Ceat annual report

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Ceat annual report

  1. 1. annualreport 2010-11vroom!CORPORATE OVERVIEW02 Company Snapshot__________ 08 Excelleration____________ 14 Financial Highlights____________16 Operational Breakthroughs of 2010-11____________Forward-looking statementsIn this Annual Report, we have disclosed forward-looking information to enable investors tocomprehend our prospects and take investmentdecisions. This report and other statements - written and oral – that we periodically make containforward-looking statements that set outanticipated results based on the management’s plans and assumptions. We have tried whereverpossible to identify such statements by usingwords such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words ofsimilar substance in connection with anydiscussion of future performance.We cannot guarantee that these forward-looking statements will be realised, although we believe wehave been prudent in assumptions. Theachievements of results are subject to risks, uncertainties, and even inaccurate assumptions. Shouldknown or unknown risks or uncertaintiesmaterialise, or should underlying assumptions prove inaccurate, actual results could vary materiallyfrom those anticipated, estimated, orprojected. Readers should keep this in mind. We undertake no obligation to publicly update anyforward-looking statements, whether as a resultof new information, future events or otherwise.STRATEGIC REVIEW17 Strategies to Stay Ahead__________ 18 Meeting Customer Demands____________ 20 Innovationin Services____________22 Branding Strategies____________ 24 Corporate Social Responsibilities____________
  2. 2. STATUTORY REPORTS26 Corporate Information__________ 27 Notice__________ 30 Directors’ Report__________40 Management Discussion and Analysis____________ 52 Corporate Governance Report__________FINANCIAL STATEMENTS69 Standalone Financials__________103 Consolidated Financials____________Attendance Slip and Proxy Form are enclosed at the end of this report.CORPORATE OVERVIEW Topic Heading Dummy Topic Heading Dummy Copy As Heading The Copy IsDummy Here1 Annual Report 2010-11ExcellerationCan excellence and acceleration converge?Can technology and human ingenuity extend the limits of the ‘possible’?Can collective dynamism and youthfulness drive momentum in business and life?At CEAT, the answer is an emphatic ‘yes’.Welcome to perpetual motion.For nearly five decades, we have traversedchallenging roads to expand our presence in thenational and international markets, on the strengthof our product innovation and deep customercentricity. Our customer delivery model revolvesaround a futuristic formula: excelleration. Putting itsimply: accelerated delivery of excellence.Product innovation, at CEAT, starts with a deepcustomer insight and a keen understanding of theglobal markets. This is supported by a culture thatencourages employees to respond nimbly with
  3. 3. new ideas to solve varied customer challenges. Asperfectionists, we value the role of technologicalbrilliance and innovation in our industry; concurrently, we have a deepregard for teamwork and stamina.We have been all-weather friends of our customers across multiple roads;and yet road friction and fatigue has not corroded our youthful confidenceand dynamism to grow. We are unrelenting in our growth approach:gaining access to new customers and markets globally; enriching productsportfolio; enhancing quality benchmarks through investments in researchand development; and extending our brand recall and respect in all spheresof life.Today, CEAT is more than a global brand for tyres, tubes and flaps. Itrepresents the courage and confidence of young Indians to help create abetter India and a humane world.SnapshotCompany, the flagship company of the RPG Enterprises, is among India’s leadingtyre manufacturers producing over 10 million tyres annually. We are widening ourvisibility nationally and internationally with our wide range of tyres, tubes and flaps. TheCEAT brand stands for superior quality and durability, so that our customers can have ahassle-free ride, even on the roads less travelled.2 CEAT LimitedCORPORATE OVERVIEW Company Snapshot Excelleration Financial Highlights OperationalBreakthroughs3 Annual Report 2010-11– a snapshot
  4. 4. RPG Enterprises is one of India’sleading business groups with aturnover of ` 18,500 crore (USD4.16 billion). RPG Enterpriseshas a strong presence inmultiple sectors: infrastructure,power, tyres, retail, informationtechnology, carbon black,speciality and entertainment.VisionTo be amongst the most profitable tyre companies in India by 2016 through: Marketleadership in select categories in India and market leadership in significant countries outside India.4 CEAT LimitedChallenger Aspiration-led Integrity Result obsession OpennessCore Values1034100+3,500+5 Annual Report 2010-11Outsourcing units fortyres, tubes and flapsRegional OfficesC&F agentsDealers
  5. 5. 3ManufacturingPlantspresenceNationalfor allTyresCEAT offers the widest range of tyres to all user segments and manufacturesworld-class tyres for all Indian vehicles comprising: Heavy-duty trucks and buses Light commercial vehicles (LCV) Earthmovers Forklifts Tractors Trailers Cars and Jeeps Motorcycles and scooters Auto-rickshaws6 CEAT Limited7 Annual Report 2010-11Product distributionSegment-wisefacilitiesManufacturingProduction capacities
  6. 6. (tonnes per day)Volume-wise (%)Volume-wise (%)661420601110847Replacement Exports OEM FarmTrucks and BusesCar/ Jeep2-3 wheelersOff the Road and Industrial VehiclesLight Commercial VehiclesCEAT owns two tyre manufacturing facilities in Maharashtra (Bhandup and Nasik) and has also set up agreenfield radial tyre manufacturing facility at Gujarat (Halol).CEAT has three manufacturing plants in Sri Lanka in Joint Venture and it also outsources certain amountofautomotive tubes, tyres and flaps.17560140
  7. 7. 2402010-11200901702402011-12E2001752052402012-13EBhandup NasikHalol OutsourcingCORPORATE OVERVIEW Company Snapshot Excelleration Financial Highlights OperationalBreakthroughs8 CEAT LimitedThink aheadto even out the oddsCEAT’s objective is to think ahead of its customers to deliverbetter value, even in a resource-scarce environment. As a partof this strategy, we often question conventional approaches,think laterally and revisit old strategies.9 Annual Report 2010-11 Opposed to conventional thinking, microfocus sometimes yields mega benefits. We
  8. 8. take a minute look at every aspect of theorganisation for opportunities to get better.Each and every process and product at CEATis approved by appropriate certification. CEATis India’s first organisation to get the ISO/TS16949:2002 certification by the InternationalAutomotive Task Force (IATF) and JapanAutomobile Manufacturers Association. Thiscertification ensures quality management anda smooth supply chain, minimising anomaliesand wastage. CEAT’s advanced technology leverage andhigh-end research and development enhancethe on-road pleasure of end customers.The tyres are tested for best enduranceand performance, and are accredited bythe Department of Scientific and IndustrialResearch (DSIR). For CEAT, customers are more than productbuyers; they are also part of the society welive and cherish. Our ‘Be Idiotsafe’ campaignenhances awareness on road safety and helpscreate a mass movement against unsafe roadconditions created by rash drivers. CEAT biketyres ‘with superior grip’ are positioned as a part
  9. 9. of this pervasive campaign against ‘road idiots’. The ‘Be Idiotsafe’ advertisement was rankedas the fourth best advertisement by rediffmailafter Vodafone, Volkswagen and Cadbury’s.Besides, CEAT Cricket rating enjoys wideacceptance, reinforcing the brand globally.10 CEAT Limited In order to enhance visibility significantly, the organisation is focusing on capacity enhancementof its current manufacturing units in India. Besides, the Halol plant in Gujarat has also commencedoperation. The plant’s advanced technology will help enhance the production of radial tyres,which has an immense market potential. We have also acquired the CEAT brand from Pirelli & C. SpA for 9 million Euro. The acquisition willhelp CEAT enter new markets, such as Latin America, Europe and the US in the radial tyre segment.Further, it allows CEAT to outsource tyres from any country under the CEAT brand.11 Annual Report 2010-11Acceleration,Sustainedour future strategyOur business approach is to formulate a feasible growth strategy,consolidate resources and evolve a derisked business model by closelymonitoring internal efficiencies and market factors.&Racing ahead withstrengthvigour
  10. 10. 12 CEAT Limited We sponsor multiple youth-focused television programmes (MTV Roadies, MTV Roadies Battle Ground,MTV StuntMania and Khatron Ke Khiladi) to make the brand relevant to Indian Youth, who comprise around 50% ofthepopulation. This differentiated branding has enabled CEAT to gain enhanced eye share and higher recallin India.Besides, CEAT’s long association with cricket has endeared it to a cricket-obsessed nation like India; andeven tothe young people of other cricket-loving nations globally. CEAT’s dynamism is also reflected in its employee profile. The average employee age is around 36years; and ifwe consider the age of trainees it is only 32. Adequate emphasis is laid to the training and developmentof eachemployee in the organisation, and a vibrant culture of continuous learning keeps the professionalsyoung at heart.CEAT brand health research in May 2010Youthful Premium Dynamic4228May’10 ‘093823May’10 ‘092239May’10 ‘0910 cities,
  11. 11. 1519 sample size(Brand Score %)CEAT is all about strength and vigour and this reflected in our differentiated branding,targeting the young population, who represent India’s driving force.13 Annual Report 2010-11FinancialHighlights14 CEAT LimitedTotal Income(` lacs)‘07 ‘08 ‘10 ‘112,159,22.152,352,50.182,415,61.922,849,61.123,529,14.53‘09PBT(` lacs)‘07 ‘08 ‘10 ‘1160,91.88197,31.04(37,17.22)238,99.6533,24.19
  12. 12. ‘09EBIDTA(` lacs)‘10 ‘11322,71.08145,90.28‘071,52,40.65‘08287,24.0458,14.31‘09PAT(` lacs)‘07 ‘08 ‘10 ‘1139,24.85148,60.44(16,11.16)161,04.1522,28.33‘0915 Annual Report 2010-11Shareholder’sfunds ( ` lacs)‘07 ‘08 ‘10 ‘11
  13. 13. 378,63.79513,25.73488,38.15628,71.45649,14.52‘09Earnings perShare ( `)‘07 ‘08 ‘10 ‘118.6040.06(4.71)47.036.51‘09Net CurrentAssets (` lacs)‘07 ‘08 ‘10 ‘1156,22.14218,45.80312,21.55241,45.48121,11.96‘09Dividend
  14. 14. (` per Share)‘07 ‘08 ‘111.80402‘09CORPORATE OVERVIEW Company Snapshot Excelleration Financial Highlights OperationalBreakthroughs‘10416 CEAT Limitedbreakthroughs of 2010-11OperationalExpanded capacity at the Nasik plant by over1000 tonnes per monthPiloted the new-age CEAT Shoppe,to enhance the tyre retailing experienceLaunched highly effectiveadvertisement campaigns:Gross Rating Point (GRP) of first campaign is1000; Cricket World Cup campaign generated800 GRP; smart leverage of digital platformto connect with youthEnhanced rural visibility and channelexpansion: 750 dealers were
  15. 15. appointed in the rural marketsin the third and fourth quarters of 2010-11Achieved elevated productivity levels, aresult of organisational initiatives, such asTotal Quality Management inthe entire workforceCommenced the first phase of productionof radial tyres at Halol, GujaratAcquired the global rights of the CEATbrand from Pirelli & C. SpA for 9million Euro (` 55 crore)Introduced India’s first tractor tyre, meantespecially for rice field applicationLaunched India RoadTransportation Awards, first ofits kind in the Indian automobile industry, torecognise and honour high-performing truckfleet and logistics companies for theirinnovations17 Annual Report 2010-11STRATEGIC REVIEW Strategies to Stay Ahead Meeting Customer Demands Innovation in ServicesBranding StrategiesNew product development is driven by two objectives:keep pace with competition and improve the existingproduct range; and develop innovative products to elevateindustry standards.
