CEAT Limited was incorporated as a public limited … PD.pdf · Placement Document Not for Circulation Private and Confidential Serial No. [ ] Dated: November 26, 2014 CEAT LIMITED

Placement Document

Not for Circulation

Private and Confidential

Serial No. [●]

Dated: November 26, 2014

CEAT LIMITED

CEAT Limited was incorporated as a public limited company under the Companies Act, 1956, in the name of CEAT Tyres of India Limited in 1958. Subsequently, the

name of CEAT Tyres of India Limited was changed to CEAT Limited in 1990. The registered office of our Company is at 463, Dr. Annie Besant Road, Worli, Mumbai

- 400030, India; Telephone: +91-22-2493 0621; Fax: +91-22-24938933; email: [email protected]; website: www.ceat.in; corporate identification number:

L25100MH1958PLC011041.

CEAT Limited (our “Company” or the “Issuer”) is issuing up to 4,494,382 equity shares of face value of ` 10 each (“Equity Shares”) at a price of ` 890 per Equity

Share, including a premium of ` 880 per Equity Share, aggregating to ` 4,000 million (“Issue”).

ISSUE IN RELIANCE UPON SECTIONS 42 AND 62 OF THE COMPANIES ACT, 2013, READ WITH RULE 14 OF THE COMPANIES (PROSPECTUS

AND ALLOTMENT OF SECURITIES) RULES, 2014, AND CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF

CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 (“SEBI ICDR Regulations”), AS AMENDED.

THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL BUYERS

(“QIB”) AS DEFINED IN SEBI ICDR REGULATIONS IN RELIANCE UPON CHAPTER VIII OF SEBI ICDR REGULATIONS, AS AMENDED AND

SECTION 42 OF THE COMPANIES ACT, 2013 AND RULES MADE THEREUNDER. THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH

PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC

OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA OTHER THAN QIB. THIS PLACEMENT DOCUMENT

WILL BE CIRULATED ONLY TO SUCH QIBS WHOSE NAMES ARE RECORDED BY OUR COMPANY PRIOR TO MAKING AN INVITATION TO

SUBSCRIBE TO EQUITY SHARES.

Invitations, offers and sales of the Equity Shares shall only be made pursuant to the Preliminary Placement Document, the Placement Document, the Application Form

and the Confirmation of Allocation Note. See ―Issue Procedure. The distribution of this Placement Document or the disclosure of its contents to any person, other

than QIBs and persons retained by QIBs to advise them with respect to their purchase of the Equity Shares, is unauthorized and prohibited. Each prospective investor,

by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents

referred to in this Placement Document.

Copies of the Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter)) have been delivered to the

National Stock Exchange of India Limited (“NSE”) and the BSE Limited (“BSE”) (collectively the Stock Exchanges”). This Placement Document has not been

reviewed by the Securities and Exchange Board of India (“SEBI”), the Reserve Bank of India (”RBI”), the Stock Exchanges or any other regulatory or listing

authority and is intended only for use by QIBs. Copies of the Placement Document (which includes disclosures prescribed under Form PAS-4) have been delivered

with the Stock Exchanges in accordance with the SEBI ICDR Regulations. This Placement Document has not been and will not be registered as a prospectus with the

RoC, and will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. The Issue is meant only for QIBs by way of a private placement and is not an offer to the public or to any other class of investors.

INVESTMENTS IN THE EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST ANY FUNDS

IN THIS ISSUE UNLESS THEY ARE PREPARED TO TAKE THE RISK OF LOSING ALL OR PART OF THEIR INVESTMENTS. PROSPECTIVE

INVESTORS ARE ADVISED TO READ THE SECTION TITLED “RISK FACTORS” ON PAGE 40 CAREFULLY BEFORE TAKING AN

INVESTMENT DECISION IN THIS ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS ADVISORS ABOUT THE

PARTICULAR CONSEQUENCES TO IT OF AN INVESTMENT IN THE EQUITY SHARES BEING ISSUED PURSUANT TO THIS PLACEMENT

DOCUMENT.

The information on our Company‘s website or any website directly or indirectly linked to our Company‘s website does not form part of this Placement Document and

prospective investors should not rely on such information contained in, or available through, such websites.

All of our Company’s outstanding Equity Shares are listed on the Stock Exchanges. The closing price of the outstanding Equity Shares on the BSE and the NSE on

November 25, 2014 was ` 909.45 and ` 910.45 per Equity Share, respectively. In-principle approvals under Clause 24(a) of the Listing Agreement for listing of the Equity Shares have been received from the BSE and the NSE on November 24, 2014. Applications to the Stock Exchanges will be made for obtaining final listing and

trading approvals for the Equity Shares offered through this Placement Document. The Stock Exchanges assume no responsibility for the correctness of any statements

made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our business or the Equity Shares.

YOU MAY NOT BE AND ARE NOT AUTHORIZED TO (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; (2)

REPRODUCE THIS PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3) RELEASE ANY PUBLIC ADVERTISEMENTS OR

UTILISE ANY MEDIA, MARKETING OR DISTRIBUTION CHANNELS OR AGENTS TO INFORM THE PUBLIC AT LARGE ABOUT THE ISSUE.

ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH

THIS INSTRUCTION MAY RESULT IN A VIOLATION OF APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION

WITH THE PROPOSED ISSUE OF THE EQUITY SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT.

The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or the laws of any state of

the United States, and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the U.S.

Securities Act and applicable U.S. state securities laws. Accordingly, the Equity Shares are being offered, sold and delivered (i) in the United States only to qualified

institutional buyers (as defined in Rule 144A under the U.S. Securities Act) pursuant to section 4 (a)(2) under the U.S. Securities Act or another available exemption

from the registration requirements of the U.S. Securities Act, and (ii) to QIBs (as defined in SEBI ICDR Regulations) outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act (“Regulation S”). See “Selling and Transfer Restrictions” on page 152.

BOOK RUNNING LEAD MANAGERS

JM Financial Institutional Securities Limited

Standard Chartered Securities (India) Limited

TABLE OF CONTENTS

NOTICE TO INVESTORS .................................................................................................................. 3

REPRESENTATIONS BY INVESTORS ........................................................................................... 6

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES ........................................................... 11

PRESENTATION OF FINANCIAL AND OTHER DATA ............................................................ 12

MARKET AND INDUSTRY DATA ................................................................................................. 13

FORWARD LOOKING STATEMENTS ......................................................................................... 14

ENFORCEMENT OF CIVIL LIABILITIES ................................................................................... 16

EXCHANGE RATES ......................................................................................................................... 17

DEFINITIONS AND ABBREVIATIONS ........................................................................................ 18

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE

COMPANIES ACT, 2013 ................................................................................................................... 23

SUMMARY OF BUSINESS ............................................................................................................... 25

SUMMARY OF THE ISSUE ............................................................................................................. 31

SUMMARY FINANCIAL INFORMATION ................................................................................... 33

RISK FACTORS ................................................................................................................................. 40

MARKET PRICE INFORMATION ................................................................................................. 63

USE OF PROCEEDS .......................................................................................................................... 66

CAPITALIZATION ........................................................................................................................... 67

CAPITAL STRUCTURE ................................................................................................................... 68

DIVIDEND POLICY .......................................................................................................................... 71

INDUSTRY OVERVIEW .................................................................................................................. 72

OUR BUSINESS ................................................................................................................................. 86

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS ......................................................................................................... 104

HISTORY AND OTHER CORPORATE MATTERS ................................................................... 120

REGULATIONS AND POLICIES .................................................................................................. 124

BOARD OF DIRECTORS AND SENIOR MANAGEMENT ....................................................... 126

PRINCIPAL SHAREHOLDERS AND OTHER INFORMATION ............................................. 134

ISSUE PROCEDURE ....................................................................................................................... 140

PLACEMENT AGREEMENT ........................................................................................................ 150

SELLING AND TRANSFER RESTRICTIONS ............................................................................ 152

THE SECURITIES MARKET OF INDIA ..................................................................................... 161

DESCRIPTION OF EQUITY SHARES ......................................................................................... 165

INDEPENDENT AUDITORS .......................................................................................................... 169

STATEMENT OF TAX BENEFITS ............................................................................................... 170

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS .................. 184

LEGAL PROCEEDINGS ................................................................................................................ 189

GENERAL INFORMATION .......................................................................................................... 203

FINANCIAL INFORMATION ....................................................................................................... 204

DECLARATION............................................................................................................................... 205

DECLARATION............................................................................................................................... 206

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NOTICE TO INVESTORS

Our Company has furnished and accept full responsibility for the information contained in this Placement

Document and confirm that, to the best of our knowledge and belief, having made all reasonable enquiries, the

Placement Document contains all information with respect to us and the Equity Shares which is material in the

context of this Issue. The statements contained in this Placement Document relating to us and the Equity Shares

are, in all material respects, true and accurate and not misleading. The opinions and intentions expressed in this

Placement Document with regard to us and the Equity Shares are honestly held, have been reached after

considering all relevant circumstances, are based on information presently available to us and are based on

reasonable assumptions. There are no other facts in relation to us and the Equity Shares, the omission of which

would, in the context of this Issue, make any statement in this Placement Document misleading in any material

respect. Further, all reasonable enquiries have been made by us to ascertain such facts and to verify the accuracy

of all such information and statements.

The Book Running Lead Managers (“BRLMs”) have made reasonable enquiries but have not separately verified

all of the information contained in this Placement Document (financial, legal or otherwise). Accordingly, neither

the BRLMs nor any of their respective affiliates including any of their respective shareholders, directors,

officers, employees, counsel, representatives, or agents make any express or implied representation, warranty or

undertaking, and no responsibility or liability is accepted by any of the BRLMs or any of their respective

shareholders, directors, officers, employees, counsel, representatives, or agents as to the accuracy or

completeness of the information contained in this Placement Document or any other information supplied in

connection with the Equity Shares. Each person receiving this Placement Document acknowledges that such

person has not relied on the BRLMs or any of their respective affiliates including any of their respective

shareholders, directors, officers, employees, counsel, representatives or agents in connection with such person’s

investigation of the accuracy of such information or such person’s investment decision, and each such person

must rely on its own examination of us and the merits and risks involved in investing in the Equity Shares.

Prospective investors should not construe the contents of this Placement Document as legal, tax, accounting or

investment advice.

No person is authorized to give any information or to make any representation not contained in this Placement

Document and any information or representation not so contained must not be relied upon as having been

authorized by or on behalf of us or any of the BRLMs. The delivery of this Placement Document at any time

does not imply that the information contained in it is correct as at any time subsequent to its date.

The Equity Shares have not been approved, disapproved or recommended by any other regulatory

authority in any jurisdiction. No such authority has passed on or endorsed the merits of this Issue or the

accuracy or adequacy of this Placement Document. Any representation to the contrary may be a criminal

offence in certain jurisdictions.

The Equity Shares have not been recommended by any foreign federal or state securities commission or

regulatory authority. As such, this Placement Document does not constitute, and may not be used for or in

connection with, an offer or solicitation by any one in any jurisdiction in which such offer or solicitation is not

authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has

been taken by the Bank and the Book Running Lead Managers which would permit an issue of the Equity

Shares or distribution of this Placement Document in any jurisdiction, other than India, where action for that

purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and

neither this Placement Document nor any other Issue-related materials in connection with the Equity Shares may

be distributed or published in or from any country or jurisdiction, except under circumstances that will result in

compliance with any applicable rules and regulations of any such country or jurisdiction.

The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended

(the “U.S. Securities Act”), or the laws of any state of the United States and may not be offered, sold or

delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the

U.S. Securities Act and applicable U.S. state securities laws. Accordingly, the Equity Shares are being offered,

sold and delivered (i) in the United States only to qualified institutional buyers (as defined in Rule 144A under

the U.S. Securities Act) pursuant to section 4 (a)(2) under the U.S. Securities Act or another available exemption

from the registration requirements of the U.S. Securities Act, and (ii) to QIBs (as defined in SEBI ICDR

Regulations) outside the United States in offshore transactions in reliance on Regulation S under the U.S.

Securities Act (“Regulation S”). Prospective purchasers that are qualified institutional buyers (as defined in

Rule 144A under the U.S. Securities Act) are hereby notified that the seller of the Equity Shares may be relying

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on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A.The Equity

Shares are transferable only in accordance with the restrictions described in the section “Selling and Transfer

Restrictions”. Purchaser of the Equity Shares will be deemed to make the representations set forth in the

sections “Representations by Investors” and “Selling and Transfer Restrictions”.

The Equity Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission,

any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the

foregoing authorities passed upon or endorsed the merits of the Issue or the accuracy or adequacy of this

Placement Document. Any representation to the contrary is a criminal offense in the United States. See the

section “Selling and Transfer Restrictions”. If you purchase the Equity Shares in the Issue, you will be deemed

to have made the representations and agreements described in the sections “Representations by Investors” and

“Selling and Transfer Restrictions” with respect to that purchase.

The distribution of this Placement Document and the issuance of Equity Shares pursuant to this Issue may be

restricted by law in certain jurisdictions. As such, this Placement Document does not constitute, and may not be

used for, or in connection with, an offer or solicitation by any one in any jurisdiction in which such offer or

solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In

particular, no action has been taken by us or the BRLMs which would permit an Issue of the Equity Shares or

distribution of this Placement Document in any jurisdiction, other than India, where action for that purpose is

required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this

Placement Document nor any other Issue related materials in connection with the Equity Shares may be

distributed or published, in or from any country or jurisdiction except under circumstances that will be in

compliance with any applicable rules and regulations of any such country or jurisdiction.

In making an investment decision, prospective investors must rely on their own examination of us and the terms

of this Issue, including the merits and risks involved. Investors should not construe the contents of this

Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel

and advisors as to business, legal, tax, accounting and related matters concerning the Issue. In addition, neither

we nor any of the BRLMs are making any representation to any offeree or purchaser of the Equity Shares

regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal,

investment or similar laws or regulations.

Each purchaser of the Equity Shares in this Issue is deemed to have acknowledged, represented and

agreed that it is eligible to invest in India and in the Equity Shares under Indian law, including Chapter

VIII of the SEBI ICDR Regulations and is not prohibited by SEBI or any other statutory authority from

buying, selling or dealing in securities including Equity Shares. Each purchaser of Equity Shares in this

Issue also acknowledges that it has been afforded an opportunity to request from us and has reviewed

information relating to us and the Equity Shares.

The information on our website, www.ceat.in, or any website directly or indirectly linked to our website or on

the respective websites of the BRLMs or their respective affiliates or any website directly or indirectly linked to

such websites does not constitute or form a part of this Placement Document. Prospective investors should not

rely on the information contained in, or available through, any such websites.

This Placement Document contains a summary of some terms of certain documents which are qualified in their

entirety by the terms and conditions of those documents.

NOTICE TO INVESTORS IN CERTAIN JURISDICTIONS

Notice to New Hampshire residents

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED

STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS

EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW

HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW

HAMPSHIRE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B OF THE NEW

HAMPSHIRE REVISED STATUTES IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER

ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR

5

A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW

HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR

RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT

IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,

CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF

THIS PARAGRAPH.

For information in certain other jurisdictions see the section “Selling and Transfer Restrictions”.

6

REPRESENTATIONS BY INVESTORS

All references to “you” or “your” in this section are to the prospective investors in this Issue. By bidding for and

subscribing to any of the Equity Shares in this Issue, you are deemed to have represented, warranted,

acknowledged and agreed to us and the BRLMs as follows:

(a) you (i) are an Eligible QIB as defined in this Placement Document and are not excluded pursuant to

Regulation 86(1)(b) of the SEBI ICDR Regulations; (ii) have a valid and existing registration under

applicable laws of India (as applicable); and (iii) undertake to acquire, hold, manage or dispose of any

Equity Shares that are Allocated to you for the purposes of your business in accordance with Chapter VIII

of the SEBI ICDR Regulations and undertake to comply with the SEBI ICDR Regulations, the Companies

Act, 2013, the Companies Act, 1956 to the extent applicable and all other applicable laws, including in

respect of reporting requirements, if any;

(b) if you are not a resident of India, but an Eligible QIB, (i) you are a FPI as defined in this Placement

Document including an FII (including a sub-account other than a sub-account which is a foreign corporate

or a foreign individual) and (ii) have a valid and existing registration with SEBI under the applicable laws

in India

(c) you are eligible to invest in India under applicable laws, including the Foreign Exchange Management

(Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended and any

notification, circulars or clarification issued thereunder, and have not been prohibited by SEBI or any other

regulatory authority from buying, selling or dealing in securities;

(d) you will make all necessary filings with the appropriate regulatory authorities including with the RBI, as

required, pursuant to applicable laws;

(e) if you are Allotted Equity Shares pursuant to this Issue, you shall not, for a period of one year from the

date of Allotment, sell the Equity Shares so acquired except on the Stock Exchanges. Additional

restrictions apply if you are within the United States, please see “Selling and Transfer Restrictions”;

(f) you are aware that this Placement Document has not been, and will not be, registered as a prospectus under

the Companies Act, 2013 and the SEBI ICDR Regulations or under any other law in force in India. You

are aware that this Placement Document has not been reviewed or affirmed by SEBI, RBI or the Stock

Exchanges or any other regulatory or listing authority and is intended for use only by Eligible QIBs. The

Preliminary Placement Document and this Placement Document has been filed with the Stock Exchanges

for record purposes only and the Preliminary Placement Document and this Placement Document has been

displayed on the websites of our Company and the Stock Exchanges;

(g) you are entitled and have necessary capacity to acquire/subscribe for the Equity Shares under the laws of

all relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all

such governmental and other consents in each case which may be required there under and complied with

all necessary formalities and have obtained all necessary consents and authorities to enable you to commit

to participation in this Issue and to perform your obligations in relation thereto (including, in the case of

any person on whose behalf you are acting, all necessary consents and authorizations to agree to the terms

set out or referred to in this Placement Document), and will honor such obligations;

(h) neither we nor the BRLMs nor any of their respective shareholders, directors, officers, employees,

counsel, representatives, agents or affiliates is making any recommendation to you or, advising you

regarding the suitability of any transactions it may enter into in connection with this Issue; your

participation in this Issue is on the basis that you are not, and will not, upto Allotment, be a client of any of

the BRLMs and that neither the BRLMs nor any of their respective shareholders, directors, officers,

employees, counsel, representatives, agents or affiliates have any duty or responsibilities to you for

providing the protection afforded to their clients or customers for providing advice in relation to this Issue

and are not in any way acting in any fiduciary capacity;

(i) you confirm that, either: (i) you have not participated in or attended any investor meetings or presentations

by us or our agents (“Company Presentations”) with regard to us or this Issue; or (ii) if you have

participated in or attended any Company Presentations: (a) you understand and acknowledge that the

BRLMs may not have knowledge of the statements that we or its agents may have made at such Company

7

Presentations and are therefore unable to determine whether the information provided to you at such

Company Presentations may have included any material misstatements or omissions, and, accordingly you

acknowledge that the BRLMs has advised you not to rely in any way on any information that was provided

to you at such Company Presentations, and (b) confirm that you have not been provided any material

information that was not publicly available;

(j) you are aware and understand that the Equity Shares are being offered only to Eligible QIBs and are not

being offered to the general public and the allotment of the Equity Shares shall be on a discretionary basis

at the discretion of our Company in consultation with the BRLMs;

(k) all statements other than statements of historical fact included in this Placement Document, including,

without limitation, those regarding our financial position, business strategy, plans and objectives of

management for future operations (including development plans and objectives relating to our products),

are forward-looking statements. Such forward-looking statements involve known and unknown risks,

uncertainties and other important factors that could cause actual results to be materially different from

future results, performance or achievements expressed or implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding our present and future

business strategies and environment in which we will operate in the future. You should not place reliance

on forward looking statements, which speak only as at the date of this Placement Document. We assume

no responsibility to update any of the forward-looking statements contained in this Placement Document;

(l) you have been provided a serially numbered copy of the Preliminary Placement Document and have read

the Preliminary Placement Document in its entirety including, in particular the section “Risk Factors”;

(m) that in making your investment decision (i) you have relied on your own examination of our Company on

a standalone and consolidated basis and the terms of this Issue, including the merits and risks involved; (ii)

you have made your own assessment of our Company, the Equity Shares and the terms of this Issue based

solely on the information contained in the Preliminary Placement Document and the Placement Document

and no other representation by us or any other party; (iii) you have consulted your own independent

advisors (including tax advisors) or otherwise have satisfied yourself concerning, without limitation, the

effects of local laws and taxation matters; (iv) you have relied solely on the information contained in the

Preliminary Placement Document and the Placement Documents and no other disclosure or representation

by us or the BRLMs or any other party; (v) you have received all information that you believe is necessary

or appropriate in order to make an investment decision in respect of us and the Equity Shares; (vi) relied

upon your investigation and resources in deciding to invest in this Issue. You are seeking to subscribe

to/acquire the Equity shares in this Issue for your own investment and not with a view to resale or

distribution;

(n) you are a sophisticated investor and have such knowledge and experience in financial and business matters

as to be capable of evaluating the merits and risks of the investment in the Equity Shares and you and any

accounts for which you are subscribing to the Equity Shares (i) are each able to bear the economic risk of

the investment in the Equity Shares; (ii) will not look to us, the BRLMs or their respective shareholders,

directors, officers, employees, counsels, representatives, agents or affiliates for all or part of any such loss

or losses that may be suffered including losses arising out of non-performance by our Company of any of

its respective obligations or any breach of any representations and warranties by our Company, whether to

you or otherwise; (iii) are able to sustain a complete loss on the investment in the Equity Shares; (iv) have

no need for liquidity with respect to the investment in the Equity Shares; and (v) have no reason to

anticipate any change in your or their circumstances, financial or otherwise, which may cause or require

any sale or distribution by you or them of all or any part of the Equity Shares;

(o) neither the BRLMs nor any of their shareholders, investors, officers, employees, counsel, agents,

representatives or affiliates has provided you with any tax advice or otherwise made any representations

regarding the tax consequences of purchase, ownership or disposal of the Equity Shares (including, but not

limited, to this Issue and the use of the proceeds from the Equity Shares). You will obtain your own

independent tax advice from a reputable service provider and will not rely on the BRLMs or any of its

shareholders, investors, officers, employees, counsel, agents, representatives or affiliates when evaluating

the tax consequences of the Equity Shares (including, but not limited to, this Issue and the use of the

proceeds from the Equity Shares). You waive and agree not to assert any claim against us, the BRLMs or

any of its shareholders, investors, officers, employees, counsel, agents, representatives or affiliates with

respect to the tax aspects of the Equity Shares or as a result of any tax audits by tax authorities, wherever

8

situated;

(p) that where you are acquiring the Equity Shares for one or more managed accounts, you represent and

warrant that you are authorized in writing, by each such managed account to acquire the Equity Shares for

each managed account and to make (and you hereby make) the representations, warranties,

acknowledgements and agreements herein for and on behalf of each such account, reading the reference to

“you” to include such accounts;

(q) you agree and acknowledge that in terms of Section 42(7) of the Companies Act, 2013, we shall file the

list of QIBs (to whom the Preliminary Placement Document has been circulated) along with other

particulars with the RoC and SEBI within 30 days of circulation of the Preliminary Placement Document

and other filings required under the Companies Act, 2013;

(r) you are not a ‘Promoter’ of our Company, as defined under section 2(69) of the Companies Act, 2013 and

the SEBI ICDR Regulations, and are not a person related to the Promoter or to group companies of the

Promoter, either directly or indirectly and your Bid does not directly or indirectly represent the Promoter

or Promoter Group or persons related to the Promoter of our Company or to group companies of the

Promoter of our Company;

(s) you have no rights under a shareholders’ agreement or voting agreement with the Promoter or persons

related to the Promoter, no veto rights or right to appoint any nominee director on the Board of Directors

of our Company other than such rights acquired, if any, in the capacity of a lender not holding any Equity

Shares of our Company, the acquisition of which shall not deem you to be a Promoter, a person related to

the Promoter;

(t) you have no right to withdraw your Bid after the Issue Closing Date;

(u) you are eligible to Bid and hold the Equity Shares so Allotted together with any Equity Shares held by you

prior to this Issue. You further confirm that your aggregate holding upon this Issue of the Equity Shares

shall not exceed the level permissible as per any applicable regulations;

(v) the Bid submitted by you would not eventually result in triggering a tender offer under the Securities and

Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as

amended (the “Takeover Code”);

(w) your aggregate holding, together with other Eligible QIBs participating in this Issue that belong to the

same group or are under common control as you, pursuant to the Allotment under the present Issue, shall

not exceed 50% of this Issue. For the purposes of this representation:

(a) the expression “belongs to the same group” shall be interpreted by applying the concept of

“companies under the same group” as provided in sub-section (11) of Section 372 of the

Companies Act, 1956; and

(b) “Control” shall have the same meaning as is assigned to it under Regulation 2 (i)(e)of the

Takeover Code;

(x) you shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time

that the final listing and trading approvals for the Equity Shares are issued by the BSE and the NSE;

(y) you are aware that the pre and post issue shareholding pattern of our Company in the format prescribed in

clause 35 of the Listing Agreements will be filed by our Company with the Stock Exchanges, and that if

you are Allotted more than 5.0% of the Equity Shares in this Issue, we shall be required to disclose your

name and the number of Equity Shares Allotted to you to the Stock Exchanges and the Stock Exchanges

will make the same available on their website and you consent to such disclosure being made by us;

(z) you are aware that our Company shall make necessary filings with the RoC pursuant to the Allotment

(which shall include certain details such as your name, address and number of Equity Shares Allotted) and

if the Allotment of Equity Shares in the Issue results in you being one of the top ten shareholders of our

Company, we shall also be required to disclose your name and shareholding details to the RoC within 15

days of Allotment, and you consent to such disclosure being made by us;

9

(aa) you are aware that (i) applications for in-principle approval, in terms of Clause 24(a) of the Equity Listing

Agreements, for listing and admission of the Equity Shares and for trading on the BSE and the NSE, were

made and an approval has been received from BSE and the NSE, and (ii) the applications for the final

listing and trading approvals will be made only after Allotment. There can be no assurance that the final

approvals for listing and trading in the Equity Shares will be obtained in time or at all. We shall not be

responsible for any delay or non-receipt of such final approvals for listing and trading or any loss arising

from such delay or non-receipt.

(bb) you are aware and understand that the BRLMs will have entered into a placement agreement with our

Company (“Placement Agreement”) whereby the BRLMs have, subject to the satisfaction of certain

conditions set out therein, undertaken severally and not jointly to use their reasonable endeavours to seek

to procure subscriptions for the Equity Shares on the terms and conditions set forth herein;

(cc) that the contents of this Placement Document are our exclusive responsibility and that neither the BRLMs

nor any person acting on their behalf, nor any of their respective shareholder, directors, officers,

employees, counsels, advisors, representatives, agents or affiliates has, or shall have, any liability for any

information, representation or statement contained in this Placement Document or any information

previously published by or on behalf of us and will not be liable for your decision to participate in this

Issue based on any information, representation or statement contained in this Placement Document or

otherwise. By accepting a participation in this Issue, you agree and confirm that you have neither received

nor relied on any other information, representation, warranty or statement made by or on behalf of either

of the BRLMs or us or any other person and neither the BRLMs, nor we or our respective directors,

officers, employees, counsels, advisors, representatives, agents or affiliates or any other person will be

liable for your decision to participate in this Issue based on any other information, representation, warranty

or statement that you may have obtained or received;

(dd) that the only information you are entitled to rely on, and on which you have relied in committing yourself

to acquire the Equity Shares, is contained in this Placement Document, such information being all that you

deem necessary to make an investment decision in respect of the Equity Shares issued in pursuance of this

Issue and that you have neither received nor relied on any other information given or representations,

warranties or statements made by BRLMs (including any view, statement, opinion or representation

expressed in any research published or distributed by any of the BRLMs or its affiliates or any view,

statement, opinion or representation expressed by any staff (including research staff) of any of the BRLMs

or its respective affiliates) or our Company or any of their respective shareholders, directors, officers,

employees, counsels, advisors, representatives, agents or affiliates and neither the BRLMs nor our

Company or any of their respective shareholders, directors, officers, employees, counsels, advisors,

representatives, agents or affiliates will be liable for your decision to accept an invitation to participate in

the Issue based on any other information, representation, warranty, statement or opinion;

(ee) you understand that neither the BRLMs nor their affiliates have any obligation to purchase or acquire all or

any part of the Equity Shares purchased by you in this Issue or to support any losses directly or indirectly

sustained or incurred by you for any reason whatsoever in connection with this Issue, including non-

performance by us of any of our obligations or any breach of any representations or warranties by us,

whether to you or otherwise;

(ff) you agree to indemnify and hold us and the BRLMs and their respective affiliates harmless from any and

all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection

with any breach of the representations, warranties, acknowledgements and agreements made by you in this

Placement Document. You agree that the indemnity set forth in this section shall survive the resale of the

Equity Shares by, or on behalf of, the managed accounts;

(gg) that each of the representations, warranties, acknowledgements and agreements set forth above shall

continue to be true and accurate at all times up to and including the Allotment and listing and trading of

the Equity Shares on the Stock Exchanges;

(hh) that we, the BRLMs, their respective affiliates and others will rely on the truth and accuracy of the

foregoing representations, warranties, acknowledgements and agreements which are given to the BRLMs

on their own behalf and on behalf of us and are irrevocable;

10

(ii) that you are a sophisticated investor who is seeking to purchase the Equity Shares for your own investment

and not with a view to distribution. In particular, you acknowledge that (i) an investment in the Equity

Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment,

(ii) you have sufficient knowledge, sophistication and experience in financial and business matters so as to

be capable of evaluating the merits and risk of the purchase of the Equity Shares, and (iii) you are

experienced in investing in private placement transactions of securities of companies in a similar stage of

development and in similar jurisdictions and have such knowledge and experience in financial, business

and investment matters that you are capable of evaluating the merits and risks of your investment in the

Equity Shares;

(jj) any dispute arising in connection with this Issue will be governed by and construed in accordance with the

laws of the Republic of India and the courts at Mumbai, India shall have exclusive jurisdiction to settle any

disputes which may arise out of or in connection with the Preliminary Placement Document and this

Placement Document; and

(kk) you have made, or been deemed to have made, as applicable, the representations set forth in this section

and in the section “Selling and Transfer Restrictions”.

Off-Shore Derivative Instruments (P-Notes)

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of

Regulation 22 of the SEBI (FPI) Regulations, an FPI (other than a Category III foreign portfolio investors and

unregulated broad based funds which are classified as FPI by virtue of their investment manager being

appropriately regulated), including the affiliates of the Book Running Lead Managers, may issue, subscribe or

otherwise deal in offshore derivative instruments as defined under the SEBI (FPI) Regulations as any

instrument, by whatever name called, which is issued overseas by a FPI against securities held by it that are

listed or proposed to be listed on any recognised stock exchange in India, as its underlying (all such offshore

derivative instruments are referred to herein as “P-Notes”) for which they may receive compensation from the

purchasers of such P-Notes, listed or proposed to be listed on any recognized stock exchange in India only in

favour of those entities which are regulated by any appropriate foreign regulatory authorities in the countries of

their incorporation or establishment subject to compliance with “know your client” requirements. An FPI shall

also ensure that further issue or transfer of any instrument referred to above issued by or on behalf of it, is made

only to persons who are regulated by appropriate foreign regulatory authorities. P-Notes have not been and are

not being offered or sold pursuant to this Placement Document. This Placement Document does not contain any

information concerning P-Notes, including, without limitation, any information regarding any risk factors

relating thereto.

Any P-Notes that may be issued are not securities of our Company and do not constitute any obligations of,

claim on, or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the

establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-

Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our

Company. Our Company and the BRLMs do not make any recommendation as to any investment in P-Notes

and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be

issued are not securities of the BRLMs and do not constitute any obligations of, or claims on, the BRLMs. FPI

affiliates (other than Category III FPI and unregulated broad based funds which are classified as FPI by virtue of

their investment manager being appropriately regulated) of the BRLMs may purchase, to the extent permissible

under law, Equity Shares in this Issue, and may issue P-Notes in respect thereof. Affiliates of the BRLMs which

are FPIs may purchase, to the extent permitted by applicable laws, the Equity Shares in the Issue and any P-

Notes thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate

disclosure as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the

issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any

P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own

financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including

whether P-Notes are issued in compliance with applicable laws and regulations.

11

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, copy of the Placement Document has been submitted to the Stock Exchanges. The Stock

Exchanges do not in any manner:

1. warrant, certify or endorse the correctness or completeness of any of the contents of this Placement

Document;

2. warrant that the Equity Shares issued pursuant to this Issue will be listed or will continue to be listed on

the Stock Exchanges; or

3. take any responsibility for the financial or other soundness of this Company, its management or any

scheme or project of this Company.

It should not for any reason be deemed or construed to mean that this Placement Document has been cleared or

approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquires any Equity

Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim

against the Stock Exchanges whatsoever by reason of any loss which may be suffered by such person

consequent to, or in connection with, such subscription/acquisition whether by reason of anything stated or

omitted to be stated herein or for any other reason whatsoever.

12

PRESENTATION OF FINANCIAL AND OTHER DATA

In this Placement Document, unless the context otherwise indicates or implies references to:

“you” “your”, “offeree”, “purchaser”, “subscriber”, “recipient”, “investors” and “potential investor” are to

the prospective investors of the Equity Shares issued pursuant to this Issue;

“we” “us”, “our” and the “Group” refer to CEAT Limited along with its Subsidiaries, Associates and Joint

Ventures on a consolidated basis; and

unless otherwise specified, “our Company”, the “Company” or the “Issuer” refers to CEAT Limited on a

standalone basis.

References in this Placement Document to “India” are to the Republic of India and the “Government” or the

“Central Government” or the “State Government” are to the Government of India, Central or State, as

applicable. In this Placement Document, references to “USD” and “U.S. Dollars” are to the legal currency of the

United States and references to “`”, “Rs.”, “INR” and “Rupees” are to the legal currency of the Republic of

India. All references herein to the “U.S.” or the “United States” are to the United States of America and its

territories and possessions, and all references to “India” are to the Republic of India and its territories and

possessions.

Financial Data

Our Company publishes its financial statements in Indian Rupees rounded off to the nearest thousand (` in lacs).

Our Company prepares its financial statements in accordance with Indian Generally Accepted Accounting

Principles (“Indian GAAP”). Indian GAAP differs in certain respects from International Financial Reporting

Standards (“IFRS”) and U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). We do not provide a

reconciliation of our financial statements to IFRS or U.S. GAAP. We also do not provide a summary of

differences between Indian GAAP, IFRS and U.S. GAAP. Each of U.S. GAAP and IFRS differs in significant

respects from Indian GAAP. Accordingly, the degree to which the financial statements prepared in accordance

with Indian GAAP included in this Placement Document will provide meaningful information is entirely

dependent on the reader’s level of familiarity with the respective accounting practices. Any reliance by persons

not familiar with Indian accounting practices on the financial disclosures presented in this Placement Document

should accordingly be limited and we urge you to consult your own advisors regarding such differences and

their impact on the financial data.

In this Placement Document, certain monetary thresholds have been subject to rounding adjustments;

accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which

precede them.

Unless the context requires otherwise, the financial data in this Placement Document is derived from our

consolidated financial statements. Our Financial Year commences on April 1 of each year and ends on March

31 of the succeeding year, so all references to a particular “Fiscal year” or “Fiscal” or “Financial Year” or “FY”

are to the 12 month period ended on March 31 of that year. Our audited consolidated financial statements for the

financial years March 2014, March 2013 and March 2012 “Audited Consolidated Financial Statements” and

our unaudited interim condensed consolidated financial statements and notes thereto for the six months ended

September 30, 2014 “Unaudited Interim Condensed Consolidated Financial Statements” that appear in this

Placement Document have been prepared by our Company in accordance with Indian GAAP. The Audited

Consolidated Financial Statements and the Unaudited Interim Condensed Consolidated Financial Statements are

collectively referred to herein as the “Financial Statements”.

13

MARKET AND INDUSTRY DATA

Information regarding market size, market share, market position, growth rates and other industry data

pertaining to our business contained in this Placement Document consists of estimates based on data reports

compiled by governmental bodies, professional organisations and analysts and on data from other external

sources, and on our knowledge of markets in which we compete. The statistical information included in this

Placement Document has been reproduced from various trade, industry and government publications and

websites.

This data is subject to change and cannot be verified with complete certainty due to limits on the availability and

reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many

cases, there is no readily available external information (whether from trade or industry associations,

government bodies or other organisations) to validate market-related analysis and estimates, so we have relied

on internally developed estimates. Industry publications generally state that the information they generally

contain has been obtained from sources believed to be reliable but that the accuracy and completeness of the

information is not guaranteed.

Neither we nor the BRLMs has independently verified this data and neither we nor the BRLMs make any

representation regarding the accuracy or completeness of such data. Similarly, while we believe our internal

estimates to be reasonable, such estimates have not been verified by any independent source and we cannot

assure potential investors as to their accuracy. Similarly, internal estimates and surveys, industry forecasts and

market research, while believed to be reliable, have not been independently verified and neither we nor the

BRLMs make any representation as to the accuracy and completeness of information based on trade, industry

and government publications and websites, data reports compiled by government bodies, professional

organisations and analysts, or from other external sources.

