Partner FCS No: 327 CP No: 1228 UDIN: F000327B000291321

Where ever required, we have obtained the Management Representation about the Compliance of laws, rules and regulations and happening of events etc.

Place: Mumbai

Date: May 28, 2020

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CORPORATE OVERVIEW VALUE CREATION

FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Corporate Governance Report

standards of Corporate Governance. The Board of CEAT, being at the core of its Corporate Governance practice, plays most pivotal role in overseeing the management in serving and protecting the long-term interests of all its stakeholders.

Securities and Exchange Board of India (‘SEBI’) vide its Notification No. SEBI/LAD-NRO/GN/2018/10 dated May 9, 2018, notified various amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations’), being implemented with effect from several dates as prescribed therein.

The CEAT’s Board plays a vibrant role in deriving its business in an ethical and profitable way to ensure the maximisation of its stakeholders’ value, in line with its purpose statement ‘Making Mobility Safer & Smarter. Every Day.’ The Board guides the management to run business as a socially responsible and ethically compliant corporate citizen and in a sustainable way.

This Corporate Governance Report of CEAT Limited (‘CEAT’ or ‘the Company’) for FY 2019-20, thus prepared pursuant to the Listing Regulations, as amended and circulars issued thereunder, forms part of the Board’s Report and states compliance as per requirements of the Companies Act, 2013 and Rules made thereunder as amended and the Listing Regulations.

Composition of the Board

The Board of the Company has a good and diverse mix of Executive and Non-executive Directors with majority of the Board Members comprising of Independent Directors in line with the applicable provisions of the Companies Act, 2013 and Listing Regulations.

I. CEAT’S PHILOSOPHY ON CORPORATE GOVERNANCE

Corporate Governance is an integral part of CEAT’s values, ethics and best business practices followed by CEAT. Corporate Governance is the broad framework which defines the way CEAT functions and interacts with its environment. CEAT follows laws and regulations in each of the markets where it operates, leading to effective management of the organisation. Moreover, CEAT in its journey towards sustainability is integrating sustainability practices in its governance system which goes beyond compliance. CEAT is guided by a key set of values for all its internal and external interactions. Simultaneously, in keeping with the best practices, CEAT seeks to execute the practices of Corporate Governance by maintaining strong business fundamentals and by delivering high performance through relentless focus on its core values, which are as following:

The composition of the Board is in conformity with the requirements of the Companies Act, 2013 and the Listing Regulations. The Board of CEAT has an optimum combination of Executive and Non-executive Directors with one Woman Independent Director and more than half of the Board comprising of Independent Directors, satisfying the criteria prescribed under the amended Listing Regulations.

The composition of the Board during the year under review was as under:

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18 %
18 %
As on
As on
March
April
31, 2020
1, 2019
18 % 18 %
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Commitment to excellence and customer satisfaction;
Maximising long-term shareholders’ value;
Socially valued enterprise and
Caring for people and environment.

In a nutshell, the philosophy can be described as observing of business practices with the ultimate aim of enhancing long-term shareholders’ value and commitment to a high standard of business ethics. CEAT has in place a Code of Corporate Ethics and Conduct reiterating its commitment to maintain the highest standards in its interface with stakeholders and clearly laying down the core values and corporate ethics to be practiced by its entire management cadre.

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64 % 64 %
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Executive Directors (1 Promoter and 1 Non-promoter)

Non-executive Non-independent Directors (1 Promoter, others Non-promoters)

II. THE BOARD OF DIRECTORS

Independent Directors (Including a Woman Independent Director)

CEAT believes that a dynamic, well-informed and independent Board is essential to ensure highest

Disclosure of relationships between directors inter se

Mr. H. V. Goenka, Chairman and Mr. Anant Goenka, Managing Director of the Company are related to each other as father and son. None of the other Directors are related to each other.

Details of changes in the Board during the year

The Members of the Company had appointed Mr. H. V. Goenka (DIN: 00026726) who retired by rotation, as Director of the Company at the Annual General Meeting (‘AGM’) held on August 1, 2019. The Members of the Company had also appointed Mr. Atul C. Choksey (DIN: 00002102), Mr. Haigreve Khaitan (DIN: 00005290), Mr. Mahesh S. Gupta (DIN: 00046810), Ms. Punita Lal (DIN: 03412604), Mr. Vinay Bansal (DIN: 00383325) as Independent Directors of the Company for the second term of 5 (five) consecutive years from September 26, 2019 to September 25, 2024 at the AGM held on August 1, 2019.

The Board at its meeting held on May 28, 2020, based on the recommendations of the Nomination and Remuneration Committee has appointed Mr. Ranjit V. Pandit (DIN: 00782296) as an Independent Director for the second term of 5 (five) consecutive years from August 12, 2020, subject to approval of shareholders at the ensuing AGM of the Company.

During the year under review, none of the Independent Director(s) of the Company resigned before the expiry of the respective tenure.

Board Meetings and Governance

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other statutory matters as required to be deliberated and approved by the Board. The Board / Committee Meetings are pre-scheduled and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors well in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board’s approval is taken by passing resolutions by circulation, as permitted by law, which are noted and confirmed in the subsequent Board Meeting.

The notice of Board / Committee Meetings is given well in advance to all the Directors. Video / tele-conferencing facilities are also provided to facilitate the Directors who are travelling or located at other locations to participate in the meetings seamlessly. The Agenda is circulated a week prior to the date of the Meeting. The Board Agenda includes an Action Taken Report comprising of actions emanating from the Board / Committee Meetings and status updates thereof. The Management endeavours to provide the Board with sufficient information apart from the items as mandated for discussion by the Board under Regulation 17(7) read with Part A of Schedule II to the Listing Regulations. Through various information

being placed or presented at the Board meetings, the Board is kept well informed about the overall functioning of the Company, which enables the Board to contribute to the growth of the Company and helps them to take informed decisions. Prior approval from the Board is obtained for circulating the agenda items with shorter notice for matters that form part of the Board and Committee Agenda and are considered to be in the nature of Unpublished Price Sensitive Information.

The Board periodically reviews the updates on the projects, business performance, risk management, strategies, people, processes, compliance with applicable laws and other key affairs of the Company having impact on the business. The Board is satisfied that plans are in place for orderly succession for appointment to the Board and to the Senior Management.

The Agenda of the Board / Committee Meetings is set by the Company Secretary in consultation with the Chairman, Managing Director and Chief Financial Officer of the Company. The Company Secretary is responsible for collation, review and distribution of all papers submitted to the Board and Committees thereof for consideration. The Company Secretary attends all the Meetings of the Board and its Committees to assist the Board and its Committees on Compliance and Governance principles and ensures appropriate recording of minutes of the Meetings.

The adoption of a digital application has enabled the Company to conduct paperless Board Meetings, thereby improving governance while simplifying the process of conducting such meetings. This involves conducting the meetings efficaciously, with the Board being able to access information directly on their digital devices. The application meets high standards of security and integrity that are required for storage and transmission of Board / Committee Agenda and prereads in electronic form.

The Independent Directors of the Company at their meeting held on March 12, 2020 appreciated the Board’s visit at the Company’s plant at Halol, its R&D facility and also appreciated 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.

The Managing Director and Chief Operating Officer are responsible for the day-to-day management of the Company, subject to the supervision, direction and control of the Board. The Managing Director and Chief Operating Officer are ably assisted by the Executive Committee and Operating Committee respectively for implementing the decisions and strategic policies of the Board for effective execution.

During the year under review, the Board met 6 (six) times on April 3, 2019, May 7, 2019, August 1, 2019, October 22, 2019, January 22, 2020 and March 12, 2020 and not more than 120 (one hundred and twenty) days elapsed between the 2 (two) meetings.

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CORPORATE OVERVIEW

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FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

The composition, category of Directors and their attendance details at the aforesaid Board meetings and at the last AGM of the Company held on August 1, 2019 are as given below:

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Name of the Director Category of Directors Number of Board % of Attendance at
Meetings Attendance the last AGM
Mr. H. V. Goenka Non-executive Non-independent
Director (Chairman) (Promoter)
Mr. Anant Goenka Managing Director (Promoter)
Mr. Arnab Banerjee Whole-time Director
Mr. Atul C. Choksey Independent Director
Mr. Haigreve Khaitan Independent Director
Mr. Mahesh S. Gupta Independent Director
Mr. Paras K. Chowdhary Independent Director
Mr. Pierre E. Cohade Non-executive
Non-independent Director
Ms. Punita Lal Independent Director
Mr. Ranjit V. Pandit Independent Director
Mr. Vinay Bansal Independent Director
100% 83.33% 50% Yes No
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Details of shares held by Non-executive Directors

As on March 31, 2020, 2 (two) Non-executive Directors, viz. Mr. H. V. Goenka and Mr. Paras K. Chowdhary held 1,33,932 and 3,000 shares in the Company respectively and such shares do not include shares held by them in any other capacity.

Directorship(s) / Committee membership(s) held by Directors

Details of Directorship(s) / Committee membership(s) / Chairmanship(s) held by Directors as on March 31, 2020

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Name of the Director Directorships in public Committee Position
companies
Listed Unlisted Membership (including Chairmanship
Chairmanship)
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Mr. H. V. Goenka	5	2	-	-
Mr. Anant Goenka	3	3	-	-
Mr. Arnab Banerjee	1	1	-	-
Mr. Atul C. Choksey	2	2	-	-
Mr. Haigreve Khaitan	7	1	7	4
Mr. Mahesh S. Gupta	5	1	5	3
Mr. Paras K. Chowdhary	2	2	4	2
Mr. Pierre E. Cohade	1	-	-	-
Ms. Punita Lal	2	-	-	-
Mr. Ranjit V. Pandit	2	5	5	1
Mr. VinayBansal	1	-	2	1

Details of Directorship(s) held by Directors in listed companies as on March 31, 2020

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Name of the Director Name of the listed companies Category of Directorship in listed
companies
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Mr. H. V. Goenka	CEAT Limited	Non-executive Director(Chairman)
	KEC International Limited	Non-executive Director(Chairman)
	Zensar Technologies Limited	Non-executive Director(Chairman)
	RPG Life Sciences Limited	Non-executive Director(Chairman)
	BajajElectricals Limited	Independent Director
Mr. Anant Goenka	CEAT Limited	ManagingDirector
	Zensar Technologies Limited	Non-executive Director
	STEL Holdings Limited	Non-executive Director

Name of the Director	Name of the listed companies	Category of Directorship in listed companies
Mr. Arnab Banerjee	CEAT Limited	Whole-time Director
Mr. Atul C. Choksey	CEAT Limited	Independent Director
	Apcotex Industries Limited	Non-executive Director
Mr. Haigreve Khaitan	CEAT Limited	Independent Director
	JSW Steel Limited	Independent Director
	Inox Leisure Limited	Independent Director
	Torrent Pharmaceuticals Limited	Independent Director
	Borosil Renewables Limited	Independent Director
	Tech Mahindra Limited	Independent Director
	Mahindra and Mahindra Limited	Independent Director
Mr. Mahesh S. Gupta	CEAT Limited	Independent Director
	Peninsula Land Limited	Non-executive Director
	Morarjee Textiles Limited	Non-executive Director
	RPG Life Sciences Limited	Independent Director
	Shree DigvijayCement Co. Limited	Independent Director
Mr. Paras K. Chowdhary	CEAT Limited	Independent Director
	Phillips Carbon Black Limited	Independent Director
Mr. Pierre E. Cohade	CEAT Limited	Non-executive Director
Ms. Punita Lal	CEAT Limited	Independent Director
	Cipla Limited	Independent Director
Mr. Ranjit V. Pandit	CEAT Limited	Independent Director
	The Great Eastern ShippingCompanyLimited	Independent Director
Mr. VinayBansal	CEAT Limited	Independent Director

Notes:

As required under the amended Regulation 17A of the Listing Regulations, none of the directors holds directorship in more than 7 (seven) listed companies and as per declarations received, none of the directors serves as an Independent Director in more than 7 (seven) listed companies, across the directorships held including that in CEAT Limited. Further, the Whole-time Directors in the Company do not serve as an Independent Director of any listed company.
The amended Regulation 17A of the Listing Regulations provides for inclusion of only equity listed entities reckoning the directorship in listed entity, in view of the said regulation becoming effective from April 1, 2019, directorships in all listed entities have been considered for reporting as above.
None of the directors was a member in more than 10 (ten) committees, nor a chairman in more than 5 (five) committees across all companies in which he was a director, including those held in CEAT Limited.
For the purpose of considering the limit of the committees on which a Director can serve, all public limited companies, whether listed or not, have been included and all other companies including private limited companies, foreign companies and companies under Section 8 of the Companies Act, 2013, have been excluded. Only Audit Committee and Stakeholders’ Relationship Committee are considered for the purpose of reckoning committee positions.

Skills / Expertise / Competence of the Board

With a view to achieve a sustainable development, the Company aims to have right balance on its Board with attributes such as experience of diverse nature, qualifications, knowledge and competencies in wide spectrum of functional areas required in the context of Company’s business, gender representation etc.

The Directors are eminent industrialists / professionals and have expertise in their respective functional areas, which bring with them the reputation of independent judgment and experience.

As required under the Listing Regulations, as amended effective April 1, 2019, the list of core skills / expertise / competencies identified by the Board of Directors as required in the context of its business(es) and sector(s) for it to function effectively and those actually available with the Board were disclosed in the Corporate Governance Report of the previous year.

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FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

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The details of Directors of the Company who possess those skills / expertise / competencies are as given below:
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||||||
|---|---|---|---|---|
|Mr. H. V. Goenka|Skills / Expertise / Competencies|
|Chairman, Non-executive Director|
|General|Thought|CEO / Senior|Tyre Industry|Human|
|Management|Leadership|Management|experience|Resources|
|and Business|experience|Management|
|Operations|
|Risk|Accounting /|Strategy / M&A|Corporate|International|
|Management|Finance / Legal|/ Restructuring|Governance|Business|
|Mr. Anant Goenka|Skills / Expertise / Competencies|
|Managing Director|
|General|CEO / Senior|Business|Risk|Human|
|Management|Management|Development|Management|Resources|
|and Business|experience|/ Sales /|Management|
|Operations|Marketing|
|Strategy / M&A|Corporate|Tyre Industry|International|
|/ Restructuring|Governance|experience|Business|
|Skills / Expertise / Competencies|
|Mr. Arnab Banerjee|
|COO and Whole-time Director|
|General|CEO / Senior|Tyre Industry|Risk|Business|
|Management|Management|experience|Management|Development|
|and Business|experience|/ Sales /|
|Operations|Marketing|
|Corporate|Strategy / M&A|International|
|Governance|/ Restructuring|Business|
|Skills / Expertise / Competencies|
|Mr. Atul C. Choksey|
|Non-executive|
|Independent Director|
|General|Thought|CEO / Senior|Business|Human|
|Management|Leadership|Management|Development|Resources|
|and Business|experience|/ Sales /|Management|
|Operations|Marketing|
|Strategy / M&A|Corporate|Risk|International|
|/ Restructuring|Governance|Management|Business|

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Skills / Expertise / Competencies

Mr. Haigreve Khaitan Non-executive Independent Director

General Thought CEO / Senior Public Policy Human Management Leadership Management / Government Resources and Business experience Regulations Management Operations Accounting / Strategy / M&A Corporate Finance / Legal / Restructuring Governance Skills / Expertise / Competencies Mr. Mahesh S. Gupta Non-executive Independent Director General CEO / Senior Public Policy Human Risk Management Management / Government Resources Management and Business experience Regulations Management Operations Accounting / Strategy / M&A Corporate Finance / Legal / Restructuring Governance

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||||||
|---|---|---|---|---|
|Skills / Expertise / Competencies|
|Mr. Paras K. Chowdhary|
|Non-executive Independent|
|Director|
|General|CEO / Senior|Business|Human|Risk|
|Management|Management|Development|Resources|Management|
|and Business|experience|/ Sales /|Management|
|Operations|Marketing|
|Accounting /|Strategy / M&A|Corporate|Tyre Industry|
|Finance / Legal|/ Restructuring|Governance|experience|

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||||||
|---|---|---|---|---|
|Mr. Pierre E. Cohade|Skills / Expertise / Competencies|
|Non-executive|
|Non-independent Director|
|General|CEO / Senior|Tyre Industry|Business|Human|
|Management|Management|experience|Development|Resources|
|and Business|experience|/ Sales /|Management|
|Operations|Marketing|
|Accounting /|Strategy / M&A|Corporate|International|Risk|
|Finance / Legal|/ Restructuring|Governance|Business|Management|

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FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

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||||||
|---|---|---|---|---|
|Ms. Punita Lal|Skills / Expertise / Competencies|
|Non-executive|
|Independent Director|
|General|Thought|CEO / Senior|Business|International|
|Management|Leadership|Management|Development|Business|
|and Business|experience|/ Sales /|
|Operations|Marketing|
|Strategy / M&A|Corporate|
|/ Restructuring|Governance|
|Skills / Expertise / Competencies|
|Mr. Ranjit V. Pandit|
|Non-executive|
|Independent Director|
|General|Thought|CEO / Senior|Public Policy|Human|
|Management|Leadership|Management|/ Government|Resources|
|and Business|experience|Regulations|Management|
|Operations|
|Risk|Corporate|Accounting /|Strategy / M&A|International|
|Management|Governance|Finance / Legal|/ Restructuring|Business|
|Skills / Expertise / Competencies|
|Mr. Vinay Bansal|
|Non-executive|
|Independent Director|
|General|CEO / Senior|Public Policy|Business|Human|
|Management|Management|/ Government|Development|Resources|
|and Business|experience|Regulations|/ Sales /|Management|
|Operations|Marketing|
|Risk|Corporate|
|Management|Governance|

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The details of familiarisation programme are provided at https://www.ceat.com/corporate/investor/corporategovernance

Familiarisation Programme for Independent Directors

Pursuant to the Code of Conduct for Independent Directors specified under the Companies Act, 2013 and requirements of the Listing Regulations, the Company has framed a familiarisation programme for all its Independent Directors. The Company follows a structured orientation programme for the Independent Directors to familiarise them to understand the nature of industry the Company operates into, its business model, updates on the business and operations of the Company and their roles, rights and responsibilities.

Confirmation of independence of Independent Directors

The Independent Directors provide an annual confirmation that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Listing Regulations.

The Board at its meeting held on May 28, 2020, reviewed the declaration of independence submitted by the

with the Related Party Transaction Policy of the Company;

Independent Directors and carried out due assessment of the veracity of the same noting that the Independent Directors of the Company fulfil the conditions specified in the Listing Regulations and are independent of the management.

recommending the appointment, remuneration and term of appointment of Statutory Auditors of the Company and approval for availing any other services;

Directors and Officers Liability Insurance (D&O) Policy

reviewing and monitoring the Auditor’s independence and performance and effectiveness of audit process; reviewing with the Management, performance of Statutory Auditors and Internal Auditors, adequacy of internal control systems; reviewing the adequacy of internal audit function and discussing with Internal Auditors any significant finding and follow-up thereon;

The Company has been taking the D&O Policy since the year 2013, even before it became mandatory pursuant to the amendment to the Listing Regulations, providing coverage to the Independent / Non-executive Directors.

III. COMMITTEES OF THE BOARD

The Committees of the Board play a significant role in the governance structure of the Company and have been instituted to transact / approve the matters as instructed by applicable regulations concerning the Company and as per the requirement of the Board. The Board Committees are set up under the formal approval of the Board to carry out clearly defined roles, as a part of good governance practice. The Chairman of the respective Committees informs the Board about the summary of the discussions held in the Committee Meetings. The minutes of the meetings of all Committees are placed before the Board for review and noting. The Board Committees request special invitees to join the meeting, as appropriate.

evaluating internal financial controls and risk management systems, reviewing the functioning of the whistle blower mechanism.

As on March 31, 2020, the Committee consisted of 3 (three) Independent Directors, viz. Mr. Mahesh S. Gupta, as the Chairman and Mr. Paras K. Chowdhary and Mr. Vinay Bansal as members of the Committee.

In compliance with the Companies Act, 2013 and Regulation 18(1)(c) of the Listing Regulations, all the 3 (three) members of the Committee are independent and are financially literate. Moreover, the Committee has members who have relevant experience in financial matters as well as have accounting or related financial management expertise.

a) Audit Committee

In accordance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations, the Company has formed its Audit Committee, composition and terms of reference which are in conformity with the said provisions and are available at https://www.ceat. - com/corporate/investor/corporate governance

During the year under review, the Committee met 6 (six) times on April 3, 2019, May 7, 2019, July 31, 2019, October 22, 2019, January 21, 2020 and March 12, 2020 and not more than 120 (one hundred and twenty) days elapsed between the 2 (two) meetings.

The Committee acts as a link between the Management, the Statutory Auditors, Internal Auditors and the Board. The Committee supervises the Company’s internal controls, monitors the inter Company’s financial reporting process and alia performs the following functions:

The details of composition of the Committee and the attendance at the meetings held during the year are given below:

overseeing the Company’s financial reporting process and disclosure of financial information to ensure that the financial statements are correct, sufficient and creditable;

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|||||||
|---|---|---|---|---|---|
|Name|Category of|Attendance|% of|
|correct, sufficient and creditable;|of the|Director|at the|Attendance|
|Director|Committee|
|reviewing performance of and examining with|
|meeting|
|the Management, Quarterly and Annual Financial|
|Mr. Mahesh|Independent|
|Results and the Auditor’s Report thereon before|
|S. Gupta|Director|
|submission to the Board for approval;|
|(Chairman)|
|reviewing|Management|Discussion|and|Mr. Paras K.|Independent|
|Analysis of financial condition and results of|Chowdhary|Director|
|operations;|Mr. Vinay|Independent|
|Bansal|Director|
|reviewing, approving or subsequently modifying|
|any Related Party Transactions in accordance|100%|

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CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

The Company Secretary functions as the Secretary to the Committee. The Committee invites the Statutory Auditors and the Internal Auditors for discussions at the meeting. The Cost Auditors are invited as and when required. Managing Director, Chief Financial Offcer, Head-Internal Audit and Vice President-Finance are permanent invitees at the Committee meetings. Members of Senior Management team also attend the meetings depending on the agenda.	Name of the Director	Category of Director	Attendance at the Committee meeting	% of Attendance
	Mr. Paras K. Chowdhary	Independent Director
	Mr. Vinay Bansal	Independent Director
	100%

Mr. Mahesh S. Gupta, the Chairman of the Committee was present at the AGM of the Company held on August 1, 2019 to answer the queries of the shareholders.

The minutes of the meetings of the Committee are placed before and noted by the Board. During the year, all recommendations of the Audit Committee as mandatorily required were accepted by the Board.

The minutes of the meetings of the Committee are placed before and noted by the Board. During the year, all recommendations of the Nomination and Remuneration Committee as mandatorily required were accepted by the Board.

Mr. Mahesh S. Gupta, Chairman of the Committee was present at the AGM of the Company held on August 1, 2019, to answer the queries of the shareholders.

b) Nomination and Remuneration Committee

Performance evaluation criteria for Independent Directors

In accordance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations, the Company has formed its Nomination and Remuneration Committee, composition and terms of reference of which are in conformity with the said provisions and are available at https://www.ceat.com/corporate/ - investor/corporate governance

Pursuant to the provisions of the Companies Act, 2013 and Regulation 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, individual Directors and of its Committees. The Company had appointed external independent agency for carrying out the said evaluation process in a transparent manner by using the questionnaire considered / approved by the Board after taking into account the Guidance Note issued by SEBI vide its Circular SEBI/HO/CFD/CMD/CIR/2017/004 dated January 5, 2017 and the recommendations of the Nomination and Remuneration Committee, covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committees, board culture, execution and performance of specific duties, obligations, compliance and governance etc.

The Committee inter alia , reviews matters relating to appointment / re-appointment and remuneration of Directors, Key Managerial Personnel, Senior Management Personnel; formulating a criteria for effective evaluation of the performance of the Board, its Committees, Chairperson and individual Directors and devising a policy on diversity of the Board.

As on March 31, 2020, the Committee consisted of 3 (three) Independent Directors, comprising of Mr. Mahesh S. Gupta, as the Chairman and Mr. Paras K. Chowdhary and Mr. Vinay Bansal as members of the Committee.

The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Directors being evaluated. The performance evaluation of the Chairman and the Non-independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction over the evaluation process.

During the year under review, the Committee met 3 (three) times on May 7, 2019, June 24, 2019, and March 12, 2020.

The details of composition of the Committee and the attendance at the meetings held during the year are given below:

c) Stakeholders’ Relationship Committee

In accordance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 20 of the Listing Regulations, the Company has formed its Stakeholders’ Relationship Committee, composition and terms of reference of which are in conformity with the said provisions and are available at https:// - www.ceat.com/corporate/investor/corporate governance

Name of the Director	Category of Director	Attendance at the Committee meeting % of Attendance	Attendance at the Committee meeting % of Attendance
Mr. Mahesh S. Gupta (Chairman)	Independent Director

The Committee inter alia reviews the mechanism of redressal of grievances of the securities holders, service level of Registrar and Transfer Agents and deals with other matters concerning securities holder including dividend.

As on March 31, 2020, the Committee consisted of 3 (three) Independent Directors, comprising of Mr. Vinay Bansal, as the Chairman and Mr. Mahesh S. Gupta, and Mr. Paras K. Chowdhary, as members of the Committee.

During the year under review, the Committee met 2 (two) times on October 22, 2019 and March 12, 2020.

The details of composition of the Committee and the attendance at the meetings held during the year are given below:

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Name Category of Attendance % of
of the Director at the Attendance
Director Committee
meeting
Mr. Vinay Independent
Bansal Director
(Chairman)
Mr. Paras K. Independent
Chowdhary Director
Mr. Mahesh Independent
S. Gupta Director
----- End of picture text -----

100%

Mr. Vinay Bansal, the Chairman of the Committee was present at the AGM of the Company held on August 1, 2019, to answer the queries of the shareholders.

Details of Compliance Officer during the period under review

Ms. Vallari Gupte, Company Secretary acts as the Compliance Officer of the Company.

Details of complaints received during the year under review

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Particulars Numbers
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Complaints as on April 1,2019*	1
Complaints received during FY 2019- 20	19
Complaints disposed-off during FY 2019-20	20
Complaints not solved to the satisfaction of shareholders during FY 2019-20	0
Complaints remaining pending as on March 31,2020	0

*Complaint was received on March 26, 2019 through SCORES and was resolved after March 31, 2019.

d) Risk Management Committee

Pursuant to the provisions of Regulation 21 of the Listing Regulations, w.e.f. April 1, 2019 top 500 listed entities based on their market capitalisation are required to form a Risk Management Committee of the Board, which previously was applicable only for the top 100 such listed entities.

The Company, however, has constituted its Risk Management Committee well before it became applicable to the Company under the aforesaid provisions. Composition and terms of reference of the Committee are in conformity with the said provisions and are available at https://www.ceat. - com/corporate/investor/corporate governance

The Committee inter alia reviews the business risk including strategic, operational, financial, cyber security and compliance risks, approves its mitigation plans and monitors effectiveness thereof.

During the year under review, the Committee met 2 (two) times on July 31, 2019 and March 12, 2020.

The details of composition of the Committee and the attendance at the meetings held during the year are given below:

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Name Category of Attendance % of
of the Director at the Attendance
Director Committee
meeting
Mr. Mahesh Independent
S. Gupta Director
(Chairman)
Mr. Paras K. Independent
Chowdhary Director
Mr. Vinay Independent
Bansal Director
100%
----- End of picture text -----

Managing Director, Chief Operating Officer, Chief Financial Officer, Head-Internal Audit who also functions as Chief Risk Officer are permanent invitees for the Committee meetings. Members of Senior Management team also attend the meetings depending on the agenda.

The minutes of the meetings of the Committee are placed before and noted by the Board. During the year, all recommendations of the Risk Management Committee as mandatorily required were accepted by the Board.

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CEAT LIMITED | ANNUAL REPORT 2019-20

the Finance and Banking Committee and delegated some of its powers, which inter alia include approving matters concerning borrowing and investment of surplus fund, banking and treasury operations, issue of power of attorney and authorisation for day to day operations etc. The composition and terms of reference of the Committee are available at https://www.ceat.com/ - corporate/investor/corporate governance

Disclosure of Risk Management

The Company has in place an Enterprise Risk Management framework to identify risks and minimise their adverse impact on the business of the Company and strives to create transparency which in turn enhances the Company’s competitive advantage.

Pursuant to the aforesaid business risk framework, the Company has identified the business risks associated with its operations and an action plan for mitigation of the same is put in place. The business risks and its mitigation have been dealt with in the Management Discussion and Analysis section of this Annual Report.

As on March 31, 2020, the Committee consisted of 3 (three) members, Mr. Anant Goenka, as Chairman of the Committee, Mr. Arnab Banerjee and Mr. H. V. Goenka as members of the Committee.

During the year under review, Committee met 7 (seven) times on April 3, 2019, June 11, 2019, August 1, 2019, September 11, 2019, November 5, 2019, January 21, 2020 and March 12, 2020.

e) Corporate Social Responsibility Committee

In accordance with provisions of Section 135 of the Companies Act, 2013, the Board has formed the Corporate Social Responsibility Committee, composition and terms of reference of which are in conformity with the said provisions and are available at https://www.ceat.com/corporate/ - investor/corporate governance

The details of composition of the Committee and the attendance at the meetings held during the year are given below:

==> picture [464 x 264] intentionally omitted <==

----- Start of picture text -----

Name Category of Attendance % of
As on March 31, 2020, the Committee consisted of the Director at the Attendance
of 3 (three) members, Mr. Anant Goenka, as Director Committee
Chairman of the Committee, Ms. Punita Lal and meeting
Mr. Vinay Bansal as members of the Committee.
Mr. Anant Executive
Goenka Director
During the year under review, the Committee met 2
(Chairman) (Managing
(two) times on May 7, 2019 and March 12, 2020.
Director)
The details of composition of the Committee and Mr. Arnab Whole-time
the attendance at the meetings held during the Banerjee Director
year are given below: (Chief
Operating
Name Category of Attendance % of Officer)
of the Director at the Attendance Mr. H. V. Non-
Director Committee Goenka independent
meeting Director
(Chairman)
Mr. Anant Managing
Goenka Director
100% 85.71%
(Chairman)
Ms. Punita Independent The minutes of the meetings of the Committee are
Lal Director placed before and noted by the Board. During
Mr. Vinay Independent the year under review, there were no instances
Bansal Director
----- End of picture text -----

The minutes of the meetings of the Committee are placed before and noted by the Board. During the year under review, there were no instances where recommendation of the Committee was not accepted by the Board.

100%

g) Independent Directors Meeting

More details about the Committee and details of expenditure made by the Company pertaining to CSR are described in detail in the Annual Report on CSR activities, as annexed to the Board’s Report, forming a part of this Annual Report.

In compliance with Schedule IV to the Companies Act, 2013 and Regulation 25(3) of the Listing Regulations, the Independent Directors of the Company held their separate meeting on March 12, 2020, without the attendance of the Nonindependent directors and members of the Management, to, inter alia :

f) Finance and Banking Committee (NonMandatory Committee)

The Board with an objective of easing business transaction and to facilitate the timely approval of the routine but important matters has constituted

i. Review the performance of Non-independent Directors and the Board as a whole;
ii. Review the performance of the Chairperson considering the views of Executive Directors and Non-executive Directors;

Managing Director / Whole-time Director compensation

Remuneration payable to Mr. Anant Goenka, Managing Director is pursuant to the approval accorded by the Members vide special resolution passed at the AGM of the Company held on August 8, 2017 and is governed by the agreement dated April 1, 2017 entered into with Mr. Anant Goenka incorporating the terms of his appointment including remuneration.

iii. Assess the quality, quantity and timelines of flow of information between the Company’s Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

All the Independent Directors were present at the meeting and Mr. Atul C. Choksey was elected to Chair the meeting.

Mr. Arnab Banerjee who has been appointed as a Whole-time Director is paid remuneration pursuant to the approval granted by the special resolution passed at the AGM of the Company held on July 20, 2018 and the agreement dated April 30, 2018 governing the terms of his appointment including remuneration.

The Independent Directors deliberated on the above and expressed their satisfaction on each of the matters.

The remuneration paid to the Managing Director and the Whole-time Director is duly recommended by the Nomination and Renumeration Committee and approved by the Board of Directors, in accordance with the Nomination and Remuneration Policy of the Company.

IV. REMUNERATION OF DIRECTORS

Details of remuneration paid to the directors during FY 2019-20 are provided in Part VI of the extract of Annual Return in the prescribed format Form MGT-9, which forms part of this Annual Report.

Mr. Anant Goenka, Managing Director and Mr. Arnab Banerjee, Whole-time Director (Chief Operating Officer) do not receive any profit related commission from any of the subsidiaries of the Company.

The Members of the Company at the AGM of the Company held on July 20, 2018, vide a special resolution approved the payment of remuneration / commission to the Non-executive Directors of the Company, up to a sum not exceeding 3% (three percent) of the net profits of the Company, calculated in accordance with the provisions of Section 198 of the Companies Act, 2013, in the manner as may be decided by the Board from time to time.

Disclosures as per Schedule V to the Listing Regulations, pertaining to remuneration of Directors:

All elements of the remuneration package of individual Directors summarised under major groups, such as salary, benefits, bonuses, stock options, pension, fixed component and performance linked incentives etc, are disclosed under Form MGT- 9, which forms a part of the Board’s Report.

In terms of the said approvals, Non-executive Directors of the Company are being paid commission as recommended by the Nomination and Renumeration Committee and approved by the Board. Additionally, Non-executive Directors are being paid sitting fees of H 1,00,000 per meeting of the Board, H 75,000 per meeting of Audit Committee and H 25,000 per meeting of Risk Management Committee, Stakeholders’ Relationship Committee, Corporate Social Responsibility Committee and Nomination and Remuneration Committee (revised from H 5,000 to H 25,000 during FY 2019-20), attended by them.

The Nomination and Remuneration Policy, inter alia , disclosing the criteria of making payments to Directors, Key Managerial Personnel and employees, along with the performance criteria is available at https://www.ceat.com/corporate/ -
investor#corporate governance
The Company does not have a practice of paying severance fees to any Director.

The Company currently does not have a stock option programme for any of its Directors.

V. GENERAL BODY MEETINGS / POSTAL BALLOT

Details of the General Meetings of the Company held in the last 3 (three) years along with summary of Special Resolutions passed thereat, as more particularly set out in the respective notices of such AGM, as passed by the Members, are as follows:

AGM / Day, Date, Time and Venue Particulars of Special Resolution EGM

58[th] AGM

Tuesday, August 8, 2017 at 3.00 Approval for appointment of Mr. Anant Goenka (DIN: 02089850) as p.m. at Ravindra Natya Mandir, Managing Director for further period of 5 (five) years and fixing his P. L. Deshpande Maharashtra remuneration. Kala Academy, Sayani Road, Approval for making offer or invitation to subscribe Non-convertible Prabhadevi, Mumbai 400 025. Debentures / Bonds or such other debt securities up to H 500 Crores

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AGM / Day, Date, Time and Venue Particulars of Special Resolution EGM 59[th] AGM Friday, July 20, 2018 at 3.30 Approval for appointment of Mr. Arnab Banerjee (DIN: 06559516) as p.m. at The Auditorium, Textile Whole-time Director for further period of 5 (five) years and fixing his Committee, next to Trade Plaza remuneration. (Tata Press), P. Balu Road, Approval for making offer or invitation to subscribe Non-convertible Prabhadevi Chowk, Prabhadevi, Debentures / Bonds or such other debt securities up to H 500 Crores Mumbai 400 025 Approval for payment of remuneration / commission to Non-executive Directors not exceeding 3% of the net profits of the Company 60[th] AGM Thursday, August 1, 2019 at 3.00 Approval for re-appointment of Mr. Atul C. Choksey (DIN: 00002102) p.m. Ravindra Natya Mandir, as Non-executive Independent Director for second term of 5 (five) P. L. Deshpande Maharashtra consecutive years with effect from September 26, 2019. Kala Academy, Sayani Road, Approval for re-appointment of Mr. Haigreve Khaitan (DIN: 00005290) Prabhadevi, Mumbai 400 025 as Non-executive Independent Director for second term of 5 (five) consecutive years with effect from September 26, 2019. Approval for re-appointment of Mr. Mahesh S. Gupta (DIN: 00046810) as Independent Director for second term of 5 (five) consecutive years with effect from September 26, 2019. Approval for re-appointment of Ms. Punita Lal (DIN: 03412604) as Nonexecutive Independent Director for second term of 5 (five) consecutive years with effect from September 26, 2019. Approval for re-appointment of Mr. Vinay Bansal (DIN: 00383325) as Non-executive Independent Director for second term of 5 (five) consecutive years with effect from September 26, 2019 and continuation of his directorship as Non-executive Independent Director after he attains the age of 75 (seventy-five) years during the aforesaid tenure. Approval for payment of annual remuneration of H 3,80,30,000/- for FY 2018-19 to Mr. H. V. Goenka (Non-executive Director), Chairman of the Company, being an amount exceeding 50% of the total annual remuneration payable to all the Non-executive Directors of the Company. Approval of borrowing under Section 180(1)(c) of the Companies Act, 2013 for borrowing not exceeding the limit of H 2,000 Crores (Rupees Two Thousand Crores Only) in excess of the aggregate of the paid-up capital of the Company and its free reserves, from time to time. Approval under Section 180(1)(a) of the Companies Act, 2013 to create mortgage and / or hypothecation, on any of movable and / or immovable properties. Approval for making offer or invitation to subscribe Non-convertible Debentures / Bonds or such other debt securities up to H 500 Crores.

During the year under review, no resolution was passed by the Company through Postal Ballot and there is no such proposal to pass any resolution through postal ballot as on the date of this Report.

Quarterly, half-yearly and annual financial results and other public notices issued to the Members are usually published in various leading dailies, such as Financial Express and Loksatta. These quarterly financial results are also hosted on the website of the Company.

VI. MEANS OF COMMUNICATION

Financial Results

Quarterly financial results are announced within 45 (fortyfive) days from the end of the quarter and annual audited results are announced within 60 (sixty) days from the end of the financial year as per the Regulation 33 of the Listing Regulations and are published in the newspapers in accordance with Regulation 47 of the Listing Regulations. Quarterly financial results are announced to stock exchanges within 30 (thirty) minutes from the closure of the Board meeting at which these are considered and approved.

Annual Report

Annual Report for FY 2018-19 containing inter alia, Audited Financial Statements, Boards’ Report, Management Discussion and Analysis and Corporate Governance Report etc. was sent to all the Members through courier / post, who had not registered their email ID and via email to all the Members who have

provided their email IDs. Annual Reports are also hosted on the website of the Company.

Press Release / Investor Presentations

The Company participates in various investor conferences and analyst meets and makes presentation there at. Press Releases, Investors presentation are submitted to the stock exchanges as well as are hosted on the website of the Company.

Website

The Company has a functional website, https:// www.ceat.com/ which under its ‘Investors’ section disseminates the information as required under the Companies Act, 2013 and the Listing Regulations, such as financial results, shareholding pattern, policies and codes, credit rating details, investor presentations, details of the corporate contact persons and share transfer agent of the Company, etc.

Email communications

As permitted under Section 20 and 136 of the Companies Act 2013, read with Companies (Accounts) Rules, 2014 during the year under review, the Company sent various communications, such as notice calling the general meeting, audited financial statements including Board’s report, credit of dividend intimation letters, etc. in electronic form at the email IDs provided by the Members and made available by them to the Company through the depositories.

Exclusive email ID for investors

The Company has [email protected] as the designated email ID exclusively for investors / Members servicing.

VII. OTHER DISCLOSURES

Related Party Transactions

All Related Party Transactions (RPTs) entered into by the Company during the year under review were on arms’ length basis and in the ordinary course of business. These RPTs did not attract provisions of Section 188 of the Companies Act, 2013 and were also not material RPTs under Regulation 23 of the Listing Regulations.

During the year under review, all RPTs were placed before the Audit Committee for its approval, as required under Section 177 of the Companies Act, 2013 and Regulation 23 of the Listing Regulations.

A statement showing the disclosure of transactions with related parties as required under Indian Accounting Standard 24 is set out separately under the Financial Statements.

There were no material transactions entered into with related parties, during the period under review, which may have had any potential conflict with the interests of the Company.

A Policy on Related Party Transaction has been formulated by the Board and is available at https://www. - ceat.com/corporate/investor#corporate governance

Details of non-compliance by the Company

The Company has complied with all the requirements of the stock exchanges, SEBI and statutory authorities related to the capital markets and there has been no instance of non-compliance and that no penalties, strictures were imposed on the Company by stock exchanges or SEBI during the last 3 (three) financial years.

Vigil Mechanism (Whistle Blower Policy)

In accordance with Section 177 of the Companies Act, 2013 and Rules made thereunder, read with Regulation 22 of the Listing Regulations, the Board has adopted a ‘Whistle Blower Policy and Vigil Mechanism’ for Directors and Employees to report their genuine concerns and actual / potential violations, if any, to the designated official of the Company fearlessly.

The said Policy provides the type of concerns / violations to be reported, investigation procedure, protection and safeguards and other related matters and the same is available at https://www.ceat.com/ - corporate/investor#corporate governance No personnel / employee of the Company has been denied access to the Audit Committee for reporting genuine concerns. During the year under review, 1 (one) complaint was received under the Whistle Blower Policy and was resolved. There are no pending complaints as on March 31, 2020.

Subsidiary Companies

The Company does not have any material subsidiary, as defined under Regulation 16 of the Listing Regulations and as prescribed for the purpose of Regulation 24 of the Listing Regulations. The Company has however, framed a Policy for determining Material Subsidiaries, as required pursuant to the said Regulation 16, which is available at https://www.ceat.com/corporate/ - investor#corporate governance

Provisions to the extent applicable as required under Regulation 24 of the Listing Regulations, with reference to subsidiary companies, were duly complied with.

During the year under review, the Audit Committee reviewed the financial statements of and in particular, the investments made by the unlisted subsidiaries, to the extent applicable. Minutes of the Board meetings of unlisted subsidiaries as well as a statement of all significant transactions and arrangements entered into by the subsidiary, as applicable, were regularly placed before the Board.

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Certificate of non-disqualification of Directors

Certificate from M/s Parikh & Associates, Practising Company Secretaries, confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by SEBI / Ministry of Corporate Affairs or any other statutory authority, is annexed to this Report.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has duly framed a Policy on Prevention of Sexual Harassment at Workplace and formed 8 (eight) Internal Complaints Committees (‘ICC’), as required pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, no complaints were received by the ICC.

Consolidated Fees paid / payable to Statutory Auditors

Details of total fees paid / payable for all services availed by the Company and its subsidiaries on a consolidated basis, to the Statutory Auditors and all entities in the network firm / network entity of which Statutory Auditor is a part, during the year under review are given below:

==> picture [226 x 71] intentionally omitted <==

----- Start of picture text -----

Name of Type of Name of Amount
Statutory Services Company (₹ in Lacs)
Auditor and or its
network subsidiaries
entity obtaining the
services
----- End of picture text -----

S R B C & CO LLP	Audit fee, Limited Review and Certifcation	CEAT Limited
S R B C & CO LLP	Audit fee, Limited Review and Certifcation	CEAT Specialty Tyres Limited
Qasem & Co. Chartered Accountants (EY Bangladesh)	Consultancy fees for formation of PF fund.	CEAT Akkhan Limited
Ernst & Young Sri Lanka	Internal Audit fee	Associated CEAT Holdings Company (Pvt)Limited
Total

Note: Above amount does not include reimbursement of out of pocket expenses.

Converted 1 LKR = 0.39735 INR as on March 31, 2020.

CEO and CFO Certification

The Managing Director (CEO) and the Chief Financial Officer (CFO) have issued a certificate pursuant to the provisions of Regulation 17(8) of the Listing Regulations certifying that the Financial Statements do not contain any untrue statement and these statements represent a true and fair view of the Company’s affairs.

Code of Conduct

The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company, which is available at https://www.ceat.com/ - corporate/investor#corporate governance

All the Board Members and Senior Management Personnel have affirmed compliance with the Code for the Financial Year ended March 31, 2020. A declaration to this effect signed by the Managing Director is annexed to this Report.

Prevention of Insider Trading

The Company has formulated a Code of Fair Disclosure (Including Determination of Legitimate Purpose), Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Designated Person(s) (‘the Code’) in accordance with provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended, to come into effect from April 1, 2019, with a view to regulate trading in securities by the Directors and Designated Persons as identified therein.

The Code prescribes for the procedures and compliances applicable for the preservation of unpublished price sensitive information under the aforesaid SEBI Regulations. Company Secretary acts as the Compliance Officer to ensure compliance with the requisite approvals on pre-clearance of trade, monitoring of trades and implementation of the Code under the overall supervision of the Board.

Annual Secretarial Compliance Report

Pursuant to Regulation 24A read with SEBI Circular CIR/CFD/CMD1/27/2019 dated February 8, 2019, M/s Parikh & Associates, Practising Company Secretaries carried out the audit for the FY 2019-20 for all applicable compliances as per SEBI Regulations and Circulars / Guidelines issued thereunder. There are no observations or qualifications under the said Report.

Report on Corporate Governance

This section, read together with the information given in the Board’s Report and the section on Management Discussion and Analysis, constitute the compliance report on Corporate Governance during the FY 2019-20. The Company, in compliance with the provisions of Regulation 27(2) of the Listing Regulations and submits the quarterly compliance report to the stock exchanges as required thereunder and uploads the same on its website.

Details of compliance with mandatory requirements

The Company is in compliance with the Corporate Governance requirements specified in Regulation 17 to 27 and Clauses (b) to (i) of Sub-regulation (2) of Regulation 46.

As per Regulation 34(3) read with Schedule V of the Listing Regulations the Company has obtained a certificate from M/s Parikh & Associates, Practising Company Secretaries confirming the compliance with the mandatory requirement of the Listing Regulations and the same is annexed to this Report.

Compliance with discretionary requirements

The status with regard to compliance by the Company with the discretionary requirements as listed out in Part E of Schedule II of the Listing Regulations is as under:

a. The position of Chairman of the Board and Managing Director are held by separate persons.
b. The Auditor’s Report on Standalone and Consolidated Financial Statements for the year ended March 31, 2020 are with unmodified audit opinion.
c. Internal Auditor reports directly to the Audit Committee in all the functional matters.

VIII. GENERAL SHAREHOLDER INFORMATION

Annual General Meeting (AGM)

Day/Date	Thursday,September 10,2020
Time	3.00p.m.(IST)
Venue / Mode	The Company is conducting meeting through Video Conferencing (‘VC’) / Other Audio Visual Means (‘OAVM’) pursuant to the MCA circulars. For details please refer to the Notice of AGM.

Annual General Meeting through Video Conferencing (‘VC’) or Other Audio Visual Means (‘OAVM’)

Since the beginning of the calendar year 2020 the spread of COVID-19 virus created a disruption in life and since being declared a global pandemic also resulted in a nationwide lockdown in India w.e.f. March 24, 2020. In view of the restriction on movement and social distancing norms to be followed by the people, the Ministry of Corporate Affairs and SEBI have essentially permitted to hold the general meetings of the companies through VC / OAVM. Accordingly, the Company has opted to provide such facility to the shareholders to join this AGM from remote locations using the technology provided through the e-voting platform of National Securities Depository Limited (‘NSDL’).

As a safety measure again, the companies are permitted this year to not publish or dispatch their annual reports to the members and to send them over email, where such email IDs are available and also to put on the company’s website. You may therefore note that the Integrated Annual Report of the Company for the Financial Year 2019-20 is hosted on the Company’s website at www.ceat.com. To receive the copy over email, the Members are requested to ensure that their email IDs are registered with the Registrar and Transfer Agents or the Depository participants, as the case may be.

The Company is also offering a facility to help you register your email ID with the Company, by sending an email on [email protected]. The Company may update its records for all the future communications on the given email ID. The Ministry of Corporate Affairs vide its Circulars dated April 8, 2020, April 12, 2020 and May 5, 2020 has provided an option to companies to conduct Annual General Meeting during the Calendar Year 2020 through ‘VC or OAVM’ and send Financial Statements (including Board’s Report, Auditor’s Report and other documents to be attached therewith) through email only.

Accordingly, the Annual Report of the Company for the Financial Year 2019-20 along with Notice of AGM are being sent only by email to the Members, and all other persons / entities entitled to receive the same and that the AGM will be convened through VC or OAVM.

Financial Year

The Company follows April 1 to March 31 as the financial year.

Dividend

The Board at its meeting held on March 12, 2020 declared an interim dividend at the rate of H 12 per equity share (120%) for the year ended March 31, 2020. The said interim dividend was remitted on March 27, 2020 through the approved electronic mode i.e., NEFT / RTGS / Direct Credit / NACH to all those Members whose bank account details were registered with the Company or were obtained through the respective Depository. However, due to the nationwide lockdown the same could not be despatched. All efforts would be taken up to complete the despatch as soon as the normalcy resumes.

The Board of Directors of the Company has proposed to consider the said interim dividend paid to be the final dividend for the Financial Year 2019-20 for the approval of Members at the ensuing AGM.

Considering the above, the Company has maintained the dividend payout for the Financial Year 2019-20 at H 12 per equity share of H 10 each (120%), same as in the previous year.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Listing on Stock Exchanges

Registrar and Transfer Agents for equity shares

The Equity shares of the Company are listed on the following stock exchanges:

The Company has appointed TSR Darashaw Consultants Private Limited (formerly TSR Darashaw Limited) (‘TSR’) as its Registrar and Transfer Agents and accordingly all physical transfers, transmissions, transpositions, issue of duplicate share certificate(s), issue of demand drafts in lieu of dividend warrants, etc. as well as requests for dematerialisation / rematerialisation are being processed in periodical cycles at TSR offices. The work related to dematerialisation / rematerialisation is handled by TSR through connectivity with NSDL and CDSL.

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Name Address Scrip /
Stock Code
----- End of picture text -----

BSE Limited	Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001	500878 (Equity)
National Stock Exchange of India Limited	Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai 400 051	CEATLTD (Equity)

During the year under review, the TSR’s name was changed from TSR Darashaw Limited to TSR Darashaw Consultants Private Limited w.e.f. May 28, 2019. The Company has communicated this information to the stock exchanges and also made it available on the Company’s website.