  16. 16. CEAT believes in comprehensive innovation,encompassing products, processes, services,communications and channels. Therefore, new productdevelopment requires considerable understanding of thecustomer requirement and their feedback. The productmanagers are trained regularly to understand andobserve the customers, dealers and vendors. Besides,research agencies, like ACNielson are also involved toconduct surveys. Critically, a new product developmentincludes the following processes: Customer Input Product development In-house testing On-field testing Corrections Commercial production and market introductionto stay aheadStrategiesNew product developmentTo elevate development of designcapabilities, CEAT uses the abovetools in their R&D Centre CATIA and Unigraphicssoftware for 3D modelling ABACUS and
  17. 17. Hypermesh software forfinite element modelling PLM to integrate all aspectsof the product from customerinputs to product performance18 CEAT LimitedThe moreclosely we seecustomersperspectives,the more likely weare to meet theirdemandsCustomer centricity is the main focus of CEAT’sbusiness strategy. Integrating the customer’sperspective and insights, CEAT developed thefollowing products:19 Annual Report 2010-11‘Aay ushmaan’R2-the ‘Rice special’tractor real tyre: first ofits kind in the countryCustomer requirements... Should avoid slippage of tractors in thefield
  18. 18. Should not burn more fuel in muddy fieldsduring harvesting Should not be pierced and punctured bydifferent plant stubs like sugarcane...have been addressed in AayushmaanR2 tyres.Direct advantages The tyres don’t get stuck in the wet soil The farmer can puddle more acres at thesame time, thus increasing productivity Saves fuel for tractor owner Better crop yieldTruck PRO seriesCustomer demands... High mileage at high load High mileage at high speed No failure with super-heavy load...have spearheaded the development of MILEXL PRO and LUG XL PRODirect advantages High load carrying capacity Higher surface contact Survives high service contact Excellent initial mileage High fuel efficiency
  19. 19. In novation in motorcycle tyresBiking on city roads can be a dangerous affair, if weencounter jay walkers and careless drivers. CEATintroduced the premium Gripp series to deal with thefrequent problems faced by the bikers on road. In thecurrent fiscal, it has completed the Gripp range acrosskey sizes. Besides, it has launched Milaze and Zoompatterns in select sizes and a special tyre for mudterrain for Hero Honda.Direct advantages Excellent grip and free rolling of tyre Excellent water pumping even while cornering Maximum leaning at corners and stability athigh speed High grip on wet and dry surfacesLCV Buland SeriesCustomer needs... Longevity, reliability and economic price Should not wear off early Should take maximum time without bursting Smooth journey...have catalysed the development of LUG XL andMIL XL RIBDirect advantages
  20. 20. Wonder Bead for high-load carrying capacity Wider tread width for higher mileage Continuous shoulder rib to withstand heavy strains atshoulder ETC system to absorb shock and provide a smooth rideSTRATEGIC REVIEW Strategies to Stay Ahead Meeting Customer Demands Innovation in ServicesBranding Strategies20 CEAT LimitedInnovation inservices for enhancedcustomer engagementCEAT Tyre Retread CentreCEAT Hub & CEAT ShoppeSpiralling rubber prices made it imperative for truck owners to seek new ways to get themost out of the old tyre. Retreads are significantly cheaper than new tyres. CEAT hasdeveloped its own brand of treads to provide high quality retread to thetruck owners through the CEAT Tyre Retread Centres (CTRC).The CTRCs will be having an agreement with CEAT for retreading of trucks, buses and LCVtyres for customers. The Pre-cured CEAT Tread Rubber belts as well as the allied materials –Bonding Gum and Black Vulcanising Cement (BVC) – will be provided to CTRCs, whereby theCTRCs will use only CEAT treads and raw materials for tyre retreading.CEAT is focusing on a pan-India presence for CTRCs, with an initial target of launching 90Tyre Retread Centres by the end of FY11-12. In terms of Pre-cured Tread Rubber(PCTR) volume, it aims to achieve sales of around 140 tonnes by the end of this fiscal.To provide a platform for direct customer interaction and offer quality products and services,CEAT has launched a one-stop tyre shop called CEAT HUB (for Truck and LCV tyres)
  21. 21. and CEAT Shoppe (for passenger cars). These retail outlets act as a suitable platformto attract new customers, and also exert control over distribution networks.The number of Hubs has increased to 335 in the current year, compared with 265 inthe previous year. Similarly, the number of CEAT Shoppes is expected to touch 200,including those in Tier II and Tier III cities.21 Annual Report 2010-11CEAT PROThe Dealer PortalTo empower the fleet owners with access of information and resources, CEAT launched itsknowledge series – CEAT PRO. High level representatives from logistics, finance,HR, commercial vehicle and other related sectors address a variety ofissues, such as driver training and shortage, new technologies, controlling credit to managebusiness and developing a platform to charge better rates for minimising acquisition cost.In the past 20 months, CEAT PRO has covered 58 cities and benefited4250 transporters, enjoying wide media publicity.For improved communication between dealers and the Company, CEAT has launched aweb interface on January 1, 2011. A unique user ID and password is provided to eachbusiness partner, enabling first-hand information access of dealers’ Statement of Accounts withthe Company, their claim status, their invoice-wise sales, and their Credit/ Debit Notes. Thedealer portal also provides updates about discounts, schemes and new product launch detailsand alerts on price hikes and roll backs.STRATEGIC REVIEW Strategies to Stay Ahead Meeting Customer Demands Innovation in ServicesBranding Strategies22 CEAT LimitedIndia Road Transportation AwardsBe Idiotsafe Campaign
  22. 22. The Above The Line (ATL) campaign in bike tyre category had two bursts of 800+ GRPs in the pan Indiatargetgroup. It has created high impact during the ICC Cricket World Cup, 2011. The digital association withthecampaign engaged 77,000+ fans on facebook and 250,000+ visitors on www.beidiotsafe.com website.It was further supported by Below The Line (BTL) campaign at Cafe Coffee Day outlets, hoardings andPoint of Salesdeployments.To recognise the transporters who have contributed immensely to India’s growth story and to set abenchmarkof excellence in the industry, CEAT organises the India Road Transportation Awards. The IRTA 2010 wasaresounding success with direct participation of over 7000 eligible fleet owners. It reinforced ourbrand visibility and facilitated the sharing of industry knowledge and enhanced customer satisfaction.Brandingstrategies23 Annual Report 2010-11CEAT Cricket RatingCEAT is one of the top five brands associated with cricket. The CEAT International Cricket Rating Systemwasformulated with direct intervention of cricketing legends (Clive Llyod, Ian Chappel and SunilGavaskar), and today the CCR is highly respected among the cricket fans globally. Furthermore, tie-upwith Neo for the whole year for Asia Cup, TOI score card and points tally branding during IPLand T20 World Cup created a strong footprint for CEAT in the international cricketing space.Brands associated with Cricket Rating (Brand Recall %)RediffMarutiIdea
  23. 23. ICCCastrol11175244533STRATEGIC REVIEW Strategies to Stay Ahead Meeting Customer Demands Innovation in ServicesBranding StrategiesSource: TNS India Private Limited, June 201024 CEAT LimitedAt RPG Group CSR is not a random list. We embrace responsibility for the Company’s actions andencouragepositive impact through core business operations. Our deliberate promotion and inclusion of publicinterestseeks to honour the ‘triple bottom line’: people, planet and profit. This culture is reflected notably atCEAT.The year-round stakeholder priorities at CEAT cover workplace, community, and environment. Throughour socialprogrammes, we strengthen our ties with the people we touch.From the various activities CEAT conducted during the last one year, we pick some that reflect ourvalues and bear directsignificance to the society.Sustainability or ‘triple bottom line’ is incompletewithout active efforts to preserve nature’selements and conserve natural resources.CEAT commemorated World Environment
  24. 24. Day at the Bhandup Plant by distributingbadges, organising art competitions foremployee children, tree plantation and ascreening of the documentary TheInconvenient Truth. CFL distributioncells were also set up for employeesso they could switch to energy conservingillumination at highly subsidised prices.SpiritedventuresEnvironmentThey say it is always in season for the oldto learn. The trick is to bring home thelearning. CEAT organises workshops,government certified trainingprogrammes, and conducts skill-building sessions.Workshop by LIC for employees onfinancial planning Skills development for women employees Government recognised courses forassistant wiremen and basic electricians toimprove employability Tailoring classes to empower women Education25 Annual Report 2010-11Healthcare and awareness are constant
  25. 25. initiatives on the CEAT CSR cell calendar.We organised multiple health check-ups for employees. These included bonedensity tests, thyroid examination, eyes andENT checks and a bone densitometry camp.Blood donation and yoga camps werealso organised for employees. Apart fromthese, to create awareness on various aspectsof health, we observed the World HeartDay to create awareness about cardiacailments, World No-Tobacco Day to bringto fore the ill effects of tobacco, gutkha andcigarette smoking and World AIDS Day.CEAT also supports underprivilegedcancer patients with monetary aid, towhich our employees contribute generously.At CEAT, we believe today’s children willto the line of enterprising endeavoursof tomorrow. We have adopted theGyananubhava Vidyalaya at Karjat.Through the year, we celebratedTeachers’ day, and conducted sessionson domestic and general safety, pollutionand its control, art of living, yoga and healthand hygiene.We also celebrated Senior Citizens’
  26. 26. day with Runanubandh, a get togetherfor the elderly of the community wherewe had organised entertainment andfelicitations for all attendees.Children of employees and the communitywere engaged in an art and craftworkshop during their Diwali break.HealthCommunity WelfareSTRATEGIC REVIEW Corporate Social Responsibilities26 CEAT LimitedCorporateInformationBoard of dire CtorsR. P. GoEnkAChairmanH. V. GoEnkAVice ChairmanPARA s k . C HowdHAR yManaging DirectorAnAnT V ARdHAn GoEnkADeputy Managing DirectorVinAy BAnsALA. C. CHoks E ys. doREswAmy
  27. 27. mAHEsH s. Gu PTAHAiGREVE kHA iTAnBAnsi s. mEHTAHARi L. mund RAk . R. Pod ARaudit CommitteeHARi L. mund RAChairmans. doREswAmyMembermAHEsH s. Gu PTAMembershareholders/investorsGrievan Ce CommitteemAHEsH s. Gu PTAChairmanPARA s k . C HowdHAR yMembers. doREswAmyMemberCompany seCretaryH. n. sin GH R AjPooTreGistered offi Ce463, Dr. Annie Besant Road,Worli, Mumbai - 400 030.