The extent to which the market and industry data used in this Placement Document is meaningful

depends on the reader’s familiarity with and understanding of the methodologies used in compiling such

data.

14

FORWARD LOOKING STATEMENTS

All statements contained in this Placement Document that are not statements of historical fact constitute

“forward-looking statements.” Investors can generally identify forward-looking statements by terminology such

as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “can”, “could”, “may”,

“objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would”, “will likely result”, “is

likely”, “are likely”, “believe”, “expect”, “expected to”, “will continue”, “will achieve”, or other words or

phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also

forward-looking statements. However, these are not the exclusive means of identifying forward-looking

statements. All statements regarding our expected financial condition and results of operations and business

plans and prospects are forward-looking statements. These forward-looking statements include statements as to

our business strategy, planned projects, revenue and profitability (including, without limitation, any financial or

operating projections or forecasts), new business and other matters discussed in this Placement Document that

are not historical facts.

These forward-looking statements and any other projections contained in this Placement Document (whether

made by us or any third party) are predictions and involve known and unknown risks, uncertainties, assumptions

and other factors that they may cause our actual results, performance or achievements to be materially different

from any future results, performance or achievements expressed or implied by such forward looking statements

or other projections.

Important factors that could cause our actual results, performances and achievements to be materially different

from any of the forward-looking statements include, among others:

volatility in the cost and availability of raw materials and crude oil;

interruptions at our manufacturing facilities;

disruptions to the operations of the third parties on which we rely for marketing, selling, distribution,

manufacturing and other activities;

our ability to maintain and expand our distribution network;

our ability to implement our strategies, including the expansion projects being considered by us;

product liability, personal injury or other litigation claim or product recalls related to our products;

market and industry risks specific to each geography associated with our international operations;

our inability to compete and increase our market share;

our inability to raise necessary funding for our capital expenditure, including for the capacity expansion

at our Halol Plant, specialty project and two-three wheeler project;

changing laws, rules, regulations, government policies and legal uncertainties;

foreign exchange rates, equity prices and other rates and prices;

certain trade regulation actions by the Government of India or governments of other countries; and

a slowdown in economic growth in India or the other countries in which we operate.

By their nature, certain of the market risk disclosures are only estimates and could be materially different from

what actually occurs in the future. As a result, actual future gains, losses or impact on revenue or income could

materially differ from those that have been estimated, expressed or implied by such forward-looking statements

or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about us

that could cause actual results to differ materially from those contemplated by the relevant forward-looking

statement. Additional factors that could cause our actual results, performance or achievements to differ include

but are not limited to, those discussed under “Risk Factors”, “Our Business” and “Management’s Discussion

and Analysis of Financial Condition and Results of Operations”.

The forward-looking statements contained in this Placement Document are based on the beliefs of the

management, as well as the assumptions made by and information currently available to the management.

Although we believe that the expectations reflected in such forward-looking statements are reasonable at this

time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties,

investors are cautioned not to place reliance on such forward-looking statements. In any event, these statements

speak only as of the date of this Placement Document or the respective dates indicated in this Placement

Document, and undertake no obligation to update or revise any of them, whether as a result of new information,

15

future events or otherwise. If any of these risks and uncertainties materialize, or if any of our underlying

assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially

from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking

statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

16

ENFORCEMENT OF CIVIL LIABILITIES

Our Company is a company incorporated under the laws of India. The Board of Directors of our Company

comprises of 12 Directors all of them are Indian citizens. All of our key managerial personnel are residents of

India and the majority of the assets of our Company and such persons are located in India. As a result, it may

not be possible for investors outside India to effect service of process upon our Company or such persons in

India, or to enforce against them judgments obtained in courts outside India.

India is not a signatory to any international treaty in relation to the recognition or enforcement of foreign

judgments. Recognition and enforcement of foreign judgments is provided for under section 13 and section 44A

of the Code of Civil Procedure, 1908 (“Civil Code”).

Section 13 of the Civil Code provides that a foreign judgment shall be conclusive as to any matter thereby

directly adjudicated upon except:

(a) where it has not been pronounced by a court of competent jurisdiction;

(b) where it has not been given on the merits of the case;

(c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or

a refusal to recognise the law of India in cases where such law is applicable;

(d) where the proceedings in which the judgment was obtained were opposed to natural justice;

(e) where it has been obtained by fraud; or

(f) where it sustains a claim founded on a breach of any law then in force in India.

A foreign judgment which is conclusive under section 13 of the Civil procedure Code can be enforced in India

(i) by instituting execution proceedings; or (ii) by instituting a suit on such judgment. Section 44A of the Civil

Code provides that where a foreign judgment has been rendered by a superior court (within the meaning of that

section) in any country or territory outside India which the Government has by notification declared to be a

reciprocating territory, it may be enforced in India by proceedings in execution as if the foreign judgment had

been rendered by the relevant court in India. Under the Civil Code, a court in India will, upon the production of

any document purporting to be a certified copy of a foreign judgment, presume that the foreign judgment was

pronounced by a court of competent jurisdiction, unless the contrary appears on record but such presumption

may be displaced by proving want of jurisdiction. However, section 44A of the Civil Code is applicable only to

monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like

nature or in respect of a fine or other penalty and is not applicable to arbitration awards.

Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government to be a

reciprocating territory for the purposes of section 44A of the Civil Code but the United States has not been so

declared. A foreign judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced

only by a new suit based upon the foreign judgment and not by proceedings in execution. Such a suit has to be

filed in India within three years from the date of the foreign judgment in the same manner as any other suit filed

to enforce a civil liability in India. Accordingly, a judgment of a court in the United States may be enforced only

by a fresh suit upon the foreign judgment and not by proceedings in execution.

It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is

brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed

the amount of damages awarded as excessive or inconsistent with public policy, and is uncertain whether an

Indian court would enforce foreign judgments that would contravene or violate Indian law. A party seeking to

enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any

amount recovered pursuant to execution, and any such amount may be subject to tax in accordance with

applicable laws. Any judgment for payment of amounts denominated in a foreign currency would be converted

into Rupees on the date of the judgment and not on the date of the payment. We cannot predict whether a suit

brought in an Indian court will be disposed off in a timely manner or be subject to considerable delays.

17

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency

equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect

the conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.

The following table sets forth information with respect to the exchange rates between the Rupee and the U.S.

dollar (` per US$), for the periods indicated. The exchange rates are based on the reference rates released by

RBI, which are available on the website of RBI. No representation is made that any Rupee amounts could have

been, or could be, converted into U.S. dollars at any particular rate, the rates stated below, or at all.

On November 20, 2014 the exchange rate (RBI reference rate) was ` 62.10 to US$ 1.00.

(Source: www.rbi.org.in)

Period end Average(1)

High Low

Financial Year: (` Per US$)

2014 60.10 60.50 68.36 53.74

2013 54.39 54.45 57.22 50.56

2012 51.16 47.95 54.24 43.95

Quarter ended:

September 30, 2014 61.61 60.59 61.61 59.72

June 30, 2014 60.09 59.77 61.12 58.43

March 31, 2014 60.10 61.79 62.99 60.10 (1)

Average of the official rate for each working day of the relevant period.

http://www.rbi.org.in/

18

DEFINITIONS AND ABBREVIATIONS

This Placement Document uses the definitions and abbreviations set forth below, which you should consider

when reading the information contained herein.

The following list of certain capitalized terms used in this Placement Document is intended for the convenience

of the reader/prospective investor only and is not exhaustive.

Unless otherwise specified, the capitalised terms used in this Placement Document shall have the meaning as

defined hereunder. Further any references to any statute or regulations or policies shall include amendments

thereto, from time to time.

“We” “us”, “our” and or “Group” refer to CEAT Limited along with its Subsidiaries, Associates and Joint

Ventures on a consolidated basis. Unless otherwise specified “our Company” the “Company” or the “Issuer”

refers to CEAT Limited on a standalone basis.

Technical and Industry Terms

Term Description

“$”, “US Dollar” or “USD” The legal currency of the U.S.

“AGM” Annual General Meeting

“AIF(s)” Alternative investment funds, as defined and registered with SEBI under the

Securities and Exchange Board of India (Alternative Investment Funds)

Regulations, 2012, as amended

“Allocated /Allocation” The allocation of Equity Shares following the determination of the Issue Price

to Investors on the basis of Application Forms submitted by them, in

consultation with the BRLMs and in compliance with Chapter VIII of the

SEBI ICDR Regulations

“Allotment/Allotted” The issue and allotment of Equity Shares pursuant to this Issue

“Allottee(s)” Bidders who are Allotted Equity Shares of our Company pursuant to this Issue

“Application Form” The form (including any revisions thereof) pursuant to which a Bidder

indicates its interest to subscribe for the Equity Shares of our Company

pursuant to the Issue

“Articles” or “Articles of

Association”

The articles of association of our Company as amended from time to time

“AS” Accounting standards notified under the Companies (Accounting Standards)

Rules, 2006

“Associates” With reference to any company, the associate of that company would mean

any other company within the meaning of the Companies Act

“ATMA” Automotive Tyre Manufacturers' Association

“Auditors” The statutory auditors of our Company, M/s. S R B C & CO LLP, Chartered

Accountants

“BIS” Bureau of International Standards

“BOLT” BSE On-Line Trading

“BSE” BSE Limited

“BRLMs” JM Financial Institutional Securities Limited and Standard Chartered

Securities (India) Limited

“Bid” An indication of interest by an Eligible QIB, including all revisions and

modifications of interest, as provided in the Application Form, to subscribe for

Equity Shares to be issued pursuant to this Issue

“Bidder” Eligible QIBs who have made a Bid pursuant to the terms of the Preliminary

Placement Document and the Application Form

“Bidding Period”/ “Issue

Period”

The period between the Issue Opening Date and Issue Closing Date inclusive

of both dates during which Bidders can submit their Bids

“Board of Directors” or

“Board”

The Board of Directors of our Company, or a duly constituted committee

thereof

“CAN/Confirmation of

Allocation Note”

Note or advice or intimation to not more than 49 Bidders confirming the

allocation of Equity Shares to such Bidders after determination of the Issue

19

Term Description

price, and requiring such Bidders to pay the entire applicable Issue Price for

all the Equity Shares Allocated to such Bidders

“CAGR” Compounded Annual Growth Rate

“Category III foreign portfolio

investor(s)”

FPIs who are registered as “Category III foreign portfolio investors” under the

SEBI (FPI) Regulations

“CCI” Competition Commission of India

“CDSL” Central Depository Services (India) Limited

“CFA” Consigning, Storing and Forwarding Agents

“CIN” Corporate Identification Number

“Closing Date” The date on which the Allotment of the Equity Shares offered pursuant to this

Issue shall be made, i.e. on or about November 28, 2014

“Companies Act” The Companies Act, 1956 and/or the Companies Act, 2013, as applicable

“Companies Act, 1956” The Companies Act, 1956 (without reference to the provisions thereof that

have ceased to have effect upon the notification of the Notified Sections) and

the rules made thereunder

“Companies Act, 2013” The Companies Act, 2013, to the extent in force pursuant to notification of the

Notified Sections, and the rules made thereunder

“CRISIL” Credit Rating Information Services of India

“CSR” Corporate Social Responsibility

“Debt to Equity Ratio” Total of long term borrowings and short term borrowings divided by total

shareholders’ funds

“DAP” Development Action Plan

“Depositories Act” The Depositories Act, 1996, as amended from time to time

“Depository” A body corporate registered under SEBI (Depositories and Participant)


“Designated Date The date of credit of Equity Shares pursuant to the Issue to the Allottee’s

demat account, as applicable to the relevant Allottee

“DIN” Director Identification Number

“DP / Depository Participant” A depository participant as defined under the Depositories Act

“DIPP” Department of Industrial Policy and Promotion, Ministry of Commerce and

Industry, Government of India

“Director(s)” Director(s) of our Company, unless otherwise specified

“ECB” External commercial borrowing

“ECB Policy” India’s policy on ECB, as notified by the RBI and currently in force

“EGM” Extraordinary General Meeting

“Eligible QIB” A qualified institutional buyer, as defined under Regulation 2(1)(zd) of the

SEBI ICDR Regulations, provided that, with respect to this Issue, this term

shall not include foreign venture capital investors and multilateral and bilateral

development financial institutions.

“EOM” Emphasis of Matter

“Equity Listing Agreement” The equity listing agreements entered into between our Company and the

Stock Exchanges

“Equity Shares” The equity shares of par value ` 10 each of our Company

“Escrow Account” The account titled ‘CEAT Limited – QIP Escrow Account’ to be opened with

the Escrow Agent, subject to the terms of the Escrow Agreement, into which

the application monies payable by Bidders in connection with subscription to

Equity Shares pursuant to the Issue shall be deposited.

“Escrow Bank”/ “Escrow

Agent”

YES Bank Limited

“Escrow Agreement” Agreement dated November 24, 2014, entered into amongst our Company, the

Escrow Agent and the BRLMs

“FDI” Foreign Direct Investment

“FEMA” Foreign Exchange Management Act, 1999 of India, as amended, and the

regulations framed thereunder

“Foreign Portfolio Investor(s)/

FPI(s)”

Foreign portfolio investors as defined under the SEBI (FPI) Regulations and

includes persons who have been registered under the SEBI (FPI) Regulations.

20

Term Description

Any foreign institutional investor or qualified foreign investor who holds a

valid certificate of registration shall be deemed to be a Foreign Portfolio

Investor till the expiry of the block of three years for which fees have been

paid as per the SEBI FII Regulations

“Financial Year” / “Fiscal

year”/ “Fiscal”/ ”FY”

A period of 12 months ending March 31, unless otherwise stated

“Floor Price” The floor price of ` 930.53 per Equity Share, which has been calculated in

accordance with Chapter VIII of the SEBI ICDR Regulations. In terms of the

SEBI ICDR Regulations, the Issue Price cannot be lower than the Floor Price.

Our Company may offer a discount of not more than 5% on the Floor Price in

terms of Regulation 85 of the SEBI ICDR Regulations.

“FVCI” Foreign venture capital investors, as defined and registered with SEBI under

the Securities and Exchange Board of India (Foreign Venture Capital

Investors) Regulations, 2000, as amended

“GAAP” Generally Accepted Accounting Principles

“GAAR” General Anti-Avoidance Rules

“GDP” Gross Domestic Product

“GHG” Green House Gas

“GoI” or “Government” Government of India, unless otherwise specified

“ICAI” The Institute of Chartered Accountants of India

“IFRS” International Financial Reporting Standards of the International Accounting

Standards Board

“Income Tax Act” or “IT Act” The Income Tax Act, 1961, as amended from time to time

“Insider Trading Regulations” The Securities and Exchange Board of India (Prohibition of Insider Trading)


“Indian GAAP” Generally accepted accounting principles followed in India

“Issue” The offer and issue of up to 4,494,382 Equity Shares each at a price of ` 890

per Equity Share, including a premium of ` 880 per Equity Share, aggregating

` 4,000 million pursuant to chapter VIII of the SEBI ICDR Regulations and

the provisions of the Companies Act, 2013

“Issue Closing Date” November 26, 2014, the last date up to which the Application Forms shall be

accepted by our Company (or the BRLMs, on behalf of our Company)

“Issue Opening Date” November 24, 2014, the date on which the acceptance of the Application

Forms shall have commenced by our Company (or the BRLMs, on behalf of

our Company)

“Issue Price” A price per Equity Share of ` 890

“Issue Size” The aggregate size of the Issue, aggregating to ` 4,000 million

“Joint Ventures” CEAT Kelani Holdings Company (Pvt.) Limited, Associated CEAT (Pvt.)

Limited, CEAT-Kelani International Tyres (Pvt.) Limited, CEAT Kelani

Radials (Pvt.) Limited and Asian Tyres (Pvt.) Limited

“LCV” Light Commercial Vehicle

“Listing Agreements” The agreement executed by a listed company with each of the Stock

Exchanges

“M&HCV” Medium and Heavy Commercial Vehicle

“MDG” Millennium Development Goals

“Memorandum” or

“Memorandum of

Association”

The Memorandum of Association of our Company, as amended from time to

time

“Mutual Fund” A mutual fund registered with SEBI under the SEBI (Mutual Funds)


“Networth” Paid up share capital plus all reserves and surplus (excluding revaluation

reserves)

“Non-Resident Indian(s) or

NRI”

Non-Resident Indian, as defined under Foreign Exchange Management

(Deposit) Regulations

“NPD” New Product Development

“NSDL” National Securities Depository Limited

“NSE” National Stock Exchange of India Limited

21

Term Description

“NTCF” Nylon Tyre Cord Fibre

“OEM” Original Equipment Manufacturer

“OTR” Off-the-Road

“p.a.” Per annum

“PAT” Profit After Tax

“PAN” Permanent Account Number

“PBR” Polybutadiene rubber

“PBT” Profit Before Tax

“Pay-In Date” Last date specified in the CAN for the payment of application monies by the

Eligible QIBs, in the Issue

“Placement Agreement” The agreement dated November 24, 2014 between our Company and the

BRLMs

“Placement Document” This Placement Document dated November 26, 2014 issued in accordance

with Chapter VIII of the SEBI ICDR Regulations and section 42 of the

Companies Act, 2013 and the rules made thereunder.

“Preference Shares” The preference shares of par value ` 10 each of our Company

“Preliminary Placement

Document”

The Preliminary Placement Document dated November 24, 2014 issued in

accordance with Chapter VIII of the SEBI ICDR Regulations

“Promoter” Mr. Harsh Vardhan Goenka, Mr. Anant Vardhan Goenka and Societe CEAT D

Investissement En Asie SA

“Promoter Group” Unless the context requires otherwise, the entities forming part of our

promoter group in accordance with SEBI ICDR Regulations and which are

disclosed by our Company to the Stock Exchanges from time to time

“QBM” Quality Business Management

“QIBs” or “Qualified

Institutional Buyers”

A qualified institutional buyer as defined under Regulation 2(1)(zd) of the

SEBI ICDR Regulations

“RBI” The Reserve Bank of India

“Registered Office” 463, Dr. Annie Besant Road, Worli, Mumbai – 400030, India

“Regulation S” Regulation S under the U.S. Securities Act

“Relevant Date” November 24, 2014, which is the date of the meeting wherein the Board of

Directors, or a duly authorised committee, decide to open the Issue

“RoC” Registrar of Companies, Mumbai

“Rule 144A” Rule 144A under the U.S. Securities Act

“Rs”, “Rupees”, “`” or

“Indian Rupees”

The legal currency of India

“SBR” Styrene butadiene rubber

“SEBI” The Securities and Exchange Board of India constituted under the SEBI Act

“SEBI Act” The Securities and Exchange Board of India Act, 1992, as amended from time

to time

“SEBI (FPI) Regulations” Securities And Exchange Board Of India (Foreign Portfolio Investors)


“SEBI ICDR Regulations” SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as

amended, including instructions and clarifications issued by SEBI from time to

time

“SENSEX” An index of 30 constituent stocks traded on BSE representing a sample of

large, liquid and representative companies

“Shareholders” Persons holding Equity Shares of our Company, unless otherwise specified in

the context thereof

“Stock Exchanges” The BSE and the NSE

“STT” Securities Transaction Tax

“Subsidiaries” Associated CEAT Holdings Company (Pvt.) Limited, CEAT Bangladesh

Limited and Rado Tyres Limited

“SUV” Sports Utility Vehicle

“Takeover Code” The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,

2011, as amended from time to time

“TPD” Tonnes Per Day

22

Term Description

“Unclassified Shares” The unclassified shares of par value ` 10 each of our Company

“Union” Mumbai Shramak Sangh

“United States” or “U.S.” The United States of America, its territories and its possessions and the

District of Columbia

“UK” The United Kingdom of Great Britain and Northern Ireland

“UV” Utility Vehicle

“UVR” Utility Vehicle Radial

“U.S. Securities Act” U.S. Securities Act of 1933, as amended

“VRS” Voluntary Retirement Scheme

23

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES

ACT, 2013

The table below sets out the disclosure requirements as provided in PAS-4 and the relevant pages in

this Placement Document where these disclosures, to the extent applicable, have been provided.

Sr.

No. Disclosure Requirements

Relevant Page of this

Placement Document

1. GENERAL INFORMATION

a. Name, address, website and other contact details of the company indicating

both registered office and corporate office.

Cover page, 207

b. Date of incorporation of the company. 120

c. Business carried on by the company and its subsidiaries with the details of

branches or units, if any.

86-103

d. Brief particulars of the management of the company. 126-133

e. Names, addresses, DIN and occupations of the directors. 126-128

f. Management's perception of risk factors. 40

g. Details of default, if any, including therein the amount involved, duration

of default and present status, in repayment of:

199

(i) Statutory dues; 199 (ii) Debentures and interest thereon; 199 (iii) Deposits and interest thereon; and 199 (iv) Loan from any bank or financial institution and interest thereon. 199 h. Names, designation, address and phone number, email ID of the nodal/

compliance officer of the company, if any, for the private placement offer

process.

203, 207

2. PARTICULARS OF THE OFFER

a. Date of passing of board resolution. 203

b. Date of passing of resolution in the general meeting, authorising the offer

of securities.

203

c. Kinds of securities offered (i.e. whether share or debenture) and class of

security.

Cover page, 31

d. Price at which the security is being offered including the premium, if any,

along with justification of the price.

Cover page, 31

e. Name and address of the valuer who performed valuation of the security

offered.

Not applicable

f. Amount which the company intends to raise by way of securities. 31

g. Terms of raising of securities:

(i) Duration, if applicable; Not applicable

(ii) Rate of dividend or rate of interest Not applicable

(iii) Mode of payment Not applicable

(iv) Repayment Not applicable

h. Proposed time schedule for which the offer letter is valid 32

i. Purposes and objects of the offer 66

j. Contribution being made by the promoters or directors either as part of the

offer or separately in furtherance of such objects

Not applicable

k. Principle terms of assets charged as security, if applicable Not applicable

3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,

LITIGATION ETC.

(i) Any financial or other material interest of the directors, promoters or key

managerial personnel in the offer and the effect of such interest in so far as it

is different from the interests of other persons

130

ii. details of any litigation or legal action pending or taken by any Ministry or

Department of the Government or a statutory authority against any promoter

of the offeree company during the last three years immediately preceding the

year of the circulation of the offer letter and any direction issued by such

Ministry or Department or statutory authority upon conclusion of such

litigation or legal action shall be disclosed

189

24

Sr.

No. Disclosure Requirements

Relevant Page of this

Placement Document

iii. remuneration of directors (during the current year and last three financial

years)

129

iv. Related party transactions entered during the last three financial years

immediately preceding the year of circulation of offer letter including with

regard to loans made or, guarantees given or securities provided

133

v. Summary of reservations or qualifications or adverse remarks of auditors in

the last five financial years immediately preceding the year of circulation of

offer letter and of their impact on the financial statements and financial

position of the company and the corrective steps taken and proposed to be

taken by the company for each of the said reservations or qualifications or

adverse remark

200

vi. Details of any inquiry, inspections or investigations initiated or conducted

under the Companies Act, 2013 or any previous company law in the last three

years immediately preceding the year of circulation of offer letter in the case

of company and all of its subsidiaries. Also if there were any prosecutions

filed (whether pending or not) fines imposed, compounding of offences in the

last three years immediately preceding the year of the offer letter and if so,

section-wise details thereof for the company and all of its subsidiaries

189

vii. Details of acts of material frauds committed against the company in the last

three years, if any, and if so, the action taken by the company

199

4. FINANCIAL POSITION OF THE COMPANY

a. the capital structure of the company in the following manner in a tabular

form:

68

i. a the authorised, issued, subscribed and paid up capital (number of securities,

description and aggregate nominal value)

68

b. size of the present offer 68

c. paid up capital:

A. after the offer

68

B. after conversion of convertible instruments (if applicable) 68

d. share premium account (before and after the offer) 68

ii. the details of the existing share capital of the issuer company in a tabular

form, indicating therein with regard to each allotment, the date of allotment,

the number of shares allotted, the face value of the shares allotted, the price

and the form of consideration

Provided that the issuer company shall also disclose the number and price at

which each of the allotments were made in the last one year preceding the

date of the offer letter separately indicating the allotments made for

considerations other than cash and the details of the consideration in each

case

68

b. Profits of the company, before and after making provision for tax, for the

three financial years immediately preceding the date of circulation of offer

letter

204, F-1 to F-156

c. Dividends declared by the company in respect of the said three financial

years; interest coverage ratio for last three years (Cash profit after tax plus

interest paid/interest paid)

71, 116

d. A summary of the financial position of the company as in the three audited

balance sheets immediately preceding the date of circulation of offer letter

33

e. Audited Cash Flow Statement for the three years immediately preceding the

date of circulation of offer letter

204, F-1 to F-156

f. Any change in accounting policies during the last three years and their effect

on the profits and the reserves of the company.

118

5. DECLARATION BY THE DIRECTORS 206

25

SUMMARY OF BUSINESS

Overview

We are one of India’s leading tyre manufacturing companies, which produced over 15 million tyres (including

tyre production outsourced to other vendors) in Fiscal 2014. We sell a large range of tyres directly to consumers

as replacements in India and abroad and through original equipment manufacturers (OEMs) in India. We were

the fourth largest tyre company in India in Fiscal 2014 with 12% share in terms of turnover among Indian tyre

manufacturers according to CRISIL. We also export tyres to 88 countries and had a 23.1% share of the Indian

export tyre market in Fiscal 2013 according to ATMA. In addition, we have a strong presence in the truck, light

truck, three-wheeler, two-wheeler and other radial tyre market segments in Sri Lanka.

We are a five-decade old player in the Indian market and were founded in 1958 as CEAT Tyres of India Ltd. In

1982, RPG Group acquired CEAT Tyres of India Ltd as well as the rights to use the CEAT brand in certain

countries in Asia, and we became a part of RPG Group. RPG Group is a group of companies involved in tyres,

infrastructure, IT, pharmaceuticals, plantations and power/telecom ancillaries. RPG Group is a leading business

group in India with over 20,000 employees and diversified business operations in key sectors of the economy. In

2010, we acquired the global rights of the brand ‘CEAT’ from the Italian tyre maker Pirelli, which enabled us to

sell tyres under CEAT brand to Europe, Latin America and other new markets.

Our products include tyres for truck and buses, two-wheelers, light commercial vehicles, passenger cars and

farm equipment and other specialty vehicle markets. Our truck and bus tyre product category make up the

largest part of our products in value terms, but our strategy is to grow our business in our non-truck tyre product

category including two-wheelers and passenger car tyres. Revenue from sales of our passenger car and two-

wheeler tyres accounted for approximately 26.5% of our standalone gross sales revenue in Fiscal 2014. We

promote our products actively through marketing campaigns on television, online and print media. We have won

several awards for our effective marketing campaigns, including the prestigious Effie Award in 2013 for “Best

Ongoing Campaign” that we won for our series of “Be Idiot Safe” Campaign and “Monsoon Smart” Campaign.

We also received a Gold Award in the International Convention of Quality Control Circles in October 2014 in

Sri Lanka.

We operate three manufacturing facilities in India: Bhandup, Nasik and Halol plants. We have operated our

Bhandup plant in Bhandup, Mumbai since 1960. Our Bhandup plant produces truck, bus, farm and specialty

bias tyres. We have operated our Nasik plant for over four decades. Our Nasik plant is located in Satpur, Nasik

and produces truck, bus, farm, LCV, passenger car and certain specialty bias tyres along with passenger car,

utility vehicles and light truck radial tyres. Our Halol plant, our newest plant, is located in Halol, Panchmahal

and became operational in 2011. Our Halol plant focuses on production of passenger car, utility vehicle and

truck and bus radial tyres. In addition to our own facilities, we outsource the production of tyres, tubes and flaps

to a number of vendors. In Fiscal 2014, approximately 28.4% of our standalone gross sales revenue was derived

from products outsourced to vendors.

We sell our tyres in India through OEMs and directly to consumers through a pan-India network of dealers,

distributors and franchisees. As of September 30, 2014, we had 17 warehouses including distribution centers

that supplied our products to over 3,500 independent dealers across India. We presently have 150 retail

franchisees across India, which are branded CEAT Shoppe and sell primarily our passenger car and SUV radial

tyres. Additionally, we have a network of 189 franchise outlets (CEAT Hubs) dedicated to selling our truck tyre

products. We established direct coverage to the two-wheeler market by setting up an innovative 2-step

distribution network to directly reach mechanic shops that service two-wheeler vehicles, which has widened our

distribution network.

In addition to our domestic sales, we are also one of the leading exporters among Indian tyre companies. In

Fiscal 2014, we sold our products to 88 countries. We focus on key international clusters of countries, including

Southeast Asia, the Middle East, East Africa, West Africa and Latin America. We also market to standalone

markets, including Pakistan, Nepal, Afghanistan, Bangladesh, Egypt, and Turkmenistan. We have opened sales

offices in key markets outside India to market our products as well as to help us develop products based on the

customer needs of those markets. We plan on expanding our offices to include offices located in our key

international clusters with cluster managers, sales executives and services engineers.

We have a strong presence in the Sri Lankan tyre market, which we have achieved through our 50%

shareholding as of September 30, 2014 in joint venture companies of our wholly owned subsidiary in Sri Lanka

viz; Associated CEAT Holdings Company (Private) Limited that we established in 1999. By producing tyres in

Sri Lanka we save on import duties payable in Sri Lanka, which in turn allow us to price our tyres more

competitively than imports. In Sri Lanka, we operate two manufacturing facilities with total capacity of 61

26

tonnes per day. In addition, we have a 70% shareholding, as of September 30, 2014, in a subsidiary in

Bangladesh viz. CEAT Bangladesh Limited where we are constructing a new manufacturing facility for the

production of automotive bias tyres.

In First Half Fiscal 2015, Fiscal 2014, 2013 and 2012, our consolidated revenue from operations (net) was `

29,002.77 million, ` 55,539.79 million, ` 50,522.15 million and ` 46,527.08 million, respectively. In First Half

Fiscal 2015, Fiscal 2014, 2013 and 2012, we earned consolidated profit for the year of ` 1,340.15 million, `

2,712.35 million, ` 1,201.90 million and ` 181.85 million, respectively. As at March 31, 2014, we had

consolidated total assets of ` 35,461.69 million and consolidated total liabilities of ` 24,812.65 million.

Our Strengths

We believe that our tyre business has the following key competitive strengths.

Balanced mix of sales

We have a balanced mix of sales across our product categories and among our OEM, replacement tyre and

export markets. We also benefit from a diverse geographic spread of operations with exports to 88 countries in

Fiscal 2014. This reduces our dependence on any single product category or market. We consciously changed

our product mix by growing our non-truck product categories such as two-wheelers and passenger car tyres. The

breakdown of our standalone gross sales revenue in Fiscal 2014 by customer, end use and tyre type is

represented in the charts below:

By customer By end use By tyre type

Note: Certain amounts may not add to 100% due to rounding

Robust growth in the two-wheeler and passenger car tyre product categories

Over the past three years, we have achieved robust growth in the two-wheeler and passenger car tyre product

categories. From Fiscal 2010 through Fiscal 2014, our revenues from our two-wheeler and passenger car/utility

vehicle tyre products have each grown at a compound annual growth rate (CAGR) of approximately 39.8% and

36.0%, respectively. As a result of our growth, non-truck tyres in Fiscal 2014 made up approximately 53.9% of

our total standalone gross sales revenue, up from approximately 39.3% in Fiscal 2010. We have also achieved

higher than industry growth in both two-wheeler and passenger car tyre product categories since Fiscal 2012.

We believe the recent shift in our product category sales revenue provides for improved profitability because the

two-wheeler and passenger car tyre product categories offer higher profit margins for us than the truck and bus

product categories which have been our targeted categories historically. The charts below show the growth of

our standalone gross sales revenue (in ` million) and market share in two-wheeler and passenger car tyre

categories.

27

Standalone gross sales revenue Market share

Strong brand position through effective marketing

We believe we have established a strong brand position in the Indian two-wheeler and passenger car tyre

markets through our aggressive brand investments behind consistent TV communication based on consumer

insights. During Fiscal 2014, we highlighted unsafe driving conditions in India’s rainy season and linked these

conditions to our offering of Superior Grip through CEAT All Season bike tyres. We also launched “Dhoom 3”

branded, high-speed, special-edition tyres in association with the popular movie of that name, and we also

released video games based on the movie to engage with the youth. In addition, we have had a consistent and

long-term association with cricket, a sport that is heavily followed by majority of Indians. Our CEAT Cricket

Ratings initiatives over the years continue to facilitate the Top Cricket talent across the world over the years.

Through campaigns like these, we believe that we effectively communicate our brand to consumers and inform

them of the important aspects of our products. Our aim is to further strengthen our position by building brand

loyalty through product innovations, differentiated customer services and innovative marketing campaigns. Our

TV campaigns, branded associations and digital promotions have been highly visible and have been facilitated

by the advertising community through various awards, including the prestigious Effie Award in 2013 for “Best


Pan India coverage through dealers and innovative distribution network

We maintain a broad sales and distribution network that allows us to efficiently sell our goods across India. As

of September 30, 2014, we had 17 warehouses including distribution centers that supplied our products to over

3,500 independent dealers across India. We presently have a network of 150 CEAT Shoppe and 189 CEAT

Hubs that provide a consistent brand and service experience throughout the country. To drive our leadership in

two-wheelers, we initiated direct coverage to the two-wheeler market by establishing a distribution network

reaching directly to mechanic and spare part shops that service two-wheeler vehicles. In addition, we are

investing in brand visibility in multi-brand outlets in India.

Our distribution network utilizes a pull-based model where the consumer places the order for our products

which is pulled through our distribution channels. This means that our procurement and distribution are

demand-driven rather to the large extent than to a forecast which reduces inventory overstocking and

bottlenecks. We intend to expand this pull model across our production facilities.

Leading Indian export business

We are one of the leading exporters among Indian tyre companies. We had a 23.1% share of India’s tyre export

market in Fiscal 2013 according to ATMA. Growth in our exports was driven by our acquisition of global rights

of the brand ‘CEAT’ from the Italian tyre maker Pirelli, which enabled us to sell tyres under CEAT brand to

Europe, Latin America and other new markets. In Fiscal 2014, approximately 18.1% of our standalone gross

sales revenue was from our export business. In Fiscal 2014, we sold our products to 88 countries. We focus on

key international clusters of countries, including Southeast Asia, Middle East, East Africa, West Africa and

Latin America. We also market to standalone markets, including Pakistan, Nepal, Afghanistan, Bangladesh,

Egypt, and Turkmenistan. We have opened sales offices in key markets outside India to market our products as

well as to help us develop products closer to the market based on the customer needs of those markets. We plan

on expanding our offices to include offices located in our key international clusters with cluster managers, sales

executives and services engineers. We are a star trading house as recognized by India’s Directorate General of

Foreign Trade. We also have won various export awards from the All India Rubber Industries Association. We

28

are also eligible for Focus Market/Product schemes that allow us to import raw material duty free in proportion

to the goods exported. These schemes, therefore, allow us to import raw materials at lower rates that improve

margins.

Established in-country presence in Sri Lanka

We have a strong presence in the Sri Lankan tyre market including truck, light truck, three-wheeler, two-

wheeler and tyres. We operate in Sri Lanka through our wholly owned subsidiary (Associated CEAT Holdings

Company (Private) Limited) in Sri Lanka with 50% shareholding, as of September 30, 2014, in each of our five

joint ventures with Kelani Tyres Ltd that was established in 1999. Our joint venture presently has extensive

dealer locations, with research and development and technical support being provided by us. By manufacturing

tyres in-country through the joint ventures, we are able to avoid import duties that we would have to pay if we

manufactured the tyres in India and exported them to Sri Lanka. This enables us to competitively price the

products.

Strong research & development focus

We believe our research and development focus contributes to our ability to meet customer needs in a

competitive market. Our research and development has been a catalyst for the growth of our two-wheeler and

passenger car tyre businesses with new products like our GRIPP two-wheeler line with over four million units

sold since April 2009. In Fiscal 2011, we set up a modern research and development facility at our Halol plant.

Our facility has the capability for virtual performance prediction, advanced indoor and vehicle dynamics testing

of tyres, three dimensional modeling and prototyping, structural and noise simulations, reverse engineering,

nanotechnology, and advanced materials development capabilities. We conduct research that focuses on new

product development, alternate materials and green tyres, as well as several projects to reduce tyre weight and

material cost in order to improve margins. We introduced over 100 new products / variants in Fiscal 2014. In

addition, we partner with institutes of global repute such as India Institute of Technology and other institutes

and vendors. We have a strong research and development team of over 70 employees as of September 30, 2014.

Large OEM footprint

We have strategically enhanced our OEM footprint, which significantly contributed to our growth. We supply

tyre to OEMs including Bajaj Auto, Tata Motors and Mahindra & Mahindra. We work closely with our OEM

customers to develop new products for their vehicles and for marketing and branding. We are a partner of choice

for many two-wheeler OEMs. We have also increased our share of business with leading passenger car OEMs

mainly due to our ability to produce low rolling resistant passenger car radial tyres meeting the stringent and

challenging requirements of OEMs. Our OEM channel accounted for approximately 21.3% of our standalone

gross sales revenue in Fiscal 2014, and approximately 21.4% of our standalone gross sales revenue in the first

half of Fiscal 2015. Strong OEM presence in the passenger car tyre category helps generate replacement

demand, gives access to latest technological development & learning in the industry and enhances our brand

equity.

