Registered Office: CEAT Mahal, 463, Dr. Annie Besant Road, Worli, Mumbai - 400 030. Annual Report 2009-10 Website: www.ceattyres.in A Prism Solution (www.prism.net.in) Printed at SAP Print Solutions Pvt. Ltd. 12 Corporate Information 13 Notice 04 Business Overview Business 04 16 Directors’ Report 02 Company Snapshot Company 02 22 Management Discussion and Analysis 27 Corporate Governance Report 41 Auditors’ Report 44 Balance Sheet 45 Profit and Loss Account 46 Cash Flow Statement 48 Schedules forming part of Balance Sheet and Profit and Loss Account 71 Information of Subsidiary Company 73 Consolidated Financial Statements Have you watched a tree take shape? Right from the time it is a little sapling taking its first peek into the world, to when it turns into a full-fledged tree, its flowers and leaves providing relief and respite to the weary traveller? That, in a nutshell, is growth. Growth is progress. Growth is development. Growth is transformation. So whether it is the human mind, the power of innovation and creative energy, or the sheer size and scale of a gigantic corporation, growth is that central energy on which the world moves forward. It is one of the very few things which are limitless, because human intelligence, spirit and wonder know no limits. Growth is powered by imagination and the spirit to dream. The spirit of enterprise and the will to tread a path different from the road less travelled are fuelled by that desire to grow, just like the sapling which reaches out for the warmth of the first rays of the sun. Growth is also central to the story of the evolution of the world. The invention of the wheel, the first ring of the telephone, the first tentative steps taken by man on the moon - these have all been the result of that desire to grow, to develop, to move forward. To us at CEAT, growth means all these things and more. Growth is a way of life, the wheel which will take us forward into a new and more exciting future. It is innovation, it is technology, it is reach. It is a deep commitment to society, to touch the lives of the people who are our stakeholders. They say that if people are growing, they will always be out of their comfort zone. At CEAT, there are no comfort zones. We are always challenging ourselves, pushing the envelope, raising the bar. Whether it is the latest in tyre technology, or the commitment to reducing our carbon footprint, or reaching new markets across the globe, growth is central to CEAT's very existence. For over five decades, we have pursued this dream relentlessly, breaking down boundaries and moving ahead. So if we produce over 10 million tyres every year or reach 112 countries, these are just a few examples of CEAT's desire to dream. And to grow. 1 Vision Mission COMPANY SNAPSHOT "CEAT will at all times provide "To nurture an exciting and total customer satisfaction challenging work environment About the Company through products and services with fairness and transparency." of highest quality and reliability." Established in 1958, CEAT Limited, the flagship company of RPG Enterprises, is one of India's leading tyre manufacturing companies. With approximately 11% market share in the industry, the Company manufactures close to 10 million tyres every year. Industrial Vehicles 1.29% Off The Road (OTR) Vehicles Quality Policy Infrastructure, Reach and Network Financial Highlights 4.11% CEAT is the first tyre The Company has 2 manufacturing plants, Revenue: The Company recorded a revenue of company in India to get situated in Mumbai (Bhandup), Maharashtra & Rs. 2,849.62 crores, as compared to Rs. 2,415.62 Two & Three Wheelers Product Portfolio 11.29% the ISO/TS 16949:2002 Nasik, Maharashtra. It exports to nearly 112 crores for 2008-09, a growth of 17.96%. The Company manufactures a certification, which is a countries across Asia, Africa, Europe and America. EBIDTA: The EBIDTA increased from Rs. 58.14 wide range of tyres for: combination of ISO 9000 Its robust network consists of 34 regional offices crores in 2008-09 to Rs. 322.71 crores, an increase and QS 9000. and over 3,500 dealers of which approximately Trucks & Buses (T&B) Farm of 455.05%. 