  28. 28. plantsVillage Road, Bhandup,Mumbai - 400 078.82, MIDC, Industrial Estate,Satpur, Nasik 422 007.Village Gate Muvala, Halol,Panchmahal, Gujarat 389 350.leG al advisorsMulla & Mulla and Craige, Blunt & Caroeauditorsn. m. RAiji & Co.reGistrar & share transferaGentsTsR dARAsHAw Limi TEd6-10, Haji Moosa Patrawala IndustrialEstate, 20, Dr. E. Moses Road, Worli,Mumbai - 400 011.BankersBAnk of BARodABAnk of indiACoRPoRAT ion B AnkExim B AnkiCiCi B Ank LimiTEdindiAn BAnkindusTRiAL dEVEL oPmEnT B Ank of
  29. 29. indiAsTATE B Ank of indiATHE kAR nATA k A B Ank LimiTEduCo B AnkyEs BAnk LimiTEdStAtutoRy REPoRtS Directors’ Report Management Discussion and Analysis Report on CorporateGovernance27 Annual Report 2010-11NotICE is hereby given that the fifty-second Annual General Meeting of the Company will be held atRavindra Natya Mandir,P. L. Deshpande Maharashtra Kala Academy, Sayani Road, Prabhadevi, Mumbai - 400 025, on Friday,August 26, 2011 at 3.30p.m. to transact the following business:ordinary B usiness1. t o receive, consider and adopt the audited Balance Sheet as at March 31, 2011 and Profit and LossAccount for the financialyear ended on that date, the Report of the Auditors thereon and the Report of the Directors.2. to declare dividend on Equity shares.3. to appoint a Director in place of Mr. H. V. Goenka who retires by rotation and, being eligible, hasoffered himself forre-appointment.4. to appoint a Director in place of Mr. S. Doreswamy who retires by rotation and, being eligible, hasoffered himself forre-appointment.5. to appoint a Director in place of Mr. Bansi S. Mehta who retires by rotation and, being eligible, hasoffered himself forre-appointment.6. to appoint Messrs N. M. Raiji & Co., as Auditors of the Company to hold office from the conclusion ofthis Annual General
  30. 30. Meeting to the conclusion of the next Annual General Meeting and to fix their remuneration.spe Cial B usiness7. t o consider and if thought fit, to pass with or without modification, the following resolution as anordinary Resolution. “RESoLVED tHAt Mr. Vinay Bansal, who was appointed as a Director of the Company with effect fromJuly 24, 2009 in thecasual vacancy caused due to the demise of Mr. M. A. Bakre, and who holds office under the provisionsof Section 262 ofthe Companies Act, 1956 upto the date of this Annual General Meeting and in respect of whom theCompany has received anotice in writing from a member proposing his candidature for the office of Director and who is eligiblefor appointment, beand is hereby appointed as Director of the Company whose term of office shall be liable to retirement byrotation.”notesa) A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead ofhimself and the proxyneed not be a member.b) the instrument appointing the proxy should, however, be deposited at the registered office of theCompany not less thanforty-eight hours before the commencement of the meeting.c) Members are requested to kindly refer the Chapter on Corporate Governance Report in the AnnualReport for the informationin respect of re-appointment/appointment of Directors, under Clause 49 of the Listing Agreement. outof the Directorsseeking re-appointment, only Mr. H. V. Goenka holds 13,932 equity shares in the Company.d) Mr. H. V. Goenka is the father of Mr. Anant Vardhan Goenka, Deputy Managing Director of theCompany and the son of Dr. R.P. Goenka, the Chairman of the Company. None of the other Directors seeking re-appointment is relatedto any member of
  31. 31. the Board of Directors or to any Management Personnel.notice28 CEAT Limitede) t he Register of Members and the Share transfer Books of the Company shall be closed from Friday,August 12, 2011 to Friday,August 26, 2011 (both days inclusive).f) Pursuant to the provisions of Section 205A of the Companies Act, 1956, dividend for the financialyear ended March 31,2004, which remained unclaimed or unpaid for the period of seven years will be transferred to theInvestor Education andProtection Fund (IEPF) established under Section 205C of the Companies Act, 1956. Members who havenot encashed theirdividend warrant(s) so far for the financial year ended March 31, 2004 or any subsequent financial yearsare requested tomake their claims to the office of our Registrar and transfer Agents, tSR Darashaw Limited (Formerlytata Share RegistryLimited), 6-10, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai - 400011. It may also benoted that once the unclaimed dividend is transferred to IEPF, as above, no claim shall lie in respectthereof. the dividend forthe Financial year ended March 31, 2004, if not claimed, will be transferred to the aforesaid account onor after october 4,2011.g) For the convenience of the Members and for proper conduct of the Meeting, entry to the place ofthe Meeting will beregulated by the Attendance Slip, which is annexed to the Proxy Form. Members are requested to affixtheir signature at theplace provided on the Attendance Slip and hand it over at the entrance.h) Members can avail of the nomination facility, under Section 109A of the Companies Act, 1956 byfiling Form No.2B with the
  32. 32. Company. Blank forms will be supplied on request.i) If any of the members are holding shares in the same name or in the same order of names, underdifferent folios, thenmembers are requested to notify the same to tSR Darashaw Limited at 6-10, Haji Moosa PatrawalaIndustrial Estate, 20,Dr. E. Moses Road, Mahalaxmi, Mumbai - 400 011 for consolidation of their shareholding into a singlefolio.j) Members are requested to notify immediately any change of address:• To their Depository Participants (DPs) in respect of their shares held in demat form, and• To TSR Darashaw Limited at 6-10, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi , Mumbai- 400 011, in case of the shares being held in physical form.k) In case the Mailing Address mentioned on this Annual Report is without a PINCoDE, Members arerequested to kindlyinform their PINCoDE to the Company’s Register and transfer Agent at their address mentioned above.l) As per Circulars issued by the Ministry of Corporate Affairs (MCA) bearing nos. 17/2011 and 18/2011dated April 21, 2011 andApril 29, 2011 respectively, members holding shares in dematerialised form are requested to registertheir email addresseswith their Depository Participant (DP) and members holding shares in physical form are requested toregister their emailaddresses with the Company at investors@ceat.in or with the Registrar and transfer Agents viz. tSRDarashaw Limited atcsg-green@tsrdarashaw.com.under the Authority of the Board of DirectorsPlace : Mumbai H. N. Singh RajpootDated : May 2, 2011 Company SecretaryRegistered office:
  33. 33. 463, Dr. Annie Besant Road, Worli,Mumbai - 400 030StAtutoRy REPoRtS Directors’ Report Management Discussion and Analysis Report on CorporateGovernance29 Annual Report 2010-11annexure to the noticeEXPLANAtoRy S tAtEMENt pursuant to Section 173(2) of the Companies Act, 1956.1. In terms of Section 173 of the Companies Act, 1956, the following explanatory statement sets out allthe material factsrelating to Item No. 7 of the accompanying Notice dated May 2, 2011.2. Item No. 7 At the meeting of the Board of Directors held on July 24, 2009, Mr. Vinay Bansal was appointed as aDirector in CasualVacancy with effect from July 24, 2009 caused due to the demise of Mr. M. A. Bakre, Director of theCompany, in terms ofSection 262 of the Companies Act, 1956. the Company has received a notice along with a deposit of `500/- as requiredby Section 257 of the Companies Act, 1956, from a member proposing Mr. Bansal for his appointment asa Director of theCompany liable to retire by rotation.the Board of Directors recommends the appointment of Mr. Bansal as a Director of the Company, liableto retire by rotation.None of the Directors except Mr. Vinay Bansal is deemed to be concerned with or interested in theabove resolution.under the Authority of the Board of DirectorsPlace : Mumbai H. N. Singh RajpootDated : May 2, 2011 Company SecretaryRegistered office:463, Dr. Annie Besant Road, Worli,
  34. 34. Mumbai - 400 03030 CEAT Limiteddirectors’ReportTo,the members ofCEA t Limitedthe Directors present their fifty-second report, together with the audited accounts for the year endedMarch 31, 2011.` in Croresfor the year ended march 31, 2011 for the year ended march 31, 2010Profit before taxation 33.24 238.99Provision for:Current tax 7.14 74.09Short/(Excess) Provision for earlier years (0.12) -Deferred tax 3.94 3.86Net Profit 22.28 161.04Surplus brought forward from previous year 237.31 108.44Sum available for Appropriation 259.59 269.48Appropriations:Proposed Dividend on Equity Shares 6.85 13.70Corporate tax on Proposed Dividend 1.06 2.32transfer to General Reserve 1.70 16.15Balance carried forward 249.98 237.31sTATuToRy REPoRTs directors’ Report Management Discussion and Analysis Report on CorporateGovernance31 Annual Report 2010-11
  35. 35. dividendthe Directors are pleased torecommend a dividend of ` 2.00 perequity share of ` 10/- each (i.e. 20 percent) for the financial year ended March31, 2011.Ceat ’s performan Cethe year under review was one of themost challenging in recent times withregard to raw material cost. Naturalrubber prices touched an all time highboth in the international and domesticmarkets. Poor crop in key rubberproducing countries and strong surgein demand led to an unprecedentedincrease in the price. Natural Rubberand the entire spectrum of other rawmaterials showed a rising trend in costsas compared to the previous year withNatural Rubber prices surging up by67 per cent, synthetic rubber by 44 percent, carbon black by 14 per cent andnylon fabric by 16 per cent. the overallbasket of raw materials escalatedby 40 per cent and the upward trend
  36. 36. continues in the current year as well.With domestic competition intensifyingfurther, despite best efforts, theCompany could not pass on theentire cost increase to the customers.Consequently, margins saw significanterosion and the net profit declined from` 161.04 Crores in the previous year to` 22.28 Crores during the year underreview.the Company’s revenue saw a growthof 23.5 per cent from ` 2,808 Croresin the previous year to ` 3,469 Croresduring the year under review. Goodgrowth was visible in all three marketsegments viz. Replacement, originalEquipment Manufacturers (oEM) andExports. the industry also grew atabout the same rate resulting in marketshare of the Company remaining at thesame levels.CEA t continues to be one of the largestexporters of tyres. With better thrustand continued focus, the Company wasable to increase its exports to ` 624