Our Strategy

We intend to grow our tyre business by implementing the following strategies:

Focus on consumer product categories

We believe that by focusing on consumer product segments, such as two-wheelers and passenger car tyres, we

can improve our margins and increase our profitability. In Fiscal 2010, approximately 39.3% of our standalone

gross sales revenue came from non-truck product categories, while in Fiscal 2014 non-truck product categories

accounted for approximately 53.9% of our standalone gross sales revenue. In Fiscal 2015, we intend to continue

this trend, and in the first half of Fiscal 2015 our product mix improved further with non-truck product

categories accounting for approximately 58.6% of our standalone gross sales revenue. We believe that we can

sustain the benefits of our improved product mix by focusing efforts on building brand loyalty in these non-

truck tyre product categories through product innovation and customer services. Similarly, we have been

focusing on maintaining a good mix of sales between the OEM and replacement tyre markets.

Continue to invest in brand building marketing campaigns

We believe that effective marketing and branding placement is critical to our success. Our consolidated

advertisement and sales promotion expenses increased by CAGR of 30.7% from FY 2012 to FY 2014. We

intend to promote our brands and effectively position our products in the market by continuing to invest in

innovative marketing campaigns behind our two-wheeler and passenger car tyres. Our marketing spends are

29

directed towards sharply defined target product categories with differentiated positioning strategies. In line with

our increasing brand building focus, we expect to increase our marketing spend in Fiscal 2015 and expect that

our marketing budget will continue to grow in the near future as we continue to drive two-wheeler and

passenger car product categories.

Drive new product growth through research and development

We intend to continue to invest in developing new products for both the domestic and international market at

our research and development center. In Fiscal 2014, we introduced over 100 new products / variants. Through

new product launches we seek to build our position as a premium innovative player in the OEM market for two-

wheeler and passenger car tyres as well as to introduce additional products in our premium tyre ranges. In

addition, we intend to expand our export business by leveraging our strong research and development

capabilities and continuing to introduce targeted products to the country specific and regional markets.

Expand production capacity

We intend to continue to expand our manufacturing capacity, particularly with respect to radial tyres. As we

witness a shift in the Indian tyre market from bias tyres toward radial tyres across all product categories, we

continue to focus on building new radial tyre capacity. We have started a capacity expansion program at our

Halol plant that will increase capacity by 120 tonnes per day from 150 to 270 tonnes per day, primarily in non-

truck radial tyres. We expect the expanded capacity to be available by July 2015. In addition, we approved an

investment of ` 4,200.00 million for setting up a plant to manufacture two- and three-wheeler tyres with a

capacity of 120 tonnes per day and an investment of ` 500.00 million for implementing a project of

manufacturing specialty tyres (including off-the-road tyres), through a subsidiary company. Internationally, we

are constructing a new manufacturing facility for the production of automotive tyres in Bangladesh with an

initial capacity of 65 tonnes per day, which we expect to complete by close of calendar year 2015. Through our

focused efforts to continue to expand manufacturing capacity, we believe that we will be well placed to meet the

emerging demand in the tyre market within India and our targeted global markets.

Expand our distribution

We presently have a network of 150 CEAT Shoppe and 189 CEAT Hubs across India, which offer a consistent

brand and service experience to our consumers. We established direct coverage to the two-wheeler market by

establishing a distribution network directly through mechanic shops that service two-wheeler vehicles. Our

strategy is to continue to expand our distribution channel with a particular emphasis on the two-wheeler and


Grow international business through exports & expansion in emerging markets through in-country

production

We are one of the leading exporters among Indian tyre companies. We sold our tyres in 88 countries in Fiscal

2014. We focus on key international clusters of countries, including the Southeast Asia cluster, the Middle East

cluster, the East Africa cluster, the West Africa cluster and the Latin American cluster. There are products that

are developed exclusively for these markets. We participate in various international exhibitions across the globe.

This further helps us to increase our visibility and add more customers.

We conduct our international operations through our subsidiaries in Sri Lanka and Bangladesh as well as

through exporting our products outside of India. We plan to replicate our success in Sri Lanka by employing a

similar model to expand into the Bangladesh market. In 2013, we entered into a joint venture agreement with

A.K. Khan & Company Limited, pursuant to which we own 70% and A.K. Khan & Company Limited owns

30% of our subsidiary in Bangladesh viz. CEAT Bangladesh Limited. Through our subsidiary in Bangladesh,

we have begun to construct a new manufacturing facility for the production of automotive bias tyres in

Bangladesh with an initial capacity of 65 tonnes per day. By manufacturing tyres in-country through our

subsidiary, we will be able to save on import duties that we would have to pay if we manufactured the tyres in

India and exported them to Bangladesh. Imports from Bangladesh to India enjoy zero basic customs duty. Our

aim is to cater to the local market in Bangladesh as well as the eastern part of India. Our strategy is to leverage

our research and development and technical support from our Indian operations and to utilize our buying power

and experience to reduce raw material costs for our Bangladesh operations. In anticipation of the opening of the

plant by close of calendar year 2015, we have begun a seed marketing campaign in Bangladesh to prepare for

our entry into the market.

Maintain an optimum mix of in-house vs. outsourced production

30

In Fiscal 2014, approximately 28.4% of our standalone gross sales revenue were from products produced by

vendors. While in-house production helps us to maintain complete control on the production, we believe that by

outsourcing certain part of the production, we can reduce our capital costs and focus on increasing our sales as

we expand our marketing efforts. We believe that this could also help us benefit from the collective scale of our

vendors. We intend to continue to maintain an optimum mix of in-house vs. outsourced production and adjust it

according to the changes in demand for our products.

Grow our OEM network

We continue to enhance our OEM distribution network through adding distribution relationships to our existing

manufacturer network. We supply tyres to OEMs including Bajaj Auto, Tata Motors, Mahindra & Mahindra and

other major manufacturers. Our growth in our OEM business was with CAGR 27.3% between FY 2012 to FY

2014. We will continue to enhance our OEM network and work closely with our OEM customers to develop

new products for their vehicles and for marketing and branding. Strong OEM presence in passenger car product

category helps generate replacement demand, gives access to latest technological development & learning in the

industry and enhances our brand equity.

31

SUMMARY OF THE ISSUE

The following is the general summary of the terms of the Issue. The summary should be read in conjunction

with, and is qualified in its entirety by, more detailed terms appearing in this Placement Document, including

under the sections titled “Risk Factors”, “Use of Proceeds”, “Issue Procedure” and “Description of Equity

Shares”.

Issuer CEAT Limited

Issue Size Up to 4,494,382 Equity Shares aggregating up to ` 4,000 million.

A minimum of 10% of the Issue Size, or at least 449,438 Equity Shares, shall be

available for Allocation to Mutual Funds only, and the balance 4,044,944 Equity

Shares shall be available for Allocation to all QIBs, including Mutual Funds.

In case of under-subscription or no subscription in the portion available for

Allocation only to Mutual Funds, such portion or part thereof may be Allocated

to other QIBs.

Face Value ` 10 per Equity Share

Issue Price ` 890 per Equity Share

Minimum Offer Size Minimum value of offer or invitation to subscribe to each QIB is ` 20,000 of the

face value of the Equity Shares

Floor Price The floor price for the Issue calculated on the basis of Chapter VIII of the SEBI

ICDR Regulations is ` 930.53 per Equity Share. Our Company may offer a

discount of not more than 5% on the Floor Price in terms of Regulation 85 of the

SEBI ICDR Regulations.

Eligible Investors QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations to whom

the Placement Document and the Application Form is circulated and who are

eligible to bid and participate in the Issue and Eligible QIBs not excluded

pursuant to Regulation 86(1)(b) of the SEBI ICDR Regulations who are outside

of the United States acquiring Equity Shares in an offshore transaction under

Regulation S. The list of QIBs to who the Placement Document and Application

Form is delivered shall be determined by the BRLMs to the Issue, being JM

Financial Institutional Securities Limited and Standard Chartered Securities

(India) Limited in consultation with our Company, at their sole discretion.

Dividend See “Description of Equity Shares”, “Dividend Policy” and “Statement of Tax

Benefits”.

Indian Taxation See “Statement of Tax Benefits”.

Issue Procedure The Issue is being made only to QIBs in reliance on Section 42 of the Companies

Act, 2013 read with rule 14 of the Companies (Prospectus and Allotment of

Securities) Rules, 2014, and Chapter VIII of the SEBI ICDR Regulations. See

“Issue Procedure” on page 140.

Date of Board Resolution

authorizing the Issue

August 26, 2014

Date of Shareholders

Resolution authorizing

the issue

September 26, 2014

Equity Shares issued and

outstanding immediately

prior to the issue

35,956,398 Equity Shares (including 688 Equity Shares offered on rights basis

and kept in abeyance)

Equity Shares issued and

outstanding immediately

after the issue

40,450,780 Equity Shares (including 688 Equity Shares offered on rights basis

and kept in abeyance)

Listing Our Company has received in principle approvals, dated November 24, 2014

from the BSE and the NSE, under Clause 24(a) of the Listing Agreements. Our

Company shall apply to the Stock Exchanges for the listing approvals and the

final listing and trading approvals, after the Allotment and after the credit of

Equity Shares to the beneficiary account with the Depository Participant,

respectively.

Lock-up Please see the sub-section titled “Lock-up” of the section titled “Placement

32

Agreement” for a description of restrictions on our Company and our Promoters

in relation to Equity Shares.

Transferability

Restriction

The Equity Shares being Allotted pursuant to this Issue shall not be sold for a

period of one year from the date of Allotment, except on the Stock Exchanges.

For details in relation to other transfer restrictions, see the section titled “Selling

and Transfer Restrictions”.

Use of Proceeds The net proceeds of the Issue, after deduction of fees, commissions and expenses

in relation to the Issue, are expected to total approximately ` 4,000 million.

Please see the section titled “Use of Proceeds”.

Risk Factors Please see the section titled “Risk Factors” for a discussion of factors that you

should consider before participating in the Issue.

Closing Date The Allotment is expected to be made on or about November 28, 2014

Ranking The Equity Shares being issued pursuant to the Issue shall be subject to the

provisions of the Memorandum and Articles of Association and shall rank pari

passu in all respects with the existing Equity Shares including rights in respect of

dividends after the closing. The holders of such Equity Shares will be entitled to

participate in dividends and other corporate benefits, if any, declared by our

Company after the Closing Date, in compliance with the Companies Act, 2013.

The holders of such Equity Shares may attend and vote in shareholders’ meetings

in accordance with the provisions of the Companies Act, 2013. Please see the

section titled “Description of Equity Shares” on page 165.

Voting Rights of Share

Holders

See “ Description of Equity Shares- Voting Rights” on page 167

Security Codes for the

Equity Shares

ISIN: INE482A01020

BSE Code: 500878

NSE Code: CEATLTD

33

SUMMARY FINANCIAL INFORMATION

The following selected information is extracted from and should be read in conjunction with our unaudited

interim condensed consolidated financial statements and notes thereto for the six months ended September 30,

2014 and our audited consolidated financial statements and notes thereto as at and for the Financial Years ended

March 31, 2014, 2013 and 2012 prepared in accordance with Indian GAAP, each included elsewhere in this

Placement Document. You should refer to “Management’s Discussion and Analysis of Financial Conditions and

Results of Operations” for further discussion and analysis of the financial statements of our Company.

The financial information included in this Placement Document does not reflect our result of operations,

financial position and cash flows for the future and its past operating results are no guarantee of its future

operating performance.

Interim Condensed Consolidated Statement of Assets and Liabilities as at September 30, 2014

(` in million)

Particulars As at September 30, 2014

I. Equity and Liabilities

(1) Shareholders’ Funds

(a) Share capital 359.56

(b) Reserves and surplus 11,159.49

11,519.05

(2) Minority Interest 365.57

(3) Non-current liabilities

(a) Long-term borrowings 3,734.34

(b) Deferred tax liabilities (Net) 1,205.35

(c) Other long term liabilities 14.21

(d) Long-term provisions 265.24

5,219.15

(4) Current liabilities

(a) Short-term borrowings 4,179.64

(b) Trade payables 6,112.17

(c) Other current liabilities 6,110.21

(d) Short-term provisions 655.76

17,057.79

Total 34,161.55

II. Assets

(1) Non-current assets

a) Fixed assets

(i) Tangible assets 14,567.42

(ii) Intangible assets 592.83

(iii) Capital work in progress 1,133.88

16,294.12

b) Goodwill on consolidation 233.61

c) Non-current investments 0.04

d) Long-term loans and advances 1,134.02

e) Other non-current assets 80.11

17,741.90

(2) Current Assets

a) Current investments 280.08

b) Inventories 6,956.19

c) Trade receivables 6,911.69

d) Cash and bank balances 1,155.71

e) Short-term loans and advances 740.97

f) Other current assets 375.00

34

16,419.65

Total 34,161.55

35

Interim Condensed Consolidated Income and Expenditure statement for the six months period ended

September 30, 2014

(` in million)

Particulars For the six months ended

September 30, 2014

Income

1. Revenue from operations (Gross) 31,886.96

Less: Excise Duty 2,884.20

Revenue from operations (Net) 29,002.77

2. Other income 108.84

3. Total Revenue (1 + 2) 29,111.60

4. Expenses

a) Cost of raw materials consumed 17,012.57

b) Purchases of Stock-in-trade 640.97

c) Changes in inventories of finished goods, work-in-progress and

stock-in-trade

640.73

d) Employee benefits expense 1,771.52

e) Finance costs 742.71

f) Depreciation and amortization expense 449.16

g) Other expenses 5,809.50

Total Expenses 27,067.16

5. Profit before tax (3 - 4) 2,044.44

6. Tax expense

1) Current tax 647.54

2) Deferred tax 63.95

7. Profit after tax and before minority interest (5 – 6 ) 1,332.95

8. Minority interest (7.20)

9. Profit for the period (7 - 8) 1,340.15

10. Earnings per equity share

[Nominal value of share of ` 10 each] [Not annualised]

(1) Basic ` 37.27

(2) Diluted ` 37.27

36

Interim Condensed Consolidated Summary of Cash Flows for the six months period ended September 30,

2014

(` in million)

Particulars For six months ended

September 30, 2014

Cash Flow from Operating Activities (A) 3,939.76

Cash Flow from Investing Activities (B) (1,075.86)

Cash Flow from Financing Activities (C) (3,319.88)

Net Increase / (Decrease) in cash and cash equivalents (A + B + C) (455.99)

Adjusted cash and cash equivalents at the end of the period 680.51

Adjusted cash and cash equivalents at the beginning of the period 1,136.50

Net Increase / (Decrease) in cash and cash equivalents (455.99)

37

Consolidated Statement of Assets and Liabilities as at March 31, 2014, 2013 and 2012

(` in million)

Particulars As at March 31,

2014

As at March 31,

2013

As at March 31,

2012

I. Equity and Liabilities

(1) Shareholders’ Funds

(a) Share capital 359.56 342.44 342.44

(b) Reserves and surplus 9,926.55 7,475.83 6,397.29

(c) Money received against share

warrants

- 36.40 36.40

10,286.11 7,854.66 6,776.13

(2) Preference Shares issued by

Subsidiaries

- 0.81 1.52

(3) Minority Interest 362.94 - N/A*

(4) Non-current liabilities

(a) Long-term borrowings 4,233.32 4,240.41 5,829.87

(b) Deferred tax liabilities (Net) 1,148.36 786.34 357.78

(c) Other long term liabilities 14.22 14.22 14.22

(d) Long-term provisions 245.80 142.28 96.92

5,641.70 5,183.25 6,298.80

(5) Current liabilities

(a) Short-term borrowings 5,968.61 4,047.88 5,218.74

(b) Trade payables 6,942.89 7,925.02 6,563.32

(c) Other current liabilities 5,541.79 5,772.92 5,893.80

(d) Short-term provisions 717.67 685.45 210.42

19,170.95 18,431.27 17,886.28

Total 35,461.69 31,469.99 30,962.71

II. Assets

(1) Non-current assets

a) Fixed assets

(i) Tangible assets 14,801.62 14,900.53 15,015.27

(ii) Intangible assets 621.99 611.58 645.27

(iii) Capital work in progress 823.15 273.73 175.97

(iv) Intangible assets under

development

N/A* - 0.20

16,246.75 15,785.84 15,836.72

b) Goodwill on consolidation 227.07 215.63 204.80

c) Non-current investments 0.04 5.89 5.89

d) Long-term loans and advances 860.84 806.62 461.60

e) Other non-current assets 100.48 105.73 113.47

17,435.20 16,919.70 16,622.47

(2) Current Assets

a) Current investments N/A* - 303.20

b) Inventories 7,535.78 5,588.24 6,026.85

c) Trade receivables 7,545.32 6,628.50 6,382.79

d) Cash and bank balances 1,678.73 1,120.77 396.85

e) Short-term loans and advances 924.59 1,045.50 1,122.76

f) Other current assets 342.07 167.29 107.80

18,026.50 14,550.29 14,340.24

Total 35,461.69 31,469.99 30,962.71

*Not applicable to / not available for a given period

38

Consolidated Income and Expenditure Statement for the year ended March 31, 2014, 2013 and 2012

(` in million)

Particulars For the year

ended March 31,

2014

For the year

ended March 31,

2013

For the year

ended March 31,

2012

Income

1. Revenue from operations (Gross) 60,959.68 55,205.40 50,046.23

Less: Excise Duty 5,419.90 4,683.25 3,519.15

Revenue from operations (Net) 55,539.79 50,522.15 46,527.08

2. Other income 139.95 176.71 222.82

3. Total Revenue (1+ 2) 55,679.74 50,698.86 46,749.90

4. Expenses

a) Consumption of raw materials,

traded goods and increase /

decrease in Stock

35,657.50 34,757.60 34,624.54

b) Employee benefits expense 3,109.16 2,830.39 2,275.60

c) Finance costs 1,720.45 1,808.10 1,958.02

d) Depreciation and amortization

expense

865.43 806.20 728.02

e) Other expenses 10,194.45 8,554.64 6,890.09

Total Expenses 51,547.00 48,756.93 46,476.28

5. Profit before exceptional items and

tax (3 - 4)

4,132.74 1,941.93 273.62

6. Exceptional items 100.39 276.96 31.56

7. Profit before tax (5 - 6) 4,032.35 1,664.98 242.06

8. Tax expense

1) Current tax 962.97 370.25 67.98

2) Less: MAT Credit Entitlement - (317.81) (38.46)

3) Short / (Excess) provision of the

earlier years

(0.53) (15.92) 0.50

4) Deferred tax – current year 362.02 497.58 30.18

5) Deferred tax – prior years - (71.02) -

9. Profit after tax and before minority

interest (7 – 8 )

2,707.90 1,201.90 181.85

10. Minority interest (4.45) - N/A*

11. Profit for the year (9 - 10) 2,712.35 1,201.90 181.85

12. Earnings per equity share

(Nominal value of share of `10) (Previous year `

10)

Basic ` 76.59 35.10 5.31

Diluted ` 76.14 34.40 5.31


39

Consolidated Summary of Cash Flows for the year ended March 31, 2014, 2013 and 2012

(` in million)

Particulars For the year

ended March 31,

2014

For the year

ended March 31,

2013

For the year

ended March 31,

2012

Cash Flow from Operating Activities (A) 1,965.81 5,844.33 169.35

Cash Flow from Investing Activities (B) (1,417.15) (529.21) (1,396.20)

Cash Flow from Financing Activities (C) (392.70) (4,642.85) 1,081.70

Net (Decrease) / Increase in cash and cash

equivalents (A + B + C)

155.96 672.28 (145.16)

Adjusted cash and cash equivalents at the end of

the year

1,136.50 983.53 311.26

Cash and cash equivalents at the beginning of the

year

983.53 311.26 456.41

Cash Adjustment for Subsidiary 2.99 - N/A*

Adjusted Cash and cash equivalents at the

beginning of the year

980.54 311.26 456.41

Net (Decrease) / Increase in cash and cash

equivalents

155.96 672.28 (145.16)


40

RISK FACTORS

This offering and an investment in Equity Shares involve a high degree of risk. You should carefully consider the

risks described below as well other information contained in this Placement Document before making an

investment decision. If any one or some combination of the risks described below actually occurs, our business,

prospects, financial condition, results of operation and cash flows could be seriously harmed, the trading price

of our shares could decline and you may lose all or part of your investment. Unless specified in the risk factors

below, we are not in a position to quantify the financial implications of any of the risks mentioned below. We

have described the risks and uncertainties that our management believes are material but the risks set out in this

Placement Document may not be exhaustive or complete and additional risks and uncertainties not presently

known to us, or which we currently deem to be immaterial, may arise or may become material in the future. This

section should be read together with “Industry Overview”, “Our Business” and “Management’s Discussion

and Analysis of Financial Condition and Results of Operations” as well as the financial statements, including

the notes thereto, and other financial information included elsewhere in this Placement Document. This

Placement Document also contains forward-looking statements that involves risks and uncertainties. Our results

could differ materially from such forward-looking statements as a result of certain factors including the

considerations described below and elsewhere in this Placement Document. Additional risks not described

below or not currently known to us or that we currently deem immaterial may also adversely affect the market

price of our Equity Shares. In making an investment decision, prospective investors must rely on their own

examination of us and the terms of the Issue including the merits and the risks involved. Unless otherwise

specified, all amounts in this section are stated on a consolidated basis.

Risk Factors Relating to Our Business

1. We, our Directors and our Subsidiaries are subject to certain legal proceedings and we cannot assure

you that we will be successful in all of these actions. In the event we are unsuccessful in litigating any or

all of the disputes, our business, results of operations and cash flows may be adversely affected.

We, our Directors and our Subsidiaries are contesting certain legal proceedings in various courts, including

certain civil/criminal cases that have been filed against us, our Directors and / or our Subsidiaries, in respect

of actions allegedly taken by us, our Directors and / or our Subsidiaries during the ordinary course of

business. Any adverse decision in any of these cases may adversely affect our reputation and financial

condition. We cannot assure investors that the outcome of these legal proceedings will be favourable. Such

litigation could divert management time and attention, and consume financial resources in their defense or

prosecution. In addition, should any new developments arise, such as changes in Indian law or rulings

against us by the regulators, appellate courts or tribunals, we may need to make provisions in our financial

statements, which could increase our expenses and current liabilities. If we fail to successfully defend our

claims or if our provisions prove to be inadequate, our business, financial condition, reputation, results of

operations and cash flows could be adversely affected. For further details of the legal proceedings that we

are subject to, please see “Legal Proceedings” on page 189.

2. We were subject to investigations/ legal proceedings in respect to cartelization in the past and we are

currently subject to legal proceedings for violation of Monopolies and Trade Practices Act, 1969. Any

adverse order or decision by the Competition Commission in respect of the said litigation or initiation of

any similar inquiries/investigations in future in relation to cartelization could adversely affect our

reputation, financial condition, results of operations and cash flows.

In the past, on the basis of a complaint filed by the All India Tyre Dealers Federation, the Competition

Commission of India investigated allegation of cartelization by the tyre manufacturers including us. The

tyre manufacturers including us were exonerated by the Competition Commission from charges of

cartelization pursuant to the order dated October 30, 2012. We cannot assure that similar

inquiries/investigations would not be initiated against us in future for violations of competition law,

including for cartelization.

Further, a case is pending before the Competition Commission for alleged violation under section 2(o) and

section 33 (1) (d) of the Monopolies and Restrictive Trade Practices Act, 1969 pertaining to alleged

collusive price behaviour. For further details please see “Legal Proceedings” on page 189. Any adverse

order or decision by the Competition Appellate Tribunal in respect of the said litigation or initiation of any

similar inquiries/investigations in future could adversely affect our reputation, financial condition, results of

operations and cash flows.

3. Rado Tyres Limited (“Rado Tyres”), our Subsidiary, has been subject to the Board for Industrial and

41

Financial Reconstruction (“BIFR”) proceedings.

In the Fiscal 2009, the networth of Rado Tyres was fully eroded. On October 9, 2009 Rado Tyres made an

application to the BIFR and on March 10, 2010 Rado Tyres was declared a “sick company” in terms of the

Sick Industrial Companies (Special Provisions) Act, 1985. The rehabilitation scheme which was prepared

for reviving Rado Tyres, inter alia, included reduction of paid-up equity share capital by 60 %, conversion

of part of unsecured loan given by our Company and waiver of the balance loan by our Company, major

repairs/ upgradation and replacements to some of the old/ critical plant and machineries, capacity expansion

and rights issue. For further details please see “History and other Corporate Matters” on page 120.

Pursuant to the rehabilitation scheme the networth of Rado Tyres was expected to be positive and the carry

forward losses were expected to be wiped off in Fiscal 2012. Rado Tyres still continues to be a “sick

company”. If Rado Tyres continues to remain a “sick company”, our consolidated financial position could

be adversely affected.

4. Our Company was unable to trace certain secretarial records, including records pertaining to the

allotment of Equity Shares acquired by our past shareholders prior to 1984.

We have been unable to locate the copies of certain of our secretarial records, i.e. prescribed forms filed by

us with the Registrar of Companies, including, among others, in respect of the allotment of Equity Shares

from incorporation until 1984. While we believe that these forms were duly filed on a timely basis, we have

not been able to obtain copies of these documents, including from the Registrar of Companies. We cannot

assure you that we will not be subject to any adverse action by a competent regulatory authority in this

regard.

5. We rely on our raw material suppliers for our business, which exposes us to risks associated with

volatility or fluctuations in prices of raw materials, and reductions in the availability of raw material

supplies could materially disrupt our operations.

Tyre production requires substantial amounts of raw materials, including natural rubber and petroleum-

based materials, such as nylon tyre cord fabric, carbon black and synthetic rubber. These raw materials have

historically been available from a number of independent suppliers, although we cannot assure you that this

will continue to be the case in the future. Pricing volatility for raw materials or commodities or an increase

in the price of key raw materials could result in increased costs and may significantly affect our financial

condition, results of operations and cash flows.

Our consumption of raw materials, traded goods and increase/decrease in stock represented 64.20% of our

consolidated net revenue from operations in Fiscal 2014. We may be adversely affected by fluctuations in

the price of these or other raw materials that have been subject to historical periods of rapid and significant

price movements. Costs for certain raw materials used in our operations, including natural rubber,

chemicals, carbon black, steel reinforcements and synthetic rubber, are highly volatile. Price volatility for

natural rubber, petroleum-based materials and other raw materials contributes to a difficulty in managing

the costs of raw materials. Increasing costs for raw material supplies will increase our production costs and

affect our margins if we are unable to pass the higher production costs on to our customers in the form of

price increases. Factors that may increase costs for our raw materials include the recent growth of the Indian

tyre industry at a faster rate than growth in domestic natural rubber production, which forces us to import

natural rubber and compete with global competitors for the supply of raw materials. Furthermore, the ability

of suppliers to deliver raw materials in a timely manner and in sufficient quantities could be restricted, in

part due to certain environmental issues faced by suppliers in China, which has decreased the amount of

rubber being exported from China. A reduction in, or lack of availability of, raw materials or interruptions

in the supply chain could also impact our profitability to the extent we are required to pay higher prices for,

or are unable to secure adequate supplies of, the necessary raw materials. We do not enter into hedging

arrangements with respect to the price of raw materials used to produce our products. If we are unable to

manage price volatility of raw materials or are unable to obtain adequate supplies of raw materials in a

timely manner or at prices that we can pass on to our customers, our business could be interrupted and our

results of operations and cash flows could be materially and adversely affected. Furthermore, the ability of

suppliers to deliver raw materials in a timely manner and in sufficient quantities could be restricted, in part

due to certain environmental issues faced by suppliers in China which has decreased the amount of rubber

chemicals being exported from China.

6. Our products are subject to continued pricing pressure, which may materially and adversely affect our

profits, results of operations and cash flows.

Pricing pressure has generally been a characteristic of the Indian tyre industry. Any failures to obtain

42

adequate and timely price increases or any adverse changes to the terms of sale of our products could

materially and adversely affect our sales and profit margins. If we are unable to offset these price pressures

through improved operating efficiencies and reduced expenditures, we may suffer declining profit margins

and our results of operations and cash flows would suffer.

7. If the price of energy sources increases, our operating expenses could increase significantly and our

results of operations and cash flows could be materially and adversely affected.

Our manufacturing facilities rely principally on oil and natural gas, as well as electrical power and other

energy sources. High demand and limited availability of oil and natural gas and other energy sources can

result in significant increases in energy costs, which could materially increase our operating expenses at our

manufacturing facilities. Increased oil costs would also increase our costs to transport our products from our

manufacturing facilities to our distribution network. There is no assurance that we will be able to secure

stable supplies of energy at favorable terms, or at all, to maintain our manufacturing operations or sustain

our future expansion. Higher energy costs would increase our production and logistics costs and could

materially and adversely affect our profits, results of operations and cash flows.

Moreover, increases in energy costs could impact consumer and industrial behavior. For instance, if the

price of gasoline increases significantly for consumers, it can cause a decrease in driving and purchasing

habits. General increases in energy costs could also cause businesses to decrease investment and slow down

overall economic activity. The occurrence of any of the foregoing could negatively impact demand for our

tyre products.

8. Our level of debt may limit our flexibility in managing our growth and maintaining our financial

condition.

Our tyre manufacturing business is capital intensive. Maintaining our competitiveness and implementing

our growth strategies both require us to obtain sufficient funds for our capital requirements. As at

September 30, 2014 and as at March 31, 2014, our total long-term borrowings on a consolidated basis were

` 3,734.34 million and ` 4,233.32 million respectively. As at September 30, 2014 and as at March 31, 2014,

our total short-term borrowings on a consolidated basis were ` 4,179.64 million and ` 5,968.61 million

respectively. Our debt to equity ratio was 1.14 in Fiscal 2014.

Our debt could, among other things:

• increase our vulnerability to adverse economic conditions or increases in prevailing interest rates;

• limit our ability to obtain additional financing that may be necessary to operate, develop or expand

our business;

• require us to dedicate a substantial portion of our cash flow from operations to service our debt,

which in turn reduces the funds available for operations and future business opportunities; and

• potentially place us at a competitive disadvantage relative to competitors with less debt.

Our ability to make payments on our debt will depend upon our future operating performance, which is

subject to general economic and competitive conditions, many of which are outside our control. If the cash

flow from our business is insufficient to make payments on our debt or is otherwise unavailable, we may

have to delay or reduce capital expenditures, attempt to restructure or refinance our debt, sell assets or raise

additional equity capital. The delay or reduction of capital expenditures could impact our growth while the

sale of assets in undesirable market conditions may not realize optimal returns. Furthermore, the

restructuring or refinancing of our debt or raising additional equity capital may not be possible on

acceptable terms, if at all. Our ability to retain our existing financial resources and obtain additional

financing on acceptable terms is subject to a variety of uncertainties, including but not limited to:

• economic, political and other conditions in India;

• investors’ perception of, and demand for, securities of tyre manufacturing companies;

• Government policies relating to bank loans and other credit facilities;

• conditions of the Indian and other capital markets in which we may seek to raise funds;

• our future results of operations, financial condition and cash flows; and

• our credit ratings.

43

If we are unable to service our debt, including due to the unavailability of additional financing on

commercially acceptable terms, we may not be able to fund our expansion, promote our brand, enhance our

products and services, respond to competitive pressures or take advantage of investments or acquisition

opportunities, all of which may materially and adversely affect our financial condition, results of operation,

cash flows and business prospects.

The Group’s contingent liabilities consist of (i) direct and indirect taxation matters (including income tax,

wealth tax, excise duty / service tax and sales tax matters), (ii) show cause notices, (iii) bills discounted

with banks, and (iv) corporate guarantee. As of September 30, 2014 and March 31, 2014, the Group had the

following contingent liabilities:

(` in million)

Contingent Liabilities As of September 30, 2014 As of March 31, 2014

Direct and indirect taxation matters, including:

Income tax 243.62 1277.16

Wealth tax 0.67 0.67

Excise duty / service tax 310.34 417.63

Sales tax 393.63 347.94

Show cause notices 1607.55 1,551.00

Bills discounted with banks 544.46 612.65

Corporate guarantee 255.00 255.00

If these contingent liabilities materialize, fully or partly, our financial condition could be materially and

adversely affected.

9. Our business is dependent on our manufacturing facilities, and the loss or shutdown of operations at any

of our manufacturing facilities may have a material adverse effect on our business, financial condition,

results of operations and cash flows .

Our manufacturing facilities and research and development center are subject to operating risks, such as (i)

the risk of substantial disruption or shutdown due to breakdowns or failure of equipment, natural disasters,

storms, fires, explosions, earthquakes, floods and other catastrophic events, which could cause power

interruptions and water shortages, actual, potential or suspected epidemic outbreaks, terrorist attacks and

wars, labor disputes, strikes, lock-outs, loss of services of our external contractors, and industrial accidents,

(ii) performance below expected levels of output or efficiency, and (iii) obsolescence. Our manufacturing

facilities are also subject to operating risk arising from any failure to comply with the directives of relevant

government authorities or any changes in governmental regulations affecting our business and our facilities,

such as any change in the zoning of the land on which our manufacturing facilities are located into a

residential or other non-industrial use, which could lead to a loss of licenses, certifications, permits and the

ability to continue operating our current manufacturing facilities. Furthermore, because our manufacturing

facilities and research and development center are all located in western India, the risk of substantial

disruption or shutdown of multiple facilities due to a single significant natural calamity or other

catastrophic event is more pronounced. Our facilities and equipment would be difficult and costly to replace

on a timely basis. Moreover, catastrophic events could also destroy any inventory located at our facilities.

For instance, we experienced a fire at our Bhandup, Mumbai plant on February 23, 2014, which caused

damage to certain equipment and destroyed some of our inventory and raw materials. While we have

received payment from the insurance company partially covering the value of the destroyed assets, there is

no assurance that we can recover all or a remaining portion of the balance amount. If there is any prolonged

disruption or shutdown of operations at our manufacturing facilities, we may not be able to replace the

equipment or inventories, or use different facilities to continue our operations in a timely and cost-effective

manner or at all. We may not be able to recover from damages or interruptions caused to our manufacturing

facilities in a timely manner or at all. The occurrence of any such event could result in the temporary or

long-term closure of any of our manufacturing facilities, severely disrupt our business operations and

materially and adversely affect our business, results of operations, financial condition and cash flows.

10. The auditors’ report in respect of our standalone financial statements as at and for the past five Fiscals

contains certain qualifications.

Audit reports for the past five Fiscals on our standalone financials contain certain qualifications. For

instance, the respective audit reports issued by our Auditors on the standalone audited financial statements

of the Company included a statement on certain matters specified in the Companies (Auditors Report)

44

Order, 2003, which were qualified for matters indicated as follows: (i) As of and for the year ended March

31, 2014 (a) There were certain instances of frauds detected, investigations relating to which have been

completed, involving misappropriation of funds and theft of inventory of finished goods by employees and

an agent of the Company, (b) Unpaid statutory dues on account of disputes, (c) Statutory dues outstanding

for more than six month, and (ii) As of and for the year ended March 31, 2013 (a) Unpaid statutory dues on

account of disputes. For further details, please refer to the section titled “Legal Proceedings” of this

Placement Document.

There can be no assurance that our auditors will not qualify their opinion in the future. A qualified audit

report from our Auditors may, inter alia, limit our ability to access certain types of financing, or may

prevent us from obtaining financing no acceptable terms or may require certain regulatory / statutory

disclosures and may subject us to certain regulatory / statutory proceedings, the outcome of which may not

be within our control.

11. As a manufacturing business, our success depends on the smooth supply and transportation of raw

materials from our suppliers to our plants and of tyres from our plants to our customers, which is subject

to various uncertainties and risks.

We procure our raw materials from domestic as well as international suppliers. Any disruption of our

suppliers’ operations and/or inadequate or interrupted transportation of raw materials and products to our

facilities could adversely affect our business, financial condition, results of operations and cash flows. We

depend principally on trucking and seaborne transportation for the delivery of raw materials to our

manufacturing facilities and the delivery of our products from our manufacturing facilities to our dealers

and distributors. We rely on third parties to provide such services. These transportation providers may not

be adequate to support our existing and future operations. Further, disruptions of transportation services

because of weather-related problems, strikes, lock-outs, inadequacies in the road infrastructure and port

facilities, geopolitical events, or other events could impair our ability to supply our products to our dealers

and distributors. In the event of any of the foregoing, we may be required to buy raw materials in the spot

market at unfavorable prices, which could materially and adversely affect our business and results of


12. If we are unable to manage our growth or execute our strategies effectively, our business and prospects

may be materially and adversely affected.