Listing fees for FY 2019-20 for both the stock exchanges were duly paid by the Company.

In view of the SEBI Circular ref no. SEBI/HO/DDHS/ CIR/P/2019/115 dated October 22, 2019, during the Financial Year 2019-20, the Commercial Papers issued by the Company were listed on one of the above stock exchanges, as opted at the time of each such issue.

Registrar for Deposits

Being eligible and as approved by the Members in 2014, the Board of Directors of the Company approved acceptance of Fixed Deposits from Members and persons other than Members in accordance with Section 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. The Company thereafter discontinued the Fixed Deposit Scheme and repaid all outstanding fixed deposits along with the interest accrued up to September 30, 2016.

Market Price Data for Equity shares of face value of `K` 10/- each

==> picture [224 x 41] intentionally omitted <==

----- Start of picture text -----

Month BSE NSE
High Low High Low
Price Price Price Price
----- End of picture text -----

Apr-19	1,152.00	1,047.60	1,153.40	1,047.05
May-19	1,069.90	935.25	1,065.00	935.50
Jun-19	1,023.70	872.05	1,022.80	871.05
Jul-19	950.00	731.00	951.10	808.00
Aug-19	925.00	776.45	920.00	776.20
Sep-19	995.65	835.50	995.00	834.80
Oct-19	1,018.35	909.20	1,017.75	915.00
Nov-19	1,037.85	928.00	1,037.00	927.05
Dec-19	1,025.00	910.45	1,020.00	910.00
J20	105370	97940	105295	97820
an-	,.	.	,.	.
Feb-20	1,101.00	940.00	1,094.40	939.10
Mar-20	1,056.00	601.50	1,061.00	600.00

During the year under review, the Company did not accept any deposits as defined under the Companies Act, 2013.

Address for correspondence for investors / deposit holders’ queries

an- ,. . ,. . Feb-20 1,101.00 940.00 1,094.40 939.10 Mar-20 1,056.00 601.50 1,061.00 600.00 Share Performance of the Company in comparison to S&P BSE 500 CEAT in comparison with S&P BSE 500 during 2019-20* 1.20 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 1.00 0.80 0.60 0.40 0.20 0.00 CEAT S&P BSE 500 ndexed to 1 on March 31, 2019	Company	CEAT Limited	463, Dr. Annie Besant Road, Worli, Mumbai 400 030 [email protected] Web: www.ceat.com 022-2493 0621 Ms. Vallari Gupte, Company Secretary and Compliance Offcer
	Registrar and Transfer Agents for equity shares	TSR Darashaw Consultants Private Limited (formerly TSR Darashaw Limited),	6, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011 [email protected] Web: www.tsrdarashaw.com 022-6617 8484; 022-6656 8494
	Registrar for Fixed Deposits	Kisu Corporate Services Private Limited	D- 28 – Mezzanine Floor Supariwala Estate, Prasad Chambers Compound, Near Roxy Cinema, Opera House Mumbai 400 004 022-4971 0146, [email protected]

*indexed to 1 on March 31, 2019

Share Transfer System

Dematerialisation of shares

The Company has an arrangement with NSDL and CDSL for dematerialisation of shares with ISIN No. INE482A01020.

Pursuant to the amendment to the Listing Regulations, made effective from April 1, 2019, no shares can be transferred unless they are held in dematerialised mode. Members holding shares in physical form are therefore requested to convert their holdings into dematerialised mode to avoid loss of shares and fraudulent transactions and avail better investor servicing.

During the year 40,948 shares were dematerialised and 35 shares were rematerialised. As on March 31, 2020, 98.92% of equity share capital corresponding to 4,00,11,772 equity shares were held in dematerialised form.

As such now only cases of valid transmission or transposition may be processed by the TSR, subject to compliance with the guidelines prescribed by SEBI.

In accordance with the Regulation 40(1) of the Listing Regulations, effective from April 1, 2019, transfers of securities of the Company shall not be processed unless the securities are held in the dematerialised form with a depository. However, investors are not barred from holding shares in physical form. In view of free transferability of shares and better investor servicing, Members holding equity shares in physical form are urged to have their shares dematerialised and update their bank accounts and email ID with the respective depository participants.

SEBI, considering the nation-wide lockdown, in the wake of the COVID-19 pandemic, granted relaxation by extending the timelines for processing various investor requests in case of physical securities including rematerialisation of shares, transmission of shares, resolution of grievances, issue of duplicate share certificates etc.

Distribution of shareholding as at March 31, 2020

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No. of Equity Shares No. of Shareholders No. of Shares % of Equity Capital
Physical Demat Physical Demat Physical Demat
----- End of picture text -----

1 to 500	12,739	64,339	3,47,694	28,45,214	0.86	7.03
501 to 1000	44	671	30,497	4,85,580	0.08	1.20
1001 to 2000	27	252	37,676	3,55,634	0.09	0.88
2001 to 3000	5	76	12,129	1,89,293	0.03	0.47
3001 to 4000	1	27	3,300	96,035	0.01	0.24
4001 to 5000	1	21	7,024	96,017	0.02	0.24
5001 to 10000	-	37	-	2,65,430	-	0.66
Greater than 10000	-	68	-	3,56,78,569	-	88.20
TOTAL	12,817	65,491	4,38,320	4,00,11,772	1.08	98.92

Categories of Shareholding as on March 31, 2020

Category	No. of Shares	% of Equity Capital
Promoters and Promoter Group	1,88,85,245	46.69
Foreign Portfolio / Institutional Investors	1,14,10,610	28.21
FI, Banks and Insurance Companies	11,28,411	2.79
Mutual Funds	24,65,440	6.10
Resident Individuals	42,49,190	10.50
NRI / OCB	16,52,986	4.09
Bodies Corporate	6,08,714	1.50
Others	49,496	0.12
TOTAL	4,04,50,092	100.00

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Outstanding GDRs / ADRs / Warrants / Any other Convertible Instruments

The Company does not have any outstanding GDRs / ADRs / Warrants / Any other Convertible Instruments as on March 31, 2020.

Disclosure of commodity price risks / foreign exchange risk and hedging activities

Risk Management Policy of the Company with respect to Commodities and Forex

Volatility in commodity prices are managed by combining a robust price forecast mechanism with a buying model comprising of spot buying, forward buying and strategic long-term contracts. Inventory levels are maintained in alignment to this. Since significant quantum of raw materials are procured from international sources, appropriate hedging mechanisms are in place to insulate forex fluctuations.

The Company manages the volatility in the foreign currency prices through hedging mechanisms. The exposure risk arises primarily due to the import and export activities of the Company as well as short-term and long-term borrowings in foreign currency. The Company has put in place a Policy for Foreign Exchange and Interest Risk Management which is duly approved by the Board of the Company. The Foreign Exchange Risk Management programme of the Company is carried out as per the said Policy and the Company uses forward contracts, derivatives, structured derivatives and swaps as hedging instruments. The Company is suitably insulated against the risk arising out of foreign currency fluctuations through appropriate hedging mechanisms and the same is monitored by the Board on a timely basis. The Company is in full compliance with the rules, regulations and guidelines, as may be applicable, prescribed by the Reserve Bank of India from time to time in this behalf.

Exposure of the Company to commodity and commodity risk faced throughout the year

The Company does not have any exposure hedged through commodity during FY 2019-20.

Plant Locations

Mumbai Plant : Subhash Nagar Road, Bhandup (West), Mumbai, Maharashtra - 400 078 Nashik Plant : 82, MIDC, Industrial Estate, Satpur, Nashik, Maharashtra 422 007

Halol, Gujarat Plant : Village Getmuvala, Taluka Halol, Dist. Panchmahal, Gujarat 389 350 Nagpur Plant : Plot No.SZ-39, Butibori MIDC,

Nagpur, Maharashtra 441 108 Chennai Plant : Village Sriperumbudur, Kannanthangal, Maduramangalam, Dist. Kancheepuram, Tamil Nadu 602 108

Credit Ratings

During the year under review, the long-term credit rating of the Company was affirmed / assigned as ‘AA’ with ‘Stable’ outlook by its rating agencies viz. CARE Ratings Limited (‘CARE’) and India Ratings and Research Private Limited (‘Ind-Ra’). The rating has been reaffirmed even after considering the expected incremental long-term debt for the on-going expansions and greenfield project. The rating of AA indicates high degree of safety regarding timely servicing of financial obligations and very low credit risk. A ‘Stable’ outlook indicates expected stability (or retention) of the credit ratings in the medium term on account of stable credit risk profile of the entity in the medium term.

The short-term facilities (working capital limit) of the Company have been granted the rating of ‘A1+’ by CARE. The rating of ‘A1+’ indicates very strong degree of safety regarding timely payment of financial obligations and carries the lowest credit risk.

The ratings on Commercial Paper issue of the Company have been reaffirmed as ‘A1+’ by CARE and Ind-Ra.

Disclosures with respect to unclaimed suspense account

In accordance with Regulation 39(4) of the Listing Regulations (erstwhile Clause 5A of the Listing Agreement), the Company during the year 2013, had sent 3 (three) reminders to such Members whose shares were lying ‘Undelivered / Unclaimed’ with the Company and opened a demat suspense account with Keynote Capital Limited, a Depository Participant (hereinafter referred as ‘Unclaimed Suspense Account’). As per the requirements of the said Regulation, the Company after completing the necessary formalities, has credited 1,40,918 such unclaimed equity shares of the Company pertaining to 4,738 Members, to Unclaimed Suspense Account in the year 2013. Voting rights on such shares remain frozen till the rightful owner claims the shares.

As and when the beneficiary of such unclaimed shares approaches the Company, after verifying authenticity of the beneficiary, the Company transfers the shares from Unclaimed Suspense Account to respective beneficiary’s demat accounts or issues a share certificate, as the case may be.

The Company, acting as a trustee in respect of the unclaimed shares, follows the modalities for the operation of the said account in the manner set out in Regulation 39(4) read with Schedule VI to the Listing Regulations.

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The summary of Unclaimed Suspense Account for FY
2019-20 is as follows:
Sr. Particulars No. of Outstanding
No. shareholders shares
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Sr. No.	Particulars	No. of shareholders	Outstanding shares
1.	Aggregate no. of shareholders and the outstanding shares lying in the Unclaimed Suspense Account as on April 1,2019	479	15,532
2.	No. of shareholders who approached the Company for transfer of shares from the Unclaimed Suspense Account during the year 2019-20	9*	106
3.	No. of shareholders to whom the shares were transferred from the Unclaimed Suspense Account during the year 2019-20	7*	102
4.	No. of shareholders whose shares were transferred to IEPF Authority during the year 2019-20	93	2,724
5.	Aggregate no. of shareholders and the outstanding shares lying in the Unclaimed Suspense Account as on March 31, 2020	379	12,706

Applications received for 2 cases in the last week of March, 2020 and hence outstanding as on March 31, 2020.

Transfer of Unclaimed / Unpaid amounts and Shares to the Investor Education and

Protection Fund

Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the IEPF Rules’), dividend which remains unclaimed for consecutive 7 (seven) years from the date of transfer to unclaimed dividend account shall be transferred to the Investor Education and Protection Fund (IEPF) Authority. During the year under review, unclaimed dividend amounting to H 5,13,933 of FY 2011-12, as required aforesaid, was transferred to the IEPF Authority on September 16, 2019. Unclaimed Dividend of H 20,784 pertaining to 38 cases was retained by the Company on account of court orders.

Further, as provided under the IEPF Rules, the Company on October 25, 2019, after compliance with the due procedure laid down under the said provisions, transferred 30,402 shares of 753 Members to the demat account of IEPF Authority, in respect of which dividend had not been claimed for 7 (seven) consecutive years.

As required under the IEPF Rules, 10,392 shares of 38 cases were retained by the Company on account of specific orders of court or tribunal or statutory authority restraining any such transfer of shares and payment of dividend.

Shares including dividends and other benefits accruing thereon which have been transferred to IEPF Authority can be claimed from IEPF Authority after following the procedure prescribed under the provisions mentioned above and no claim shall lie against the Company or it’s Registrar and Transfer Agents.

Member(s) who have not encashed / claimed their dividend of FY 2012-13 or any subsequent financial years are requested to submit their claims to the office of the Registrar and Transfer Agents, on or before September 14, 2020, to avoid any transfer of dividend or shares to the IEPF Authority.

Mandatory Bank details for Payment of

dividend

As per Regulation 12 of the Listing Regulations, the Company is providing the facility for payment of dividend through electronic mode permissible by the Reserve Bank of India. The dividend amount will thereby directly be credited to the Member’s bank account, maintained with Registrar and Transfer Agents in case of shares held in physical mode or maintained with the Depository Participants in case of shares are held in demat mode.

This facility ensures speedier credit of the dividend amount and eliminates the risk of loss / interception of dividend warrants in postal transit and / or fraudulent encashment of dividend warrants. Members are requested to avail of the facility by registering their complete and correct bank details viz. name of the Bank, full address of the branch, core banking account number and account type, 9-digit MICR and 11 digits IFSC against the bank account.

The request for registration of the Bank details should be accompanied by an original cancelled cheque bearing the name of the first Member as the account holder and should be sent to TSR Darashaw Consultants Private Limited, Registrar and Transfer Agents of the Company in case the shares are held in physical form and to your Depository Participant in case shares are held in demat mode.

Registration of PAN for deduction of tax

Pursuant to the Finance Act, 2020, divided income for resident shareholders in excess of H 5,000/- for

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the financial year will be taxable in the hands of the shareholders w.e.f. April 1, 2020 and the Company is required to deduct tax at source from dividend paid to such shareholders at the prescribed rates. The Shareholders are requested to note that in case their PAN is not registered with the Company / RTA / DP, the tax will be deducted at a higher rate of 20%. The Shareholders are requested to update their PAN with Registrar and Transfer Agents (in case of shares held in physical mode) and depository participants (in case shares held in demat mode).

Registration of email ID

As a step towards Green Initiative, the Company has availed of special services offered by NSDL to update email IDs of more number of Members of the Company who have not registered their email IDs. This would enable such Members to immediately receive various email communication from the Company from time to time including the annual report, dividend credit intimation etc.

In view of the restrictions of dispatching the Annual Reports or other communications through post, we request you to permanently register your email ID with the Company’s RTA in case you hold shares in physical or with your Depository Participant, if you hold shares in demat mode. For more details you may also refer the Notice of 61[st] AGM.

Voting through electronic means

Pursuant to Section 108 of the Companies Act, 2013 and the Rules made thereunder and provisions under the

Listing Regulations, every listed company is required to provide its members, the facility to exercise their right to vote at general meetings by electronic means.

The Company has entered into an arrangement with NSDL, the authorised agency for this purpose, to facilitate such e-voting for its Members.

The Shareholders would therefore be able to exercise their voting rights on the items put up in the Notice of AGM, through such e-voting method. Further, in accordance with the Companies (Management and Administration) Rules, 2014 and MCA circulars, the Company will also provide e-voting facility for Shareholders attending the AGM through VC or OAVM.

Shareholders, who are attending the meeting through VC or OAVM and who have not already cast their votes by remote e-voting shall only be able to exercise their right of voting at the meeting.

Cut-off date, as per the said Rules, shall be Thursday, September 3, 2020 and the remote e-voting shall be open for a period of 3 (three) days from Monday, September 7, 2020 (9.00 a.m.) till Wednesday, September 9, 2020 (5.00 p.m.). The Board has appointed Mr. P. N. Parikh (FCS 327, CP 1228), or failing him Mr. Mitesh Dhabliwala (FCS 8331, CP 9511) of M/s Parikh & Associates, Practising Company Secretaries, as scrutinizer for the e-voting process.

Detailed procedure is given in the Notice of the 61[st ] AGM and is also placed on the Company’s website at www.ceat.com

Annexure to the Corporate Governance Report

Declaration on the Code of Conduct

[Regulation 34(3) read with Schedule V (Part D) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015]

This is to declare that all the members of the Board of Directors and the Senior Management of the Company have, for the year ended March 31, 2020, affirmed the compliance with the Code of Conduct laid down in terms of Regulation 17(5) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

For CEAT Limited Place: Mumbai Anant Goenka Date: May 28, 2020 Managing Director

Certificate of Non-Disqualification of Directors

[Pursuant to Regulation 34(3) and Schedule V Para C Clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

To,

The Members of CEAT LIMITED 463, Dr. Annie Besant Road, Worli, Mumbai 400 030.

We have examined the relevant registers, records, forms, returns and disclosures received from the Directors of CEAT Limited having CIN L25100MH1958PLC011041 and having registered office at 463, Dr. Annie Besant Road, Worli, Mumbai 400 030 (hereinafter referred to as ‘the Company’), produced before us by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In our opinion and to the best of our information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to us by the Company and its officers and considering the relaxations granted by the Ministry of Corporate Affairs and Securities and Exchange Board of India warranted due to the spread of the COVID-19 pandemic, we hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31[st] March, 2020 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other statutory authority.

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S. Name of Director DIN Date of Appointment in
No. Company
----- End of picture text -----*

1.	H. V. Goenka	00026726	16/10/1981
2.	Anant Goenka	02089850	01/04/2012
3.	Arnab Banerjee	06559516	07/05/2013
4.	Atul C. Choksey	00002102	28/01/2000
5.	Haigreve Khaitan	00005290	29/07/1999
6.	Mahesh S. Gupta	00046810	02/05/2002
7.	Paras K. Chowdhary	00076807	01/04/2013
8.	Pierre E. Cohade	00468035	01/02/2018
9.	Punita Lal	03412604	29/04/2014
10.	Ranjit V. Pandit	00782296	03/03/2015
11.	VinayBansal	00383325	24/07/2009

*the date of appointment is as per the MCA Portal.

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Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Business Responsibility Report

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

For Parikh & Associates Practising Company Secretaries

P. N. Parikh FCS: 327 CP: 1228 Mumbai, May 28, 2020 UDIN : F000327B000291299

Practising Company Secretaries’ Certificate on Corporate Governance

TO THE MEMBERS OF CEAT LIMITED

We have examined the compliance of the conditions of Corporate Governance by CEAT Limited (‘the Company’) for the year ended on March 31, 2020, as stipulated under Regulations 17 to 27, Clauses (b) to (i) of sub-regulation (2) of Regulation 46 and para C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’).

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the review of procedures and implementation thereof, as adopted by the Company for ensuring compliance with conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

SECTION A: GENERAL INFORMATION ABOUT THE	COMPANY
1. Corporate IdentityNumber(CIN)of the Company:	L25100MH1958PLC011041
2. Corporate Name of the Company:	CEAT Limited
3. Registered Address:	463, Dr. Annie Besant Road, Worli, Mumbai 400 030
4. Website:	www.ceat.com
5. Email ID:	[email protected]
6. Financial Year reported:	2019-20
7. Sector(s) that the Company is engaged in (industrial activitycode-wise):	22111- Manufacture of rubber tyres and tubes for motor vehicles, motorcycles, scooters, 3-wheelers, tractors
8. List three Key products / services that the Company manufactures /provides(as in balance sheet):	Tyres, Tubes and Flaps
9. Total number of locations where business activity is undertaken by the Company: (a) Number of International Locations (provide details of major 5) (b) Number of National Locations	3 (three): Representative offces in Indonesia, United Arab Emirates, and Frankfurt, Germany (R&D Centre) Registered Offce: 463, Dr. Annie Besant Road, Worli, Mumbai 400 030 Factories: 5 (fve) Regional Offces: 33 (thirty-three) Zonal Offces: 6(six)
10. Market served by the Company- Local / State / National / International	India and Internationally in over 100 (hundred) countries

SECTION B: FINANCIAL DETAILS OF THE COMPANY

In our opinion and to the best of our information and according to the explanations given to us, and the representations made by the Directors and the management and considering the relaxations granted by the Ministry of Corporate Affairs and Securities and Exchange Board of India warranted due to the spread of the COVID-19 pandemic, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the SEBI Listing Regulations for the year ended on March 31, 2020.

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For Parikh & Associates Practising Company Secretaries

P. N. Parikh Partner FCS: 327 CP: 1228 Mumbai, May 28, 2020 UDIN: F000327B000291376

1. Paid-upCapital(`H`):	4,045 Lacs
2. Total Turnover(`H`):	6,58,111 Lacs
3. Totalproft after taxes(`H`):	27,076 Lacs
4. Total spending on Corporate Social Responsibility (‘CSR’)as apercentage ofproft after tax(%):	3.4%
5. List of activities in which expenditure in 4 above has been incurred:	CSR activities of the Company are carried out through an Implementing Agency i.e. RPG Foundation, a Public Charitable Trust recognised for the purpose of CSR, broadly in the area of Education, Health Care, Community Development, Skilling, Employablity, Eyecare, Women Empowerment and Heritage Conservation. More details of such activities are given in the Annual Report on CSR activities, which formpart of this Annual Report.
SECTION C: OTHER DETAILS
1. Does the Company have any subsidiary company / companies?	Yes
2. Do the subsidiary company / companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(ies).	Business Responsibility (‘BR’) initiatives of the Company and its subsidiaries are guided by the Code of Corporate Governance and Ethics. The Company encourages its subsidiaries to carryout BR initiatives.
3. Do any other entity / entities (e.g. suppliers, distributors, etc.) that the Company does business with participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity / entities? [Less than 30%, 30-60%, More than 60%]	The Company encourages responsible and sustainable business practices and supports such initiatives. All entities (e.g. suppliers, distributors etc.) that the Company does business with make an active attempt to participate in the BR initiatives of the Company.

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SECTION D: BUSINESS RESPONSIBILITY (BR) 2. Principle-wise (as per NVGs) BR Policy / Policies INFORMATION

The Company continuously strives to live its Purpose of ‘Making Mobility Safer & Smarter. Every Day.’ The Company believes that Corporate Social Responsibility (‘CSR’) is an integral part of its ethos and one of its core business tenets. Its CSR vision is to drive ‘holistic empowerment’ of the community, through the implementation of sustainable initiatives which will have a maximum societal impact by identifying the critical gaps and requirements.

1. Details of Director / Directors responsible for BR

(a) Details of the Director / Director responsible for the implementation of the BR policy / policies

The Board of Directors particularly the Managing Director is responsible for the Business Responsibility initiatives.

(b) Details of BR Head:

The Company drives its business in line with the 9 (nine) principles prescribed under the National Voluntary Guidelines, as detailed in this Report.

No. 1.	Particulars	Details
	DIN:	02089850
2.	Name:	Mr. Anant Goenka
3.	Designation:	ManagingDirector
4.	Telephone number:	022-2493 0621
5.	Email ID:	[email protected]

Details of compliance (Reply in Y / N)

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No. Questions P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9
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1.	Doyou have apolicy/policies for...	Y	Y	Y	Y	Y	Y	Y	Y	Y
2.	Has the policy being formulated in consultation with the relevant stakeholders?	Y	Y	Y	Y	Y	Y	Y	Y	Y
3.	Does the policy conform to any national / international standards? If yes, specify (50 words).
4.	Has the policy been approved by the Board? Is yes, has it been signed by MD / owner / CEO / appropriate Board Director?	Y	Y	Y	Y	Y	Y	Y	Y	Y
5.	Does the Company have a specifed committee of the Board / Director / Offcial to oversee the implementation of thepolicy?	Y	Y	Y	Y	Y	Y	Y	Y	Y
6.	Indicate the link for the policy to be viewed online.


7.	Has the policy been formally communicated to all relevant internal and external stakeholders?	Y	Y	Y	Y	Y	Y	Y	Y	Y
8.	Does the Company have an in-house structure to implement thepolicy/policies?	Y	Y	Y	Y	Y	Y	Y	Y	Y
9.	Does the Company have a grievance redressal mechanism related to the policy / policies to address stakeholders’ grievances related to thepolicies?	Y	Y	Y	Y	Y	Y	Y	Y	Y
10.	Has the Company carried out an independent audit / evaluation of the working of this policy byan internal or external agency?	Y	Y	Y	Y	Y	Y	Y	Y	Y

(a) If the answer to the question at serial number 1 against any principle, is ‘No’, please explain why: (Tick up to 2 options) - N.A.

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No. Questions P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9
----- End of picture text -----

No.	Questions P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9
1.	The Company has not understood the principles Not Applicable The Company is not at a stage where it fnds itself in a position to formulate and implement thepolicies on specifedprinciples The Company does not have fnancial or manpower resources available for the task
2.
3.

It is planned to be done within the next 6 months
It is planned to be done within the next 1 year
Any other reason (please specify)

integrity, responsibilities relating to employees, consumers and the environment. The Company periodically cascades the principles under the Code across the organisation. Concerns and issues related to this framework are reviewed and dealt with by the CGEC.

3. Governance related to Business Responsibility (BR)

The Board of Directors reviews the BR initiatives, the Audit Committee reviews the Whistle Blower Policy of the Company, the CSR Committee reviews the CSR Policy and the CSR initiatives undertaken by the Company periodically or on a need basis.

A dedicated email ID [email protected] is provided for reporting grievances and violations of the said Code to the CGEC. The report of the CGEC is placed before the Audit Committee as deemed necessary.

The Company has been publishing a BR Report on an annual basis as a part of the Annual Report from Financial Year 2016-17. This year, the Company has published an Integrated Report prepared in alignment with the Framework developed by the International Integrated Reporting Council (IIRC) and forms a part of this Annual Report for Financial Year 2019-20, which can also be accessed on the website of the Company at www.ceat.com

The Company has adopted a Whistle Blower Policy which provides a framework through which the Directors and employees as well as external stakeholders viz. customers, vendors, suppliers, outsourcing partners, etc. may report their concerns and actual / potential violations to the designated officials of the Company fearlessly.

Additionally, the Company has formulated a Code of Conduct for Board Members and Senior Management for ethical and transparent behaviour to achieve the highest standards of corporate governance.

SECTION E: PRINCIPLE-WISE PERFORMANCE

Principle 1: Ethics, Transparency and Accountability

During Financial Year 2019-20, 1 (one) complaint was received by the Ethics Committee under Whistle Blower Policy and Vigil Mechanism as referred to it by the Company and the same was resolved satisfactorily.

The Company is part of the RPG Group, a group that has always stood for conducting business responsibly and ethically. RPG Group has laid down the Code of Corporate Governance and Ethics (‘the Code’) applicable and adopted by the Company. The Code has outlined the principles of corporate governance that will apply in managing the affairs of the Company. The Group has set up the Corporate Governance and Ethics Committee (‘the CGEC’) which acts as a central body for monitoring this Code. The Code inter alia prescribes that all the activities and business conducted in the Company should be free from the influence of corruption and bribery. Employees and business partners of the Company are expected to be aware of and follow all anti-corruption and anti-bribery laws everywhere the Company does its business. The Code is extended to its subsidiaries, joint venture, and its business partners to a certain extent.

Principle 2: Product Lifecycle Sustainability

A customer-focused strategy is required to retain and expand the customer base in a competitive environment. Customer satisfaction can be achieved by ensuring high standards of quality of products and services. The Company is committed to supplying quality goods and services, backed by after-sales services consistent with the requirements of its customers within the legal framework.

The lifecycle of the product covers the entire value chain from sourcing of raw materials to manufacturing, distribution, consumer use and disposal. The Company believes that product lifecycle sustainability is an approach to managing the stages of a product’s existence to minimise any negative impact on the environment. The degree of sustainability is largely determined during the beginning of the life stage of the product lifecycle in which the product is designed and developed. Based on the very same principle, the Company

The Company believes in an environment of mutual respect, fairness, transparency and integrity and is committed to conduct its business ethically and responsibly. Towards this goal, the Company has formulated / adopted various policies including the Code, covering principles of business

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has developed its products bearing in mind its impact on the environment.

With the above objective in mind, the Company is committed to deliver the products that are safe for the environment. It has developed several new green resources for various types of raw materials that follow international norms and standards like REACH, ELV, CMRT etc. Among its various products, the following products / services have contributed to reducing environmental hazards:

Material development
a. REACH compliance raw materials: Reduction in environmental hazards
b. Fossil free and recycled material usage
Low Rolling Resistance Tyres: WinFuel (commercial radial category) Series, 10% reduction in Fuelsmart platform (Passenger Car category)
High Mileage tyres: Milaze X3 (1.0 Lakh) series in passenger category
High Grip tyes: Puncture safe tyres in 2-Wheeler category and SportDrive (High grip tyres for passenger category – Higher A label as per EU norms) for social safety

The Company always promotes local and domestic resources for their business enrichment and has identified local small-scale industries which have capability / resources and encourage them to come up with the products of international benchmark for mutual benefits.

The Company has developed local partners pan India for mould and tooling procurement, raw material procurement and new materials for developing technologies for green environment (e.g. rubber chemicals, new generation silica, wax and process oils and new generation fillers), developing newer digital technologies (e.g. simulation, automation, virtual reality, etc.) to promote local and domestic businesses. With few of the partners, the Company is working on annuity basis to enrich their business and support them to develop new capabilities which can be used by the Company for developing niche products which also creates mutual benefits.

In the last year, the Company has used approximately 7,780 MT (metric tons) being 2.5% of the total production of reclaimed rubber of different forms in their products.

Principle 3: Employee Engagement

The Company encourages its employees to maintain a healthy ‘work-life balance’ and stresses the importance of safety both at the workplace and outside it. The aim is to create a working environment supportive of employees’ personal lives while meeting the Company’s objectives. Over years it has helped employees to grow and have a fruitful career with us.

The Company also extensively worked on offering work-life balance and rolled out some beneficial policies, 5 (five) days working in manufacturing, satellite offices to name a few.

This year the Company extended this concept of employee wellness and added another dimension called Quality of Life. The Company believes in engaging with employees and make them happy to help them achieve more, through continuous learning and growth, work-life balance and freedom and trust.

The Quality of Life concept stands firm on the belief ‘Happiness’ has a direct correlation with employee’s productivity. Focussing only on the quality of work won’t suffice. The Company defined the quality of life as a component of physical as well as mental health. Thus, the Company has started its journey to make CEAT a physically and mentally fit organisation and in a unique initiative, onboarded the Chief Fitness Officer, who is responsible for the overall health quotient of the employees. The Company with the help of the Chief Fitness Officer has rolled out various initiatives in the physical and mental health space which are aimed at improving the overall quality of life of the employees.

The Company continued its focus on diversity, skilling, upskilling, and other HR initiatives. More details on the Human Resources Initiatives are given in the Management Discussion and Analysis and Integrated Reporting, which form part of this Annual Report.

As on March 31, 2020, the Company had total 6,474 permanent employees including 591 women and 7 with disabilities. Besides this, the Company has 4,070 people employed on a contractual basis.

Currently, there is 1 (one) recognised employee association across the Company and 2,126 workmen are its members constituting 32.89% of the total permanent employees.

There were no complaints relating to child labour, forced labour, involuntary labour, sexual harassment, pending at the beginning of the financial year, received during and pending as at the end of the Financial Year 2019-20.

Principle 4: Stakeholder Engagement

The Company believes that businesses should respect the interests of and be responsive towards all stakeholders especially those who are disadvantaged, vulnerable and marginalised. The Company’s mission ‘Making Mobility Safer & Smarter. Every Day.’, is proof of the Company’s stakeholder engagement. Customer-centricity is the core value of the Company. There are various policies for the internal as well external stakeholders of the Company such as Corporate Social Responsibility (‘CSR’) Policy, Policy on Code of Conduct for Board Members and Senior Management, Whistle Blower Policy for External Stakeholders etc. through which the stakeholder’s engagement with the Company is encouraged.

The Company constantly seeks to understand what motivates the consumers to consume the Company’s products, seeks to provide best in class products and services and to connect and engage with the consumers. This principle is enshrined in the Quality Policy of the Company. The Company has undertaken important initiatives like establishing call centres and creation of helplines to become more customer centric.

The Company constantly endeavours to provide the best of services to its shareholders and investors and to maintain the highest level of corporate governance. For this, the Company regularly interacts with the shareholders and investors through investor calls, results announcements, media releases and interactions, Company’s website and the quarterly and annual reports. The Investor Relations team also regularly interacts with investors and analysts through quarterly results calls, one-on-one and group meetings participation at investor conferences, road shows and RPG investor meets. The Annual General Meeting is also a forum where the shareholders of the Company engage directly with the Board of Directors and get answers to their queries on Company’s business.

As part of engaging with the communities that it is part of, the Company undertakes several CSR initiatives through RPG Foundation, a public charitable Trust. The Company collaborates through RPG Foundation to undertake various social initiatives relating to eye care, education, plant driven initiatives, women empowerment and community development initiatives for skill development, restoration of culture and heritage, etc.

Principle 5: Human Rights

The Company duly endorses the human rights element of the Constitution of India, various laws and regulations and the contents of the international human rights. The Company believes in providing equal employment opportunities based on talent and meritocracy without any discrimination. The fundamental human rights of all the stakeholders are protected and the Company stand committed to human rights while enaging with its employees, business partners and suppliers. The Company expects and encourages its partners, suppliers and contractors to fully respect human rights and strictly avoid any violation of human rights. All stakeholders including employees impacted by the business have full right and access to the grievance mechanisms introduced by the Company.

The Company upholds the principles of human rights and fair treatment through various policies adopted by it such as the Code of Corporate Governance and Ethics, Policy on Prevention of Sexual Harassment at Workplace, CSR Policy and various HR Policies.

During the period of COVID-19 pandemic national lockdown, the Company, along with RPG Foundation, joined hands with the All India Truck Workers’ Association (AITWA), Bombay Goods and Transport Association (BGTA) and Western Union LPG Association (WULA) to ensure health and safety of the truck drivers. The Company undertook the sanitisation of trucks at the goods loading points of Nhava Sheva, Mahul and Jasai. Distributed face masks, sanitisers and food packets to drivers and other daily-wage workers. Over 4,670 food packets were distributed as on March 31, 2020, with the initiative continuing well beyond the reporting period. The Company also undertook the sanitisation of close to 200 trucks in FY 2019-20, which also continued after the reporting period. Additionally, the Company donated 1.25 Lac pairs of gloves and 10,000 PPE kits to frontline workers in the reporting period, as part of its COVID-19 response.

There were no complaints or grievances received against the Company concerning human rights violations.

Principle 6: Environment

In line with the Purpose of ‘Making Mobility Safer & Smarter. Every Day.’ The Company’s environment vision is to minimising its environmental impact on the planet and communities where it exists, works and sources and the goal is to manufacture tyre using environment-friendly processes which conserve energy and natural resources and are safe for employees, society, customers and economically sound. To achieve its goal, the Company has clearly defined strategic priorities such as Compliance Management, Risk Management and Sustainability Management.

Compliance with all relevant laws and regulations is an essential part of the Company’s business operations. The Company has institutionalised mechanisms to monitor and comply with changes in legislation, both existing and proposed.

The Company follows the clearly defined process to identify and evaluate environmental ‘risk and opportunity’ which includes environmental aspects and associated impacts, needs and expectations of relevant internal and external stakeholders and internal and external issues relevant to the context of the organisation. Risk Management Committee carries out periodic reviews for continual improvement. All the manufacturing plants of the Company have implemented Environmental Management System (ISO 14001:2015), Certification Standard. Also, one of the manufacturing plants has implemented the Energy Management System (ISO 50001:2018) certification standard and others are in the process of implementing such standards.

Various initiatives / focus areas under sustainability management address global environmental issues. The Company believes in a well-rounded approach across the value chain based on the 4R’s: ‘Reduce, Reuse, Recycle and Recover.’ During the year, the Company took significant steps to further reduce waste, water consumption, energy usage and Green House Gas emissions in the factories and offices. The Company has increased its renewable energy share. Various energy saving initiatives to reduce GHG emissions account for about 6,900+ tons of CO2 equivalent during the year. Under the 4R principle, the Company has initiated systematic efforts to find solutions to reduce the factory and packaging waste. The Company has initiated projects to collect, segregate, and safely dispose off plastic waste in collaboration with partners across the country. The Company is also working towards identifying alternative packaging materials / substances / solutions.

During the year under review, the emissions / waste generated by the Company was within the permissible limits given by the Central Pollution Control Board (CPCB) / State Pollution Control Boards (SPCB). During the year, the Company has not received any show cause / legal notice.

Principle 7: Policy Advocacy

The Company believes that businesses when engaged in influencing public and regulatory policy must do so in a

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responsible manner. Towards this, the Company has set to make a difference to public issues that matter most to its business such as safety. By combining its own actions with external advocacy on public matters and jointly working with Corporate Social Responsibility partners, the Company is seeking transformational change. The Company is well represented in industry and trade / business associations.

Principle 8: Inclusive Growth

The Company believes that inclusive business means social and economic development through employment generation and skill development. The Company is committed to creating a positive impact through its existence on all the stakeholders. Through various initiatives and programmes under its Corporate Social Responsibility (‘CSR’) activities including community development, the Company not only contributes to economic and social development but also works along with underdeveloped communities to improve their lifestyle. The Company undertakes several community development initiatives in the vicinity of its plants. Through its CSR Policy under the aegis of the RPG Foundation, the Company runs several programmes relating to eye care, education, plant driven initiatives, women empowerment and community development initiatives for skill development, upliftment of life and promoting health and safety of the community. Most prominent amongst them are Swayam, Netranjali and Saksham. Over 38,000 lives were impacted through CSR interventions at CEAT’s project locations

More details on CSR initiatives and impact on the community are listed out in detail in the Annual Report on CSR activities, and Integrated Report which form part of this Annual Report.

Principle 9: Customer Value

The Company’s business partners are the most important ingredients to run the operation smoothly. All the business partners namely the dealers, distributors, fleet operators, mechanics, C&FAs, suppliers and last but not the least end consumers are the powers that run the Company’s operation smoothly. The Company also has a continuous focus on the improvement of the distribution channels to ensure that its products can cater to the innermost parts of the market. The Company constantly re-invents its distribution channels and has launched initiatives like CEAT Shoppes and CEAT Hubs. Another initiative undertaken by the Company is providing the customers the ultimate service experience which goes beyond tyres through Fleet Advisory Services.

The Company has a strong belief in quality and delivers the best in class products and services which are enshrined in the Quality Policy of the Company. The Company has undertaken important initiatives like establishing call centers and the creation of helplines to become more customercentric. The Company is committed to creating delightful customer journeys through transparent, convenient and a quick way to provide claim replacement to the valuable customers. The Company constantly measures the consumer experience through NPS scores for various touchpoints of the consumers. The Company strives to evolve the processes to improve consumer satisfaction. The Company has reinvented the claim process and launched an e-Claim mobile app for on-spot claim resolution, first of its kind in the tyre industry, to resolve the customer claims in less than an hour.

As of March 31, 2020, only 0.93% of the total customer complaints received during the year under review remained pending. These complaints were resolved subsequently.

Standalone Financial Statements

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Independent Auditor’s Report

To the Members of CEAT Limited

and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of CEAT Limited (‘the Company’), which comprise the Balance Sheet as at March 31, 2020, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

Emphasis of Matter

We draw attention to note 50 of the standalone Ind AS financial statements, which states the impact of Coronavirus disease - 2019 (COVID-19) on the operations of the Company. Our opinion is not qualified in respect of this matter.

Key Audit Matters

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended (‘the Act’) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2020, its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ind AS financial statements for the financial year ended March 31, 2020. These matters were addressed in the context of our audit of the Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (‘SAs’), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements’ section of our report. We are independent of the Company in accordance with the ‘Code of Ethics’ issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act

Key audit matters

Auditor’s Response

Significant estimates and judgment relating to capitalisation of property, plant and equipment [refer note 2.9 (accounting policy) and note 3 (financial disclosures) to the Ind AS financial statements]

As a part of expansion plan, the Company has incurred significant capital expenditure mainly on greenfield project at Chennai and brownfield expansion at Halol & Nagpur plants. The capital expenditure requires consideration of the nature of costs incurred to ensure that capitalisation of property, plant and equipment meets the specific recognition criteria under Ind AS 16, ‘Property, Plant and Equipment’ and also judgement is involved in assigning appropriate useful economic lives to respective assets.

Our audit procedures included the following:

We examined the nature of property, plant and equipment capitalised by the Company to verify that the assets capitalised meets the recognition criteria set out in Ind AS 16.

We evaluated and tested the design effectiveness and operating effectiveness of internal controls with respect to the capitalisation of property plant and equipment.

Key audit matters

Auditor’s Response

We examined the useful economic lives and residual value assigned to assets capitalised during the year with reference to the Company’s historical experience and technical evaluation and our understanding of the Company’s business.

As a result, this was noted as a key audit matter, considering the significance of amounts involved.

As disclosed in note 3 to the standalone Ind AS financial statements, as at March 31, 2020 the carrying value of property, plant and equipment including capital work-in-progress was H 4,55,189 lacs and the additions during the year were H 2,29,727 lacs.

We compared the capitalisations during the year to approved budgets.
We assessed the adequacy of disclosures in the standalone Ind AS financial statements relating to capitalisation of property, plant and equipment.

Significant estimates and judgment relating to litigations, claims and contingencies [refer note 2.23 (accounting policy), note 22 (financial disclosures) and note 40(a) (financial disclosures) to the Ind AS financial statements]

The Company is involved in material legal proceedings including direct and indirect taxes, contracts, and other regulatory matters relating to conduct of its business.

Our audit procedures included the following:

We evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of tax and other demands, proceedings and investigations and related provisions and disclosures.

The Company assesses the need to make provision or disclose a contingency on a case-to-case basis considering the underlying facts of each litigation. The aforesaid assessment involves significant judgement and estimates.

We obtained a list of litigations and claims from the Company’s tax and legal head. We identified material litigations from the list and performed inquiries with the said tax and legal head on the management evaluation of these material litigations.

The evaluation of management’s judgments, including those that involve estimations in assessing the likelihood that a pending claim will succeed, or a liability will arise, and the quantification of potential financial impact have been a matter of most significance during the current year audit. Evaluation of the outcome of legal proceedings and whether the risk of loss requires significant judgment by management given the complexities involved.

In relation to the material litigations, claims and contingencies, we involved our legal / tax specialists to perform an independent assessment of the conclusions reached by management.

We obtained independent confirmations from the Company’s external lawyers / advisors with respect to the material litigations and demands. We evaluated the independence, objectivity and competency of the Company’s external lawyers / advisors involved.
We evaluated the management’s assumptions, estimates and judgments used in the calculations of provision for litigation, claims and contingencies and related disclosures in the standalone Ind AS financial statements.

and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Other Information

The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility Report and Shareholder’s Information, but does not include the Ind AS financial statements and our auditor’s report thereon.

Responsibilities of Management for the Ind AS Financial Statements

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information

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other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (‘Ind AS’) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone Ind AS financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31, 2020 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

(g) In our opinion, the managerial remuneration for the year ended March 31, 2020 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the ‘Annexure 1’ a statement on the matters specified in paragraphs 3 and 4 of the Order.
- (h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:
As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements – refer notes 22 and 40(a) to the standalone Ind AS financial statements;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on longterm contracts including derivative contracts – refer notes 8, 15 and 51 to the standalone Ind AS financial statements;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
(e) On the basis of the written representations received For S R B C & CO LLP
from the directors as on March 31, 2020 taken on Chartered Accountants
record by the Board of Directors, none of the directors ICAI Firm Registration Number: 324982E/E300003
is disqualified as on March 31, 2020 from being appointed as a director in terms of Section 164(2) of the Act;

per Vinayak Pujare

Partner

(f) With respect to the adequacy of the internal financial Membership Number: 101143
controls over financial reporting of the Company UDIN: 20101143AAAAAU5840
with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure 2’ Place of Signature: Mumbai to this report; Date: May 28, 2020

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Annexure 1 referred to in paragraph 1 under the heading ‘Report on Other Legal and Regulatory Requirements’ of our report of even date

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Companies Act 2013 in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the company.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
- (v) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013, and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order in this regard has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.
(c) According to the information and explanations given by the management, the title deeds of immovable properties other than self-constructed buildings, included in property, plant and equipment are held in the name of the company.
(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2020 and no material discrepancies were noticed in respect of such confirmations.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of rubber tyres, tubes and flaps for all types of vehicles, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(iii) (a) The Company has granted loan to a subsidiary company covered in the register maintained under section 189 of the Companies Act, 2013. In our opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the company’s interest.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees’ state insurance, incometax, duty of custom, goods and services tax, cess and other statutory dues applicable to it.
(b) In respect of the loan granted to the subsidiary company covered in the register maintained under Section 189 of the Companies Act, 2013, the schedule of repayment of principal and payment of interest has been stipulated and these payments are regular. The company has also granted another loan to the subsidiary company, which is repayable on demand. We are informed that the amount of interest and principal demanded by the company has been paid during the year. Thus in respect of these loan, there has been no default on part of the subsidiary company to which the money was lent.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, incometax, duty of custom, goods and service tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, goods and service tax, value added tax, and cess on account of any dispute, are as follows:
(c) There are no amounts of loans granted to subsidiary company listed in the register maintained under section 189 of the Companies Act, 2013 which are overdue for more than ninety days.

( H in Lacs)

==> picture [494 x 39] intentionally omitted <==

----- Start of picture text -----

Period to which Appellate
High Supreme Net
Name of the statute the amounts Commissionerate authorities Deposit
Court Court Amount
relates and Tribunal
----- End of picture text -----

Central Excise Act / Customs Act (Tax / Interest / Penalty)	1974 - 2017	1,397	2,801	39	-	78	4,159
Service Tax under the Finance Act, 1994 (Tax / Interest / Penalty)	2004 - 2017	2	1,906	51	-	72	1,887
Income Tax Act (Tax / Interest / Penalty)	1985 - 2019	336	-	160	-	67	429
Sales Tax, VAT, CST (Tax / Interest / Penalty)	1987 - 2018	3,070	2,369	-	-	685	4,754
Good and Services Tax Act, 2017(Tax)	2017 - 2018	50	-	-	-	-	50
		4,855	7,076	250	-	902	11,279

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government.
(xiv) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the company and hence, not commented upon.
(ix) In our opinion and according to the information and explanations given by the management, the term loans were applied for the purpose for which the loans were obtained.
(xv) According to the information and explanations given by the management, the Company has not entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.
(x) Based upon the audit procedures performed for the management, the Company has not entered into any non-
purpose of reporting the true and fair view of the financial cash transactions with directors or persons connected with
statements and according to the information and him as referred to in section 192 of the Companies Act,
explanations given by the management, we report that no 2013. fraud by the company or no fraud on the company by the officers and employees of the Company has been noticed (xvi) According to the information and explanations given to us, or reported during the year. the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

For S R B C & CO LLP

Chartered Accountants

(xii) In our opinion, the Company is not a Nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

ICAI Firm Registration Number: 324982E/E300003

per Vinayak Pujare

Partner

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013, where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
Membership Number: 101143 UDIN: 20101143AAAAAU5840

Place of Signature: Mumbai Date: May 28, 2020

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Annexure 2 to the Independent Auditor’s Report of even date on the Standalone Financial Statements of CEAT Limited

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of CEAT Limited (‘the Company’) as of March 31, 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Financial Statements

A company’s internal financial control over financial reporting with reference to these standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting with reference to these standalone financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting with reference to these standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘Guidance Note’) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these standalone financial statements was established and maintained and if such controls operated effectively in all material respects.