  37. 37. Crores, as against ` 479 Crores for theprevious year registering a healthygrowth of more than 30 per cent. themarket mix for exports also improvedsignificantly, leading to higher pricerealisation.the Company has attained greaterstrength in supply chain managementand logistics. Hence, it is now betterplaced to outsource and develop alarge base of vendors who supplyfinished products under technical andmanufacturing supervision of theCompany. As a result, the Company hassucceeded in generating 23 per cent ofits revenue through outsourcing. CEAtwill continue its endeavor to explorethe outsourcing option to improve itsmarket share in key segments.radial plant at halol , GuJaratthe Company’s state of the art radialplant with an overall planned capacityof 150 Mt/day at Halol, Gujarat hassuccessfully been commissioned duringthe year under review with an installed
  38. 38. capacity of 60 M t/day. Full capacityis expected to be commissionedduring July-September 2011 quarter.this is one of the most eco-friendlyand highly efficient plants in Indiaand will manufacture both truck andBus Radials (tBR) and Passenger CarRadials (PCR). Commercial productionhas commenced from March 25, 2011which is expected to gradually reach fullcapacity utilisation by the end of thecurrent financial year.With the commencement of productionof Radial tyres from the Halol plant,the Company is now in a position tocater to the rapidly growing domesticmarket for Commercial and Passengersegments as well as exploit itsextensive channels in key exportmarkets. Going forward, this plant isexpected to become the main source ofrevenue for the Company.Brand aCQuisitionthe Company historically hadownership rights on the “CEA t ”
  39. 39. trademark in India and 8 other Asiancountries. During the year under review,the Company successfully acquiredworldwide ownership rights of the“CEAt ” trademark from Pirelli & C.S.p.A, Italy for Euro 9 million. Withthe acquisition of the brand whichis renowned worldwide, new andhitherto unexplored markets will beaccessible to the Company and theCompany would be in a position to fullyexploit the export market resultingin increased volume and better pricerealisation from the year 2012.The Company’s revenue saw a growth of 23.5 per cent from` 2,808 Crores in the previous to ` 3,469 Crores during theyear under review. Good growth was visible in all three marketsegments viz. Replacement, original Equipment manufacturers(oEm) and Exports.32 CEAT Limitedindustry sCenario and futureoutlookthe Indian economy has emerged fromthe global financial crisis remarkablyand rapidly, with a robust growth
  40. 40. of over 8 per cent. the growth wasexhibited across all segments ofthe economy and the growth of theautomotive sector has exceededexpectations. the tyre industry beingan ancillary of the automotive sectoralso experienced increased demand.the tyre industry is a uSD 140 billionindustry globally and the Indian tyreIndustry commands a share of only 4.5per cent at uSD 6.8 billion. the industryis projected to grow at a CAGR of over15 per cent over the next five years.As the Company embarks on a newphase of its journey, it is better poisedto accept new challenges and takefull advantage of favourable marketconditions. the Company expects togrow at a good pace in the next fewyears and hopes to increase marketshare in all segments particularly PCRand Motorcycle.A dampener on the good demandconditions, however, is the raw materialscenario, particularly that of Natural
  41. 41. Rubber, which is expected to continueto exert pressure on margins in the firstquarter of 2012. We are hopeful thatthe raw material prices will stabilisethereafter.researCh & developmentAlong with the radial plant at Halol,Gujarat, the Company has set up anew state-of-the-art-Research andDevelopment Centre at the samelocation. this centre has the mostcontemporary equipment for testingand development of all types oftyres, including tyres manufacturedfor markets having difficult weatherconditions. this will reduce thedependency of the Company onexternal testing centres and will reducethe need for field testing of tyres.the year 2010-11 also saw significantR&D efforts to develop new rawmaterials, new range of products andalso to enhance the quality of tyres.Innovative launches of first of itskind concepts in the truck and farm
  42. 42. category during the year under reviewhave set into motion the process ofthought leadership by CEA t. In lightof the increasing raw material costs,successful efforts were made indevelopment of cheaper substitutesfor costly raw materials withoutcompromising on quality parameters.this has helped the Company to notonly reduce cost but also in optimisingmaterial consumption.assoCiated C eat kelani venture(Joint venture in sri lanka)the Company has acquired a stakeof 45.16 per cent in Associated CEAtHoldings Company Private Limited(ACHL), the Company’s investmentarm in Sri Lanka during the year. WithsTATuToRy REPoRTs directors’ Report Management Discussion and Analysis Report on CorporateGovernance33 Annual Report 2010-11Along with the radial plant at Halol, Gujarat, theCompany has set up a new state-of-the-art Researchand development Centre at the same location. Thiscentre has the most contemporary equipment fortesting and development of all types of tyres, including
  43. 43. tyres manufactured for markets having difficultweather conditions.this acquisition, ACHL has becomea wholly owned subsidiary of theCompany. ACHL controls 50 per centstake in the joint venture company viz.CEA t Kelani Holding Private Limitedwhich in turn has three wholly ownedtyre manufacturing companies. ACHLconsolidates 50 per cent of the jointventure in its accounts as per SriLankan laws.During the year under review, ACHL hasregistered a revenue of LKR 3,790.83million during 2010-11 as compared toLKR 2,702.66 million in the previousyear, registering a growth of 51.90 percent. Profit after tax stood at LKR277.89 million as compared to profitafter tax of LKR 261.48 million. theCompany has dominant market share inall categories of tyres.Conservation of enerGy,teChnoloGy aBsorption , forei Gne XChan Ge earninGs and out Go
  44. 44. A statement giving details ofconservation of energy, technologyabsorption, foreign exchange earningsand outgo, in accordance with theCompanies (Disclosure of Particulars inthe Report of the Board of Directors)Rules, 1988, is annexed hereto andforms part of this report.human resourCesthe Company continues to focus onperformance management throughleveraging the Balanced BusinessScore Card and triggering Culturetransformation. Initiatives have alsobeen taken towards driving productivitythrough total Quality Management( tQM) and in developing and retainingcritical talent through coaching andmentoring. the tQM movement hastaken roots in the manufacturing areaand a culture of strong continuousimprovements as well as breakthroughresults are setting in.the Company has kick-started acampaign of improvement in employee
  45. 45. engagement through “MRM Connect”a forum where the top managementof the Company engages with theemployees on a quarterly basis andshare and exchange views on Companyperformance. the Company has alsostarted a programme of rewards andrecognition for employees throughquarterly awards for excellencein performance, leadership andimprovement in cross functionalcollaboration.employee statementIn terms of Section 217(2A) of theCompanies Act, 1956 read with theCompanies (Particulars of Employees)Rules, 1975, as amended, the namesand other particulars of employeesof the Company, are required to beset out in this report. However, as perprovisions of Section 219 (1) (b) (iv)of the said Act, the Annual Reportexcluding the aforesaid information isbeing sent to all the members of theCompany. those members who are
  46. 46. desirous of obtaining full informationare requested to write to the Company.34 CEAT LimitedsuBsidiary C ompanythe Ministry of Corporate Affairshas vide General Circular No. 2/2011dated February 8, 2011 grantedgeneral exemption from attaching theaccounts and financial statements ofsubsidiary companies as provided underSection 212 (8) of the Companies Act,1956, provided conditions specifiedin the said Circular are fulfilled. theCompany has complied with all theconditions mentioned in the abovecircular. therefore, the Annual Accountsof the wholly owned subsidiary ofthe Company i.e. Associated CEAtHoldings Company (Private) Limited(ACHL) have not been annexed tothis Report. However, the same areopen for inspection at the Registeredoffice of the Company and also atthe Registered office of ACHL. Anymember desirous of obtaining the
  47. 47. same may request the Company inwriting.direCtorsIn accordance with the Companies Act,1956 and Articles of Association, Mr. H.V. Goenka, Mr. S. Doreswamy and Mr.Bansi S. Mehta retire by rotation andbeing eligible, have offered themselvesfor re-appointment.Mr. Vinay Bansal was appointed asdirector of the Company in the casualvacancy caused due to the demise ofMr. M. A. Bakre. He would hold officeup to the date of this Annual GeneralMeeting. A Notice has been receivedfrom a member proposing the nameof Mr. Vinay Bansal as Director retiringby rotation. Members are requested toappoint Mr. Vinay Bansal as Director atthis Annual General Meeting and theBoard of Directors recommends theappointment of Mr. Vinay Bansal asDirector.Mr. Paras K. Chowdhary was re-appointed as the Managing Directorof the Company for a period from
  48. 48. January 18, 2011 to March 31, 2012. thisre-appointment was approved by theBoard of Directors at their meetingheld on october 20, 2010 and by theshareholders vide a resolution passedthrough Postal Ballot on March 11, 2011.issue of preferentialWarrantsPursuant to the Special Resolutionpassed by the shareholders throughPostal Ballot on September 17, 2010, theCompany has on September 30, 2010issued and allotted 17,12,170 Warrantsto the Promoters on a preferentialbasis convertible into an equal numberof equity shares at a price of ` 141.44per Warrant. of the said price, 25 percent has been received up-front at thetime of allotment i.e. on September 30,2010 and the Warrants are convertibleinto equity shares at the option of theallottees within a period of 18 monthsfrom the date of allotment, the last dayfor conversion being March 31, 2012.during the year under review, the Company successfully
  49. 49. acquired worldwide ownership rights of the “CEAT”trademark from Pirelli & C. s.p.A, italy for Euro 9 million.sTATuToRy REPoRTs directors’ Report Management Discussion and Analysis Report on CorporateGovernance35 Annual Report 2010-11direCtors’ responsiBilitystatementPursuant to Section 217 (2AA) of theCompanies Act, 1956, your Directors, tothe best of their knowledge and belief,confirm that:i) the applicable AccountingStandards have been followedin the preparation of the annualaccountsii) such accounting policies have beenselected and applied consistentlyand such judgements andestimates have been made that arereasonable and prudent so as togive a true and fair view of the stateof affairs of the Company in theBalance Sheet as at March 31, 2011and of the Profit and Loss Accountfor the said financial year viz. April1, 2010 to March 31, 2011