Our revenue and our business operations have grown in recent years. Our consolidated revenue from

operations (net) was ` 46,527.08 million, ` 50,522.15 million, and ` 55,539.79 million, respectively, for

Fiscal 2012, 2013 and 2014, representing a CAGR of 9.26% over such period. We may not be able to

sustain these rates of growth in future periods due to a number of factors, including, among others, our

execution capability, our ability to maintain customer satisfaction, macroeconomic factors out of our

control, competition within India’s tyre industry, the greater difficulty of growing at sustained rates from a

larger revenue base, our inability to control our expenses and the availability of resources for our growth. In

addition, our anticipated expansion will place a significant strain on our management, systems and

resources. Our development and expansion strategies will require substantial managerial efforts and skills

and the incurrence of additional expenditures and may subject us to new or increased risks. Further,

pursuing these strategies may require us to expand our operations through internal development efforts as

well as partnerships, joint ventures, investments and acquisitions. We may not be able to efficiently or

effectively implement our growth strategies or manage the growth of our operations, and any failure to do

so may limit future growth and hamper our business strategies.

13. Our ability to invest in overseas subsidiaries and joint ventures may be constrained by Indian and foreign

laws, which may adversely affect our growth strategy and business prospects.

Under Indian foreign investment laws, with effect from July 3, 2014, an Indian company is permitted to

invest in its overseas joint ventures or subsidiaries up to 400% of its net worth as on the date of its last

audited balance sheet. This limit also applies to any other form of financial commitment by such Indian

company, including in terms of a loan, guarantee or counter guarantee. However, any financial commitment

exceeding US$1 billion (or its equivalent) in a financial year would require prior approval of the Reserve

Bank of India, even when the total financial commitment of the Indian company is within the eligible limit

as mentioned above.

Other restrictions include the restriction on an Indian company providing an “open ended” guarantee for an

overseas entity (i.e., not specifying the amount and period of the guarantee, upfront). Investment or

45

financial commitment not complying with the stipulated requirements is permitted with the RBI’s prior

approval. In addition, there are certain routine procedural and disclosure requirements in relation to any

such overseas direct investment. These limitations on overseas direct investment may constrain our ability

to acquire interests or increase our stakes in overseas entities as well as to provide other forms of financial

support to such entities, which may adversely affect our growth strategy and business prospects

14. Our success depends largely on the continued efforts of our senior management and our ability to attract

and retain skilled personnel.

Our future success depends on the continued services and performance of the members of our management

team and other key employees. Competition for senior management in the industry is intense, and we may

not be able to retain our existing senior management or attract and retain new senior management in the

future. The loss of the services of key persons in the organization could seriously impair our ability to

continue to manage and expand our business. Further, the loss of any other member of our senior

management or other key personnel may adversely affect our business, results of operations, financial

condition and cash flows. We do not maintain ‘key man’ life insurance for our promoter, senior members of

our management team or other key personnel.

The success of our business will also depend on our ability to identify, attract, hire, train, retain and

motivate skilled personnel. Demand for qualified professional personnel is high and these personnel are in

limited supply. Our professionals are highly sought after by our competitors as well as other Indian

companies, particularly as India’s economy continues to grow and mature. If we fail to hire and retain

sufficient numbers of qualified personnel for functions such as manufacturing, technical, finance,

marketing, sales, operations and research and development, our business operating results and financial

condition could be adversely affected.

15. We will continue to be controlled by our Promoter after the completion of the Issue.

After the completion of the Issue, our Promoter and Promoter Group will continue to exercise control over

us, including being able to influence the composition of our Board and influence matters requiring

shareholder approval. Our Promoter and Promoter Group may take or block actions with respect to our

business, which may conflict with our interests or the interests of our minority shareholders. Through their

influence, our Promoter and Promoter Group may be in a position to delay, defer or cause a change of our

control or a change in our capital structure, delay, defer or cause a merger, consolidation, takeover or other

business combination involving us, discourage or encourage a potential acquirer from making a tender offer

or otherwise attempting to obtain control of us.

16. We may face labor disruptions that could interfere with our operations.

We are exposed to the risk of strikes and other industrial actions. We have experienced difficulties with our

labor relations in the past and we may experience a strike, work stoppage or other industrial action in the

future. As of September 30, 2014, the majority of our employees at Bhandup and Nasik plants were the

members of trade unions such as the Mumbai Shramik Sangh and Akhil Bhartiya Asanghatit Shramik

General Kamgar Union. During the past five fiscal years and the six months ended September 30, 2014,

there had been a total of 32 strike days at our Nasik plant and no strikes at our Bhandup and Halol plants.

Although we believe that we have good industrial relations with our employees and unions presently, there

can be no assurance that our employees will not undertake or participate in strikes, work stoppages or other

industrial actions in the future. Any labor disruptions may adversely affect our operations by delaying or

slowing down our production of tyres, increasing our cost to produce tyres or even halting a portion of our

tyre production. This may also cause us to miss sales commitments, hurt our relationships with customers

and disrupt our supply chain, further affecting our revenue and margins.

17. If we fail to develop technologies, processes or products needed to support consumer demand, we may

lose significant market share or be unable to recover associated costs.

Our ability to sell replacement tyres or tyres to original equipment manufacturers and in our export markets

may be significantly impacted if we do not develop or make available technologies, processes, or products

that competitors may be developing and consumers demanding. This includes but is not limited to changes

in the design of and materials used to manufacture tyres. Technologies may also be developed by

competitors that better distribute tyres to consumers, which could affect our customers. Additionally,

developing new products and technologies requires significant investment and capital expenditures, is

technologically challenging and requires extensive testing and accurate anticipation of technological and

market trends. If we fail to develop new products that are appealing to our customers, or fail to develop

46

products on time and within budgeted amounts, we may be unable to recover our product development and

testing costs. If we cannot successfully use new production or equipment methodologies we invest in, we

may also not be able to recover those costs, whether because we lose market share in the replacement

market or in sales to original equipment manufacturers and in our export markets.

18. We rely on the success of our distribution network in the replacement tyre market.

A significant portion of our tyre products are sold to third-party dealers. There is no assurance that our

current dealers will continue to do business with us or that we can continue to attract additional dealers to

our distribution network in the replacement tyre market. We rely on our distribution network, including our

exclusive franchisees, to distribute, market and sell our manufactured tyre products. Competition for tyre

dealers in India is intense. Our business is dependent on our ability to attract and retain qualified third-party

dealers and exclusive franchisees and such parties’ ability to promote our products effectively. Maintaining

good relations with our dealers and ensuring that our dealers are successful is vital to our business. Our

domestic replacement sales accounted for approximately 60.6% of our standalone gross sales revenue in

Fiscal 2014, and approximately 62.5% of our standalone gross sales revenue in the first half of Fiscal 2015.

Furthermore, our business growth depends on our ability to attract additional high-quality dealerships to our

distribution network. If we do not succeed in maintaining the stability of our distribution network and

attracting additional high-quality dealers to our distribution network, our market share may decline, which

would materially and adversely affect our results of operations, financial condition and cash flows.

19. A significant portion of our tyre products are sold to OEMs and any failure to maintain the relationship

with these OEMs or find competent replacements could affect the sales of our products.

The OEM channel accounted for approximately 21.3% of our standalone gross sales revenue in Fiscal 2014,

and approximately 21.4% of our standalone gross sales revenue in the first half of Fiscal 2015. We may be

unable to maintain or renew relationships with our OEMs or we may not be able to obtain orders from our

OEMs at the current levels. We may also be unsuccessful in competing for desired OEMs to promote and

sell our products. If any of these relationships were to be so altered or terminated and we are unable to

obtain sufficient replacement orders on comparable terms, our business, financial condition, results of

operations, cash flows and business prospects could be materially and adversely affected.

20. If the transition from bias-ply to radial tyres in domestic Indian commercial vehicle and Truck and Bus

markets does not occur at the rate we anticipate, our business, results of operations, cash flows,

profitability and financial condition could be adversely affected.

We intend to increase our production of radial tyres by expanding our manufacturing facilities. However,

the rate at which radial tyres penetrate the Indian light commercial vehicle and bus tyre markets may occur

more or less rapidly than we currently anticipate. Although the Indian passenger car tyre market has moved

almost exclusively to radial tyres, the Indian light commercial vehicle and Truck and Bus tyre markets have

been slower to embrace radial tyres due to cost considerations, overload practices, maintenance

requirements and India’s poor road infrastructure. If the rate of adoption of radial tyres in the Indian light

commercial vehicle and Truck and Bus tyre markets is slower than we anticipate, we could have an

overcapacity of production capacity for radial tyres and may be unable to market or sell enough radial tyres

to recoup our capital investment. In such case, we may also be in a position of having underinvested in our

bias-ply tyre production capacity and may lost market share to competitors because of an inability unable to

meet customer demands for bias-ply tyre products. Furthermore, a slower than expected embrace of radial

tyres in the domestic market could be exacerbated by the potential expansion by other Indian tyre

manufacturers of their production of radial tyres or the entry of international participants in the domestic

radial tyre market. This could lead to a significant oversupply of radial tyres on the Indian market, which

would result in increased competition in marketing and selling radial tyres. On the other hand, if the rate of

adoption of radial tyres in the Indian light commercial vehicle and Truck and Bus tyre markets is faster than

we anticipate, we may not be able to meet customer demand for such tyre products and may lose market

share to our competitors. Accordingly, if our expectations for the rate of transition from bias-ply to radial

tyres are incorrect, our business, results of operations, cash flows, profitability and financial condition may

be materially and adversely affected.

21. We are exposed to product recalls and warranty claims in all of the countries in which we manufacture

tyres or to which we export our products.

Warranty claims reduce our profitability. Our tyres are subject to warranties against manufacturing defects.

47

In the event of claimed defects or non-performance of our tyres, our practice is to accept such genuine

claims and to replace such tyres on a proportionate basis. In the future, we might also experience recalls or

a material number of warranty claims due to defects in our tyre products. Defects, if any, in our products

could adversely affect our reputation and demand for our products. In the event that defects, product recalls,

or warranty claims become more frequent, there may be an adverse effect on our operating results and

financial condition.

22. If we are subject to product liability claims, it could expose us to costs and liabilities and adversely affect

our reputation, revenues and profitability.

We are exposed to risks associated with product liability claims as a result of developing, producing,

marketing, promoting and selling tyres in India and other jurisdictions in which our tyre products are

marketed and sold. Such claims may arise if any of our products are deemed or proven to be unsafe,

ineffective or defective contaminated or if we are alleged to have engaged in practices such as improper,

insufficient or improper labeling of products or providing inadequate warnings. There can be no assurances

that we will not become subject to product liabilities claims or that we will be able to successful defend

ourselves against any such claims. If we are unable to defend ourselves against such claims, among other

things, we may be subject to civil liability for physical injury, death or other losses caused by our products

and to criminal liability and the revocation of our business licenses if our tyre products are found to be

defective. In addition, we may be required to recall the relevant tyre products, suspend sales or cease sales.

Other jurisdictions in which our products are, or may in the future be, sold, may have similar or more

onerous product liability and regulatory regimes, as well as more litigious environments that may further

expose us to the risk of product liability claims. We currently maintain product liability insurance, however,

we cannot guarantee its full coverage or that we will be able to maintain it in future. Even if we are able to

successfully defend ourselves against any such product liability claims, doing so may require significant

financial resources and the time and attention of our management. Moreover, even the allegation that our

tyre products are harmful, whether or not ultimately proven, may adversely affect our reputation and sales

volumes.

23. If estimates or assumptions used in developing our strategic plan are inaccurate or we are unable to

execute our strategic plan effectively, our profitability and financial position could be negatively

impacted.

If the estimates or assumptions used in developing our strategic plan vary significantly from actual

conditions, our sales, margins and profitability could be harmed. For instance, sales of two-wheelers and

passenger cars may not grow as quickly as we currently expect, and we may be incorrect in our assumptions

and expectations regarding consumer preferences and tastes when researching, developing and introducing

new products. Also, the fund requirement and deployment for our expansion projects are based purely on

management estimates and assumptions, considering the current market scenario and are subject to revision

in the light of changes in external circumstances or costs. We have not yet determined all of our expected

expenditures, and we, therefore, cannot estimate the exact amounts to be used for our expansion projects

and implementation of other aspects of our strategy. The amounts and timing of any expenditure will

depend on, among other factors, the amount of cash generated by our operations, competitive and market

developments. If we are unsuccessful in implementing the tactics necessary to execute our strategic plan, or

if the underlying estimates or assumptions used to develop our strategic plan are materially inaccurate, our

business can also be negatively impacted.

24. The implementation of our strategies and other aspects of our business will require significant funding;

if we do not have access to sufficient funding, it could adversely affect our business prospects.

The implementation of many aspects of our strategies will require significant funding, including:

• the funding of our expansion projects and augmentation of the long term working capital required

for business growth;

• the expenses associated with expanding our sales and distribution network;

• the costs of developing and expanding our product portfolio;

• the funding required to consummate acquisitions and integrate acquired businesses;

• the costs and expenditures required to grow our business internationally, including through joint

ventures with international partners in overseas markets; and

• the capital expenditure required to increase our production capacity and to make upgrades and

48

enhancements.

In addition, many aspects of our general business operations have on-going funding requirements that may

increase over time.

Subject to compliance with applicable laws and regulations, we intend to use the net proceeds of the Issue

for our various expansion projects and also for augmentation of the long term working capital required for

business growth, as detailed in the section “Use of Proceeds”. We have not yet entered into any contract or

binding agreement or determined the mix of funding required for our expansion projects and cannot

guarantee that we will be able to obtain necessary funding.

Over the longer term, we expect that the implementation of our strategy and business plans will require us

to rely in part on external financing sources. However, our ability to continue to obtain external financing

on commercially reasonable terms will depend on a number of factors, many of which are outside of our

control, including our financial condition, results of operations and cash flows, India’s economic condition,

industry and competitive conditions, interest rates, prevailing conditions in the credit markets and

government policies on lending. In addition, any such financing (whether debt or equity) may subject our

subsidiaries and joint ventures to certain restrictions as well as obligate them to grant security over future

revenue streams. If we cannot obtain sufficient external funding on commercially acceptable terms to

implement our strategies and business plans as currently contemplated, we could be required to revise our

strategies and business plans, which could adversely affect our business prospects.

25. Failures by third-party contract manufacturers to deliver products and key components could adversely

affect our reputation, results of operations and cash flows.

Certain of our products and key components for our products are manufactured by third-party contract

manufacturers. We rely on such contract manufacturers to meet demand for our products and to reduce the

incremental capital expenditures that we would otherwise face. In Fiscal 2014, approximately 28.4% of our

standalone gross sales revenue were from products produced by third-party vendors. We do not control the

operations of these contract manufacturers. If the operations of our contract manufacturers were interrupted

or if they were otherwise unable to meet our delivery requirements due to capacity limitations, regulatory

problems or other constraints, we may be limited in our ability to fulfill new customer orders. Our inability

to fulfill new customer orders or our need to find replacement contract manufacturers, which could entail

significant delay, the devotion of substantial time and resources on our part and potentially a period in

which our products could not be produced in a timely or consistently high-quality manner, could materially

and adversely affect our business, reputation, results of operations and cash flows.

26. Joint ventures and subsidiaries that are not wholly owned by us present risks that we would not otherwise

face.

Our business and our strategy involves the use of joint ventures and subsidiaries in which we do not own

100%, including our joint ventures in Sri Lanka and our subsidiary Bangladesh, which bring risks that we

would not otherwise face. Our joint ventures and subsidiaries that are not wholly owned by us are generally

less well-capitalized than we are. In addition, there are specific risks applicable to these joint ventures and

subsidiaries and these risks, in turn, add potential risks to us. Such risks include greater risk of joint venture

partners or other investors failing to meet their obligations under related joint venture or other agreements,

conflicts with joint venture partners/ investors , the possibility of a joint venture partner/ investors taking

valuable knowledge from us and the inability of a joint venture/ subsidiary to access the capital markets,

which could lead to resource demands on us in order to maintain or advance our strategy.

27. We have, in the past, entered into related party transactions and continue to do so in the future.

We have entered into various transactions with related parties, such as sales of our products, the purchase of

raw materials and lease rentals. See section “Board of Directors and Senior Management-Related Party

Transactions” on page 133.

While we believe that we have obtained requisite approvals under applicable laws, wherever required, for

all such transactions and have carried them out on an arms-length basis and on commercially reasonable

terms, there can be no assurance that we could not have achieved more favorable terms had such

transactions been entered into with unrelated parties. It is likely that we may enter into related party

transactions in the future. Such related party transactions may potentially involve conflicts of interest. For

more details on our related party transactions on page 133. We cannot assure you that such transactions,

individually or in the aggregate, will always be in the best interests of our shareholders.

49

28. We conduct manufacturing, sales and distribution operations on a worldwide basis and are subject to

risks associated with doing business internationally.

We operate in Bangladesh and Sri Lanka and have distribution operations worldwide which we use for our

export business. Our objective over the longer term is to expand our international sales. Our ability to

continue to generate revenue and increase demand for our products outside of India depends in significant

part on our joint venture partners. There are a number of risks in doing business abroad, where we have less

experience, including dealing with political and economic uncertainty, social unrest, sudden changes in

laws and regulations, shortages of trained labor and the uncertainties associated with entering into joint

ventures or similar arrangements in foreign countries. These risks may impact our ability to expand our

operations in different regions and otherwise achieve our objectives relating to our foreign operations,

including utilizing these locations as suppliers to other markets. In addition, compliance with multiple and

potentially conflicting foreign laws and regulations, import and export limitations and exchange controls is

burdensome and expensive. Our foreign operations also subject it to the risks of international terrorism and

hostilities and to foreign currency risks, including exchange rate fluctuations and limits on the repatriation

of funds. Our international expansion plans may require significant investment but may fail to generate the

level of returns we expect. If we are unable to expand our international business effectively or at all, our

business, financial conditions, results of operation, cash flows and business prospects may be adversely

affected.

Moreover, we have limited control over our joint venture partners. Our joint venture partners may fail to

provide an adequate level and quality of service to retail customers or otherwise fail to perform pursuant to

agreements. In addition, our joint venture partners may misuse, infringe or violate our intellectual properties

to their advantage, adopt or implement unsuccessful marketing strategies for our tyre products or fail to

devote the necessary resources to successfully operate the joint venture, the occurrence of any of which

could damage our brand, business, financial condition, results of operations, cash flows and business

prospects.

29. Our business depends heavily on our reputation and consumer perception of our brand, and any

negative publicity or other harm to our brand or failure to maintain and enhance our brand recognition

may materially and adversely affect our business, financial condition, results of operations and cash

flows.

We believe that our reputation and consumer perception of our brand are critical to our business.

Maintaining and enhancing our reputation and brand recognition depends primarily on the quality and

consistency of our products and services, as well as the success of our marketing and promotional efforts.

We believe that maintaining and enhancing our brand is essential to our efforts to maintain and expand our

customer base. If customers do not perceive our products or services to be of high quality, our brand image

may be harmed, thereby decreasing the attractiveness of our products. While we have devoted significant

resources to brand promotion efforts in recent years, our ongoing marketing efforts may not be successful in

further promoting our brand. In addition, our brand image may be harmed by negative publicity relating to

us or India’s tyre manufacturing industry regardless of its veracity. If we are unable to maintain and further

enhance our brand recognition and increase market awareness for us and our products, our ability to attract

and retain customers may be impeded and our business prospects may be materially and adversely affected.

30. We own certain intellectual property rights and any failure to enforce our rights could have an adverse

effect on our business prospects.

We own trademarks and copyrights relating to our products. See the section titled “Our Business – Our

Intellectual Property” on page 102 of this Placement Document. Our ability to enforce our trademarks and

other intellectual property is subject to general litigation risks. If we are not ultimately successful in

enforcing our intellectual property rights for any reason, we may experience a material adverse effect on our

competitive position and our business.

We also rely in part on mutual trust for protection of our trade secret and confidential information relating

to our production processes. We also have written confidentiality agreements with each of our managerial

employees. While it is our policy to take precautions to protect our trade secrets and confidential

information against breach of trust by our employees, consultants, customers and suppliers, it is possible

that unauthorized disclosure of our trade secrets or confidential information may occur. We cannot assure

you that we will be successful in protecting our trade secrets and confidential information.

31. We may be subject to claims of infringement of third-party intellectual property rights, which could

adversely affect our business.

50

While we take care to ensure that we comply with the intellectual property rights of third parties and that

there are no pending claims against us for infringement of third party intellectual property rights, we cannot

determine with certainty whether we are infringing upon any existing third-party intellectual property

rights. Any claims of infringement, regardless of merit or resolution of such claims, could force us to incur

significant costs in responding to, defending and resolving such claims, and may divert the efforts and

attention of our management and technical personnel away from our business. As a result of such

infringement claims, we could be required to pay third party infringement claims, alter our technologies,

obtain licenses or cease some portions of our operations. The occurrence of any of the foregoing could

result in unexpected expenses. In addition, if we alter our technologies or cease production of affected

items, our revenue could be adversely affected.

32. Our results of operations and cash flows could be impacted by changes in tariffs imposed by the GoI

and/or foreign governments.

Our ability to competitively source and sell tyres could be significantly impacted by changes in tariffs

imposed by various governments, whether the GoI or any of the governments of the countries in which we

sell our tyres. In particular, a safeguard duty was introduced for carbon black imports into India that, if

maintained, will result in an increased cost to us of carbon black. India or other governments may impose

tariffs on imports of tyres or the raw materials that we use to manufacture our tyres, which may increase our

cost of exporting tyres to certain jurisdictions and the cost of our raw materials. In the event that we are

unable to pass on any increased costs due to the imposition of tariffs on our products and/or raw materials

by increasing the prices of our products, our profitability may be adversely affected and we could lose

market share due to the opportunity for other competitors to establish or increase their presence in markets

where we participate.

33. We depend significantly on sales in India, any decrease in which will adversely affect our business,

revenue, results of operations and cash flows.

For the Fiscal 2012, 2013 and 2014, we derived 74.79%, 74.97%, and 76.92%, respectively, of our

consolidated revenue from operations (net) from our sales in India. Existing and potential competitors may

increase their focus on India, which could reduce our market share. For example, our competitors may

intensify their efforts to capture a larger market share by incurring higher promotional expenses and

launching aggressive promotional campaigns. If we are unable to compete effectively in India, it could

adversely affect our sales volumes and pricing levels for tyre products in India, as well as erode our market

share. In the event that we experience adverse effects on our sales volumes or pricing levels, or loss of

market share, due to increased competition or otherwise, it could adversely affect our business, revenue,

results of operations and cash flows.

34. Because we generate revenue and incur expenses in multiple currencies, exchange rate movements may

have an adverse effect on our results of operations and cash flows.

We have foreign currency exposure related to foreign-denominated revenues, including export sales and

costs of imported raw materials and equipment. We expect that our foreign currency exposure will increase

as our business grows. Significant currency exchange rate fluctuations and currency devaluations could

have an adverse effect on our results of operations and cash flows from period to period.

35. We are exposed to market risks from our hedging activities, and the use of hedging instruments could

result in financial losses that may adversely affect our results of operations, financial condition and cash

flows.

We currently hold, and have in the past held, derivative contracts, including forward exchange contracts and

interest rate swaps. We believe that these forward exchange contracts, and cross currency swaps, generally

speaking, have the effect of reducing the volatility of our profit and reducing our exposure to foreign

exchange and interest rate risk. If, in the future, foreign exchange rates or interest rates move contrary to our

expectations, or if our risk management procedures prove to be inadequate, we could incur derivative-

related or other charges and opportunity losses independent of the relative strength of our business, which

could affect our results of operations, financial condition and cash flows.

36. Our insurance coverage may not adequately protect us against possible risk of loss.

While we believe that we maintain insurance coverage in amounts consistent with industry norms, our

insurance policies do not cover all risks and are subject to exclusions and deductibles. If any or all of our

production facilities are damaged in whole or in part and our operations are interrupted for a sustained

51

period due to fire and similar perils, there can be no assurance that our insurance policies will be adequate

to cover the losses that may be incurred as a result of such interruption or the costs of repairing or replacing

the damaged facilities. If we suffer a large uninsured loss or any insured loss suffered by us significantly

exceeds our insurance coverage, our business, financial condition, results of operations and cash flows may

be materially and adversely affected. See the section titled “Our Business – Insurance” on page 99 of this

Placement Document.

37. Our operations are hazardous and could expose us to the risk of liabilities, loss of revenues and

increased expenses.

Our operations are subject to various hazards associated with the production of tyres, such as the use,

handling, processing, storage and transportation of hazardous materials, as well as accidents such as leakage

or spillages of chemicals. The storage of these hazardous materials near our production facilities and the

handling of these materials in the production process poses inherent risks. Any mishandling of hazardous

chemical substances could materially disrupt the production of our products and may give rise to potential

death or injuries of our work force. In addition, our employees operate heavy machinery at our

manufacturing facilities and accidents may occur while operating such machinery.

These hazards can cause personal injury and loss of life, severe damage to and destruction of property and

equipment, environmental damage and may result in the suspension of operations and the imposition of

civil and criminal liabilities. As a result of past or future operations, claims of injury by employees or

members of the public due to exposure, or alleged exposure, to the hazardous materials involved in our

business may arise.

In the past three fiscal years, we have had one fatality and 1,722 injuries at our manufacturing facilities. We

could be held liable for damages in connection with injuries or death of any of our employees, which could

adversely affect our business, financial condition, results of operations and cash flows.

In addition, we may be subject to claims of injury from accidents at our manufacturing facilities or from

indirect exposure to hazardous materials that are incorporated into our products. Liabilities incurred as a

result of these events have the potential to adversely impact our financial position. While we maintain

general insurance against these liabilities, insurance proceeds may not be adequate to fully cover the

substantial liabilities, lost revenues or increased expenses that we might incur.

38. We rely on our IT systems in managing our supply chain, production process, logistics and other integral

parts of our business.

We rely on our information technology systems in connection with order booking, dealer management,

material procurement, accounting and production. Therefore, the reliability of our network infrastructure is

critical to our business. Any failure in our information technology systems could result in business

interruptions, including disruption in our supply management, the loss of buyers, damaged reputation and

weakening of our competitive position, any of which could have a material adverse effect on our business,

financial condition, results of operations and cash flows.

39. Increased staff costs could negatively affect our ability to operate efficiently and adversely affect our

profitability, results of operations and cash flows.

The cost of labor in India has been increasing over the past years due to increasing competition for quality

employees among manufacturing companies well as growth in inflation and general wage increases. Many

aspects of our strategies and business growth may require us to hire additional employees. Due to the nature

of our operations, a significant proportion of our employees are contract labor, which is more cost-efficient

for us and provides us with some flexibility in managing our labor pool as. If competitive forces require us

to hire hire proportions of permanent, full-time employees and/or convert existing contract employees into

permanent, full-time employees, our staff costs could increase without corresponding increases in our

revenue, which could adversely affect our profitability, results of operations and cash flows.

40. Any damages caused by fraud, theft or other misconduct by our employees could adversely affect our

profitability, results of operations and cash flows.

We are exposed to operational risk arising from inadequacy or failure of internal processes or systems or

from fraud or theft. We are susceptible to, and have experienced in the past, fraud, theft or other

misconduct by our employees or outsiders, unauthorized transactions by our employees and operational

errors. For instance, our chartered accountants report for the Company’s Fiscal 2014 financial statements,

contains a note of instances of fraud involving misappropriation of funds and theft of inventory or finished

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goods by our employees and agents. Employee or executive misconduct could also involve the improper

use or disclosure of confidential information, which could result in regulatory sanctions and reputational or

financial harm, including harm to our brand. Our management information systems and internal control

procedures are designed to monitor our operations and overall compliance. However, they may not be able

to identify non-compliance and/or suspicious transactions in a timely manner or at all. In addition, certain

internal control processes are carried out manually, which may increase the risk that human error,

tampering or manipulation will result in losses that may be difficult to detect. As a result, we may suffer

monetary losses, which may not be covered by our insurance and may thereby adversely affect our

profitability, results of operations and cash flows. Such a result may also adversely affect our reputation.

Risk Factors Relating to Our Industry

41. If we do not compete successfully against existing and new competitors, we may lose customers and

market share.

New tyres are sold in highly competitive conditions in India and throughout the world. We compete with

other tyre manufacturers on the basis of product design, performance, price, reputation, warranty terms,

customer service and consumer convenience. In India, our major competitors are MRF, JK Tyre, and

Apollo Tyres. Other global tyre manufacturers, such as Michelin, Goodyear and Bridgestone have entered

or may enter the Indian market either directly or through joint ventures or partnerships. Internationally, we

also compete with tyre manufacturers in all of the 88 countries in which we market and sell our tyres. An

increasingly competitive threat facing our Middle East and Southeast Asia exports comes from tyre

manufacturers, particularly in China, marketing radial tyres at a cheaper price than our bias-ply tyres.

Increasing penetration of light commercial vehicle and bus radial tyres in the Indian market may attract

global manufacturers to enter the domestic market, which will lead to increased competition for radial tyre

manufacturers. Some of our competitors, including many international companies and potential entrants to

the domestic market, may have significantly greater resources than us. Any failure by us to compete

effectively, including in terms of pricing or providing quality products, could have a material adverse effect

on our financial condition, results of operations and cash flows. Our ability to compete successfully will

depend, in significant part, on our ability to reduce costs by such means as leveraging global purchasing,

improving productivity, elimination of redundancies and increasing production at low-cost supply sources.

If we are unable to compete successfully, our market share may decline, which may have a material adverse

effect on our results of operations, financial condition and cash flows.

42. If purchases of new vehicles decline, it could significantly decrease the demand for our products.

The demand for our tyre products is dependent, among other things, on the conditions of the global and, in

particular, the Indian economy. For instance, the demand for our tyre products is significantly affected by

the number of cars and other motor vehicles in India and elsewhere. A decline in economic activity in India

or in international markets may have an adverse effect on consumer and industrial demand for new

vehicles. The original equipment manufacturers (OEM) channel accounted for approximately 21.3% of our

standalone gross sales revenue in Fiscal 2014, and approximately 21.4% of our standalone gross sales

revenue in the first half of Fiscal 2015. Sales of new vehicles in India are affected by the time of year,

weather, interest rates, fuel prices and the overall economic environment. If industrial or consumer demand

for new vehicles decreases, it would have a corresponding impact on the demand for our products and may

materially and adversely affect our business, financial condition, results of operations, cash flows and

business prospects.

43. A shift in the India tyre market from bias-ply to radial tyres would lead to an oversupply of bias-ply tyres,

which may result in pricing pressure that could adversely affect our profitability.

If the India tyre market continues to shift toward radial tyres for commercial vehicles, the demand for bias

tyres for commercial vehicles will likely fall. At the same time, we and other Indian tyre manufacturers will

retain the same production capacity for bias-ply tyres because bias-ply tyre manufacturing equipment

cannot be modified to produce radial tyres. This will cause an oversupply in the bias-ply tyre market in

India which may exert a downward pressure on prices, impacting our revenues and profitability.

44. We require certain regulatory approvals and licenses in the ordinary course of our business, and the

failure to obtain, maintain and renew these approvals and licenses necessary for carrying out our

business, in a timely manner or at all, may adversely affect our operations.

We are subject to various environmental, health and safety, employee-related and other laws and

regulations applicable to our business operations, including laws and regulations governing our relationship

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with our employees in areas such as minimum wages, maximum working hours, overtime, working

conditions, hiring and terminating employees, contract labor and work permits, as well as other local laws

or regulations in the countries in which we operate. The success of our strategy to modernize, optimize and

expand our existing operations in the sectors in which we operate is contingent upon, among other factors,

receipt of all required licenses, permits and authorizations, including local land use permits, building and

zoning permits, environmental permits, and health and safety permits.

Although we believe that we are in compliance with all environmental, health and safety, employee-related

and other applicable laws and regulations currently in force, changes in laws or regulations in the countries

in which we operate may result in us incurring significant costs in order to maintain compliance with such

laws and regulations and may delay or prevent project completion. There can be no assurances that the legal

framework, licensing and other regulatory requirements or enforcement trends in our industry will not

further change in a manner that does not result in increased costs of compliance, or that we will be

successful in responding to such changes. Moreover, as we grow our business, the potential for violating

these laws and regulations may also increase.

If we fail to comply with any existing laws and regulations, or fail to obtain, maintain or renew any of the

required licenses or approvals, the relevant regulatory authorities may impose fines and penalties on us,

revoke our business licenses and approvals and/or require us to discontinue our business or impose

restrictions on the affected portion of our business. Any action brought against us for alleged violations of

laws or regulations, even if our defense thereof is successful, could cause us to incur significant legal

expenses and divert our management’s attention from the operation of our business. Any determination that

we have violated, or the public announcement that we are being investigated for possible violations, of

these laws or regulations, could harm our reputation, operating results and financial condition. If we are

found in violation, we may be subject to any applicable penalties associated with such violations, including

civil and criminal penalties, damages and fines, loss of various licenses, certificates, accreditations or

authorizations, orders to refund payments received by us, and orders to curtail or cease our operations. If we

lose or otherwise are unable to maintain any of our required licenses and approvals under applicable laws

and regulations, our business operations will be materially and adversely affected.

45. We are required to comply with environmental laws and regulations that could cause us to incur

significant costs.

Our manufacturing facilities are subject to numerous laws and regulations designed to protect the

environment, and we expect that additional requirements with respect to environmental matters will be

imposed in the future. In addition, there have been various reports indicating that the Government may

adopt new environmental laws and regulations that could affect our operations. In addition, our Mumbai

and Nasik plants are located in residential zone, which imposes stricter requirements on our manufacturing

operations. Material future expenditures may be necessary if compliance standards change, if material

unknown conditions that require remediation are discovered or if required remediation of known conditions

becomes more extensive than expected. If we fail to comply with present and future environmental laws

and regulations, we could be subject to future liabilities or the suspension of production, which could harm

our business, results of operations or cash flows. Environmental laws could also restrict our ability to

expand our facilities or could require us to acquire costly equipment or to incur other significant expenses

in connection with our manufacturing processes.

Risks Related to India

46. Our business and activities may be further regulated by the Competition Act and any adverse application

or interpretation of the Competition Act could materially and adversely affect our business, financial


The Competition Act seeks to prevent business practices that have or are likely to have an appreciable

adverse effect on competition in India and has established the CCI. Under the Competition Act, any

arrangement, understanding or action, whether formal or informal, which has or is likely to have an

appreciable adverse effect on competition is void and attracts substantial penalties. Any agreement among

competitors which, directly or indirectly determines purchase or sale prices; directly or indirectly results in

bid rigging or collusive bidding, limits or controls the production, supply or distribution of goods and

services; or shares the market or source of production or providing of services by way of allocation of

geographical area or type of goods or services or number of customers in the relevant market or in any other

similar way, is presumed to have an appreciable adverse effect on competition and shall be void. Further,

the Competition Act prohibits the abuse of a dominant position by any enterprise. If it is proven that a

breach of the Competition Act committed by a company took place with the consent or connivance or is

54

attributable to any neglect on the part of, any director, manager, secretary or other officer of such company,

that person shall be guilty of the breach themselves and may be punished as an individual. If we, or any of

our employees, are penalized under the Competition Act, our business may be adversely affected. On

March 4, 2011, the GoI notified and brought into force new provisions under the Competition Act in

relation to combined entities (the “Combination Regulation Provisions”), which came into effect from June

1, 2011. The Combination Regulation Provisions require that any acquisition of shares, voting rights, assets

or control or mergers or amalgamations, which cross the prescribed asset and turnover based thresholds,

must be notified to and pre-approved by the CCI. In addition, on May 11, 2011, the CCI issued the final

Competition Commission of India (Procedure in regard to the transaction of business relating to

combinations) Regulations, 2011 (which were further amended on March 28, 2014). These regulations, as

amended, set out the mechanism for the implementation of the Combination Regulation Provisions under

the Competition Act.

It is difficult to predict the impact of the Competition Act on our growth and expansion strategies in the

future. If we are affected, directly or indirectly, by the application or interpretation of any provision of the

Competition Act or any enforcement proceedings initiated by the CCI or any adverse publicity that may be

generated due to scrutiny or prosecution by the CCI, it may adversely affect our business, financial


47. We price certain intercompany transactions using transfer pricing, which subjects us to certain risks that

may adversely affect our results of operation, financial condition and cash flows.

We evaluate certain intercompany transactions using transfer pricing, which, in India, is currently governed

by the Income Tax Act, 1961, as amended and the relevant provisions of the Companies Act, 2013. The

Income Tax Department of India has, in the past, initiated a significant number of disputes against Indian

companies related to transfer pricing. These disputes can be costly and difficult to defend due in part to the

inherent challenge of documenting and defending the transfer prices that companies used. Moreover, the

regulations that govern transfer pricing are vaguely drafted and provide limited guidance regarding their

application and interpretation, leaving discretion to the Income Tax Department of India and other

regulatory bodies in interpretation and enforcement. If the Income Tax Department of India initiates a

dispute against us for our transfer pricing practices, our results of operations, financial condition and cash

flows may be adversely affected.

48. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

The Indian securities markets are smaller and may be more volatile than securities markets in more

developed economies. The regulation and monitoring of Indian securities markets and the activities of

investors, brokers and other participants differ, in some cases significantly, from those in the U.S. and

Europe. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed

securities.