Inherent Limitations of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these standalone financial statements and such internal financial controls over financial reporting with reference

to these standalone financial statements were operating effectively as at March 31, 2020, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S R B C & CO LLP

Chartered Accountants ICAI Firm Registration Number: 324982E/E300003

per Vinayak Pujare Partner

Membership Number: 101143 UDIN: 20101143AAAAAU5840

Place of Signature: Mumbai Date: May 28, 2020

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CORPORATE OVERVIEW VALUE CREATION STATUTORY REPORTS FINANCIAL STATEMENTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Balance Sheet

as at March 31, 2020

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( H in Lacs)
As at As at
Particulars Note No.
March 31, 2020 March 31, 2019
I Assets
(1) Non-current assets
(a) Property, plant and equipment 3 3,63,503 2,78,574
(b) Capital work-in-progress 3 91,686 71,889
(c) Right-of-use asset 4 10,185 -
(d) Intangible assets 5 8,359 6,057
(e) Intangible assets under development 5 1,692 3,055
(f) Financial assets
(i) Investments 6 32,022 31,301
(ii) Loans 7 473 408
(iii) Other financial assets 8 460 181
(g) Non-current tax assets (net) 23 1,724 5,733
(h) Other non-current assets 9 4,856 12,520
Total non-current assets 5,14,960 4,09,718
(2) Current assets
(a) Inventories 10 87,950 96,515
(b) Financial assets
(i) Trade receivables 11 70,466 72,646
(ii) Cash and cash equivalents 12 2,017 5,426
(iii) Bank balances other than cash and cash equivalents 13 642 548
(iv) Loans 14 5,032 5,800
(v) Other financial assets 15 2,161 3,525
(c) Other current assets 16 11,274 11,964
(d) Assets held-for-sale 3 - 44
Total current assets 1,79,542 1,96,468
Total assets 6,94,502 6,06,186
II Equity And Liabilities
(1) Equity
(a) Equity share capital 17 4,045 4,045
(b) Other equity 18 2,88,695 2,71,059
Total equity 2,92,740 2,75,104
(2) Non-current liabilities
(a) Financial liabilities
(i) Borrowings 20 1,40,199 1,00,272
(ii) Lease liabilities 4 6,375 -
(iii) Other financial liabilities 21 10,072 461
(b) Provisions 22 3,819 3,683
(c) Deferred tax liability (net) 23 26,111 20,771
Total non-current liabilities 1,86,576 1,25,187
(3) Current liabilities
(a) Financial liabilities
(i) Borrowings 24 16,559 21,431
(ii) Lease liabilities 4 4,226 -
(iii) Trade payables 25
- Total outstanding dues of micro enterprises and small enterprises 1,756 547
- Total outstanding dues of creditors other than micro enterprises and 1,15,381 1,02,846
small enterprises
(iv) Other financial liabilities 26 57,291 58,099
(b) Provisions 22 12,165 9,985
(c) Current tax liabilities (net) 23 1,457 4,377
(d) Other current liabilities 27 6,351 8,610
Total current liabilities 2,15,186 2,05,895
Total equity and liabilities 6,94,502 6,06,186
Significant accounting policies 2
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The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No: 324982E/E300003

Kumar Subbiah Chief Financial Officer

H. V. Goenka Chairman

Anant Goenka Managing Director

per Vinayak Pujare Vallari Gupte Partner Company Secretary Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

Mahesh Gupta

Chairman - Audit Committee

Statement of Profit and Loss

for the year ended March 31, 2020

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( H in Lacs)
Particulars Note No. 2019-20 2018-19
I Income
Revenue from operations 28 6,58,111 6,83,130
Other income 29 4,134 5,530
Total income 6,62,245 6,88,660
II Expenses
Cost of material consumed 30 3,81,597 4,27,364
Purchase of stock-in-trade 2,120 6,092
Changes in inventories of finished goods, work-in-progress and stock-in-trade 31 1,458 (19,425)
Employee benefit e xpense 32 50,054 49,195
Finance costs 33 12,296 6,451
Depreciation and amortisation expenses 34 25,540 17,430
Other expenses 35 1,52,352 1,56,151
Total expenses 6,25,417 6,43,259
III Profit before exceptional items and tax 36,828 45,401
IV Exceptional items 36 2,975 4,424
V Profit before tax 33,853 40,977
VI Tax expense 23
Current tax 7,401 9,009
Deferred tax (624) 3,077
VII Profit for the year 27,076 28,891
VIII Other comprehensive income
(a) Items that will not be reclassified subsequently to the statement
of profit and loss
(i) Remeasurement gains / (losses) on defined benefit plans 39 (695) (798)
(ii) Income tax relating to above 23 243 279
(b) Items that will be reclassified subsequently to the statement of
profit and loss
(i) Net movement of cash flow hedges 3,854 (3,792)
(ii) Income tax relating to above 23 (1,347) 1,323
Total other comprehensive income for the year 2,055 (2,988)
IX Total comprehensive income for the year (Comprising profit and 29,131 25,903
other comprehensive income for the year)
X Earnings per equity share (of face value of J 10 each) 38
(a) Basic (in H ) 66.94 71.42
(b) Diluted (in H ) 66.94 71.42
Significant accounting policies 2
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The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

per Vinayak Pujare Vallari Gupte Mahesh Gupta Partner Company Secretary Chairman - Audit Committee Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

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CORPORATE OVERVIEW VALUE CREATION STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Statement of Cash Flow

for the year ended March 31, 2020

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( H in Lacs)
Particulars 2019-20 2018-19
I Cash Flow From Operating Activities
Profit before tax 33,853 40,977
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortisation expenses 25,540 17,430
Interest income (998) (3,205)
Finance costs 12,296 6,452
Dividend income (1,036) (732)
Provision for obsolescence of stores and spares 100 74
Allowance for doubtful debts and advances 174 197
Credit balances written back (755) (23)
Bad debts and advances written off (net) 4 6
(Profit) / Loss on disposal of property, plant and equipment (net) (428) 480
Unrealised foreign exchange (gain) / loss (net) 88 109
Net gain on disposal of investments (4) (83)
Provision for unusable inventories (refer note 36) 1,327 -
Finance costs (refer note 36) 104 -
Operating profit before working capital changes 70,265 61,682
Adjustments for:
Decrease / (Increase) in inventories 7,138 (21,093)
Decrease / (Increase) in trade receivables 2,392 (1,689)
Decrease / (Increase) in current loans, other current assets and other financial assets (66) (874)
Decrease / (Increase) in non-current loans and other non-current assets (187) (523)
(Decrease) / Increase in trade payables 14,296 19,122
(Decrease) / Increase in current financial liabilites and other current liabilities (688) 713
(Decrease) / Increase in non-current financial liabilities (316) (702)
(Decrease) / Increase in current provisions 1,382 4,172
(Decrease) / Increase in non-current provisions 136 303
Cash flows from operating activities 94,352 61,111
Direct taxes paid (net of refunds) (1,452) (7,836)
Net cash flow generated from operating activities (I) 92,900 53,275
II Cash Flow From Investing Activities
Purchase of property, plant and equipment and intangible assets (including capital (1,02,799) (1,06,215)
work-in progress, intangible assets under development and capital advance)
Proceeds from sale of property, plant and equipment 846 -
Withdrawal / (Investment) of margin money deposit with banks 53 (0)
Changes in other bank balances (94) (212)
Investment in Subsidiaries & Associate (299) (3,300)
Purchase of other non current investments (422) (2)
Proceeds from sale of investments (net) 4 4,088
Interest received 3,503 601
Repayment of loan given to subsidary 8,486 18,730
Loan given to subsidary (7,718) (19,630)
Dividend received 1,036 732
Net cash flow (used in) investing activities (II) (97,404) (1,05,208)
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Statement of Cash Flow

for the year ended March 31, 2020

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( H in Lacs)
Particulars 2019-20 2018-19
III Cash Flow From Financing Activities
Interest paid (16,560) (6,268)
Change in other short-term borrowings (net) (4,872) 12,344
Repayment of short-term buyers credit - (5,314)
Proceeds from long-term borrowings 42,724 97,097
Repayment of long-term borrowings (4,245) (42,201)
Payment of lease liabilities (4,562) -
Dividend paid (9,603) (4,434)
Dividend distribution tax paid (1,787) (829)
Net cash flows generated from financing activities (III) 1,095 50,395
Net increase / (decrease) in cash and cash equivalents (I + II + III) (3,409) (1,538)
Cash and cash equivalents at the beginning of the year (refer note 12) 5,426 6,964
Cash and cash equivalents at the end of the year (refer note 12) 2,017 5,426
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The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

per Vinayak Pujare Vallari Gupte Mahesh Gupta Partner Company Secretary Chairman - Audit Committee Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

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CORPORATE OVERVIEW

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Statement of Changes in Equity for the year ended March 31, 2020

(`H`in Lacs) Other equity	Particulars Equity share capital Total other equity Total equity Securities premium (refer note 18(a)) Capital Reserve (refer note 18(b)) Capital redemption reserve (refer note 18(c)) Debenture redemption reserve (refer note 18(e)) General reserve (refer note 18(f)) Retained earnings (refer note 18(g)) Cash flow hedge reserve (refer note 18(d)) As at April 01, 2018 4,045 56,703 1,177 390 5,001 20,177 1,66,713 476 2,50,637 2,54,682 Profit for the year - - - - - - 28,891 - 28,891 28,891 Other comprehensive income - - - - - - (519) (2,469) (2,988) (2,988) Total comprehensive income - - - - - - 28,372 (2,469) 25,903 25,903 Payment of dividend (refer note 19) - - - - - - (4,652) - (4,652) (4,652) Payment of Dividend Distribution Tax (DDT) (refer note 19) - - - - - - (829) - (829) (829) Transfer to general reserve (refer note 18(e)) - - - - (5,001) - - (5,001) (5,001) Transfer from debenture redemption reserve (refer note 18(f)) - - - - - 5,001 - - 5,001 5,001 As at March 31, 2019 4,045 56,703 1,177 390 - 25,178 1,89,604 (1,993) 2,71,059 2,75,104 Profit for the year - - - - - - 27,076 - 27,076 27,076 Other comprehensive income - - - - - - (452) 2,507 2,055 2,055 Total comprehensive income - - - - - - 26,624 2,507 29,131 29,131 Payment of dividend (refer note 19) - - - - - - (9,708) - (9,708) (9,708) Payment of Dividend Distribution Tax (DDT) (refer note 19) - - - - - - (1,787) - (1,787) (1,787) As at March 31, 2020 4,045 56,703 1,177 390 - 25,178 2,04,733 514 2,88,695 2,92,740	The accompanying notes are an integral part of the financial statements For and on behalf of Board of Directors of CEAT Limited As per our report of even date For S R B C & CO LLP Kumar Subbiah H. V. Goenka Anant Goenka Chartered Accountants Chief Financial Officer Chairman Managing Director ICAI Firm Registration No: 324982E/E300003 per Vinayak Pujare Vallari Gupte Mahesh Gupta Partner Company Secretary Chairman - Audit Committee Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

Notes to Financial Statements

for the year ended March 31, 2020

Derivative financial instruments and

Note 1: Corporate information

Certain financial assets measured at fair value (refer accounting policy regarding financial instruments)

CEAT Limited (the ‘Company’) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act applicable in India. The Company’s principal business is manufacturing of automotive tyres, tubes and flaps. The Company started operations in 1958 as CEAT Tyres of India Limited and was renamed as CEAT Limited in 1990. The Company caters to both domestic and international markets. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registered office of the Company is located at RPG House, 463, Dr Annie Besant Road, Worli, Mumbai, Maharashtra 400030. The financial statements were authorised for issue in accordance with a resolution of the Board of Directors on May 28, 2020.

In addition, the carrying values of recognised assets and liabilities designated as hedged items in fair value hedges that would otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships.

2.2 Changes in accounting policies

2.2.1 Accounting for leases

The Company has adopted Ind AS 116 ‘Leases’ effective April 01, 2019, using modified retrospective method. The Company has applied the standard to all its leases with the cumulative impact recognised on the date of initial application i.e. April 01, 2019. The Company has elected to measure the right-of-use asset equal to the amount of lease liability. Accordingly, previous period information has not been restated. On transition, the adoption of the new standard resulted in recognition of right-of-use asset of H 13,085 lacs and a lease liability of INR H 13,085 lacs.

Note 2: Basis of preparation, measurement and significant accounting policies

2.1 Basis of preparation and measurement

2.1.1 Basis of preparation

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and presentation requirements of Division II of Schedule III of the Companies Act 2013 (Ind AS compliant Schedule III).

In the Statement of Profit and Loss for the current period, the nature of expenses in respect of operating leases has changed from lease rent in previous periods to depreciation cost for the right-to-use asset and finance cost for interest accrued on lease liability.

In the context of initial application, the Company has exercised the option not to apply the new recognition requirements to short-term leases and to leases of lowvalue asset.

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements.

The following table presents the reconciliation of lease liability:

The financial statements are presented in H , the functional currency of the Company. Items included in the financial statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the ‘functional currency’).

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Particulars J in Lacs
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Particulars	`J`in Lacs
Off-Balance Sheet lease obligations as of March 31, 2019	226
Current leases with lease term of 12 months or less(short-term leases)	(226)
Lease liability recognised with respect to minimum guarantee payable under outsourcingcontracts asper Ind AS 116	15,245
Operating lease obligations as of April 01, 2019(gross without discounting)	15,245
Effect from discounting at the incremental borrowingrate as at April 01, 2019	2,160
Total lease liabilities as of April 01, 2019	13,085

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lacs as per the requirements of Schedule III of the Companies Act, 2013, unless otherwise stated. Wherever the amount represented ‘0’ (zero) construes value less than Rupees fifty thousand.

2.1.2 Measurement

These financial statements are prepared under the historical cost convention except for the following assets and liabilities which have been measured at fair value:

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

The Company classifies all other liabilities as non-current.

The following are the practical expedients availed by the Company on transition:

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

The Company to disclose all the practical expedients availed from para C10 of Ind AS 116

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

Used a single discount rate to a portfolio of leases with reasonably similar characteristics.
Relied on its assessment of whether leases are onerous immediately before the date of initial application.

2.4 Revenue recognition

Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application.

2.4.1 Revenue from contracts with customers

Revenues from contracts with customers are recognised when the performance obligations towards customer have been met. Performance obligations are deemed to have been met when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company acts as the principle in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.

Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company’s business needs. Management exercises significant judgment in determining whether these extension and termination options are reasonably certain to be exercised (refer notes 2.12 and 4).

An entity collects Goods and Services Tax (‘GST’) on behalf of the government and not on its own account. Hence it should be excluded from revenue, i.e. revenue should be net of GST.

2.3 Current versus non-current classification

2.4.2 Sale of Goods

The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current when it is:

Revenue from sale of goods (Tyres, tubes and flaps) is recognised at the point of time when control of the goods is transferred to customer depending on terms of sales. The normal credit term is 27 to 60 days upon delivery.

Expected to be realised or intended to be sold or consumed in normal operating cycle

The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties). In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration, the existence of significant financing components, if any.

Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

2.4.2.1 Variable consideration

All other assets are classified as non-current.

Variable consideration includes various forms of discounts like volume discounts, price concessions, incentives, etc. on the goods sold to its dealers and distributors. In all such cases, accumulated experience is used to estimate and provide for the variability in revenue, using the expected value method and the revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur in future on account of refund or discounts.

A liability is current when:

It is expected to be settled in normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

Notes to Financial Statements

for the year ended March 31, 2020

an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries and associates, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.

2.4.2.2 Significant financing component

Generally, the Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.

2.6 Government grants, subsidies and export

incentives

Government grants / subsidies are recognised when there is reasonable assurance that the Company will comply with all the conditions attached to them and that the grant / subsidy will be received. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.

2.4.3 Contract balances

Trade receivables

A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to note 2.17 - Financial Instruments in accounting policies.

The Company has chosen to adjust grant under the Export Promotion Capital Goods (‘EPCG’) scheme from the carrying value of non-monetary asset pursuant to amendment in Ind AS 20.

2.4.4 Royalty and technology development fees

The Company also earns sales based royalty income which is recognised as revenue over the period of time. This is because in such arrangements, the customer gets a right to access the Company’s intellectual property throughout the license period. The revenue to be recognised is determined based on a specified percentage of the sales made by the customer.

Export Incentive under Merchandise Export from India Scheme (‘MEIS’) is recognised in the Statement of Profit and Loss as a part of other operating revenues.

2.7 Taxes

2.7.1 Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in India where the Company operates and generates taxable income.

2.4.5 Interest income

For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the Effective Interest Rate (‘EIR’) method. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the EIR, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.

Current tax relating to items recognised outside the Statement of Profit and Loss is recognised either in Other Comprehensive Income (‘OCI’) or in equity. Current tax items are recognised in correlation to the underlying transaction either in the Statement of Profit and Loss or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Interest expenses and penalties, if any, related to income tax are included in finance cost and other expenses respectively. Interest Income, if any, related to income tax is included in Other Income.

2.4.6 Dividends

Dividend income is recognised when the Company’s right to receive dividend is established, which is generally when shareholders approve the dividend.

2.5 Investments in subsidiaries and associates

Investments in subsidiaries and associates are carried at cost less accumulated impairment losses, if any. Where

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the Company’s domicile.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

2.7.2 Deferred tax

Deferred tax is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax relating to items recognised outside the Statement of Profit and Loss is recognised either in OCI or in equity. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

When the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit and loss.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

In respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Minimum Alternate Tax (‘MAT’) paid in a year is charged to the Statement of Profit and Loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the Statement of Profit and Loss and shown as part of deferred tax asset. The Company reviews the MAT credit entitlement asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit and loss.

2.7.3 GST paid on acquisition of assets or on incurring expenses

Expenses and assets are recognised net of the amount of GST paid, except:
- When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is

Notes to Financial Statements

for the year ended March 31, 2020

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as “Capital work-in-progress”.

When receivables and payables are stated with the amount of tax included.

The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under “Other non-current assets”.

2.8 Non-current assets held for sale

The Company classifies Non-current assets or disposal groups comprising of assets and liabilities as ‘held for sale’ when all of the following criteria are met:

Depreciation is provided on a pro-rata basis on the straight line method based on useful life estimated by the management and supported by independent assessment by professionals. Depreciation commences when the asset is ready for it’s intended use. The Company has used the following useful lives to provide depreciation on its fixed assets.

decision has been made to sell;

the assets are available for immediate sale in its present condition;

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Asset Class Useful life
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the assets are being actively marketed; and,

Freehold land	Non depreciable
Leasehold land	Lease term - 95years
Buildings (includingtemporarystructures)	1 year - 60 years
Plant & Equipment	3years - 20years
Furniture & Fixture	10years
Vehicle	8years
Office Equipment	5years

sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.

Subsequently, such non-current assets and disposal groups classified as ‘held for sale’ are measured at the lower of its carrying value and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense. Non-current assets held for sale are not depreciated or amortised.

The identified components are depreciated over their useful lives, the remaining asset is depreciated over the life of the principal asset.

2.9 Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred. The present value of the expected cost for the decommissioning of an asset after it’s use is included in the cost of the respective asset if the recognition criteria for a provision are met.

The management believes that the depreciation rates fairly reflect its estimation of the useful lives and residual values of the fixed assets.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

2.10 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the Statement Profit and Loss in the period in which the expenditure is incurred.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.

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CORPORATE OVERVIEW

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

intangible asset may be impaired. The amortisation expense on intangible assets with finite lives is recognised in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.

2.10.2 Research and development costs (product development)

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:

Intangible assets with infinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level (the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit). The assessment of infinite life is reviewed annually to determine whether the infinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

The technical feasibility of completing the intangible asset so that the asset will be available for use or sale.
Its intention to complete and its ability and intention to use or sell the asset.
How the asset will generate future economic benefits.
The availability of resources to complete the asset.
The ability to measure reliably the expenditure during development.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

During the period of development, the asset is tested for impairment annually.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets are amortised on a pro-rata basis on the straight line method based on useful life estimated by the management as under:

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Asset Class Useful life
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Software	3 – 6years
Brand(refer 2.10.1)	20years
Technical know-how (refer 2.10.1)	20 years
Product development (refer 2.10.2)	20 years

2.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale (‘qualifying asset’) are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

2.10.1 Technical know-how and Brand

Technical know-how : The Company has originally generated technical know-how and assistance from International Tire Engineering Resources LLC, for setting up of Halol radial plant. Considering the life of the underlying plant / facility, this technical know-how, is amortised on a straight line basis over a period of twenty years.

To the extent that the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the Company determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

Brand : The Company has acquired global rights of “CEAT” brand from the Italian tyre maker, Pirelli. Prior to the said acquisition, the Company was the owner of the brand in only a few Asian countries including India. With the acquisition of the brand which is renowned worldwide, new and hitherto unexplored markets will be accessible to the Company. The Company will be in a position to fully exploit the export market resulting in increased volume and better price realization. Therefore, the management believes that the Brand will yield significant benefits for a period of at least twenty years.

To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Company determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate

Notes to Financial Statements for the year ended March 31, 2020

to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

2.12.1.2 Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including insubstance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless the cost is included in the carrying value of inventories) in the period in which the event or condition that triggers the payment occurs.

2.12 Leases

The Company has entered into various arrangements like lease of vehicles, premises and outsourcing arrangements which has been disclosed accordingly under Ind AS 116. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The assessment of whether a contract conveys the right to control the use of an identified asset depends on whether the Company obtains substantially all the economic benefits from the use of the asset and whether the Company has the right to direct the use of the asset.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

2.12.1 Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except for shortterm leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

2.12.1.1 Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). The cost of rightof-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over shorter of the lease term or the estimated useful life of the underlying asset as follows:

The Company’s lease liabilities are included in current and non-current financial liabilities. Lease liability have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

2.12.1.3 Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to the contracts which have a lease term of 12 months or less from the date of commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to the lease contracts that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Asset Class	Useful life
Building	2 - 3years
Others	2 - 4years

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The Company presents right-of-use assets separately in the Balance Sheet.

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CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets / forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in which the asset is used.

2.13 Inventories

Inventories are valued at the lower of cost and net realisable value.

Cost is determined on a weighted average basis:

Cost of raw materials includes the transfer of gains and losses on qualifying cash flow hedges, recognised in OCI, in respect of the purchases of raw materials. Raw materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Work-in-progress and finished goods includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing cost.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the Statement of Profit and Loss. The impairment loss is allocated first to reduce the carrying amount of any goodwill (if any) allocated to the CGU and then to the other assets of the unit, pro-rata based on the carrying amount of each asset in the unit.

Traded goods include cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

An assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement Profit and Loss.

2.14 Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash-Generating Unit’s (‘CGU’) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

2.15 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement Profit and Loss net of any reimbursement. If the effect of the time value of money is

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

Notes to Financial Statements

for the year ended March 31, 2020

Company recognises contribution payable to these funds / schemes as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the Balance Sheet date exceeds the contribution already paid, the deficit payable is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the Balance Sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.15.1 Sales related obligations

The estimated liability for sales related obligations is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of obligations and management estimates regarding possible future incidence based on corrective actions on product failure. The timing of outflows will vary as and when the obligation will arise - being typically up to three years. Initial recognition is based on historical experience. The initial estimate of sales related obligations (related costs) is revised annually.

2.16.2 Defined benefit plan

For defined benefit plans, the amount recognised as ‘Employee benefit expenses’ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past / future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ‘Finance costs’ in the Statement of Profit and Loss. Any differences between the expected interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in OCI and subsequently not reclassified to the Statement of Profit and Loss.

2.15.2 Decommissioning liability

The Company records a provision for decommissioning costs of land taken on lease at one of the manufacturing facility for the production of tyres. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognised in the Statement Profit and Loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

The defined benefit plan surplus or deficit on the Balance Sheet date comprises fair value of plan assets less the present value of the defined benefit liabilities using a discount rate by reference to market yields on Government bonds at the end of the reporting period.

2.15.3 Litigations

The Company is party to various lawsuits that are at administrative or judicial level or in their initial stages, involving tax and civil matters. The Company contests all claims in the court / tribunals / appellate authority levels and based on their assessment and that of their legal counsel, records a provision when the risk or loss is considered probable. The outflow is expected on cessations of the respective events.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company’s net obligation into current and non-current is as per the actuarial valuation report.

2.16.3 Termination benefits

2.16 Employee benefits

Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in the Statement of Profit and Loss. The Company recognises termination benefits at the earlier of the following dates:

2.16.1 Defined contribution plan

Retirement benefit in the form of Provident Fund, Superannuation, Employees State Insurance Contribution and Labour Welfare fund are defined contribution scheme. The Company has no obligation, other than the contribution payable to the above mentioned funds. The

When the Company can no longer withdraw the offer of those benefits; or

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CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

When the Company recognises costs for a restructuring that is within the scope of Ind AS 37: Provisions, Contingent Liabilities and Contingent Assets and involves the payment of termination benefits.

EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement Profit and Loss. The losses arising from impairment are recognised in the Statement Profit and Loss. This category generally applies to trade and other receivables, loans and other financial assets.

Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

2.17 Financial instruments

2.17.1.2.2 Debt instrument at FVTOCI

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

A debt instrument is classified as at FVTOCI if both of the following criteria are met:

2.17.1 Financial assets

The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets; and

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.

The asset’s contractual cash flows represent SPPI.

2.17.1.1 Initial recognition and measurement

On initial recognition, a financial asset is recognised at fair value. In case of Financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost is recognised in the statement of profit and loss. In other cases, the transaction cost is attributed to the acquisition value of the financial asset.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the OCI. However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

2.17.1.2 Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

2.17.1.2.1 Debt instruments at amortised cost

2.17.1.2.3 Debt instrument at FVTPL

2.17.1.2.2 Debt instruments at Fair Value Through Other Comprehensive Income (‘FVTOCI’)

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as amortised cost or as FVTOCI, is classified as FVTPL.

2.17.1.2.3 Debt instruments, derivatives and equity instruments at Fair Value Through Profit and Loss (‘FVTPL’)

In addition, the Company may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch’). The Company has not designated any debt instrument as FVTPL.

2.17.1.2.4 Equity instruments measured at FVTOCI

2.17.1.2.1 Debt instruments at amortised cost

A debt instrument is measured at the amortised cost if both the following conditions are met:

The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and

Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement Profit and Loss.

Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (‘SPPI’) on the principal amount outstanding.

2.17.1.2.4 Equity instruments

After initial measurement, such financial assets are subsequently measured at amortised cost using the

Notes to Financial Statements

for the year ended March 31, 2020

may make an irrevocable election to present in the OCI subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.

2.17.1.4 Impairment of financial assets

In accordance with Ind AS 109, the Company applies Expected Credit Loss (‘ECL’) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

In case of equity instrument classified as FVTOCI, all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to the Statement Profit and Loss, even on derecognition of investment. However, the Company may transfer the cumulative gain or loss within equity.

(i) Trade receivables
(ii) Financial assets measured at amortised cost (other than trade receivables)
(iii) Financial assets measured at fair value through other comprehensive income (FVTOCI).

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement Profit and Loss.

2.17.1.3 Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

For recognition of impairment loss on other financial assets [i.e. (ii) and (iii) above] and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12 month ECL.

The rights to receive cash flows from the asset have expired; or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

2.17.2.2 Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates and changes in the forward-looking estimates are updated. For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

2.17.2.2.1 Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.

Gains or losses on liabilities held for trading are recognised in the Statement Profit and Loss.

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / expense in the Statement Profit and Loss. This amount is reflected under the head ‘other expenses’ in the Statement Profit and Loss.

Financial liabilities designated upon initial recognition at FVTPL are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains / losses attributable to changes in own credit risks are recognised in OCI. These gains / loss are not subsequently transferred to the Statement Profit and Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement Profit and Loss. The Company has not designated any financial liability as at FVTPL.

The Balance Sheet presentation for various financial instruments is described below:

Financial assets measured at amortised cost and contractual revenue receivables: ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the Balance Sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

2.17.2.2.2 Financial liabilities at amortised cost

This is the category most relevant to the Company. After initial recognition, financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.

Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value.

The Company does not have any purchased or originated credit-impaired financial assets, i.e., financial assets which are credit impaired on purchase / origination.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement Profit and Loss.

2.17.2 Financial liabilities

2.17.2.2.3 Financial guarantee contracts

2.17.2.1 Initial recognition and measurement

Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and in the case of borrowings net of directly attributable transaction costs.

Notes to Financial Statements for the year ended March 31, 2020

Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.

2.17.3 Reclassification of financial assets

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company’s senior management determines change in the business model as a result of external or internal changes which are significant to the Company’s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

2.17.2.3 Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement Profit and Loss.

The following table shows various reclassifications and how they are accounted for:

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Original classification Revised classification Accounting treatment
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Original classification	Revised classification	Accounting treatment
Amortised cost	FVTPL	Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in the Statement Profit and Loss.
Amortised cost	FVTOCI	Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in OCI. No change in EIR due to reclassification.
FVTPL	Amortised Cost	Fair value at reclassification date becomes its new gross carrying amount. EIR is calculated based on the newgross carryingamount.
FVTPL	FVTOCI	Fair value at reclassification date becomes its new carrying amount. No other adjustment is required.
FVTOCI	Amortised cost	Fair value at reclassification date becomes its new amortised cost carrying amount. However, cumulative gain or loss in OCI is adjusted against fair value. Consequently, the asset is measured as if it had always been measured at amortised cost.
FVTOCI	FVTPL	Assets continue to be measured at fair value. Cumulative gain or loss previously recognised in OCI is reclassified to the Statement Profit and Loss at the reclassification date.

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Amounts recognised as OCI are transferred to the Statement Profit and Loss when the hedged transaction affects profit and loss, i.e. when the hedged financial income or financial expense is recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the non-financial asset or liability.

2.17.4 Derivative financial instruments and hedge accounting

The Company uses derivative financial instruments, such as forward currency contracts, to manage its foreign currency risks. These derivative instruments are designated as cash flow, fair value or net investment hedges and are entered into for period consistent with currency. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the Statement Profit and Loss.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.

2.17.4.1 Fair value hedges

The change in the fair value of a hedging instrument is recognised in the Statement Profit and Loss as finance costs. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the Statement Profit and Loss as finance costs.

2.17.5 Fair value measurement

The Company measures derivatives instruments like forward contracts at fair value at each Balance Sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through the Statement Profit and Loss over the remaining term of the hedge using the EIR method. EIR amortisation may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

If the hedged item is derecognised, the unamortised fair value is recognised immediately in the Statement Profit and Loss. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in the Statement Profit and Loss.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

2.17.4.2 Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the Statement Profit and Loss.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The ineffective portion relating to foreign currency contracts is recognised in the Statement Profit and Loss.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based

Notes to Financial Statements

for the year ended March 31, 2020

Exchange differences arising on settlement or translation of monetary items are recognised in the Statement Profit and Loss.

on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or the Statement Profit and Loss are also recognised in OCI or the Statement Profit and Loss, respectively).

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

2.21 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company after adjusting impact of dilution shares by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

2.17.6 Offsetting of financial instruments

Financial assets and financial liabilities can be offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

2.22 Segment Reporting

2.18 Cash and cash equivalents

Based on “Management Approach” as defined in Ind AS 108 - Operating Segments, the Executive Management Committee evaluates the Company’s performance and allocates the resources based on an analysis of various performance indicators by business segments.

Cash and cash equivalent in the Balance Sheet comprises cash at banks and on hand.

2.19 Dividend distribution to equity shareholders

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

The Company recognises a liability to pay dividend to equity shareholders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders.

2.23 Contingent liabilities and assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

2.20 Foreign currencies

The Company’s financial statements are presented in H , which is also the Company’s functional currency.

Transactions in foreign currencies are initially recorded by the Company at H spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements for the year ended March 31, 2020

Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

A contingent assets is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements. Contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:

2.24 Significant accounting judgments, estimates and assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require an adjustment to the carrying amount of assets or liabilities in future periods. Difference between actual results and estimates are recognised in the periods in which the results are known / materialised.

(a) Measurement of defined benefit obligations - note 39
(b) Measurement and likelihood of occurrence of provisions and contingencies - note 22
(c) Recognition of current tax and deferred tax assets - note 23
(d) Key assumptions used in fair valuations - note 45

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company has based its assumptions and estimates on parameters available when the financial statements were prepared.

(e) Measurement of lease liabilities and right-of-use asset - note 4
(f) Estimation of uncertainties relating to the global health pandemic from COVID-19 - note 50

Notes to Financial Statements

for the year ended March 31, 2020

(Hin Lacs)
Particulars
Freehold
land
Leasehold land
(Financial
lease)
Buildings
(refer foot
note 1 and 8)
Plant and
equipment
(Owned)
Furniture and
fixtures
Vehicles
Office
equipments
Capital work-
in-progress
Total
Gross carrying amount
As at April 01, 2018
48,454
5,391
32,824
1,87,049
1,363
603
914
15,247
2,91,845
Additions
1
186
7,731
46,801
199
93
277
1,11,930
1,67,218
Disposals
-
-
(71)
(1,091)
(2)
(1)
(6)
-
(1,171)
Transfers / capitalised
-
-
-
-
-
-
-
(55,288)
(55,288)
Adjustments during the year
-
-
(48)
2
-
-
(2)
-
(48)
As at March 31, 2019
48,455
5,577
40,436
2,32,761
1,560
695
1,183
71,889
4,02,556
Additions
69
79
14,836
89,099
529
37
316
1,24,762
2,29,727
Disposals
-
-
(124)
(602)
(1)
(4)
(12)
-
(743)
Transfers / capitalised
-
-
-
-
-
-
-
(1,04,965) (1,04,965)
Adjustments during the year
-
-
-
-
-
-
-
-
-
As at March 31, 2020
48,524
5,656
55,148
3,21,258
2,088
728
1,487
91,686
5,26,575
Accumulated depreciation
As at April 01, 2018
-
222
3,219
32,509
362
260
95
-
36,667
Depreciation for the year
-
76
1,340
14,233
169
101
252
-
16,171
Disposals
-
-
(59)
(674)
(1)
(1)
(5)
-
(740)
Adjustments during the year
-
-
(4)
1
-
-
(2)
-
(5)
As at March 31, 2019
-
298
4,496
46,069
530
360
340
-
52,093
Depreciation for the year
-
79
1,473
17,608
181
96
290
-
19,727
Disposals
-
-
(9)
(411)
(1)
(2)
(11)
-
(434)
Adjustments during the year
-
-
-
-
-
-
-
-
-
As at March 31, 2020
-
377
5,960
63,266
710
454
619
-
71,386
Net book value
As at March 31, 2019
48,455
5,279
35,940
1,86,692
1,030
335
843
71,889
3,50,463
As at March 31, 2020
48,524
5,279
49,188
2,57,992
1,378
274
868
91,686
4,55,189
Note 3: Property, plant and equipment and Capital work-in-progress
Refer note 2.9 for accounting policy on Property, plant and equipment * Adjustments include regrouping of certain assets into other class of assets

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Net book value

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Property, plant and equipment 3,63,503 2,78,574
Capital work in progress 91,686 71,889
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Notes:

Building includes H 0.10 lacs as at March 31, 2020 (As at March 31, 2019: H 0.10 lacs) being value of unquoted fully-paid shares held in various co-operative housing societies.
During the year, the company has transfered the following expenses which are attributable to the construction activity and are included in the cost of capital work-in-progress / property, plant and equipment as the case may be. Consequently, expenses disclosed under the respective notes are net of such amounts.

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( H in Lacs)
Particulars Note No. 2019-20 2018-19
Finance cost 33 4,724 3,156
Professional and consultancy charges 35 576 238
Miscellaneous expenses 35 1,697 2,782
Employee benefit expenses 32 3,387 1,356
Travelling and conveyance 35 443 512
Total 10,827 8,044
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As a part of ongoing expansion project at Halol-Phase III, during the year the Company has capitalised and commissioned assets of H 27,217 lacs (March 31, 2019: H 33,819 lacs).
As a part of ongoing expansion project at Nagpur the Company has capitalised and commissioned assets of H 13,638 lacs (March 31, 2019: H 7,409 lacs).
As a part of ongoing green field project at Chennai, during the year the Company has capitalised and commissioned assets of H 56,050 lacs (March 31, 2019: H 7,233 lacs).
The amount of borrowing cost capitalised during the year ended March 31, 2020 is H 4,724 lacs (March 31, 2019: H 3,156 lacs). The rates used to determine the amount of borrowing cost eligible for capitalisation was in the range of 8.15% to 8.90% (March 31, 2019: 7.40% to 8.90%) which is the effective interest rate of specific borrowings.
Refer note 20 and 24 for details on pledges and securities.
The Company has classified building having net block of Nil (March 31, 2019: H 44 lacs) as assets held-for-sale (refer note 2.8 for accounting policy on Non-current assets held for sale)

Note 4: Leases

Notes to Financial Statements

for the year ended March 31, 2020

Note 4(b): Lease liabilities

Note 4(b): Lease liabilities
	(`H`in Lacs)
Particulars	As at March 31, 2020
Openingnet carryingbalance	-
Adoption of Ind AS 116 "Leases" as on April 01,2019	13,085
Additions	1,028
Accretion of interest(refer note 33)	1,050
Payments	(4,562)
Total	10,601
Notes:

a) The rate used for discounting is 9%.
b) Refer note 44 for information about fair value measurement and note 46(c) for information about liquidity risk relating to lease liabilities.

	(`H`in Lacs)
Particulars	As at March 31, 2020
Non-current lease liabilities	6,375
Current lease liabilities	4,226

Note 5: Intangible assets and Intangible assets under development

Refer note 2.10 for accounting policy on Intangible assets

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( H in Lacs)
Technical Product
Particulars Software Brand Total
know-how development
----- End of picture text -----

Gross carrying amount
As at April 01, 2018	2,674	4,404	704	1,426	9,208
Additions	665	-	-	107	772
As at March 31, 2019	3,339	4,404	704	1,533	9,980
Additions	4,187	-	-	-	4,187
As at March 31, 2020	7,526	4,404	704	1,533	14,167
Accumulated amortisation
As at April 01, 2018	1,473	794	124	273	2,664
Amortisation duringtheyear	723	265	41	230	1,259
As at March 31, 2019	2,196	1,059	165	503	3,923
Amortisation duringtheyear	1,289	289	45	262	1,885
As at March 31, 2020	3,485	1,348	210	765	5,808
Net book value:
As at March 31, 2019	1,143	3,345	539	1,030	6,057
As at March 31, 2020	4,041	3,056	494	768	8,359

Refer note 2.12 for accounting policy on Leases and 2.2.1 for changes in accounting policy of Leases

Note 4(a): Right-of-use assets

Note 4(a): Right-of-use assets
	(`H`in Lacs)
Particulars	As at March 31, 2020
	Building	Others*	Total
Openingnet carryingbalance	-	-	-
Adoption of Ind AS 116 "Leases" as on April 01,2019	-	13,085	13,085
Additions duringtheyear	1,028	-	1,028
Depreciation	(112)	(3,816)	(3,928)
Total	916	9,269	10,185

Right-of-use assets are arising out of outsourcing arrangements which consists of both buildings and plant machinery used for production of goods under such arrangements.

Net book value

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Intangible assets 8,359 6,057
Intangible assets under development 1,692 3,055
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Note:

During the year, the Company has transfered employee benefit expenses of H 271 lacs (March 31, 2019: H 576 lacs) which are attributable to the development activity and are included in the cost of intangible assets under development / intangible assets as the case may be. Consequently, expenses disclosed under note 32 are net of such amounts.

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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 6: Investments

Note 6(a): Investments in subsidiaries and associate

Refer note 2.5 for accounting policy on Investments in subsidiaries and associate

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( H in Lacs)
As at As at
Particulars Face value
March 31, 2020 March 31, 2019
Non-current
Unquoted equity shares (at cost) (Non trade)
Investment in subsidiaries
1,00,00,000 (March 31, 2019: 1,00,00,000) equity shares of 10 LKR 4,358 4,358
Associated CEAT Holdings Company (Pvt) Limited.
10,49,99,994 (March 31, 2019: 10,49,99,994) equity shares of CEAT 10 Taka 3,717 3,717
AKKHAN Limited
94,16,350 (March 31, 2019: 94,16,350) equity shares of Rado Tyres H 4 9 9
Limited
2,10,50,000 (March 31, 2019: 2,10,50,000) equity shares of CEAT H 10 21,005 21,005
Specialty Tyres Limited
Investment in Associate (at cost)
100 (March 31, 2019: 100) equity shares of TYRESNMORE Online H 1 1 1
Pvt Limited
Unquoted preference shares (Non trade)
Investment in subsidiaries (at amortised cost)
15,10,000 (March 31, 2019: 15,10,000) 12.5% cumulative H 100 1,510 1,510
redeemable preference shares of Rado Tyres Limited
Investment in associate (at cost classified as equity)
76,337 (March 31, 2019: 63,596) 0.001% compulsory convertible H 1 998 699
preference shares of TYRESNMORE Online Pvt Limited
Total 6(a) 31,598 31,299
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Note 6(b): Investment in others

Refer note 2.17 for accounting policy on Financial instruments

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----- Start of picture text -----

( H in Lacs)
As at As at
Particulars Face value
March 31, 2020 March 31, 2019
Unquoted investment in others (at fair value through profit and loss)
Nil (March 31, 2019: 1,800) equity shares of RPG Ventures Limited H 10 - 0
(formerly known as Maestro Comtrade Private Limited)
9,75,000 (March 31, 2019: 9,75,000) equity shares of Bhadreshwar H 0.19 2 2
Vidyut Private Limited (formerly known as OPGS Power Gujarat
Private Limited)
7,129 (March 31, 2019: Nil) compulsorily convertible preference H 10 399 -
shares of E-Fleet Systems Private Limited
10 (March 31, 2019: Nil) equity shares of E-Fleet Systems Private H 10 1 -
Limited
27,313 (March 31, 2019: Nil) equity shares of Greenzest Solar Private H 10 22 -
Limited
Total 6(b) 424 2
Total [6(a) + 6(b)] 32,022 31,301
Aggregate amount of quoted investments - -
Aggregate market value of quoted investments - -
Aggregate amount of unquoted investments 32,022 31,301
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Notes to Financial Statements

for the year ended March 31, 2020

Information about subsidiaries

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----- Start of picture text -----

Proportion (%) of equity interest
Country of
Name and principle business As at As at
Incorporation
March 31, 2020 March 31, 2019
CEAT Specialty Tyres Limited - Trading & manufacturing of tyres, tubes India 100.00 100.00
and flaps
Associated CEAT Holdings Company (Pvt) Limited - Investing in Sri Lanka 100.00 100.00
companies engaged in manufacturing of tyres
CEAT AKKHAN Limited - Trading of tyres, tubes and flaps Bangladesh 70.00 70.00
Rado Tyres Limited - Manufacturing of tyres India 58.56 58.56
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Information about associate

Name and principle business Country of Incorporation TYRESNMORE Online Pvt Limited - Tradingof tyres,tubes and flaps India	Proportion(%) of equity interest
	As at March 31, 2020 As at March 31, 2019 41.30 36.96

*Includes compulsory convertible preference shares (potential voting right)

Note 7: Loans

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current (at amortised cost)
Secured, considered good
Security deposits 472 407
Unsecured, considered good
Security deposits 1 1
Unsecured, considered doubtful
Security deposits 110 121
Less : Allowance for doubtful deposits (110) (121)
Total 473 408
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Notes:

a) No loans are due from directors or promoters of the company either severally or jointly with any person.

b) Refer note 44 of information about fair value measurement.

178

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 8: Other financial assets

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current
Unsecured, considered good
At fair value through other comprehensive income
Derivative financial instrument 332 -
At amortised cost
Margin money deposits (refer foot note a) 128 181
Unsecured, considered doubtful
Receivables from subsidiaries (refer note 41) 209 209
Less : Allowance for doubtful receivables (209) (209)
Total 460 181
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Notes:

Notes to Financial Statements

for the year ended March 31, 2020

Note 10: Inventories (Contd..)

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----- Start of picture text -----

( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
e) Stores and spares 3,163 3,374
Goods in transit 7 1
3,170 3,375
Total 87,950 96,515
Details of finished goods
Automotive tyres 42,469 42,576
Tubes and others 7,090 9,175
Total 49,559 51,751
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Notes:

1) Cost of inventory recognised as an expense as at March 31, 2020 includes H 1,445 lacs (March 31, 2019: H 1,292 lacs) of write down in net realisable value with respect to slow moving stock as per Company’s policy.
2) Refer note 24 for details on pledges and securities.
a) The margin deposits are for bank guarantees given to statutory authorities.
b) Refer note 44 of information about fair value measurement.

Note 11: Trade receivables

Refer note 2.17 for accounting policy on Financial instruments

Note 9: Other non-current assets

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Unsecured, considered good
Capital advances (Others) 2,764 9,148
Capital advances (Related parties) (refer note 41) 241 1,643
Security deposits with statutory authorities 1,851 1,729
Unsecured, considered doubtful
Balances with government authorities and agencies 219 274
Less : Allowance for doubtful balances (219) (274)
Total 4,856 12,520
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Note 10: Inventories

(At cost or net realisable value, whichever is lower)

Refer note 2.13 for accounting policy on Inventories

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
a) Raw materials 28,670 34,024
Goods in transit 3,042 3,263
31,712 37,287
Less: Provision for unusable raw materials [refer note 36(d)] (200) -
31,512 37,287
b) Work-in-progress 4,445 3,273
Less: Provision for unusable work-in-progress materials [refer note 36(d)] (1,127) -
3,318 3,273
c) Finished goods 49,559 51,751
d) Stock in trade 346 713
Goods in transit 45 116
391 829
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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Trade receivables from others 59,964 64,308
Trade receivables from related parties (refer note 41) 10,502 8,338
Total 70,466 72,646
( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Break-up for security details
Secured, considered good (refer foot note a) 25,840 23,549
Unsecured, considered good 44,626 49,097
Doubtful 2,121 2,020
72,587 74,666
Less: Allowance for doubtful debts (2,121) (2,020)
Total 70,466 72,646
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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
The movement in allowance for doubtful debts is as follows:
Balance as at beginning of the year 2,020 2,129
Change in allowance for doubtful debts during the year 184 20
Trade receivables written off during the year (83) (129)
Balance as at end of the year 2,121 2,020
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Notes:

a) These debts are secured to the extent of security deposit obtained from the dealers.
b) No trade receivables are due from directors or other officers of the company either severally or jointly with any other person nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member other than those disclosed in note 41.

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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 11: Trade receivables (Contd..)

c) For terms and conditions relating to related party receivables, refer note 41.
d) Trade receivables are non-interest bearing within the credit period which is generally 27 to 60 days.
e) Refer note 46(b) for information about credit risk of Trade receivables.
f) The Company has entered into an arrangement to sell it receivable to third parties on without recourse to the Company. The Company has derecognised trade receivables of H 6,112 lacs during the year ended March 31, 2020 ( H 4,894 lacs during the year ended March 31, 2019) from the books. The Company has transferred substantially all the risks and rewards of the asset.
g) Refer note 24 for details on pledges and securities.

Note 12: Cash and cash equivalents

Notes to Financial Statements

for the year ended March 31, 2020

Note 14: Loans

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current (at amortised cost)
Unsecured, considered good
Loans to related parties (refer note 41) 5,032 5,800
Unsecured, considered doubtful
Loans advances and deposits 104 149
Less: Allowance for doubtful advances and deposits (104) (149)
Total 5,032 5,800
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Refer note 2.18 for accounting policy on cash and cash equivalents

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Balances with Banks
On current accounts 1,783 764
On remittance in transit 231 4,661
Cash on hand 3 1
Cash and cash equivalent as per statement of cash flow 2,017 5,426
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Changes in liabilities arising from financing activities

		(`H`in Lacs)
Particulars	Current borrowings	Non-current borrowings*
As at April 01, 2018	14,364	49,724
Cash flows	7,029	54,896
Foreign Exchange Impact	38	-
As at March 31, 2019	21,431	1,04,620
Cash flows	(4,959)	38,479
Foreign Exchange Impact	87	-
As at March 31, 2020	16,559	1,43,099

Includes current maturities of non-current borrowings.

Note 13: Bank balances other than cash and cash equivalents

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Balances held for unclaimed public fixed deposit and interest thereon (refer foot note a) 94 105
Balances held for unclaimed dividend accounts (refer foot note b) 548 443
Total 642 548
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Notes:

Note 15: Other financial assets

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current
Unsecured, considered good
At fair value through other comprehensive income
Derivative financial instrument 495 -
At amortised cost
Advance receivable in cash 891 354
Other receivables 48 50
Interest receivable 90 2,595
Receivable from related parties (refer note 41) 637 420
Others - 106
Total 2,161 3,525
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*Includes interest due on Income tax refunds Nil (March 31, 2019: H 2,594 lacs).

Note 16: Other current assets

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Unsecured, considered good
Advance receivable in kind or for value to be received 3,712 4,677
Balance with government authorities 6,496 4,732
Advance to employees 32 29
Prepaid expense 1,034 2,526
Unsecured, considered doubtful
Advance receivable in kind or for value to be received 44 44
Less: Allowance for advance receivable in kind or for value to be received (44) (44)
Total 11,274 11,964
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a) These balances are available for use only towards settlement of matured deposits and interest on deposits. Also includes H 0.20 lacs (March 31, 2019: H 0.20 lacs) outstanding for a period exceeding seven years, in respect of which a Government agency has directed the Company to hold.
b) These balances are available for use only towards settlement of corresponding unpaid dividend liabilities.

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 17: Equity share capital

Authorised share capital	Equity	shares	Preference shares	Preference shares	Unclassified shares	Unclassified shares
	Numbers	`J`in Lacs	Numbers	`J`in Lacs	Numbers	`J`in Lacs
At April 01, 2018	4,61,00,000	4,610	39,00,000	390	1,00,00,000	1,000
Increase /(decrease)duringtheyear	-	-	-	-	-	-
At March 31, 2019	4,61,00,000	4,610	39,00,000	390	1,00,00,000	1,000
Increase /(decrease)duringtheyear	-	-	-	-	-	-
At March 31, 2020	4,61,00,000	4,610	39,00,000	390	1,00,00,000	1,000

Issued share capital

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Equity shares of J 10 each issued Numbers J in Lacs
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At April 01, 2018(refer foot note a)	4,04,50,780	4,045
Alloted duringtheyear	-	-
At March 31, 2019(refer foot note a)	4,04,50,780	4,045
Alloted duringtheyear	-	-
At March 31, 2020(refer foot note a)	4,04,50,780	4,045

Subscribed and Paid-up share capital

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Equity shares of J 10 each subscribed and fully paid Numbers J in Lacs
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At April 01, 2018(refer foot note a)	4,04,50,092	4,045
Alloted duringtheyear	-	-
At March 31, 2019(refer foot note a)	4,04,50,092	4,045
Alloted duringtheyear	-	-
At March 31, 2020(refer foot note a)	4,04,50,092	4,045

Notes:

a) Includes 688 (March 31, 2019: 688) equity shares offered on right basis and kept in abeyance.

b) Terms / rights attached to equity shares

The Company has only one class of equity shares having face value of H 10 per share. Each holder of equity shares is entitled to one vote per equity share. Dividend is recommended by the Board of Directors and is subject to the approval of the members at the ensuing Annual General Meeting except interim dividend. The Board of Directors have a right to deduct from the dividend payable to any member, any sum due from him to the Company.

In the event of winding-up, the holders of equity shares shall be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

The shareholders have all other rights as available to equity shareholders as per the provision of the Companies Act, applicable in India read together with the Memorandum of Association and Articles of Association of the Company, as applicable.

Notes to Financial Statements

for the year ended March 31, 2020

c) Details of shareholders holding more than 5% shares in the company

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As at March 31, 2020 As at March 31, 2019
Name of the shareholders % holding in % holding in
Numbers Numbers
the class the class
Equity shares of J 10 each fully paid
Instant Holdings Limited 1,18,20,524 29.22% 1,18,16,662 29.21%
Swallow Associates LLP 44,84,624 11.09% 44,84,624 11.09%
Amansa Holdings Pvt Limited 32,22,110 7.97% 24,09,373 5.96%
Jwalamukhi Investment Holdings 23,33,991 5.77% 29,53,366 7.30%
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d) As per the records of the Company as at March 31, 2020, no calls remain unpaid by the directors and officers of the company.
e) The Company has not issued any equity shares as bonus for consideration other than cash and has not bought back any shares during the period of 5 years immediately preceeding March 31, 2020.

Note 18: Other equity

Refer Statement of Changes in Equity for detailed movement in other equity balance

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Securities premium (refer foot note a) 56,703 56,703
Capital reserve (refer foot note b) 1,177 1,177
Capital redemption reserve (refer foot note c) 390 390
Cash flow hedge reserve (refer foot note d) 514 (1,993)
Debenture redemption reserve (DRR) (refer foot note e) - -
General reserve (refer foot note f) 25,178 25,178
Retained earnings (refer foot note g) 2,04733 1,89,604
Total other equity 2,88,695 2,71,059
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a) Securities premium

Amount received on issue of shares in excess of the par value has been classified as security share premium.

b) Capital reserve

Capital reserve includes profit on amalgamation of entities.

c) Capital redemption reserve

Capital redemption reserve represents amount transferred from the Statement of Profit and Loss on redemption of preference shares during the financial year 1998-99.

d) Cash flow hedge reserve

It represents mark-to-market valuation of effective hedges as required by Ind AS 109.

e) Debenture redemption reserve

Debenture redemption reserve is required to be created in accordance with section 71 of the Companies Act, 2013 read with Companies (Share capital and Debenture) Rules, 2014 at equivalent to 25% of the value of the debentures issued.