  50. 50. iii) proper and sufficient care hasbeen taken for the maintenanceof adequate accounting recordsin accordance with the provisionsof the Companies Act, 1956 forsafeguarding the assets of theCompany and for preventingand detecting fraud and otherirregularitiesiv) the annual accounts have beenprepared on a going concern basis.Corporate G overnanCeA report on corporate governance,along with a certificate from theauditors of the Company, regarding thecompliance of conditions of corporategovernance, as also the ManagementDiscussion and Analysis Report, asstipulated under Clause 49 of theListing Agreement, are annexed to thisreport.auditorsMessrs N. M. Raiji & Co., auditors of theCompany, retire at the ensuing AnnualGeneral Meeting and being eligible,
  51. 51. offer themselves for re-appointment.aCkno Wled Gementyour Directors place on record theirappreciation for the continued supportand cooperation received from thecustomers, suppliers, dealers, financialinstitutions, banks, members andCentral/State Governments towardsconducting the business of theCompany during the year under review.on behalf of the Board of Directors,H. V. Goenka Paras K. ChowdharyVice Chairman Managing DirectorPlace : MumbaiDated : May 2, 201136 CEAT Limitedannexureto the Directors’ ReportConservation of enerGy(a) t he Company continued to givemajor emphasis for conservationof energy, and the measures takenduring the previous years werecontinued. the Efficiency of Energyutilisation in each manufacturing
  52. 52. unit is monitored at the corporatelevel every quarter, in order toachieve effective conservationof energy. the significant EnergyConservation measures during theyear were: Identification and monitoringof operation of high energyconsuming load centers and alsospecific loads like Compressorsand Briquette boiler etc. use of Energy Efficient Lightingsystems like t5 lamps, Compactfluorescent lamps and t8fluorescent tube lights withelectronic ballasts Switching off machines/equipment when not in use andswitching off lights in areasnot having adequate activity byregrouping/repositioning theactivity so that there will not beany wastage of energy due tolighting 12 Pneumatic hoist replaced
  53. 53. with electrical hoist Automatic power factorcorrection (KVAR) panelconnected in plant to achieveunity power factor and reductionin subsequent energy loss Installation of compressorcontroller system Centralised Plant lighting circuitand fixing of energy savinglighting controller unit Installation of energy efficientscrew compressor in utility area Replacement of old compressedair pipe lines with new pipe lines Banbury 2 speed reductionthrough recipe Dual fire burner with VFD 65 watts CFL lamp for streetand dusting area lighting Conversion of Pneumaticpoking drill heads withelectromechanically drill head- 5nos. Installation of APFC for reactive
  54. 54. power management Energy efficient ballast in placeof copper ballast Fine tuning of the Lttransformer voltages Introduced heat recovery unit inbriquette boiler system to saveenergy, saved 2 per cent fuel Improved Condensate recoveryby 20 per cent Reduction in steam/productionratio by 30 per cent Replaced tD traps with ball flaptraps New plate type heat exchangersinstalled(b) Additional investments/Proposalsfor reduction of Consumption ofenergy. Harmonic controller Panels 37 kw Cold feed extruder inplace of 90 kw BC mill Centralised office lighting circuitand fixing of energy savinglighting controller unit
  55. 55. Replacement of old inefficientcompressor of instrumentationair with energy efficient screwcompressor Installation of energy efficientpumps Compressed air linesreplacement Energy efficient pump for HPCWsystem Pneumatic poking machinesdrill heads to be replaced withelectric on remaining machines Energy efficient screwcompressors in place ofreciprocating compressors Maximising the capacityutilisation of 8 x 10 CFE line Energy efficient air knife forwater removing on extrudingline Conversion of oil fired boilers togas (PNG) fired boilersConservation of enerGy, teChnoloGy aBsorption and forei Gn e XChan Ge earninGs and out Go.(Pursuant to the Companies (disclosure of Particulars in the Report of Board of directors) Rules, 1988)
  56. 56. sTATuToRy REPoRTs directors’ Report Management Discussion and Analysis Report on CorporateGovernance37 Annual Report 2010-11 Replacement of Briquette Boilerwith Gas (PNG) fired Boiler New LP dome line for truckpresses(c) Impact of the measures at (a) and(b) above for reduction of energyconsumption and consequentimpact on the cost of production ofgoods. the above efforts have helped inreduction of power consumptionper kg. of production. However, theactual power consumption has goneup due to change in product-mix.(d) t otal energy consumption andenergy consumption per unit ofproduction, as per Form A.form “ a”2010-11 2009-10a . poWer and fuel C onsumption1. ELECTRiCiT y(a) Purchased units (KWH) 9,94,24,200 9,53,72,595
  57. 57. total Amount ( ` in Crores) 56.65 49.73 Rate per unit ( `) 5.70 5.21(b) o wn generation(i) through Diesel Generator : units (KWH) 2,14,824 2,56,855 units/ Litre of Diesel (KWH) 2.76 2.50 Cost per unit ( `) 14.25 13.632. fuRnACE oiLQuantity ( K.Ltrs.) 11,331 11,644total amount ( ` in Crores) 29.33 27.59Average rate ( `per Litre) 25.88 23.693. L. s.H.s.Quantity ( K.Ltrs.) 3,409 9,212total amount ( ` in Crores) 8.80 19.68Average rate ( ` per Litre) 25.83 21.374. BRiqu ETTEsQuantity (tonnes) 50,429 23,407total amount ( ` in Crores) 27.37 11.55Average rate ( `per Kg) 5.43 4.945. G AsQuantity (SCM) 60,758 -total amount ( ` in Crores) 0.12 -Average rate ( ` per SCM) 19.96 -B.Consumption/ unit of produCtion(i) Electricity (KWH/M t.) 680.67 690.27(ii) Furnace oil ( Ltrs./ M t ) 77.41 84.05(iii) Briquettes (KG / M t ) 344.50 168.96(iv) Gas (SCM / Mt ) 0.42 -(v) L.S.H.S ( Ltrs./ M t ) 23.29 66.49
  58. 58. 38 CEAT LimitedteChnoloGy aBsorptionform “B” Reduced new productdevelopment cycles Approval of tyres for oEfitments Value addition to customerby way of performanceenhancement Improvement in productivityand cost Increasing use of non petroleumproducts Certification by InternationalAgencies3. f uture plans of action Setting up advanced ResearchCentre which will be operationalnext year technology developmentfor very high performancepassenger radial including runflat tyres upgradation of tBR technology
  59. 59. Develop innovative products inKey categories Material Science research forpeak performance in multiplecharacteristics Partnering IIt ’s and otherResearch Institutes inapplication of emergingtechnologiesREsEARCH & dEVEL oPmEnT (R & d)1. s pecific areas in which R & dactivities were carried out by theCompany Development of tBR tyres inspecific sizes for applicationin domestic and internationalmarkets technology development fortBR and high performancepassenger radials Introduction of new generationmotor cycle tyres with superiorgrip and handling characteristics Development of alternatecompound recipes
  60. 60. Enhanced usage of environmentfriendly materials like silica andrecycled rubber Development of super premiumproducts in 10.00-20 lug and ribsizes Development of new sizes foroEM’s Continual deployment of Valueengineering projects Modification of Process designfor higher productivity andenergy efficiency Development of premium brandAgricultural tyres Development of Cane andRice Special R2 tyres in tractorrear, the first of its kind in thecountry Build in house capability foradvanced prototyping andvirtual validations Providing technical know- howto – Associated CEAt (Private)
  61. 61. Limited, Sri Lanka Associated CEAt KelaniRadials (Private) Limited, SriLanka CEA t Kelani Internationaltyres (Private) Limited, SriLanka ACE tyres Limited,Hyderabad Innovative tyres & tubesProject, Baroda Zahi Rubbers, Kozhikode,Kerala2. Benefits derived as a result ofabove R & d- Expansion of product portfolioin tBR and PCR tyres Development of highperformance tyres matchingglobal standards in tBR andPCR categories4. Expenditure on R & d` in Crores2010-11 2009-10a) Capital 1.55 0.41b) Recurring 4.17 2.82
  62. 62. c) total 5.72 3.23d) total R & D expenditure as % of total turn over 0.16 0.11sTATuToRy REPoRTs directors’ Report Management Discussion and Analysis Report on CorporateGovernance39 Annual Report 2010-11teChnoloGy aBsorption, adaptation and innovation1) EffoRTs, in BRiEf, m AdETowARds TECHnoLoGyABsoRPT ion, AdAPTAT ion AndinnoVAT ion Adaptation of state of the arttechnology for radial passengerand truck tyres the benefit of the above couldbe realised in terms of improvedtyre life and lower rollingresistance (fuel efficiency forthe vehicle) the Rice Special R2 farm tyre isan innovative concept that hasbeen introduced and is receivingpositive customer response2) BEnEfi Ts dERiVEd As A REsuLTof THE ABoVE Effo RTs E.G.PRodu CT im PRoVEmEnT,CosT REduCTion, PRodu CT
  63. 63. dEVELoPmEnT , EnTRy To nEwm ARkETs ETC . Shorter developmental cyclefor product customisation withoEM’s and development andenabling entry to the high techsegment of the major automanufacturers New products with higher levelof performance were developedin main product categories,‘PRo’ series in truck bias,’Buland series in light truck bias’,‘Gripp’ and ‘Milaze’ in Motorcycle, ‘Ayushman’ in Farm Alternative recipe developmentfor managing volatility in rawmaterial price and availability Reducing dependence onpetroleum origin raw materials3) i n CAsE of im PoRTE d TECHnoLoGy (imPoRTE d duRin G THE LAsT fiVEyEAR s REC kon Ed fRom THE BEG innin G of THE fin AnCiAL y EAR )foLLowinG info Rm ATion m Ay BE fu RnisHEda) technology imported Nilb) year of import Not Applicable
  64. 64. c) Has the technology been fully absorbed? Not Applicabled) If not fully absorbed, areas where this hasnot taken place, reasons thereof and futurePlan of actionNot Applicableforei Gn e XChan Ge earninGs and out Goa) Activities relating to exports, initiatives taken to increase exports, developmentof new export markets for products and services and export plans. Please refer to the main report.b) total foreign exchange used and earned` in Crores2010-11 2009-10i) Foreign exchange earned 631.87 482.84ii) Foreign exchange used 1,225.29 669.55on behalf of the Board of Directors,Place : Mumbai H. V. Goenka Paras K. ChowdharyDated : May 2, 2011 Vice Chairman Managing Director40 CEAT LimitedeConomiC revie Wthe Indian economy has once again emerged as one of the most successful performers globally with theGDP growth of 8.6 percent. the growth has been broad with a rebound in the agricultural (5.4 per cent), industrial (8.6 percent), and manufacturingsectors (9.1 per cent). Although there have been few threats and crises in the Indian economy due tothe high rates of inflationand increase in expenses of essential commodities like food and oil, the Indian policy makers are routinga way to ensure