Indian stock exchanges have, in the past, experienced problems that have affected the market price and

liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults,

settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges

have from time to time restricted securities from trading, limited price movements and increased margin

requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock

exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment.

If similar problems occur in the future, the market price and liquidity of the Equity Shares could be

adversely affected. A closure of, or trading stoppage on, either the BSE or the NSE could adversely affect

the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the

prices at which the Equity Shares will trade in the future.

49. A slowdown in economic growth in India or globally and extended inflation in India could cause our

business to suffer.

A slowdown in the Indian economy could adversely affect our business and our customers and contractual

counterparties, especially if such a slowdown were to be continued and prolonged. According to the Annual

Report for Fiscal 2014, the RBI estimated real GDP growth to have improved marginally to 4.7% in Fiscal

2014 from 4.5% in Fiscal 2013. The RBI predicted in the Monetary Policy Report of September 2014 that

real GDP growth would increase to 5.5% in Fiscal 2015. Further, in light of the increasing linkage of the

Indian economy to other economies, the Indian economy will be increasingly influenced by economic and

55

market conditions in other countries. As a result, a recession in the United States and other countries in the

developed world and a slowdown in economic growth in major emerging markets like China could have an

adverse impact on economic growth in India. A slowdown in the pace of growth in the Indian economy

could result in lower demand for our products, which could adversely impact our results of operations and

cash flows, our ability to implement our strategy and the trading price of the Equity Shares.

Further, an increase in input prices owing to inflation could cause our results of operations to decline if we

are unable to pass price increases on to consumers. According to the Monthly Economic Report for June

2014 prepared by the Department of Economic Affairs, Ministry of Finance, GoI, the year-on-year inflation

in terms of the Wholesale Price Index was 5.43% for the month of June 2014 as compared to 4.86% in June

2013. There is no assurance that inflation will not further increase in the future. In periods of high rates of

inflation, our costs, such as operating expenses, may increase, which could have an adverse effect on our

results of operations and cash flows.

50. Investing in securities that carry emerging market risks can be affected generally by volatility in the

emerging markets.

The markets for securities bearing emerging market risks, such as risks relating to India, are, to varying

degrees, influenced by economic and securities market conditions in other emerging market countries.

Although economic conditions differ in each country, investors’ reactions to developments in one country

may affect securities of issuers in other countries, including India. Accordingly, the price and liquidity of

our Equity Shares may be subject to significant fluctuations, which may not necessarily be directly or

indirectly related to our financial performance.

51. Companies operating in India are subject to a variety of central and state government taxes and

surcharges.

Tax and other levies imposed by the central and state governments in India that affect our tax liability

include central and state taxes and other levies, income tax, value added tax, turnover tax, service tax, stamp

duty and other special taxes and surcharges which are introduced on a temporary or permanent basis from

time to time. Moreover, the central and state tax scheme in India is extensive and subject to change from

time to time. For example, a new direct tax code has been introduced in the monsoon session of the Indian

Parliament. In addition, a new goods and services tax regime is expected to be introduced in the near future,

and the scope of the service tax is proposed to be enlarged. Further, the provisions in relation to the GAAR

have been introduced in the Finance Act, 2012 to come into effect from 1 April 2016. The GAAR

provisions intend to catch arrangements declared as “impermissible avoidance arrangements”, which is any

arrangement, the main purpose or one of the main purposes of which is to obtain a tax benefit and which

satisfy at least one of the following tests (i) creates rights, or obligations, which are not ordinarily created

between persons dealing at arm’s length; (ii) results, directly or indirectly, in misuse, or abuse, of the

provisions of the Income Tax Act, 1961; (iii) lacks commercial substance or is deemed to lack commercial

substance, in whole or in part; or (iv) is entered into, or carried out, by means, or in a manner, which are not

ordinarily employed for bona fide purposes. If GAAR provisions are invoked, then the tax authorities have

wide powers, including denial of tax benefit or a benefit under a tax treaty. The statutory corporate income

tax in India, which includes a surcharge on the tax and an education cess on the tax and the surcharge, is

currently 33.99%. The central or state government may in the future further increase the corporate income

tax it imposes. Any such future increases or amendments may affect the overall tax efficiency of companies

operating in India and may result in significant additional taxes becoming payable. Additional tax exposure

could adversely affect our business, results of operations and cash flows.

52. A significant change in the GoI’s economic liberalization and deregulation policies could adversely

affect our business and the price of our Equity Shares.

Our business and customers are predominantly located in India or are related to and influenced by the

Indian economy. The GoI has traditionally exercised, and continues to exercise, a dominant influence over

many aspects of the economy. GoI policies could adversely affect business and economic conditions in

India, our ability to implement our strategy and our future financial performance. Since 1991, successive

Indian governments have pursued policies of economic liberalization, including significantly relaxing

restrictions on the private sector and encouraging the development of the Indian financial sector. For the

past several years, coalition governments have governed India. The leadership of India and the composition

of the coalition in power are subject to change and election results are sometimes not along expected lines.

It is difficult to predict the economic policies that will be pursued by the GoI. The rate of economic

liberalization could change and specific laws and policies affecting banking and finance companies, foreign

56

investment, currency exchange and other matters affecting investment in our securities could change as

well. Any significant change in India’s economic liberalization and deregulation policies could adversely

affect business and economic conditions in India generally and our business in particular.

53. Communal disturbances, riots, terrorist attacks and other acts of violence or war involving India or other

countries could adversely affect the financial markets, result in loss of client confidence, and adversely

affect our business, financial condition, results of operations and cash flows.

India has experienced communal disturbances, terrorist attacks and riots during recent years. Any major

hostilities involving India or other acts of violence, including civil unrest or similar events that are beyond

our control, could have a material adverse effect on India’s economy and our business and may adversely

affect the Indian stock markets where our Equity Shares will trade as well as the global equity markets

generally. Such acts could negatively impact business sentiment as well as trade between countries, which

could adversely affect our business and profitability.

Also, India or other countries may enter into armed conflict or war with other countries or extend pre-

existing hostilities. South Asia has, from time to time, experienced instances of civil unrest and hostilities

among neighboring countries. Military activity or terrorist attacks could adversely affect the Indian

economy by, for example, disrupting communications and making travel more difficult. Such events could

also create a perception that investments in Indian companies involve a higher degree of risk. This, in turn,

could adversely affect client confidence in India, which could have an adverse impact on the economies of

India and other countries, on the markets for our products and services and on our business. Additionally,

such events could have a material adverse effect on the market for securities of Indian companies, including

the Equity Shares.

54. Trade deficits could adversely affect our business and the price of our Equity Shares.

India’s trade relationships with other countries and its trade deficit may adversely affect Indian economic

conditions. In Fiscal 2014, India experienced a trade deficit of US$138.59 billion, as announced by the

Ministry of Commerce and Industry in its Annual Supplement 2013-14 to the Foreign Trade Policy 2009-

14, which decreased from a trade deficit of US$190.34 billion in Fiscal 2013. If trade deficits were to

increase or become no longer manageable, the Indian economy, and therefore our business, our financial

performance and our stockholders’ equity could be adversely affected.

55. A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian

economy, which could adversely impact us.

The direct adverse impact of the global financial crisis on India has been the reversal of capital inflows and

decline in exports, leading to pressures on the balance of payments and a sharp depreciation of the Indian

Rupee vis-à-vis the US Dollar. Any increased intervention by the RBI in the foreign exchange market to

control the volatility of the exchange rate may result in a decline in India’s foreign exchange reserves and

reduced liquidity and higher interest rates in the Indian economy, which could adversely affect our business

and our future financial performance.

56. Any downgrading of India’s debt rating by an international rating agency could adversely affect our

business and the price of our Equity Shares.

Following expansionary fiscal policies and the increase in India’s fiscal deficit, Standard and Poor’s, an

international rating agency, has revised its outlook for India’s debt rating from ‘Stable’ to ‘Negative’ in

April 2012. Any adverse revisions to India’s credit ratings for domestic and international debt by

international rating agencies may adversely impact our business and limit our access to capital markets,

increase the cost of funds, adversely impact our liquidity position, our shareholders’ funds and the price of

our Equity Shares.

57. Our ability to raise foreign capital may be constrained by Indian law, which may adversely affect our

business, financial condition, cash flows and results of operations.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies.

Such regulatory restrictions limit our financing sources and hence could constrain our ability to obtain

financing on competitive terms and refinance existing indebtedness. In addition, we cannot assure you that

the required approvals will be granted to us without onerous conditions, if at all. Limitations on raising

foreign debt may have an adverse effect on our business, financial condition, cash flows and results of

operations.

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58. Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.

Our charter documents and various provisions of Indian law govern our corporate affairs. Legal principles

relating to these matters and the validity of corporate procedures, directors’ fiduciary duties and liabilities,

and shareholders’ rights may differ from those that would apply to a company in another jurisdiction.

Shareholders’ rights under Indian law may not be as extensive as shareholders’ rights under the laws of

other countries or jurisdictions. Investors may have more difficulty in asserting their rights as a shareholder

of our Company than as a shareholder of a corporation in another jurisdiction.

59. Investors may not be able to enforce a judgment of a foreign court against us.

It may not be possible for investors in our Equity Shares to effect service of process outside of India on us

or our directors and executive officers and experts named in this Placement Document who are residents of

India or to enforce judgments obtained against us or these persons in foreign courts predicated upon the

liability provisions of foreign countries. Moreover, it is unlikely that a court in India would award damages

on the same basis as a foreign court if an action were brought in India or that an Indian court would enforce

foreign judgments if it viewed the amount of damages as excessive or inconsistent with Indian law and

practice. See the section “Enforcement of Civil Liabilities” beginning on page 16 of this Placement

Document.

60. Anti-takeover provisions under Indian law could prevent or deter an entity from acquiring us.

Indian takeover regulations contain certain provisions that may delay, deter or prevent a future takeover or

change in control. These provisions may discourage a third party from attempting to take control over

business, even if a change in control would result in the purchase of our Equity Shares at a premium to the

market price or would otherwise be beneficial to the investor. See sections “The Securities Market of India”

and “Regulations and Policies” of this Placement Document.

61. The Companies Act, 2013 has effected significant changes to the existing Indian company law

framework, which may subject us to higher compliance requirements and increase our compliance costs.

A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and have

come into effect from the date of their respective notifications, resulting in the corresponding provisions of

the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect

significant changes to the Indian company law framework, such as in the provisions related to issue of

capital, disclosures, corporate governance norms, audit matters, and related party transactions. Further, the

Companies Act, 2013 has also introduced additional requirements which do not have corresponding

equivalents under the Companies Act, 1956, including the introduction of a provision allowing the initiation

of class action suits in India against companies by shareholders or depositors, a restriction on investment by

an Indian company through more than two layers of subsidiary investment companies (subject to certain

permitted exceptions), and prohibitions on advances to directors. We are also required to spend 2.0% of our

average net profits during three immediately preceding financial years on corporate social responsibility

activities. Further, the Companies Act, 2013 imposes greater monetary and other liability on us, our

Directors and officers in default, for any non-compliance. To ensure compliance with the requirements of

the Companies Act, 2013, we may need to allocate additional resources, which may increase our regulatory

compliance costs and divert management attention.

We may face challenges in anticipating the changes required by, interpreting and complying with such

provisions due to limited jurisprudence on them. In the event, our interpretation of such provisions of the

Companies Act, 2013 differs from, or contradicts with, any judicial pronouncements or clarifications issued

by the GoI in the future, we may face regulatory actions or we may be required to undertake remedial steps.

Additionally, some of the provisions of the Companies Act, 2013 overlap with other existing laws and

regulations (such as the corporate governance norms and insider trading regulations). We may face

difficulties in complying with any such overlapping requirements. Further, we cannot currently determine

the impact of provisions of the Companies Act, 2013 which are yet to come in force. Any increase in our

compliance requirements or in our compliance costs may have an adverse effect on our business, results of


Further, there is no assurance that the Government will not in the future introduce new laws or regulations

(other than the Companies Act, 2013) or amend or change existing laws or regulations in a manner that

materially and adversely impacts our business operations and costs of doing business.

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62. Health epidemics and natural calamities in Asia or elsewhere could adversely affect the Indian economy

or our business and the price of our Equity Shares.

Since 2003, there have been outbreaks of Severe Acute Respiratory Syndrome in Asia, the outbreak of

avian influenza across Asia and Europe, the outbreak of Influenza A (H1N1) across the world and the

outbreak of the Ebola virus in western Africa, which adversely affected a number of countries and

companies. Any future outbreak of infectious diseases or other serious public health epidemics may have a

negative impact on the economies, financial markets and level of business activity in affected areas, which

may, in turn, adversely affect our business. India has also experienced natural calamities such as

earthquakes, floods, drought and a tsunami in the recent past. The extent and severity of these natural

disasters determine their impact on the Indian economy. Prolonged spells of abnormal rainfall and other

natural calamities could have an adverse impact on the Indian economy. Any future outbreak of infectious

disease among humans and/or animals or any other serious public health concerns or the occurrence of any

natural calamities could materially and adversely affect our business, prospects, financial condition, cash

flows and results of operations, and the price of our Equity Shares.

63. Political instability or changes in the government in India or in the government of the states where we

operate could cause us significant adverse effects.

Our performance, market price and liquidity of our Equity Shares may be affected by changes in control,

government policies, taxation, social and ethnic instability, social/civil unrest and other political and

economic developments affecting India. Our business is also impacted by regulations and conditions in the

various states in India where we operate. Since 1991, successive governments have pursued policies of

economic liberalization and financial sector reforms. However, there can be no assurance that such policies

will continue in the future. Any political instability could affect specific laws and policies affecting foreign

investment. A significant change in the government’s policies could adversely affect our business, results of

operations, financial condition, prospects and cash flows and could cause the price of our Equity Shares to

decline.

64. Continuing high prices of crude oil could adversely affect the Indian economy, which could adversely

affect our business.

India imports a substantial portion of its crude oil requirement. While oil prices have declined from their

peak levels, any sharp increases or volatility in oil prices and the pass-through of such increases to Indian

consumers could have a material negative impact on the Indian economy, including through a rise in

inflation and market interest rates and a higher trade deficit. Continued high oil prices or further increases in

oil prices could affect the Indian economy. This could adversely affect our liquidity and business, including

our ability to grow, the quality of our assets, our financial condition and the price of the Equity Shares.

65. Global economic instability or slowdown is likely to adversely affect our business and our results of


Economic developments outside India can adversely affect the economy. During the global financial crisis

that began around the second half of 2007, the global credit markets experienced significant volatility,

which originated from the adverse developments in the United States and the European Union credit and

sub-prime residential mortgage markets. These and other related events, such as the recent collapse of a

number of financial institutions and the debt crisis, have had, and may continue to have, a significant

adverse impact on the availability of credit and the confidence of the financial markets, globally as well as

in India. Our business is affected by domestic and international economic conditions, including rates of

economic growth and the impact that such economic conditions have on consumer spending. The global

economic downturn led to an increased level of consumer delinquencies, lack of consumer confidence,

decreased market valuations and liquidity, increased market volatility and a widespread reduction of

business activity generally. The resulting economic pressure and dampened consumer sentiment may

adversely affect our business and our results of operations and cash flows.

In addition, the market has been volatile in recent years, and the resulting economic turmoil may continue

to exacerbate industry conditions or have other unforeseen consequences, leading to uncertainty about

future conditions in our industry. There can be no assurances that government responses to the disruptions

in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity and the

availability of credit. Any sustained economic downturns or decreases in general economic conditions may

have a material and adverse effect on our business, liquidity, results of operations and cash flows.

66. Our ability to raise capital outside India may be constrained by Indian law, which may adversely affect

59

our financial condition, results of operations, cash flows and prospects.

Under India's policy on external commercial borrowing (“ECB”), as notified by the RBI and currently in

force (the “ECB Policy”), ECB by an eligible borrower is permitted under the automatic route up to

US$750 million in a year, with a minimum average maturity of three years for ECB up to US$20 million

and five years for ECB of US$20 million to US$750 million, for permissible end-uses. Permissible end-

uses for ECB include import of capital goods, new projects, modernization or expansion of existing

production units in the industrial and certain other specified sectors, as well as import of services and

technical know-how and payment of license fees by manufacturing companies. End-uses not permitted

include working capital, general corporate purposes, repayment of existing Rupee denominated borrowings,

investment in real estate and on-lending or investment for acquisition of a company or part thereof (other

than an overseas subsidiary or joint venture, subject to existing laws and regulations governing overseas

direct investment by Indian companies). Further, the ECB Policy limits the all-in-cost to 500 basis points

above the London Interbank Offered Rate or applicable benchmark for ECB with minimum average

maturity of over five years. ECB not complying with these requirements is permitted with prior approval of

the RBI, in accordance with the ECB Policy. In addition, there are certain routine procedural and disclosure

requirements in relation to any such ECB. Any fund raising in the international capital markets will require

our Company to comply with the unfamiliar capital markets laws of such countries.

These limitations on ECB may constrain our ability to raise cost-effective funding for implementing asset

purchases, refinancing existing indebtedness, or financing acquisitions and other strategic transactions in

the future, which may adversely affect our business, financial condition, results of operations, cash flows

and prospects.

Risks Relating to Our Equity Shares and the Issue

67. Applicants to the Issue are not allowed to withdraw their Bids after the Bid/Issue Closing Date.

In terms of the SEBI ICDR Regulations, applicants in the Issue are not allowed to withdraw their Bids after

the Bid/Issue Closing Date. The Allotment of Equity Shares in this Issue and the credit of such Equity

Shares to the applicant’s demat account with depository participant could take approximately seven days

and up to 10 days from the Bid/Issue Closing Date. However, there is no assurance that material adverse

changes in the international or national monetary, financial, political or economic conditions or other events

in the nature of force majeure, material adverse changes in our business, results of operation, cash flows or

financial condition, or other events affecting the applicant’s decision to invest in the Equity Shares, would

not arise between the Bid/Issue Closing Date and the date of Allotment of Equity Shares in the Issue.

Occurrence of any such events after the Bid/Issue Closing Date could also impact the market price of the

Equity Shares. The applicants shall not have the right to withdraw their Bids in the event of any such

occurrence without the prior approval of SEBI. We may complete the Allotment of the Equity Shares even

if such events may limit the applicants’ ability to sell the Equity Shares after the Issue or cause the trading

price of the Equity Shares to decline.

68. You will be subject to market risks until the Equity Shares credited to your demat account are listed and

permitted to trade.

You can start trading the Equity Shares Allotted to you only after they have been credited to your demat

account, are listed and permitted to trade. Since our Equity Shares are currently traded on the Stock

Exchanges, you will be subject to market risk from the date you pay for the Equity Shares to the date when

trading approval is granted for the same. Further, there can be no assurance that the Equity Shares Allocated

to you will be credited to your demat account or that trading in the Equity Shares will commence in a timely

manner. This risk factor is for the information of investors and does not in any way dilute the right of

investors and our obligations.

69. An investor will not be able to sell any of our Equity Shares purchased in the offering other than on a

recognized Indian stock exchange for a period of 12 months from the date of issue of our Equity Shares.

Pursuant to the SEBI ICDR Regulations, for a period of 12 months from the date of the issue of our Equity

Shares in this offering, investors purchasing our Equity Shares in the offering may only sell their Equity

Shares on the NSE or the BSE and may not enter into any off-market trading in respect of their Equity

Shares. We cannot be certain that these restrictions will not have an impact on the price of our Equity

Shares. In addition to the above, investors will be subject to the respective regulations applicable to their

operations and any lock-in requirements prescribed thereunder.

70. Investors may be subject to Indian taxes arising out of capital gains on the sale of our Equity Shares.

60

Under current Indian tax laws, capital gains arising from the sale of the Equity Shares within 12 months in

an Indian company are generally taxable in India. Any gain realized on the sale of listed Equity Shares on a

stock exchange held for more than 12 months will not be subject to capital gains tax in India if Securities

Transaction Tax (“STT”) has been paid on the transaction. STT will be levied on and collected by a

domestic stock exchange on which the Equity Shares are sold. Any gain realized on the sale of the Equity

Shares held for more than 12 months to an Indian resident, which are sold other than on a recognized stock

exchange and on which no STT has been paid, will be subject to long term capital gains tax in India.

Further, any gain realized on the sale of listed Equity Shares held for a period of 12 months or less will be

subject to short-term capital gains tax in India. Capital gains arising from the sale of our Equity Shares will

be exempt from taxation in India in cases where the exemption from taxation in India is provided under a

treaty between India and the country of which the seller is resident. Generally, Indian tax treaties do not

limit India’s ability to impose tax on capital gains. As a result, residents of other countries may be liable for

tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares. The above

statements are based on the current tax laws.

71. Foreign investors are subject to foreign investment restrictions under Indian law that limit our ability to

attract foreign investors, which may adversely impact the market price of our Equity Shares.

Under foreign exchange regulations currently in force in India, transfers of shares between non-residents

and residents are freely permitted (subject to certain exceptions) if they comply with the pricing and

reporting requirements specified by the RBI. If the transfer of shares is not in compliance with such pricing

or reporting requirements and does not fall under any of the exceptions referred to above, then the prior

approval of the RBI will be required. Additionally, shareholders who seek to convert Rupee proceeds from

a sale of shares in India into foreign currency and repatriate that foreign currency from India will require a

no objection or a tax clearance certificate from the income tax authority. We cannot assure you that any

required approval from the RBI or any other Government agency can be obtained on any particular terms or

at all.

72. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a

shareholder’s ability to sell, or the price at which it can sell Equity Shares at a particular point in time.

We are subject to a daily “circuit breaker” imposed by all stock exchanges in India, which does not allow

transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker

operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on

Indian stock exchanges. The percentage limit on our circuit breakers is set by the stock exchanges based on

the historical volatility in the price and trading volume of the Equity Shares. The BSE and NSE halted

trading due to the index-based market-wide circuit breaker on May 18, 2009 after the index crossed the

threshold of such circuit breaker. A closure of, or trading stoppage on, either the BSE or the NSE could

adversely affect the trading price of the Equity Shares.

The stock exchanges do not inform us of the percentage limit of the circuit breaker in effect from time to

time and may change it without our knowledge. This circuit breaker limits the upward and downward

movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance may be given

regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity

Shares at any particular time.

73. There is no guarantee that the Equity Shares will be listed on the BSE and the NSE in a timely manner

or at all.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted

until after those Equity Shares have been issued and allotted. Approval will require all other relevant

documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or delay in

listing the Equity Shares on the BSE and/or the NSE. Any failure or delay in obtaining the approval would

restrict your ability to dispose of your Equity Shares.

74. Your ability to sell Equity Shares that you acquire in this Issue is restricted by the transfer restrictions set

forth in this Placement Document.

No actions have been taken by us in order to permit a public offering of the Equity Shares in any

jurisdiction including India. The Equity Shares are subject to restrictions on transferability and resale. You

are required to inform yourself about and observe these restrictions, which are set forth in this Placement

Document under the section “Selling and Transfer Restrictions” on page 152. We, our representatives and

our agents will not be obligated to recognize any acquisition, transfer or resale of the Equity Shares made

61

other than in compliance with the restrictions set forth herein.

75. Your holdings may be diluted by additional issuances of equity and any dilution may adversely affect the

market price of our Equity Shares.

We may be required to finance our growth through additional equity offerings. Any future issuances of our

equity shares could dilute the holdings of investors in our Company and could adversely affect the market

price of our Equity Shares.

76. Information and rights of shareholders under Indian law may be more limited than under the laws of

other jurisdictions.

Our constitutional documents and various provisions of Indian law govern our corporate affairs. Legal

principles relating to these matters and the validity of corporate procedures, directors’ fiduciary duties and

liabilities, and shareholders’ rights may differ from those that would apply to a company in another

jurisdiction. Shareholders’ rights and disclosure standards under Indian law may not be as extensive as

under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their

rights as our shareholder than as a shareholder of a corporation in another jurisdiction. See the section titled

“Description of Equity Shares” on page 165.

77. Holders of Equity Shares could be restricted in their ability to exercise pre-emptive rights under Indian

law and could thereby suffer future dilution of their ownership position.

Under the Companies Act, 2013 any company incorporated in India must offer its holders of equity shares

pre-emptive rights to subscribe and pay for a proportionate number of shares to maintain their existing

ownership percentages prior to the issuance of any new equity shares, unless the pre-emptive rights have

been waived by the adoption of a special resolution by holders of three-fourths of the shares voted on such

resolution, unless the company has obtained GoI approval to issue without such rights. However, if the law

of the jurisdiction in which you are located does not permit the exercise of such pre-emptive rights without

us filing an offering document or registration statement with the applicable authority in such jurisdiction,

you will be unable to exercise such pre-emptive rights unless we make such a filing. We may elect not to

file a registration statement in relation to pre-emptive rights otherwise available by Indian law to you. To

the extent that you are unable to exercise pre-emptive rights granted in respect of the Equity Shares, your

proportional interests in us would be reduced.

78. Significant differences exist between GAAP as applied in India and other accounting principles with

which investors may be more familiar.

Our financial statements are prepared in conformity with Indian GAAP. GAAP as applied in India differs in

certain significant respects from IFRS, U.S. GAAP and other accounting principles and accounting

standards with which prospective investors may be familiar with in other countries. We do not provide a

reconciliation of our financial statements to IFRS or U.S. GAAP or a summary of principal differences

between Indian GAAP, IFRS and U.S. GAAP relevant to our business. Furthermore, we have not quantified

or identified the impact of the differences between Indian GAAP and IFRS or between Indian GAAP and

U.S. GAAP as applied to our financial statements. As there are significant differences between GAAP as

applied in India and IFRS and between GAAP as applied in India and U.S. GAAP, there may be substantial

differences in our results of operations, cash flows and financial position if we were to prepare our financial

statements in accordance with IFRS or U.S. GAAP instead of Indian GAAP. The significant accounting

policies summarized in the section “Management’s Discussion and Analysis of Financial Condition and

Results Of Operations” have been applied in the preparation of our Indian GAAP consolidated financial

statements. Prospective investors should review the accounting policies applied in the preparation of our

financial statements, and consult their own professional advisors for an understanding of the differences

between Indian GAAP and IFRS and between Indian GAAP and U.S. GAAP and how they might affect the

financial information contained in this Placement Document.

79. Sales of our securities by the existing shareholders may lower the prices of shares.

The market price of our Equity Shares could decline as a result of sales of a large number of our Equity

Shares or the perception that such sales could occur in the future. Sales by existing shareholders may also

make it more difficult for you to sell equity shares in the future.

80. Investors bear the risk of fluctuation in the price of the Equity Shares.

The offer price of the Equity Shares in this Issue will be determined by our Company in consultation with

62

the Book Running Lead Managers based on the applications received in compliance with Chapter VIII of

the SEBI ICDR Regulations, and it may not necessarily be indicative of the market price of the Equity

Shares after this Issue is complete. You may be unable to resell your Equity Shares at or above the offer

price and, as a result, you may lose all or part of your investment. The price at which the Equity Shares will

trade after this Issue will be determined by the marketplace and may be influenced by many factors,

including:

• our financial condition and the financial condition of the companies in the businesses we operate

in;

• the history of, and the prospects for, our business and the sectors in which we compete;

• an assessment of our management, our past and present operations, and the prospects for, and

timing of, our future revenues and cost structures; and

• the present state of our development.

In addition, the Indian stock market has from time to time experienced significant price and volume

fluctuations that have affected the market prices for the securities of Indian companies. As a result,

investors in the Equity Shares may experience a decrease in the value of the Equity Shares regardless of our

operating performance or prospects.

81. Statistical, industry and financial data in this Placement Document may be incomplete or unreliable.

We have not independently verified data obtained from official and industry publications and other sources

referred to in this Placement Document and therefore, while we believe them to be true, we cannot assure

you that they are complete or reliable. Such data may also be produced on different bases from those used

in the industry publications we have referenced. Therefore, discussions of matters relating to India, its

economy and the industries in which we currently operate are subject to the caveat that the statistical and

other data upon which such discussions are based may be incomplete or unreliable. See the section

“Industry Overview” beginning on page 72 of this Placement Document.

63

MARKET PRICE INFORMATION

The Equity Shares have been listed and are available for trading on the BSE and the NSE.

(i) The following tables set forth the reported high, low and average market prices and the trading volumes

of the Equity Shares on the BSE and the NSE on the dates on which such high and low prices were

recorded for financial years ended March 2012, March 2013 and March 2014:

BSE

Financial

Year

High

(`)

Date of

High

Total

Volume on

date of

High

(Number of

Equity

Shares

traded on

the date of

high)

Total

Volume of

Equity

shares

traded on

the date of

high (`

million)

Low

(`)

Date of

low

Volume on

date of Low

(Number of

Equity

Shares

traded on

the date of

low)

Total

Volume of

Equity

shares

traded on

the on date

of low (`

million)

Average

price

for the

year (`)

March

2012

119.60 April 8,

2011

120,313 14.10 66.20 December

21, 2011

10,939 0.70 88.92

March

2013

125.00 August

22, 2012

556,652 67.70 87.15 March 22,

2013

29,025 2.60 104.11

March

2014

456.30 March 25,

2014

577,121 258.80 87.30 April 9,

2013

11,963 1.10 198.52

(Source: www.bseindia.com)

NSE

Calendar

Year

High

(`)

Date of

High

Volume on date

of High

(Number of

Equity Shares

traded on the

date of high)

Total

Volume of

Equity

shares

traded on

the date of

high (`

million)

Low

(`)

Date of

low

Volume on

date of Low

(Number of

Equity

Shares

traded on

the date of

low)

Total

Volume of

Equity

shares

traded on

the on date

of low (`

million)

Average

price for

the year

(`)

March

2012

119.50 April 8,

2011

153,037 17.90 65.90 December

21, 2011

37,427 2.50 88.96

March

2013

125.15 August

22, 2012

1,437,699 174.90 87.45 March 22,

2013

105,331 9.40 104.13

March

2014

456.65 March 25,

2014

1,721,389 771.60 87.10 April 9,

2013

37,793 3.40 198.64

(Source: www.nseindia.com)

Notes:

1. High based on maximum intraday high, low based on minimum intraday low and average prices are of

the daily closing prices.

2. In case of two days with the same high or low price, the date with the higher volume has been

considered.

64

(ii) The following tables set forth the reported high, low and average market prices and the trading volumes

of the Equity Shares on the BSE and NSE on the dates on which such high and low prices were recorded

during each of the last six months:

BSE

Month

Year

High(`) Date of

High

(Volume

on date of

High)

Number of

Equity

Shares

traded on

the date of

high

Total Volume

of Equity

shares traded

on the date of

high (`

million)

Low

(`)

Date of

low

(Volume

on date of

Low)

Number of

Equity

Shares

traded on

the date of

low

Total

Volume of

Equity

shares

traded on

the on date

of low (`

million)

Average

price for

the

month

(`)

May 2014 475.00 May 26,

2014

138,212 62.98 371.10 May 2,

2014

87,372 33.26 411.05

June 2014 731.00 June 25,

2014

850,120 610.56 421.10 June 2,

2014

67,459 29.17 538.23

July 2014 705.25 July 1,

2014

275,898 191.84 512.00 July 31,

2014

185,298 97.44 612.59

August

2014

601.00 August

26, 2014

229,201 135.04 486.50 August

14, 2014

88,049 43.52 545.80

September

2014

848.90 September

9, 2014

993,312 811.78 589.50 September

1, 2014

103,054 62.15 738.22

October

2014

919.00 October

28, 2014

124,992 113.92 751.20 October

10, 2014

187,371 144.35 831.41

(Source: www.bseindia.com)

NSE

Month

Year

High

(`)

Date of

High

(Volume

on date of

High)

Number of

Equity

Shares

traded on

the date of

high

Total Volume

of Equity

shares traded

on the date of

high (`

million)

Low

(`)

Date of

low

(Volume

on date of

Low)

Number of

Equity

Shares

traded on

the date of

low

Total

Volume of

Equity

shares

traded on

the on date

of low (`

million)

Average

price

for the

month

(`)

May 2014 476.65 May 26,

2014

473,068 215.55 366.10 May 2,

2014

274,165 104.47 411.84

June 2014 730.00 June 25,

2014

2,551,121 1,832.86 420.05 June 16,

2014

240,522 107.17 538.52

July 2014 704.50 July 1,

2014

847,614 588.23 511.20 July 30,

2014

716,492 374.84 612.37

August

2014

601.00 August

26, 2014

588,902 346.59 485.00 August

14, 2014

363,905 179.66 546.15

September

2014

848.80 September

9, 2014

4,091,564 3,345.90 588.60 September

1, 2014

464,291 279.81 738.42

October

2014

919.00 October

28, 2014

558,862 509.26 750.55 October

10, 2014

689,851 531.74 831.33

(Source: www.nseindia.com)

Notes:

1. High based on maximum intraday high, low based on minimum intraday low and average prices are of the

daily closing prices.

2. In case two days with the same high or low price, the date with the higher volume has been considered.

(iii) The following table set forth the details of the number of Equity Shares traded and the volume of business

transacted during the last six months and the Financial Years ending March 2012, March 2013 and March

2014 on the BSE and the NSE:

65

Period Number of Equity Shares Traded Volume of Business Transacted

(In ` million)

BSE NSE BSE NSE

Year ending 2012 14,727,216 28,987,807 1,393 2,758

Year ending 2013 19,630,966 44,406,507 2,142 4,849

Year ending 2014 34,209,053 99,079,372 8,662 25,447

May 2014 1,739,306 5,822,494 717 2,417

June 2014 6,621,709 20,939,021 4,111 12,846

July 2014 5,406,816 17,010,628 3,345 10,476

August 2014 3,079,130 11,237,888 1,680 6,115

September 2014 6,197,752 24,951,624 4,740 19,069

October 2014 3,732,014 15,504,615 3,126 12,988

(Source: www.bseindia.com and www.nseindia.com)

(iv) The following table sets forth the market price on the BSE and NSE i.e. August 27, 2014, the first

working day following the approval of the Board of Directors for the Issue:

BSE NSE

Open High Low Close Numbe

r of

Equity

Shares

traded

Turnov

er

(million

)

Open High Low Close Number

of

Equity

Shares

traded

Turnov

er (`

million)

593.7

0 595.6

0 584.0

5 588.0

5 58,504.

00 34.43 590.1

0 595.8

5 584.0

5 588.2

5 336,328.

00 197.55

(Source: www.bseindia.com and www.nseindia.com)

66

USE OF PROCEEDS

The total proceeds of the Issue will be ` 4,000 million. After deducting the Issue expenses of approximately `

80 million, the net proceeds of the Issue will be approximately ` 3,920 million (the “Net Proceeds”).

Subject to compliance with applicable laws and regulations, we intend to use the net proceeds of the Issue for

our various expansion projects viz. capacity expansion at the Halol Plant, specialty tyres project (through a

subsidiary company) and two-three wheeler tyres project and also for augmentation of the long term working

capital required for business growth. At this time, we have not entered into any contract or binding agreement in

this respect. For details regarding our expansion plans, see “Our Business” on page 86.

The fund requirement and deployment for the expansion projects are based purely on management estimates and

assumptions, considering the current market scenario and are subject to revision in the light of changes in

external circumstances or costs.

The projects are proposed to be funded through a mix of net proceeds from the Issue, internal accruals and debt.

We have not yet decided the mix of the same.

We have not yet determined all of our expected expenditures, and we, therefore, cannot estimate the exact

amounts to be used for the purposes set out above. The amounts and timing of any expenditure will depend on,

among other factors, the amount of cash generated by our operations, competitive and market developments. In

accordance with the decision of our Board, our management will have significant flexibility in applying the net

proceeds of this Issue. For further details with respect to means of finance for our identified use of proceeds, see

“Our Business” on page 86.

Neither our Promoters nor our Directors are making any contribution either as part of the Issue or separately in

furtherance of the objects of the Issue.

67

CAPITALIZATION

The following table sets forth the consolidated capitalisation as on September 30, 2014, derived from the

unaudited interim condensed consolidated financial statements, and as adjusted to give effect to the Issue. This

table should be read in conjunction with the “Summary Financial Information”, “Risk Factors”,

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other

financial information contained in the “Financial Information”, on pages 33, 40, 104 and 204 of this Placement

Document.

(` in million)

Particulars As at September 30, 2014 As Adjusted for the Issue(1)

(Actual)

Shareholders’ Funds

Share Capital 359.56 404.50

Reserves and surplus

(including securities

premium)

11,159.49 15,034.55(2)

Total Shareholders’

Funds (A)

11,519.05 15,439.05

Borrowings

Short-term

borrowings

4,179.64 4,179.64

Long-term borrowings 3,734.34 3,734.34

Current maturities of

long-term borrowings

1,669.85 1,669.85

Total Borrowings (B) 9,583.83 9,583.83

Total Capitalisation

(A+B)

21,102.88 25,022.88

Notes:

(1) As adjusted to show the number of equity shares to be issued pursuant to the Issue.

(2) ‘Reserves & Surplus (including Securities Premium)’ is arrived at after reducing the estimated issue

expenses amounting to ` 80.00 million.