During the year ended March 31, 2019, the Company has prepaid its non-convertible debentures amounting to H 20,000 lacs on July 31, 2018 and accordingly, the balance of debenture redemption reserve has been transferred to general reserves.

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

f) General reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriations purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to the Statement of Profit and Loss.

g) Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to reserves, dividends or other distributions paid to shareholders.

Note 19: Distribution made and proposed

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Cash dividends on equity shares declared and paid
Final dividend for the year ended on March 31, 2019: H 12 per share 4,854 4,652
(March 31, 2019: H 11.50 per share for the year ended on March 31, 2018)
Dividend Distribution Tax on final dividend 791 829
Interim dividend for the year ended on March 31, 2020: H 12 per share 4,854 -
(March 31, 2019: Nil)
Dividend Distribution Tax on interim dividend 996 -
Total 11,495 5,481
( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Proposed dividends on equity shares
Proposed dividend for the year ended on March 31, 2020: Nil - 4,854
(March 31, 2019: H 12 per share)
Dividend distribution tax on proposed dividend - 998
Total - 5,852
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Proposed dividends on equity shares which are subject to approval at the Annual General Meeting are not recognised as a liability (including Dividend Distribution Tax thereon) in the year in which it is proposed.

During the year ended March 31, 2020, the Company has paid dividend to its’ shareholders. This has resulted in payment of Dividend Distribution Tax to the taxation authority which the Company believes represents additional payment on behalf of the shareholders and hence charged to equity.

Notes to Financial Statements

for the year ended March 31, 2020

Note 20: Borrowings

(At amortised cost)

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
Non-current Current maturities
Particulars As at As at As at As at
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Interest bearing loans and borrowings
I. Secured
i) Term loans
a) Indian rupee loan from banks
Citibank N.A. (refer foot note 1) 21,500 21,500 - -
Citicorp Finance (India) Limited (refer foot note 2) 8,500 8,500 - -
HDFC Bank (refer foot note 3) 18,333 17,299 1,667 -
Kotak Mahindra Bank (refer foot note 4) 29,974 29,971 - -
Bank of Baroda (refer foot note 5) 32,618 19,826 - -
State Bank of India (refer foot note 6) 27,229 - - -
b) Buyer's Credit (Refer foot note 7) - 619 685 4,143
II. Unsecured
i) Public deposits (refer foot note 8) 0 0 - -
ii) Deferred sales tax (refer foot note 9) 2,045 2,557 548 205
1,40,199 1,00,272 2,900 4,348
Less: amount classified under other financial - - (2,900) (4,348)
liabilities (refer note 26)
Total 1,40,199 1,00,272 - -
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Indian rupee loan from banks carries floating interest rate ranging from 5.96% p.a. to 8.90% p.a.

Notes:

1) Term loan from Citibank N.A. H 21,500 lacs as on March 31, 2020 (March 31, 2019: H 21,500 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable as under :

Year	Repayment Schedule (In %) Schedule of Payment
2021 - 22	20.00% To be repaid in 3 annual instalments at the end of 3rd, 4th and 5th year 30.00% 50.00%
2022 - 23
2023 - 24
Term loan from Citicorp Finance India Limited`H`8,500 lacs as on March 31, 2020 (March 31, 2019:`H`8,500 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable as under :
Year	Repayment Schedule (In %) Schedule of Payment
2021 - 22	20.00% To be repaid in 3 annual instalments at the end of 3rd, 4th and 5th year 30.00% 50.00%
2022 - 23
2023 - 24

2) Term loan from Citicorp Finance India Limited H 8,500 lacs as on March 31, 2020 (March 31, 2019: H 8,500 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable as under :
3) Term loan from HDFC Bank H 20,000 lacs as on March 31, 2020 (March 31, 2019: H 17,300 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable in 12 equal quarterly instalments after 2 years of moratorium.

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CORPORATE OVERVIEW

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

4) Term loan from Kotak Mahindra Bank Limited H 30,000 lacs as on March 31, 2020 (March 31, 2019: H 30,000 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol, Nashik, Nagpur & Chennai Plant. It is payable as under:

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Year Repayment Schedule (In %) Schedule of Payment
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Year	Repayment Schedule (In %) Schedule of Payment
2021 - 22	2.50% To be repaid in 28 structured quarterly instalments commencing (March 2022) after 3 years of moratorium from first drawdown date (December 2018) 10.00% 11.50% 16.00% 16.00% 16.00% 16.00% 12.00%
2022 - 23
2023 - 24
2024 - 25
2025 - 26
2026 - 27
2027 - 28
2028 - 29

5) Term loan from Bank of Baroda H 32,775 lacs as on March 31, 2020 (March 31, 2019: H 20,000 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol, Nashik, Nagpur & Chennai Plant. It is payable as under:

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Year Repayment Schedule (In %) Schedule of Payment
----- End of picture text -----

Year	Repayment Schedule (In %) Schedule of Payment
2022 - 23	5.00% To be repaid in 28 structured quarterly instalments commencing (June 2022) after 3 years of moratorium from first drawdown date (March 2019) 5.00% 15.00% 15.00% 20.00% 20.00% 20.00%
2023 - 24
2024 - 25
2025 - 26
2026 - 27
2027 - 28
2028 - 29

6) Term loan from State Bank of India H 27,582 lacs as on March 31, 2020 (March 31, 2019: Nil) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol, Nashik, Nagpur & Chennai Plant. It is payable as under:

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Year Repayment Schedule (In %) Schedule of Payment
----- End of picture text -----

Year	Repayment Schedule (In %) Schedule of Payment
2022 - 23	2.50% To be repaid in 28 structured quarterly instalments commencing (December 2022) after 3 years of moratorium from first drawdown date (November 2019) 5.00% 10.00% 15.00% 17.50% 20.00% 20.00% 10.00%
2023 - 24
2024 - 25
2025 - 26
2026 - 27
2027 - 28
2028 - 29
2029 - 30

7) Long-term buyer’s credit is secured by way of first pari passu charge on all movable assets (excluding current assets) and immovable assets of the Company situated at Nagpur plant. It is repayable within 3 years from the date of disbursement. The long-term buyer’s credit carries interest of 12 months LIBOR plus 60 bps p.a. and 6 months LIBOR plus 70 bps p.a.
8) Public deposits H 0.20 lacs (March 31, 2019 H 0.20 lacs) outstanding for a period exceeding seven years, in respect of which a Government agency has directed the Company to hold.
9) Interest-free deferred sales tax is repayable in ten equal annual instalment commencing from April 26, 2011 and ending on April 30, 2025.
10) Outstanding balances, shown in foot notes above, are grossed up to the extent of unamortised transaction cost.
11) Refer note 44 for information about fair value measurement and note 46(c) for information about liquidity risk relating to borrowings.

Notes to Financial Statements

for the year ended March 31, 2020

Note 21: Other financial liabilities

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current
At fair value through other comprehensive income
Derivative financial instrument - 315
At amortised cost
Payable to capital vendors (refer foot note b) 9,926 -
Deposits 146 146
Total 10,072 461
Notes:
a) Refer note 44 of information about fair value measurement and note 46(c) for information about liquidity risk relating to other
financial liabilities.
b) These pertain to payable to capital vendors based on deferred payment terms.
Note 22: Provisions
Refer note 2.15 for accounting policy on Provisions
( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current provisions
Provision for sales related obligation (refer foot note a) 791 849
Provision for compensated absences (refer foot note b) 2,952 2,766
Provision for decommissioning liability (refer foot note c) 76 68
Total 3,819 3,683
Current provisions
Provision for sales related obligation (refer foot note a) 4,609 3,499
Provision for gratuity (refer note 39b) 2,491 1,032
Provision for compensated absences (refer foot note b) 558 537
Provision for litigations (refer foot note d) 4,507 4,917
Total 12,165 9,985
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a) Refer note 44 of information about fair value measurement and note 46(c) for information about liquidity risk relating to other financial liabilities.

Notes:

a) Provision for sales related obligation

A provision is recognised for expected sales related obligation on product sold during the last three years, based on past experience of the level of returns and cost of claim. It is expected that significant portion of these costs will be incurred in the next financial year and within three years from the reporting date. Assumptions used to calculate the provision for sales related obligation were based on current sales levels and current information available about returns based on the three years period for all products sold. The rate used for discounting provision for sales related obligation is 11.50%. The table below gives information about movement in provision for sales related obligation.

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Movement in provision for sales related obligation ( J in Lacs)
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As at April 01, 2018	3,729
Additions duringtheyear	6,261
Utilised duringtheyear	(5,642)
As at March 31, 2019	4,348
Additions duringtheyear	7,035
Utilised duringtheyear	(5,983)
As at March 31, 2020	5,400

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

b) Compensated absences

Employee leaves are encashed as per the Company’s leave encashment policy. A provision has been recognised for leave encashment liability based on the actuarial valuation of leave balance of employees as at year end.

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Movement in provision for compensated absences ( J in Lacs)
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As at April 01, 2018	2,746
Additions duringtheyear	1,020
Utilised duringtheyear	(463)
As at March 31, 2019	3,303
Additions duringtheyear	709
Utilised duringtheyear	(502)
As at March 31, 2020	3,510

c) Provision for decommissioning liability

The Company has recognised a provision for decommissioning obligations associated with a land taken on lease at Nashik manufacturing facility for the production of tyres. In determining the fair value of the provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs. The Company estimates that the costs would be realised in year 2066 at the expiration of the lease and calculates the provision using the Discounted Cash Flow (DCF) method based on the following assumptions:

Notes to Financial Statements

for the year ended March 31, 2020

Note 23: Income taxes and deferred taxes

Refer note 2.7 for accounting policy on Taxes

Balance Sheet

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current tax assets (net)
Advance payment of tax (net of provision) 1,724 5,733
Current tax liabilities (net)
Provision for income tax (net of advance tax) 1,457 4,377
Deferred tax liability (net) 26,111 20,771
Statement of Profit and Loss
( H in Lacs)
Particulars 2019-20 2018-19
Tax expense
Current tax 7,401 9,009
Deferred tax (624) 3,077
Income tax expense recognised in the Statement of Profit and Loss 6,777 12,086
(refer foot note b)
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Estimated range of cost per square meter: H 45 – H 50
Discount rate: 11.50%

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Movement in provision for decommissioning liability ( J in Lacs)
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As at April 01, 2018	61
Additions duringtheyear	7
As at March 31, 2019	68
Additions duringtheyear	8
As at March 31, 2020	76

d) Provision for litigations

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Movement in provision for litigations ( J in Lacs)
----- End of picture text -----

As at April 01, 2018	1,858
Additions duringtheyear	3,106
Utilised duringtheyear	(47)
As at March 31, 2019	4,917
Additions duringtheyear	28
Utilised duringtheyear	(438)
As at March 31, 2020	4,507

Other Comprehensive Income (OCI) section

Deferred tax related to items recognised in OCI during the year

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( H in Lacs)
Particulars 2019-20 2018-19
Income tax effect on actuarial losses for gratuity 243 279
Income tax effect on movement in cash flow hedges (1,347) 1,323
Income tax (expense) / income charged to OCI (1,104) 1,602
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Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate for March 31, 2020 and March 31, 2019:

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( H in Lacs)
Particulars 2019-20 2018-19
Accounting profit before tax from continuing operations 33,853 40,977
Income tax rate of 34.94% (March 31, 2019: 34.94%) 11,830 14,317
Additional deduction on Research and Development (R&D) expense (1,523) (1,281)
Income tax at special rates (179) (128)
Income tax refund for earlier years (net of provision for tax of earlier years) (3,604) (1,505)
Others (86) 285
Non-deductible expenses for tax purposes
Depreciation on revaluation 142 183
Corporate Social Responsibility (CSR) expenses 160 184
Other non-deductible expenses 37 31
At the effective income tax rate of 20.02% (March 31, 2019: 29.49%) 6,777 12,086
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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Deferred tax

Deferred tax relates to the following

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( H in Lacs)
Balance Sheet Statement of Profit and Loss
Particulars As at As at
2019-20 2018-19
March 31, 2020 March 31, 2019
Accelerated depreciation for tax purposes (44,042) (34,919) 9,123 4,168
MAT credit entitlement 8,037 5,764 (7,133) -
Voluntary retirement scheme 1,639 1,637 (2) (33)
Allowance for doubtful debts / advances 1,673 2,021 348 (1,081)
Others 6,582 4,726 (2,960) 23
Deferred tax expense / (income)
(26,111) (20,771) (624) 3,077
Net deferred tax asset / (liability)
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Notes to Financial Statements

for the year ended March 31, 2020

Note 24: Borrowings

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current
Secured
Cash credit facilities from banks (repayable on demand) (refer foot note a) 172 1,379
Export packing credit from banks (refer foot note a) 1,514 -
Term loans from banks (refer foot note a) - 200
Unsecured
Commercial paper (refer foot note b) 14,873 19,852
Total 16,559 21,431
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Notes:

Reflected in the Balance Sheet as follows

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Deferred tax asset 17,931 14,148
Deferred tax liability (44,042) (34,919)
Deferred tax liability (net) (26,111) (20,771)
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Reconciliation of deferred tax liability (net)

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Opening balance as at April 01 (20,771) (17,815)
Tax expense / (income) recognised in the Statement of Profit and Loss 624 (3,077)
Tax (expense) / income recognised in Other Comprehensive Income (1,104) 1,602
MAT credit utilisation (4,860) (1,481)
Closing balance as at March 31 (26,111) (20,771)
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Notes:

a) The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and liabilities as well as the deferred tax assets and liabilities related to income taxes levied by the same taxation authority.
b) Pursuant to the Taxation Laws (Amendment) Act, 2019, corporate assesses have been given the option under section 115BBA of the Income Tax Act, 1961 to apply lower income tax rate with effect from April 01, 2019, subject to certain conditions specified therein. The Company had assessed the impact of the Ordinance and believes that it will continue to remain in the existing tax structure for the foreseeable future based on its forecasted profits. Accordingly, no effect in this regard has been considered in measurement of tax expense for the year ended March 31, 2020. Management, however, will continue to review its profitability forecast at regular intervals and make necessary adjustments to tax expense when there is reasonable certainty to avail the beneficial (lower) rate of tax.
a) Cash credit facilities and working capital demand loan from banks is part of working capital facilities availed from consortium of banks secured by way of first pari passu charge on the current assets of the Company, wherever situated and by way of second pari passu charge on the movable assets (except current assets) and immovable assets of the Company situated at Nashik and Halol plants. All short-term borrowings availed in Indian rupees during the current year carry interest in the range of 7.75% p.a. to 10.90% p.a. (March 31, 2019: 7.80% p.a. to 12.30% p.a.) and all short-term borrowing availed in foreign currency during the year carry interest at 1 month Libor Plus 110 bps. (LIBOR is set corresponding to the period of the loan).
b) The Company had issued commercial papers (total available limit H 35,000 lacs) at regular intervals for working capital purposes with interest ranging from 5.45% p.a. to 8.00% p.a. The commercial papers outstanding as on March 31, 2020 are listed on the National Stock Exchange.
c) Refer note 46(c) for information about liquidity risk relating to borrowings.

Note 25: Trade payables

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Dues to micro and small enterprises (refer foot note a)
Overdue 171 -
Not due 1,585 547
Other trade payables 1,14,553 1,00,905
Trade payables to related parties (refer note 41) 828 1,941
Total 1,17,137 1,03,393
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c) Based on approved plans and budgets, the Company has estimated that the future taxable income will be sufficient to absorb MAT credit entitlement , which management believes is probable. Accordingly, the Company has recognised MAT credit as an asset.

192

193

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Notes:

a) Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the MSMED Act) are given as follows* :

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
i) The principal amount remaining unpaid to any supplier as at the end of each 1,755 547
accounting year
ii) Interest due thereon remaining unpaid to any supplier as at the end of 1 -
accounting year
iii) The amount of interest paid by the buyer in terms of section 16 of the MSMED - -
Act 2006 along with the amounts of the payment made to the supplier beyond
the appointed day during each accounting year
iv) The amount of interest due and payable for the year 1 -
v) Amount of further interest remaining due and payable even in the succeeding - -
years, until such date when the interest dues as above are actually paid to the
small enterprises, for the purpose of disallowance as a deductible expenditure
under section 23 of the Act.
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Notes to Financial Statements

for the year ended March 31, 2020

Note 28: Revenue from operations

Refer note 2.4 for accounting policy on revenue recognition and 2.6 for government grant, subsidies and export incentives

Set out below is the disaggregation of the Company’s revenue from contracts with customers:

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( H in Lacs)
Particulars 2019-20 2018-19
Revenue recognised at the point of time
Automotive tyres 5,81,122 6,10,967
Tubes and others 65,910 64,826
Sale of scrap 3,262 2,909
Other revenues 1,125 863
Revenue recognised over the period of time
Royalty income (refer note 41) 438 441
Total revenue from contracts with customers 6,51,857 6,80,006
Other operating income
Government grants (refer foot note d) 6,254 3,124
Revenue from operations 6,58,111 6,83,130
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Notes:

The information disclosed above is to the extent available with the Company.
b) Trade payables are non interest bearing and normally settled on 30 to 180 days.

c) Refer note 46(c) for information about liquidity risk relating to trade payables.

a) Revenue disaggregation basis geography has been included in segment information (refer note 42).

b) Contract assets and liabilities

The Company has recognised the following revenue-related contract assets and liabilities:

Note 26: Other financial liabilities

Refer note 2.17 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current
At fair value through other comprehensive income
Derivative financial instrument - 3,136
At amortised cost
Current maturities of long-term borrowings (refer note 20) 2,900 4,348
Interest accrued but not due on borrowings 739 538
Unpaid dividends 548 443
Unpaid matured deposits and interest accrued thereon (refer foot note a) 91 101
Payable to capital vendors 19,066 17,383
Deposits from dealers and others 33,800 32,150
Others 147 0
Total 57,291 58,099
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Notes:

a) Refer foot note a) below note 13: Bank balances other than cash and cash equivalents.

b) Refer note 44 for information about fair value measurement and note 46(c) for information about liquidity risk relating to other financial liabilities.

Note 27: Other current liabilities

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Statutory dues 5,092 7,369
Advance received from customers 1,259 1,241
Total 6,351 8,610
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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Trade receivables (refer note 11) 70,466 72,646
Contract liabilities (refer note 27) 1,259 1,241
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The Company receives payment from customers based on a billing schedule, as established in the contracts with customers. Trade receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) the Company perform under the contract.

c) Reconciling the amount of revenue recognised in the statement of profit and loss with the contracted price:

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Revenue as per contracted price 6,72,132 6,99,565
Reductions towards variable consideration components (20,275) (19,559)
Revenue from contracts with customers 6,51,857 6,80,006
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The reduction towards variable consideration comprises of discounts, indexations etc.

d) Government Grant:

i) The Company has recognised a government grant as income on account of Export Incentive under Merchandise Exports from India Scheme (MEIS) from Directorate General of Foreign Trade, Government of India.

ii) Pursuant to the memorandum of understanding executed with the Government of Maharashtra, the Company is entitled for industrial promotion subsidy. During the year, the Company has recognised subsidy income of H 4,026 lacs (March 31, 2019: Nil).

Represents contract liabilities

194

195

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 29: Other Income

Refer note 2.4 for accounting policy on revenue recognition

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( H in Lacs)
Particulars 2019-20 2018-19
Interest income on
Bank deposits 14 16
Other interest income 984 3,189
Dividend income from subsidiaries (refer note 41) 1,036 732
Other non-operating income 1,668 1,510
Gain on disposal of investments (net) 4 83
Gain on disposal of property, plant and equipment / asset held for sale (net) 428 -
Total 4,134 5,530
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Note 30: Cost of material consumed

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( H in Lacs)
Particulars 2019-20 2018-19
Raw Material
Opening stock 37,287 35,876
Add: Purchases 3,76,022 4,28,775
4,13,309 4,64,651
Less: Closing stock (31,712) (37,287)
Total 3,81,597 4,27,364
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* The closing stock is gross off provision towards unusable raw materials aggregating H 200 lacs. Refer note 36 for further details.

Details of raw materials consumed

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( H in Lacs)
Particulars 2019-20 2018-19
Rubber 1,83,860 2,03,292
Fabrics 52,364 66,000
Carbon black 58,459 63,716
Chemicals 44,579 52,504
Others 42,335 41,852
Total 3,81,597 4,27,364
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Details of closing inventories

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Rubber 19,549 23,728
Fabrics 3,077 4,485
Carbon black 2,281 2,946
Chemicals 2,444 3,345
Others 4,361 2,783
Total [refer note 10(a)] 31,712 37,287
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Notes to Financial Statements

for the year ended March 31, 2020

Note 31: Changes in inventories of finished goods, work-in-progress and stock-in-trade

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( H in Lacs)
Particulars 2019-20 2018-19
Opening Stock
Work-in-progress 3,273 2,933
Finished goods 51,751 32,215
Stock-in-trade 829 1,280
55,853 36,428
Closing Stock
Work-in-progress 4,445 3,273
Finished goods 49,559 51,751
Stock in trade 391 829
54,395 55,853
Total change in inventories 1,458 (19,425)
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* The closing work-in-progress is gross off provision towards unusable semi finished inventory aggregating H 1,127 lacs. Refer note 36 for further details.

Note 32: Employee benefit expense

Refer note 2.16 for accounting policy on employee benefits

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( H in Lacs)
Particulars 2019-20 2018-19
Salaries, wages and bonus 41,852 41,009
Contribution to provident and other funds 2,214 1,899
Gratuity expenses (refer note 39) 691 631
Staff welfare expenses 5,297 5,656
Total 50,054 49,195
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Note 33: Finance costs

Refer note 2.11 for accounting policy on Borrowing costs and 2.12 for accounting policy on leases

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( H in Lacs)
Particulars 2019-20 2018-19
Interest on debts and borrowings [refer note 3(6)] 10,389 5,613
Other finance charges 351 408
Interest on lease liabilities [refer note 4(b)] 1,050 -
Total interest expense 11,790 6,020
Unwinding of decommissioning liability 8 7
Unwinding of discount on provision of sales related obligation 498 424
Total 12,296 6,451
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Note 34: Depreciation and amortisation expenses

Refer notes 2.9 for accounting policy on Property, plant and equipment, 2.10 for accounting policy on Intangible assets and 2.12 for accounting policy on leases

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( H in Lacs)
Particulars 2019-20 2018-19
Depreciation of property, plant and equipment (refer note 3) 19,727 16,171
Amortisation of intangible assets (refer note 5) 1,885 1,259
Depreciation of right-of-use assets [refer note 4(a)] 3,928 -
Total 25,540 17,430
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196

197

STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 35: Other expenses

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( H in Lacs)
Particulars 2019-20 2018-19
Conversion charges 30,265 40,315
Stores and spares consumed 5,907 5,602
Provision for obsolescence of stores and spares 100 74
Power and fuel 20,734 21,286
Freight and delivery charges 32,960 32,415
Short-term and low value lease rent 1,048 821
Rates and taxes 272 177
Insurance 1,036 418
Repairs and maintenance:
Machinery 6,463 5,603
Buildings 557 598
Others 25 50
Travelling and conveyance 3,480 3,489
Printing and stationery 227 225
Directors' sitting fees (refer note 41) 49 53
Payment to auditors (refer foot note 1) 92 89
Cost audit fees 4 3
Advertisement and sales promotion expenses 16,096 16,892
Commission on sales 265 76
Communication expenses 1,181 653
Bad debts and advances written off 272 135
Allowance for bad debts written back (268) (129)
4 6
Allowance for doubtful debts and advances 174 197
Loss on disposal of property, plant and equipment (net) - 480
Legal charges 332 167
Foreign exchange fluctuations (net) 395 338
Professional and consultancy charges 5,661 3,160
Commission to directors (refer note 41) 93 438
Training and conference expenses 1,132 1,271
Corporate Social Responsibility (CSR) expenses (refer foot note 2) 913 1,051
Bank charges 227 320
Sales related obligations 7,035 6,261
Miscellaneous expenses (refer foot note 3) 15,625 13,623
Total 1,52,352 1,56,151
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Notes:

1) Payment to auditors*

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( H in Lacs)
Particulars 2019-20 2018-19
As auditor
Audit fee 54 54
Limited review 21 21
In other capacity
Other services (including certification fees) 12 10
Reimbursement of expenses 5 4
Total 92 89
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Notes to Financial Statements

for the year ended March 31, 2020

2) Details of Corporate Social Responsibility (CSR) expenses

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( H in Lacs)
Particulars 2019-20 2018-19
a) Gross amount required to be spent during the year 913 1,051
( H in Lacs)
Yet to be
Particulars In cash Total
paid in cash
b) Amount spent during the year ended on March 31, 2020
i) Construction / acquisition of any asset - - -
ii) On purposes other than (i) above 913 - 913
Total 913 - 913
( H in Lacs)
Yet to be
Particulars In cash Total
paid in cash
c) Amount spent during the year ended on March 31, 2019
i) Construction/acquisition of any asset - - -
ii) On purposes other than (i) above 1,051 - 1,051
Total 1,051 - 1,051
The company does not carry any CSR expense provisions for current and previous year.
3) The Company made contributions through electoral bonds of H 800 lacs for the year ended March 31, 2020 (year ended March
31, 2019: Nil) which is included in Miscellaneous expenses.
Note 36: Exceptional items
( H in Lacs)
Particulars 2019-20 2018-19
Voluntary retirement scheme (VRS) (refer foot note a) 1,390 1,195
Workmen's separation expense (refer foot note b) - 229
Provision for indirect tax matters (refer foot note c) - 3,000
Expenses / losses attributable to COVID-19 (refer foot note d) 1,585 -
Total 2,975 4,424
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3) The Company made contributions through electoral bonds of H 800 lacs for the year ended March 31, 2020 (year ended March 31, 2019: Nil) which is included in Miscellaneous expenses.

Notes:

a) The Company had introduced VRS for employees across the Company. During the year, 60 employees (March 31, 2019, 56 employees) opted for the VRS.
b) During the previous year, the Company has paid compensation in respect of workmen’s separation.
c) During the previous year, provision for differential amount of GST attributable to the composite supply of Tyres and Tubes for the period from November 15, 2017 to January 11, 2019, aggregating to H 3,000 lacs and in respect of which the Company is evaluating further legal options.
d) As explained in note 50, the COVID-19 pandemic had a significant impact on the Company operations. The Company has made provision for unusable semi finished inventory and raw materials, aggregating H 1,327 lacs due to abrupt stoppage of production facilities. Further, borrowing costs not capitalised due to temporary suspension related to ongoing capital projects, contract manpower cost and export detention (for the period attributable to the COVID-19) aggregate H 258 lacs.
Exclusive of Goods and Services Tax (GST)

198

199

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 37: Research and development costs

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( H in Lacs)
Particulars 2019-20 2018-19
Capital expenditure 4,644 2,917
Revenue expenditure 6,783 6,159
Total 11,427 9,076
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The above expenditure of research and development has been determined on the basis of information available with the Company and as certified by the management.

Notes to Financial Statements

for the year ended March 31, 2020

Investment Strategy

The Board of trustees have appointed LIC of India, Birla Sun Life Insurance, India First Life Insurance & HDFC Life Insurance to manage its funds. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company. In case of death, while in service, the gratuity is payable irrespective of vesting.

The following set out the amounts recognised in the Company’s financial statements as at March 31, 2020 and March 31, 2019.

Balance Sheet

Note 38: Earnings per share (‘EPS’)

Refer note 2.21 for accounting policy on Earnings per share

Basic EPS amounts are calculated by dividing profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

The following reflects the profit and shares data used in the basic and diluted EPS computations:

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( H in Lacs)
Particulars 2019-20 2018-19
Profit after tax for calculation of basic and diluted EPS 27,076 28,891
Weighted average number of equity shares (face value per share H 10) in calculating 4,04,50,092 4,04,50,092
basic EPS and diluted EPS
Basic EPS (of face value of H 10 each) 66.94 71.42
Diluted EPS (of face value of H 10 each) 66.94 71.42
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Note 39: Post-retirements benefit plan

Refer note 2.16 for accounting policy on employee benefits

a) Defined contribution plan

The Company has recognised and included in note no. 32 “Contribution to Provident and other funds” expenses towards the defined contribution plan as under:

defined contribution plan as under:
		(`H`in Lacs)
Particulars	2019-20	2018-19
Contribution to Provident fund(Government)	1,968	1,686

b) Defined benefit plan - Gratuity

Description of plan

The Company has a defined benefit gratuity plan which is funded with an Insurance Company in the form of a qualifying Insurance policy. The Company’s defined benefit gratuity plan is a salary plan for employees which requires contributions to be made to a separate administrative fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, every employee who has completed five years of service gets a gratuity on separation at 15 days of last drawn salary for each completed year of service.

i) Net Assets / (Liability) as at year end

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( H in Lacs)
Sr. As at As at
No. [Particulars] March 31, 2020 March 31, 2019
1. Closing present value of the defined benefit obligation 11,700 10,281
2. Closing fair value of plan assets 9,209 9,249
Net (Liability) / Assets recognised in the Balance Sheet (2,491) (1,032)
Change in present value of the defined benefit obligation
( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1. Opening present value of defined benefit obligation 10,281 9,301
2. Current service cost 697 631
3. Interest cost 772 698
4. Benefits paid (845) (1058)
5. Remeasurement (gain) / loss in other comprehensive income
- Change in demographic Assumptions 83 -
- Actuarial changes arising from changes in financial assumption 608 -
- Experience adjustments 104 709
6. Adjustment in the Opening Liability - -
Closing present value of defined benefit obligation 11,700 10,281
iii) Changes in fair value of plan assets
( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1. Opening fair value of plan assets 9,249 9,667
2. Expected return on plan assets 695 724
3. Contributions made 10 5
4. Benefits paid (845) (1,058)
5. Return on plan assets, excluding amount recognised in net interest 100 (89)
expense
Closing fair value of plan assets 9,209 9,249
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ii) Change in present value of the defined benefit obligation

iii) Changes in fair value of plan assets

The Company’s gratuity funds are invested through insurers.

Governance

200

201

STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements for the year ended March 31, 2020

Statement of Profit and Loss

iv) Expenses recognised during the year

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1. In income statement 775 603
2. In other comprehensive income 695 798
Total expenses recognised during the period 1,470 1401
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v) Expenses recognised in the income statement

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1. Current service cost (refer note 32) 697 631
2. Interest cost on benefit obligation 78 (28)
Net benefit expense 775 603
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Includes H 6 lacs capitalised during the year (previous year: Nil)

Notes to Financial Statements

for the year ended March 31, 2020

The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields / rates available on applicable bonds as on the current valuation date.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company’s best estimate of contribution during the next year is H 3,288 lacs.

ix) Sensitivity analyses of the defined benefit obligation

The sensitivity analysis below have been determined based on reasonably possible change of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

	Particulars	As at March 31, 2020	(`H`in Lacs) As at March 31, 2019
	Defined Benefit Obligation(Base)	11,700	10,281

A quantitative sensitivity analysis for significant assumption as at March 31, 2020 is as shown below:

( H in Lacs)

vi) Expenses recognised in other comprehensive income

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1. Remeasurement arising from changes in demographic assumptions 83 -
2. Remeasurement arising from changes in financial assumptions 608 -
3. Remeasurement arising from changes in experience adjustment 104 709
4. Return on plan assets, excluding amount recognised in net interest (100) 89
expense
Components of defined benefit costs recognised in other 695 798
comprehensive income
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vii) Actual return on plan assets for the year ended

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1. Expected return on plan assets 695 724
2. Actuarial (loss) / gain on plan assets 100 (89)
Actual return on plan assets 795 635
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viii) The principal assumptions used in determining gratuity and leave encashment for the Company’s plan are shown below

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( H in Lacs)
Particulars 2019-20 2018-19
Discount Rates (per annum) 6.75% 7.50%
Salary growth rate (per annum) 7.00% 7.00%
Mortality rate (% of Indian Assured Lives Mortality (2006-08) Modified Ultimate) 100% 100%
Disability Rate (% of mortality rate) 5.00% 5.00%
Withdrawal rates, based on service year: (per annum)
- Below 5 years 8.20% 22.70%
- Equal and above 5 years 5.67% 5.67%
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2019-20 2018-19
Particulars
Decrease Increase Decrease Increase
Discount Rate (- / + 1%) 12,627 10,886 11,048 9,603
(% change compared to base due to sensitivity) 7.90% (6.90)% 7.50% (6.60)%
Salary Growth Rate (- / + 1%) 10,882 12,614 9,595 11,043
(% change compared to base due to sensitivity) (7.00)% 7.80% (6.70)% 7.40%
Attrition Rate (- / + 50% of attrition rates) 11,779 11,633 10,261 10,286
(% change compared to base due to sensitivity) 0.70% (0.60)% (0.20)% 0.10%
Mortality Rate (- / + 10% of mortality rates) 11,699 11,698 10,279 10,280
(% change compared to base due to sensitivity) 0.00% 0.00% 0.00% 0.00%
----- End of picture text -----

These plans typically expose the Company to actuarial risks such as: Investment Risk, Interest Risk, Demographic Risk and Salary Risk.

Risk Exposure Interest The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements). Investment The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Demographic The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption. Salary Escalation The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

x) Weighted average duration and expected employers contribution for the next year for the defined benefit plan

The weighted average duration (based on discounted cash flows) of defined benefit obligation is 7 years.

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Within the next 12 months (next annual reporting period) 1,897 1,676
Between 2 and 5 years 4,427 4,210
Between 5 and 10 years 5,057 4,839
Beyond 10 years 10,448 9,241
Total 21,829 19,966
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Note 40: Commitments and contingencies

a) Contingent liabilities

Refer note 2.23 for accounting policy on Contingent liabilities and assets (to the extent not provided for)

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
1. Direct and indirect taxation matters
Income tax 495 911
Excise duty / Service tax / GST 6,247 7,083
Sales tax 5,439 5,345
Bills discounted with banks 3,672 10,586
2. Claims against the Company not acknowledged as debts
In respect of labour matters 660 586
Customer disputes - 446
Vendor disputes 294 294
3. Other claims 3,208 3,199
4. Corporate Guarantee upto H 32,800 lacs (previous year H 22,800 lacs) to 26,967 22,800
CEAT Specialty Tyres Limited as a collateral security for raising the term
loans
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In respect of above matters, future cash outflows are determinable only on receipt of judgements pending at various forums / authorities.

b) Commitments

Commitments
		(`H`in Lacs)
Particulars Estimated amount of contracts remaining to be executed on Capital account and notprovided for(net of advancepayments)	As at March 31, 2020 64,916	As at March 31, 2019 1,22,572

c) Others

The Company has availed the Sales Tax Deferral Loan and Octroi refund from the Directorate of Industries for Nashik Plant. Hence, the Company has to take prior permission of the appropriate authority for removal / transfer of any asset (falling under the above Schemes) from Nashik Plant. In case of violation of terms & conditions, the Company is required to refund the entire loan / benefit along with the interest @ 22.50% on account of Sales Tax deferral Loan and @ 15% on account of Octroi refund.

Notes to Financial Statements

for the year ended March 31, 2020

d) Material demands and disputes considered as “Remote” by the Company

The Company has been served with a Show Cause cum Demand Notice from the DGCEI (Directorate General of Central Excise Intelligence) Mumbai, on the ground that, the activity of making tyre set, i.e. inserting Tubes and Flaps inside the Tyres and tied up through Polypropylene Straps, amounts to manufacture / pre-packaged commodity under Section 2(f) (iii) of Central Excise Act, read with Section 2(l) of the Legal Metrology Act, 2009. Accordingly, the authorities worked out the differential duty amounting to H 27,672 lacs i.e., the amount of duty already paid on the basis of transaction value and duty payable on the basis of MRP under Section 4A, for the period from April 2011 to July 2017. The Company believes that Set of TT / TTF (Tyre and Tube / Tyre, Tube and Flap) is not pre-packaged commodity in terms of provisions of Legal Metrology Act, 2009. The Company has a strong case on the ground that, the said issue has been clarified by the Controller of the Legal Metrology Department vide its letter dated May 01, 1991 that “Tyre with tube & flaps tied with three thin polythene strips may not be treated as a pre-packed commodity within the meaning of rule 2(l) of the Standards of Weights and Measures (Packaged Commodities), Rules, 1977”. The above clarification has been re-affirmed vide letter dated November 16, 1992 by the Legal Metrology authorities.
The Competition Commission of India (‘CCI’) had, while considering the representation of the All India Tyres Dealers Federation (AITDF) made a prima facie finding that the major players of tyre industry (including the Company) had some understanding amongst themselves, especially in the replacement market, as they did not pass the benefit of corresponding reduction in prices of major raw material inputs for the period subsequent to the financial year 2011-12. CCI had, vide its order passed on June 24, 2014 under Section 26(1) of the Act, directed the Office of the Director General (‘DG’) to investigate the said alleged violation of the Act. DG submitted its investigation report to CCI in December 2015, based on which CCI directed the said tyre manufacturers to file their suggestions / objections by May 05, 2016. Objections were filed as directed and the CCI had also heard the tyre manufacturers in detail.

Aggrieved by the conduct of the investigation by the DG, one of the other tyre manufacturer filed Writ Petition in the Madras High Court, challenging the legality of the investigation conducted by the DG. The Madras High Court had initially admitted the Writ Petition and directed the CCI to not pass any Orders till the disposal of the Petition. Subsequently, the Writ Petition was dismissed on March 06, 2018. Aggrieved by the decision of the Single Judge of the Madras High Court, the above said tyre manufacturer filed Appeal before the Division Bench on March 07, 2018. On hearing the Appeal, the Division Bench on March 08, 2018 directed the CCI to keep its Orders in sealed cover till the disposal of the Appeal. The Appeal is still pending.

Meanwhile, few other tyre manufactures having been aggrieved by the decision of the Single Judge of the Madras High Court, have filed Special Leave Petition before the Supreme Court. The Supreme Court initially admitted the Special Leave Petition. However, when the Petition came up for hearing, the Parties have withdrawn the Petition citing their willingness to approach the Division Bench of the Madras High Court. The Appeal filed before the Madras High Court continues to be pending.

The Company’s decision to change the price is purely a business decision which depends upon many factors like cost of production, brand value perception, profit margin of each product, quality perception of each product in the market, demand and supply situation of each product category, market potential and market share targets of various product categories etc. In view of the above, Company believes that it has a strong case, hence, considered as remote.

Note 41: Related party transactions

a) Names of related parties and related party relationship

Related parties where control exists

Associated CEAT Holdings Company (Pvt.) Limited (“ACHL”) (Subsidiary Company)

CEAT AKKHAN Limited (Subsidiary Company)

Rado Tyres Limited (“Rado”) (Subsidiary Company)

CEAT Specialty Tyres Limited (“CSTL”) (Subsidiary Company)

CEAT Specialty Tires Inc. (Subsidiary of CSTL)

CEAT Specialty Tyres B. V. (Subsidiary of CSTL)

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Related parties with whom transactions have taken place during the current year and previous year

CEAT Kelani Holdings (Pvt.) Limited (“CKHL”) (Joint venture of ACHL)
Associated CEAT (Pvt.) Limited (“ACPL”) (Subsidiary of CKHL)
Ceat-Kelani International Tyres (Pvt.) Limited (“CKITL”) (Subsidiary of CKHL)
Ceat Kelani Radials Limited (“CKRL”) (Subsidiary of CKHL)
Asian Tyres (Pvt.) Limited (“ATPL”) (Subsidiary of CKITL)
CEAT Specialty Tyres Limited (“CSTL”) (Subsidiary Company)
TYRESNMORE Online Pvt Ltd. (“TNM”) (Associate Company)
RPG Enterprises Limited (“RPGE”) (Directors, KMP or their relatives are interested)
RPG Lifesciences Limited (“RPGLS”) (Directors, KMP or their relatives are interested)
Zensar Technologies Limited (“Zensar”) (Directors, KMP or their relatives are interested)
Raychem RPG (Pvt.) Limited (“Raychem”) (Directors, KMP or their relatives are interested)
KEC International Limited (“KEC”) (Directors, KMP or their relatives are interested)
Al Sharif Group & KEC Ltd. Co (“AL sharif”) (Subsidiary of KEC International Limited)
Vinar Systems Pvt. Limited (“Vinar”) (Directors, KMP or their relatives are interested) upto May 31, 2018
B.N. Elias & Co. LLP (“B. N. Elias”) (Directors, KMP or their relatives are interested)
Atlantus Dwellings & Infrastructure LLP (“Atlantus”) (Directors, KMP or their relatives are interested)
Chattarpati Apartments LLP (“Chattarpati”) (Directors, KMP or their relatives are interested)
Allwin Apartments LLP (“Allwin”) (Directors, KMP or their relatives are interested)
Amber Apartments LLP (“Amber”) (Directors, KMP or their relatives are interested)
Khaitan & Co. (“Khaitan”) (Directors, KMP or their relatives are interested)
CEAT AKKHAN Limited (Subsidiary Company)
Rado Tyres Limited(“Rado”) (Subsidiary Company)
Associated CEAT Holdings Company (Pvt.) Limited (“ACHL”) (Subsidiary Company)
CEAT Limited Superannuation Scheme (“Superannuation Scheme”)(Post employment benefit fund)
CEAT Limited Employees Gratuity Fund (“Gratuity trust”)(Post employment benefit fund)
Artemis ventures Limited (“Artemis”) (Directors, KMP or their relatives are interested)
Key Management Personnel (KMP):
i) Mr. Harsh Vardhan Goenka, Chairman ii) Mr. Anant Vardhan Goenka, Managing Director

iii) Mr. Arnab Banerjee, Whole-time Director

iv) Mr Kumar Subbiah, Chief Financial Officer

v) Ms. Shruti Joshi, Company Secretary upto June 11, 2018

vi) Ms. Vallari Gupte, Company Secretary w.e.f. October 25, 2018

vii) Mr. Paras K. Chowdhary, Independent Director

viii) Mr. Vinay Bansal, Independent Director

ix) Mr. Hari L Mundra, Non-Executive - Non Independent Director up to January 29, 2019

x) Mr. Atul Choksey, Independent Director

xi) Mr. Mahesh Gupta, Independent Director

xii) Mr. Haigreve Khaitan, Independent Director

Notes to Financial Statements

for the year ended March 31, 2020

b) The following transactions were carried out during the year with the related parties in the ordinary course of business:

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( H in Lacs)
Transactions Related Party 2019-20 2018-19
ACPL (142) (28)
AL sharif 14 -
CKITL (18) (28)
Raychem (15) (2)
Rado (2) (2)
KEC (69) (56)
Reimbursement / (recovery) of expenses (net)
Amber - 2
Zensar 5 9
RPGE 331 129
CSTL (20) (42)
RPGLS (21) (20)
Total 63 (38)
Dividend income ACHL 1,036 732
ACPL 108 84
CKITL 129 137
Royalty income ATPL 96 82
CKRL 105 138
Total 438 441
ACPL 1,338 4,064
CKITL 16 767
Purchase of Traded goods
CSTL 316 276
Total 1,670 5,107
Purchase of MEIS License CSTL 296 116
CKITL 1,244 551
TNM 713 403
ACPL 14 45
Sales KEC - 1
CEAT AKKHAN Limited 6,970 5,482
CSTL 20,312 23,398
Total 29,253 29,880
Loan given CSTL 7,718 19,630
Repayment of loan given CSTL 8,486 18,730
Interest income on loan CSTL 367 405
TNM 299 300
Investments (including share application money) made during the year CSTL - 3,000
Total 299 3,300
Technical development fees received ATPL - 65
Allwin 3 16
KEC 2 1
Amber 4 16
Rent paid on residential premises / guest house,
Atlantus 17 19
etc.
Chattarpati 42 45
B N Elias 22 21
Total 90 118
Raychem 95 95
KEC 520 496
CSTL 33 29
Building maintenance recovery
RPGE 122 96
RPGLS 117 103
Total 887 819
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xiii) Ms. Punita Lal, Independent Director

xiv) Mr. S. Doreswamy, Independent Director up to March 12, 2019

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CEAT LIMITED | ANNUAL REPORT 2019-20

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CORPORATE OVERVIEW VALUE CREATION STATUTORY REPORTS FINANCIAL STATEMENTS
| ANNUAL REPORT 2019-20
Notes to Financial Statements Notes to Financial Statements
for the year ended March 31, 2020 for the year ended March 31, 2020
b) The following transactions were carried out during the year with the related parties in the ordinary c) Balance outstanding at the year end (Contd..)
course of business: (Contd..) ( H in Lacs)
( H in Lacs) As at As at
Amount due to / from related party Related Party
Transactions Related Party 2019-20 2018-19 March 31, 2020 March 31, 2019
KEC 15 25 CKITL 414 231
Raychem 14 13 CEAT AKKHAN Limited 117 596
Rent recovery on residential premises
RPGE 7 8 CSTL 9,894 7,418
Total 36 46 ACPL - 26
Trade receivables
Gratuity trust 10 5 RPGE - 2
Contribution to Post-Employment Benefit Plans Superannuation Scheme 101 97 CKRL - 0
Total 111 102 TNM 77 65
Gratuity trust 845 1,058 Total 10,502 8,338
Receipt from Post-Employment Benefit Plans Superannuation Scheme 14 25 Loans given CSTL 5,032 5,800
Total 859 1,083 Capital advance net of capital creditors KEC 241 1,643
Raychem - 110
KEC 4,413 4,972
Purchase of capex / spares Vinar - 2 d) Transactions with key management personnel and their relatives
Zensar - 130 ( H in Lacs)
Sr.
Total 4,413 5,214 2019-20 2018-19
No. [Related party ]
Consultancy fees Artemis 35 48
Legal fees Khaitan 21 45 1) Mr. Harsh Vardhan Goenka
License fees RPGE 1,167 662 Commission 375 373
Facility agreement recovery CSTL 1,883 2,071 Director sitting fees 6 5
Corporate guarantee commission CSTL 199 181 Dividend 16 15
Total 397 393
2) Mr. Anant Vardhan Goenka
c) Balance outstanding at the year end Salaries 428 313
( H in Lacs)
Allowances and perquisites 42 34
As at As at
Amount due to / from related party Related Party Performance bonus 48 96
March 31, 2020 March 31, 2019 Contribution to provident & superannuation fund 41 30
ACPL 128 11 Dividend 2 2
CEAT AKKHAN Limited 209 209 Leave encashment - 0
CKITL 7 27 Total 561 475
KEC 25 15 3) Mr. Arnab Banerjee
CSTL 866 163 Salaries 248 212
Advances recoverable in cash or kind and other
Rado 1 - Allowances and perquisites 0 0
balances
RPGE 6 - Performance bonus 29 67
Khaitan 3 - Contribution to provident & superannuation fund 18 12
Raychem 27 - Leave encashment - 0
RPGLS 7 1 Dividend 0 0
Total 1,279 426 Total 295 291
ACPL 54 43 4) Mr. Kumar Subbiah
CKITL 64 60 Salaries 167 150
Royalty receivable CKRL 59 66 Allowances and perquisites 1 0
ATPL 52 35 Performance bonus 23 46
Total 229 204 Contribution to provident & superannuation fund 6 5
ACPL 225 780 Leave encashment - 0
Atlantus 3 - Dividend 0 0
Raychem - 116 Total 197 201
Rado - 1 5) Ms. Vallari Gupte
CEAT AKKHAN Limited 114 62 Salaries 44 26
Trade payables CKITL - 132 Performance bonus 3 -
Zensar 18 18 Contribution to provident & superannuation fund 3 2
RPGE - 1 Leave Encashment - -
CSTL 375 393 Total 50 28
Total 735 1,503
209
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Notes to Financial Statements for the year ended March 31, 2020

b) The following transactions were carried out during the year with the related parties in the ordinary course of business: (Contd..)

c) Balance outstanding at the year end

208

STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

d) Transactions with key management personnel and their relatives (Contd..)

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( H in Lacs)
Sr.
No. [Related party ] 2019-20 2018-19
6) Ms. Shruti Joshi
Salaries - 7
Performance bonus - 8
Contribution to provident & superannuation fund - 6
Leave Encashment - 1
Total - 22
7) Mr. Paras K. Chowdhary
Commission 8 6
Director sitting fees 10 6
Dividend 0 0
Total 18 12
8) Mr. Hari L. Mundra
Commission 7 6
Director sitting fees - 5
Total 7 11
9) Mr. Vinay Bansal
Commission 8 6
Director sitting fees 10 8
Total 18 14
10) Mr. Atul C. Choksey
Commission 8 6
Director sitting fees 5 4
Total 13 10
11) Mr. Mahesh S. Gupta
Commission 8 6
Director sitting fees 10 8
Total 18 14
12) Mr. Haigreve Khaitan
Commission 8 6
Director sitting fees 5 4
Total 13 10
13) Ms. Punita Lal
Commission 8 6
Director sitting fees 3 5
Total 11 11
14) Mr. S. Doreswamy
Commission 8 6
Director sitting fees - 8
Total 8 14
Grand Total 1,606 1,506
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Represents amount paid during the year.

Notes to Financial Statements

for the year ended March 31, 2020

e) Balance outstanding at the year end for KMP

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( H in Lacs)
Amount due to As at As at
Related party
related party March 31, 2020 March 31, 2019
Mr. Harsh Vardhan Goenka 45 375
Mr. Paras K. Chowdhary 8 8
Mr. Hari L. Mundra - 7
Mr. Vinay Bansal 8 8
Mr. Atul C. Choksey 8 8
Commission Payable
Mr. Mahesh S. Gupta 8 8
Mr. Haigreve Khaitan 8 8
Ms. Punita Lal 8 8
Mr. S. Doreswamy - 8
Total 93 438
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Terms and conditions of transactions with related parties

The sales to and purchases and others from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.

The remuneration to the key managerial personnel does not include the provisions made for gratuity as it is determined on an actuarial basis for the Company as a whole.

Managerial remuneration is computed as per the provisions of section 198 of the Companies Act, 2013. The amount outstanding are unsecured and will be settled in cash.