  65. 65. sustainable long term growth.2005-06 2006-07 2007-08 2008-09 2009-10 2010-11GDP trend* (%) 9.5 9.6 9.3 6.8 8.0 8.6(Source: CS o * Growth in GDP at factor cost at 2004-05 prices)the pace of economic activity in the country is directly reflected in the tyre offtake by differentautomobile segments. theprospects of the Indian economy have thus augured well for the Indian tyre industry.managementDiscussion and AnalysissTATuToRy REPoRTs Directors’ Report management discussion and Analysis Report on CorporateGovernance41 Annual Report 2010-11t yre industry revieWGLoBAL s CEnARioAs of April 2011, the Global tyre market is worth approx uSD 140 billion, with theoriginal Equipement Manufacturer ( oEM) segment and replacement segmentconstituting 30 per cent and 60 per cent respectively of the overall tyre markets.owing to excellent road infrastructure, the extent of radialisation is much higherin the developed nations. the average radialisation levels in the medium to heavycommercial vehicles is around 60 per cent, whereas in geographies like NorthAmerica and Europe it is as high as 95 per cent.(Source: Investment Information and Credit Rating Agency of India Limited, April 2011)Glo Bal tyre industry Composition (%) (as of feBruary, 2011)60276
  66. 66. 412 Passenger Cars and LCVs t rucks and Buses Farth Movers 2 Wheelers Agricultural Aircraft(Source: CRISIL)indiAn sCEnARiothe chronicle of Indian tyre industry started in 1926. Since then, the industry hasgrown rapidly, harmonising with the growth of automobile industry. A highly capitaland raw material intensive and predominantly cross ply (or bias) tyre manufacturingindustry, produces all categories of tyres, except snow tyres and aero tyres. theindustry is dominated by the organised sector while the unorganised sector holdscontrol over bicycle tyres. After the abysmal performance post slowdown in Fy2009, the industry has witnessed considerable rebound in Fy 2010, driven by theeconomic revival, resurgence in automobile demand, rising per capita income andease of interest rates.snapshot on the indiantyre industry` 25,000 Crores – total turnover` 1,430 Crores– Imports` 3,000 Crores– Exports5% – of Global tyre demand36 – Number of companies60 – Manufacturing plantstop 10 companies – account for85-90% of the total production
  67. 67. (Source: Investment Information and Credit RatingAgency of India Limited, April 2011)Global Tyre market is worth approx usd 140 billion, with the oEmsegment and replacement segment constituting 30 per cent and60 per cent respectively of the overall tyre markets.42 CEAT LimitedWhile more and more people opt for two-wheelers, value-wise; the sector isstrongly dominated by the Medium to Heavy Commercial Vehicle (MHCV) and LightCommercial Vehicle (LCV) segment, a reflection directly linked to the country’seconomic development. With greater access to, and introduction of, affordablePassenger Vehicles (PV), Cars and utility Vehicles ( uV) follow a close second. thetwo-wheeler, three-wheeler, exports and other segments such as off the Road(otR), tractors, construction equipment, etc. collectively constitute the remainingpie.t yre produCtion in india (number of tyres in ’000) o thers 2 Wheeler LCV Passenger Car t ruck and Bus2001 2002 2003 2004 2005 2006 2007 2008 2009 2010100806040200(Source: AtMA, April 2011)
  68. 68. value- Wise se Gment alloC ation (%) MHCV LCV Cars and uVS o thers6218713(Source: Crisil Research, February, 2011)sTATuToRy REPoRTs Directors’ Report management discussion and Analysis Report on CorporateGovernance43 Annual Report 2010-11industry CompositionREPLACEmEnT mARkETthe replacement market dominates the Indian tyre industry accounting for 71 percent of the total tyre off-take. this segment is most sought after in India as itprovides a better margin compared to the oEM segment.oRiGin AL Equi PmEnT mAnuf ACT uRER s (oEm)this segment constitutes 21 per cent of the total market demand. With increasedlaunch of new cars, the oEM segment is expected to grow around 17-18 per cent in2011-12.ExPoRTsExports comprise the remaining 8 per cent. the Indian tyres are exported mainly toAsia, Africa, Middle East and Latin America. Commercial Vehicle (CV) tyres dominatethe exports, with more than 60 per cent share, for which the primary exportdestinations are Latin America, uAE, Bangladesh, Iran, Philippines, and Vietnam.PV tyres constitute around 18 per cent of the market demands (export destination
  69. 69. uAE and Nigeria).(Source: Investment Information and Credit Rating Agency of India Limited, April 2011)t yre markets Break-up (%)71218 Replacement o EM Exports(Source: Crisil Research, February 2011)industry GroW th (%)9.810.910.4 10.413.110.6 2004-05 to 2009-10 2009-10 to 2014-15EoEM Replacement total44 CEAT LimitedRoBusT GRowTH of Au TomoBiLE indusTRyIndia continues to consolidate its position in the global space. It is the seventh largestvehicle producing nation in the world, accounting for 5 per cent of global auto production,up from 1.4 per cent at the beginning of 2000. the industry as a whole is expected togrow around 15-20 per cent annually in the coming years. It expects PV sales, includingexports, to touch 5.1 million units by 2015. Again, CV sales (which accounts for morethan 70 per cent of CEA t ’s total revenue) including small, medium and large commercialvehicles are expected to touch 1.42 million. the rise in auto demand would increase the
  70. 70. demand for oEM tyres, which will further transpire into replacement demand in next twoyears. the overall demand growth would drive revenue visibly for tyre manufacturers likeCEA t for next two years.(Source: SIAM, April 2011)PRodu CTion And sALE s TRE nd of indiAn AuTomoBiLE indusTRy( total numbers)domestic trend 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11Production 97,43,503 1,10,87,997 1,08,53,930 1,11,72,275 1,40,57,064 1,79,16,035Sales 89,06,428 1,01,23,988 96,54,435 97,24,243 1,22,95,397 1,55,13,156(Source: Society of Indian Automobile Manufacturers, April 2011)R Adi ALis ATionIn recent times, radialisation is the most important innovation in tyre industry as itimproves driving, saves fuel and provides additional mileage. In India, the radialisationhas been only seen in the PV segment (98 per cent), while the MHCV segment has only8.6 per cent of radialised tyres as compared to the global average of 65 per cent.the reason for lower radialisation was poor road infrastructure and overloading of freightcorridors which made radial tyres unviable in India. However, the Government has nowbegun to emphasise on the improvement of road infrastructure through its NationalHighway Development Programme. It has also laid curbs against overloading of trucks onmajor freight corridors. these measures would lead to a stronger demand for radial tyresin the coming years.r adialisation (%)1009596
  71. 71. 715748208.665(Source: CRISIL Research, February 2011) Western Europe North America Central Europe Africa Middle East Asia South America Asia Eastern Europe India WorldsTATuToRy REPoRTs Directors’ Report management discussion and Analysis Report on CorporateGovernance45 Annual Report 2010-11R Aw m ATERiALsthe tyre industry is highly raw material intensive. thus, raw materials play a pivotalrole in Indian tyre industry, constituting around 72 per cent of the cost of productionand 63 per cent of tyre industry turnover.PRiCE ComPosiTion of GEnERAL CommERC iAL T yRE (%)431811545
  72. 72. 59 Natural Rubber Nylon tyre Cord Fabric Carbon Black Rubber Chemicals Butyl Rubber PBR (Polybutadiene Rubber) SBR (Styrene Butadiene Rubber) o thers(Source: Automotive tyre Manufacturers Association, April 2011)Business overvieWCEA t Limited is geared to meet customer needs in every segment. It offers a widearray of tyres, which include heavy duty trucks and Buses (t&B), Light CommercialVehicles (LCVs), Passenger Cars (PC), earthmovers and forklifts (Specialty segment),tractors, trailers, scooters, motorcycles, auto-rickshaws and 2/3 wheelers. theCompany markets flaps and tubes outsourced from partners, thereby becoming aone-stop shop to cater to its wide consumer base.truck and Bus tyres are the highest contributor to the annual turnover of theCompany (61 per cent). In terms of market segments, replacement marketcontributes around 75 per cent in the topline.46 CEAT LimitedsEG mEnT-wisE P Rodu CT Po RTfoLio (%)601110847
  73. 73. t rucks and Buses 2-3 wheelers Light Commercial Vehicles Farm Car/ Jeep off the Road and Industrial VehiclesmARkET-wisE V ALuE B REA kuP (%)701416 Replacement o EM ExportperformanCe overvie WoPERATion AL o VERViEwto enrich customer experience, the Company continuously expands its range ofproducts and services. to facilitate the paddy farmer, CEA t launched India’s firstRice Special tyre (Aayushmaan R2) last year for tractors used in paddy fields.Besides this, the Company was also involved in the following activities to act uponvarious learning from its consumer feedback.nEw PRodu CT LAunCHE struck High mileage ; high load front tyre – 10.00-20 1 RD 12LCV Premium Buland Range of tyres across all sizesLast Mile Rib tyre in 165 D 12 and 165 D 13 sizesMotorcycle Premium ‘Gripp’ range across key sizes; Launched ‘Milaze’ and‘Zoom’ patterns in select sizes. Special tyre for mud terrain forHero Honda developedPassenger New sizes introduced in ‘Milaze’ rangesTATuToRy REPoRTs Directors’ Report management discussion and Analysis Report on CorporateGovernance47 Annual Report 2010-11
  74. 74. CEAT PRo CEA t actively organiseseducational sessions known asCEA t PR o to spread awarenessamong truck owners aboutthe best business practices toimprove operational efficiency.the Company has conducted58 such seminars last yearwith expert speakers on lubes,auto finance and insurance,vehicle AMCs, telematics, andother related topics for bettercustomer satisfaction, resultingin higher profit margins. Tyre service Centre (TsC) t he backbone of CEAt ’s tBRchannel strategy, its tyre ServiceCentre (formerly the WheelManagement Centre) caters toall service requirements of atruck fleet owner. the currenttwo tSCs provide end-to-endsolutions to customers to buy,fit, service, retread and dispose
  75. 75. tyres at a single point. theCompany aims to provide theconvenience of 10 other tSCs inF y 12.fin AnCiAL o VERViEw Net sales increased 23 per centfrom ` 2,80,747.60 lacs in 2009-10 to ` 3,46,892.25 lacs in 2010-11. the growth is attributed toexpanded product portfolio,increased sales volume, superiorcustomer service and improvedcapacity utilisation. Secured loan almost doubledfrom ` 31,205.11 lacs in 2009-10to ` 62,413.46 lacs in 2010-11,mainly utilised for Capacityexpansion at Halol andacquisition of “CEA t ” brandfrom Pirelli & C. S.p.A, Italy. operating expense increasedby 39 per cent because of the54 per cent hike in cost of rawmaterials, which impacted thePAt. PA t decreased from `16,104.15 lacs in 2009-10 to` 2,228.33 lacs in 2010-11.