68

CAPITAL STRUCTURE

Share capital of our Company as on the date of filing of this Placement Document is as follows:

(` in millions)

Aggregate

nominal value

Authorized Capital

46,100,000 Equity Shares

3,900,000 Preference Shares

10,000,000 Unclassified Shares

461.00

39.00

100.00

Issued equity share capital prior to the Issue

35,956,398* Equity Shares 359.56

Subscribed and paid-up share capital prior to the Issue

35,955,710 Equity Shares 359.56

Present Issue being offered to the Equity Shareholders through this Placement

Document

4,494,382 Equity Shares at a premium of ` 880, i.e. at a price of ` 890 44.94

Paid up equity share capital after the Issue

40,450,092 Equity shares 404.50

Securities premium account

Existing securities premium account 1,780.83

Securities premium account after the issue(1)

5,655.89

*Includes 688 Equity Shares offered on rights basis and kept in abeyance.

(1) Securities premium account is arrived at after reducing the estimated issue expenses amounting to ` 80.00 million.

a) As on September 30, 2014, our Promoter and Promoter Group, hold 57.11% of the pre Issue share

capital of our Company. We presently comply with the provisions relating minimum public

shareholding as required pursuant to the Listing Agreement.

b) The Issue has been authorised by the Board on August 26, 2014 and the Shareholders pursuant to their

resolution dated September 26, 2014.

Equity capital history of our Company

The history of the equity share capital of our Company since inception is as follows:

Date of

Issue/

Allotment

Number of

Equity

Shares

Face

Value

(`)

Issue

Price

(`)

Cumulative

Number of

Equity

Shares

Cumulative

paid-up

capital

(`)

Nature of

Considerati

on

Nature of Allotment

June 14,

1958

115,000 100 100 115,000 11,500,000 Cash Allotment to the initial

subscribers to the

Memorandum, promoters

and public

July 12,

1961

161,000 100 100 276,000 27,600,000 Cash Rights Issue

May 15,

1969

27,600 100 - 303,600 30,360,000 Bonus Bonus Issue

May 15,

1972

30,360 100 200 333,960 33,396,000 Cash Rights Issue

August

24,1973


November

19, 1976


October

16, 1980


69

Date of

Issue/

Allotment

Number of

Equity

Shares

Face

Value

(`)

Issue

Price

(`)

Cumulative

Number of

Equity

Shares

Cumulative

paid-up

capital

(`)

Nature of

Considerati

on

Nature of Allotment

March 31,

1984*

87,105 100 - 621,441 62,144,100 Other than

Cash

Scheme of Arrangement

January

01, 1987

6,214,410 10 - 6,214,410 62,144,100 - 621,441 Equity Shares of

` 100 sub-divided into

denomination of `10 each

per share.

April 01,

1987

3,107,205 10 - 9,321,615 93,216,150 Bonus Bonus Shares

March 01,

1988

5,438,700 10 25 14,760,315 147,603,150 Cash Equity Shares allotted

upon conversion of fourth

series of partly

convertible debentures

September

27, 1990

8,504,008

reduced to

8,466,989

pursuant to

forfeiture

of Equity

Shares

10 60 23,227,304 232,273,040 Cash Equity shares issued upon

conversion of fifth series

of debentures

January

01,

1991**

49,719 10 10 23,277,023 232,770,230 Other than

Cash

Scheme of Arrangement

June 07,

1993

7,836,325

reduced to

7,782,303

pursuant to

forfeiture

of Equity

Shares

10 75 31059326 310,593,260 Cash Equity Shares allotted

upon conversion of

seventh series of 15%

secured redeemable partly


February

01, 1995

4,062,953 10 75 35,122,279 351,222,790 Cash Equity Shares allotted

upon exercise of warrants

attached to the sixth

series of 14% secured

redeemable non-


February

20, 2006

10,534,347 10 50 45,656,626 456,566,260 Cash Rights Issue

April 23,

2007

386 10 50 45,657,012 456,570,120 Cash Allotted out of the equity

shares kept in abeyance

during the rights issue

November

23,

2007***

34,242,759 10 - 34,242,759 342,427,590 - Equity shares allotted

pursuant to a scheme of

arrangement vide

demerger of investment

undertaking

April 29,

2008

775 10 50 34,243,534 342,435,340 Cash Allotted out of the equity

shares kept in abeyance

during the rights issue

July 23,

2013

1,712,176 10 85.03 35,955,710 359,557,100 Cash Equity shares allotted on

exercise of options

attached to convertible

warrants

*Pursuant to the scheme of Amalgamation of Deccan Fibre Glass Limited with our Company as approved by

the High Court of Bombay and Hyderabad, the shareholders of the erstwhile Deccan Fibre Glass Limited were

allotted 87,105 equity shares of our Company, in the ratio of 1 equity share of ` 100 each of our Company for

every forty equity shares held by them in erstwhile Deccan Fibre Glass Limited.

**Pursuant to the order dated August 31, 1990 issued by the Board for Industrial and Financial Reconstruction

(BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985, Murphy India Limited was

amalgamated with CEAT Limited. Under the scheme, one share of our Company was required to be allotted to

the shareholders of Murphy India Limited, for every 25 equity shares held by them in Murphy India Limited.

70

***Issued pursuant to scheme of arrangement (“Scheme”) between our Company, CHI Investments Limited

(“CHI”) and their respective shareholders for demerger of our Company by transfer of its investment

undertaking to CHI Investments Limited, sanctioned by the High Court, Bombay vide its order November 23,

2007. Under the Scheme, CHI issued and allotted to the shareholders of our Company 25 equity shares of ` 10

each in CHI, credited as fully paid for every 100 equity shares of ` 10 each held in our Company. Further,

shareholders of our Company were entitled to 75 new equity shares of ` 10 each of our Company credited as

fully paid up for every 100 equity shares of ` 10 each held in our Company.

71

DIVIDEND POLICY

The declaration and payment of dividend by our Company is governed by the applicable provisions of the

Companies Act, 2013 and our Articles of Association. Under the Companies Act, 2013, the board of directors of

a company recommends the payment of dividend and the shareholders approve of the same at a general meeting.

In case of final dividend, it is recommended by the board of directors and approved by the shareholders at a

general meeting is distributed and paid to shareholders in proportion to the paid-up value of their shares as on

the record date for which such dividend is payable. Under the Companies Act, 2013, dividends can only be paid

in cash to shareholders listed in the register of shareholders or to his order or to his banker or those persons

whose names are entered as beneficial owner in the record of the depositary on the date specified as the ‘record

date’ or ‘book closure date’. Under the Companies Act, 2013, a company may pay dividends only out of (i) its

profits in the year in which the dividend is declared (after providing for depreciation); or (ii) its profits in the

previous years after providing for depreciation and which remains undistributed; or (iii) out of money provided

by the Central Government or a State Government for the payment of dividend by the company in pursuance of

a guarantee given by that Government; or (iv) accumulated profits earned by the company in the previous years

and transferred by the company to the free reserves in accordance with the Companies (Declaration and

Payment of Dividend) Rules, 2014.

The table below sets forth the details of the dividends declared by our Company on its Equity Shares during the

last three financial years:

Financial Year

ending

Dividend per

Equity Share

(`)

Amount of dividend declared

exclusive of tax

(` in million)

Dividend Payout Ratio

(including dividend

distribution tax)

(%)

March 2014 10 366.41 16.50 March 2013 4 136.97 15.10

March 2012 1 34.24 52.80

The amounts paid as dividends in the past are not necessarily indicative of the dividend policy of our Company

or dividend amounts, if any, in the future. There is no guarantee that any dividends will be declared or paid or

that the amount thereof will not be decreased in the future.

Dividends are payable within 30 days from the date of its declaration. The Articles grant discretion to the Board

to declare and pay interim dividends as appear to it to be justified by the profits of our Company. Any

shareholder who ceases to be a shareholder prior to the record date or who becomes a shareholder after the

record date will not be entitled to the dividend declared by our Company.

Under the current Indian tax laws, dividends are not subject to income tax in India in the hands of the recipient.

However, our Company is liable to pay a dividend distribution tax currently at the rate of 15% plus a surcharge

at 10% on the dividend distribution tax and an education cess at the rate of 3% on dividend distribution tax and

surcharge. With effect from October 1, 2014, dividends declared by a domestic company are required to be

grossed up while making payment of dividend distribution tax. Thus, effective tax rate of dividend distribution

tax from October 1, 2014 shall be 19.994% on amount actually distributed as dividend to the shareholders.

72

INDUSTRY OVERVIEW

The information in this section has been extracted from publicly available documents, including officially

prepared materials from the Government of India and its various ministries, trade, industry or general

publications and other third party sources as cited in this section. Industry websites and publications generally

state that the information contained therein has been obtained from sources believed to be reliable but their

accuracy and completeness are not guaranteed and their reliability cannot be assured. While we have exercised

reasonable care in compiling and reproducing such official, industry, market and other data in this document, it

has not been independently verified by us or any of our advisors, or any of the Book Running Lead Managers or

any of their advisors, and should not be relied on as if it had been so verified.

CRISIL Disclaimer:

CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this

report (Report) based on the Information obtained by CRISIL from sources which it considers reliable (Data).

However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not

responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is

not a recommendation to invest / disinvest in any company covered in the Report. CRISIL especially states that

it has no liability whatsoever to the subscribers / users / transmitters/ distributors of this Report. CRISIL

Research operates independently of, and does not have access to information obtained by CRISIL’s Ratings

Division / CRISIL Risk and Infrastructure Solutions Ltd (CRIS), which may, in their regular operations, obtain

information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of

CRISIL’s Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without

CRISIL’s prior written approval.

Overview of the Indian Economy and Road Infrastructure

GDP and Disposable Income

The Indian economy is one of the largest economies in the world, with a GDP at current price of an estimated ₹ 105.4

trillion for the fiscal year 2013-2014. (Source: CIA Factbook) Despite the global financial crisis in late 2008, India continued

to show one of the highest annual real GDP growth in the world. (Source: the International Monetary Fund’s World

Economic Outlook as of October 2014) The following table represents a comparison by calendar year of real GDP growth

rates of certain countries:

(%)

Country 2009 2010 2011 2012 2013 2014P 2015P 2019P

Australia 1.5 2.2 2.6 3.6 2.3 2.8 2.9 3.0

Brazil (0.3) 7.5 2.7 1.0 2.5 0.3 1.4 3.0

China 9.2 10.4 9.3 7.7 7.7 7.4 7.1 6.3

Euro Area (4.5) 1.9 1.6 (0.7) (0.4) 0.8 1.3 1.6

India 8.5 10.3 6.6 4.7 5.0 5.6 6.4 6.7

Japan (5.5) 4.7 (0.5) 1.5 1.5 0.9 0.8 1.0

Russian Fed. (7.8) 4.5 4.3 3.4 1.3 0.2 0.5 2.0

UK (5.2) 1.7 1.1 0.3 1.7 3.2 2.7 2.4

USA (2.8) 2.5 1.6 2.3 2.2 2.2 3.1 2.6

Note: Years refer to calendar years; data for 2014, 2015 and 2019 is projected.

(Source: the International Monetary Fund’s World Economic Outlook as of October 2014)

Despite an overall slowdown in India’s rate of GDP growth since 2010, per capita GDP in India has

nevertheless grown from estimated US$3,800 in calendar year 2011 to an estimated US$4,000 in calendar year

2013. (Source: CIA Factbook) This has had a significant investment multiplier effect on the economy leading to

increasing consumerism and wealth creation and thus positively impacting savings.

On a global basis, with world growth in the first half of 2014 slower than expected, IMF projected global growth

for 2014 and 2015 at 3.3% and 3.8%, respectively. (Source: the International Monetary Fund’s World

Economic Outlook as of October 2014)

Population

73

India had an estimated population of 1.252 billion in 2013, according to the World Bank. Approximately 68.0%

and 32.0% of the entire population in India in 2013 lived in rural and urban areas, respectively. India has a

young population. The median age of its population is only 27 years as of the year 2014. (Source: CIA

Factbook)

Road Network

In India, the roads are the main arteries for commuting and transporting goods across the country. Road usage

by passenger cars and cargo traffic has increased steadily over the years as compared to other modes of

transport. In the fiscal year 2011, the percentage of passenger traffic using roads as opposed to other means of

transport amounted to 86%, while the percentage of cargo traffic using roads over other means of transport

amounted to 64.5%. Increase in popularity of road transport is mainly due to its easy accessibility, door-to-door

reach and reliability. The total road length of India increased significantly from 399,000 kilometers as on March

31, 1051 to 4,865,000 kilometers as on March 31, 2012, implying CAGR of 4.2% across the period. (Source:

Government of India, Ministry of Road Transport and Highways, Basic Road Statistics of India, 2011-12).

The Government of India has recognized the need to upgrade India’s road infrastructure. The National

Highways Authority of India (“NHAI”) is mandated to implement National Highways Development Project

(“NHDP”), which is India’s largest ever highways project. It is expected that infrastructure development will

provide a boost to tyre demand both at the time of construction activity, through the increase in movement of

construction materials, and after completion, when passenger and cargo traffic take advantage of the new roads.

In addition, increase in road traffic is expected to contribute to the growth of use of automobile and hence the

tyre industry.

Automobile Production

As India’s economy develops and its aggregate annual disposal income increases, the demand for automobiles

in India is expected to increase. From 1951 to 2012, the number of registered motor vehicles in India had also

recorded growth at CAGR of 6.4%, which is higher than the growth of road length in India at CAFR of 4.2%.

From 2002 to 2012, the number of registered motor vehicles in India had grown at a CAGR of 10.5%. The

following table sets out the CAGR growth of number of registered motor vehicles in India from 1951 to 2012:

CAGR growth (%)

Period

Registered motor

vehicles

2012/1951 6.4

1961/1951 8.1

1971/1961 10.9

1981/1971 11.2

1991/1981 14.8

2001/1991 9.9

2012/2002 10.5

(Source: Government of India, Ministry of Road Transport and Highways, Basic Road Statistics of India, 2011-12)

The following table sets out the automobile production, by product categories, from the year 2008-09 to the year

2013-14:

(Number of vehicles)

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

M&HCVs 192,383 249,068 345,597 384,801 280,677 221,556

Growth (%) 29.5% 38.8% 11.3% -27.1% -21.1%

LCVs 224,587 315,936 413,975 544,335 551,972 477,339

Growth (%) 40.7% 31.0% 31.5% 1.4% -13.5%

PC+UVs 1,825,748 2,335,081 2,973,660 3,146,147 3,231,058 3,065,816

Growth (%) 27.9% 27.3% 5.8% 2.7% -5.1%

Two Wheelers 8,385,128 10,510,853 13,351,948 15,427,532 15,744,156 16,879,306

Growth (%) 25.4% 27.0% 15.5% 2.1% 7.2%

74

Three Wheelers 496,828 616,537 799,553 879,289 839,748 830,121

Growth (%) 24.1% 29.7% 10.0% -4.5% -1.1%

(Source: CRISIL Research)

In the year 2013-2014, the production volume of motorcycles, tractors and scooters increased while the

production volume of M&HCV, passenger vehicles and LCVs decreased, when compared to the year 2012-

2013. When compared to the year 2012-2013, production volume of motorcycles, tractors and scooters in the

year 2013-2014 increased by 13%, 10% and 28%, respectively.

The production volume of M&HCV, passenger vehicles and LCVs in the year 2013-2014 decreased by 15%,

7% and 29%, respectively, when compared to the year 2012-2013.

(Source: ATMA newsletter, Vol.-IV, Issue 3, May-Jun 2014)

Global Tyre Industry

The global tyre industry is highly competitive. It has undergone significant consolidation over the last 10 to 15

years, pursuant to which three major global players, namely, Michelin, Goodyear and Bridgestone, have

emerged. The following chart sets out the market share of the top 25 tyre companies on a global basis, in terms

of sales value in the calendar year 2013:

75

(Source: ATMA, Indian Tyre Industry 2014-15)

A majority of these 25 top players in the global tyre industry are based in Asia, with three of which based in

India, representing approximately 12% of the aggregate sales value of these 25 top players.


In terms of product categories, passenger cars and utility vehicles category represented a majority of the global

tyre market, in terms of sales value, in the year 2013-2014, followed by the M&HCVs category which

contributed approximately 28% of the global tyre sales.

1521

1557

1580

1770

1800

1800

1818

1884

2406

2620

2712

2970

3419

3439

3756

4529

4787

4916

6868

6971

8007

11150

17586

25545

27390

JK

Xingyuan

Shandong Hengfeng

Naxen

Titan

Double coin

Nokian

Sahndong Linglong

Apollo

MRF

Triangle

Toyo Tire

Kumho

Cooper

GITI Tire

Zhonghua

Maxxis

Yokohama

Hankook

Sumitomo

Pirelli

Continental

Goodyear

Michelin

Bridgestone

3 Indian tyre companies are in the list of top 25 global tyre majors

(-4%)

(-3%)

(-7%)

(2%)

(5%)

(-10%)

(10%)

(-12%)

(3%)

(-1%)

(39%)

(-18%)

(5%)

(4%)

(10%)

(-3%)

(3%)

(3%)

(-3%)

(flat)

(24%)

(23%)

(40%)

(2%)

(9%)

76


According to CRISIL Research, the production volume of the passenger car and utility vehicle tyres amounted

to approximately 1,100 million units in 2009, with approximately 32% contributed by tyre manufacturers based

in Europe. The following chart illustrates the breakdown of production volume of passenger car and utility

vehicle tyres, by geographical base of manufacturers, in terms of units, in 2009:


According to CRISIL Research, the production volume of the M&HCV tyres amounted to approximately 146

million units in 2009, with approximately 45% contributed by tyre manufacturers based in Asia. The following

chart illustrates the breakdown of production volume of M&HCV tyres, by geographical base of manufacturers,

in terms of units, in 2009:

Asia 27%

Europe 32%

North America 28%

South America

6%

Africa & Middle

East 7%

77


Raw Materials

The major raw materials used in the production of tyres are natural rubber, synthetic rubber (which includes

styrene butadiene rubber (“SBR”) and polybutadiene rubber (“PBR”)), carbon black and nylon tyre cord fibre

(“NTCF”). Synthetic rubber and carbon black are derivatives of crude oil. On average, natural rubber accounts

for approximately 44% of the costs for manufacturing tyres. The following chart sets out the breakdown of the

costs of manufacturing tyres by raw materials:

(per cent)


Natural rubber prices are determined by market equilibrium between supply and demand. Over the past two

years, global natural rubber prices fell significantly, in light of over-supply in the global market. Global natural

rubber prices are expected to remain subdued in the near term as supply continues to outpace demand.

The following graph illustrates the fluctuations of international and domestic natural rubber prices from

Asia 45%

Europe 18%

North America 16%

South America 10%

Africa & Middle East 11%

Natural rubber, 44

SBR, 5 PBR, 5

NTCF, 19

Carbon black, 12

Others, 15

78

September 2012 to September 2014:

The prices of key raw materials like SBR, PBR, NTCF and carbon black are also influenced by feedstock price

movement, apart from demand-supply gap. Feedstocks used to produce these raw materials are derived from

crude oil. As a result, the crude oil price movement influences prices of these raw materials. With increased

supply and weak global demand, crude oil prices are expected to decline over the long term. Consequently,

prices of crude oil based tyre raw materials are also expected to reduce. Indian Tyre Industry

Overview

The size of the Indian tyre industry (including exports) is estimated at approximately (i) ` 462 billion for the

year 2013-14, in terms of value, and (ii) 1,779 tonnage, in terms of production volume, according to CRISIL

Research. Excluding exports, the market size of the Indian domestic tyre industry, in terms of value, has grown

at a CAGR of 12.09% during 2009-10 and 2013-14, mainly driven by robust growth in the Indian automobile

industry. (Source: CRISIL Research) The following graph illustrates the growth of the Indian domestic tyre

industry from the year 2009-2010 to the year 2013-14:

Competitive Landscape

Currently, there are over 30 players in the Indian tyre industry. However, the top seven players accounted for

approximately 79.5% of the market share (in value terms) of the Indian tyre industry for the year 2013-14.

(Source: CRISIL Research) The following table sets out the market share of leading tyre manufacturing

companies in India for the year 2013-14:

Company Market Share (%)

MRF Ltd. 27.5

Apollo Tyres Ltd. 18.8

JK Tyres & Inds. Ltd. 12.9

Ceat Ltd. 11.6

TVS Srichakra Ltd. 3.6

Goodyear India Ltd. 3.5

Falcon Tyres Ltd. 1.7

79

Others 20.5

Total 100.0


End-user Categories

Tyre demand originates from two end-user categories, namely OEMs (vehicle manufacturers) and the

replacement/ aftermarket segment (vehicle owners/users). Consumption by OEMs generally follows vehicle

production trend while the replacement segment is more closely linked to economic condition, usage

characteristics and replacement cycles. In the year 2013-14, demand from replacement segment continued to

dominate the Indian tyre market by contributing approximately 68% to total demand, in terms of tonnage.


The table and graphs below set out the growth of the overall tyre consumption in India in terms of tonnage, by

end-user categories, for the years indicated:


In the year 2012-13 and the year 2013-14, weak automobile demand impacted demand of tyres by OEMs,

resulting in a negative growth of 6% and negative growth of 4% in tyre consumption in the OEMs segment in

India, respectively. On the other hand, tyre consumption by the replacement segment had grown by 8% and 3%

during the year 2012-13 and the year 2013-14, respectively.

In the year 2014-15, CRISIL Research expects that demand for tyres from the OEMs segment in India will

improve, mainly to be driven by increase in sales of tyres for the M&HCV, passenger car and two wheelers

segments, in light of improved economic growth and consumer sentiments. Demand for tyres from the

replacement segment is expected to grow by approximately 5-7% in the year 2014-15. (Source: CRISIL

Research) The following graph sets out the growth trend of OEM production of various categories of

automobiles for the periods indicates:

80


Product Categories

The Indian tyre industry can be broadly divided into three broad product categories, namely, commercial

vehicles tyres, passenger vehicles tyres and industrial tyres. Commercial vehicles tyres comprise of Medium and

Heavy Commercial Vehicles (M&HCVs), Light Commercial Vehicles (LCVs) and tractors. Passenger vehicles

comprise passenger car and utility vehicles (including jeep), motorcycles and scooters (2/3 Wheelers). The third

category comprises Off-The-Road (OTR) and other industrial tyres. The structure of the Indian tyre industry can

be illustrated as follows:

The following chart sets out the breakdown of the Indian tyre industry by product categories in the year 2013-

81

14:


According to CRISIL Research, the total tyre demand in India in tonnage (excluding OTR segment) grew at a

CAGR of 8% from the year 2008-09 to the year 2013-14. CRISIL Research expects that total tyre demand in

India in tonnage (excluding OTR segment) will grow at a CAGR of approximately 7-9% from the year 2013-14

to the year 2018-2019. (Source: CRISIL Research) The following table sets out the growth trend of the tyre

demand in India, by product categories, from the periods indicated:

Note: Data for the year 2014-15 and data for the year 2013-14 to 2018-2019 are projections.


M&HCV

The M&HCV tyres segment is the largest in tonnage terms and accounts for nearly 50% of total tyre demand in

India in the year 2013-14. The OEM segment accounts for approximately 15% of M&HCV tyre demand, with

the rest of the demand is sustained by replacement segment. Demand of tyres from the OEM segment depends

on vehicle production, while replacement segment is linked to economic performance. In the year 2013-14, tyre

sales for the OEM segment declined by 24%, mainly due to a sharp decline of approximately 21.1% in M&HCV

production as a result of weak domestic M&HCV sales during the year. Due to weak economic activity,

M&HCV tyre sales for the replacement segment only grew at 1.8% for the year 2013-14, resulting in an overall

decrease of 3% in M&HCV tyre demand in the year.

As replacement segment accounts for approximately 85% of the M&HCV tyre demand in India, CRISIL

Research expects that M&HCV tyre demand in the future will largely depend on domestic economic

environment (Source: CRISIL Research). Recovery in economic activity is expected to improve freight

82

availability and result in improved M&HCV tyre demand. In the year 2014-15, CRISIL Research expects a

revival in M&HCV tyres sales in both the replacement and OEM segments, with a 5-7% growth in replacement

segment and a 10-12% growth in the OEM segment, resulting in an overall growth of 7-9% during the year.


LCV

In the year 2013-14, OEM segment and the replacement segment each contributed approximately 50% of the

LCV tyre demand in India (Source: CRISIL Research). In the year 2013-14, demand of tyres from the OEM

segment declined by approximately 13.5%, mainly due to weak domestic sales of LCVs during the year. In the

same year, demand of tyres from the replacement segment grew by 9% during the year, mainly due to strong

domestic sales of LCVs in the 2010-2012 period. Overall, LCV tyre demand declined by approximately 2% in

the year 2013-14.

In the year 2014-2015, CRISIL Research expects LCV tyre demand for the OEM segment to decrease by

approximately 6-9%, while replacement segment to increase marginally, resulting in an overall negative growth

of 4-6%.

Passenger Cars & UVs

In the year 2013-14, OEM segment and replacement segment contributed approximately 62% and 38% of the

passenger cars and utility vehicles tyre demand, according to CRISIL Research. In the year 2013-14, tyre

demand for the passenger cars and utility vehicles product categories remained stable, as cars and utility

vehicles production declined by approximately 4.5% while replacement segment grew at approximately 4%

during the year.

However, in the year 2014-15, it is expected that improvement in economic growth and consumer sentiment will

lead to a recovery in sales of passenger cars, resulting in a growth of approximately 5-7% in passenger vehicle

tyre demand during the year. Replacement segment demand is also expected to resume growth, mainly due to

strong sales of vehicles in the 2010-2012 period. Overall, CRISIL Research expects that the passenger cars and

utility vehicles tyre demand to grow at approximately 7-9% in the year 2014-15.

2 - Wheeler

In the year 2013-14, OEM segment and replacement segment contributed approximately 57% and 43% of the 2-

wheeler tyre demand in India. In the year 2013-14, demand of tyres from the OEM segment increased by

approximately 7% while demand of tyres from the replacement segment increased by approximately 6.5%,

resulting in an overall demand growth of approximately 7% for the 2-Wheeler tyre product category.

In the year 2014-15, CRISIL Research expects that OEM segment to grow at approximately 10-12%, due to

similar growth in 2-Wheeler vehicle sales. Replacement demand is also expected grow at similar rate due to

strong 2-wheeler sales during the 2011-2013 period.

Tyre Imports

Radial tyres used by M&HCVs constituted 70% of tyre imports into India in the year 2010-11, largely due to

low production capacities of radial tyres in India, coupled with removal of radial tyre imports from the restricted

list in India in May 2010 and a strong domestic demand for radial tyres in India. As a result, CRISIL Research

estimates that tyre imports have risen significantly by 68% in the year 2010-11. (Source: CRISIL Research)

To reduce competition from cheaper imports the government implemented the Bureau of International Standards

(BIS) norms in May 2011, which make it mandatory to obtain a certification for tyres that are imported, stocked

or sold. These norms helped eliminate low-quality Chinese imports, which had flooded the market between

2009 and 2011.

Thereafter, most tyre manufacturers in India have expanded production capacities of radial tyre significantly to

address domestic scarcity of radial tyres. Such addition of production capacities also caused radial tyre imports

to decline after 2011. M&HCV tyre imports declined by approximately 41%, 5% and 8%, respectively, in the

year 2011-12, the year 2012-13 and the year 2013-14. Depreciation in the rupees across these periods also

83

caused imports to be more costly, resulting in lower imports of cheaper tyres from countries such as China and

Thailand. (Source: CRISIL Research)

In 2014-15, we expect imports to grow by 7-9 per cent, led by shipments from China, where some

manufacturers (Triangle tires, Linglong tyres etc) have obtained BIS norm certificates, as per industry

interactions. Additionally, Chinese radial tyres are over 20 per cent cheaper than Indian radial tyres giving them

significant advantage. We expect imports to continue to grow at a similar pace in 2015-16 as well. Over the next

five years, too, CRISIL Research expects imports to clock a CAGR of 7-9 per cent.

The following table sets out the tyre imports into India, in terms of tonnage, from the year 2005-2006 to the year

2014-15:


Tyre Exports

CRISIL Research estimates that tyre exports from India grew by approximately 3% in the year 2012-13, mainly

driven by exports of M&HCV tyres and passenger car tyres. Indian M&HCV tyres possess a good brand image,

particularly in regions with lesser radial tyre production capacities, such as Middle East and South East Asia.

Despite competition from China, Indian players have greater demand in the replacement market.

In the year 2013-14, exports are estimated to grow at approximately 5%, according to CRISIL Research. Due to

weak domestic demand for tyres in China, several Chinese manufacturers have commenced exporting tyres in

recent years. Generally, tyres exported from China are cheaper than tyres exported from India. In addition,

radial tyres are gaining popularity in the global tyre markets, which also contributed to moderation of Indian

exports. As a result of the abovementioned factors, CRISIL Research expects Indian tyre exports to grow at a

rate of 4-6% in the year 2014-15. Over the next five years, CRISIL Research expects that India tyre exports to

grow at a CAGR of approximately 4-6%.

The following graph sets out the tyre exports from India, in terms of tonnage, from the year 2005-2006 to the

year 2014-15:

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The following table sets out the tyre exports from India in terms of tonnage, by product categories, from the year

2008-09 to the year 2013-14:

In 000's tonnes 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

M&HCVs 105 113 110 124 130 136

LCVs 30 26 25 28 27 29

Passenger Cars & UVs 7 6 9 12 12 13

Tractors 3 3 3 2 3 2

2/3 wheelers 3 2 4 6 6 6

Others 1 0 2 2 1 1

Total 148 150 153 174 178 187


India’s exports of tyres were largely made to developing countries, such as Asian countries, Middle East and

Africa. For the year 2012-2013, approximately 40% of India’s tyre exports were made to Asian countries, while

21% and 17% were made to Middle East and Africa, respectively. (Source: ATMA, Indian Tyre Industry –

Production and Export Statistics 2012-13) The following chart illustrates the breakdown of India’s tyre exports

by destinations for the year 2012-2013 by value:

166 160 176

148 150 153

174 178 187

195

0

50

100

150

200

250

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15P

(In

00

0 t

on

nes

) Exports

85

(Source: ATMA, Indian Tyre Industry – Production and Export Statistics 2012-13)

Radialisation

Demand for radial tyres in India has been increasing in recent years. For the year 2012-2013, approximately

98% of passenger car tyres are radial. The radialisation of the LCV and M&HVC product categories have

lagged behind the passenger car category, mainly due to poor roads, old generation vehicles and overloading

tendencies which favoured the continuation of bias tyres. However, with the improvement of road infrastructure,

launch of multi-axle vehicles and tightening of control on overloading in India in recent years, the radialisation

in these categories has gained momentum. The radialisation level in the M&HVC had increased from 3% in the

year 2006-2007 to 25% in the year 2013-2014. ATMA estimates that the radialisation level in M&HCV

category will reach 50% in the next few years. (Source: ATMA, Indian Tyre Industry – Production and Export

Statistics 2012-13) The following table sets out the growth of radialisation in M&HVC, LCV and passenger car

product categories from the year 2006-2007 to the year 2013-2014:

Radialisation (%) FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14

M&HVC 3 4 6 10 12 18 22 25

LCV 12 12 12 15 16 22 25 30

P. Cars 95 95 97 97 98 98 98 98

Note: Data for FY14 is estimate.

(Source: ATMA, Indian Tyre Industry – Production and Export Statistics 2012-13)

Australasia, 1% Pakistan, 4%

Europe, 5%

Americas, 12%

Africa, 17%

M. East, 21%

Asian Countries,

40%

FY2012-13 (% Share)

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OUR BUSINESS

Overview








We are a five-decade old player in the Indian market and were founded in 1958 as CEAT Tyres of India Ltd. In

1982, RPG Group acquired CEAT Tyres of India Ltd as well as the rights to use the CEAT brand in certain

countries in Asia, and we became a part of RPG Group. RPG Group is a group of companies involved in tyres,

infrastructure, IT, pharmaceuticals, plantations and power/telecom ancillaries. RPG Group is a leading business

group in India with over 20,000 employees and diversified business operations in key sectors of the economy. In

2010, we acquired the global rights of the brand ‘CEAT’ from the Italian tyre maker Pirelli, which enabled us to

sell tyres under CEAT brand to Europe, Latin America and other new markets.


farm equipment and other specialty vehicle markets. Our truck and bus tyre product categories make up the

largest part of our products in value terms, but our strategy is to grow our business in our non-truck tyre product

category including two-wheelers and passenger car tyres. Revenue from sales of our passenger car and two-

wheeler tyres accounted for approximately 26.5% of our standalone gross sales revenue in Fiscal 2014. We

promote our products actively through marketing campaigns on television, online and print media. We have won

several awards for our effective marketing campaigns, including the prestigious Effie Award in 2013 for “Best


We also received a Gold Award in the International Convention of Quality Control Circles in October 2014 in

Sri Lanka.

We operate three manufacturing facilities in India: Bhandup, Nasik and Halol plants. We have operated our

Bhandup plant in Bhandup, Mumbai since 1960. Our Bhandup plant produces truck, bus, farm and specialty

bias tyres. We have operated our Nasik plant for over four decades. Our Nasik plant is located in Satpur, Nasik

and produces truck, bus, farm, LCV, passenger car and certain specialty bias tyres along with passenger car,

utility vehicles and light truck radial tyres. Our Halol plant, our newest plant, is located in Halol, Panchmahal

and became operational in 2011. Our Halol plant focuses on production of passenger car, utility vehicle and

truck and bus radial tyres. In addition to our own facilities, we outsource the production of tyres, tubes and flaps

to a number of vendors. In Fiscal 2014, approximately 28.4% of our standalone gross sales revenue was derived

from products outsourced to vendors.

We sell our tyres in India through OEMs and directly to consumers through a pan-India network of dealers,

distributors and franchisees. As of September 30, 2014, we had 17 warehouses including distribution centers

that supplied our products to over 3,500 independent dealers across India. We presently have 150 retail

franchisees across India, which are branded CEAT Shoppe and sell primarily our passenger car and SUV radial

tyres. Additionally, we have a network of 189 franchise outlets (CEAT Hubs) dedicated to selling our truck tyre

products. We established direct coverage to the two-wheeler market by setting up an innovative 2-step

distribution network to directly reach mechanic shops that service two-wheeler vehicles, which has widened our

distribution network.


Fiscal 2014, we sold our products to 88 countries. We focus on key international clusters of countries, including

Southeast Asia, the Middle East, East Africa, West Africa and Latin America. We also market to standalone

markets, including Pakistan, Nepal, Afghanistan, Bangladesh, Egypt, and Turkmenistan. We have opened sales

offices in key markets outside India to market our products as well as to help us develop products based on the

customer needs of those markets. We plan on expanding our offices to include offices located in our key

international clusters with cluster managers, sales executives and services engineers.

We have a strong presence in the Sri Lankan tyre market, which we have achieved through our 50 %


viz; Associated CEAT Holdings Company (Private) Limited that we established in 1999. By producing tyres in

Sri Lanka we save on import duties payable in Sri Lanka, which in turn allow us to price our tyres more

competitively than imports. In Sri Lanka, we operate two manufacturing facilities with total capacity of 61

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tonnes per day. In addition, we have a 70% shareholding, as of September 30, 2014, in a subsidiary in

Bangladesh viz. CEAT Bangladesh Limited where we are constructing a new manufacturing facility for the

production of automotive bias tyres.

In First Half Fiscal 2015, Fiscal 2014, 2013 and 2012, our consolidated revenue from operations (net) was `

29,002.77 million, ` 55,539.79 million, ` 50,522.15 million and ` 46,527.08 million, respectively. In First Half

Fiscal 2015, Fiscal 2014, 2013 and 2012, we earned consolidated profit for the year of ` 1,340.15 million, `

2,712.35 million, ` 1,201.90 million and ` 181.85 million, respectively. As at March 31, 2014, we had

consolidated total assets of ` 35,461.69 million and consolidated total liabilities of ` 24,812.65 million.

Our Strengths

We believe that our tyre business has the following key competitive strengths.

Balanced mix of sales

We have a balanced mix of sales across our product categories and among our OEM, replacement tyre and

export markets. We also benefit from a diverse geographic spread of operations with exports to 88 countries in

Fiscal 2014. This reduces our dependence on any single product category or market. We consciously changed

our product mix by growing our non-truck product categories such as two-wheelers and passenger car tyres. The

breakdown of our standalone gross sales revenue in Fiscal 2014 by customer, end use and tyre type is

represented in the charts below:

By customer By end use By tyre type

Note: Certain amounts may not add to 100% due to rounding.

Robust growth in the two-wheeler and passenger car tyre product categories

Over the past three years, we have achieved robust growth in the two-wheeler and passenger car tyre segments.

From Fiscal 2010 through Fiscal 2014, our revenues from our two-wheeler and passenger car/utility vehicle tyre

products have each grown at a compound annual growth rate (CAGR) of approximately 39.8% and 36.0%,

respectively. As a result of our growth, non-truck tyres in Fiscal 2014 made up approximately 53.9% of our total

standalone gross sales revenue, up from approximately 39.3% in Fiscal 2010. We have also achieved higher

than industry growth in both two-wheeler and passenger car tyre product categories since Fiscal 2012. We

believe the recent shift in our product category sales revenue provides for improved profitability because the

two-wheeler and passenger car tyre segments offer higher profit margins for us than the truck and bus product

categories which have been our targeted categories historically. The charts below show the growth of our

standalone gross sales revenue (in ` million) and market share in two-wheeler and passenger car tyre categories.