Loan and guarantee to subsidiary

Following are the details of loans and guarantee given to subsidiary companies in which directors are interested, as required under Schedule V read with Regulation 34(3) and 53(f) of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 and disclosure required under section 186(4) of the Companies Act, 2013.

i. The loan granted to CEAT Specialty Tyres Limited (‘CSTL’) is intended to finance their working capital requirements. The loan has been granted via two facilities i.e. Revolving Credit Facility and Short Term Bridge Finance. Both loans are unsecured. Loan given during the year was H 7,718 lacs (March 31, 2019: H 19,630 lacs). Loan repaid during the year H 8,486 lacs (March 31, 2019: H 18,730 lacs). The loan has been utilised for the purpose for which it was granted. Terms of both the facilities are as follows:

( H in Lacs)

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Outstanding as on
Facility Terms of repayment Interest rate
March 31, 2020
Short term Outstanding loan to be 3,400 April 01, 2019 to March 11, 2020 – 10.40% p.a.
bridge finance repaid at the end of 1 year
March 12, 2020 to March 31, 2020 - 8.20%p.a
from the first date of drawal
Revolving credit On demand 1,632 April 01, 2019 to March 11, 2020 – 8.80% p.a.
facility March 12, 2020 to March 31, 2020 - 8.20%p.a
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ii. Maximum outstanding during the year as loan to CSTL was H 6,600 lacs (March 31, 2019: H 5,900 lacs).
iii. CEAT has given a corporate guarantee up to H 32,800 lacs to CSTL as collateral security for raising the term loans. The outstanding guarantee as on March 31, 2020 is H 26,967 lacs (March 31, 2019: H 22,800 lacs).

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Capital commitments with related parties

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance payments) pertaining to the related parties are as follows:

		(`H`in Lacs)
Related KEC	Party As at March 31, 2020 903	As at March 31, 2019 4,258

Note 42: Segment information

Refer note 2.22 for accounting policy on Segment reporting

The Company is primarily engaged in business of manufacturing and sales of Automotive Tyres ,Tubes & Flaps.

Information about products

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( H in Lacs)
2019-20 2018-19
Particulars Automotive Tubes and Automotive Tubes and
Total Total
Tyres others Tyres others
Revenue from contracts with customers 5,81,122 70,735 6,51,857 6,10,967 69,039 6,80,006
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Information about geographical areas

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( H in Lacs)
2019-20 2018-19
Particulars Outside Outside
In India Total In India Total
India India
Revenue from contracts with customers 5,65,641 86,216 6,51,857 5,96,029 83,977 6,80,006
Non-current assets 5,14,960 - 5,14,960 4,09,718 - 4,09,718
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During the financial year 2019-20 and 2018-19, no single external customer has generated revenue of 10% or more of the Company’s total revenue.

During the financial year 2019-20 and 2018-19, no single country outside India has given revenue of more than 10% of total revenue.

Note 43: Hedging activities and derivatives

Derivatives designated as hedging instruments

The Company uses derivative financial instruments such as foreign currency forward contracts to hedge foreign currency risk arising from future transactions in respect of which firm commitments are made or which are highly probable forecast transactions. It also uses Cross Currency Interest Rate Swaps (‘CCIRS’) to hedge interest rate and foreign currency risk arising from variable rate foreign currency denominated loans. All these instruments are designated as hedging instruments and the necessary documentation for the same is made as per Ind AS 109.

Cash flow hedges

Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of recognised purchase payables, committed future purchases, recognised sales receivables, forecast sales and Foreign Currency loan (Buyer’s Credit) in US dollar, Euro, Japanese Yen and Pound Sterling.

Notes to Financial Statements

for the year ended March 31, 2020

CCIRS measured at fair value through OCI are designated as hedging instruments in cash flow hedges for Foreign currency loan (Buyer’s Credit) in US Dollar.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates. CCIRS has been designated as effective hedging instrument from April 01, 2016 onwards.

Hedged foreign currency exposure

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(Amount in Foreign currency and H in Lacs)
As at March 31, 2020 As at March 31, 2019
Derivative
Purpose Currency Foreign Foreign
instrument J J
Currency Currency
Hedge of Foreign Currency sales USD 91 6,894 121 8,390
Forward contract to EUR 6 533 12 970
sell Foreign Currency Hedge of Foreign Currency High USD 188 14,190 140 9,650
probable sales
Hedge of foreign currency USD 140 10,610 82 5,668
purchase EUR 185 15,367 64 4,968
Forward contract to JPY 1,766 1,231 - -
buy Foreign Currency Hedge of Foreign Currency USD 558 42,263 694 47,991
Firm Commitment – PO based EUR 161 13,338 472 36,675
GBP - - 0 9
hedging
JPY 3,480 2,426 5,847 3,650
Cross currency interest Hedge of Foreign Currency USD 9 686 70 4,846
rate swap Buyer's Credit
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Unhedged foreign currency exposure*

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----- Start of picture text -----

(Amount in foreign currency in Lacs)
Particulars Currency 2019-20 2018-19
Short Term borrowing [#] USD 20 -
USD 29 28
EUR 8 11
Trade Payables and other financial liabilities JPY 322 614
GBP - 0
AED 5 26
USD 29 10
Trade Receivables [#]
EUR - 3
Advances Recoverable in cash or kind USD 3 7
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The trade payables / short term borrowings are naturally hedged (off-set) to the extent of exposure under trade receivables / advances for respective currencies.

The short term borrowing pertains to PCFC which is naturally hedged against trade receivable of equivalent amount.

The terms of the foreign currency forward contracts match the terms of the expected highly probable forecast transactions. As a result, no hedge ineffectiveness arise requiring recognition through the Statement of Profit and Loss.

The cash flow hedges as at March 31, 2020 were assessed to be highly effective and a net unrealised gain of H 3,854 lacs, with a deferred tax liability of H 1,347 lacs relating to the hedging instruments, is included in OCI. Comparatively, the cash flow hedges as at March 31, 2019 were assessed to be highly effective and a net unrealised loss of H 3,792 lacs, with a deferred tax asset of H 1,323 lacs relating to the hedging instruments, was included in OCI.

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

Note 44: Fair values

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

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( H in Lacs)
Carrying value / Fair value
Particulars Note As at As at
March 31, 2020 March 31, 2019
Financial assets
a) Measured at fair value through profit and loss
Investments in others 6 424 2
b) Measured at fair value through other comprehensive income
Derivative financial instruments (non-current and current) 8 and 15 827 -
c) Measured at amortised cost
Investment in subsidiaries and associate 6 31,598 31,299
Loans (non-current) 7 473 408
Other financial assets (non-current) 8 128 181
Total 33,450 31,890
Financial liabilities
a) Measured at fair value through other comprehensive income
Derivative financial instruments (non-current and current) 21 and 26 - 3,451
b) Measured at amortised cost
Lease liability (non-current and current) 4 10,601 -
Borrowings (non-current) 20 1,40,199 1,00,272
Other financial liabilities (non-current) 21 10,072 146
Total 1,60,872 1,03,869
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Notes to Financial Statements

for the year ended March 31, 2020

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities as at March 31, 2020 and March 31, 2019

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( H in Lacs)
Fair Value measurement using
Particulars Total
Level 1 Level 2 Level 3
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As at March 31, 2020
Financial assets at fair value
a) Through profit & loss
Investments in others	424	-	-	424
b) Through other comprehensive income
Derivative financial instruments(non-current and current)	827	-	827	-
As at March 31, 2019
Financial assets at fair value
a) Through profit & loss
Investments in others	2	-	-	2
Financial liabilities at fair value
a) Through other comprehensive income
Derivative financial instruments(non-current and current)	3,451	-	3,451	-

There have been no transfers between Level 1 and Level 2 during the period.

Calculation of Fair Values

The fair values of the financial assets and liabilities are defined as the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2019.

Financial assets and liabilities measured at fair value as at Balance Sheet date:

The Management assessed that fair values of cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, trade payables, short term borrowings, other current financial assets and liabilities (except derivative financial instrument those being measured at fair value through other comprehensive income) which are receivable / payable within one year approximate their carrying amounts largely due to the short-term maturities of these instruments.

Note 45: Fair value hierarchy

The fair value of financial instruments as referred to in note 44 above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and
Level 3: Inputs which are not based on observable market data.

Derivative financial instruments: The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counter-parties, foreign exchange forward rates, etc.

Lease liabilities: A change in one or more of the inputs to reasonably possible alternative assumptions would not change the value significantly.

Investment in others: The fair value is calculated using the Discounted Cashflow method where the significant unobservable input used is discount rate - 14.32%.

Note 46 : Financial risk management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, mutual fund investments, cash and cash equivalents that derive directly from its operations. The Company also enters into derivative transactions.

The Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors through its Risk Management Committee reviews and agrees policies for managing each of these risks, which are summarised below.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

a) Market risk

The Company’s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:

Interest rate risk;

Foreign currency risk;

Equity price risk; and
Commodity risk

The above risks may affect the Company’s income and expenses, or the value of its financial instruments. The Company’s exposure to and management of these risks are explained below.

The sensitivity of the relevant Statement of Profit or Loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2020 and March 31, 2019 including the effect of hedge accounting

i. Interest rate risk

Risk

Exposure Risk Management

The Company manages its interest rate risk pertaining to domestic borrowings by maintaining a balanced portfolio of borrowings linked to various tenor benchmark of MCLR and T-Bills. The Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.

Risk that the fair value Relates primarily to or future cash flows of the Company’s longa financial instrument term debt obligations will fluctuate because with floating interest of changes in market rates. interest rates.

As at March 31, 2020, after taking into account the effect of interest rate swaps, approximately 11% of the Company’s total borrowings are at a fixed rate of interest (March 31, 2019: 22%).

The following table provides a break-up of Company’s fixed and floating rate borrowing (gross off processing fees)

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Fixed rate borrowings 18,152 27,434
Floating rate borrowings 1,42,043 98,879
Total borrowings 1,60,195 1,26,313
----- End of picture text -----

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

		(`H`in Lacs)
Particulars	Increase / decrease in basis points	Effect on profit before tax
March 31, 2020
`H`1,42,043 lacs	+ / - 100 bps	-1,420.43 / +1,420.43
March 31, 2019
`H`98,879 lacs	+ / - 100 bps	-988.79 / +988.79

Notes to Financial Statements

for the year ended March 31, 2020

ii. Foreign currency risk

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----- Start of picture text -----

Risk Exposure Risk Management
----- End of picture text -----

Risk that the fair value	Relates primarily to the	The Company manages its foreign currency risk by hedging
or future cash flows of an exposure will	Company’s operating activities (when	transactions that are expected to occur within a maximum 6 month period for the foreign currency denominated trade payables and
fluctuate because of	revenue or expense	trade receivables. The foreign currency risk on the foreign currency
changes in foreign	is denominated in a	loans are mitigated by entering into Cross Currency Swaps. When
exchange rates.	foreign currency) and	a derivative is entered into for the purpose of being a hedge, the
	the Company’s net	Company negotiates the terms of those derivatives to match the
	investments in foreign	terms of the hedged exposure. For hedges of forecast transactions,
	subsidiaries.	the derivatives cover the period of exposure from the point the cash

The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 6 month period for the foreign currency denominated trade payables and trade receivables. The foreign currency risk on the foreign currency loans are mitigated by entering into Cross Currency Swaps. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions, the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

As at March 31, 2020, the Company has hedged 100% (March 31, 2019: 100 %) of its foreign currency loans. As at March 31, 2020, the Company has hedged 84% (March 31, 2019: 88%) of its foreign currency receivables / payables.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD and EURO rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Company’s exposure to foreign currency changes for all other currencies is not material.

		(`H`in Lacs)
Particulars	Change in Currency	Effect on profit before tax
March 31, 2020
Recognised netpayables – USD 1.62 Mio	`H`+ 1 / - 1	- 16 / + 16
Recognised netpayable – EUR 0.83 Mio	`H`+ 1 / - 1	- 8 / + 8
March 31, 2019
Recognised netpayables – USD 1.10 Mio	`H`+ 1 / - 1	- 11 / + 11
Recognised netpayable – EUR 0.80 Mio	`H`+ 1 / - 1	- 8 / + 8

The movement in the pre-tax effect is a result of a change in the fair value of the financial asset / liability due to the exchange rate movement. The derivatives which have not been designated in a hedge relationship act as an economic hedge and will offset the underlying transactions when they occur. The same derivatives are not covered in the above table.

In Management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

iii. Equity price risk

The Company invests its surplus funds in various debt instruments and debt mutual funds. These comprise of mainly liquid schemes of mutual funds (liquid investments) and fixed deposits.

Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments. However due to the very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk.

There is no material equity risk relating to the Company’s equity investments which are detailed in note 6. The Company’s equity investments majorly comprises of strategic investments rather than trading purposes.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

iv. Commodity price risk

Potential impact Exposure Risk Management Fluctuations in price Price volatility of rubber The Company’s Board of Directors has reviewed and approved a of essential raw and carbon black which risk management strategy regarding commodity price risk and its materials. may affect continuous mitigation. supply.

Commodity price sensitivity

The following table approximately details the Company’s sensitivity to a 5% movement in the input price of rubber and carbon black. The sensitivity analysis includes only 5% change in commodity prices for quantity sold or consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit or equity where the commodity prices decrease by 5%. For a 5% increase in commodity prices, there would be a comparable impact on profit or equity, and the balances below would be negative.

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( H in Lacs)
Increase in profit due to Decrease in profit due to
decrease in commodity price increase in commodity price
Particulars
As at As at As at As at
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Natural rubber 5,400 5,500 (5,400) (5,500)
Synthetic rubber 3,800 4,700 (3,800) (4,700)
Carbon black 2,900 3,400 (2,900) (3,400)
----- End of picture text -----

b) Credit risk

Trade receivables

Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

Risk Management:

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management.

Trade receivables are non-interest bearing and are generally on 27 days to 60 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

Export customers are against Letter of Credit, bank guarantees, payment against documents. For open credit exports insurance cover is taken. Generally deposits are taken from domestic debtors under replacement segment. The carrying amount and fair value of security deposit from dealers amounts to H 33,800 lacs (March 31, 2019: H 32,150 lacs) as it is payable on demand. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.

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( H in Lacs)
Particulars As at March 31, 2020 As at March 31, 2019
More than More than
Less than More than Less than More than
Ageing 180 but less 180 but less
180 days 360 days 180 days 360 days
than 360 days than 360 days
Expected loss rate 0.00% 50.00% 100.00% 0.00% 50.00% 100.00%
Gross carrying amount 70,329 274 1,984 72,561 170 1,935
Loss allowance provision - 137 1,984 - 85 1,935
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Notes to Financial Statements

for the year ended March 31, 2020

c) Liquidity risk

The Company prepares cash flow on a daily basis to monitor liquidity. Any shortfall is funded out of short term loans. Any surplus is invested in liquid funds. The Company also monitors the liquidity on a longer term wherein it is ensured that the long term assets are funded by long term liabilities. The Company ensures that the duration of its current assets is in line with the current assets to ensure adequate liquidity in the 3-6 months period.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

Liquidity exposure

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( H in Lacs)
Particulars < 1 year 1-5 years > 5 years Total
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As at March 31, 2020
Non-derivative financial liabilities
Non current borrowings*	-	89,239	51,496	1,40,735
Current borrowings	16,559	-	-	16,559
Lease liability	5,009	6,825	-	11,834
Other financial liabilities	57,291	9,926	146	67,363
Trade and otherpayables	1,17,137	-	-	1,17,137
	1,95,996	1,05,990	51,642	3,53,628
Derivative financial instruments	-	-	-	-
Total	1,95,996	1,05,990	51,642	3,53,628
As at March 31, 2019
Non-derivative financial liabilities
Non current borrowings*	-	59,538	40,935	1,00,473
Current borrowings	21,431	-	-	21,431
Other financial liabilities	54,963	-	146	55,109
Trade and otherpayables	1,03,393	-	-	1,03,393
	1,79,787	59,538	41,081	2,80,406
Derivative financial instruments	3,136	315	-	3,451
Total	1,82,923	59,853	41,081	2,83,857

Non-current borrowings are gross off processing fees.

Note 47: Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.

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( H in Lacs)
Particulars March 31, 2020 March 31, 2019
Borrowings (note 20, 24 and 26) 1,59,658 1,26,051
Less: cash and cash equivalents (note 12) (2,017) (5,426)
Net debt 1,57,641 1,20,624
Equity (note 17 and 18) 2,92,740 2,75,104
Capital and net debt 4,50,381 3,95,728
Gearing ratio 35% 30%
----- End of picture text -----*

Includes current maturities of long term borrowings.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Financial Statements

for the year ended March 31, 2020

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2020 and March 31, 2019.

Note 48: Business Combinations

Notes to Financial Statements

for the year ended March 31, 2020

In light of these circumstances, the Company has considered the possible effects that may result from COVID-19 on the carrying values of financials assets, inventory, trade receivables, advances, property plant and equipment, intangibles, etc. as well as liabilities accrued. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Company has used internal and external information such as our current contract terms, financial strength of partners, investment profile, future volume estimates from the business, etc. Having reviewed the underlying data and based on current estimates, the Company expects the carrying values of these assets will be recovered and there is no significant impact on liabilities accrued other than those reported in note 36. The impact of COVID-19 on the Company’s financial statements may differ from that estimated as at the date of approval of these financial statements and the Company will continue to closely monitor any material changes to future economic conditions.

Amalgamation with CEAT Specialty Tyres Limited

Note 51: Material foreseeable losses

The Board of Directors of the Company at its meeting held on April 03, 2019 approved the Scheme of Amalgamation (the ‘Scheme’) for the amalgamation of CEAT Specialty Tyres Limited (a wholly-owned subsidiary of the Company) with the Company. The National Company Law Tribunal, Mumbai Bench (the ‘NCLT’), had its final hearing on March 13, 2020 and the Order approving the Scheme became accessible on the website of the NCLT on May 25, 2020. However, the certified copy of the Order is still awaited. The Scheme is effective only upon filing of the certified copy of the NCLT Order with the Registrar of Companies, and no part of the Scheme, including the accounting treatment therein, can be made operative until such time. The Company has also obtained a legal expert’s opinion in this regard. Accordingly, the financial statement does not include any adjustments arising from the Scheme.

Note 49: Events after the reporting period

The Company’s Halol plant witnessed a fire incident at its Passenger Car Radial Tyre Curing Section (Phase II) on April 08, 2020. On initial assessment, cost of damages are estimated to be approximately H 500 lacs. The assets and materials are insured. Due to travel restrictions on account of lockdown following COVID-19, the assessors did an initial assessment through video call on April 10, 2020. Once the lockdown is lifted, physical assessment of the loss would be carried out and the insurance claim would be filed with the insurer, United India Insurance Company Limited. The net loss would be known post the physical inspection and evaluation.

Note 50 : Estimation of uncertainties relating to the global health pandemic from COVID-19

The COVID-19 pandemic is an evolving human tragedy declared a global pandemic by the World Health Organisation with adverse impact on economy and business. Supply Chain disruptions in India as a result of the outbreak started with restrictions on movement of goods, closure of borders etc., in several states followed by a nationwide lockdown from March 25, 2020 announced by the Indian Government, to stem the spread of COVID-19. Due to this the operations in many of the Company’s manufacturing, distribution centres and warehouses got temporarily disrupted.

The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

For and on behalf of Board of Directors of CEAT Limited

As per our report of even date For S R B C & CO LLP Kumar Subbiah H. V. Goenka Anant Goenka Chartered Accountants Chief Financial Officer Chairman Managing Director ICAI Firm Registration No: 324982E/E300003 per Vinayak Pujare Vallari Gupte Mahesh Gupta Partner Company Secretary Chairman - Audit Committee Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

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CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure-I

Part “B”: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part “A”: Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in H lacs)

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1 Sl No. 1 2 3 4 5 6
Associated CEAT CEAT Specialty CEAT Specialty
CEAT
Name of the CEAT Holdings Specialty Rado Tyres Tyres Inc. Tyres B.V
2 AKKhan
subsidiary Company (Pvt.) Tyres Limited Limited (RTL) (Subsidiary of (Subsidiary of
Limited
Limited (CSTL) CSTL) CSTL)
----- End of picture text -----

3 The date since when subsidiary was acquired (Date of remittance of funds)	27.10.2009	30.05.2012	8.12.2014	27.09.2013	11.07.2017	24.07.2018
4 Reporting period for the subsidiary concerned, if different from the holding company’s reporting period	Uniform	Uniform	Uniform	Uniform	Uniform	Uniform
5 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries.	1 LKR = `H`0.3914	1 BDT = `H`0.8698	`H` Not Applicable	`H` Not Applicable	1 USD = `H`75.69	1 EUR = `H`82.90
6 Share capital	391	13,047	2,105	643	26	40
7 Reserves & surplus	1,257	(3,795)	3,573	(1,634)	108	63
8 Total assets	1,652	15,125	57,563	531	134	93
9 Total Liabilities	3	3,903	51,885	1,520	0	10
10 Investments	391	-	66	0	-	-
11 Turnover	2,246	10,073	37,814	3	733	247
12 Profit before taxation	2,251	167	(4,744)	(29)	41	22
13 Provision for taxation	(2)	(525)	-	-	-	-
14 Profit after taxation	2,249	(358)	(4,744)	(29)	41	22
15 Proposed Dividend	-	-	-	-	-	-
16 % of shareholding	100%	70%	100%	58.56%	CSTL holding is 100 %	CSTL holding is 100 %

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----- Start of picture text -----

( H in Lacs)
CEAT Kelani Holdings Company
Name of Associates/Joint Ventures Tyresnmore Online Private Limited
(Pvt.) Limited
----- End of picture text -----

1. Latest audited Balance sheet Date	March 31,2020	March 31,2020
2. Date on which the Associate or Joint Venture was associated or acquired	21.08.2017	27.10.2009
3. Shares of Associate/Joint Ventures held bythe companyon theyear end
No.	100 Equity shares of`H`1 each 76,337 0.001% compulsory convertible preference shares of Tyresnmore Online Private Limited of`H`1 each	1,00,00,000 Shares
Amount of Investment in Associates/Joint Venture	`H`999 lacs	`H`4,357.46 lacs (Investment through the Company’s wholly owned subsidiary Associated CEAT Holdings Company (Pvt)Limited)
Extent of holding%	41.30%	50%
4. Description of how there is a significant influence	By holding more than 20% share	By holding more than 20% share
5. Reason why the associate/joint venture is not consolidated	Not Applicable	Not Applicable
6. Networth attributable to Shareholding as per latest audited Balance Sheet	`H`333 lacs	`H`17,193 lacs
7. Profit / Loss for theyear
i. Considered in Consolidation	`H`135 lacs	`H`1,857 lacs
ii. Not Considered in Consolidation	`H`200 lacs	`H`1,857 lacs

Names of associates or joint ventures which are yet to commence operations. - Not Applicable
Names of associates or joint ventures which have been liquidated or sold during the year. - Not Applicable

For and on behalf of Board of Directors of CEAT Limited

Kumar Subbiah Chief Financial Officer Vallari Gupte Company Secretary

H.V. Goenka Anant Goenka Chairman Managing Director

Mahesh Gupta Chairman- Audit Committee

Place: Mumbai Date: May 28, 2020

Names of subsidiaries which are yet to commence operations.- Not Applicable
Names of subsidiaries which have been liquidated or sold during the year. - Not Applicable

Note: Above figures are based on standalone financial information of the subsidiary.

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Independent Auditor’s Report

To the Members of CEAT Limited

Consolidated Financial Statements

Report on the Audit of the Consolidated Ind AS Financial Statements

Opinion

We have audited the accompanying consolidated Ind AS financial statements of CEAT Limited (hereinafter referred to as “the Holding Company”), its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) its associate and joint ventures comprising of the consolidated Balance sheet as at March 31 2020, the consolidated Statement of Profit and Loss, including other comprehensive income, the consolidated Cash Flow Statement and the consolidated Statement of Changes in Equity for the year then ended, and notes to the consolidated Ind AS financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated Ind AS financial statements”).

In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of other auditors on separate financial statements and on the other financial information of the subsidiaries, associate and joint ventures, the aforesaid consolidated Ind AS financial statements give the information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group, its associate and joint ventures as at March 31, 2020, their consolidated profit including other comprehensive income, their consolidated cash flows and the consolidated statement of changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the consolidated Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the Consolidated Ind AS Financial Statements’ section of

Key audit matters

our report. We are independent of the Group, associate, joint ventures in accordance with the ‘Code of Ethics’ issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the consolidated Ind AS financial statements.

Emphasis of Matter

We draw attention to Note 55 of the consolidated Ind AS financial statements, which states the impact of Coronavirus disease-2019 (COVID-19) on the operations of the Company. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated Ind AS financial statements for the financial year ended March 31, 2020. These matters were addressed in the context of our audit of the consolidated Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated Ind AS financial statements. The results of audit procedures performed by us, including those procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated Ind AS financial statements.

Auditor’s Response

Significant estimates and judgment relating to Capitalisation of property, plant and equipment (refer note 2.11 (accounting policy), note 3 (financial disclosures) to the Ind AS financial statements)

As a part of expansion plan, the Group has incurred significant capital expenditure mainly on greenfield project at Chennai and brownfield expansion at Halol, Nagpur and Ambernath plants. The capital expenditure requires consideration of the nature of costs incurred to ensure that capitalisation of property, plant and equipment meets the specific recognition

Our audit procedures included the following:

We examined the nature of property, plant and equipment capitalised by the Company to verify that the assets capitalised meets the recognition criteria set out in Ind AS 16.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Key audit matters

Auditor’s Response

criteria under Ind AS 16, ‘Property, Plant and Equipment’ and also judgement is involved in assigning appropriate useful economic lives to respective assets.

We evaluated and tested the design effectiveness and operating effectiveness of internal controls with respect to the capitalisation of property plant and equipment;

We examined the useful economic lives and residual value assigned to assets capitalised during the year with reference to the Group’s historical experience and technical evaluation, and our understanding of the Company’s business.

As a result, this was noted as a key audit matter, considering the significance of amounts involved.

As disclosed in Note 3 to the consolidated Ind AS financial statements, as at March 31, 2020 the carrying value of property, plant and equipment including capital work-in-progress was H 5,00,849 lacs and the additions during the year were H 2,39,056 lacs.

We compared the capitalisations during the year to approved budgets;

We assessed the adequacy of disclosures in the consolidated Ind AS financial statements relating to capitalisation of property, plant and equipment.

Litigation, claims and contingencies (refer note 2.25 (accounting policy), note 24 (financial disclosures) and note 45(a) (financial disclosures) to the consolidated Ind AS financial statements)

The Group is involved in material legal proceedings including direct and indirect taxes, contracts, and other regulatory matters relating to conduct of its business.

Our principal audit procedures included the following:

The Group assesses the need to make provision or disclose a contingency on a case-to-case basis considering the underlying facts of each litigation. The aforesaid assessment involves significant judgement and estimates.

In relation to the material litigations, claims and contingencies, we involved our legal / tax specialists to perform an independent assessment of the conclusions reached by management.

We obtained independent confirmations from the Company’s external lawyers / advisors with respect to the material litigations and demands. We evaluated the independence, objectivity and competency of the Company’s external lawyers / advisors involved.

We evaluated the management’s assumptions, estimates and judgments used in the calculations of provision for litigation, claims and contingencies and related disclosures in the consolidated Ind AS financial statements.

Our opinion on the consolidated Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

Other Information

The Holding Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility Report and Shareholder’s Information, but does not include the consolidated Ind AS financial statements and our auditor’s report thereon.

In connection with our audit of the consolidated Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the

work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Consolidated Ind AS Financial Statements

The Holding Company’s Board of Directors is responsible for the preparation and presentation of these consolidated Ind AS financial statements in terms of the requirements of the Act that give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive income, consolidated cash flows and consolidated statement of changes in equity of the Group including its associate and joint ventures in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. The respective Board of Directors of the companies included in the Group and of its associate and joint ventures are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Group and of its associate and joint ventures and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated Ind AS financial statements by the Directors of the Holding Company, as aforesaid.

In preparing the consolidated Ind AS financial statements, the respective Board of Directors of the companies included in the Group and of its associate and joint ventures are responsible for assessing the ability of the Group and of its associate and joint ventures to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those respective Board of Directors of the companies included in the Group and of its associate and joint ventures are also responsible for overseeing the financial reporting process of the Group and of its associate and joint ventures.

Auditor’s Responsibilities for the Audit of the Consolidated Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated Ind AS financial statements as a whole are free from material misstatement, whether due to

fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated Ind AS financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Holding Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and its associate and joint ventures to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and its associate and joint ventures to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated Ind AS financial statements, including the disclosures, and whether the consolidated Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group and its associate and joint ventures of which we are the independent auditors and whose financial information we have audited, to express an opinion on the consolidated Ind AS financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the consolidated financial statements of which we are the independent auditors. For the other entities included in the consolidated Ind AS financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

We communicate with those charged with governance of the Holding Company and such other entities included in the consolidated Ind AS financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated Ind AS financial statements for the financial year ended March 31, 2020 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

We did not audit the financial statements and other financial information, in respect of three subsidiaries, whose Ind AS financial statements include total assets of H 28,299 lacs as at March 31, 2020, and total revenues of H 10,083 lacs and net cash outflows of H 710 lacs for the year ended on that date. These Ind AS financial statement and other financial information have been audited by other auditors, which financial statements, other financial information and auditor’s reports have been furnished to us by the management. The consolidated Ind AS financial statements also include the Group’s share of net profitof H 1,722 lacs for the year ended March 31, 2020, as considered in the consolidated Ind AS financial statements, in respect of one associate and five joint ventures, whose financial statements, other financial information have been audited by

other auditors and whose reports have been furnished to us by the Management. Our opinion on the consolidated Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, joint ventures and an associate, and our report in terms of subsections (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, joint ventures and an associate, is based solely on the reports of such other auditors.

Our opinion above on the consolidated Ind AS financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

Report on Other Legal and Regulatory Requirements

As required by Section 143(3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial statements and the other financial information of subsidiaries, associate and joint ventures, as noted in the ‘other matter’ paragraph we report, to the extent applicable, that:

(a) We/the other auditors whose report we have relied upon have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated Ind AS financial statements;
(b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidation of the financial statements have been kept so far as it appears from our examination of those books and reports of the other auditors;
(c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Consolidated Cash Flow Statement and Consolidated Statement of Changes in Equity dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements;
(d) In our opinion, the aforesaid consolidated Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors of the Holding Company as on March 31, 2020 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors who are appointed under Section 139 of the Act, of its subsidiary companies and associate, none of the directors of the Group’s companies and its associate, incorporated in India, is disqualified as on March 31, 2020 from being appointed as a director in terms of Section 164(2) of the Act;
(f) With respect to the adequacy and the operating effectiveness of the internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements of the Holding Company and its subsidiary companies, incorporated in India, refer to our separate Report in “Annexure 1” to this report;
ii. Provision has been made in the consolidated Ind AS financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – Refer notes 9, 16, 28 and 56 to the consolidated Ind AS financial statements in respect of such items as it relates to the Group, its associate and joint ventures;
(g) In our opinion and based on the consideration of reports of other statutory auditors of the subsidiaries incorporated in India, the managerial remuneration for the year ended March 31, 2020 has been paid / provided by the Holding Company and its subsidiaries incorporated in India to their directors in accordance with the provisions of section 197 read with Schedule V to the Act;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company, its subsidiaries, and associate, incorporated in India during the year ended March 31, 2020.
(h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditors on separate financial statements as also the other financial information of the subsidiaries, associate and joint ventures, as noted in the ‘Other matter’ paragraph:

For S R B C & CO LLP

Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003

per Vinayak Pujare

Partner

i. The consolidated Ind AS financial statements disclose Membership Number: 101143
the impact of pending litigations on its consolidated UDIN: 20101143AAAAAV1767
financial position of the Group, its associate and joint ventures in its consolidated Ind AS financial statements – Refer Note 24 and 45(a) to the consolidated Ind AS Place of Signature: Mumbai financial statements; Date: May 28, 2020
Membership Number: 101143 UDIN: 20101143AAAAAV1767

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CORPORATE OVERVIEW VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure 1 to the Independent Auditor’s Report of even date on the Consolidated Ind AS Financial Statements of Ceat Limited

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

In conjunction with our audit of the consolidated Ind AS financial statements of CEAT Limited as of and for the year ended March 31, 2020, we have audited the internal financial controls over financial reporting of CEAT Limited (hereinafter referred to as the “Holding Company”) and its subsidiary companies, which are companies incorporated in India, as of that date.

Management’s Responsibility for Internal Financial Controls

The respective Board of Directors of the Holding Company and its subsidiary companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Holding Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements.

Meaning of Internal Financial Controls over Financial Reporting with Reference to these Consolidated Ind AS financial statements

A company’s internal financial control over financial reporting with reference to these consolidated Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting with reference to these consolidated Ind AS financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Auditor’s Responsibility

Our responsibility is to express an opinion on the company’s internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, both, issued by Institute of Chartered Accountants of India, and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.

Inherent Limitations of Internal Financial Controls Over Financial Reporting with Reference to these Consolidated Ind AS financial statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these consolidated Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Holding Company and its subsidiary companies, which are companies incorporated in India, have, maintained in all material respects, adequate internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements and such internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements were operating effectively as at March 31,2020, based on the internal control over financial reporting criteria established by the Holding

Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matters

Our report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting with reference to these consolidated Ind AS financial statements of the Holding Company, insofar as it relates to one subsidiary company, which is a company incorporated in India, is based on the corresponding reports of the auditors of such subsidiary incorporated in India.

For S R B C & CO LLP

Chartered Accountants ICAI Firm Registration Number: 324982E/E300003

per Vinayak Pujare Partner

Membership Number: 101143 UDIN: 20101143AAAAAV1767

Place of Signature: Mumbai Date: May 28, 2020

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CORPORATE OVERVIEW

CEAT LIMITED | ANNUAL REPORT 2019-20

Consolidated Balance Sheet

as at March 31, 2020

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( H in Lacs)
As at As at
Particulars Note No.
March 31, 2020 March 31, 2019
I Assets
(1) Non-current assets
(a) Property, plant and equipment 3 3,95,776 3,10,250
(b) Capital work-in-progress 3 1,05,073 80,159
(c) Right-of-use asset 4 10,185 -
(d) Intangible assets 5 10,018 7,703
(e) Intangible assets under development 5 1,781 3,132
(f) Investments accounted using equity method 6 17,941 18,140
(g) Financial assets
(i) Investments 7 424 2
(ii) Loans 8 473 408
(iii) Other financial assets 9 481 195
(h) Non-current tax assets (net) 25 1,725 5,739
(i) Deferred tax assets (net) 25 68 60
(j) Other non-current assets 10 8,421 14,638
Total non-current assets 5,52,366 4,40,426
(2) Current assets
(a) Inventories 11 92,569 100,560
(b) Financial assets
(i) Trade receivables 12 67,435 70,638
(ii) Cash and cash equivalents 13 2,740 6,755
(iii) Bank balances other than cash and cash equivalents 14 681 599
(iv) Loans 15 95 75
(v) Other financial assets 16 2,502 3,222
(c) Other current assets 17 16,430 17,699
(d) Assets held-for-sale 18 475 519
Total current assets 1,82,927 2,00,067
Total assets 7,35,293 6,40,493
II Equity and liabilities
(1) Equity
(a) Equity share capital 19 4,045 4,045
(b) Other equity 20 2,86,747 2,72,566
Equity attributable to equity holders of parent 2,90,792 2,76,611
(c) Non-controlling interest 41 2,365 2,379
Total equity 2,93,157 2,78,990
(2) Non-current liabilities
(a) Financial liabilities
(i) Borrowings 22 1,64,078 1,22,264
(ii) Lease liabilities 4 6,375 -
(iii) Other financial liabilities 23 10,072 461
(b) Provisions 24 4,035 3,840
(c) Deferred tax liabilities (net) 25 27,439 21,978
Total non-current liabilities 2,11,999 1,48,543
(3) Current liabilities
(a) Financial liabilities
(i) Borrowings 26 23,645 22,425
(ii) Lease liabilities 4 4,226 -
(iii) Trade payables 27 1,19,476 1,05,287
(iv) Other financial liabilities 28 61,985 61,462
(b) Provisions 24 12,319 10,053
(c) Current tax liabilities (net) 25 1,980 4,732
(d) Other current liabilities 29 6,506 9,001
Total current liabilities 2,30,137 2,12,960
Total equity and liabilities 7,35,293 6,40,493
Significant accounting policies 2
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Consolidated Statement of Profit and Loss

for the year ended March 31, 2020

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( H in Lacs)
Particulars Note No. 2019-20 2018-19
I Income
Revenue from operations 30 6,77,883 6,98,451
Other income 31 2,051 3,900
Total income 6,79,934 7,02,351
II Expenses
Cost of material consumed 32 3,87,296 4,30,549
Purchase of stock-in-trade 3,583 7,579
Changes in inventories of finished goods, work-in-progress and stock-in trade 33 629 (19,947)
Employee benefit expense 34 54,177 53,006
Finance costs 35 15,093 8,804
Depreciation and amortisation expenses 36 27,651 19,271
Other expenses 37 1,59,814 1,63,010
Total expenses 6,48,243 6,62,272
III Profit before share of profit / (loss) of associate and joint venture, 31,691 40,079
exceptional items and tax
IV Share of profit / (loss) of associate and joint venture 42, 43 1,722 2,020
V Profit before exceptional items and tax 33,413 42,099
VI Exceptional items 38 2,984 4,479
VII Profit before tax 30,429 37,620
VIII Tax expense 25
Current tax 7,932 9,400
Deferred tax (509) 3,112
IX Profit for the year 23,006 25,108
Attributable to
(a) Non-controlling interest 41 (119) (114)
(b) Equity holders of the parent 23,125 25,222
X Other comprehensive income (OCI)
(a) Items that will not be reclassified subsequently to the statement of
profit and loss
(i) Remeasurement gains/(losses) on defined benefit plans 44 (734) (740)
(ii) Income tax relating to above 25 245 278
(b) Items that will be reclassified subsequently to the statement of
profit and loss
(i) Net movement on cash flow hedges 4,247 (4,134)
(ii) Income tax relating to above 25 (1,347) 1,323
(iii) Net movement in foreign exchange fluctuation reserve 122 (522)
Total other comprehensive income for the year (net of tax) 2,533 (3,795)
XI Total Comprehensive Income for the year (Comprising profit and other 25,539 21,313
comprehensive income for the year)
Attributable to
(a) Non-controlling interest (119) (114)
(b) Equity holders of the parent 25,658 21,427
XII Earnings per equity share (Face value of J 10 each) 40
(a) Basic (in H ) 57.17 62.35
(b) Diluted (in H ) 57.17 62.35
Significant accounting policies 2
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The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No: 324982E/E300003

For S R B C & CO LLP Kumar Subbiah Chartered Accountants Chief Financial Officer ICAI Firm Registration No: 324982E/E300003 per Vinayak Pujare Vallari Gupte Partner Company Secretary Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

H. V. Goenka Chairman

Mahesh Gupta

Chairman - Audit Committee

Anant Goenka Managing Director

As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No: 324982E/E300003

Kumar Subbiah H. V. Goenka Anant Goenka Chief Financial Officer Chairman Managing Director

per Vinayak Pujare Vallari Gupte Mahesh Gupta Partner Company Secretary Chairman - Audit Committee Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

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CORPORATE OVERVIEW VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Consolidated Statement of Cash Flow

for the year ended March 31, 2020

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( H in Lacs)
Particulars 2019-20 2018-19
I CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax and excluding share of profit / (loss) of associate and joint 28,707 35,600
venture
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortisation expenses 27,651 19,271
Interest income (646) (2,942)
Finance costs 15,093 8,804
Provision for obsolescence of stores and spares 100 107
Allowance for doubtful debts / advances 174 197
Credit balances written back (755) (23)
Bad debts and advances written off (net) 53 7
Net gain on disposal of investments (4) (83)
(Profit) / Loss on sale of property, plant and equipment (net) (428) 481
Unrealised foreign exchange (gain) / loss (net) 43 106
Foreign Currency Translation Reserve on Consolidation 193 351
Provision for unusable inventories (refer note 38) 1,327 -
Finance costs (refer note 38) 112 -
Operating profit before working capital changes 71,620 61,876
Adjustments for :
Decrease / (Increase) in inventories 6,564 (22,205)
Decrease / (Increase) in trade receivables 3,476 3,811
Decrease / (Increase) in other current assets 1,269 (3,173)
Decrease / (Increase) in current loans and other financial assets (137) 392
Decrease / (Increase) in non-current loans and other financial assets (65) (94)
Decrease / (Increase) in other non current asset (104) (248)
(Decrease) / Increase in trade payables 14,295 18,873
(Decrease) / Increase in current financial liabilities and other current liabilities (885) 1,016
(Decrease) / Increase in non-current financial liabilities and deferred revenue (317) (702)
(Decrease) / Increase in current provisions 2,266 5,015
(Decrease) / Increase in non-current provisions (539) (338)
Cash flows from operating activities 97,443 64,223
Direct taxes paid (net of refunds) (1,810) (8,083)
Net cash flow (used in) / generated from operating activities (I) 95,633 56,140
II CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment and intangible assets (including (1,11,834) (1,10,732)
capital work-in progress, intangible assets under development and capital
advance)
Proceeds from sale of property, plant and equipment 846 -
Withdrawal / (Investment) in bank deposits 12 20
Withdrawal / (Investment) of margin money deposit with banks 46 17
Changes in other bank balances (94) (212)
Purchase of non current investments (422) (2)
Investment in Joint Venture and Associate (299) (300)
Dividend received from Joint Venture 1,036 732
Proceeds from sale of investments (net) 4 4,089
Interest received 3,155 341
Net cash flow (used in) / generated from investing activities (II) (1,07,550) (1,06,047)
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Consolidated Statement of Cash Flow

for the year ended March 31, 2020

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( H in Lacs)
Particulars 2019-20 2018-19
III CASH FLOW FROM FINANCING ACTIVITIES
Interest paid (19,249) (8,889)
Change in other short-term borrowings (net) 1,220 13,315
Repayment of short-term buyers credit - (10,484)
Proceeds from long-term borrowings 46,888 105,404
Repayment of long-term borrowings (5,005) (45,639)
Payment of lease liabilities (4,562) -
Dividend paid (9,603) (4,434)
Dividend distribution tax paid (1,787) (829)
Net cash flow (used in) / generated financing activities (III) 7,902 48,444
Net increase / (decrease) in cash and cash equivalents (I + II + III) (4,015) (1,463)
Cash and cash equivalents at the beginning of the year 6,755 8,218
Cash and cash equivalents at the end of the year 2,740 6,755
----- End of picture text -----

The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No: 324982E/E300003

Kumar Subbiah H. V. Goenka Anant Goenka Chief Financial Officer Chairman Managing Director

per Vinayak Pujare Vallari Gupte Partner Company Secretary Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

Mahesh Gupta Chairman - Audit Committee

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CEAT LIMITED | ANNUAL REPORT 2019-20

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CORPORATE OVERVIEW VALUE CREATION STATUTORY REPORTS FINANCIAL STATEMENTS
CEAT LIMITED | ANNUAL REPORT 2019-20
Consolidated Statement of Changes in Equity Notes to Consolidated Financial Statements
for the year ended March 31, 2020 for the year ended March 31, 2020
Note 1: Group Corporate Information manufacturing of automotive tyres, tubes and flaps. The Group
started operations in 1958 as CEAT Tyres of India Limited and
The consolidated financial statements comprise financial was renamed as CEAT Limited in 1990. The Company caters
statements of CEAT Limited (“the Company”) and its to both domestic and international markets. The Company is
subsidiaries (collectively, “the Group”), associate and jointly listed on the Bombay Stock Exchange (BSE) and the National
controlled entities for the year ended March 31, 2020. The Stock Exchange (NSE). The registered office of the Company
Company is a public limited company domiciled in India is located at RPG House, 463, Dr Annie Besant Road, Worli,
and incorporated under the provisions of the Companies Mumbai, Maharashtra 400030. The financial statements were
Act applicable in India. The Company’s principal business is
authorised for issue in accordance with a resolution of the Board of Directors on May 28, 2020.
The following subsidiaries, associate and Jointly controlled entities have been considered in the consolidated financial
statements
a) Subsidiaries Country of % of equity interest
Name Principal activities
incorporation March 31, 2020 March 31, 2019
CEAT Specialty Tyres Limited Trading & manufacturing of India 100.00% 100.00%
tyres, tubes and flaps
CEAT Specialty Tyres Inc. (Subsidiary Marketing Support United States of 100.00% 100.00%
of CEAT Specialty Tyres Limited) Services America
CEAT Specialty Tyres B.V (Subsidiary Marketing Support Netherlands 100.00% 100.00%
of CEAT Specialty Tyres Limited) Services
Associated Ceat Holdings Company Investing in companies Sri Lanka 100.00% 100.00%
(Pvt.) Ltd. engaged in manufacturing
of tyres
CEAT AKKHAN Limited Trading of tyres, tubes and Bangladesh 70.00% 70.00%
flaps
Rado Tyres Limited Manufacturing of tyres India 58.56% 58.56%
b) Joint venture
Country of % of equity interest
Name Principal activities
incorporation March 31, 2020 March 31, 2019
CEAT Kelani Holding (Pvt) Limited Manufacturing of tyres Sri Lanka 50% 50%
(Joint venture of Associated Ceat
Holdings Company (Pvt.) Ltd.)
c) Associate
Country of % of equity interest
Name Principal activities
incorporation March 31, 2020 March 31, 2019
TYRESNMORE Online Pvt Ltd Trading of tyres, tubes and India 41.30% 36.96%
flaps
Includes compulsory convertible preference shares (potential voting right)
236 237
in Lacs)( H Total equity 2,62,946 25,108 (3,795) 21,313 (4,652) (829) 5,001 (5,001) 19 156 37 2,78,990 23,006 2,533 25,539 (9,708) (1,787) 18 105 - 2,93,157
Non- controlling interest 2,337 (114) - (114) - - - - - 156 - 2,379 (119) - (119) - - - 105 - 2,365 Anant Goenka Managing Director
Total other equity 2,56,564 25,222 (3,795) 21,427 (4,652) (829) 5,001 (5,001) 19 - 37 2,72,566 23,125 2,533 25,658 (9,708) (1,787) 18 - - 2,86,747
Foreign currency translation reserve (refer note 20(f)) (366) - (522) (522) - - - - - - - (888) - 122 122 - - - - - (766)
income - - - - - - - - - - - - - -
Cash flow hedge note 20(d)) 474 (2,811) (2,811) (2,337) 2,900 2,900 563
Items of other comprehensive reserve (refer
Retained earnings (refer note 20(h)) 1,72,819 25,222 (462) 24,760 (4,652) (829) - - - - 37 1,92,135 23,125 (489) 22,636 (9,708) (1,787) - - - 2,03,276 For and on behalf of Board of Directors of CEAT Limited H. V. Goenka Chairman Mahesh Gupta Chairman- Audit Committee
General reserve (refer note 20(g)) 20,165 - - - - - 5,001 - - - - 25,166 - - - - - - - - 25,166
- - - - - - - - - - - - - - - - - - -
Other equity
Debenture redemption reserve (refer note 20(e)) 5,001 (5,001)
Capital redemption reserve (refer note 20(c)) 390 - - - - - - - - - - 390 - - - - - - - - 390
Capital reserve (refer note 20(b)) 1,378 - - - - - - - 19 - - 1,397 - - - - - 18 - - 1,415 Kumar Subbiah Chief Financial Officer Vallari Gupte Company Secretary Place: Mumbai Date: May 28, 2020
Securities premium (refer note 20(a)) 56,703 - - - - - - - - - - 56,703 - - - - - - - - 56,703
Equity share capital (refer note 19) 4,045 - - - - - - - - - - 4,045 - - - - - - - - 4,045
Particulars As at April 01, 2018 Profit for the year Other comprehensive income Total comprehensive income Payment of dividend (Refer note 21) Payment of dividend distribution tax (DDT) (Refer note 21) Transfer from debenture redemption reserve (refer note 20(e)) Transfer to general reserve refer note 20(g))( Increase in capital reserve Forex gain /(loss) on restatement of non-controlling interest Others As at March 31, 2019 Profit for the year Other comprehensive income Total comprehensive income Payment of dividend (Refer note 21) Payment of dividend distribution tax (DDT) (Refer note 21) Increase in capital reserve Forex gain /(loss) on restatement of non-controlling interest Others As at March 31, 2020 The accompanying notes are an integral part of the financial statements As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No: 324982E/E300003 per Vinayak Pujare Partner Membership Number:101143 Place: Mumbai Date: May 28, 2020
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Consolidated Statement of Changes in Equity

for the year ended March 31, 2020

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

not been restated. On transition, the adoption of the new standard resulted in recognition of Right-of-Use asset of H 13,085 lacs and a lease liability of H 13,085 lacs.

Note 2: Basis of preparation, measurement and significant accounting policies

2.1 Basis of preparation and measurement

In statement of profit and loss for the current period, the nature of expenses in respect of operating leases has changed from lease rent in previous periods to depreciation cost for the right-to-use asset and finance cost for interest accrued on lease liability.

2.1.1 Basis of preparation

The financial statements of the group have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and presentation requirements of Division II of Schedule III of the Companies Act 2013 (Ind AS compliant Schedule III).

In the context of initial application, the Group has exercised the option not to apply the new recognition requirements to short-term leases and to leases of low-value asset.

The following table presents the reconciliation of lease liability:

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements.

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Particulars J in Lacs
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Off-Balance sheet lease obligations as of March 31, 2019	226
Current leases with lease term of 12 months or less(short-term leases)	(226)
Lease liability recognised with respect to minimum guarantee payable under outsourcingcontracts asper Ind AS 116*	15,245
Operating lease obligations as of April 01, 2019(gross without discounting)	15,245
Effect from discounting at the incremental borrowingrate as at April 01, 2019	2,160
Total lease liabilities as of April 01, 2019	13,085

The financial statements are presented in H , the functional currency of the Group. Items included in the financial statements of the Group are recorded using the currency of the primary economic environment in which the Group operates (the ‘functional currency’).