  76. 76. opportunities and threatsowing to increased awareness amongconsumers and the steady growthof Global and Indian economy, theautomobile industry is all set forrobust growth, which will in turncontribute to healthy oEM demand.on the other hand, the growingvehicle population will augmentdemand in the replacement tyremarket proportionately. Investment ininfrastructure and projects of NationalHighway Development Programmefurther nurtures industry escalation.Besides, the low radialisation in CVtyres provides ample scope for industryexpansion. However, increased imports,especially of cheap Chinese tyres, inthe Indian truck and Bus radial tyresegment poses a considerable threat tothe industry.48 CEAT Limitedindustry risks and ConCernsinCREAsEd CosT of n ATuRAL RuBBERAs tyres are mainly composed of natural rubber (72 per cent of the total production
  77. 77. cost), increased prices highly influence the industry. tyre sector is the largestconsumer of rubber (total consumption of rubber by tyre industry: 60 per cent), witha monthly demand of 75,000-80,000 tonne. though the total rubber production isexpected to touch 8.6 lakh tonne in Fy 2011, there will still be a deficit of 85,000-90,000 tonnes. Recentfloods in thailand pushed the price of rubber to a recordheight of ` 243/kg which is a serious concern for the whole industry.(Source: the Economic times, March 2011)monTHL y RuBBER P RiCE moVEmEnT (Price per kg. in `)2004 2005 2006 2007 2008 2009 2010 2011natural rubberprices at all-time high250200150100500(Source: Reuters, March 2011)non TAR iff m EAsuREs on imPoRT of T yREs And RAw m ATERiALsthough import of natural rubbers is under open General Licence ( oGL), thedomestic rubber price is set up by the Government through the mechanism ofMinimum Statutory Price (MSP). often, that leads to a domestic price higherthan the international price. the import duty on natural rubbers is also quite high.Alternatively, the custom duty on import of tyres is very less (nil for Bangladesh,Bhutan, Maldives and Nepal). So even if there is scope for raw material import,the option is not very feasible for the Indian players and they have to depend on
  78. 78. domestic rubber production.(Source: ICRA Report, June 2009)inCREAsEd CRudE oiL PRiCERising crude oil price is also a threat tothe tyre industry, as carbon, syntheticrubber and nylon tyre cords arepetroleum by-products.inCREAsEd ComPET iTionAfter liberalisation, severalmanufacturers are expandingglobally by acquiring or setting upmanufacturing bases overseas, whichescalates domestic competition.unCERTA in TiEs in E x TER nALEnViRonmEnTthe Indian tyre industry faces majorconcerns such as rising inflation,turbulent economic environment,competition from imports, and rise ininterest rates.outlookFollowing strategies demonstrateCEA t ’s strong motivation and potentialto capitalise the growth opportunitiesprevailing in the industry.
  79. 79. inCREAsEd PRE sEnCE inREPLACE mEnT mARkET To im PRoVEm ARG insLower bargaining power of tyremanufacturers with oEMs result ina low profit margin of the segmentcompared to the replacement market.CEA t Shoppes and CEA t Hubs resultin wider reach among end users. thisenhanced accessibility has increasedthe replacement market share forCEA t. to leverage the opportunityand to improve the overall margin,the Company is gradually shiftingtowards improved product mix in thereplacement segment.sTATuToRy REPoRTs Directors’ Report management discussion and Analysis Report on CorporateGovernance49 Annual Report 2010-11sHif T of CEAT TowARds HiGHER mARG in REPLACE mEnT mARkET (% of sales)increase in shifttowards high-marginreplacement market F y 2009 F y 2010oEM Export Replacement9
  80. 80. 1519681874EmPHA sisinG Comm ERC iAL V EHiCLE s sEGmEnTCV segment contributes more value to revenues. It therefore registers a higherCAGR compared to the PV segment. Moreover, CV tyres are generally replaced at aninterval of 12 to 14 months, a shorter time span as compared to the 24 to 48 monthreplacement period of the PV tyre. Further, usage of radial tyres is still at a stage ofinfancy in CVs, which opens a huge scope for expansion. CEA t thus capitalises onthis opportunity with a greater focus on CV tyres. In F y 2010, more than 70 per centof the total revenue of the Company came from this segment.Comm ERC iAL V EHiCLE(number of Vehicles in ’000)e xpected togrow at C aGr18.3% till 2015292384432570608459612
  81. 81. 14202004 2005 2006 2007 2008 2009 2010 2015E(Source: SIAM, April 2011)PAssEnGER V EHiCLE(number of Vehicles in ’000)e xpected togrow at C aGr12.8% till 20151,1191,3761,4851,7441,9962,1742,7975,1002004 2005 2006 2007 2008 2009 2010 2015E50 CEAT LimitedC APACiT y E xPAnsiontill F y 2010, the capacity of CEA tstood at 410 tonnes per day. theCompany has set up a green field radialmanufacturing facility at Halol (of 150tonnes per day truck and Bus, Lighttrucks and Passenger Vehicle radials),
  82. 82. which will increase the capacity ofthe Company to 560 tonnes per day.A further value addition of 35 tonnesper day radial tyre at Nasik plant isexpected to lead the total production ofthe Company to 595 tonnes per day bythe end of Q4 of Fy 2012.ACquisiTion of B RAnd CEAT fRomPi RELLithe Company has acquired global rightsof “CEAt ” brand from the Italian tyremaker, Pirelli for Euro 9 million. thisacquisition is expected to double theexport revenues over the next threeyears. Prior to the said acquisition, theCompany was the owner of the brandin nine South Asian countries. Pirellihas exclusive rights to the “CEA t ”brand in Europe, Latin America, Mexicoand turkey upto December 31, 2011,post which the Company shall havecomplete rights to the brand.risk m ana GementRisk: Rising raw materials pricescould considerably affect the
  83. 83. profit margin.mitigation: CEA t ’s long presence andexperience in the industrycontribute to the wisdom ofplanning in advance to keepthe risk to the minimum.Risk: Demand fluctuation indifferent product categories.mitigation: Strong presence acrossall tyre categories andextensive domestic andinternational network easesthe risk considerably.Risk: Rising domestic competitionas well as imports fromChina.mitigation: Superior after sales service,extended credit periodin addition to the anti-dumping duty imposedon Chinese tyres will helpthe Company to managedomestic competition to agreat extent.sTATuToRy REPoRTs Directors’ Report management discussion and Analysis Report on CorporateGovernance51 Annual Report 2010-11
  84. 84. internal Control systems andtheir ade QuaCyIn any industry, the processes andinternal control systems play acritical role in the health of theCompany. CEA t ’s well definedorganisational structure, documentedpolicy guidelines, defined authoritymatrix and internal controls ensureefficiency of operations, compliancewith internal policies and applicablelaws and regulations as well asprotection of resources. Moreover,the Company continuously upgradesthese systems in line with the bestavailable practices. the internal controlsystem is supplemented by extensiveinternal audits, regular reviews bymanagement and standard policiesand guidelines to ensure reliabilityof financial and all other records toprepare financial statements and otherdata. the management informationsystem provides timely and accurateinformation for effective control.