Standalone gross sales revenue Market share

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Strong brand position through effective marketing

We believe we have established a strong brand position in the Indian two-wheeler and passenger car tyre

markets through our aggressive brand investments behind consistent TV communication based on consumer

insights. During Fiscal 2014, we highlighted unsafe driving conditions in India’s rainy season and linked these

conditions to our offering of Superior Grip through CEAT All Season bike tyres. We also we launched “Dhoom

3” branded, high-speed, special-edition tyres in association with the popular movie of that name, and we also

released video games based on the movie to engage with the youth. In addition, we have had a consistent and

long-term association with cricket, a sport that is heavily followed by majority of Indians. Our CEAT Cricket

Ratings initiatives over the years continue to facilitate the Top Cricket talent across the world over the years.

Through campaigns like these, we believe that we effectively communicate our brand to consumers and inform

them of the important aspects of our products. Our aim is to further strengthen our position by building brand

loyalty through product innovations, differentiated customer services and innovative marketing campaigns. Our

TV campaigns, branded associations and digital promotions have been highly visible and have been facilitated

by the advertising community through various awards, including the prestigious Effie Award in 2013 for “Best


Pan India coverage through dealers and innovative distribution network

We maintain a broad sales and distribution network that allows us to efficiently sell our goods across India. As

of September 30, 2014, we had 17 warehouses including distribution centers that supplied our products to over

3,500 independent dealers across India. We presently have a network of 150 CEAT Shoppe and 189 CEAT

Hubs that provide a consistent brand and service experience throughout the country. To drive our leadership in

two-wheelers, we initiated direct coverage to the two-wheeler market by establishing a distribution network

reaching directly to mechanic and spare part shops that service two-wheeler vehicles. In addition, we are

investing in brand visibility in multi-brand outlets in India.

Our distribution network utilizes a pull-based model where the consumer places the order for our products

which is pulled through our distribution channels. This means that our procurement and distribution are

demand-driven rather to the large extent than to a forecast which reduces inventory overstocking and

bottlenecks. We intend to expand this pull model across our production facilities.

Leading Indian export business

We are one of the leading exporters among Indian tyre companies. We had a 23.1% share of India’s tyre export

market in Fiscal 2013 according to ATMA. Growth in our exports was driven by our acquisition of global rights

of the brand ‘CEAT’ from the Italian tyre maker Pirelli, which enabled us to sell tyres under CEAT brand to

Europe, Latin America and other new markets. In Fiscal 2014, approximately 18.1% of our standalone gross

sales revenue was from our export business. In Fiscal 2014, we sold our products to 88 countries. We focus on

key international clusters of countries, including Southeast Asia, Middle East, East Africa, West Africa and

Latin America. We also market to standalone markets, including Pakistan, Nepal, Afghanistan, Bangladesh,

Egypt, and Turkmenistan. We have opened sales offices in key markets outside India to market our products as

well as to help us develop products closer to the market based on the customer needs of those markets. We plan

on expanding our offices to include offices located in our key international clusters with cluster managers, sales

executives and services engineers. We are a star trading house as recognized by India’s Directorate General of

Foreign Trade. We also have won various export awards from the All India Rubber Industries Association. We

are also eligible for Focus Market/Product schemes that allow us to import raw material duty free in proportion

to the goods exported. These schemes, therefore, allow us to import raw materials at lower rates that improve

margins.

Established in-country presence in Sri Lanka

We have a strong presence in the Sri Lankan tyre market including truck, light truck, three-wheeler, two-

wheeler and tyres. We have a strong presence in the Sri Lankan tyre market, which we have achieved through

our 50 % shareholding as of September 30, 2014 in joint venture companies of our wholly owned subsidiary in

Sri Lanka viz; Associated CEAT Holdings Company (Private) Limited that we established in 1999. Our joint

venture presently has extensive dealer locations, with research and development and technical support being

provided by us. By manufacturing tyres in-country through the joint ventures, we are able to avoid import duties

that we would have to pay if we manufactured the tyres in India and exported them to Sri Lanka. This enables us

to competitively price the products.

Strong research & development focus

We believe our research and development focus contributes to our ability to meet customer needs in a

competitive market. Our research and development has been a catalyst for the growth of our two-wheeler and

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passenger car tyre businesses with new products like our GRIPP two-wheeler line with over four million units

sold since April 2009. In Fiscal 2011, we set up a modern research and development facility at our Halol plant.

Our facility has the capability for virtual performance prediction, advanced indoor and vehicle dynamics testing

of tyres, three dimensional modeling and prototyping, structural and noise simulations, reverse engineering,

nanotechnology, and advanced materials development capabilities. We conduct research that focuses on new

product development, alternate materials and green tyres, as well as several projects to reduce tyre weight and

material cost in order to improve margins. We introduced over 100 new products / variants in Fiscal 2014. In

addition, we partner with institutes of global repute such as India Institute of Technology and other institutes

and vendors. We have a strong research and development team of over 70 employees as of September 30, 2014.

Large OEM footprint

We have strategically enhanced our OEM footprint, which significantly contributed to our growth. We supply

tyre to OEMs including Bajaj Auto, Tata Motors and Mahindra & Mahindra. We work closely with our OEM

customers to develop new products for their vehicles and for marketing and branding. We are a partner of choice



challenging requirements of OEMs. Our OEM channel accounted for approximately 21.3% of our standalone

gross sales revenue in Fiscal 2014, and approximately 21.4% of our standalone gross sales revenue in the first

half of Fiscal 2015. Strong OEM presence in the passenger car tyre category helps generate replacement


equity.

Our Strategy

We intend to grow our tyre business by implementing the following strategies:

Focus on consumer product categories

We believe that by focusing on consumer product categories, such as two-wheelers and passenger tyres, we can

improve our margins and increase our profitability. In Fiscal 2010, approximately 39.3% of our standalone gross

sales revenue came from non-truck product categories, while in Fiscal 2014 non-truck product categories

accounted for approximately 53.9% of our standalone gross sales revenue. In Fiscal 2015, we intend to continue

this trend, and in the first half of Fiscal 2015 our product mix improved further with non-truck product

categories accounting for approximately 58.6% of our standalone gross sales revenue. We believe that we can

sustain the benefits of our improved product mix by focusing efforts on building brand loyalty in these non-

truck tyre segments through product innovation and customer services. Similarly, we have been focusing on

maintaining a good mix of sales between the OEM and replacement tyre markets.

Continue to invest in brand building marketing campaigns

We believe that effective marketing and branding placement is critical to our success. Our consolidated

advertisement and sales promotion expenses increased by CAGR of 30.7% from FY 2012 to FY 2014. We

intend to promote our brands and effectively position our products in the market by continuing to invest in

innovative marketing campaigns behind our two-wheeler and passenger car tyres. Our marketing spends are

directed towards sharply defined target product categories with differentiated positioning strategies. In line with

our increasing brand building focus, we expect to increase our marketing spend in Fiscal 2015 and expect that

our marketing budget will continue to grow in the near future as we continue to drive two-wheeler and

passenger car products.

Drive new product growth through research and development

We intend to continue to invest in developing new products for both the domestic and international market at

our research and development center. In Fiscal 2014, we introduced over 100 new products / variants. Through

new product launches we seek to build our position as a premium innovative player in the OEM market for two-

wheeler and passenger car tyres as well as to introduce additional products in our premium tyre ranges. In

addition, we intend to expand our export business by leveraging our strong research and development

capabilities and continuing to introduce targeted products to the country specific and regional markets.

Expand production capacity

We intend to continue to expand our manufacturing capacity, particularly with respect to radial tyres. As we

witness a shift in the Indian tyre market from bias tyres toward radial tyres across all product categories, we

continue to focus on building new radial tyre capacity. We have started a capacity expansion program at our

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Halol plant that will increase capacity by 120 tonnes per day from 150 to 270 tonnes per day, primarily in non-

truck radial tyres. We expect the expanded capacity to be available by July 2015. In addition, we approved an

investment of ` 4,200.00 million for setting up a plant to manufacture two- and three-wheeler tyres with a

capacity of 120 tonnes per day and an investment of ` 500.00 million for implementing a project of

manufacturing specialty tyres (including off-the-road tyres), through a subsidiary company. Internationally, we

are constructing a new manufacturing facility for the production of automotive tyres in Bangladesh with an

initial capacity of 65 tonnes per day, which we expect to complete by close of calendar year 2015. Through our

focused efforts to continue to expand manufacturing capacity, we believe that we will be well placed to meet the

emerging demand in the tyre market within India and our targeted global markets.

Expand our distribution



establishing a distribution network directly through mechanic shops that service two-wheeler vehicles. Our

strategy is to continue to expand our distribution channel with a particular emphasis on the two-wheeler and


Grow international business through exports & expansion in emerging markets through in-country

production

We are one of the leading exporters among Indian tyre companies. We sold our tyres in 88 countries in Fiscal

2014. We focus on key international clusters of countries, including the Southeast Asia cluster, the Middle East

cluster, the East Africa cluster, the West Africa cluster and the Latin American cluster. There are products that

are developed exclusively for these markets. We participate in various international exhibitions across the globe.

This further helps us to increase our visibility and add more customers.

We conduct our international operations through our subsidiaries in Sri Lanka and Bangladesh as well as

through exporting our products outside of India. We plan to replicate our success in Sri Lanka by employing a

similar model to expand into the Bangladesh market. In 2013, we entered into a joint venture agreement with

A.K. Khan & Company Limited, pursuant to which we own 70% and A.K. Khan & Company Limited owns

30% of our subsidiary in Bangladesh viz. CEAT Bangladesh Limited. Through our subsidiary in Bangladesh,

we have begun to construct a new manufacturing facility for the production of automotive bias tyres in

Bangladesh with an initial capacity of 65 tonnes per day. By manufacturing tyres in-country through our

subsidiary, we will be able to save on import duties that we would have to pay if we manufactured the tyres in

India and exported them to Bangladesh. Imports from Bangladesh to India enjoy zero basic customs duty. Our

aim is to cater to the local market in Bangladesh as well as the eastern part of India. Our strategy is to leverage

our research and development and technical support from our Indian operations and to utilize our buying power

and experience to reduce raw material costs for our Bangladesh operations. In anticipation of the opening of the

plant by close of calendar year 2015, we have begun a seed marketing campaign in Bangladesh to prepare for

our entry into the market.

Maintain an optimum mix of in-house vs. outsourced production

In Fiscal 2014, approximately 28.4% of our standalone gross sales revenue were from products produced by

vendors. While in-house production helps us to maintain complete control on the production, we believe that by

outsourcing certain part of the production, we can reduce our capital costs and focus on increasing our sales as

we expand our marketing efforts. We believe that this could also help us benefit from the collective scale of our

vendors. We intend to continue to maintain an optimum mix of in-house vs. outsourced production and adjust it

according to the changes in demand for our products.

Grow our OEM network

We continue to enhance our OEM distribution network through adding distribution relationships to our existing

manufacturer network. We supply tyres to OEMs including Bajaj Auto, Tata Motors and Mahindra & Mahindra

other major manufacturers. Our growth in our OEM business was with CAGR 27.3%. We will continue to

enhance our OEM network and work closely with our OEM customers to develop new products for their

vehicles and for marketing and branding. Strong OEM presence in passenger car product category helps

generate replacement demand, gives access to latest technological development & learning in the industry and

enhances our brand equity.

Our Products

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We manufacture tyres for the truck and buses, two-wheelers, light commercial vehicles, passenger cars and farm

equipment and other specialty vehicle markets. The truck and buses market were our largest product categories

in Fiscal 2014, representing approximately 46.1% of our standalone gross sales revenue, followed by the two-

wheelers category at approximately 17.4% of our standalone gross sales revenue. Over the last several years, we

have focused on changing our product portfolio by increasing volumes in non-truck categories like two-

wheelers and passenger cars that we believe offer higher profit margins. In Fiscal 2010, approximately 39.3% of

our standalone gross sales revenue came from non-truck product categories, while in Fiscal 2014 non-truck

product categories accounted for approximately 53.9% of our standalone gross sales revenue.

Our approximate standalone gross sales revenue in the truck and bus and non-truck product categories is set

forth in the table below for each of the last three fiscal years.

Type of Tyres Fiscal 2014 Fiscal 2013 Fiscal 2012

Truck and Bus 46.1% 51.8% 53.1%

Non Truck 53.9% 48.2% 46.9%

Truck and Bus Tyres

Truck and bus tyres accounted for approximately 46.1% of our standalone gross sales revenue in Fiscal 2014.

We have Nylon and Radial Tyres for front, rear and all wheel application for trucks and bus categories.

Some of our key product offerings include:

Lug XL - Tyres for customers looking for high loadability;

Mile XL - Tyres for customers looking for high mileage;

HCL Super - Tyres for customers looking for high load for short haul travel;

Trac XL - Tyres for customers looking for high load for short haul mining operation; and

Radial - Tyres for customers looking for high mileage with cooler running.

Non Truck Tyres

The non truck tyres accounted for approximately 53.9% of our standalone gross sales revenue in Fiscal 2014.

The non truck product category includes tyres for two-wheelers, passenger cars and UV and farm and other

specialty tyres.

Two-wheeler tyres:

Two-wheeler tyres accounted for approximately 17.4% of our standalone gross sales revenue in Fiscal 2014.

Our two-wheeler products include front and rear tyres for motorcycles and scooters.

Some of our key two-wheeler offerings include:

Gripp- Tyres for dry and wet grip in difficult driving conditions prevalent in India;

Milaze- Tyres with longer life targeted for commuter use;

Secura Zoom- Our entry range pattern for affordable grip performance; and

Zoom- Our directional patterns targeted for faster paced ride experiences and control at high speeds.

Tyres for passenger cars and UV

Tyres for passenger cars and UV accounted for approximately 9.1% of our standalone gross sales revenue in

Fiscal 2014. We produce both bias and radial passenger car tyres.

Some of our key passenger car tyre offerings include:

Milaze- Long-lasting tyres; and

Gripp LN – A premium low noise range of tyres.

Some of our key offerings for the jeep and UV radial category include;

Czar- Tyres for highways and all-purpose terrain; and

Rhino- Tyres for heavy loads.

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Farm and other vehicle tyres

Farm and specialty tyres accounted for approximately 14.1% of our standalone gross sales revenue in Fiscal

2014. Our products in this category include tyres for light commercial vehicles, last mile, tractors, forklifts, skid

steers, compactors, graders, loaders, dozers and other industrial equipment.

Bias and Radial Tyres

We produce and market both bias and radial tyres. As we focus our sales in the two-wheeler and passenger car

product categories and have altered our production capacity, our relative sales of bias and radial tyres have

shifted.

The following table sets forth sales of bias-ply and radial tyres as an approximate percentage of our standalone

gross sales revenue over the past three fiscal years:

Technology Fiscal 2012 Fiscal 2013 Fiscal 2014

Bias 86.7% 82.7% 80.8%

Radial 13.3% 17.3% 19.2%

Our Sales and Distribution

Our distribution network utilizes a pull-based model where the consumer requests our products and “pulls” it

through our distribution channels. This means that our procurement and distribution are demand-driven rather

than to a forecast which reduces inventory overstocking and bottlenecks.

Our products are sold through three channels:

Replacement - includes dealers and new distribution networks;

OEM - includes OEMs such as Indian and international car, truck and motorcycle companies; and

Exports - includes tyres that are exported out of India and sold through a network of distributors.

We have traditionally focused on the replacement market. However, we are now driving our sales to OEMs to

strengthen our brand credibility and exports to widen our geographical footprint. As a result, our OEM portfolio

and exports have grown in recent years, and we today enjoy a healthy mix of sales from all three channels.

The following table sets forth the sales to the replacement, OEM and export markets as an approximate

percentage of our standalone gross sales revenue over the past five fiscal years:

Channel Fiscal 2010 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014

Replacement 74.6% 71.2% 63.8% 60.3% 60.6%

OEM 10.1% 13.0% 16.1% 19.8% 21.3%

Exports 15.3% 15.8% 20.1% 19.9% 18.1%

Domestic replacement market

Our largest marketing channel is domestic replacement sales, which accounted for approximately 60.6% of our

standalone gross sales revenue in Fiscal 2014, and approximately 62.5% of our standalone gross sales revenue

in the first half of Fiscal 2015. We maintain a broad distribution network to sell tyres to the domestic

replacement market and presently have over 3,500 dealers across India.

We promote our brand visibility in several multi-brand outlets in India through the use of standout CEAT

branding. In conjunction with our marketing activities, this branding helps strengthen our brand imagery and

differentiate our product in the replacement market.



establishing an innovative 2-step distribution network to directly reach mechanic shops that service two-wheeler

vehicle, which has widened our distribution network. In addition, we are strengthening our franchise in multi-

brand dealers by investing on brand visibility in multi-brand outlets in India.

In addition, we are establishing CEAT Tyre Service Centers that provide a one-stop-solution for the entire tyre

and wheel related service needs of trucks and buses. These centers offer end-to-end tyre-related services for

trucks and buses and are equipped with facilities such as a computerized truck tyre alignment machine, nitrogen

93

inflator and truck tyre repair tools.

Original equipment manufacturer (OEM) market

The OEM channel accounted for approximately 21.3% of our standalone gross sales revenue in Fiscal 2014, and

approximately 21.4% of our standalone gross sales revenue in the first half of Fiscal 2015.

We have tyre supply relationships with Bajaj Auto, Tata Motors, Mahindra & Mahindra and other major

manufacturers. We work closely with our OEM customers to develop new products for their vehicles and also

for marketing and brand building of our brands through their sales and service network.

In recent years, we have been as expanding our OEM relationships in non-truck product categories, such as two-

wheelers and passenger car tyres, as part of our strategy to strengthen our presence. We are a partner of choice



challenging requirements of OEMs.

We continue to enhance our OEM distribution network through adding distribution arrangements to our existing

manufacturer network. Strong OEM presence in passenger car product category helps generate replacement


equity.

International Exports

We are one of the leading exporters among Indian tyre companies and have been recognized for outstanding

export performance by the prestigious CAPEXIL & AIRIA Export Awards for a record 10 consecutive years.

Growth in our exports was driven by our acquisition of global rights of brand ‘CEAT’ from the Italian tyre

maker Pirelli, which enabled us to sell tyres under CEAT brand to Europe, Latin America and other new

markets. Our export channel accounted for approximately 18.1% of our standalone gross sales revenue in Fiscal

2014.

In Fiscal 2014, we sold our products to 88 countries. We focus on key international clusters of countries,

including Southeast Asia, the Middle East, East Africa, West Africa and Latin America. We also market to

standalone markets, including Pakistan, Nepal, Afghanistan, Bangladesh, Egypt, and Turkmenistan. We have

opened sales offices in key markets outside India to market our products as well as to help us develop products

closer to the market based on the customer needs of those markets. We plan on expanding our offices to include

offices located in our key international clusters with cluster managers, sales executives and services engineers.

We intend to continue to expand our sales internationally by leveraging our strong R&D capabilities and

continuing to introduce targeted products to the country specific and regional markets, and then by supporting

these products through on-ground marketing campaigns.

Marketing, Branding and Promotion

We believe that effective marketing and branding placement is critical to our success. We designate certain

media, creative, PR and event management agencies to act on behalf of us for the sales and promotion of our

products and ancillary customer and other services. The agents or sales representatives in return receive a

commission of certain percentage for the services rendered.

Our TV campaigns, branded associations and digital promotions have been highly visible, and we believe

effective in communicating our brand to consumers and informing them of the important aspects of our

products. During Fiscal 2014, we highlighted unsafe driving conditions in India’s rainy season and linked these

conditions to our offering of Superior Grip through CEAT All Season bike tyres. We launched “Dhoom 3”

branded, high-speed, special-edition tyres in association with the popular movie of that name, and we also

released video games based on the movie to engage with the youth. We also launched a joint promotional

campaign for specified tyres of our brand with another movie “Singham Returns”.

From time to time, we have launched significant and consumer relevant advertisement campaigns, which have

helped develop a strong consumer demand and brand value for our products. In Fiscal 2014, we launched a new

UVR (Utility Vehicle radial) campaign called Pakka Bharosa, where we roped in Bollywood actor Irrfan Khan.

Through this campaign supported with series of channel expansion programs, we have been able to grow our

passenger car and UV radial business significantly. In addition, we have had a consistent and long-term

association with cricket, a sport that is heavily followed by majority of Indians. Our CEAT Cricket Ratings

continues to facilitate the Top Cricket talent across the world.

We have won several awards for our effective marketing campaigns, including the prestigious Effie Award in

2013 for “Best Ongoing Campaign” that we won for our series of “Be Idiot Safe” Campaign and “Monsoon

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Smart” Campaign, Rural Marketing Association of India’s Flame Awards, and “Most Effective Digital Media

Strategy” at the Youth Marketing Summit & Awards. We also received a Gold Award in the International

Convention of Quality Control Circles in October 2014 in Sri Lanka.

CEAT has been investing continuously in the virtual space in an effort to target a youthful market. We have

revamped our website which is now accessible on mobile screens. Several branded properties such as Mother

Brand CEAT, CEAT Cricket Rating, and “Be Idiot Safe” are present across social media platform such as

Facebook, Youtube and Twitter. Our customers engage with us through these platforms. We are also present

across other brands such as MTV Chase The Monsoon, Mahendra Adventures, XBhp and Supercross. Our

campaigns associated with the movies “Dhoom 3” and “Singham Returns” are available via social media and

mobile applications.

Production and Outsourcing

We produce tyres at our three manufacturing facilities in India and also our two manufacturing facilities in Sri

Lanka. We also outsource the production of tyres, tubes & flaps to vendors. In addition, we have a subsidiary in

Bangladesh where we are constructing manufacturing facility.

Production facilities

We operate three manufacturing facilities in India: Bhandup, Nasik and Halol plants. Our Halol plant maintains

ISO9001, ISO14001, OHSAS 18001 and TS16949 manufacturing certifications. Our Bhandup and Nasik plants

maintain ISO9001 and TS16949 manufacturing certifications.

The following table sets forth for the details of each of our three plants in India:

Facility Location Installed

Capacity (TPD)

Achievable

Capacity (TPD)

Products Range

Bhandup plant Bhandup,

Mumbai

275 240 Truck, bus, farm and specialty bias

tyres

Nasik plant Satpur, Nasik 240 205 Truck, bus, farm, LCV, passenger car

and certain specialty bias tyres

Passenger car, utility vehicles and

light truck radial tyres

Halol plant Halol,

Panchmahal

167 150 Passenger car, utility vehicle and truck

and bus radial tyres

We are expanding our Halol facility to increase capacity to 270 tonnes per day, which we expect to be available

by July 2015.

In Fiscal 2014, we had a fire accident at the raw material store of our Bhandup plant, which resulted in loss of `

31.47 million. For further information, see “Risk Factors” on page 40.

Outsourcing relationships

In addition to manufacturing tyres at our own facilities, we also outsource production of tyres, tubes and flaps to

approved vendors. Through our outsourcing arrangements, we manufacture two-wheeler tyres, tubes and flaps.

We also use vendors to meet special customer requirements such as industrial solid tyres and OTR radial tyres.

Our outsourcing vendors spread across in domestic and international geographical areas. In India, outsourcing

units are spread over Telangana, Karnataka, Kerala, Gujarat, Maharastra, and Uttarakhand. International

outsourcing is from China and Sri Lanka.

We have long term arrangements with some of our outsourcing vendors. Under these arrangements, we provide

the vendor with the raw materials, manufacturing parameters and designs for each category of tyre to be

produced and monitor product quality and output at various stages of production. We supply the raw material

requirements from approved sources including packing materials to most vendors so that we benefit from the

overall scale of procurement. We also bear the transportation and handling charges of both the raw materials and

finished goods and the insurance cost of the raw materials, work-in-progress and finished goods. The vendors

are responsible for storage facilities. We also provide technical assistance and support to the vendors. To enable

us to monitor the production effectively, the vendors must submit to us monthly reports on the inventory level of

raw materials, details of work-in-progress and details of finished goods. The vendors will ensure that the raw

material and property supplied by us will be used exclusively for the production of our goods only and will not

be mixed for supply to third parties. The intellectual property rights to the products also remain exclusively with

us.

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Under the supply agreements we undertake to off-take a minimum tonnage of goods per month subject to a

variance of a specified percentage, irrespective of our production orders. The vendor in turn charges us a

conversion charge based on the number of units produced.

We are currently dependent on a small number of vendors for all of our two-wheeler tyres, tubes and flaps. For a

discussion of the risks associated with our outsourcing production arrangements, please see “Risk Factors” on

page 40 of this Placement Memorandum.

We also procure Tyres directly from few local vendors, CEAT Sri Lanka and one Chinese vendor.

Production Process

The following diagram sets forth the critical processes of radial tyre manufacturing process:

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The following diagram sets forth the critical processes of bias tyre manufacturing process:

Quality assurance in connection with production

Robust process and product audit and quality rating are being conducted on a monthly basis and quality check

parameters are laid down to ensure adherence to defined process and product specifications. Audits for new

products are also launched at each stage of production. We make use of visual aids, alarms and annunciators as

aids to determine compliance with product specifications.

We have specialized tests to ensure the quality of raw materials used for production of our tyres attain our

standards. We also conduct a number of tests on the final product as part of our quality check exercise. These

include endurance test on tyre life, plunger test on breaking energy, dimension test on tyre dimension, deflection

test on deflection measurement and footprint testing on tyre grip. We generally conduct random sample testing

for our products. However, we conduct inspection on all of the tyres that have been repaired for defects, which

are produced for OEMs and which are to be exported.

Logistics

Our plants and vendors deliver tyres and other products to our 17 warehouses including distribution centers. The

warehouses are responsible for receiving and dispatch of goods to all of our regional distribution centers and

consigning, storing and forwarding agents (“CFAs”). We have engaged over 100 CFAs, which deliver to our

CEAT Shoppes, CEAT Hubs, distributors and multi-brand dealers.

We also have agreements with several logistics providers in India who provide transportation of our products to

our distribution network and customers. We are normally responsible for the loading and the unloading of our

products. The transporters also collect defective goods from time to time that are returned to us.

Our Subsidiaries and Joint Ventures outside of India

Sri Lanka

We have a strong presence in the Sri Lankan tyre market through our subsidiary (Associated CEAT Holdings

Company (Private) Limited) with 50% shareholding, as of September 30, 2014, in each of our five joint

ventures in Sri Lanka with Kelani Tyres Ltd which we established in 1999. Through our Sri Lanka joint

ventures companies we manufacture tyres in-country, as opposed to importing tyres manufactured in India,

which allows us to sell the tyres at a more competitive price by saving on import duties. In Sri Lanka, we have

won various awards such as National Occupational Safety and Health Excellence Awards – Best Worforce

Involvement Award by the National Institute of Occupational Safety & Health in Sri Lanka, Gold Award in the

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International Convention of Quality Control Circles in 2014, National Business Excellence Award in Export

section, Runner-Up in the National Business Excellence Award in Financial Results and a National Quality

Award in the ‘Manufacturing – Large Scale’ category. We presently have extensive dealer locations, with

research and development and technical support coming from India.

The following table sets forth the details of our manufacturing facilities in Sri Lanka:

Facility Installed Capacity

(TPD)

Achievable

Capacity (TPD)

Products Range

Kalutara plant 27.5 25.0 Truck, light truck, two-wheelers, three-

wheelers, OTR

Kelaniya plant 40.5 36.3 Truck, light truck, agricultural; car, van,

SUV radials

The charts below show the growth of revenue, EBITDA, profit after tax (PAT) and net worth of our Sri Lanka

subsidiary and joint ventures over the periods indicated in the charts.

Note 1: EBITDA = Profit before taxation + Depreciation and Amortization Exps + Finance Costs

Bangladesh

We have a 70% shareholding as of September 30, 2014 in our subsidiary in Bangladesh viz. CEAT Bangladesh

Limited, with the remaining 30% shareholding owned by A.K. Khan & Company Limited. Our Bangladesh joint

venture is constructing a new manufacturing facility for the production of automotive bias tyres plant in

Mymensingh, Bangladesh with an initial capacity of 65 tonnes per day. We expect that this plant will be

operational by the end of calendar year 2015.

Raw Materials

The principal raw materials we use to manufacture tyres are natural and synthetic rubber, carbon black and

nylon fabric. Other important raw materials that we use in the tyre manufacturing process include process oils,

rubber chemicals, butyls, steel tyre cords, bead wire and reclaimed rubber.

We source our raw materials from a wide pool of vendors in India and internationally. We believe that this helps

us reduce our dependence on few large vendors and thereby minimize risks of supply disruption and price. The

volume of our imported materials has increased significantly over the past four years.

Our largest single commodity purchase is natural rubber, which in Fiscal 2014 accounted for 36.7% of our raw

material spend on a standalone basis. Over the past three fiscal years, the price of natural rubber and has

decreased significantly, which has led to decreased input costs for our manufacturing process.

We also purchase synthetic rubber, which in Fiscal 2014 accounted for 18.8% of our raw material spend on a

standalone basis. The price of synthetic rubber depends largely on the price of crude oil derived commodities

like butadiene, styrene, and propylene as well as local supply and demand dynamics.

India is net importer of synthetic rubber (Styrene Butadiene Rubber, Poly Butadiene Rubber, Butyl Rubber and

EPDM). Certain new capacities are being set up in India for manufacturing of synthetic rubber which will

improve domestic Indian supply and enable us to operate with lower inventories.

Although the prices for natural rubber and synthetic rubber have dropped in the past three fiscal years, prices

can still fluctuate greatly. As a result, we strive to minimize our overall rubber procurement costs over a year

through timely booking of international natural rubber in the spot markets and pursuant to long-term contracts.

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The other main commodity we purchase is carbon black, which in Fiscal 2014 represented approximately 13.8%

of our raw material spend on a standalone basis. Prices for carbon black in India have increased over the past

three fiscal years largely in line with international prices. Though international prices are lower, prevailing

antidumping duty regime makes importing large quantities of carbon black impossible.

We also purchase a variety of reinforcement materials, including nylon fabric, steel tyre cord and polyester

fabric. One of the major market changes impacting our consumption of these materials is the industry shift in

production from bias-ply tyres to radial tyres for the truck product category. Radial tyres require more

reinforcement materials to manufacture, leading to increased consumption of reinforcement materials. Imports

from China are limited due to an anti-dumping duty in India on nylon fabric.

In total, changes in the market prices of raw materials have been favorable for us over the past three fiscal years.

As a result, we have seen our cost of materials consumed decrease from approximately 65.2% of our standalone

gross sales revenue in Fiscal 2012, to approximately 60.3% in Fiscal 2013 and to approximately 56.3% in Fiscal

2014.

We engage in foreign currency hedging with banks by way of currency forward contracts in order to decrease

our foreign exchange exposure arising from our foreign-currency denominated raw material purchases and

borrowings. We only hedge a portion for foreign currency exposure, and our currency hedging policy does not

protect us from all fluctuations in currency exchange rates.

Research and Development

Our research and development department, located at our Halol plant, includes a large team that conducts

research focused on new product development, alternate materials and green tyres. We have a strong team of

over 70 employees at September 30, 2014. Our facility is equipped with modern equipment which has the

capability for virtual performance prediction, advanced indoor and vehicle dynamics testing of tyres, three

dimensional modeling and prototyping, structural and noise simulations, reverse engineering, nanotechnology,

and advanced materials development capabilities and advanced materials development and analysis. The facility

employs many engineers who pioneer in areas like end-to-end product management, customer in-sighting,

design, material development, virtual prototyping and advance simulation. We use a new product development

system that includes software for tracking the product life cycle.

The following diagram illustrates our new product development system from initial customer insights to final

sign off a new product.

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A robust NPD process has been institutionalized to ensure smooth execution. Many of the new products are

developed with key differentiators. To reduce time to market for new products, rapid prototyping technology is

being used.

We developed a detailed NPD process integrating the basic concepts of Quality Business Management (QBM).

There are 3 NPD process streams based on this integration.

Innovative products which create attractive quality;

Continual improvement products; and

Development for OEMs.

We introduced over 100 new products in Fiscal 2014 for the international and domestic markets.

Examples of our important new products developed by our research and development team include:

GRIPP two-wheeler tyre line has received the prestigious Indian Design Mark awarded by the

India Design Council, an autonomous body under the Ministry of Commerce and Industry of India;

and

India’s first H rated motorcycle tyre “Zoom XL” popularly known as “Dhoom 3”.

We have a customer-focused approach and have successfully developed a number of new products based on

customer needs that we identified. Key examples are:

Our tyres with excellent mileage, ride comfort and low noise for Dubai taxis;

Our low noise tyres surpassing the stringent requirements under European regulations;

Our CZAR range tyres with high grip and maneuverability which we believe is an answer to the

SUV category; and

Our low RR series for premium OEMs that reduces fuel consumption.

In addition, we continue to partner with respected institutes and global vendors to work on projects in

nanotechnology and bio-based, hybrid materials. Recent projects include working with the India Institute of

Technology and other institutes of global repute. We also work jointly with raw material manufacturers for the

development and manufacturing of special tyre cords and fabrics.

Our Competition

The Indian tyre industry is very competitive and includes a number of well-established tyre manufacturers. Our

principal competitors are domestic tyre companies like MRF, Apollo Tyres, JK Tyre and TVS and international

manufacturers such as Goodyear, Continental and Bridgestone. In Sri Lanka, Bangladesh and other Southeast

Asia markets, we face a number of international competitors, including manufacturers from China.

Our position in relation to our competitors will depend upon effective marketing initiatives and our ability to

anticipate and respond to various competitive factors facing the industry, including pricing strategies by

competitors, our ability to source raw materials cost effectively, make required investments to improve our

distribution network, eliminate redundancies and increase production at low-cost, high-quality supply sources.

We also believe in investing in our brand equity consistently to build a differentiated value proposition. For

further information, see “Risk Factors” on page 40 of this Placement Memorandum.

Insurance

We obtain specialized insurance for manufacturing risks and third party liabilities. We generally maintain

insurance covering our assets and operations at levels that we believe to be appropriate for our business at

reinstatement values.

Our significant insurance policies consist of coverage for risks relating to physical loss or damage. Loss or

damage to our materials and property are generally covered by “all risks” insurance. Under the industrial all

risks insurance policy, we are also provided cover for stocks with the insured premises. Under our

comprehensive general liability insurance policy, we are indemnified against any legal liability to pay damages

for third party claims intra-alia arising out of bodily injury or property damage that is caused by an occurrence

taking place in our premises or any of our products. We maintain a standard fire and special perils policy, which

covers loss and damage due to fire, lightning, riot, strike and similar perils. We also maintain burglary and

housebreaking insurance for our premises.

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In addition, we maintain marine cargo annual turnover policy that covers loss or damage to all items pertaining

to our trade such as raw materials, finished goods, machineries and equipment, containers, capital goods, etc. for

loss or damage incurred during transits within India or between India and the rest of the world. We also

maintain money insurance, cash in transit and cash in safe policy for indemnity against loss of money. We have

maintained trade credit insurance to cover loss directly caused by the failure of the buyer to pay us all or part of

the invoice value of certain shipments of our goods within certain period.

We maintain workmen’s compensation policies. We also maintain a group medi-claim personal accident policy,

group term life policy, medi-claim insurance policy and hospitalization insurance policy for our employees. In

addition, we have directors’ and officers’ liability insurance that indemnify us against costs and legal liability to

pay damages for claims arising out of bodily injury or property damage.

Employees

We believe that employees are our valuable asset and core strength. To further support that strength, we have

identified skill set building as one of key business drivers, and have focused our employee initiatives in that

direction.

We periodically organize various trainings for our employees to enhance their knowledge and skills. Our

learning and development training programs are governed by Quality Business Management principles adopted

by us, which include a principle of in-depth identification of development needs and comprehensive structure of

learning and development. We have also implemented institutionalized academies in manufacturing and sales,

and identified expert coaches to run a system of continuous process improvement and problem solving.

Initiatives under these academies include the development of a skills matrix for capability building, the

Leadership Development Program for supervisors, training on time and condition-based maintenance, and

developing sales tools.

We also recognize the importance of retaining critical talents and have introduced Development Action Plans

(DAPs) for all our managers. DAPs help our managers identify their development needs and meet them through

participation in live projects, cross functional teams, virtual / E-learning and classroom trainings run by internal

and external experienced trainers. Our junior managers are encouraged to participate in our Young Executive

Board to develop their leadership skills. Some of our managers are also enrolled in the management

development programs at premiere business schools.

The CEAT values were redesigned to reflect the direction and sentiment of the organization and were called

CAIRO (Challenger, Aspiration-led, Integrity, Result-obsession and Openness). CAIRO values have become an

integral part of our corporate culture.

We have developed a reward system to recognize achievements of our employees and regularly conduct surveys

of and discussions with our employees to receive their feedback. Our performance management process ensures

that our employees understand the connection between their personal objectives for career growth and our

overall objectives.