The following are the practical expedients availed by the Company on transition:

2.1.2 Measurement

The Group to disclose all the practical expedients availed from para C10 of Ind AS 116

These financial statements are prepared under the historical cost convention except for the following assets and liabilities which have been measured at fair value:

Used a single discount rate to a portfolio of leases with reasonably similar characteristics.
Derivative financial instruments and
Relied on its assessment of whether leases are onerous immediately before the date of initial application.
Certain financial assets measured at fair value (refer accounting policy regarding financial instruments)
Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application.

Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

2.2 Changes in accounting policies

2.2.1 Accounting for leases

The Group has adopted Ind AS 116 ‘Leases’ effective April 01, 2019, using modified retrospective method. The Group has applied the standard to all its leases with the cumulative impact recognised on the date of initial application i.e. April 01, 2019. The Group has elected to measure the right-of-use asset equal to the amount of lease liability. Accordingly, previous period information has

The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant judgment in determining whether these

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

extension and termination options are reasonably certain to be exercised (refer note 2.14 and 4).

uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that group member’s financial statements in preparing the consolidated financial statements to ensure conformity with the group’s accounting policies.

2.3 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at March 31, 2020. The Group’s investment in jointly controlled entities and associate are accounted for using the equity method. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

The financial statements of all entities used for the purpose of consolidation are drawn up to same reporting date as that of the parent company, i.e., year ended on March 31. When the end of the reporting period of the parent is different from that of a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial information as of the same date as the financial statements of the parent to enable the parent to consolidate the financial information of the subsidiary, unless it is impracticable to do so.

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

Consolidation procedure:

a. Combine items like of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries. For this purpose, income and expenses of the subsidiary are based on the amounts of the assets and liabilities recognised in the consolidated financial statements at the acquisition date.
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

b. Offset (eliminate) the carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill.
The contractual arrangement with the other vote holders of the investee
c. Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Ind AS 12 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
The size of the Group’s holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

d. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the noncontrolling interests having a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the group

Derecognises the assets (including goodwill) and liabilities of the subsidiary

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Derecognises the carrying amount of any noncontrolling interests

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Derecognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained

A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Recognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities

2.4 Business Combination

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at fair value as on acquisition date and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’ s identifiable net assets. Acquisition-related costs are expensed as incurred.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

2.5 Investment in joint venture and associate

At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their acquisition date fair values.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 Financial Instruments, is measured at fair value with changes in fair value recognised in profit or loss. If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and subsequently its settlement is accounted for within equity.

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The considerations made in determining whether joint control are similar to those necessary to determine control over the subsidiaries.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. Any gain on a bargain purchase is recognised in other comprehensive income and accumulated in equity as capital reserve if there exists clear evidence, of the underlying reasons for classifying the business combination as resulting in a bargain purchase; otherwise the gain is recognised in equity as capital reserve.

The Group’s investments in joint venture and associate are accounted for using the equity method. Under the equity method, the investment in a joint venture or associate is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of joint venture or associate since the acquisition date. Goodwill relating to joint venture or associate is included in the carrying amount of the investment and is not tested for impairment individually.

Notes to Consolidated Financial Statements for the year ended March 31, 2020

The statement of profit and loss reflects the Group’s share of the results of operations of joint venture and associate. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of joint venture or associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and joint venture or associate are eliminated to the extent of the interest in joint venture or associate.

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Group has identified twelve months as its operating cycle.

The aggregate of the Group’s share of profit or loss of a joint venture and associate is shown on the face of the statement of profit and loss.

2.7 Revenue recognition

2.7.1 Revenue from contracts with customers

The financial statements of joint venture and associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

Revenues from contracts with customers are recognised when the performance obligations towards customer have been met. Performance obligations are deemed to have been met when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group acts as the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its joint venture or associate. At each reporting date, the Group determines whether there is objective evidence that the investment in joint venture or associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of joint venture or associate and its carrying value, and then recognises the loss as ‘Share of profit of a joint venture and associate’ in the statement of profit or loss.

An entity collects Goods and Services Tax (“GST”) on behalf of the government and not on its own account. Hence it should be excluded from revenue, i.e. revenue should be net of GST.

2.7.2 Sale of Goods:

2.6 Current versus non-current classification

The Group presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:

Expected to be realised or intended to be sold or consumed in normal operating cycle

The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties). In determining the transaction price for the sale of goods, the Group considers the effects of variable consideration, the existence of significant financing components, if any.

Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

2.7.2.1 Variable consideration

All other assets are classified as non-current.

A liability is current when:

It is expected to be settled in normal operating cycle

It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

/ subsidy will be received. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.

2.7.2.2 Significant financing component

Generally, the Group receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.

The Group has chosen to adjust grant under the Export Promotion Capital Goods (‘EPCG’) scheme from the carrying value of non-monetary asset pursuant to amendment in Ind AS 20.

Export Incentive under Merchandise Export from India Scheme (‘MEIS’) is recognised in the Statement of Profit and Loss as a part of other operating revenues.

2.7.3 Trade receivables

A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to note 2.19 Financial Instruments in accounting policies.

2.9 Taxes

2.9.1 Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the Group operates and generates taxable income.

2.7.4 Royalty and Technology Development fees:

The Group also earns sales-based royalty income which is recognised as revenue over the period of time. This is because in such arrangements the customer gets a right to access the Group’s intellectual property as it exists throughout the license period. The revenue to be recognised is determined based on a specified percentage of the sales made by the customer.

Current tax relating to items recognised outside profit and loss is recognised outside the Statement of Profit and Loss [either in Other Comprehensive Income (‘OCI’) or in equity]. Current tax items are recognised in correlation to the underlying transaction either in Statement of profit and loss or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

2.7.5 Interest income:

For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the Effective Interest Rate (EIR) method. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the EIR, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the Group’s domicile.

2.7.6 Dividends:

Dividend income is recognised when the Group’s right to receive dividend is established, which is generally when shareholders approve the dividend.

2.8 Government grants, subsidies and export incentives

Government grants / subsidies are recognised when there is reasonable assurance that the Group will comply with all the conditions attached to them and that the grant

Notes to Consolidated Financial Statements for the year ended March 31, 2020

is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

2.9.2 Deferred tax:

Deferred tax is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax relating to items recognised outside profit and loss is recognised outside the Satatement of Profit and Loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

When the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit and loss

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Group will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Group recognises MAT credit as an asset, it is created by way of credit to the statement of profit and loss and shown as part of deferred tax asset. The Group reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.

In respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future

2.9.3 GST paid on acquisition of assets or on incurring

expenses

When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

Expenses and assets are recognised net of the amount of GST paid, except:

When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised
When receivables and payables are stated with the amount of tax included

The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

2.10 Non-current assets held for sale

The Group classifies Non-current assets or disposal groups comprising of assets and liabilities are classified as ‘held for sale’ when all of the following criteria are met:

decision has been made to sell.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset

the assets are available for immediate sale in its present condition.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

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Asset Class Useful life
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the assets are being actively marketed and

Freehold land	Non depreciable
Leasehold land	Lease term – 95years
Buildings (including temporary structures)	1 year - 60 years
Plant & Equipment	3years - 20years
Furniture & Fixture	10years
Vehicle	8years
Office Equipment	5years

sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.

Subsequently, such non-current assets and disposal groups classified as ‘held for sale’ are measured at the lower of it carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.

2.11 Property, plant and equipment

The identified components are depreciated over their useful lives, the remaining asset is depreciated over the life of the principal asset.

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for longterm construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

The management believes that the depreciation rates fairly reflect its estimation of the useful lives and residual values of the fixed assets.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

2.12 Intangible assets

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.

Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either infinite or finite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as “Capital work-in-progress”.

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under “Other Non Current Assets”.

Depreciation is provided on a pro-rata basis on the straight line method based on useful life estimated by the management and supported by independent assessment by professionals. Depreciation commences when the asset is ready for it’s intended use. The Group has used the following useful lives to provide depreciation on its fixed assets.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net

Notes to Consolidated Financial Statements for the year ended March 31, 2020

disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

Intangible assets are amortised on a pro-rata basis on the straight line method based on useful life estimated by the management as under:

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Asset Class Useful life
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2.13 Borrowing costs

Software	3 – 6years
Brand(refer 2.12.1)	20years
Technical know-how (refer 2.12.1)	20 years
Product development (refer 2.12.2)	20 years

2.12.1 Technical know-how and Brand:

Technical know-how: The Group has originally generated technical know-how and assistance from International Tire Engineering Resources LLC, for setting up of Halol radial plant. Considering the life of the underlying plant/facility, this technical know-how, is amortised on a straight-line basis over a period of twenty years.

To the extent that the Group borrows funds specifically for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

Brand: The Group has acquired global rights of “CEAT” brand from the Italian tyre maker, Pirelli. Prior to the said acquisition, the Group was the owner of the brand in only a few Asian countries including India. With the acquisition of the brand which is renowned worldwide, new and hitherto unexplored markets will be accessible to the Group. The Group will be in a position to fully exploit the export market resulting in increased volume and better price realisation. Therefore, the management believes that the Brand will yield significant benefits for a period of at least twenty years.

To the extent that the Group borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Group that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

2.12.2 Research and development costs (Product development)

2.14 Leases

The Group has entered into various arrangements like lease of vehicles, premises and outsourcing arrangements which has been disclosed accordingly under Ind AS 116. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The assessment of whether a contract conveys the right to control the use of an identified asset depends on whether the Group obtains substantially all the economic benefits from the use of the asset and whether the Group has the right to direct the use of the asset.

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
Its intention to complete and its ability and intention to use or sell the asset

How the asset will generate future economic benefits

The availability of resources to complete the asset
The ability to measure reliably the expenditure during development

2.14.1 Group as a lessee:

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and

During the period of development, the asset is tested for impairment annually.

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for the year ended March 31, 2020

leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets

the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

2.14.1.1 Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). The cost of rightof-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over shorter of the lease term or the estimated useful life of the underlying asset as follows:

The Group’s lease liabilities are included in current and non-current financial liabilities. Lease liability have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

2.14.1.3 Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to the contracts which have a lease term of 12 months or less from the date of commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to the lease contracts that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Asset Class	Useful life
Building	2 - 3years
Others	2 - 4years

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

2.15 Inventories

The Group presents right-of-use assets separately in the Balance Sheet.

Inventories are valued at the lower of cost and net realisable value.

2.14.1.2 Lease liabilities

Cost is determined on a weighted average basis.

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including insubstance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless the cost is included in the carrying value of inventories) in the period in which the event or condition that triggers the payment occurs.

Cost of raw materials includes the transfer of gains and losses on qualifying cash flow hedges, recognised in OCI, in respect of the purchases of raw materials. Raw materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Work-in-progress and finished goods includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing cost.
Traded goods include cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss.

2.16 Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

2.17 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Group extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in which the asset is used.

2.17.1 Sales related obligation

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss. The impairment loss is allocated first to reduce the carrying amount of any goodwill (if any) allocated to the cash generating unit and then to the other assets of the unit, pro rata based on the carrying amount of each asset in the unit.

2.17.2 Decommissioning liability

The Group records a provision for decommissioning costs of land taken on lease at one of the manufacturing facility for the production of tyres. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability.

An assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have

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for the year ended March 31, 2020

The unwinding of the discount is expensed as incurred and recognised in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

adjustments within the plans, are recognised immediately in OCI and subsequently not reclassified to the Statement of Profit and Loss.

2.17.3 Litigations

The Group is party to various lawsuits that are at administrative or judicial level or in their initial stages, involving tax and civil matters. The Group contests all claims in the court / tribunals / appellate authority levels and based on their assessment and that of their legal counsel, records a provision when the risk or loss is considered probable. The outflow is expected on cessations of the respective events.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Group’s net obligation into current and non-current is as per the actuarial valuation report.

2.18.3 Termination benefits

Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in the Statement of Profit and Loss. The Group recognises termination benefits at the earlier of the following dates:

2.18 Employee benefits

2.18.1 Defined Contribution plan

Retirement benefit in the form of Provident Fund, Superannuation, Employees State Insurance Contribution and Labour Welfare fund are defined contribution scheme. The Group has no obligation, other than the contribution payable to the above mentioned funds. The Group recognizes contribution payable to these funds / schemes as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the Balance Sheet date exceeds the contribution already paid, the deficit payable is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

When the Group can no longer withdraw the offer of those benefits; or
When the Group recognises costs for a restructuring that is within the scope of Ind AS 37: Provisions, Contingent Liabilities and Contingent Assets and involves the payment of termination benefits.
Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

2.19 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

2.18.2 Defined benefit plan

2.19.1 Financial assets

Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.

2.19.1.1 Initial recognition and measurement

On initial recognition, a financial asset is recognised at fair value. In case of Financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost is recognised in the statement of profit and loss. In other cases, the transaction cost is attributed to the acquisition value of the financial asset.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

2.19.1.2 Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

2.19.1.2.1 Debt instruments at amortised cost

2.19.1.2.2 Debt instruments at Fair Value Through Other Comprehensive Income (FVTOCI)

2.19.1.2.3 Debt instruments, derivatives and equity instruments at Fair Value Through Profit and Loss (FVTPL)

2.19.1.2.3 Debt instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as amortised cost or as FVTOCI, is classified as FVTPL.

2.19.1.2.4 Equity instruments measured at (FVTOCI)

2.19.1.2.1 Debt instruments at amortised cost

In addition, the Group may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch’). The Group has not designated any debt instrument as FVTPL.

A debt instrument is measured at the amortised cost if both the following conditions are met:

The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.

Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.

After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit and loss. The losses arising from impairment are recognised in the profit and loss. This category generally applies to trade and other receivables, loans and other financial assets.

2.19.1.2.4 Equity investments

All investments in equity instruments within the scope of Ind AS 109 are initially measured at fair value. Equity instruments which are held for trading are classified as FVTPL. For all other equity instruments, the Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Group makes such election on an instrument-byinstrument basis. The classification is made on initial recognition and is irrevocable.

2.19.1.2.2 Debt instrument at FVTOCI

A ‘debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:

In case of equity instrument classified as FVTOCI, all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on derecognition of investment. However, the Group may transfer the cumulative gain or loss within equity.

a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset’s contractual cash flows represent SPPI.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in (OCI). However, the Group

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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

does not require the Group to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

2.19.1.3 Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

For recognition of impairment loss on other financial assets [i.e. (ii) and (iii) above] and risk exposure, the Group determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12 month ECL.

The rights to receive cash flows from the asset have expired or
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

2.19.1.4 Impairment of financial assets

Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms

In accordance with Ind AS 109, the Group applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

As a practical expedient, the Group uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates and changes in the forward-looking estimates are updated. For assessing increase in credit risk and impairment loss, the Group combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating

(i) Trade receivables
(ii) Financial assets measured at amortised cost (other than trade receivables)
(iii) Financial assets measured at fair value through other comprehensive income (FVTOCI).

The Group follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables. The application of simplified approach

Notes to Consolidated Financial Statements for the year ended March 31, 2020

Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.

an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / expense in the Statement of Profit and Loss. This amount is reflected under the head ‘other expenses’ in the Statement of Profit and Loss.

Financial liabilities designated upon initial recognition at fair value through profit and loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risks are recognised in OCI. These gains/ loss are not subsequently transferred to Statement of Profit and Loss. However, the Group may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement of Profit and Loss. The Group has not designated any financial liability as at Fair Value Through Profit and Loss.

The balance sheet presentation for various financial instruments is described below:

Financial assets measured at amortised cost and contractual revenue receivables: ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Group does not reduce impairment allowance from the gross carrying amount.

2.19.2.2.2 Financial liabilities at amortised cost

Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value.

This is the category most relevant to the Group. After initial recognition, financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.

The Group does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase / origination.

2.19.2 Financial liabilities

2.19.2.1 Initial recognition and measurement

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and in the case of borrowings net of directly attributable transaction costs.

2.19.2.2.3 Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.

2.19.2.2 Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

2.19.2.2.1 Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through profit and loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit and loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.

2.19.2.3 Derecognition

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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

for managing those assets. Changes to the business model are expected to be infrequent. The Group’s senior management determines change in the business model as a result of external or internal changes which are significant to the Group’s operations. Such changes are evident to external parties. A change in the business model occurs when the Group either begins or ceases to perform an activity that is significant to its operations. If the Group reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Group does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

2.19.3 Reclassification of financial assets

The Group determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model

The following table shows various reclassifications and how they are accounted for:

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Original classification Revised classification Accounting treatment
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Original classification	Revised classification	Accounting treatment
Amortised cost	FVTPL	Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in statement of profit and loss.
Amortised cost	FVTOCI	Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in OCI. No change in EIR due to reclassification.
FVTPL	Amortised Cost	Fair value at reclassification date becomes its new gross carrying amount. EIR is calculated based on the newgross carryingamount.
FVTPL	FVTOCI	Fair value at reclassification date becomes its new carrying amount. No other adjustment is required.
FVTOCI	Amortised cost	Fair value at reclassification date becomes its new amortised cost carrying amount. However, cumulative gain or loss in OCI is adjusted against fair value. Consequently, the asset is measured as if it had always been measured at amortised cost.
FVTOCI	FVTPL	Assets continue to be measured at fair value. Cumulative gain or loss previously recognised in OCI is reclassified to statement of profit and loss at the reclassification date.

2.19.4 Derivative financial instruments and hedge accounting

2.19.4.1 Fair value hedges

The change in the fair value of a hedging instrument is recognised in the Statement of Profit and Loss as finance costs. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the Statement of Profit and Loss as finance costs.

The Group uses derivative financial instruments, such as forward currency contracts, to manage its foreign currency risks. These derivative instruments are designated as cash flow, fair value or net investment hedges and are entered into for period consistent with currency. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.

Notes to Consolidated Financial Statements for the year ended March 31, 2020

If the hedged item is derecognised, the unamortised fair value is recognised immediately in the Statement of Profit and Loss. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit and loss.

The principal or the most advantageous market must be accessible by the Group.

2.19.4.2 Cash flow hedges

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The ineffective portion relating to foreign currency contracts is recognised in the Statement of Profit and Loss.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Amounts recognised as OCI are transferred to statement of profit and loss when the hedged transaction affects profit and loss, i.e. when the hedged financial income or financial expense is recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or nonfinancial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the nonfinancial asset or liability.

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

2.19.5 Fair value measurement

The Group measures derivatives instruments like forward contracts at fair value at each Balance Sheet date.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

2.19.6 Offsetting of financial instruments

Financial assets and financial liabilities can be offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

In the principal market for the asset or liability or

In the absence of a principal market, in the most advantageous market for the asset or liability

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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

be issued on conversion of all the dilutive potential equity shares into equity shares.

2.20 Cash and cash equivalents

Cash and cash equivalent in the Balance Sheet comprises cash at banks and on hand.

2.24 Segment reporting

Based on “Management Approach” as defined in Ind AS 108 - Operating Segments, the Executive Management Committee evaluates the Group’s performance and allocates the resources based on an analysis of various performance indicators by business segments.

2.21 Dividend distribution to equity holders

The Group recognises a liability to pay dividend to equity shareholders of the Group when the distribution is authorised, and the distribution is no longer at the discretion of the Group. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders.

The Group prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Group as a whole.

2.22 Foreign currencies

The Group’s financial statements are presented in H , which is also the Group’s functional currency.

2.25 Contingent liability and contingent assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the financial statements.

Transactions in foreign currencies are initially recorded by the Group at H spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Exchange differences arising on settlement or translation of monetary items are recognised in the Statement of Profit and Loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit and loss are also recognised in OCI or the Statement of Profit and Loss, respectively).

2.26 Significant accounting judgments, estimates and assumptions

2.23 Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Group by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Group after adjusting impact of dilution shares by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would

Notes to Consolidated Financial Statements for the year ended March 31, 2020

the next financial year, are described below. The Group has based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Measurement of defined benefit obligations – Note 44
(b) Measurement and likelihood of occurrence of provisions and contingencies – Notes 24
(c) Recognition of current tax and deferred tax assets – Note 25
(d) Key assumptions used in fair valuations – Note 50

(e) Measurement of Lease liabilities and Right-of-Use Assets- Note 4
(f) Estimation of uncertainties relating to the global health pandemic from COVID-19 – Note 55

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

(`H`in L)	acs Particulars Freehold land Leasehold land (Financial lease) Buildings (refer foot note 1) Plant and equipment (Owned) Furniture and fixtures Vehicles Office equipments Capital work- in-progress Total Gross carrying amount As at April 01, 2018 48,546 10,638 37,352 2,00,754 1,384 663 930 30,935 3,31,202 Additions 1 186 10,706 54,426 199 93 277 1,14,717 1,80,605 Disposals - - (71) (1,117) (2) (1) (6) - (1,197) Transfers / capitalised - - - - - - - (65,888) (65,888) Adjustments during the year (92) - (199) (400) - - (2) - (693) Foreign Exchange Adjustment - - - 2 1 - 1 395 399 As at March 31, 2019 48,455 10,824 47,788 2,53,665 1,582 755 1,200 80,159 4,44,428 Additions 69 79 15,360 90,637 533 37 356 1,31,985 2,39,056 Disposals - - (124) (603) (1) (4) (12) - (744) Transfers / capitalised - - - - - - - (1,07,071) (1,07,071) Foreign Exchange Adjustment - - - 2 1 - 1 - 4 As at March 31, 2020 48,524 10,903 63,024 3,43,701 2,115 788 1,545 1,05,073 5,75,673 Accumulated Depreciation: As at April 01, 2018 - 357 3,280 32,981 369 267 107 - 37,361 Depreciation for the year - 145 1,480 15,405 171 101 255 - 17,557 Disposals - - (59) (660) (1) (1) (5) - (726) Adjustments during the year - - (21) (152) - - (2) - (175) Foreign Exchange Adjustment - - - 1 - - 1 - 2 As at March 31, 2019 - 502 4,680 47,575 539 367 356 - 54,019 Depreciation for the year - 145 1,619 18,889 186 100 298 - 21,237 Disposals - - (9) (412) (1) (2) (11) - (435) Foreign Exchange Adjustment - - - 1 1 - 1 - 3 As at March 31, 2020 - 647 6,290 66,053 725 465 644 - 74,824 Net Book Value: As at March 31, 2019 48,455 10,322 43,108 2,06,090 1,043 388 844 80,159 3,90,409 As at March 31, 2020 48,524 10,256 56,734 2,77,648 1,390 323 901 1,05,073 5,00,849	* Adjustments include regrouping of certain assets into other class of assets.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Net book value

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Property, plant and equipment 3,95,776 3,10,250
Capital work in progress 1,05,073 80,159
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Building includes H 0.10 Lacs as at March 31, 2020 (As at March 31, 2019: H 0.10 Lacs) being value of unquoted fully-paid shares held in various co-operative housing societies.
During the year, the Group has transferred the following expenses which are attributable to the construction activity and are included in the cost of capital work-in-progress (CWIP) / property, plant and equipment as the case may be. Consequently, expenses disclosed under the respective notes are net of such amounts.

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( H in Lacs)
Particulars Note No. 2019-20 2018-19
Finance Cost 35 4,965 3,224
Professional and consultancy charges 37 647 315
Miscellaneous expenses 37 1,723 2,785
Employee benefit expenses 34 3,477 1,448
Travelling & Conveyance 37 443 512
Total 11,255 8,284
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As a part of ongoing expansion project at Halol-Phase III, during the year the Group has capitalised and commissioned assets of H 27,217 lacs (March 31, 2019: H 33,819 lacs).
As a part of ongoing expansion project at Nagpur the Group has capitalised and commissioned the assets of H 13,638 lacs (March 31, 2019: H 7,409 lacs).
As a part of ongoing green field project at Chennai, during the year the Group has capitalised and commissioned the assets of H 56,050 lacs (March 31, 2019: H 7,233 lacs).
The amount of borrowing cost capitalised during the year ended March 31, 2020 was H 4,965 lacs (March 31, 2019: H 3,224 lacs). The rates used to determine the amount of borrowing cost eligible for capitalisation was in the range of 8.15% to 8.90% (March 31, 2019 : 7.40% to 8.90%) which is the effective interest rate of specific borrowings.
Refer note 22 and 26 for details on pledges and securities.
The Group has classified building having net block of Nil (March 31, 2019: H 44 lacs) as assets held-for-sale (refer note 2.10 for accounting policy on Non-current assets held for sale)

Note 4: Leases

Refer note 2.14 for accounting policy on Leases

Note 4(a): Right-of-use assets

Note 4(a): Right-of-use assets
	(`H`in Lacs)
Particulars	As at March 31, 2020
	Building	Others*	Total
Openingnet carryingbalance	-	-	-
Adoption of Ind AS 116 "Leases" as on April 01,2019	-	13,085	13,085
Additions duringtheyear	1,028	-	1,028
Depreciation	(112)	(3,816)	(3,928)
Total	916	9,269	10,185

Right-of-use assets are arising out of outsourcing arrangements which consists of both buildings and plant machinery used for production of goods under such arrangements.

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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 4(b): Lease liabilities

Note 4(b): Lease liabilities
	(`H`in Lacs)
Particulars	Amount
Openingnet carryingbalance	-
Adoption of Ind AS 116 "Leases" as on April 01,2019	13,085
Additions	1,028
Accretion of interest(refer note 35)	1,050
Payments	(4,562)
Total	10,601

Notes:

a) The rate used for discounting is 9%

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Intangible assets 10,018 7,703
Intangible assets under development 1,781 3,132
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Note:

During the year, the Group has transferred employee benefit expenses of H 662 Lacs (March 31, 2019: H 937 lacs) and Professional and consultancy charges of Nil (March 31, 2019: H 3 Lacs)which are attributable to the development activity and are included in the cost of intangible assets under development / intangible assets as the case may be. Consequently, expenses disclosed under note 34 and 37 are net of such amounts.

b) Refer note 49 for information about fair value measurement and note 51(vi) for information about liquidity risk relating to lease

	(`H`in Lacs)
Particulars	Amount
Non-current lease liabilities	6,375
Current lease liabilities	4,226

Note 5: Intangible assets and Intangible assets under development

Refer note 2.12 for accounting policy on Intangible assets

( H in Lacs)

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Technical Product
Particulars Software Brand Total
Knowhow development
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Gross carrying amount
As at April 01, 2018	4,427	4,404	704	1,426	10,961
Additions	700	-	-	699	1,399
Foreign Exchange Adjustment	1	-	-	-	1
As at March 31, 2019	5,128	4,404	704	2,125	12,361
Additions	4,244	-	-	557	4,801
Foreign Exchange Adjustment	1	-	-	-	1
As at March 31, 2020	9,374	4,404	704	2,682	17,163
Accumulated amortisation
As at April 01, 2018	1,752	794	123	274	2,943
Amortisation for theyear	792	265	41	616	1,714
Foreign Exchange Adjustment	1	-	-	-	1
As at March 31, 2019	2,545	1,059	164	890	4,658
Amortisation for theyear	1,336	289	45	816	2,486
Foreign Exchange Adjustment	1	-	-	-	1
As at March 31, 2020	3,882	1,348	209	1,706	7,145
Net Book Value:
As at March 31, 2019	2,583	3,345	540	1,235	7,703
As at March 31, 2020	5,491	3,056	495	976	10,018

Note 6: Investments accounted using equity method

Refer note 2.5 for accounting policy on Investments in joint venture and associate

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Investment in Joint venture (refer note 42)
CEAT Kelani Holding Company (Pvt.) Limited 17,193 17,556
Investment in Associate (refer note 43)
Tyresnmore Online Private Limited 748 584
Total 17,941 18,140
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Note 7: Investments

Refer note 2.19 for accounting policy on Financial instruments

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( H in Lacs)
As at As at
Particulars Face value
March 31, 2020 March 31, 2019
Unquoted investment in others (at fair value through profit and loss)
NIL (March 31, 2019: 1,800) equity shares of RPG Ventures Limited H 10 - 0
(formerly known as Maestro Comtrade Private Limited)
9,75,000 (March 31, 2019: 9,75,000) equity shares of Bhadreshwar H 0.19 2 2
Vidyut Private Limited (formerly known as OPGS Power Gujarat
Private Limited)
National Saving Certificates VIII issue (refer foot note a) 0 0
7,129 (March 31, 2019: Nil) Compulsorily Convertible Preference H 10 399 -
shares of E-Fleet Systems Private Limited
10 (March 31, 2019: Nil) equity shares of E-Fleet Systems Private H 10 1 -
Limited
Rado Employees Co-operative Society H 10 0 0
27,313 (March 31, 2019: Nil) equity shares of Greenzest Solar Private H 10 22 -
Limited
Total 424 2
Aggregate amount of quoted investments - -
Aggregate Market value of quoted investments - -
Aggregate amount of unquoted investments 424 2
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Note:

a) Pledged as security for sales tax purpose

b) Refer note 49 of information about fair value measurement

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 8: Loans

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current (at amortised cost)
Secured, considered good
Security deposits 472 407
Unsecured, considered good
Security deposits 1 1
Unsecured, considered doubtful
Security deposits 110 121
Less : Allowance made for doubtful deposits (110) (121)
Total 473 408
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Notes:

a) No loans are due from directors or promoters of the holding company either severally or jointly with any person

b) Refer note 49 for information about fair value measurement

Note 9: Other financial assets

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current
Unsecured, considered good
At amortised cost
Margin money deposits (refer foot note b) 149 195
At fair value through other comprehensive income
Derivative financial instrument 332 -
Total 481 195
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Notes:

a) Refer note 49 for information about fair value measurement.

b) The margin deposit are for bank guarantees given to statutory authorities.

Note 10: Other non-current assets

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Unsecured, considered good
Capital advances (others) 6,099 11,018
Capital advances (related party) (refer note 46) 241 1,643
Security deposits with statutory authorities 2,077 1,969
Others 4 8
Unsecured, considered doubtful
Balance with government authorities and agencies 219 274
Less : Allowance made for doubtful balances (219) (274)
Total 8,421 14,638
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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 11: Inventories

(at cost or net realisable value whichever is lower)

Refer note 2.15 for accounting policy on Inventories

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
a) Raw materials 29,090 34,644
Goods in transit 3,180 3,399
32,270 38,043
Less: Provision for unusable raw materials [refer note 38(d)] (200) -
32,070 38,043
b) Work-in-progress 4,515 3,342
Less: Provision for unusable work-in-progress materials [refer note 38(d)] (1,127) -
3,388 3,342
c) Finished goods 49,871 51,878
d) Stock-in-trade 3,464 3,167
Goods in transit 511 604
3,975 3,771
e) Stores and spares 3,258 3,525
Goods in transit 7 1
3,265 3,526
Total 92,569 1,00,560
Details of finished goods
Automotive tyres 42,781 42,702
Tubes and others 7,090 9,176
Total 49,871 51,878
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Notes:

1) Cost of inventory recognised as an expense as at March 31, 2020 includes H 1,604 lacs ( March 31, 2019 H 1,319 lacs) in respect of write down due to net realisable value with respect to slow moving stock as per Group’s policy.
2) Refer note 26 for details on pledges and securities.

Note 12: Trade receivables

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Trade receivables from others 66,944 70,314
Trade receivables from related parties (refer note 46) 491 324
Total Receivables 67,435 70,638
( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Break-up for security details
Secured, considered good (refer foot note a) 26,311 24,493
Unsecured, considered good 41,124 46,145
Doubtful 2,231 2,080
69,666 72,718
Less: Allowance for doubtful debts (2,231) (2,080)
Total 67,435 70,638
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FINANCIAL STATEMENTS

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
The movement in allowance for doubtful debts is as follows:
Balance as at beginning of the year 2,080 2,146
Change in allowance for doubtful debts during the year 370 63
Trade receivables written off during the year (219) (129)
Balance as at the end of the year 2,231 2,080
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Notes:

a) These debts are secured to the extent of security deposit obtained from the dealers.
b) No trade or other receivable are due from directors or other officers of the holding company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member other than those disclosed in note no 46.
c) For terms and conditions with related parties, refer to note 46

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 14: Bank balances other than cash and cash equivalents

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Deposits with original maturity of more than 3 months but remaining maturity of less 39 51
than 12 months
Balances held for unclaimed public fixed deposits and interest thereon 94 105
(refer foot note a)
Balances held for unpaid/unclaimed dividend accounts (refer foot note b) 548 443
Total 681 599
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Notes:

a) These balances are available for use only towards settlement of matured deposits and interest on deposits. Also includes H 0.20 lacs (March 31, 2019 H 0.20 lacs) outstanding for a period exceeding seven years, in respect of which a Government agency has directed to the Group to hold.
b) These balances are available for use only towards settlement of corresponding unpaid dividend liabilities.
d) Trade receivables are non-interest bearing within the credit period which is generally 27 to 90 days.

Note 15: Loans

e) Refer note 51(v) for information about credit risk relating to trade receivables

Refer note 2.19 for accounting policy on financial instruments

f) The Group has entered into an arrangement to sell it receivable to third parties on without recourse to the Group. The Group has derecognised trade receivables of H 6,112 Lacs as at March 31, 2020 ( H 4,894 lacs as at March 31, 2019) from the books. The Group has transferred substantially all the risks and rewards of the asset.
g) Refer note 26 for details on pledges and securities.

Note 13: Cash and cash equivalents

Refer note 2.20 for accounting policy on Cash and cash equivalents

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Balances with Banks
On current accounts 2,461 2,087
On remittance in transit 231 4,661
Cash on hand 48 7
Cash and cash equivalents as per statement of cash flow 2,740 6,755
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Changes in liabilities arising out of financing activities

Changes in liabilities arising out of financing activities
		(`H`in Lacs)
Particulars	Current borrowings	Non- current borrowings*
As at April 01, 2018	19,557	67,610
Cash Flows	2,830	59,767
Foreign Exchange Impact	38	-
As at March 31, 2019	22,425	127,377
Cash Flows	1,220	41,882
As at March 31, 2020	23,645	169,259

*includes current maturities of non-current borrowings.

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current ( at amortised cost)
Unsecured, considered good
Advance receivable in cash 91 70
Security deposits 4 5
Unsecured, considered doubtful
Loans advances and deposits 104 149
Less: Allowance for doubtful advances and deposits (104) (149)
Total 95 75
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Note 16: Other financial assets

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current
Unsecured, considered good
At fair value through other comprehensive income
Derivative financial instrument 495 -
At amortised cost
Advance receivable in cash 202 161
Other receivables 1 96
Interest receivable (refer foot note a) 92 2,601
Receivable from group companies and joint ventures (refer note 46) 428 258
Dividend receivable 1,236 -
Others 48 106
Total 2,502 3,222
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Notes:

a) Includes interest due on income tax refunds Nil (March 31, 2019: H 2,594 lacs)

b) Refer note 49 of information about fair value measurement

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

Note 17: Other current assets

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Unsecured, considered good
Advance receivable in kind or for value to be received 3,859 4,916
Balance with government authorities 11,358 10,147
Advance to employees 56 52
Prepaid expense 1,157 2,584
Unsecured considered doubtful
Advance receivable in kind or for value to be received 44 44
Less: Allowance for advance receivable in kind or for value to be received (44) (44)
Total 16,430 17,699
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Note 18: Assets held-for-sale

Refer note 2.10 for accounting policy on Assets held-for-sale

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Free hold land and building (refer foot note a and b) 226 270
Plant and equipment (refer foot note b) 249 249
Total 475 519
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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Issued share capital

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Equity shares of J 10 each issued Numbers J in lacs
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At April 01, 2018(refer foot note a)	40,450,780	4,045
Allotted duringtheyear	-	-
At March 31, 2019(refer foot note a)	40,450,780	4,045
Allotted duringtheyear	-	-
At March 31, 2020(refer foot note a)	40,450,780	4,045

Subscribed equity share capital

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Equity shares of J 10 each subscribed and fully paid Numbers J in lacs
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At April 01, 2018(refer note a)	40,450,092	4,045
Allotted duringtheyear	-	-
At March 31, 2019(refer note a)	40,450,092	4,045
Allotted duringtheyear	-	-
At March 31, 2020(refer note a)	40,450,092	4,045

a) Includes 688 (March 31, 2019: 688) equity shares offered on right basis and kept in abeyance.
b) Terms/ rights attached to equity shares

Notes:

a) Free hold land and building includes building of Nil (March 2019: H 44 Lacs) classified as assets held for sale by the holding company
b) Last year, the wholly owned subsidiary - RADO Tyres limited (RADO) received the order from Labour & Skills (A) Department, Government of Kerala, granting permission under the Industrial Dispute Act, 1947 to close the Factory located at Nellikuzhi, near Kothamangalam. In the opinion of the management there were no further business opportunities for RADO to explore.

On the basis of the above the Board of directors of RADO has decided that the most appropriate course of action for RADO is to sell its assets such as plant and machinery, equipment, spares and such other assets located at its factory near Kothamangalam.

The Group has only one class of equity shares having face value of H 10 per share. Each holder of equity shares is entitled to one vote per equity share. Dividend is recommended by the Board of Directors and is subject to the approval of the members at the ensuing Annual General Meeting except interim dividend. The Board of Directors have a right to deduct from the dividend payable to any member, any sum due from him to the Group.

In the event of winding-up, the holders of equity shares shall be entitled to receive remaining assets of the Group after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

The process to obtain quotation have also been initiated by the RADO’s Board and they expect the sale to be concluded soon.

c) Details of shareholders holding more than 5% shares in the group

Given these circumstances the RADO’s Board has considered prudent to reclassify the above assets to the head assets held for sale.

Note 19: Equity share capital

Refer Statement of Changes in Equity for detailed movement in other equity balance

Authorised share capital	Equity	shares	Preference shares	Preference shares	Unclassified shares	Unclassified shares
	Numbers	`J`in lacs	Numbers	`J`in lacs	Numbers	`J`in lacs
At April 01, 2018	46,100,000	4,610	3,900,000	390	10,000,000	1,000
Increase /(decrease)duringtheyear	-	-	-	-	-	-
At March 31, 2019	46,100,000	4,610	3,900,000	390	10,000,000	1,000
Increase /(decrease)duringtheyear	-	-	-	-	-	-
At March 31, 2020	46,100,000	4,610	3,900,000	390	10,000,000	1,000

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As at March 31, 2020 As at March 31, 2019
Name of the shareholders % holding in % holding in
Numbers Numbers
the class the class
Equity shares of J 10 each fully paid
Instant Holdings Limited 11,820,524 29.22% 11,816,662 29.21%
Swallow Associates LLP 4,484,624 11.09% 4,484,624 11.09%
Amansa Holdings Pvt Limited 3,222,110 7.97% 2,409,373 5.96%
Jwalamukhi Investment Holdings 2,333,991 5.77% 2,953,366 7.30%
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d) As per the records of the Company as at March 31, 2020 no calls remain unpaid by the directors and officers of the company.
e) The Company has not issued any equity shares as bonus for consideration other than cash and has not bought back any shares during the period of 5 years immediately preceding March 31, 2020.

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FINANCIAL STATEMENTS

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 20: Other equity

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Securities premium (refer note a) 56,703 56,703
Capital reserve (refer note b) 1,415 1,397
Capital redemption reserve (refer note c) 390 390
Cash flow hedge reserve (refer note d) 563 (2,337)
Debenture redemption reserve (DRR) (refer note e) - -
Foreign currency translation reserve (refer note f) (766) (888)
General reserve (refer note g) 25,166 25,166
Retained earnings (refer note h) 2,03,276 1,92,135
Total other equity 2,86,747 2,72,566
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a) Securities premium

Amount received on issue of shares in excess of the par value has been classified as security share premium

b) Capital reserve

Capital reserve includes profit on amalgamation of entities and on account of consolidation of the Company’s Bangladesh Subsidiary, CEAT AKKHAN Limited (FY 2013-14)

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

g) General reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to the statement of profit and loss.

h) Retained earnings

Retained earnings are the profits that the Group has earned till date, less any transfers to reserves, dividends or other distributions paid to shareholders.

Note 21: Distribution made and proposed

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Cash dividend on equity shares declared and paid
Final dividend for the year ended on March 31, 2019: H 12 per share 4,854 4,652
(March 31, 2018: H 11.50 per share for the year ended on March 31, 2018)
Dividend Distribution Tax on final dividend 791 829
Interim dividend for the year ended on March 31, 2020: H 12 per share 4,854 -
(March 31, 2019: Nil)
Dividend Distribution Tax on interim dividend 996 -
11,495 5,481
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c) Capital redemption reserve

Capital redemption reserve represents amount transferred from profit and loss account on redemption of preference shares during financial year 1998-99.

d) Cash flow hedge reserve

It represents mark-to-market valuation of effective hedges as required by Ind AS 109.

e) Debenture redemption reserve (DRR)

Debenture redemption reserve (DRR) is required to be created in accordance with section 71 of the Companies Act, 2013 read with Companies (Share capital and Debenture) Rules, 2014 at equivalent to 25% of the value of the debentures issued.

During the year ended March 31, 2019, the Group has prepaid its non-convertible debentures amounting to H 20,000 lacs on July 31, 2018 and accordingly, the balance of debenture redemption reserve has been transferred to general reserves.

f) Foreign currency translation reserve

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Proposed dividend on equity shares
Proposed dividend for the year ended on March 31, 2020: Nil (March 31, 2019 H 12 - 4,854
per share)
Dividend Distribution Tax (DDT) on proposed dividend - 998
- 5,852
----- End of picture text -----

It represents aggregate exchange difference arising on consolidation of our foreign subsidiaries. For the purpose of consolidation, the balance sheet items are translated at closing exchange rate as at the balance sheet date and revenue items are translated at average exchange rate as at the date of transaction, including the difference of rupee and subsidiaries reporting currency is accumulated to foreign currency translation reserve.

266

267

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 22: Borrowings

(at amortised cost)

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
Non-current Current maturities
Particulars As at As at As at As at
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Interest bearing loans and borrowings
I. Secured
Term loans
a) Indian rupee loan from banks
Citibank N.A. (Refer foot note 1) 21,500 21,500 - -
Citicorp Finance (India) Limited (Refer foot note 2) 8,500 8,500 - -
HDFC Bank (Refer foot note 3) 18,333 17,299 1,667 -
Kotak Mahindra Bank (Refer foot note 4) 29,974 29,971 - -
Bank of Baroda (Refer foot note 5) 32,618 19,826 - -
SVC Bank (refer foot note 6) 6,630 7,410 780 390
State Bank of India (Refer foot note 7) 27,229 - - -
HSBC Bank Ltd. ( refer foot note 8) 4,161 -
ICICI Bank Ltd. (refer foot note 9) 13,088 14,582 1,500 375
b) Buyer's Credit (Refer foot note 10) - 619 685 4,143
II. Unsecured
i) Public deposits (Refer foot note 11) 0 0 - -
ii) Deferred sales tax incentive (Refer foot note 12) 2,045 2,557 548 205
1,64,078 1,22,264 5,180 5,113
Less: amount classified under other current financial - - (5,180) (5,113)
liabilities (refer note 28)
Total 1,64,078 1,22,264 - -
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*Indian rupee loan from Banks, carries floating interest rate ranging from 5.96% p.a. to 8.90% p.a.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

3) Term Loan from HDFC Bank H 20,000 lacs as on March 31, 2020 (March 31, 2019: H 17,300 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable in 12 equal quarterly instalments payable after 2 years of Moratorium.
4) Term Loan from Kotak Mahindra Bank Limited H 30,000 lacs as on March 31, 2020 (March 31, 2019: H 30,000 lacs) is secured by first pari passu charge over the holding Company’s immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol, Nashik, Nagpur & Chennai Plant. It is payable as under:

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Year Repayment Schedule (In %) Schedule of Payment
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2021 - 22	2.50% To be repaid in 28 structured quarterly instalment commencing (March 2022) after 3 years of moratorium from First drawdown Date (December 2018) 10.00% 11.50% 16.00% 16.00% 16.00% 16.00% 12.00%
2022 - 23
2023 - 24
2024 - 25
2025 - 26
2026 - 27
2027 - 28
2028 - 29

5) Term Loan from Bank of Baroda H 32,775 lacs as on March 31, 2020 (March 31, 2019: H 20,000 lacs) is secured by first pari passu charge over the holding Company’s immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol, Nashik, Nagpur & Chennai Plant. It is payable as under:

Year	Repayment Schedule (In %) Schedule of Payment
2022 - 23	5.00% To be repaid in 28 structured quarterly instalment commencing (June 2022) after 3 years of moratorium from First drawdown Date (March 2019) 5.00% 15.00% 15.00% 20.00% 20.00% 20.00%
2023 - 24
2024 - 25
2025 - 26
2026 - 27
2027 - 28
2028 - 29

Notes:

1) Term Loan from Citibank N.A. H 21,500 lacs as on March 31, 2020 (March 31, 2019: H 21,500 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable as under :

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Year Repayment Schedule (In %) Schedule of Payment
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Year	Repayment Schedule (In %) Schedule of Payment
2021 - 22	20.00% To be repaid in 3 annual instalment at the end of 3rd, 4th & 5th year 30.00% 50.00%
2022 - 23
2023 - 24

2) Term Loan from Citicorp Finance India Limited H 8,500 lacs as on March 31, 2020 (March 31, 2019: H 8,500 lacs) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol. It is payable as under:
6) Term Loan from SVC Bank of H 7,400 lacs(March 31, 2019: H 7,800 lacs) is secured by first pari passu charge over the all movable and immovable fixed assets of the borrower and second pari-passu, charge by way of hypothecation on all current assets of the CEAT Specialty Tyres Limited. The loan is guaranteed by corporate guarantee from the Holding Company. It is repayable as under:

Year	Repayment Schedule (In %) Schedule of Payment
2019-20	5.00% To be repaid in 28 structured quarterly instalment, commencing December 2019 10.00% 12.50% 15.00% 15.00% 16.25% 17.50% 8.75%
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27

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Year Repayment Schedule (In %) Schedule of Payment
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2021 - 22	20.00% To be repaid in 3 annual instalment at the end of 3rd, 4th & 5th year 30.00% 50.00%
2022 - 23
2023 - 24

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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

7) Term Loan from State Bank of India H 27,582 lacs as on March 31, 2020 (March 31, 2019: Nil) is secured by first pari passu charge over the immovable fixed assets and movable fixed assets (excluding current assets) situated at Halol, Nashik, Nagpur & Chennai Plant. It is payable as under:

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Year Repayment Schedule (In %) Schedule of Payment
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Year	Repayment Schedule (In %) Schedule of Payment
2022 - 23	2.50% To be repaid in 28 structured quarterly instalments commencing (Dec 2022) after 3 years of moratorium from First drawdown Date (Nov 2019) 5.00% 10.00% 15.00% 17.50% 20.00% 20.00% 10.00%
2023 - 24
2024 - 25
2025 - 26
2026 - 27
2027 - 28
2028 - 29
2029 - 30

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 23: Other financial liabilities

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current
At fair value through other comprehensive income
Derivative financial instrument - 315
At amortised cost
Deposits 146 146
Payable to capital vendors (refer note b) 9,926 -
Total other financial liabilities 10,072 461
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Notes:

8) Term Loan from HSBC Bank of H 4,161 lacs (March 31, 2019: Nil) is secured first pari passu charge over all the fixed assets of the Group at Ambernath Plant. The loan is guaranteed by corporate guarantee from the Holding Company. It is repayable as under:
a) Refer note 49 for information about fair value measurement and note 51(vi) for information about liquidity risk relating to other financial liabilities
b) These pertain to payable to capital vendors based on deferred payment terms.

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Year Repayment Schedule (In %) Schedule of Payment
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Year	Repayment Schedule (In %) Schedule of Payment
2021-22	6.36% To be repaid in 12 structured quarterly instalments, commencing Sep 2021. 25.10% 39.13% 29.41%
2022-23
2023-24
2024-25

The subsidiary company is in process of creating security against the loan availed from HSBC Bank.

9) Term Loan from ICICI Bank of H 14,625 lacs (March 31, 2019: H 15,000 lacs) is secured by first pari passu charge over the all movable and immovable fixed assets of the CEAT Specialty Tyres Limited and second pari-passu, charge by way of hypothecation on all current assets of the Borrower. The loan is guaranteed by corporate guarantee from the Holding Company. It is repayable as under:

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Year Repayment Schedule (In %) Schedule of Payment
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Year	Repayment Schedule (In %) Schedule of Payment
2019-20	2.50% To be repaid in 28 structured quarterly installment, commencing March 2020 10.00% 11.25% 15.00% 15.00% 15.63% 17.50% 13.12%
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27

10) Long-term buyer’s credit is secured by way of first pari passu charge on all movable assets (excluding current Assets) and immovable assets of the Holding Company situated at Nagpur plant. It is repayable within 3 years from the date of disbursement. The long-term buyer’s credit carries interest of 12 months LIBOR plus 60 bps p.a. and 6 months LIBOR plus 70 bps p.a.
11) Public deposits H 0.20 lacs (March 31, 2019: H 0.20 lacs) outstanding for a period exceeding seven years, in respect of which a Government agency has directed the Group to hold.
12) Interest-free deferred sales tax is repayable in ten equal annual instalment commencing from April 26, 2011 and ending on April 30, 2025.
13) Outstanding balances shown in foot notes above, are grossed up to the extent of unamortised transaction cost.
14) Refer note 49 for information about fair value measurement and note 51(vi) for information about liquidity risk relating to Borrowings

Note 24: Provisions

Refer note 2.17 for accounting policy on Provision

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non-current provisions
Provision for Sales related obligations (refer note a) 891 959
Provision for Gratuity [refer note 46(b)] 47 -
Provision for compensated absences (refer foot note b) 3,021 2,813
Provision for decommissioning liability (refer note c) 76 68
4,035 3,840
Current provisions
Provision for Sales related obligations (refer note a) 4,749 3,503
Provision for Gratuity [refer note 46(b)] 2,491 1,032
Provision for compensated absences (refer foot note b) 572 547
Provision for litigations (refer foot note d) 4,507 4,971
12,319 10,053
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a) Provision for Sales related obligations

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Movement in provision for sales related obligations ( J in Lacs)
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As at April 01, 2018	3,748
Additions duringtheyear	6,406
Utilised duringtheyear	(5,692)
As at March 31, 2019	4,462
Additions duringtheyear	7,230
Utilised duringtheyear	(6,052)
As at March 31, 2020	5,640

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

b) Provision for compensated absences

Employee leaves are encashed as per the Group’s leave encashment policy. A provision has been recognised for leave encashment liability based on the actuarial valuation of leave balance of employees as at year end.