  85. 85. Reports on key performance indicatorsand variance analysis vis-à-vis thebudgets are discussed and actionplans are drawn for proper follow upat regular Management Committeemeetings. At each Board Meeting,operational reports are tabled afterbeing discussed at Audit CommitteeMeetings.m aterial developments inhuman resourCesthe Company recognises the value ofits work force for continuous growth.A well drawn recruitment policy, clearlydefined roles and responsibilities,individual performance managementsystems, and performance-basedcompensation policies facilitate theemployee progress and encourageinnovative thinking. the Companyhas also identified requirementsfor training and developmentopportunities, to boost credibility ofmanpower as well as business process.Such initiatives also develop a sense of
  86. 86. ownership within the organisation.Cautionary statementStatements in the ManagementDiscussion and Analysis describingthe Company’s objectives, projections,estimates, expectations may be“forward-looking statements” withinthe meaning of applicable securitieslaws and regulations. Actual resultscould differ materially from thoseexpressed or implied. Importantfactors that could influence theCompany’s operations include economicdevelopments within the country,demand and supply conditions inthe industry, input prices, changes inGovernment regulations, tax laws andother factors such as litigation andindustrial relations.52 CEAT LimitedCorporateGovernance Reporti C ompany philosophythe Company’s philosophy onCorporate Governance mirrors its
  87. 87. belief that principles of transparency,fairness and accountability towardsthe stakeholders are the pillars of agood governance system. the Companybelieves that the discipline of CorporateGovernance pertains to systems, bywhich companies are directed andcontrolled, keeping in mind long-term interests of shareholders,while respecting interests of otherstakeholders and society at large. Itaims to align interests of the Companywith its shareholders and otherkey stakeholders. Accordingly, thisCompany’s philosophy extends beyondwhat is being reported under thisReport and it has been the Company’sconstant endeavor to attain the highestlevels of Corporate Governance.this Report is for compliance of Clause49 of the Listing Agreement, whichthe Company has entered into with theStock Exchanges.ii Board of direCtorsIn terms of the Company’s CorporateGovernance Policy, all statutory
  88. 88. and other significant and materialinformation including informationmentioned in Annexure IA of Clause49 of the Listing Agreement areplaced before the Board to enable itto discharge its responsibilities ofstrategic supervision of the Companywith due compliance of laws and astrustees of stakeholders.1. Com PosiTion At present the Board of Directorsof the Company consists of twelve(12) members, of whom two (2) are‘Executive’ Directors and ten (10)are ‘Non-Executive’ Directors. the Chairman, Dr. R. P. Goenkais a Non-Executive Director. Mr.Paras K. Chowdhary, the ManagingDirector and Mr. Anant VardhanGoenka, the Deputy ManagingDirector are the ExecutivesDirectors. the Directors are eminentindustrialists/professionals withexperience in industry/business/finance/law and bring with them
  89. 89. the reputation of independentjudgment and experience, whichthey exercise and also satisfy thecriteria of independence. However,the Board of Directors, adopting amore exacting view, has decided totreat only the Directors, as indicatedin Para II-2 below, as independentdirectors.2. BoARd mEETin Gs HEL dduRin G THE y EAR AndATTEndAnCE THEREAT During the financial year endedMarch 31, 2011, five (5) meetingsof the Board of Directorswere held on April 29, 2010, July27, 2010, September 30, 2010,october 20, 2010 andJanuary 25, 2011.sTATuToRy REPoRTs Directors’ Report Management Discussion and Analysis Report on CorporateGovernance53 Annual Report 2010-11details of directors and their attendance in the said Board meetings and also at the last Annual Generalmeeting aregiven below:name Category
  90. 90. no. ofBoardmeetingsattendedduringthe yearWhetherattendedlast aGmheld onJuly 27,2010no. ofdirector-ships in otherpublic limitedcompaniesno. of Committeepositions held inother publiclimitedcompanies*Chairman MemberDr. R. P. Goenka Non-Executive Non-Independent 0 No 2 - -Mr. H. V. Goenka Non-Executive Non-Independent 5 yes 8 - -Mr. Paras K. Chowdhary Executive Non-Independent 5 yes 7 - 2Mr. Anant Vardhan Goenka Executive Non-Independent 5 yes 5 - -Mr. Mahesh S. Gupta Non-ExecutiveIndependent 5 yes 13 3 4
  91. 91. Mr. A. C. Choksey Non-Executive Independent 4 yes 8 - -Mr. S. Doreswamy Non-Executive Independent4 yes 6 3 4Mr. Haigreve Khaitan Non-Executive Independent 1 No 14 - 9Mr. Bansi S. Mehta Non-Executive Independent 4 yes 14 5 5Mr. Hari L. Mundra Non-Executive Independent 5 yes 1 1 -Mr. K. R. Podar Non-Executive Independent 3No 4 - -Mr. Vinay Bansal Non-Executive Independent 4 yes 1 - - * only Audit Committee andShareholders/Investors Grievance Committee are reckoned for this purpose.3. dETA iLs of diRECToRsPRoPosEd fo R A PPoinTmEnT/RE -A PPoinTmEnT AT THEfoRTHCominG Annu AL G EnERALmEETin G [Pu RsuAnT To CLAusE49 ( iV)(G)]i) m r. H. V. Goenka Mr. H. V. Goenka is the Chairmanof RPG Enterprises Limited, oneof the leading business groupsin India with over uSD 3.7 billionin annual sales. RPG Enterpriseshas interests in Sectors likePower, tyres, transmission,Retail, technology andEntertainment. Mr. Goenka comes from the wellknown family of industrialistsof Kolkata and is the son ofDr. Rama Prasad Goenka. Mr.
  92. 92. Goenka graduated in Economicsand is an MBA from IMD,Switzerland. He is Chairman ofKEC International Limited, RPGLife Sciences Limited, Zensartechnologies Limited and ViceChairman of CEA t Limited. Mr.Goenka, a past President ofthe Indian Merchant’s Chamber(IMC) serves on the ExecutiveCommittee of the Federation ofIndian Chambers of Commerceand Industry (FICCI) and is aMember of the FoundationBoard of IMD, Lausanne,Switzerland. He is 53 years of age, marriedand has a son and a daughter,both of whom are married. Hisinterests are art and sports.54 CEAT Limitedother directorships Bajaj Electricals Limited Zensar technologies Limited KEC International Limited
  93. 93. RPG Enterprises Limited Raychem RPG Private Limited RPG Life Sciences Limited Spencer International HotelsLimited the State Industrial &Investments Corporation ofMaharashtra Limited (SICoM) m ember/Chairman of the following Committeesname of the Company name of the Committee member/ChairmanCaliber Point Business Solutions Limited Audit ChairmanPantaloon Retail India Limited Audit ChairmanPantaloon Retail India Limited Investors Grievance MemberShakti Sugar Limited Audit MemberRama Newsprints and Paper Limited Audit ChairmanHexaware technologies Limited Audit MemberHexaware technologies Limited Investors Grievance Member Mr. Goenka is not Chairmanor Member of any Auditor Shareholders/InvestorsGrievance Committee.ii) m r. s. doreswamy Mr. S. Doreswamy is aprofessional banker with about35 years of experience. He
  94. 94. has held a variety of senioroperational and administrativeassignments. He was theChairman and ManagingDirector of two large publicsector banks- Dena Bank andCentral Bank of India, makingsignificant contribution to theirgrowth and progress during histenure. He is currently engagedin corporate and financialconsultancy and is on theBoards of a few well knowncompanies.other directorships Pantaloon Retail India Limited Shakti Sugar Limited Hexaware technologies Limited Caliber Point Business SolutionsLimited Rama Newsprint & PapersLimited DSP Black Rock trustee Limitediii) m r. Bansi s. mehta
  95. 95. Mr. Mehta is a graduate incommerce and a Fellow ofthe Institute of CharteredAccountants of India. Mr.Mehta is an accountant inpractice dealing with taxation,accountancy and valuation ofmergers and acquisitions. Heis a director on the boards ofseveral prominent companies inIndia. He has been a director ofthe Company since 1996.other directorships Atul Limited Bharat Bijlee Limited Century Enka Limited Clariant Chemicals (India)Limited Gillette India Limited Housing Development FinanceCorporation Limited IL & FS Investment ManagersLimited J. B. Chemicals andPharmaceuticals Limited
  96. 96. National Securities DepositoryLimitedsTATuToRy REPoRTs Directors’ Report Management Discussion and Analysis Report on CorporateGovernance55 Annual Report 2010-11 Pidilite Industries Limited Proctor & Gamble Hygiene andHealth Care Limited Sasken Communicationtechnologies Limited SBI Capital Markets Limited Sudarshan Chemical IndustriesLimited udhe India Limited (AlternateDirector) m ember/Chairman of the following Committeesname of the Company name of the Committee member/ChairmanGillette India Limited Audit MemberHousing Development Finance Corporation Limited Audit MemberAtul Limited Audit MemberCentury Enka Limited Audit MemberProctor & Gamble Hygiene and Health Care Limited Audit MemberIL & FS Investment Managers Limited Audit ChairmanJ. B. Chemicals & Pharmaceuticals Limited Audit ChairmanSudarshan Chemicals Limited Audit ChairmanSasken Communication technologies Limited Audit Chairman
  97. 97. Pidilite Industries Limited Audit Chairmaniv) m r. Vinay Bansal Mr. Bansal an IAS officer of 1969Batch (Maharashtra Cadre),retired as Secretary in theDepartment of Chemicals in theGovernment of India. Before that, he served asAdditional Secretary Commerce,Government of India, Chairman,MSEB, Principal SecretaryIndustries and PrincipalSecretary to Chief Minister,Maharashtra. He has represented theGovernment of India in JointCommissions to severalcountries and negotiated theComprehensive EconomicCooperation Agreementbetween Government of Indiaand Singapore. Currently, heis working as consultant inReliance Industries Limited. Mr. Bansal holds a Master’s
  98. 98. degree in Mathematics fromthe university of Allahabad,a Diploma in PetroleumManagement from ArthurD’Little, MDI, Boston in uSand also Diplomas in BusinessAdministration and French.other directorships Rewas Ports Limited Navi Mumbai SEZ PrivateLimited Mr. Bansal is not a Chairmanor Member of any Auditor Shareholders/InvestorsGrievance Committee.iii Committees of the B oard1. AudiT CommiTTEE the terms of reference ofAudit Committee include thematters specified under Clause49 (II) (D) and (E) of the ListingAgreement as well as in Section292A of the Companies Act,1956. the terms of reference ofthe Audit Committee, inter alia,
  99. 99. include the following:1) o versight of the Company’sfinancial reporting process andthe disclosure of its financialinformation to ensure that thefinancial statements are correct,sufficient and credible.2) Reviewing with themanagement the financialstatements at the end of thequarter, half year and the annualstatements before submission56 CEAT Limitedto the Board for approval withparticular reference to:a) Matters required to be includedin the Directors’ ResponsibilityStatement which forms part ofthe Board’s Report in terms ofClause (2AA) of Section 217 ofthe Companies Act, 1956.b) Changes, if any, in accountingpolicies and practices andreasons for the same.c) Major accounting policies and
  100. 100. practices and reasons for thesame.d) Significant adjustments madein the financial statementsarising out of audit findings.e) Compliance with the listingand other legal requirementsrelating to financial statements.f) Disclosure of any related partytransaction.g) Qualifications, in the draft auditreport.3) Considering and recommendingthe appointment, re-appointment, of the statutoryauditors, fixation of theaudit fee and fee for anyother services rendered bythe Statutory Auditors andif required, the replacementor removal of the StatutoryAuditor.4. Reviewing with themanagement, performanceof the Statutory and InternalAuditors and adequacy of the
  101. 101. internal control systems.5. Reviewing the adequacy ofthe internal audit function, ifany, including the structure ofthe internal audit department,staffing and seniority of theofficial heading the departmentreporting structure coverageand frequency of the internalaudit.6. Discussion with internalauditors, any significantfindings and follow up thereon.7. Reviewing the findings of anyinternal investigations by theinternal auditors into matterswhere there is suspected fraudor irregularity or a failure ofinternal control systems of amaterial nature and reportingthe matter to the Board.8. Looking into the reasons forsubstantial defaults in paymentto the depositors, debentureholders, shareholders and
  102. 102. creditors, if any. the Company has compliedwith the requirements ofClause 49 (II) (A) as regardsthe composition of theAudit Committee. the Auditcommittee has three (3)members; Mr. Hari L. Mundra,Mr. S. Doreswamy, Mr. MaheshS. Gupta. Mr. Mundra isthe Chairman of the AuditCommittee. During the financial yearended March 31, 2011, four(4) meetings of the AuditCommittee were held on April29, 2010, July 26, 2010, october20, 2010 and January 25, 2011. Attendance at the Audit Committee meetingsname of the member no. of meetings attendedMr. Hari L. Mundra 4Mr. S. Doreswamy 4Mr. Mahesh S. Gupta 4 Full quorum was present at the meetings. the Audit Committee Meetings are also generally attended by the representatives of Statutory Auditorsand Internal

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