7.61% 100 are exclusive dealers running the CEAT Light Commercial Vehicles (LCVs) PAT: The Profit After Tax (PAT) stood at Rs. 161.04 Product Shoppe outlets for the PC segment and 96 run Passenger Cars (PC) crores against a loss of Rs. 16.11 crores in Car/Jeep Mix the CEAT Hubs for the T&B segments. Tractors and Trailers 5.38% 2008-09. Two Wheelers and Three Wheelers Market capitalisation: The Company's market Off The Road (OTR) Vehicles capitalisation stood at Rs. 510.91 crores as on Industrial Vehicles 31st March, 2010. Light Commercial Vehicles (LCVs) 9.70% EPS: The Earnings Per Share (EPS) of the Company increased to Rs. 47.03 from Rs. (4.71) in the Trucks & Buses (T&B) 60.61% previous year. 2 3 Vision Mission COMPANY SNAPSHOT "CEAT will at all times provide "To nurture an exciting and total customer satisfaction challenging work environment About the Company through products and services with fairness and transparency." of highest quality and reliability." Established in 1958, CEAT Limited, the flagship company of RPG Enterprises, is one of India's leading tyre manufacturing companies. With approximately 11% market share in the industry, the Company manufactures close to 10 million tyres every year. Industrial Vehicles 1.29% Off The Road (OTR) Vehicles Quality Policy Infrastructure, Reach and Network Financial Highlights 4.11% CEAT is the first tyre The Company has 2 manufacturing plants, Revenue: The Company recorded a revenue of company in India to get situated in Mumbai (Bhandup), Maharashtra & Rs. 2,849.62 crores, as compared to Rs. 2,415.62 Two & Three Wheelers Product Portfolio 11.29% the ISO/TS 16949:2002 Nasik, Maharashtra. It exports to nearly 112 crores for 2008-09, a growth of 17.96%. The Company manufactures a certification, which is a countries across Asia, Africa, Europe and America. EBIDTA: The EBIDTA increased from Rs. 58.14 wide range of tyres for: combination of ISO 9000 Its robust network consists of 34 regional offices crores in 2008-09 to Rs. 322.71 crores, an increase and QS 9000. and over 3,500 dealers of which approximately Trucks & Buses (T&B) Farm of 455.05%. 7.61% 100 are exclusive dealers running the CEAT Light Commercial Vehicles (LCVs) PAT: The Profit After Tax (PAT) stood at Rs. 161.04 Product Shoppe outlets for the PC segment and 96 run Passenger Cars (PC) crores against a loss of Rs. 16.11 crores in Car/Jeep Mix the CEAT Hubs for the T&B segments. Tractors and Trailers 5.38% 2008-09. Two Wheelers and Three Wheelers Market capitalisation: The Company's market Off The Road (OTR) Vehicles capitalisation stood at Rs. 510.91 crores as on Industrial Vehicles 31st March, 2010. Light Commercial Vehicles (LCVs) 9.70% EPS: The Earnings Per Share (EPS) of the Company increased to Rs. 47.03 from Rs. (4.71) in the Trucks & Buses (T&B) 60.61% previous year. 2 3 CAPACITY EXPANSION A state-of-the-art radial manufacturing facility at Halol in Gujarat with a capacity of 130 Tonnes Per Day (TPD) for truck, bus, light truck & passenger car radials is expected to be operational by the third quarter of 2010-11. Additional capacity of 30 TPD at Nasik facility, will increase total manufacturing BUSINESS capacity to 570 TPD by the end of 2011-12. OVERVIEW WHEEL MANAGEMENT CENTRES (WMCs) WMC is a unique initiative to expand reach and customer contact across the country, which apart from selling tyres will offer a plethora of services including wheel alignment, greasing, repair of tyres, nitrogen inflation and retreading of tyres. CONNECTING WITH THE YOUTH Apart from sponsoring shows like MTV Roadies and Stunt Mania as well as college festivals at various IITs, the Company has also made its presence felt on online forums like Facebook, Twitter and blogs. 5 CAPACITY EXPANSION A state-of-the-art radial manufacturing facility at Halol in Gujarat with a capacity of 130 Tonnes Per Day (TPD) for truck, bus, light truck & passenger car radials is expected to be operational by the third quarter of 2010-11. Additional capacity of 30 TPD at Nasik facility, will increase total manufacturing BUSINESS capacity to 570 TPD by the end of 2011-12. OVERVIEW WHEEL MANAGEMENT CENTRES (WMCs) WMC is a unique initiative to expand reach and customer contact across the country, which apart from selling tyres will offer a plethora of services including wheel alignment, greasing, repair of tyres, nitrogen inflation and retreading of tyres. CONNECTING WITH THE YOUTH Apart from sponsoring shows like MTV Roadies and Stunt Mania as well as college festivals at various IITs, the Company has also made its presence felt on online forums like Facebook, Twitter and blogs. 5 ENVIRONMENT CONSERVATION INITIATIVES Instead of using environment polluting fuels to run our plants, we use environment friendly bio-mass briquettes made from sugarcane, baggasse, CEAT HUBS mustard seed and shoots etc. thereby creating a source of additional income for CEAT Hubs are outlets that primarily sell and service truck and LCV tyres and were the farmers. launched to expand the presence in rural markets. All CEAT tyres are specially engineered to provide low rolling resistance which gets During the year, this initiative was given a significant push by increasing the converted to lower fuel consumption for the customer.