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Movement in provision for compensated absences ( J in Lacs)
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As at April 01, 2018	2,799
Additions duringtheyear	1,031
Utilised duringtheyear	(470)
As at March 31, 2019	3,360
Additions duringtheyear	746
Utilised duringtheyear	(513)
As at March 31, 2020	3,593

c) Provision for decommissioning liability

The Group has recognised a provision for decommissioning obligations associated with a land taken on lease at Nashik manufacturing facility for the production of tyres. In determining the fair value of the provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs. The Group estimates that the costs would be realised in year 2066 at the expiration of the lease and calculates the provision using the Discounted Cash Flow (DCF) method based on the following assumptions:

Notes to Consolidated Financial Statements for the year ended March 31, 2020

Note 25: Income tax and deferred taxes

Refer note 2.9 for accounting policy on Taxes

Statement of Balance Sheet

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----- Start of picture text -----

( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non current tax assets (net)
Advance payment of tax (net of provision) 1,725 5,739
Current tax liabilities (net)
Provision for income tax (Net of advance tax) 1,980 4,732
Deferred tax liabilities (net) 27,439 21,978
Deferred tax assets (net) 68 60
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Statement of profit and loss

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( H in Lacs)
Particulars 2019-20 2018-19
Tax expense
Current tax 7,932 9,400
Deferred tax (509) 3,112
Income tax expense reported in the statement of profit and loss (refer foot note c) 7,423 12,512
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Estimated range of cost per square meter – H 45 – H 50
Discount rate - 11.50%

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Movement in provision for decommissioning liability ( J in Lacs)
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As at April 01, 2018	61
Additions duringtheyear	7
As at March 31, 2019	68
Additions duringtheyear	8
As at March 31, 2020	76

d) Provision for litigations

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Movement in provision litigations ( J in Lacs)
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As at April 01, 2018	1,858
Additions duringtheyear	3,161
Utilised duringtheyear	(48)
As at March 31, 2019	4,971
Additions duringtheyear	28
Utilised duringtheyear	(492)
As at March 31, 2020	4,507

Other comprehensive income (OCI) section

Deferred tax related to items recognised in OCI during the year:

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( H in Lacs)
Particulars 2019-20 2018-19
Income tax effect on actuarial losses for gratuity 245 278
Income tax effect on movement in cash flow hedges (1,347) 1,323
Income tax (expense) / income charged to OCI (1,102) 1,601
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Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate for March 31, 2020 and March 31, 2019

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( H in Lacs)
Particulars 2019-20 2018-19
Accounting profit before tax from continuing operations 30,429 37,620
Income tax rate of 34.94% (March 31, 2019: 34.94%) 10,633 13,145
Additional Deduction on Research and Development (R&D) expense (1,523) (1,281)
Income taxable at special rates (179) (128)
Impact of share of profit from joint venture (644) (736)
Income tax refund for earlier years (net of provision for tax of earlier years) (3,604) (1,505)
Impact of subsidiaries with no tax on account of losses 1,844 1,873
Impact of associate with no tax on account of losses 47 31
Difference in tax rates for certain entities of the group 525 367
Other Ind AS adjustments 71 60
Others (86) 287
Non-deductible expenses for tax purposes:
Depreciation on revaluation 142 183
Corporate social responsibility (CSR) Expenses 160 184
Other non-deductible expenses 37 32
At the effective income tax rate of 24.39% (March 31, 2019: 33.26%) 7,423 12,512
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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

Deferred tax

Deferred tax relates to the following

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( H in Lacs)
Balance sheet Statement of profit and loss
Particulars As at As at
2019-20 2018-19
March 31, 2020 March 31, 2019
Accelerated depreciation for tax purposes (44,028) (34,903) 9,125 4,152
MAT Credit entitlement (refer foot note a) 8,037 5,764 (7,133) -
Voluntary retirement scheme 1,639 1,637 (2) (33)
Allowance for doubtful debts / advances 1,727 2,023 296 (1,077)
Undistributed profit of Subsidiary (refer foot note c) (1,976) (1,483) 493 134
Others 7,230 5,044 (3,288) (64)
Deferred tax expense / (income)
Net deferred tax assets / (liabilities) (27,371) (21,918) (509) 3,112
(refer foot note a)
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Reflected in the balance sheet as follows:

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Deferred tax assets 18,633 14,468
Deferred tax liabilities (46,004) (36,386)
Deferred tax liabilities, net (27,371) (21,918)
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Reconciliation of deferred tax liabilities (net)

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Opening balance as of April 01 (21,918) (18,929)
Tax (expense) / income recognised in the statement of profit and loss 509 (3,112)
Tax (expense) / income recognised in other comprehensive income (1,102) 1,601
MAT credit utilisation (4,860) (1,481)
Others - 3
Closing balance as at March 31 (27,371) (21,918)
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Notes:

a) This figure includes deferred tax asset of H 68 lacs (March 31, 2019: H 60 lacs) of CEAT Akkhan Limited.
b) The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related to income taxes levied by the same tax authority.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 26: Borrowings

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current
Secured
Cash credit facilities from banks (repayable on demand) (refer foot note a) 779 2,373
Export packing credit from banks (refer foot note a) 1,514 -
Buyer’s credit from banks 1,479 -
Term loans from banks (refer foot note a) 5,000 200
Unsecured
Commercial Paper (refer foot note b) 14,873 19,852
Total 23,645 22,425
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Notes:

a) Cash credit facilities and working capital demand loan from banks is part of working capital facilities availed from consortium of banks secured by way of first pari passu charge on the current assets of the Group, wherever situated and by way of second pari passu charge on the movable assets (except current assets) and immovable assets of the Company situated at Nashik and Halol plants. All short-term borrowings availed in Indian rupees during the current year carry interest in the range of 7.75% p.a. to 10.90% p.a. (March 31, 2019: 7.80% p.a. to 12.30% p.a.) and all short-term borrowing availed in foreign currency during the year carry interest at 1 month Libor Plus 110 bps. (LIBOR is set corresponding to the period of the loan).
b) The Group had issued commercial papers (total available limit H 35,000 lacs) at regular intervals for working capital purposes with interest ranging from 5.45% p.a. to 8.00% p.a. The commercial papers outstanding as on March 31, 2020 are listed on the National Stock Exchange.
c) Refer note 51(vi) for information about liquidity risk relating to Borrowings

Note 27: Trade payables

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Dues to micro and small enterprises (refer note a)
Overdue 171 11
Not due 1,600 565
Other trade payables 117,366 103,226
Trade payables to related parties (refer note 46) 339 1,485
Total 119,476 105,287
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Notes:

c) Pursuant to the Taxation Laws (Amendment) Act, 2019, corporate assesses have been given the option under section 115BBA of the Income Tax Act, 1961 to apply lower income tax rate with effect from April 01, 2019, subject to certain conditions specified therein. The Group had assessed the impact of the Ordinance and believes that it will continue to remain in the existing tax structure for the foreseeable future based on its forecasted profits. Accordingly, no effect in this regard has been considered in measurement of tax expense for the year ended March 31, 2020. Management, however, will continue to review its profitability forecast at regular intervals and make necessary adjustments to tax expense when there is reasonable certainty to avail the beneficial (lower) rate of tax.
a) Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the MSMED Act) are given as follows*:
d) Based on approved plans and budgets, the Group has estimated that the future taxable income will be sufficient to absorb MAT credit entitlement , which management believes is probable. Accordingly, the Group has recognised MAT credit as an asset.

274

275

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
i) The principal amount remaining unpaid to any supplier as at the end of each 1,771 576
accounting year
ii) Interest due thereon remaining unpaid to any supplier as at the end of 9 7
accounting year
iii) The amount of interest paid by the buyer in terms of section 16 of the MSMED - 7
Act 2006 along with the amounts of the payment made to the supplier beyond
the appointed day during each accounting year
iv) The amount of interest due and payable for the year 2 -
v) Amount of further interest remaining due and payable even in the succeeding - -
years, until such date when the interest dues as above are actually paid to the
Small Enterprises for the purpose of disallowance as a deductible expenditure
under section 23 of the Act.
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*The information disclosed above is to the extent available with the Group.

b) Trade payables are non interest bearing and normally settled on 30 to 180 days
c) Refer note 51(vi) for information about liquidity risk relating to trade payables

Note 28: Other financial liabilities

Refer note 2.19 for accounting policy on financial instruments

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Current
At fair value through other comprehensive income
Derivative financial instrument 59 3,473
At amortised cost
Current maturities of long-term borrowings (refer note 22) 5,180 5,113
Interest accrued but not due on borrowings 744 542
Interest accrued but not due on Security deposit 14 13
Unpaid dividends 548 443
Unpaid matured deposits and interest accrued thereon (refer foot note a) 91 101
Payable to capital vendors 20,266 18,531
Deposits from dealers and Others 34,935 33,246
Others 148 0
Total 61,985 61,462
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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 30: Revenue from operations

Set out below is the disaggregation of the Group’s revenue from contracts with customers:

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( H in Lacs)
Particulars 2019-20 2018-19
Revenue recognised at the point of time
Automotive Tyres 6,00,927 6,11,425
Tubes and others 65,906 79,912
Sale of scrap 3,323 3,012
Other revenues 1,032 146
Revenue recognised over the period of time
Royalty income (refer note 46) 438 441
Total revenue from contracts with customers 6,71,626 6,94,936
Other operating income
Government grants (refer foot note d) 6,257 3,515
Revenue from operations 6,77,883 6,98,451
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Notes:

a) Revenue disaggregation basis geography has been included in segment information (refer note 47)

b) Contract assets and liabilities

The Group has recognised the following revenue-related contract assets and liabilities:

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Trade receivables (refer note 12) 67,435 70,638
Contract liabilities (refer note 29) 1,332 1,359
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The Group receives payment from customers based on a billing schedule, as established in the contracts with customers. Trade receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) the Group perform under the contract.

c) Reconciling the amount of revenue recognised in the statement of profit and loss with the contracted price:

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( H in Lacs)
Particulars 2019-20 2018-19
Revenue as per contracted price 6,92,187 7,14,665
Reductions towards variable consideration components (20,561) (19,729)
Revenue from contracts with customers 6,71,626 6,94,936
----- End of picture text -----*

*The reduction towards variable consideration comprises of discounts, indexations etc.

Notes:

d) Government Grant:

a) Refer foot note (a) of note 14- Bank balances other than cash and cash equivalents

b) Refer note 49 for information about fair value measurement and note 51(vi) for information about liquidity risk relating to other financial liabilities

Note 29: Other current liabilities

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Statutory dues 5,173 7,640
Advance received from customers * 1,332 1,359
Other payables 1 2
Total 6,506 9,001
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i) The Group has recognised a government grant as income on account of Export Incentive under Merchandise Exports from India Scheme (MEIS) from Directorate General of Foreign Trade, Government of India.
ii) Pursuant to the memorandum of understanding executed with the Government of Maharashtra, the Group is entitled for industrial promotion subsidy. During the year, the Group has recognised subsidy income of H 4,026 lacs (March 31, 2019: Nil)

*Represents contract liabilities

276

277

FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 31: Other income

Refer note 2.7 for accounting policy on revenue recognition

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( H in Lacs)
Particulars 2019-20 2018-19
Interest income on
Bank deposits 29 96
Other interest income 617 2,846
Other non-operating income 973 875
Gain on disposal of property, plant and equipment / asset held for sale (net) 428 -
Gain on disposal of investments (net) 4 83
Total 2,051 3,900
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Note 32: Cost of material consumed

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( H in Lacs)
Particulars 2019-20 2018-19
Raw material
Opening stock 38,043 36,167
Add: Purchases 3,81,523 4,32,425
4,19,566 4,68,592
Less: Closing stock (32,270) (38,043)
Total 3,87,296 4,30,549
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*The closing stock is gross off provision towards unusable raw materials aggregating H 200 lacs. Refer note 38 for further details.

Details of raw materials consumed

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----- Start of picture text -----

( H in Lacs)
Particulars 2019-20 2018-19
Rubber 1,86,568 2,04,407
Fabrics 53,153 66,106
Carbon black 59,654 64,506
Chemicals 45,032 53,054
Others 42,889 42,476
Total 3,87,296 4,30,549
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Details of Closing inventories

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Rubber 19,836 24,182
Fabrics 3,164 4,557
Carbon black 2,327 3,040
Chemicals 2,491 3,443
Others 4,452 2,821
Total (refer note 11(a)) 32,270 38,043
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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 33: Changes in inventories of finished goods, stock-in-trade and work-in-progress

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( H in Lacs)
Particulars 2019-20 2018-19
Opening Stock
Finished goods 51,878 32,416
Work-in-progress 3,342 3,095
Stock-in-trade 3,770 3,532
58,990 39,043
Closing Stock
Finished goods 49,871 51,878
Work-in-progress 4,515 3,342
Stock-in-trade 3,975 3,770
58,361 58,990
Total change in inventories 629 (19,947)
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*The closing work-in-progress is gross off provision towards unusable semi finished inventory aggregating H 1,127 lacs. Refer note 38 for further details.

Note 34: Employee benefit expense

Refer note 2.18 for accounting policy on employee benefits

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( H in Lacs)
Particulars 2019-20 2018-19
Salaries, wages and bonus 45,294 44,168
Contribution to provident and other funds 2,364 2,024
Gratuity expenses (refer note 44) 730 667
Staff welfare expenses 5,789 6,147
Total 54,177 53,006
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Note 35: Finance costs

Refer note 2.13 for accounting policy on Borrowing costs and 2.14 for accounting policy on leases

( H in Lacs)

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Particulars 2019-20 2018-19
Interest on debts and borrowings [refer note 3(6)] 13,082 7,842
Other finance charges 455 531
Interest on lease liabilities [refer note 4(b)] 1,050 -
Total Interest expense 14,587 8,373
Unwinding of decommissioning liability 8 7
Unwinding of discount on provision of sales related obligations 498 424
Total finance cost 15,093 8,804
Note 36: Depreciation and amortisation expense
Refer note 2.11 for accounting policy on property, plant and equipments and 2.12 on intangible assets and 2.14 for accounting
policy on leases
( H in Lacs)
Particulars 2019-20 2018-19
Depreciation on property, plant and equipment (refer note 3) 21,237 17,557
Amortisation on intangible assets (refer note 5) 2,486 1,714
Depreciation on Right-of-use assets [refer note 4(a)] 3,928 -
27,651 19,271
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Refer note 2.11 for accounting policy on property, plant and equipments and 2.12 on intangible assets and 2.14 for accounting policy on leases

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

Note 37: Other expenses

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( H in Lacs)
Particulars 2019-20 2018-19
Conversion charges 30,265 40,315
Short-term and low value lease rent 1,235 1,077
Stores and spares consumed 6,167 5,786
Provision for obsolescence of stores and spares 100 107
Power and fuel 21,658 22,079
Freight and delivery charges 34,920 34,419
Rates and taxes 539 179
Insurance 1,171 511
Repairs and maintenance:
Machinery 6,570 5,717
Buildings 586 610
Others 119 62
Travelling and conveyance 4,131 4,010
Printing and stationery 254 246
Directors' fees (refer note 46) 49 53
Payment to auditors (refer foot note 1) 115 112
Cost audit fees 4 3
Advertisement and sales promotion expenses 17,479 17,937
Commission on sales 265 76
Communication expenses 1,303 801
Bad debts and advances written off 272 136
Allowance for doubtful debts written back (219) (129)
53 7
Allowance for doubtful debts and advances 174 197
loss on disposal of property, plant and equipment(net) - 481
Legal charges 344 214
Foreign exchange fluctuations (net) 256 357
Professional and consultancy charges 5,902 3,406
Commission to directors (refer note 46) 93 438
Training and conference expenses 1,181 1,365
Corporate social responsibility (CSR) expenses (refer foot note 2) 913 1,051
Bank charges 299 483
Sales related obligations 7,230 6,406
Miscellaneous expenses (refer foot note 3) 16,439 14,505
Total 1,59,814 1,63,010
Notes:
1) Payment to auditors
( H in Lacs)
Particulars 2019-20 2018-19
As auditor
Audit fee 69 68
Limited review 27 27
In other capacity:
Other services (including certification fees) 13 12
Reimbursement of expenses 6 5
Total 115 112
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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

2) Details of Corporate Social Responsibility (CSR) expenditure

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( H in Lacs)
Particulars 2019-20 2018-19
a) Gross amount required to be spent during the year 913 1,051
( H in Lacs)
Yet to be
Particulars In cash Total
paid in cash
b) Amount spent during the year ending on March 31, 2020
(i) Construction/acquisition of any asset - - -
(ii) On purposes other than (i) above 913 - 913
Total 913 - 913
( H in Lacs)
Yet to be
Particulars In cash Total
paid in cash
c) Amount spent during the year ending on March 31, 2019
(i) Construction/acquisition of any asset - - -
(ii) On purposes other than (i) above 1,051 - 1,051
Total 1,051 - 1,051
The Group does not carry any CSR expense provisions for current and previous year.
3) The Group made contributions through electoral bonds of H 800 lacs for the year ended March 31, 2020 (year ended
March 31, 2019: nil) which is included in Miscellaneous expenses.
Note 38: Exceptional items
( H in Lacs)
Particulars 2019-20 2018-19
Voluntary retirement scheme (VRS) (refer foot note a) 1,390 1,195
Expenses / losses attributable to COVID19 (refer foot note d) 1,594 -
Workmen's separation expense (refer foot note b) - 229
Provision for indirect tax matters (refer foot note c) - 3,055
Total 2,984 4,479
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3) The Group made contributions through electoral bonds of H 800 lacs for the year ended March 31, 2020 (year ended March 31, 2019: nil) which is included in Miscellaneous expenses.
a) The Group had introduced VRS for employees . During the year, 60 employees (March 31, 2019, 56 employees) opted for the VRS.
b) During the previous year, the Group has paid compensation in respect of workmen’s separation.
c) During the previous year, provision for differential amount of GST attributable to the composite supply of Tyres and Tubes for the period from November 15, 2017 to January 11, 2019, aggregating to H 3,055 lacs and in respect of which the Group is evaluating further legal options.
d) As explained in note 55, the COVID-19 pandemic had a significant impact on the Group’s operations. The Group has made provision for unusable Semi Finished Inventory and Raw Materials, aggregating H 1,327 lacs due to abrupt stoppage of production facilities. Further, borrowing costs not capitalised due to temporary suspension related to ongoing capital projects, contract manpower cost and export detention (for the period attributable to the COVID-19) aggregate H 267 lacs.

*Exclusive of Goods and Services Tax (GST)

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FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 39: Research and development costs

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( H in Lacs)
Particulars 2019-20 2018-19
Capital expenditure 5,186 3,281
Revenue expenditure 7,121 6,599
Total 12,307 9,880
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The above expenditure of research and development has been determined on the basis of information available with the Group and as certified by the management.

Note 40: Earnings per share (EPS)

Refer note 2.23 for accounting policy on earnings per share

Basic earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

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( H in Lacs)
Particulars 2019-20 2018-19
Profit after tax for calculation of basic and diluted EPS 23,125 25,222
Weighted average number of equity shares (face value per share H 10) in calculating 40,450,092 40,450,092
basic EPS and diluted EPS
Basic earnings per share (face value of H 10 each) 57.17 62.35
Diluted earnings per share (face value of H 10 each) 57.17 62.35
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Note 41: Non-controlling interest

Financial information of subsidiaries that have material non-controlling interests is provided below:

Proportion of equity interest held by non-controlling interests

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Country of % of Equity interest
Particulars
Incorporation March 31, 2020 March 31, 2019
Rado Tyres Limited India 41.44% 41.44%
CEAT AKKHAN Limited Bangladesh 30.00% 30.00%
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Information regarding non-controlling interest

Information regarding non-controlling interest
		(`H`in Lacs)
Particulars	2019-20	2018-19
Accumulated balances of material non-controllinginterest:
Rado Tyres Limited	(411)	(398)
CEAT AKKHAN Limited	2,776	2,777
Total	2,365	2,379
Total comprehensive income allocated to material non-controllinginterest:
Rado Tyres Limited	(12)	(61)
CEAT AKKHAN Limited	(107)	(53)
Total	(119)	(114)

Notes to Consolidated Financial Statements for the year ended March 31, 2020

The summarised financial information of these subsidiaries is provided below. This information is based on amounts before intercompany eliminations:

Summarised statement of profit and loss for the year ended March 31, 2020

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( H in Lacs)
Particulars Rado Tyres Limited CEAT AKKHAN Limited
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Revenue	3	10,073
Profit/(Loss)for theyear	(29)	(359)
Other comprehensive income	-	-
Total comprehensive income	(29)	(359)
Attributable to:
Equityholders ofparent	(17)	(252)
Non-controllinginterest	(12)	(107)

Summarised statement of profit and loss for the year ended March 31, 2019

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( H in Lacs)
Particulars Rado Tyres Limited CEAT AKKHAN Limited
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Revenue	14	8,447
Profit/(Loss)for theyear	(147)	(176)
Other comprehensive income	-	-
Total comprehensive income	(147)	(176)
Attributable to:
Equityholders ofparent	(86)	(123)
Non-controllinginterest	(61)	(53)

Summarised balance sheet as at March 31, 2020

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( H in Lacs)
Particulars Rado Tyres Limited CEAT AKKHAN Limited
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Non Current Assets	484	8,234
Current Assets	45	4,922
Non Current Liabilities	1,510	27
Current Liabilities	10	3,877
Total equity	(991)	9,252
Attributable to:
Equityholders ofparent	(580)	6,476
Non-controllinginterest	(411)	2,776

Summarised balance sheet as at March 31, 2019

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( H in Lacs)
Particulars Rado Tyres Limited CEAT AKKHAN Limited
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Non Current Assets	513	7,832
Current Assets	46	4,214
Non Current Liabilities	1,510	19
Current Liabilities	10	2,770
Total equity	(961)	9,257
Attributable to:
Equityholders ofparent	(563)	6,480
Non-controllinginterest	(398)	2,777

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STATUTORY REPORTS FINANCIAL STATEMENTS

CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Summarised cash flow information as at March 31, 2020

Summarised cash flow information as at March 31, 2020
		(`H`in Lacs)
Particulars	Rado Tyres Limited	CEAT AKKHAN Limited
Operating	(4)	(1,675)
Investing	6	(32)
Financing	-	987
Net increase /(decrease) in cash and cash equivalents	2	(720)

Summarised cash flow information as at March 31, 2019

Summarised cash flow information as at March 31, 2019
		(`H`in Lacs)
Particulars	Rado Tyres Limited	CEAT AKKHAN Limited
Operating	(20)	(712)
Investing	12	(25)
Financing	-	809
Net increase /(decrease) in cash and cash equivalents	(8)	72

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Summarised statement of profit and loss

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( H in Lacs)
Particulars 2019-20 2018-19
Revenue 37,051 41,384
Finance Costs (249) (212)
Depreciation and amortisation (1,655) (1,375)
Profit before tax 4,805 5,466
Income tax expenses (1,090) (1,251)
Profit after tax (A) 3,715 4,215
Other comprehensive income (14) 6
Total other comprehensive income 3,701 4,221
Percentage of the Group's ownership (B) 50% 50%
Profit considered for consolidation [A x B] 1,857 2,108
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The Group has no contingent liabilities or capital commitments relating to its interest in CEAT Kelani Holding (Pvt) Limited as at March 31, 2020 and March 31, 2019. The joint venture has no contingent liabilities or capital commitments as at 31 March 2020 and 31 March 2019.

Note 42: Interest in Joint Venture

The group has 50% interest in CEAT Kelani Holding (Pvt) Limited, a joint venture incorporated in Sri Lanka. The joint venture entity has wholly owned subsidiaries who are involved in the manufacture of tyres. The group interest in CEAT Kelani Holdings (Pvt) Limited is accounted for using the equity method in the consolidated financial statements. Summarised financial information of the joint venture based on its financial statements, and reconciliation with the carrying amount of the investment in consolidated financial statements are set out below.

Details of interest held by company

Particulars Principal activities Country of Incorporation	% of equity interest
	March 31, 2020 March 31, 2019
CEAT Kelani Holding (Pvt)Limited Manufacturingof tyres Sri Lanka	50% 50%

Note 43: Interest in Associate

During the year, the Group made additional investment of H 299 lacs (March 31, 2019, H 300 lacs) in TYRESNMORE Online Pvt Ltd. The group interest in TYRESNMORE Online Pvt Ltd is accounted for using the equity method in the consolidated financial statements. Summarised financial information of an associate for the year ended March 31, 2020 is based on its financial statements are set out below.

Details of interest held by Group

Particulars Principal activities Country of Incorporation	% of equity interest
	March 31, 2020 March 31, 2019
TYRESNMORE Online Pvt Ltd Trading of tyres, tubes and flaps India	41.30% 36.96%

*Includes compulsory convertible preference shares (potential voting right)

Summarised balance sheet

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non Current Assets 22,086 21,635
Current Assets 24,950 23,252
Non Current Liabilities (4,373) (4,722)
Current Liabilities (12,360) (8,986)
Foreign currency translation differences 3,744 3,590
Net Assets 34,047 34,769
Percentage of the Group's ownership 50% 50%
Group's share in Net worth 17,023 17,385
Goodwill on Consolidation 1,968 1,982
Revaluation reserve (1,798) (1,811)
Carrying amount of investments 17,193 17,556
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Summarised balance sheet

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Non Current Assets 129 132
Current Assets 276 338
Non Current Liabilities 3 3
Current Liabilities 69 98
Total equity 333 369
Percentage of the Group's ownership 41.30% 36.96%
Group's share in Net worth 138 136
Goodwill on Consolidation 610 448
Carrying amount of investment 748 584
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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

Summarised statement of profit and loss

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( H in Lacs)
Particulars 2019-20 2018-19
Revenue 1,160 578
Finance Costs 7 6
Depreciation and amortisation 24 15
Profit / (Loss) for the period (335) (254)
Other comprehensive income - -
Total comprehensive income (335) (254)
Profit / (Loss) considered for consolidation (335) (254)
Percentage of the Group's ownership 41.30% 36.96%
Group share in Profit / (Loss) considered for consolidation [#] (135) (88)
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Notes to Consolidated Financial Statements for the year ended March 31, 2020

The following set out the amounts recognised in the Group’s financial statements as at March 31, 2020 and March 31, 2019

Balance Sheet

i) Net Assets / (Liability) as at year end

( H in Lacs)

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Sr. As at As at
No. [Particulars] March 31, 2020 March 31, 2019
1 Closing Present value of the defined benefit obligation 11,839 10,351
2 Closing Fair value of plan Assets 9,301 9,339
Net Assets / (Liability) recognised in the Balance Sheet (2,538) (1,012)
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36.96 % profit is considered for consolidation for period up to August 23, 2019.

*Loss of associate up to the date of acquisition of shares is not considered for consolidation

The Group has no contingent liabilities or capital commitments relating to its interest in TYRESNMORE Online Pvt Ltd as at March 31, 2020 and March 31, 2019. The associate has no contingent liabilities or capital commitments as at March 31, 2020 and March 31, 2019.

Note 44: Post-retirement benefit plan

Refer note 2.18 for accounting policy on employee benefits

a) Defined contribution plan

The group has recognised and included in Note No.34 “Contribution to Provident and other funds” expenses towards the defined contribution plan as under:

					(`H`in Lacs)
Particulars Contribution	to	provident	fund	2019-20 2,092	2018-19 1,797

b) Defined benefit plan - Gratuity

Description of plan

The Group has a defined benefit gratuity plan which is funded with an Insurance Company in the form of a qualifying Insurance policy. The Group’s defined benefit gratuity plan is a salary plan for employees which requires contributions to be made to a separate administrative fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, every employee who has completed five years of service gets a gratuity on separation at 15 days of last drawn salary for each completed year of service.

ii) Change in present value of the defined benefit obligation are as follows:

( H in Lacs)

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Sr.
No. [Particulars] 2019-20 2018-19
1 Opening present value of Defined Benefit obligation 10,351 9,407
2 Current Service Cost 736 667
3 Interest Cost 778 706
4 Benefits paid (851) (1,078)
5 Remeasurement (Gain) / Loss in other comprehensive income
- Actuarial changes arising from changes in demographic assumptions 82 (11)
- Actuarial changes arising from changes in financial assumption 616 3
- Experience adjustments 127 657
Closing present value of defined benefit obligation 11,839 10,351
iii) Changes in fair value of plan assets
( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1 Opening fair value of plan assets 9,339 9,765
2 Expected return on plan assets 703 730
3 Contributions made 10 15
4 Benefits paid (851) (1,078)
5 Return on plan assets, excluding amount recognised in net interest 100 (93)
expense
Closing fair value of plan assets 9,301 9,339
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iii) Changes in fair value of plan assets

The Group’s gratuity funds are invested through insurers

Governance

The fund has the form of a trust and it is governed by the Board of Trustees, which consists of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review.

Investment Strategy

The Board of trustees have appointed LIC of India, Birla Sun Life Insurance, India First Life Insurance & HDFC Life Insurance to manage its funds. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Group. Any deficit in the assets arising as a result of such valuation is funded by the Group. In case of death, while in service, the gratuity is payable irrespective of vesting.

Statement of profit and loss

iv) Expenses recognised during the year

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1 In Income Statement 812 641
2 In Other Comprehensive Income 734 740
Total expenses recognised during the period 1,546 1,381
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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

v) Expenses recognised in the income statement

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1 Current service cost (refer note 34) * 736 667
2 Interest cost on benefit obligation 83 (19)
3 Expected return on plan assets (7) (7)
Net benefit expense 812 641
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Includes H 6 lacs capitalised during the year (previous year: nil)

vi) Expenses recognised in Other comprehensive income

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( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1 Remeasurement arising from changes in demographic assumptions 82 (12)
2 Remeasurement arising from changes in financial assumptions 625 2
3 Remeasurement arising from changes in experience variance 127 658
4 Return on plan assets, excluding amount recognised in net interest (100) 92
expense
Components of defined benefit costs recognised in other 734 740
comprehensive income
vii) Actual return on plan assets for the year ended
( H in Lacs)
Sr.
No. [Particulars] 2019-20 2018-19
1 Expected return on plan assets 703 730
2 Actuarial gain / (loss) on plan assets 100 (93)
Actual return on plan assets 803 637
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vii) Actual return on plan assets for the year ended

viii) The principal assumptions used in determining gratuity and leave encashment for the Group’s plan are shown below

These plans typically expose the Group to actuarial risks such as: Investment Risk, Interest Risk, Demographic Risk and Salary Risk.

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Risk Exposure
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Risk	Exposure
Interest	The plan exposes the Group to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Investment	The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
Demographic	The Group has used certain mortality and attrition assumptions in valuation of the liability. The Group is exposed to the risk of actual experience turningout to be worse compared to the assumption.
Salary Escalation	The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearingon theplan's liability.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

a) CEAT Limited

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Particulars 2019-20 2018-19
Discount Rates (per annum) 6.75% 7.50%
Salary growth rate (per annum) 7.00% 7.00%
Mortality rate (% of Indian Assured Lives Mortality (2006-08) Modified 100% 100%
Ultimate)
Disability Rate (% of mortality rate) 5% of mortality rate 5% of mortality rate
Withdrawal rates, based on service year: (per annum)
- Below 5 years 8.20% 22.70%
- Equal and above 5 years 5.67% 5.67%
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The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields / rates available on applicable bonds as on the current valuation date.

The Company’s best estimate of contribution during the next year is H 3,288 lacs.

Sensitivity analyses of the defined benefit obligation

below:
		(`H`in Lacs)
Particulars	As at March 31, 2020	As at March 31, 2019
Defined Benefit Obligation(Base)	11,700	10,280

A quantitative sensitivity analysis for significant assumption as at March 31, 2020 is as shown below:

			(`H`in Lacs)	(`H`in Lacs)
Particulars	2019-20		2018-19
	Decrease	Increase	Decrease	Increase
Discount Rate(- / + 1%)	12,627	10,886	11,048	9,603
(% change compared to base due to sensitivity)	7.90%	(6.90%)	7.50%	(6.60%)
SalaryGrowth Rate(- / + 1%)	10,882	12,614	9,595	11,043
(% change compared to base due to sensitivity)	(7.00%)	7.80%	(6.70%)	7.40%
Attrition Rate(- / + 50% of attrition rates)	11,779	11,633	10,261	10,286
(% change compared to base due to sensitivity)	0.70%	(0.60%)	(0.20%)	0.10%
MortalityRate(- / + 10% of mortalityrates)	11,699	11,698	10,279	10,280
(% change compared to base due to sensitivity)	0.00%	0.00%	0.00%	0.00%

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Weighted average duration and expected employers contribution for the next year for the defined benefit plan

The weighted average duration (based on discounted cash flows) of defined benefit obligation is 7 years.

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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Weighted average duration and expected employers contribution for the next year for the defined benefit plan

The weighted average duration (based on discounted cash flows) of defined benefit obligation is 6 years.

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Within the next 12 months (next annual reporting period) 13 5
Between 2 and 5 years 80 38
Between 5 and 10 years 62 39
Total expected payments 155 82
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Note 45: Commitments and contingencies

b) CSTL

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( H in Lacs)
Particulars 2019-20 2018-19
Discount Rates (per annum) 6.35% 7.60%
Salary growth rate (per annum) 7.00% 7.00%
Mortality rate (% of Indian Assured Lives Mortality (2006-08) Modified 100% 100%
Ultimate)
Disability Rate 5% of mortality rate 5% of mortality rate
Withdrawal rates, based on service year per annum 15.00% 15.00%
Retirement Age 58 years 58 years
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The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields / rates available on applicable bonds as on the current valuation date.

The Company’s best estimate of contribution during the next year is NIL.

Sensitivity analyses of the defined benefit obligation

		(`H`in Lacs)
Particulars	As at March 31, 2020	As at March 31, 2019
Defined Benefit Obligation(Base)	139	71

A quantitative sensitivity analysis for significant assumption as at March 31, 2020 is as shown below:

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( H in Lacs)
2019-20 2018-19
Particulars
Decrease Increase Decrease Increase
Discount Rate (- / +1%) 149 132 76 67
(% change compared to base due to sensitivity) 6.50% (5.80%) 6.80% (6.10%)
Salary Growth Rate (- / + 1%) 131 148 67 76
(% change compared to base due to sensitivity) (5.80%) 6.40% (6.20%) 6.80%
Attrition Rate (- / + 1%) 141 138 72 70
(% change compared to base due to sensitivity) 1.10% (1.10%) 1.60% (1.60%)
Mortality Rate (- / + 10% of mortality rates) 140 140 71 71
(% change compared to base due to sensitivity) 0.00% 0.00% 0.00% 0.00%
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a) Contingent Liabilities

Refer note 2.25 for accounting policy on contingent liability and contingent asset (to the extent not provided for)

( H in Lacs)

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As at As at
Particulars
March 31, 2020 March 31, 2019
1. Direct and indirect taxation matters
Income tax 495 911
Excise duty / Service tax / GST 6,247 7,083
Sales tax / VAT 5,439 5,360
Bills discounted with banks 3,672 10,586
2. Claims against the Group not acknowledged as debts
In respect of labour matters 660 586
Customer disputes - 446
Vendor disputes 294 294
3. Other claims 3,208 3,199
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In respect of above matters, future cash outflows are determinable only on receipt of judgements pending at various forums / authorities.

b) Commitments

Commitments
		(`H`in Lacs)
Particulars	As at March 31, 2020	As at March 31, 2019
Estimated amount of contracts remaining to be executed on Capital account	73,999	1,31,648
and notprovided for(net of advancepayments)

c) Others

The Group has availed the Sales Tax Deferral Loan and Octroi refund from the Directorate of Industries for Nashik Plant. Hence, the Group has to take prior permission of the appropriate authority for removal/transfer of any asset (falling under the above Schemes) from Nashik Plant. In case of violation of terms & conditions, the Group is required to refund the entire loan/benefit along with the interest @ 22.50% on account of Sales Tax deferral Loan and @ 15% on account of Octroi refund.

d) Demands and disputes considered as “Remote” by the Group

The Group has been served with a Show Cause cum Demand Notice from the DGCEI (Directorate General of Central Excise Intelligence) Mumbai, on the ground that, the activity of making tyre set, i.e. inserting Tubes and Flaps inside the Tyres and tied up through Polypropylene Straps, amounts to manufacture / pre-packaged commodity under Section 2(f)(iii) of Central Excise Act, read with Section 2(l) of the Legal Metrology Act, 2009. Accordingly, the authorities worked out the differential duty amounting to H 27,672 Lacs i.e., the amount of duty already paid on the basis of transaction value and duty

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

payable on the basis of MRP under Section 4A, for the period from April-2011 to July-2017. The Group believes that Set of TT / TTF (Tyre and Tube / Tyre, Tube and Flap) is not pre-packaged commodity in terms of provisions of Legal Metrology Act, 2009. The Group has a strong case on the ground that, the said issue has been clarified by the Controller of the Legal Metrology Department vide its letter dated May 01, 1991 that “Tyre with tube & flaps tied with three thin polythene strips may not be treated as a pre-packed commodity within the meaning of rule 2(l) of the Standards of Weights and Measures (Packaged Commodities), Rules, 1977”. The above clarification has been re-affirmed vide letter dated November 16, 1992 by the Legal Metrology authorities.

The Competition Commission of India (CCI) had, while considering the representation of the All India Tyres Dealers Federation (AITDF) made a prima facie finding that the major players of tyre industry (including the Company) had some understanding amongst themselves, especially in the replacement market, as they did not pass the benefit of corresponding reduction in prices of major raw material inputs for the period subsequent to the financial year 2011-12. CCI had, vide its order passed on June 24, 2014 under Section 26(1) of the Act, directed the Office of the Director General (DG) to investigate the said alleged violation of the Act. DG submitted its investigation report to CCI in December 2015, based on which CCI directed the said tyre manufacturers to file their suggestions/objections by May 05, 2016. Objections were filed as directed and the CCI had also heard the tyre manufacturers in detail.

Aggrieved by the conduct of the Investigation by the DG, one of the other tyre manufacturer filed Writ Petition in the Madras High Court, challenging the legality of the investigation conducted by the Director General. The Madras High Court had initially admitted the Writ Petition and directed the CCI to not pass any Orders till the disposal of the Petition. Subsequently, the Writ Petition was dismissed on March 06, 2018. Aggrieved by the decision of the Single Judge of the Madras High Court, the above said tyre manufacturer filed Appeal before the Division Bench on March 07, 2018. On hearing the Appeal, the Division Bench on March 08, 2018 directed the CCI to keep its Orders in sealed cover till the disposal of the Appeal. The Appeal is still pending.

The Group’s decision to change the price is purely a business decision which depends upon many factors like cost of production, brand value perception, profit margin of each product, quality perception of each product in the market, demand and supply situation of each product category, market potential and market share targets of various product categories etc. In view of the above, Group believes that it has a strong case, hence, considered as remote.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

RPG Enterprises Limited (“RPGE”) (Directors, KMP or their relatives are interested)
RPG Lifesciences Limited (“RPGLS”) (Directors, KMP or their relatives are interested)
Zensar Technologies Limited(“Zensar”) (Directors, KMP or their relatives are interested)
Raychem RPG (Pvt.) Limited (“Raychem”) (Directors, KMP or their relatives are interested)
KEC International Limited (“KEC”) (Directors, KMP or their relatives are interested)
Al Sharif Group & KEC Ltd. Co (“AL Sharif”) (Subsidiary of KEC International Limited)
Vinar Systems Pvt. Limited (“Vinar”) (Directors, KMP or their relatives are interested) upto May 31, 2018
B.N. Elias & Co. LLP (“B.N. Elias”) (Directors, KMP or their relatives are interested)
Atlantus Dwellings & Infrastructure LLP (“Atlantus”) (Directors, KMP or their relatives are interested)
Chattarpati Apartments LLP (“Chattarpati”) (Directors, KMP or their relatives are interested)
Allwin Apartments LLP (“Allwin”) (Directors, KMP or their relatives are interested)
Amber Apartments LLP (“Amber”) (Directors, KMP or their relatives are interested)
Khaitan & Co. (“Khaitan”) (Directors, KMP or their relatives are interested)
CEAT Limited Superannuation Scheme (“Superannuation Scheme”)(Post employment benefit fund)
CEAT Limited Employees Gratuity Fund (“Gratuity trust”)(Post employment benefit fund)
CEAT Specialty Tyres Ltd Emp New Group Gratuity Cash Accumulation Scheme (“Gratuity trust”)(Post employment benefit fund)
Artemis ventures Limited (“Artemis”) (Directors, KMP or their relatives are interested)

Key Management Personnel (KMP):

i) Mr. Harsh Vardhan Goenka, Chairman

ii) Mr. Anant Vardhan Goenka, Managing Director iii) Mr. Arnab Banerjee, Whole-time Director

iv) Mr Kumar Subbiah, Chief Financial Officer

v) Ms. Shruti Joshi, Company Secretary upto June 11, 2018

Note 46: Related party transactions

a) Names of related parties and related party relationship

Related parties with whom transactions have taken place during the current year and previous year

CEAT Kelani Holdings (Pvt.) Limited (“CKHL”) (Joint venture of ACHL)
Associated CEAT (Pvt.) Limited (“ACPL”) (Subsidiary of CKHL)
Ceat-Kelani International Tyres (Pvt.) Limited (“CKITL”) (Subsidiary of CKHL)
Ceat Kelani Radials Limited (“CKRL”) (Subsidiary of CKHL)
Asian Tyres (Pvt.) Limited (“ATPL”) (Subsidiary of CKITL)
TYRESNMORE Online Pvt Ltd. (“TNM”) (Associate Company)

vi) Ms. Vallari Gupte, Company Secretary w.e.f. October 25, 2018

vii) Mr. Paras K. Chowdhary, Independent Director

viii) Mr. Vinay Bansal, Independent Director

ix) Mr. Hari L Mundra, Non-Executive - Non Independent Director up to January 29, 2019

x) Mr. Atul Choksey, Independent Director

xi) Mr. Mahesh Gupta, Independent Director xii) Mr. Haigreve Khaitan, Independent Director xiii) Ms. Punita Lal, Independent Director

xiv) Mr. S. Doreswamy, Independent Director up to March 12, 2019

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

b) The following transactions were carried out during the year with the related parties in the ordinary course of business:

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( H in Lacs)
Transactions Related Party 2019-20 2018-19
ACPL (142) (28)
AL Sharif 14 -
CKITL (18) (28)
Raychem (15) (2)
KEC (65) (56)
Reimbursement / (recovery) of expenses (net)
Amber - 2
Zensar 5 9
RPGE 331 129
RPGLS (21) (20)
Total 89 6
ACPL 108 84
CKITL 129 137
Royalty income ATPL 96 82
CKRL 105 138
Total 438 441
ACPL 1,338 4,064
Purchase of Traded goods CKITL 16 767
Total 1,354 4,831
CKITL 1,244 551
TNM 713 403
Sales ACPL 14 45
KEC - 1
Total 1,971 1,000
Investments (including share application money) TNM 299 300
made during the year
Technical development fees received ATPL - 65
Allwin 3 16
KEC 2 1
Amber 4 16
Rent paid on residential premises / guest house Atlantus 17 19
Chattarpati 42 45
B N Elias 22 21
Total 90 118
Raychem 95 95
KEC 520 496
Building maintenance recovery RPGE 122 96
RPGLS 117 103
Total 854 790
KEC 15 25
Raychem 14 13
Rent recovery on residential premises
RPGE 7 8
Total 36 46
Gratuity trust 10 15
Contribution to Post-Employment Benefit Plans Superannuation Scheme 101 97
Total 111 112
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Notes to Consolidated Financial Statements for the year ended March 31, 2020

b) The following transactions were carried out during the year with the related parties in the ordinary course of business: (Contd..)

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( H in Lacs)
Transactions Related Party 2019-20 2018-19
Gratuity trust 851 1,078
Receipt from Post-Employment Benefit Plans Superannuation Scheme 14 25
Total 865 1,103
Purchase of capex / spares Raychem - 110
KEC 4,413 4,972
Vinar - 2
Zensar - 130
Total 4,413 5,214
Consultancy fees Artemis 35 48
Legal fees Khaitan & Co. 21 45
License fees RPGE 1,167 662
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c) Balance outstanding at the year end

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( H in Lacs)
As at As at
Amount due to / from related party Related Party
March 31, 2020 March 31, 2019
ACPL 128 11
CKITL 7 27
KEC 21 15
Advances recoverable in cash or kind and other RPGE 6 -
balances Khaitan & Co. 3 -
Raychem 27 -
RPGLS 7 1
Total 199 54
ACPL 54 43
CKITL 64 60
Royalty receivable CKRL 59 66
ATPL 52 35
Total 229 204
ACPL 225 780
Raychem - 116
CKITL - 132
Trade payables Zensar 18 18
RPGE - 1
Atlantus 3 -
Total 246 1,047
CKITL 414 231
ACPL - 26
RPGE - 2
Trade receivables
CKRL 0 0
TNM 77 65
Total 491 324
Capital advance net of capital creditors KEC 241 1,643
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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements for the year ended March 31, 2020

d) Transactions with key management personnel and their relatives

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( H in Lacs)
Sr.
No. [Related party ] 2019-20 2018-19
1) Mr. Harsh Vardhan Goenka
Commission 375 373
Director sitting fees 6 5
Dividend 16 15
Total 397 393
2) Mr. Anant Vardhan Goenka
Salaries 428 313
Allowances and perquisites 42 34
Performance bonus 48 96
Contribution to provident & superannuation fund 41 30
Dividend 2 2
Leave encashment - 0
Total 561 475
3) Mr. Arnab Banerjee
Salaries 248 212
Allowances and perquisites 0 0
Performance bonus 29 67
Contribution to provident & superannuation fund 18 12
Leave encashment - 0
Dividend 0 0
Total 295 291
4) Mr. Kumar Subbiah
Salaries 167 150
Allowances and perquisites 1 0
Performance bonus 23 46
Contribution to provident & superannuation fund 6 5
Dividend 0 0
Leave encashment - 0
Total 197 201
5) Ms. Vallari Gupte
Salaries 44 26
Performance bonus 3 -
Contribution to provident & superannuation fund 3 2
Leave Encashment - -
Total 50 28
6) Ms Shruti Joshi
Salaries - 7
Performance bonus - 8
Contribution to provident & superannuation fund - 6
Leave Encashment - 1
Total - 22
7) Mr. Paras K. Chowdhary
Commission 8 6
Director sitting fees 10 6
Dividend 0 0
Total 18 12
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Notes to Consolidated Financial Statements for the year ended March 31, 2020

d) Transactions with key management personnel and their relatives (Contd..)

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( H in Lacs)
Sr.
No. [Related party ] 2019-20 2018-19
8) Mr. Hari L. Mundra
Commission 7 6
Director sitting fees - 5
Total 7 11
9) Mr. Vinay Bansal
Commission 8 6
Director sitting fees 10 8
Total 18 14
10) Mr. Atul C. Choksey
Commission 8 6
Director sitting fees 5 4
Total 13 10
11) Mr. Mahesh S. Gupta
Commission 8 6
Director sitting fees 10 8
Total 18 14
12) Mr. Haigreve Khaitan
Commission 8 6
Director sitting fees 5 4
Total 13 10
13) Ms. Punita Lal
Commission 8 6
Director sitting fees 3 5
Total 11 11
14) Mr. S. Doreswamy
Commission 8 6
Director sitting fees - 8
Total 8 14
Grand Total 1,606 1,506
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Represents amount paid during the year.

e) Balance outstanding at the year end for KMP

( H in Lacs)

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Amount due to As at As at
Related party
related party March 31, 2020 March 31, 2019
Mr. Harsh Vardhan Goenka 45 375
Mr. Paras K. Chowdhary 8 8
Mr. Hari L. Mundra - 7
Mr. Vinay Bansal 8 8
Mr. Atul C. Choksey 8 8
Commission Payable
Mr. Mahesh S. Gupta 8 8
Mr. Haigreve Khaitan 8 8
Ms. Punita Lal 8 8
Mr. S. Doreswamy - 8
Total 93 438
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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

f) Terms and conditions of transactions with related parties

The sales, purchases and other transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.

The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefit as they are determined on an actuarial basis for the Group as a whole.

Managerial remuneration is computed as per the provisions of section 198 of the Companies Act, 2013. The amount outstanding are unsecured and will be settled in cash.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 48: Hedging activities and derivatives

Derivatives designated as hedging instruments

The Group uses derivative financial instruments such as foreign currency forward contracts to hedge foreign currency risk arising from future transactions in respect of which firm commitments are made or which are highly probable forecast transactions. It also uses cross currency interest rate swaps (CCIRS) to hedge interest rate and foreign currency risk arising from variable rate foreign currency denominated loans. All these instruments are designated as hedging instruments and the necessary documentation for the same is made as per Ind AS 109.

Cash flow hedges

g) Capital and other commitments with related parties

i. The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance payments) pertaining to the related parties are as follows:

		(`H`in Lacs)
Related	Party As at March 31, 2020	As at March 31, 2019
KEC	903	4,258

Note 47: Segment information

Refer note 2.24 for accounting policy on Segment reporting

The Group is primarily engaged in business of manufacturing and sales of Automotive Tyres ,Tubes & Flaps.

Information about products		(`H`in Lacs)
Particulars	2019-20	2018-19
	Automotive Tyres Tubes and others Total 6,00,927 70,699 6,71,626	Automotive Tyres Tubes and others Total
Revenue from contracts with customers		6,11,425 83,511 6,94,936

Information about geographical areas:

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( H in Lacs)
2019-20 2018-19
Particulars Outside Outside
In India Total In India Total
India India
Revenue from contracts with customers 5,59,262 1,12,364 6,71,626 5,92,078 1,02,858 6,94,936
Non-current assets 5,30,779 21,587 5,52,366 4,18,735 21,691 4,40,426
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During the year 2019-20 and 2018-19, no single external customer has generated revenue of 10% or more of the Group’s total revenue.

During the year 2019-20 and 2018-19, no single country outside India has given revenue of more than 10% of total revenue.

Foreign currency risk

Cross currency Interest Rate Swaps (CCIRS) measured at fair value through OCI are designated as hedging instruments in cash flow hedges for Foreign currency loan (Buyer’s Credit) in US Dollar.

Hedged foreign currency exposure

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(Amount in Foreign currency and H in Lacs)
As at March 31, 2020 As at March 31, 2019
Derivative
Purpose Currency Foreign Foreign
instrument J J
Currency Currency
Forward Contract to Hedge of foreign currency sales USD 105 7,978 121 8,985
sell Foreign Currency EUR 16 1,347 17 1,299
Hedge of foreign currency high USD 188 14,190 140 9,650
(FC)
probable sales
Hedge of foreign currency USD 160 12,072 101 7,001
purchase EUR 198 16,419 109 8,448
Forward Contract to JPY 1,766 1,231 - -
buy Foreign Currency USD 558 42,263 694 47,991
(FC) Hedge of foreign currency firm EUR 161 13,338 472 36,675
commitment – PO based hedging GBP - - 0 9
JPY 3,480 2,426 5,847 3,650
Cross Currency Hedge of foreign currency USD 9 686 71 4,914
Interest Rate Swap Buyer's Credit
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Unhedged Foreign currency Exposure*

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(Amount in foreign currency in Lacs)
Particulars Currency 2019-20 2018-19
Short Term borrowing [#] USD 20 -
USD 30 39
EUR 8 5
Trade Payables and other financial liabilities JPY 322 602
GBP - 0
AED 5 26
USD 37 22
Trade Receivables [#]
EUR 7 7
Advances Recoverable in cash or kind USD 3 7
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*The trade payables / short term borrowings are naturally hedged (off-set) to the extent of exposure under trade receivables / advances for respective currencies.

The short term borrowing pertains to PCFC which is naturally hedged against trade receivable of equivalent amount.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

The cash flow hedges as at March 31, 2020 were assessed to be highly effective and a net unrealised gain of H 4,247 lacs, with a deferred tax liability of H 1,347 lacs relating to the hedging instruments, is included in OCI. Comparatively, the cash flow hedges as at March 31, 2019 were assessed to be highly effective and an unrealised loss of H 4,134 lacs, with a deferred tax assets of H 1,323 lacs was included in OCI.

Note 49: Fair values

Set out below, is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

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( H in Lacs)
Carrying value / Fair value
Particulars Note As at As at
March 31, 2020 March 31, 2019
Financial assets
a) Measured at fair value through profit and loss
Investments 7 424 2
b) Measured at fair value through other comprehensive income
Derivative financial instruments (non-current and current) 9 & 16 827 -
c) Measured at amortised cost
Loans (Non-current) 8 473 408
Other financial assets (Non-current) 9 149 195
Total 1,873 605
Financial liabilities
a) Measured at fair value through other comprehensive income
Derivative financial instruments (non-current and current) 23 & 28 59 3,788
b) Measured at amortised cost
Lease liability (non-current and current) 4 10,601 -
Borrowings (Non-current) 22 1,64,078 1,22,264
Other financial liabilities (Non-current) 23 10,072 146
Total 1,95,411 1,26,198
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Notes to Consolidated Financial Statements

for the year ended March 31, 2020

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities as at March 31, 2020 and March 31, 2019

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( H in Lacs)
Fair Value measurement using
Particulars Total
Level 1 Level 2 Level 3
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As at March 31, 2020
Financial assets at fair value
a) Through profit & loss
Investments	424	-	-	424
b) Through other comprehensive income
Derivative financial instruments(non-current and current)	827	-	827	-
As at March 31, 2019
Financial assets at fair value
a) Through profit & loss
Investments in others	2	-	-	2
Financial liabilities at fair value
a) Through other comprehensive income
Derivative financial instruments(non-current and current)	3,788	-	3,788	-

There have been no transfers between Level 1 and Level 2 during the period.

Calculation of Fair Values

Financial assets and liabilities measured at fair value as at Balance Sheet date:

Lease liabilities: A change in one or more of the inputs to reasonably possible alternative assumptions would not change the value significantly.

Investment in others: The fair value is calculated using the Discounted Cashflow method where the significant unobservable input used is discount rate - 14.32%.

The management assessed that fair values of cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables, trade payables, short term borrowings, other current financial assets and liabilities (except derivative financial instrument those being measured at fair value through other comprehensive income) which are receivable / payable within one year approximate their carrying amounts largely due to the short-term maturities of these instruments.

Note 50: Fair values hierarchy

The fair value of financial instruments as referred to in note 49 above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Note 51: Financial risk management objectives and policies

The Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade and other receivables, mutual fund investments and cash and cash equivalents that derive directly from its operations. The Group also enters into derivative transactions.

The Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors through its risk management committee reviews and agrees policies for managing each of these risks, which are summarised below.

Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and
Level 3: Inputs which are not based on observable market data.

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CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

a. Market risk

The Group’s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:

Interest rate risk;

Foreign currency risk;
Equity price risk; and

Commodity risk

The above risks may affect the Group’s income and expenses, or the value of its financial instruments. The Group’s exposure to and management of these risks are explained below.

The sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2020 and March 31, 2019 including the effect of hedge accounting.

i. Interest rate risk

Risk

Risk Management

Exposure

The Group manages its interest rate risk pertaining to domestic borrowings by maintaining a balanced portfolio of borrowings linked to various tenor benchmark of MCLR & T-Bills. The Group enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. As at March 31, 2020, after taking into account the effect of interest rate swaps, approximately 10% of the Group’s total borrowings are at a fixed rate of interest (March 31, 2019: 18%).

Risk that the fair value Relates primarily to the or future cash flows of Group’s long-term debt a financial instrument obligations with floating will fluctuate because interest rates. of changes in market interest rates.

The following table provides a break-up of Group’s fixed and floating rate borrowing (gross off processing fees)

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( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Fixed rate borrowings 20,238 27,377
Floating rate borrowings 1,73,202 1,22,425
Total borrowings 1,93,440 1,49,802
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Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings, as follows:

		(`H`in Lacs)
Particulars	Increase/decrease in basis points	Effect on profit before tax
March 31, 2020
`H`1,73,202 lacs	+/- 100 bps	-1,732.02 / 1,732.02
March 31, 2019
`H`1,22,425 lacs	+/- 100 bps	-1,224.25 / +1,224.25

Notes to Consolidated Financial Statements for the year ended March 31, 2020

ii. Foreign currency risk

Risk Exposure Risk that the fair value Relates primarily to or future cash flows the Group’s operating of an exposure will activities (when fluctuate because of revenue or expense changes in foreign is denominated in a exchange rates. foreign currency)

Risk Management

The Group manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 6 month period for the foreign currency denominated trade payables and trade receivables. The foreign currency risk on the foreign currency loans are mitigated by entering into Cross Currency Swaps. When a derivative is entered into for the purpose of being a hedge, the Group negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

As at March 31, 2020, the Group hedged 100% (March 31, 2019: 100 %) of its foreign currency loans. At March 31, 2020, the Group hedged 84% (March 31, 2019: 88%) of its foreign currency receivables/payables.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD and EURO rates, with all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not material.

		(`H`in Lacs)
Particulars	Change in Currency	Effect on profit before tax
March 31, 2020
Recognised netpayable – USD 2.17 Mio	`H`+/- 1	-22 / +22
Recognised netpayable – EUR 1.55 Mio	`H`+/- 1	-16 / +16
March 31, 2019
Recognised netpayable – USD 1.40 Mio	`H`+/- 1	-14 / +14
Recognised netpayable – EUR 1.22 Mio	`H`+/- 1	-12 / +12

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

iii. Equity price risk

The Group invests its surplus funds in various debt instruments and debt mutual funds. These comprise of mainly liquid schemes of mutual funds (liquid investments) and fixed deposits.

There is no material equity risk relating to the Group’s equity investments which are detailed in note 7. The Group’s equity investments majorly comprises of strategic investments rather than trading purposes.

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STATUTORY REPORTS

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

iv. Commodity price risk

Potential impact Exposure Risk Management Fluctuations in price Price volatility of rubber The Group’s Board of Directors has reviewed and approved a of essential raw and carbon black which risk management strategy regarding commodity price risk and its materials may affect continuous mitigation. supply

Commodity price sensitivity

The following table approximately details the Group’s sensitivity to a 5% movement in the input price of rubber and carbon black. The sensitivity analysis includes only 5% change in commodity prices for quantity sold or consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit or equity where the commodity prices decrease by 5%. For a 5% increase in commodity prices, there would be a comparable impact on profit or equity, and the balances below would be negative.

==> picture [460 x 98] intentionally omitted <==

----- Start of picture text -----

( H in Lacs)
Increase in profit due to Decrease in profit due to
decrease In commodity price increase In commodity price
Commodity
As at As at As at As at
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Natural rubber 5,466 5,566 (5,466) (5,566)
Synthetic rubber 3,847 4,747 (3,847) (4,747)
Carbon black 2,944 3,444 (2,944) (3,444)
----- End of picture text -----

v. Credit risk

Trade receivables

Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

Risk Management:

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management.

Trade receivables are non-interest bearing and are generally on 27 days to 90 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Group has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

Export customers are against Letter of Credit, bank guarantees, payment against documents. For open credit exports insurance cover is taken. Generally deposits are taken from domestic debtors under replacement segment. The carrying amount and fair value of security deposit from dealers amounts to H 34,935 lacs (March 31, 2019: H 33,246 lacs) as it is payable on demand. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.

( H in Lacs)

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----- Start of picture text -----

Particulars As at March 31, 2020 As at March 31, 2019
More than More than
Less than More than Less than More than
Ageing 180 but less 180 but less
180 days 360 days 180 days 360 days
than 360 days than 360 days
Expected loss rate 0.00% 50.00% 100% 0.00% 44.32% 99%
Gross carrying amount 67,259 352 2,055 70,511 194 2,013
Loss allowance provision 20 176 2,055 0 86 1,994
----- End of picture text -----

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

vi) Liquidity risk

The Group prepares cash flow on a daily basis to monitor liquidity. Any shortfall is funded out of short term loans. Any surplus is invested in liquid funds. The Group also monitors the liquidity on a longer term wherein it is ensured that the long term assets are funded by long term liabilities. The Group ensures that the duration of its current assets is in line with the current assets to ensure adequate liquidity in the 3-6 months period.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

Liquidity exposure

==> picture [477 x 26] intentionally omitted <==

----- Start of picture text -----

( H in Lacs)
Particulars < 1 year 1-5 years > 5 years Total
----- End of picture text -----

As at March 31, 2020
Non-derivative financial liabilities
Non current borrowings*	-	1,00,977	61,749	1,62,726
Current borrowings	23,645	-	-	23,645
Lease Liabilities	5,009	6,825	-	11,834
Other Financial Liabilities	61,985	9,926	146	72,057
Trade and Otherpayables	1,19,476	-	-	1,19,476
Total	2,10,115	1,17,728	61,895	3,89,738
Derivative financial instruments	59	-	-	59
Grand Total	2,10,174	1,17,728	61,895	3,89,797
As at March 31, 2019
Non-derivative financial liabilities
Non current borrowings*	-	68,481	49,878	1,18,359
Current borrowings	22,425	-	-	22,425
Other Financial Liabilities	61,462	315	146	61,923
Trade and Otherpayables	1,05,287	-	-	1,05,287
Total	1,89,174	68,796	50,024	3,07,994
Derivative financial instruments	3,473	315	-	3,788
Grand Total	1,92,647	69,111	50,024	3,11,782

*Non-current borrowings are gross off processing fees

Note 52: Capital management

For the purpose of the Group capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Group. The primary objective of the Group’s capital management is to maximise the shareholder value.

The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

==> picture [495 x 109] intentionally omitted <==

----- Start of picture text -----

( H in Lacs)
As at As at
Particulars
March 31, 2020 March 31, 2019
Borrowings (note 22, 26 & 28) 1,92,903 1,49,802
Less: cash and cash equivalents (note 13) (2,740) (6,755)
Net debt 1,90,163 1,43,047
Equity attributable to equity holders of parent(note 19 and 20) 2,90,792 2,76,611
Capital and net debt 4,80,955 4,19,658
Gearing ratio 40% 34%
----- End of picture text -----*

*Includes current maturities of long term borrowings

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CORPORATE OVERVIEW

VALUE CREATION

CEAT LIMITED | ANNUAL REPORT 2019-20

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2020 and March 31, 2019.

Note 53: Business Combinations

Amalgamation with CEAT Specialty Tyres Limited

The Board of Directors of the Company at its meeting held on April 03, 2019 approved the Scheme of Amalgamation (the ‘Scheme’) for the amalgamation of CEAT Specialty Tyres Limited (a wholly-owned subsidiary of the Company) with the Company. The National Company Law Tribunal, Mumbai Bench (the ‘NCLT’), had its final hearing on March 13, 2020 and the Order approving the Scheme became accessible on the website of the NCLT on May 25, 2020. However, the certified copy of the Order is still awaited. The Scheme is effective only upon filing of the certified copy of the NCLT Order with the Registrar of Companies, and no part of the Scheme, including the accounting treatment therein, can be made operative until such time. The Company has also obtained a legal expert’s opinion in this regard. Accordingly, the financial statements do not include any adjustments arising from the Scheme.

Note 54: Events after the reporting period

The Group’s Halol plant witnessed a fire incident at its Passenger Car Radial Tyre Curing Section (Phase II) on April 08, 2020. On initial assessment, cost of damages are estimated to be approximately H 500 lacs. The assets and materials are insured. Due to travel restrictions on account of lockdown following COVID-19, the assessors could not carry out a physical assesment. Once the lockdown is lifted, physical assessment of the loss would be carried out and the insurance claim would be filed with the insurer, United India Insurance Company Limited. The net loss would be known post the physical inspection and evaluation.

Note 55: Estimation of uncertainties relating to the global health pandemic from COVID-19

The COVID-19 pandemic is an evolving human tragedy declared a global pandemic by the World Health Organisation with adverse impact on economy and business. Supply Chain disruptions in India as a result of the outbreak started with restrictions on movement of goods, closure of borders etc., in several states followed by a nationwide lockdown from March 25, 2020 announced by the Indian Government, to stem the spread of COVID-19. Due to this the operations in many of the Group’s manufacturing, distribution centres and warehouses got temporarily disrupted.

In light of these circumstances, the Group has considered the possible effects that may result from COVID-19 on the carrying amounts of financials assets, inventory, receivables, advances, property plant and equipment, Intangibles etc. as well as liabilities accrued. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Group has used internal and external information such as our current contract terms, financial strength of partners, investment profile, future volume estimates from the business etc. Having reviewed the underlying data and based on current estimates the Group expects the carrying value of these assets will be recovered and there is no significant impact on liabilities accrued other than those reported in note 38. The impact of COVID-19 on the Group’s financial statements may differ from that estimated as at the date of approval of these financial statements and the Group will continue to closely monitor any material changes to future economic conditions.

Notes to Consolidated Financial Statements

for the year ended March 31, 2020

Note 57: Information required for consolidated financial statement pursuant to Schedule III of the Companies Act, 2013

==> picture [496 x 316] intentionally omitted <==

----- Start of picture text -----

As at March 31, 2020 2019-20
Net Assets i.e. Total
Assets minus Total Share in Profit or Loss
Liabilities
Name of Entity Relationship As % of
As % of As % of
As % of consolid
consolidated ₹ in ₹ in consolidated ₹ in
consolidated ₹ in Lacs ated other
Profit or Loss Lacs Lacs Profit or Loss Lacs
net assets comprehensive
(before OCI) (after OCI)
income
CEAT Limited Parent 88% 2,54,794 114% 26,342 81% 2,056 111% 28,398
Rado Tyres Limited Indian 0% 931 0% (17) 0% - (0%) (17)
Subsidiary
CEAT Specialty Tyres Limited Indian 3% 10,194 (20%) 14% 346 (17%)
Subsidiary (4,626) (4,280)
CEAT AKKHAN Limited Foreign 2% 5,684 (1%) (330) 9% 232 (1%) (330)
Subsidiary
Associated CEAT Holding Pvt Foreign 0% 1,248 0% 3 (4%) (101) 1% 134
Limited (ACHL) Subsidiary
CEAT Kelani Holding Pvt Joint Venture 6% 17,193 8% 1,888 0% - 7% 1,888
Limited (Joint venture of
ACHL)(As per Equity Method)
Tyresnmore Online Private Associate 0% 748 (1%) (135) 0% - (1%) (135)
Limited
Non-controlling interest in all
subsidiaries
Rado Tyres Limited Indian (0%) (410) (0%) (12) 0% - (0%) (12)
Subsidiary
CEAT AKKHAN Limited Foreign 1% 2,775 (0%) (107) 0% - (0%) (107)
Subsidiary
Total 100% 2,93,157 100% 23,006 100% 2,533 100% 25,539
----- End of picture text -----

The accompanying notes are an integral part of the financial statements

For and on behalf of Board of Directors of CEAT Limited

As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No: 324982E/E300003

Kumar Subbiah Chief Financial Officer

H. V. Goenka Anant Goenka Chairman Managing Director

per Vinayak Pujare Vallari Gupte Partner Company Secretary Membership Number:101143 Place: Mumbai Place: Mumbai Date: May 28, 2020 Date: May 28, 2020

Mahesh Gupta Chairman - Audit Committee

Note 56: Material foreseeable losses

The Group has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Group has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

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Notice

Ordinary Business

To receive, consider and adopt:
a. the Audited Standalone Financial Statements of the Company for the Financial Year ended March 31, 2020, together with the Reports of the Board of Directors and the Auditors thereon; and
b. the Audited Consolidated Financial Statements of the Company for the Financial Year ended March 31, 2020, together with the Report of the Auditors thereon.
To confirm the interim dividend of H 12 per equity share of face value of H 10 each paid during the financial year,

as final dividend for the year ended March 31, 2020.

To appoint a Director in place of Mr. Pierre E. Cohade (DIN: 00468035), who retires by rotation in terms of Section 152(6) of the Companies Act, 2013 and being eligible, offers himself for re-appointment.

Special Business

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

To consider and if thought fit, to pass the following resolution as a Special Resolution:

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

RESOLVED FURTHER THAT on approval of the

Stock Exchanges (or such other authorities as may be empowered in this regard by the SEBI) upon application for Re-classification of SCIA from promoter category to public category, the Company shall effect such reclassification in the Statement of Shareholding Pattern from immediate succeeding quarter under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended and SCIA shall ensure necessary compliance under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, SEBI (Prohibition of Insider Trading) Regulations, 2015 or other SEBI Regulations, as may be applicable.

To consider and if thought fit, to pass the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 23, 42, 71 and any other applicable provisions of the Companies Act, 2013 and the Rules made thereunder and applicable provisions of any other laws, rules, regulations, guidelines, circulars, if any, prescribed by the Government of India, Reserve Bank of India, Securities and Exchange Board of India, as amended from time to time and subject to the provisions of the Memorandum and Articles of Association of the Company and such sanctions, approvals or permissions as may be required from regulatory authorities from time to time, approval of the Members be and is hereby accorded to the Board of Directors of the Company (‘the Board’ which expression shall also include a Committee thereof, for the time being exercising the powers conferred on it by the Board by this resolution) for making offer(s) or invitation(s) to subscribe secured / unsecured, non-convertible debentures / bonds or such other securities (‘debt securities’) through private placement basis in one or more series / tranches, for an amount not exceeding H 5,00,00,00,000 (Rupees Five Hundred Crores only) at such price or on such terms and conditions as the Board may from time to time determine and consider proper and beneficial to the Company including listing of such debt securities with

NOTES:

In view of the continuing COVID-19 pandemic and consequently social distancing norms to be followed, the Ministry of Corporate Affairs (‘MCA’) vide its Circular No. 14/2020 dated April 8, 2020, Circular No.17/2020 dated April 13, 2020 and Circular No. 20/2020 dated May 5, 2020 (collectively referred to as ‘MCA Circulars’) and Securities and Exchange Board of India (‘SEBI’) vide its Circular dated May 12, 2020 permitted conducting the Annual General Meeting (‘AGM’) of the companies to be held during the calendar year 2020 through Video Conferencing (‘VC’) or Other Audio Visual Means (‘OAVM’), and dispensed physical presence of the Members at the meeting venue. Accordingly, in terms of the said MCA Circulars, the 61[st] AGM of the Company is being held through VC/OAVM and the proceedings of which shall be deemed to be conducted at the Registered Office of the Company at 463, Dr. Annie Besant Road, Worli, Mumbai 400 030. The detailed procedure for participating in the meeting through VC/ OAVM is annexed herewith and also available at the Company’s website www.ceat.com
As this AGM is being held through VC / OAVM pursuant to the MCA Circulars, physical attendance of Members has been dispensed with and the attendance of the Members attending the AGM through VC / OAVM shall be counted for the purpose of reckoning the quorum under Section 103 of the Companies Act, 2013. As such, the facility for the appointment of proxies by the Members will not be available for the AGM and hence the Proxy Form and Attendance Slip including route map are not annexed to this Notice.

Under the Authority of the Board of Directors

Vallari Gupte Company Secretary (M. No. FCS-5770)

Place: Mumbai

Date: May 28, 2020

CEAT Limited

CIN: L25100MH1958PLC011041 Registered Office: 463, Dr. Annie Besant Road, Worli, Mumbai 400 030

An interim dividend of H 12 per equity share of H 10 each declared by the Board at its meeting held on March 12, 2020 has been paid to all the eligible Members on March 20, 2020, being the record date for the purpose of dividend. The Directors recommend for consideration of the Members the above referred interim dividend as final dividend for the Financial Year ended March 31, 2020.
The Company at its AGM held on August 8, 2017 appointed M/s S R B C & CO LLP as the Statutory Auditors for the second term of 5 (five) consecutive years from the conclusion of the 58[th] AGM to the conclusion of the 63[rd] AGM to be held in the year 2022 subject to ratification of their appointment every year, if so required under the Companies Act, 2013. The requirement to place the matter relating to the appointment of auditors for ratification by the Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 8, 2018. Accordingly, no resolution is being proposed for ratification of the appointment of the Statutory Auditors at this AGM.
Brief Details of the directors, who are seeking appointment / re-appointment, are provided in the Notice as provided under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Explanatory Statement setting out material facts, pursuant to Section 102 of the Companies Act, 2013, which sets out details relating to the special business at the AGM is annexed hereto.

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The Register of Directors and Key Managerial Personnel and their shareholding, maintained under Section 170 of the Companies Act, 2013 and the Register of Contracts or Arrangements in which the directors are interested, maintained under Section 189 of the Companies Act, 2013, will be available electronically for inspection by the Members during the AGM. All the documents referred to in the accompanying Notice and Explanatory Statements, shall be available for inspection through electronic mode by the Members, without any fee, on all working days, except weekends, from 11:00 a.m. to 1:00 p.m. up to the date of AGM, basis the request being sent on [email protected]
In view of the Regulation 40 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended with effect from April 1, 2019, securities of listed companies can now be transferred only in the dematerialised form, except in case of request received for transmission or transposition of securities. Members holding shares in physical form are therefore requested to convert their holdings into the dematerialised mode to avoid loss of shares and fraudulent transactions and better investor servicing.
In any case, Members holding shares in the same name or in the same order of names, under different folios are requested to consolidate their shareholding into single folio by submitting the original share certificate along with the Amalgamation Form to the Company’s Registrar and Transfer Agent (‘RTA’) viz. TSR Darashaw Consultants Private Limited at 6, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011 to help us serve you better.
SEBI vide its Circular dated April 20, 2018 has mandated that for making dividend payments, companies whose securities are listed on the Stock Exchanges shall use permissible modes for electronic remittance of dividend. Further, pursuant to MCA General Circular 20/2020 dated May 5, 2020, companies are directed to credit the dividend directly to the bank accounts of the Members using Electronic Clearing Services. Therefore:
a. Members holding shares in the dematerialised form are requested to intimate all changes pertaining to their bank details such as bank account number, name of the bank and branch details, MICR code and IFSC code, mandates, nominations, power of attorney, change of address, change of name, email ID, contact numbers, etc., to their depository participant (‘DP’). Changes intimated to the DP will then be automatically reflected in the Company’s records.
b. Members holding shares in physical form are requested to intimate such changes to the Company’s RTA.
SEBI has mandated the submission of Permanent Account Number (PAN) by every participant in the securities market. Members holding shares in electronic form are therefore requested to submit the PAN to their depository participants with whom they are maintaining their demat accounts. Members holding

shares in physical form can submit their PAN details to the Company’s RTA.

Pursuant to Section 72 of the Companies Act, 2013, Members holding shares in physical form are advised to file nomination in the prescribed Form SH-13 with the Company’s RTA. In respect of shares held in electronic form, the Members may please contact their respective DP.
In terms of Section 124(5) of the Companies Act, 2013, dividend amount for the year ended March 31, 2013, remaining unclaimed for a period of 7 (seven) years shall become due for transfer in October 2020 to the Investor Education and Protection Fund (‘IEPF’) established by the Central Government.
Further in terms of Section 124(6) of the Companies Act, 2013, in case of such Members whose dividends are unpaid for a continuous period of 7 (seven) years, the corresponding shares shall be transferred to the IEPF demat account.

ELECTRONIC DISPATCH OF ANNUAL REPORT AND PROCEDURE FOR REGISTRATION OF EMAIL ID FOR OBTAINING COPY OF ANNUAL REPORT AND FUTURE CORRESPONDENCE:

REGISTRATION OF EMAIL ID:

i) FOR MEMBERS HOLDING PHYSICAL SHARES:

The Members of the Company holding Equity Shares of the Company in physical form and who have not registered their email may get their

ii) FOR MEMBERS HOLDING SHARES IN DEMAT MODE:

The Members holding shares in demat mode are requested to register their email IDs, with the respective DP by following the procedure prescribed by the concerned DP.

For more details on Members’ matters, please refer to the General Shareholder Information section included in the Corporate Governance Report.

PARTICIPATION AT THE AGM AND VOTING

A) The details of the process and manner for participating in the Annual General Meeting (‘AGM’) through VC / OAVM are explained herein below:
i. Members will be provided with a facility to attend the AGM through VC / OAVM through the NSDL e-voting system. Members may access the same at https://www.evoting.nsdl. com under Shareholders / Members login by using the remote e-voting credentials. The link for VC / OAVM will be available in Shareholders / Members login where the EVEN of Company will be displayed. Please note that the Members who do not have the User ID and Password for e-voting or have forgotten the User ID and / or Password may retrieve the same by following the remote e-voting instructions mentioned in the Notice to avoid the last-minute rush. Further, Members can also use the OTP based login for logging into the e-voting system of National Securities Depositories Limited (‘NSDL’).
ii. The Members can join the AGM in the VC / OAVM mode 30 (thirty) minutes before the scheduled commencement time of the Meeting and window for joining the Meeting shall be kept open throughout the proceedings of the AGM.
iii. Members are encouraged to join the Meeting through Laptops / IPads connected through broadband for a better experience. Please note that Participants connecting from mobile devices or tablets or through Laptop via mobile hotspot may experience Audio / Video loss due to fluctuation in their respective network connections. It is therefore recommended to use stable Wi-Fi or LAN connection to mitigate any kind of aforesaid glitches.
iv. Members who would like to express their views / ask questions during the AGM may

v. The Members who do not wish to speak during the AGM but have queries on accounts or any other matter to be placed at the AGM may send the same latest by Monday, September 7, 2020 mentioning their name, DP ID and Client ID / folio number, PAN, mobile number at [email protected]. These queries will be replied suitably either at the AGM or by an email.
vi. Institutional / Corporate Members are required to send scanned copy (PDF / JPG Format) of the relevant Board Resolution, whereby their Authorised Representative has been appointed to attend and vote at the AGM on their behalf pursuant to Section 113 of the Companies Act, 2013, to the Scrutinizer’s email ID at [email protected] with a copy marked to [email protected].
vii. Members who need assistance before or during the AGM with the use of technology can:
Send a request at [email protected] or use Toll free no.: 1800-222-990; or
Contact Ms. Pallavi Mhatre, Manager, NSDL at the designated email ID: [email protected] or [email protected] or at telephone number + 91 22 2499 4545; or
Contact Ms. Sarita Mote, Assistant Manager, NSDL at the designated email ID: [email protected] or SaritaM@nsdl. co.in or at telephone number + 91 22 2499 4890.
viii. Members attending the AGM through VC / OAVM shall be counted for the purpose of reckoning the quorum under Section 103 of the Companies Act, 2013.

B) Remote e-voting and Voting at AGM:

i. Pursuant to the provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014, as amended from time to time and Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,

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CEAT LIMITED | ANNUAL REPORT 2019-20

ii. The Members, who have cast their vote by remote e-voting prior to the AGM, may also attend the AGM but shall not be entitled to cast their vote again at the AGM.
iii. A person whose name is recorded in the Register of Members or in the Register of Beneficial Owners maintained by the depositories as on the cut-off date i.e. Thursday, September 3, 2020 only shall be entitled to avail the facility of remote e-voting, as well as voting at the meeting. The voting rights of Members shall be in proportion to their shares in the paid-up equity share capital of the Company as on the cut-off date i.e. Thursday, September 3, 2020.

iv. The Company has appointed Mr. P. N. Parikh (FCS 327, CP 1228), or failing him Mr. Mitesh Dhabliwala (FCS 8331, CP 9511) of M/s Parikh & Associates, Practising Company Secretaries, to act as the Scrutinizer, to the remote e-voting process and e-voting at the AGM in a fair and transparent manner.
v. The Results will be declared within 48 (fortyeight) hours from the conclusion of the AGM. The results declared along with the Scrutinizer’s Report shall be uploaded on the website of the Company www.ceat.com and the website of NSDL e-voting i.e. www.evoting.nsdl.com and communicated to the Stock Exchanges where the shares of the Company are listed. The resolutions shall be deemed to be passed at the AGM of the Company.

The instructions for Members voting electronically are as under:

REMOTE E-VOTING PRIOR TO AGM:

The way to vote electronically on NSDL e-voting system consists of ‘Two Steps’ which are mentioned below:

Step-1: Log-in to NSDL e-voting system at https://www. evoting.nsdl.com/

How to Log-in to the NSDL e-voting website?

Visit the e-voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl. com/ either on a Personal Computer or on a handheld mobile phone.
Once the home page of the e-voting system is launched, click on the icon ‘Login’ which is available under ‘Shareholders’ section.
A new screen will open. You will have to enter your User ID, your Password and a Verification Code (captcha) as shown on the screen.

Your User ID details are given below:

Your User ID is:

Manner of holding

shares i.e. Demat (NSDL or CDSL) or Physical

a) For Members 8 Character DP ID followed who hold shares by 8 Digit Client ID in demat account For Example: If your DP ID with NSDL. is IN300 and Client ID is 12 then your user ID is IN30012** b) For Members 16 Digit Beneficiary Id of who hold shares demat account held with in demat account CDSL. with CDSL. For example: If your ID is Beneficiary 12** then user user ID Is 12** c) For Members EVEN number followed by holding shares in folio number registered with Physical form. the Company. For Example: If you folio number is ZV and EVEN is _ then user ID is _____ ZV**

Your password details are given below:
a. If you are already registered for e-voting, then you can use your existing password to login and cast your vote.
b. If you are using NSDL e-voting system for the first time, you will need to retrieve the ‘initial password’ which was communicated to you. Once you retrieve your ‘initial password’, you need to enter the ‘initial password’ and the system will force you to change your password.
c. How to retrieve your ‘initial password’?
- i. If your email ID is registered in your demat account or with the Company, your ‘initial password’ is communicated to you on your email ID. You will be required to trace the email sent to you from NSDL from your mailbox. You can open the email and open the attachment i.e. a PDF file. The password to open the PDF file is your 8 digit client ID for NSDL account, last 8 digits of client ID for CDSL account or folio number for shares held in physical form. The PDF file contains your ‘User ID’ and your ‘initial password’.
- ii. If your email ID is not registered, please follow steps mentioned below for procuring the User ID and password and registration of email IDs for e-voting for the resolutions set out in this notice:

Member may send an email request to [email protected] for obtaining User ID and Password by proving the details mentioned in Point (a) or (b) as the case may be:

  - (a) In case shares are held in physical mode please provide folio number, Name of shareholder, scanned copy of the share certificate (front and back), PAN (self-attested scanned copy of PAN card), AADHAR (selfattested scanned copy of Aadhar Card) ;

  - (b) In case shares are held in demat mode, please provide DPID-CLID (16 digit DPID + CLID or 16 digit Beneficiary ID), Name, client master or copy of Consolidated Account Statement, PAN (self-attested scanned copy of PAN card), AADHAR (self-attested scanned copy of Aadhar Card).

If you are unable to retrieve or have not received the ‘Initial password’ or you have forgotten your password:
a. If you are holding shares in your demat account with NSDL or CDSL: Click on ‘Forgot User Details / Password’ option available on www.evoting.nsdl. com
b. If you are holding shares in physical mode: Physical User Reset Password option available on www.evoting.nsdl.com
c. If you are still unable to get the password by aforesaid two options, you can send a request at [email protected] mentioning your demat account number / folio number, your PAN, your name and your registered address.
d. Members can also use the OTP (One Time Password) based login for casting the votes on the e-voting system of NSDL.
After entering your password, tick on Agree to ‘Terms and Conditions’ by selecting on the check box.
Now, you will have to click on ‘Login’ button.
After you click on the ‘Login’ button, home page of e-voting will open.
It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Login to the e-voting website will be disabled upon 5 (five) unsuccessful attempts to key in the correct password. In such an event, you will need to go through the ‘Forgot User Details / Password’ or ‘Physical User Reset Password’ option available on www.evoting.nsdl.com to reset the password.

Step-2: Cast your vote electronically on NSDL e-voting system.

How to cast your vote electronically on NSDL e-voting system?

After successful login at Step 1, you will be able to see the Home page of e-voting. Click on ‘e-voting’. Then, click on ‘Active Voting Cycles’.
After clicking on ‘Active Voting Cycles’, you will be able to see all the companies ‘EVEN’ in which you are holding shares and whose voting cycle is in the active status.
Select ‘EVEN’ of CEAT Limited which is 113391.
Now you are ready for e-voting as the Voting page opens.
Cast your vote by selecting appropriate options i.e. Assent or Dissent, verify / modify the number of shares for which you wish to cast your vote and click on ‘Submit’ and also ‘Confirm’ when prompted.
Upon confirmation, the message ‘Vote cast successfully’ will be displayed.
You can also take the printout of the votes cast by you by clicking on the ‘print’ option on the confirmation page.
Once you confirm your vote on the resolution, you will not be allowed to modify your vote.

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313

NOTICE

CEAT LIMITED | ANNUAL REPORT 2019-20

Annexure to the Notice

Item No. 3 of the Notice:

Mr. Pierre E. Cohade (DIN: 00468035)

As regards the re-appointment of Mr. Pierre E. Cohade referred to in Item No. 3 of the Notice, following necessary disclosures are made for the information of the Members.

None of the Directors, Key Managerial Personnel of the Company or their relatives except Mr. Cohade is, in any way, concerned or interested in the resolution set out in Item No. 3 of the Notice.

E-VOTING AT THE AGM:

i) The procedure for e-voting on the day of the AGM is same as the instructions mentioned above for remote e-voting.

ii) Only those Members, who will be present in the meeting through VC / OAVM facility and have not cast their vote on the resolutions through remote e-voting and are otherwise not barred from doing so, shall be eligible to vote through e-voting system in the AGM.

iii) The details of the person who may be contacted for any grievances connected with the facility for e-voting on the day of the AGM shall be the same person mentioned for remote e-voting.

The Board recommends the Ordinary Resolution as set out in Item No. 3 of the Notice for approval of the Members.

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 IN RESPECT OF THE SPECIAL BUSINESS IN THE NOTICE:

The following Explanatory Statement sets out all material facts relating to the business mentioned under Item Nos. 4 to 7 of the accompanying Notice:

Item No. 4 of the Notice:

None of the Directors, Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution set out in Item No. 4 of the Notice.

The Board recommends the Ordinary Resolution as set out in Item No. 4 of the Notice for approval of the Members.

Item No. 5 of the Notice:

appointed as an Independent Director of the Company for a term of 5 (five) consecutive years with effect from August 12, 2015 to August 11, 2020.

Information about the appointee:

Brief resume

Other Directorships:

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Sr Name of the Company Category of the
No Directorship
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1.	Reliance Jio Infocomm Limited	Independent Director
2.	Reliance Retail Limited	Independent Director
3.	Genesis Colors Limited	Independent Director
4.	Reliance Retail Ventures Limited	Independent Director
5.	The Indian Film Combine Pvt Ltd	Independent Director
6.	The Great Eastern Shipping Company Limited	Independent Director
7.	PratapPandit Limited	Non-executive Director
8.	Bombay Footware Private Limited	Non-executive Director
9.	The Industrial Leather Company Private Limited	Non-executive Director

Memberships / Chairmanships in Committees:

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*Positions held as Chairman of the Committee

314

315

NOTICE

CEAT LIMITED | ANNUAL REPORT 2019-20

The Board recommends the Special Resolution as set out in Item No. 5 of the Notice for approval of the Members.

Item No. 6 of Notice:

SCIA in its request letter has informed the Company that owing to the following reasons, they have decided that it would be prudent for it to seek re-classification:

a) It does not hold any equity shares of the Company;
b) It does not exercise any control over the affairs of the Company, directly or indirectly. At any given point of time, it has not been engaged in the Management or day to day affairs of the Company;
c) It has not nominated any directors at the Board of Directors of the Company; and
d) It has no special rights, through formal or informal arrangements, and was not privy to any price sensitive information relating to the Company and its securities.

SCIA vide its request letter has also informed the Company that it:

i. satisfies all conditions specified in Regulation 31A(3) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; and

ii. undertakes to comply with the requirements specified in Regulation 31A(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 at all times.

None of the Directors, Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution set out in Item No. 6 of the Notice.

Item No 7 of Notice:

The Members of the Company had by passing a Special Resolution at the Annual General Meeting held on

None of the Directors, Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution set out in Item No. 7 of the Notice.

The Board recommends the Special Resolution as set out in Item No. 7 of the Notice for approval of the Members.

Under the Authority of the Board of Directors

Vallari Gupte Company Secretary (M. No. FCS-5770)

Place: Mumbai Date: May 28, 2020

CEAT Limited

CIN: L25100MH1958PLC011041 Registered Office: 463, Dr. Annie Besant Road, Worli, Mumbai 400 030

The Board recommends the Ordinary Resolution as set out in Item No. 6 of the Notice for approval of the Members.

316

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CEAT LIMITED

ANNUAL REPORT 2019-20

GRI Content Index

The following table is in line with the requirements of the GRI Standards

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GRI Standard Disclosure No. and Title Page No.
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		General disclosures
GRI 102 Disclos	: General ures	102-1 Name of the organization	04
		102-2 Activities, brands,products, and services	04
		102-3 Location of headquarters	04
		102-4 Location of operations	05
		102-5 Ownershipand legal form	Coverpage
		102-6 Markets served	05
		102-7 Scale of the organization	04 - 06
		102-8 Information on employees and other workers	44
		102-9 Supplychain	58
		102-10 Signifcant changes to the organization and its supplychain	Not applicable
		102-11 PrecautionaryPrinciple or approach	19
		102-12 External initiatives	03, 59
		102-13 Membershipof associations	25
		102-14 Statement from senior decision-maker	10 - 13
		102-15 Keyimpacts, risks and opportunities	18-21
		102-16 Values,principles, standards, and norms of behavior	04
		102-18 Governance structure	14, 15
		102-40 List of stakeholdergroups	25
		102-41 Collective bargainingagreements	46
		102-42 Identifyingand selectingstakeholders	24
		102-43 Approach to stakeholder engagement	24
		102-44 Keytopics and concerns raised	25
		102-45 Entities included in the consolidated fnancial statements	03
		102-46 Defningreport content and topic boundaries	03
		102-47 List of material topics	26
		102-48 Restatements of information	Not applicable
		102-49 Changes in reporting	Not applicable
		102-50 Reporting period	03
		102-51 Date of most recent report	03
		102-52 Reportingcycle	03
		102-53 Contactpoint forquestions regardingthe report	03
		102-54 Claims of reportingin accordance with the GRI Standards	03
		102-55 GRI content index	318-319
		102-56 External assurance	03
		Economic
GRI 201 perform	: Economic ance	103-1 Explanation of the material topic and its boundary	29
		103-2 The management approach and its components	29
		103-3 Evaluation of the management approach	29
		201-1 Direct economic valuegenerated and distributed	30
		Environmental
GRI 302	: Energy	103-1 Explanation of the material topic and its boundary	52
		103-2 The management approach and its components	52
		103-3 Evaluation of the management approach	52
		302-1 Energyconsumption within the organization	52
		302-4 Reduction of energyconsumption	52

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GRI Standard Disclosure No. and Title Page No.
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GRI 305: Emissions	103-1 Explanation of the material topic and its boundary	52
	103-2 The management approach and its components	52
	103-3 Evaluation of the management approach	52
	305-1 Direct(Scope 1)GHG emissions	52
	305-2 Energyindirect(Scope 2)GHG emissions	52
	305-3 Other indirect(Scope 3)GHG emissions	52
	305-5 Reduction of GHG emissions	53
	305-6 Emissions of ozone-depletingsubstances(ODS)	53
	305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other signifcant air emissions	53
	Social
GRI 401: Employment	103-1 Explanation of the material topic and its boundary	43
	103-2 The management approach and its components	43
	103-3 Evaluation of the management approach	43
	401-1 New employee hires and employee turnover	44
	401-3 Parental leave	44
GRI 403: Occupational Health and Safety	103-1 Explanation of the material topic and its boundary	47-48
	103-2 The management approach and its components	47-48
	103-3 Evaluation of the management approach	47-48
	403-1 Occupational health and safetymanagement system	47-48
	403-2 Hazard identifcation, risk assessment and incident mitigation	47-48
	403-4 Worker participation, consultation, and communication on occupational health and safety	47-48
	403-9 Work-related injuries	47-48
GRI 416: Customer health and Safety	103-1 Explanation of the material topic and its boundary	57
	103-2 The management approach and its components	57
	103-3 Evaluation of the management approach	57
	416-2 Incidents of non-compliance concerning the health and safety impacts of products and services	39
	Non-GRI
Ditigisation	103-1 Explanation of the material topic and its boundary	35, 41
	103-2 The management approach and its components	35, 41
	103-3 Evaluation of the management approach	35, 41
Product Innovation / Smart Mobility	103-1 Explanation of the material topic and its boundary	40
	103-2 The management approach and its components	40
	103-3 Evaluation of the management approach	40

318

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CEAT LIMITED

ANNUAL REPORT 2019-20

SDG Linkage Index

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Sustainable Development Goals (SDGs) Section in Report Page Number
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SDG 3: and pro	Good health and well-being – Ensure healthy lives mote well-being for all at all ages	• Social and Relationship Capital • Human Capital	46, 47, 48, 59, 60
SDG 4: equitab opportu	Quality education – Ensure inclusive and le quality education and promote lifelong learning nities for all	• Social and Relationship Capital	61
SDG 5: empow	Gender equality – Achieve gender equality and er all women and girls	• Social and Relationship Capital	60
SDG 6: sustain	Clean water and sanitation – Ensure availability and able management of water and sanitation for all	• Natural Capital	55
SDG 7: afforda	Affordable and clean energy – Ensure access to ble, reliable, sustainable and modern energy for all	• Natural Capital	52
SDG 8: sustain and pro	Decent work and economic growth – Promote ed, inclusive and sustainable economic growth, full ductive employment and decent work for all	• Human Capital • Social and Relationship Capital • Intellectual Capital	43-48, 59, 61-63
SDG 9: resilient and fos	Industry, innovation and infrastructure – Build infrastructure, promote sustainable industrialization ter innovation	• Intellectual Capital • Natural Capital	37-41, 53-54
SDG 10 and am	:Reduced inequalities – Reduce inequality within ong countries	• Social and Relationship Capital	60, 61
SDG 11 cities a sustain	:Sustainable cities and communities – Make nd human settlement inclusive, safe, resilient and able	• Intellectual Capital • Social and Relationship Capital	39-40, 63
SDG 12 Ensure	:Responsible production and consumption – sustainable consumption and production patterns	• Natural Capital	51

UNGC Principles Index

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UNGC Principles Section in Report Page No.
----- End of picture text -----

Principle 1:Businesses should support and respect the protection of internationally proclaimed human rights.	• Human Capital	46
Principle 2:Make sure that they are not complicit in human right abuses.	• Human Capital	46
Principle 3:Business should uphold the freedom of association and the effective recognition of the right to collective bargaining	• Human Capital	46
Principle 4:The elimination of all forms of forced and compulsory labour.	• Human Capital	46
Principle 5:The effective abolition of child labour	• Human Capital	46
Principle 6:The elimination of discrimination in respect of employment and occupation.	• Human Capital	46
Principle 7:Business should support a precautionary approach to environmental challenges.	• Natural Capital	50
Principle 8:Undertake initiatives to promote greater environmental responsibility.	• Natural Capital	50-55
Principle 9:Encourage the development and diffusion of environmentally friendly technologies.	• Natural Capital	53, 54
Principle 10:Business should work against corruption in all its forms, including extortion and bribery.	• Business Responsibility Report	139

320

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CEAT LIMITED

ANNUAL REPORT 2019-20

List of Abbreviations

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Abbreviation Full Form
----- End of picture text -----

BMC		Brihanmumbai Municipal Corporation
CAGR		Compound Annual Growth Rate
CCR		CEAT Cricket Rating
CCTV		Closed-Circuit Television
CETC		CEAT European Technical Centre
CLIT		Cleaning, Lubrication, Inspection & Tightening (CLIT)
CSR		Corporate Social Responsibility
CV		Curriculum Vitae
EBIT		Earnings Before Interest and Taxes
EBITDA		Earnings Before Interest, Taxes, Depreciation, and Amortisation
ESG		Environmental, Social, and Governance
EV		Electric Vehicle
FLB		Future Leader Board
FY		Financial Year
GHG		Greenhouse Gas
GRI		Global Reporting Initiative
GT		Green Tyre
IIRC		International Integrated Reporting Council
IIT		Indian Institute of Technology
IR		Integrated Reporting
ISO		International Organization for Standardization
IT		Information Technology
KPI		Key Performance Indicator
LCV		Light Commercial Vehicle
LOTO		Lock Out, Tag Out
MD		Managing Director
MIDC		Maharashtra Industrial Development Corporation
NGO		Non-Governmental Organisation
NPS		Net Promoter Score
ODS		Ozone-Depleting Substances
OEE		Overall Equipment Effectiveness
OEM		Original Equipment Manufacturer
OHT		Off-Highway Tyre

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----- Start of picture text -----

Abbreviation Full Form
PAT
Profit After Tax
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Abbreviation PAT	Full Form Proft After Tax
PCR	Passenger Car Radial
PhD	Doctor of Philosophy
PM	Particulate Matter
PNW	Professional Net Worth
PPE	Personal Protective Equipment
Q&A	Question and Answer
QBM	Quality-Based Management
QIP	Quality Intellectual Property
R&D	Research & Development
ROCE	Return on Capital Employed
ROE	Return on Equity
ROI	Return on Interest
RSPM	Respirable Suspended Particulate Matter
SDG	Sustainable Development Goal
SKU	Stock Keeping Unit
SUV	Sport Utility Vehicle
SVP	Senior Vice President
TBR	Truck and Bus Radial
TED	Technology, Entertainment, Design
TQM	Total Quality Management
UN	United Nations
UNGC	UN Global Compact
VR	Virtual Reality
Y-o-Y	Year-on-Year
ZLD	Zero Liquid Discharge

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Notes

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CEAT LIMITED 463, Dr. Annie Besant Road, Worli, Mumbai - 400 030 Tel - 022 24930621, www.ceat.com

A Company

AI assistant

Ceat Ltd. — AGM Information 2020

61454_rns_2020-08-18_67b6b689-0135-4522-b004-38065f79dadc.pdf

BSE Limited

Sub: Notice of 61[st] Annual General Meeting and Integrated Annual Report for FY 2019-20

Notice

Ordinary Business

Special Business

NOTES:

CEAT Limited

ELECTRONIC DISPATCH OF ANNUAL REPORT AND PROCEDURE FOR REGISTRATION OF EMAIL ID FOR OBTAINING COPY OF ANNUAL REPORT AND FUTURE CORRESPONDENCE:

REGISTRATION OF EMAIL ID:

i) FOR MEMBERS HOLDING PHYSICAL SHARES:

ii) FOR MEMBERS HOLDING SHARES IN DEMAT MODE:

PARTICIPATION AT THE AGM AND VOTING

B) Remote e-voting and Voting at AGM:

The instructions for Members voting electronically are as under:

REMOTE E-VOTING PRIOR TO AGM:

Step-1: Log-in to NSDL e-voting system at https://www. evoting.nsdl.com/

Step-2: Cast your vote electronically on NSDL e-voting system.

Annexure to the Notice

Item No. 3 of the Notice:

Mr. Pierre E. Cohade (DIN: 00468035)

E-VOTING AT THE AGM:

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 IN RESPECT OF THE SPECIAL BUSINESS IN THE NOTICE:

Item No. 4 of the Notice:

Item No. 5 of the Notice:

Information about the appointee:

Brief resume

Other Directorships:

Memberships / Chairmanships in Committees:

Item No. 6 of Notice:

Item No 7 of Notice:

CEAT Limited

About RPG Group

‘Making Mobility Safer & Smarter. Every Day.’ is the ethos the Company lives by to create a sustainable future.

Index

Corporate Overview

Value Creation

Statutory Reports

hello happiness

CEAT on Social Media:

Financial Statements

Safer. Smarter. Sustainable.

Integrated Reporting offers a chance

ABOUT THE REPORT

Approach to Reporting

Report Scope and Boundary

Responsibility Statement

Statutory Audit

Feedback

CEAT at a Glance

Prudent Performance (Consolidated)

EBITDA[1] and EBITDA Margin (%)

Book Value per Share and Earnings per Share

Dividend per Share

Chairman’s Message

Dear Shareholders,

H. V. Goenka

Chairman

MD’s Message

Dear Shareholders,

Anant Goenka

Board of Directors

COMMITTEES OF THE BOARD OF DIRECTORS

Corporate Information

BANKERS

EXECUTIVE COMMITTEE

COMPANY SECRETARY AND COMPLIANCE OFFICER

Ms. Vallari Gupte

AUDITORS

SECRETARIAL AUDITORS

COST AUDITORS

REGISTRAR AND TRANSFER AGENTS

Plants:

CEAT LIMITED

Registered Office:

Memorable Milestones

Value Creation Model

STRATEGY, RISKS AND OPPORTUNITIES

Ceat Ltd. AGM Information 2020