Our human resources initiatives led to positive trends in the production, quality, cost, delivery, safety and

morale parameters in manufacturing, a higher level of engagement in workers, better working relationships

between sales managers and reportees, and a significant drop in front-line attrition.

As of September 30, 2014, we employed over 5,500 permanent employees in a variety of management, office,

sales and manufacturing roles at our facilities in India, Bangladesh and Sri Lanka, of which 3,958 permanent

employees were employed at our Bhandup, Nasik and Halol plants. To address this concern, an Attrition Risk

Profiling tool is used to grade the level of risk of attribution of all frontline employees. Through profiling, an

action plan may be created to tackle the potential attribution problem.

As of September 30, 2014, the majority of our employees at Bhandup and Nasik plants were the members of

trade unions such as the Mumbai Shramik Sangh and Akhil Bhartiya Asanghatit Shramik General Kamgar

Union. During the past five fiscal years and the six months ended September 30, 2014, there had been a total of

32 strike days at our Nasik plant and no strikes at our Bhandup and Halol plants.

We have entered into settlement agreement with the Mumbai Shramik Sangh (the “Union”) as the sole

bargaining agent for our daily rated workmen and monthly rated staff in the Nasik plant in July 2014 and

entered into settlement agreements with the Union for the daily rated workmen and monthly paid staff in our

Bhandup plant in October, 2014. Under the settlement agreements, we have in general agreed on increases on

different levels of wages, increments, dearness allowance and other allowances such as leave travel allowance,

shift allowance, education allowance, service allowance, efficiency allowance, house rent allowance, etc. for

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staff who are eligible based on their year of service, productivity or special circumstances. In addition, we have

specified different leave entitlements such as privilege leave, casual leave, sick leave, accident leave, statutory

leave, etc. based on eligibility. In return, we agreed with the employees, the Union and the management to work

together to increase productivity, engage in continuous improvement activities, improve quality, reduce cost,

ensure greater delivery, promote safety and attain higher morale. We believe the agreements strike a balance

between our interests and interest of our employees and equip us with a motivated work force for future

challenges.

Health, Safety, Environment

Our goal is to be the most preferred supplier by adopting Quality Based Management to deliver markets to

product in a safe and environmentally friendly manner and at a competitive cost. We are committed to

complying with applicable occupational health, safety and environmental regulations and other requirements in

our operations. We believe that accidents and occupational health illness cases and hazards can be significantly

reduced through the proactive and systematic approach including risks and hazards identification, assessment,

analysis and control and by providing appropriate training to employees and contractors. We work proactively

towards minimizing or eliminating the impact of hazards to people and the environment.

Our occupational health protection measures are aimed at achieving ‘zero occupational illness cases’. We have

carried out Occupational Health Risk Assessment and ergonomic study in all three of our plants in India and

implemented recommendations received. We formed cross functional teams to implement fatigue reduction

projects to boost productivity and established occupational health centers manned by medical staff operating

24x7. All our Indian plants are equipped with the ambulance and first-aid medical facilities. We periodically

carry out medical checkups of all our employees as well as our contractors’ employees. We also have

implemented a Periodic Medical Examination program to improve occupational health and safety.

The objective of our safety measures is to achieve ‘zero accidents’. To achieve this objective, we have proactive

approach of risk management such as risk elimination, substitution and control by implementing engineering

measures. Safety induction trainings to new entrants and periodical trainings to all employees and contractors is

our continuous activity. We involve our employees in safety management system through constant consultations

and communication. Our Halol plant is certified for OHSAS 18001. Our Bhandup and Nasik plants were

recommended for OHSAS 18001 Certification by TUV SUD.

Principles of our environment protection measures include reduction, reuse and recycle of waste and prevention

of pollution instead of control over it. We have obtained environmental consents to operate our Bhandup, Nasik

and Halol plants conditional upon fulfillment of certain ongoing requirements. These requirements include,

amongst others, observing the limits in quantity of trade effluent and fuel gas emission, limiting the number of

workers to be employed at given time, handling and disposing hazardous waste in compliance with the

provisions of Hazardous Waste (Management, Handling & Transboundary Movement) Rules, 2008. Periodic

monitoring and review of the conditions under these consents is our top priority. We have implemented various

projects to reduce GHG emissions such as briquette boiler and use of cleaner fuel such as piped natural gas.

Rain water harvesting projects are implemented in all our plants. Our Halol and Nasik plants are ‘zero discharge

facilities’. Our Halol plant is ISO14001 certified. Our Bhandup and Nasik plants were recommended for

ISO14001 Certification by TUV SUD.

We have identified and implemented critical procedures to ensure effective control over workplace hazards, and

we have further deployed engineering controls to reduce exposure.

In Fiscal 2012, Fiscal 2013, Fiscal 2014 and the six months ended September 30, 2014, we have had 26, 9 and

13 accidents resulting in lost-time injury in our Bhandup, Nasik and Halol plants respectively, and one accident

resulting in death in each of these plants.

Our Properties

Our Registered Office and corporate headquarters are located at RPG house, 463, Dr. Annie Besant Road,

Worli, Mumbai 400 030.As of September 30, 2014, we had 17 warehouses including distribution centers across

India.

We operate three tyre manufacturing facilities in India, the details of which are set forth in the following table:

Property Address

Bhandup plant Village Road

Bhandup, Mumbai 400 078

Nasik plant 82, MIDC Industrial Estate

Satpur, Nasik 422 007

102

Halol plant Village Gate Muvala

Halol, Panchmahal 389 350

Our Intellectual Property

We own the trademarks to our names and offerings including, amongst others, “CEAT”, “Altura”, “CEAT

Hub”, “CEAT Shoppe” and “CEAT Cricket Rating” in some classes in India.

We have acquired from Pirelli the global rights to the trademark “CEAT” which is registered in 130 countries,

including Australia, Canada, China, Denmark, France, Germany, Britain, Italy, Japan, etc. We also owned the

registered trademarks to “CEAT” or CEAT-related names, logos or word marks in various countries such as

Afghanistan, Bhutan, Myanmar, Nepal and Sri Lanka prior to acquisition of worldwide rights from Pirelli. We

also have another trademark “Altura” under which we manufacture some of our products, registered in 34

countries outside India, including Australia, China, European Union, Philippines, Singapore, USA, etc.

In addition, we own designs right to 9 different types of tyres and copyrights in our CEAT cricket rating, CEAT

new logo and our work “Tyre Expert”.

We have applied for domestic registration of our names or logos in certain classes, including the service mark

category but some of the copyright, trademark, trade name or other intellectual property rights in or to our

names or logos, including, amongst others, our “CEAT” and “CEAT secura tubes” logos, “CEAT Shoppe” and

“CEAT Theta” labels and our “CEAT” and “CEAT Hub” trade names or trademarks are pending registration.

We have also applied for international registration of “CEAT”, “Altura” or related names, logos or word marks

in various countries such as Sri Lanka, Pakistan and, in particulars, Bangladesh, but some of such copyright,

trademark, trade name or other intellectual property rights in or to our names or logos are pending registration.

In addition, we have also applied for registration but do not yet own the copyrights to some of our works of

“Tyre Expert”. Further, we have applied for registration of “rubber cement with superconductive black for

electrical conductivity of pneumatic tyre” as our patent but do not yet own the patent. We do not therefore enjoy

the statutory protections accorded to a registered trademark, copyright, or patent, as the case may be. See the

section “Risk Factors–Risk Factors Relating To Our Business–We own certain intellectual property rights and

any failure to enforce our right could have an adverse effect on our business prospects.” We may be unable to

adequately protect our intellectual property. Furthermore, we may be subject to claims alleging breach of third

party intellectual property rights.

Corporate Social Responsibility

As a responsible business corporation, we take pride in building sustainable and effective CSR initiatives that

are vital towards fulfilling critical societal need gaps in the communities we operate in. We also believe that we

have a larger responsibility towards making a difference within our industry and also society at large and

therefore we are undertaking some initiatives that are in accord with the Millennium Development Goals

(MDGs) established by the United Nations.

Our Vision is – to “drive “holistic empowerment” of our community around the local vicinity of our plants and

the industry we operate in, across all geographies”. We also believe in implementing sustainable, which will

have maximum societal impact by identifying the critical need gaps.

Our Corporate Social Responsibility (“CSR”) initiatives operate within three tiers in our ecosystem, which we

believe encircles our philosophy and values:

Tier 1 – Development of the local vicinity around our plants in the areas of Primary Education, Skill

development and Community Development via Health, Nutrition & Water based interventions. For

example, Jeevan is an integrated community project and its focus is on improving all round quality of life

in the areas of clean drinking water, overall health and nutrition based interventions amongst others;

Tier 2 – focuses on Promoting Gender Equality & Women’s Empowerment by driving powerful social

change within the industry that we operate in i.e. the motor driving/transport industry. Our Swayam

program has a goal of empowering women by training them in driving skills to enhance their livelihood

across various sectors like cab transportation, home care, patient care, school care etc.;

Tier 3 – our flagship Netranjali project is a Vision/ Eye care initiative with a focus on eye care

interventions ranging from children to senior citizens thus reducing the incidence of preventable blindness.

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To ensure implementation of our CSR Policy, the Board of the Company has created a CSR Committee to

discuss and review CSR activities and Policy.

Litigation

We are not a party to any proceedings that, if finally determined against us, would result in a material adverse

effect on our business and operating results. See the section titled “Legal Proceedings” beginning on page 189

of this Placement Memorandum for a summary of litigation to which we are a party.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

You should read the following discussion and analysis of our financial condition, results of operations and cash

flows together with our financial statements included in this Placement Document, along with the section titled

“Financial Information” in this Placement Document. You should also read the section titled “Risk Factors” in

this Placement Document, which discusses a number of factors and contingencies that could impact our

financial condition, results of operations and cash flows and the section titled “Our Business”, which presents

important information about our business.

The following discussion relates to the consolidated audited financial statements of the Company and its

subsidiaries, associate and joint venture companies (together, the “Group”) for Fiscal 2014, 2013 and 2012

which have been prepared in accordance with Indian GAAP, the accounting standards referred to in Section

211(3C) of the Companies Act, 1956 and the other applicable provisions of the Companies Act, 1956. In

addition, this discussion relates to the unaudited consolidated financial statements of the Group for the six-

month period ended September 30, 2014, which have been subjected to a limited review. The following

discussion, in relevant parts, is also based on internally prepared statistical information and on publicly

available information.

In this section, references to “we” and “our” are to the Group on a consolidated basis.

The Group’s fiscal year ends on March 31 of each year, so all references to a particular “fiscal year” or

“Fiscal” are to the 12-month period ended March 31 of that year. Unless otherwise specified, all amounts in

this section are stated on a consolidated basis.

Certain industry, technical and financial terms used in this section have the meanings ascribed to them in the

section titled “Definitions and Abbreviations” in this Placement Document.

Overview









farm equipment and other specialty vehicle markets. Our truck and bus tyre product categories make up the

largest part of our products in value terms, but our strategy is to grow our business in our non-truck tyre category

including two-wheelers and passenger car tyres.

We operate manufacturing facilities in India at our Bhandup, Nasik and Halol plants. In addition to our own

facilities, we outsource the production of tyres, tubes and flaps to a number of vendors. We sell our tyres in India

through OEMs and directly to consumers through a pan-India network of dealers, distributors and franchisees.

As of September 30, 2014, we had 17 warehouses including distribution centers that supplied our products to

over 3,500 independent dealers across India.


Fiscal 2014, we sold our products to 88 countries.

We have a strong presence in the Sri Lankan tyre market, which we have achieved through our 50 %


viz; Associated CEAT Holdings Company (Private) Limited that we established in 1999.

105

Basis of Presentation of Fiscal 2012

In order to present the Group’s consolidated statement of profit and loss, balance sheet and cash flow statement

for Fiscal 2012 on a consistent basis with the Consolidated Financial Statements of the Group for Fiscal 2013,

we have regrouped the Fiscal 2012 Audited Consolidated Financial Statements of the Group in accordance with

the requirements of Revised Schedule VI of the Companies Act, 1956, as amended and in force at March 31,

2013. These regrouped Fiscal 2012 financial statements are used in this “Management’s Discussion And

Analysis Of Financial Condition And Results Of Operations” section and all financial numbers presented in this

section for Fiscal 2012 are from such regrouped financial statements for Fiscal 2012.

The Fiscal 2012 Audited Consolidated Financial Statements of the Group and the audit report thereon are

included in section “Financial Information” on page 204 of this Placement Document. The regrouped

consolidated financial statements of the Group for Fiscal 2012 are included in their entirety as a comparative to

Audited Consolidated Financial Statements for 2013 in section “Financial Information” on page 204 of this

Placement Document.

Factors affecting the Group’s financial condition, results of operations and cash flows

Our financial condition, results of operations and cash flows are affected by numerous factors including the

following factors of particular importance:

Growth in Indian economy. A major portion of our business is derived from India, and the Group’s business is

dependent in large part on the growth of the Indian economy. As a result, our business and financial and

operating results have been and will be affected by developments in the Indian economy. The challenges in the

Indian economy persisted in Fiscal 2014 in the form of slow growth, high inflation and fiscal imbalances. It is

expected that the Indian GDP will grow by 5.4% in Fiscal 2015 against a projected 4.6% in Fiscal 2014 (Source:

IMF). For further information, see “Industry Overview” on page 72 and “Risk Factors” on page 40, of this

Placement Document.

Competition. We compete against various domestic and international tyre manufacturers in the domestic and

export markets on the basis of product design, performance, price, reputation, warranty terms, customer service

and customer convenience. Greater competition especially from foreign players could impact market share and

profitability. Indian tyre manufacturers are also facing stiff competition in certain export markets from Chinese

counterparts due to lower prices. Our ability to compete successfully will depend, in significant part, on our

ability to differentiate and effectively market our products, reduce costs by such means as leveraging global

purchasing, improving productivity, elimination of redundancies and increasing production at low-cost supply

sources. If we are unable to compete successfully, the Group’s market share may decline, which may have a

material adverse effect on our results of operations, financial condition and cash flows.

Changing Product Mix. Our strategy is to change our product mix with an emphasis on two-wheelers and

passenger car tyres because we believe that these categories bring higher profit margins, and can increase our

profitability. Similarly, we have been focusing on maintaining a good mix of sales between the OEM, Exports

and Replacement markets. In Fiscal 2012, approximately 64% of our standalone gross sales revenue came from

Replacement market, while in Fiscal 2014 the Replacement market accounted for approximately 61% of our

standalone gross sales revenue. Accordingly our results of operations, financial condition and cash flows will be

affected by our ability to continue to change our product mix and grow our business in the more profitable

product categories.

Exports. We are one of the leading exporters among Indian tyre companies. The export channel accounted for

approximately 18.1% of our standalone gross sales revenue sales in Fiscal 2014. We sell our tyres to 88

countries in Fiscal 2014. We intend to continue to expand our sales internationally by introducing targeted

products to the country specific and regional markets, and then by supporting these products through on-ground

marketing campaigns. We believe our sales outside of India, results of operations and cash flows will be affected

by our ability to continue grow our export tyre business.

Subsidiaries and Joint Ventures. We have a strong presence in the Sri Lankan tyre market, which we have

achieved through our 50 % shareholding as of September 30, 2014 in joint venture companies of our wholly

owned subsidiary in Sri Lanka viz; Associated CEAT Holdings Company (Private) Limited that we established

in 1999. We established our Sri Lanka joint ventures in 1999, and have a strong presence in the truck, light truck,

106

three-wheeler, two-wheeler and other radial tyre market segments in Sri Lanka. In Fiscal 2014, our share in our

joint ventures contributed ` 2,089.42 million in revenue from operations (gross) (3.75% of our total revenue).

In addition, we have a 70% shareholding as of September 30, 2014, in a subsidiary in Bangladesh viz. CEAT

Bangladesh Limited, where we are constructing a new manufacturing facility for the production of automotive

bias tyre. The financial statements of our subsidiary companies have been combined in our consolidated

financial statements line by line basis by adding together like items of Assets, Liabilities, Revenue and Expenses.

The intra group balances and intra group transactions and unrealized profits have been fully eliminated. The

above accounting is in line with Accounting Standard 21 “Consolidated Financial Statements”.

Our joint venture entities are important to our results of operations, cash flows and financial condition, but, in

turn, add potential risks to the Group. Such risks include the risk that our joint venture partners fail to meet their

obligations under related shareholders’ agreements, conflicts with joint venture partners and other associated

risks. See “Risk Factors” on page 40 of this Placement Document.

Outsourced Production. In Fiscal 2014, approximately 28% of our standalone gross sales revenue was from

tyres produced by vendors. While in-house production helps us to maintain complete control on the production,

we believe that by outsourcing certain part of the production, we can reduce our capital costs and focus on

increasing our sales as we expand our marketing efforts. Accordingly, our results of operations, financial

condition and cash flows will be affected based on the change in the mix between owned and outsourced

production.

Costs of raw materials and other inputs. The cost of raw materials and other inputs constitutes a significant part

of our operating expenses. In recent years, many of the prices for these commodities like natural and synthetic

rubber have decreased substantially due to weak demand internationally. These lower prices have been an

important factor positively affecting our results of operations, cash flows and our gross operating margins.

Notwithstanding, the prices of these raw materials fluctuate and may increase or decrease quickly in the future.

Higher raw material and other input costs could result declining margins and operating results in the future. For

more information on the fluctuation of rubber prices, see “Industry Overview – Raw Materials” on page 77 of

this Placement Document.

In addition, as the prices for imported commodities are in foreign currencies, fluctuations in the value of the

Rupee against other currencies may also affect the cost of our raw materials. We engage in foreign currency

hedging with banks by way of currency forward contracts in order to decrease our foreign exchange exposure

arising from our foreign-currency denominated raw material purchases and borrowings. We only hedge a portion

for foreign currency exposure, and our currency hedging policy does not protect us from all fluctuations in

currency exchange rates.

Capital Expenditure for New Capacities. We intend to continue to expand our manufacturing capacity,

particularly with respect to radial tyres. We have started a capacity expansion program at our Halol plant that

will increase capacity to 270 tonnes per day, primarily in non-truck radial tyres. We expect this expanded

capacity to be available by July 2015. In addition, we approved an investment of ` 4,200.00 million for setting

up a plant to manufacture two- and three-wheeler tyres with a capacity of 120 tonnes per day and an investment

of ` 500.00 million for implementing a project of manufacturing specialty tyres (including off-the-road tyres),

through a subsidiary company. Internationally, we are expanding our Bangladesh capacity by 65 tonnes per day,

which we expect to complete by end of calendar year 2015. Accordingly, we expect that our capital expenditure

will increase significantly as these investments are made, which will in turn increase our depreciation costs.

While we expect the expanded capacities to help us grow our sales, we expect that we will need to raise debt

and equity funding for these capital expenditure, which likely will increase our funding costs.

Significant Accounting Policies

For a description of our significant accounting policies adopted in the preparation of the consolidated financial

statements, see “Financial Information” chapter, on page 204 of this Placement Document.

Revenues

Our total revenue consists primarily of revenues from operations and other income. Our total revenue has

increased from ` 50,698.86 million in Fiscal 2013 to ` 55,679.74 million in Fiscal 2014, primarily due to

increased revenue from operations.

107

The table below provides a breakdown of our total revenue for the six months ended September 30, 2014 and

Fiscal 2014, 2013 and 2012:

(` in million, except percentage)

Fiscal

Six months ended

September 30,

2014

2014 2013 2012

Income

Revenue from operations (gross) 31,886.96 60,959.68 55,205.40 50,046.23

Share of revenue from operations from joint

ventures

N/A* 2,089.42 1,776.07 N/A*

Less: Excise Duty 2,884.20 5,419.90 4,683.25 3,519.15

Revenue from operations (net) 29,002.77 55,539.79 50,522.15 46,527.08

Other income 108.84 139.95 176.71 222.82

Total Revenue 29,111.60 55,679.74 50,698.86 46,749.90


Revenue from operations

We derive most of our revenues from sales of tyres manufactured by the Group. These include sales to OEMs

and to our dealers, other distributors and end customers.

The Group’s other operating revenues include royalty income, sale of scrap, government grants and export

incentives and other operating revenues.

For the six months ended September 30, 2014 and for the Fiscal years ended March 31, 2014, 2013 and 2012,

our net revenue from operations accounted for 99.63%, 99.75%, 99.65% and 99.52% of our total revenue,

respectively.

Other Income

The Group’s other income includes (i) interest income on bank deposits, (ii) dividend income on current

investments, (iii) income from foreign exchange fluctuation, (iv) profit on sale of current investments, and (v)

other non-operating income. For the six months ended September 30, 2014 and Fiscal years ended March 31,

2014, 2013 and 2012, our other income accounted for 0.37%, 0.25%, 0.35% and 0.48% of our total revenue,

respectively.

Expenses

The Group’s operating expenses consists of (i) consumption of raw materials, traded goods and

increase/decrease in stock, (ii) employee benefits expense, (iii) finance costs, (iv) depreciation and amortization

expense and (v) other expenses.

The table below provides a breakdown of our total expenses, profit before exceptional items and tax,

exceptional items, profit before tax, tax expense for the six months ended September 30, 2014 and Fiscal 2014,

2013 and 2012, and the percentage of total revenue for the corresponding periods, respectively.

(` in million, except percentage)

Particulars Six months

ended September

30,

Twelve months ended March 31,

2014 2014 2013 2012

108

Particulars Six months

ended September

30,

Twelve months ended March 31,

2014 2014 2013 2012

EXPENSES

Consumption of raw

materials, traded goods

and increase/decrease in

stock

18,294.27 35,657.50 34,757.60 34,624.54

Consumption of raw

materials, traded goods

and increase/decrease in

stock, as a % of total

revenue

62.84% 64.04% 68.56% 74.06%

Employee benefits

expense

1,771.52 3,109.16 2,830.39 2,275.60

Employee benefits

expense, as a % of total

revenue

6.09% 5.58% 5.58% 4.87%

Finance costs 742.71 1,720.45 1,808.10 1,958.02

Finance costs, as a % of

total revenue

2.55% 3.09% 3.57% 4.19%

Depreciation and

amortization expense

449.16 865.43 806.20 728.02

Depreciation and

amortization expense, as

a % of total revenue

1.54% 1.55% 1.59% 1.56%

Other expenses 5,809.50 10,194.45 8,554.64 6,890.09

Other expenses, as a %

of total revenue

19.96% 18.31% 16.87% 14.74%

Total Expenses 27,067.16 51,547.00 48,756.93 46,476.28

Total expenses, as a % of

total revenue

92.98% 92.58% 96.17% 99.41%

Profit before

exceptional items and

tax

2,044.44 4,132.74 1,941.93 273.62

Profit before exceptional

items and tax, as a % of

total revenue

7.02% 7.42% 3.83% 0.59%

Exceptional items 0 100.39 276.96 31.56

Profit before tax 2,044.44 4,032.35 1,664.98 242.06

Tax expense 711.49 1,324.45 463.08 60.21

Consumption of raw materials, traded goods and increase/decrease in stock. Raw materials consumed include

natural rubber, synthetic rubber, carbon black, nylon fabric, steel tyre cord, polyester fabric, chemicals and other

materials.

Employee benefits expense. Employee benefits expense includes salaries, wages and bonuses paid to the

Group’s employees, contribution to Provident and other funds, gratuity expenses and staff welfare expenses.

Finance costs. Finance costs include interest payable and other borrowing costs.

Other expenses. Other expenses include conversion charges, stores and spares consumed, power and fuel,

freight and delivery charges, rent and lease rent, insurance, repairs, travelling and conveyance, printing and

stationery, directors’ fees, auditors’ remuneration, advertisement and sales promotion expenses, communication

expenses, legal charges, professional and consultancy charges, training and conference expenses, bank charges

and miscellaneous expenses.

109

Group Results of Operations

Six months ended September 30, 2014 (Half Year Fiscal 2015)

Our results from operations for the Half Year Fiscal 2015 were particularly impacted by the following factors:

strong sales volumes and the change of our product mix with an emphasis on two-wheeler and

passenger car tyres;

growth in our OEM business mainly for two-wheeler and passenger car tyre categories as well as in our

replacement tyre business;

launching new tyre products, in particular for our two wheeler and passenger car categories;

lower average prices of natural rubber and synthetic rubber; and

lower finance charges due to a reduction in borrowings, hedging costs, and interest rates.

Total revenue. Our total revenue was ` 29,111.60 million in the six months ended September 30, 2014. Our total

income reflected strong volumes of tyres sold and our changing product mix with an emphasis on two-wheeler

and passenger car tyres.

Revenue from operations (net). The Group’s revenue from operations (net) was ` 29,002.77 million in the six

months ended September 30, 2014. This reflected primarily strong sales volumes in replacement and OEM

business particularly for passenger car tyre categories. In addition, we believe that our advertisement campaigns

in Half Year Fiscal 2015 continued to be a catalyst for our sales volume improvements.

Our revenue in Half Year Fiscal 2015 also benefited from our change in product mix as we continued our

strategic emphasis on the two-wheeler and passenger car tyres categories, which have better margins.

Other income. Our other income was ` 108.84 million in the six months ended September 30, 2014. Our other

income reflected growth in interest income in Half Year Fiscal 2015 and disposal of assets.

Total Expenses. Our total expenses were ` 27,067.16 million in the six months ended September 30, 2014. Our

total expenses as a percentage of total revenue were 92.98% in the six months ended September 30, 2014.

Cost of raw material consumed, purchases of stock-in-trade, changes in inventories of finished goods, work-in-

progress and stock-in-trade. Our expenses in relation to cost of raw material consumed, purchases of stock-in-

trade, changes in inventories of finished goods, work-in-progress and stock-in-trade were ` 18,294.27 million in

the six months ended September 30, 2014. Our expenses in relation to the above as a percentage of total revenue

were 62.84% in the six months ended September 30, 2014 and reflected a continued fall in raw material prices

particularly natural rubber and synthetic rubber prices.

Employee benefits expense. Employee benefits expense was ` 1,771.52 million in the six months ended

September 30, 2014. As a percentage of total revenue, employee benefits expense was 6.09% in the six months

ended September 30, 2014. Our employee benefits expense reflected an increase in the number of employees

and incremental wage increases for management staff and wage revisions for factory workers.

Finance costs. Our finance costs was ` 742.71 million in the six months ended September 30, 2014. As a

percentage of total revenue, finance costs were 2.55% for in Half Year Fiscal 2015. Our finance costs in the

Half Year Fiscal 2015 reflected a reduction in borrowings, hedging costs, and interest rates during the period.

Depreciation and amortization expense. The Group’s depreciation and amortization expense was ` 449.16

million in the Half Year Fiscal 2015. This reflected the change in the estimate of useful life of certain assets due

to changes required by Companies Act, 2013 and additional capital expenditure incurred by the Group.

Other expenses. Our other expenses were ` 5,809.50 million in the six months ended September 30, 2014. As a

percentage of total revenue, our other expenses were 19.96% in the six months ended September 30, 2014.

Other expenses in the Half Year Fiscal 2015 reflect increase in conversion charges paid to outsourced vendors

and in freight & delivery charges due to overall strong sales volumes as well as continued increases in

advertisement and sales promotion expenses in line with our strategy.

110

Profit before exceptional items and tax. Profit before exceptional items and tax was ` 2,044.44 million in the six

months ended September 30, 2014.

Tax expense. Our tax expense was ` 711.49 million in the six months ended September 30, 2014.

Profit after tax and before minority interest. Our profit after tax and exceptional items before minority interest

was ` 1,332.95 million in the six months ended September 30, 2014.

Profit for the period. Our profit for the period was ` 1,340.15 million in the six months ended September 30,

2014. As a percentage of our total revenue, our profit for the period was 4.60% in the six months ended

September 30, 2014.

Results for Fiscal 2014 compared with Fiscal 2013

Our results from operations for the Fiscal 2014 were particularly impacted by the following factors:

increase in the volume of tyres manufactured and sold and the change of our product mix with an

emphasis on two-wheeler and passenger car tyres;

growth in our replacement business and OEM business mainly for passenger car tyre categories;

launching new tyre products, in particular for our two wheeler and passenger car categories;

lower average prices of natural rubber and synthetic rubber prices; and

increase in employee benefits expenses mainly due to higher incentives and incremental increases in

wages

Total revenue. Our total revenue increased by ` 4,980.88 million, or 9.82%, from ` 50,698.86 million in Fiscal

2013 to ` 55,679.74 million in Fiscal 2014. This was principally due to a 10.42% increase in revenue from

operations (gross) from ` 55,205.40 million in Fiscal 2013 to ` 60,959.68 million in Fiscal 2014.

Revenue from operations (net). Our revenue from operations (net) increased by ` 5,017.64 million, or 9.93%,

from ` 50,522.15 million in Fiscal 2013 to ` 55,539.79 million in Fiscal 2014. This was primarily due to growth

in sales volume in Fiscal 2014 particularly in our replacement business and OEM business mainly for passenger

car tyre categories. Our sales volumes in Fiscal 2014 benefited from our launch of new products, including

important new releases in our two wheeler and passenger car categories. In addition, we believe that our

advertisement campaigns in Fiscal 2014 were a catalyst for our volume increases.

Our revenue in Fiscal 2014 also benefited from our change in product mix as we continue our strategic emphasis

on the two-wheeler and passenger car tyre categories, which have better margins.

Other income. Our other income decreased by ` 36.76 million, or 20.80%, from ` 176.71 million in Fiscal 2013

to ` 139.95 million in Fiscal 2014. This decrease was principally due to a decrease in interest income and

income from foreign exchange fluctuations. In Fiscal 2014, our other income included primarily royalties, short-

term investments in mutual funds and proceeds from the sale of flats realized during the year.

Share of revenue from operations (gross) from joint ventures. Our revenue from our share in joint ventures

increased by ` 313.35 million, or 17.64% from ` 1,776.07 million in Fiscal 2013 to ` 2,089.42 million in Fiscal

2014. This was primarily due to a robust performance of our Sri Lankan joint ventures’ operations especially in

the domestic replacement segment.

Total expenses. Our total expenses increased by ` 2,790.07 million, or 5.72%, from ` 48,756.93 million in

Fiscal 2013 to ` 51,547.00 million in Fiscal 2014. This was principally due to a 2.59% increase in expense

related to consumption of raw materials, traded goods and increase/decrease in stock, a 9.85% increase in

employee benefits and a 19.17% increase in other expenses. However, as a percentage of total revenue, the

Group’s expenditure decreased from 96.17% in Fiscal 2013 to 92.58% in Fiscal 2014.

Consumption of raw materials, traded goods and increase/decrease in stock. Our expenses in relation to

consumption of raw materials, traded goods and increase/decrease in stock increased by ` 899.90 million, or

2.59%, from ` 34,757.60 million in Fiscal 2013 to ` 35,657.50 million in Fiscal 2014. This increase reflects an

increase in the volume of raw materials consumed as our production and sales increased in Fiscal 2014. As a

percentage of total revenue, however, expenses in relation to consumption of raw materials, traded goods and

111

increase/decrease in stock decreased from 68.56% in Fiscal 2013 to 64.04% in Fiscal 2014. This decrease

reflects the overall decline in the prices of natural and synthetic rubber during Fiscal 2014 offset in part by

marginal price increases in other raw materials.

Employee benefits expense. Employee benefits expense increased by ` 278.77 million, or 9.85%, from `

2,830.39 million in Fiscal 2013 to ` 3,109.16 million in Fiscal 2014. As a percentage of total revenue, employee

benefits expense remained stable and amounted to 5.58% in Fiscal 2013 and Fiscal 2014. The overall increase in

employee benefits expense was primarily due to increase in the average number of employees as part of the

growth of the Group’s business and higher incentives and incremental wage increases.

Finance costs. The Group’s finance costs decreased by ` 87.65 million, or 4.85%, from ` 1,808.10 million in

Fiscal 2013 to ` 1,720.45 million in Fiscal 2014. This was mainly attributable to lower borrowings, lower

hedging costs and a reduction in interest rates. In Fiscal 2014, the Group’s loan portfolio comprised of a blend

of long-term and short-term, domestic and foreign currency loans.

Depreciation and amortization expense. The Group’s depreciation and amortization expense increased by `

59.23 million, or 7.35%, from ` 806.20 million in Fiscal 2013 to ` 865.43 million in Fiscal 2014. This increase

was primarily due to additional capital expenditure undertaken by the Group.

Other expenses. The Group’s other expenses increased by ` 1,639.81 million, or 19.17%, from ` 8,554.64

million in Fiscal 2013 to ` 10,194.45 million in Fiscal 2014. As a percentage of total revenue, the Group’s other

expenses increased from 16.87% in Fiscal 2013 to 18.31% in Fiscal 2014. The overall increase was principally

due to the growth of the Group’s business in Fiscal 2014 as well as the following:

Conversion charges increased by 45.78% from ` 1,482.39 million in Fiscal 2013 to ` 2,161.08 million

in Fiscal 2014 primarily due to an increase in volume of two wheeler tyres outsourced to vendors in

Fiscal 2014.

Freight and delivery charges increased by 23.72% from ` 1,611.32 million in Fiscal 2013 to ` 1,993.57

million in Fiscal 2014 primarily due to overall increase in sales volume in Fiscal 2014.

Power and fuel charges increased by 4.37% from ` 1,732.09 million in Fiscal 2013 to ` 1,807.78

million in Fiscal 2014 primarily due to overall increase in production volume in Fiscal 2014.

Rebates and discounts increased by 49.29% from ` 605.50 million in Fiscal 2013 to ` 903.97 million in

Fiscal 2014 primarily due to overall increase in sales volume in Fiscal 2014.

Profit before exceptional items and tax. For the reasons discussed above, profit before exceptional items and tax

increased by ` 2,190.81 million, or 112.82%, from ` 1,941.93 million in Fiscal 2013 to ` 4,132.74 million in

Fiscal 2014.

Exceptional items. We had exceptional items of ` 100.39 million in Fiscal 2014 and ` 276.96 million in Fiscal

2013. During Fiscal 2014 and Fiscal 2013 respectively, the Group’s exceptional items included:

payments pursuant to the Voluntary Retirement Scheme (VRS) for our employees of ` 68.92 million in

Fiscal 2014 as compared to ` 136.53 million in Fiscal 2013;

provisions of ` 140.42 million in Fiscal 2013 in relation to a change in the method of recognizing

warranty claims from a cash basis of actual claims incurred to an annual expected cost basis as at April

1, 2012; and

a fire accident at a raw material store of our plant at Bhandup, Mumbai, on February 23, 2014 resulting

in expenditure of ` 31.47 million in Fiscal 2014.

Profit before tax. Our profit before tax increased by ` 2,367.37 million, or 142.19%, from ` 1,664.98 million in

Fiscal 2013 to ` 4,032.35 million in Fiscal 2014.

Tax expense. The Group’s tax expense increased by ` 861.37 million, or 186.01%, from ` 463.08 million in

Fiscal 2013 to ` 1,324.45 million in Fiscal 2014 mainly due to increase in profits before tax of 142.19% in

112

Fiscal 2014 and after recording one time adjustment of reversal of deferred tax liability on account of various

timing differences Fiscal 2013.

Profit after tax and before minority interest. For the reasons discussed above, the Group’s profit after tax and

before minority interest increased by ` 1,506.00 million, or 125.30%, from ` 1,201.90 million in Fiscal 2013 to

` 2,707.90 million in Fiscal 2014.

Minority interest. Adjustment for minority interest decreased from ` nil in Fiscal 2013 to an expense of ` 4.45

million in Fiscal 2014. This was due to change in the percentage of holding in two entities in the Group in Fiscal

2014.

Profit for the year. For the reasons discussed above, our profit for the year increased by ` 1,510.45 million, or

125.67%, from ` 1,201.90 million in Fiscal 2013 to ` 2,712.35 million in Fiscal 2014. As a percentage of the

Group’s total revenue, profit for the year increased from 2.37% in Fiscal 2013 to 4.87% in Fiscal 2014.

Results for Fiscal 2013 compared with Fiscal 2012

The Fiscal 2012 consolidated financial statements have been regrouped on a consistent basis with the Fiscal

2013 Consolidated Financial Statements. See “—Basis of Presentation of Fiscal 2012” above.

Our results from operations for the Fiscal 2013 were particularly impacted by the following factors:

increase in the volume of tyres manufactured and sold and the change of our product mix with an

emphasis on two-wheeler and passenger car tyres;

lower average prices of natural and synthetic rubber;

increase in employee benefits expenses due to higher incentives and incremental increases in wages.

Total revenue. Our total revenue increased by ` 3,948.96 million, or 8.45%, from ` 46,749.90 million in Fiscal

2012 to ` 50,698.86 million in Fiscal 2013. This was principally due to a 10.31% increase in our revenue from

operations (net) from ` 50,046.23 millon in Fiscal 2012 to ` 55,205.40 million in Fiscal 2013.

Revenue from operations (net). Our revenue from operations (net) increased by ` 3,995.07 million, or 8.59%,

from ` 46,527.08 million in Fiscal 2012 to ` 50,522.15 million in Fiscal 2013. This was primarily due to growth

in sales volume in Fiscal 2013 particularly in our passenger car product categories.

Our revenue in Fiscal 2013 also benefited from our change in product mix towards categories of motorcycle,

scooter, passenger car, utility vehicles and last mile tyres.

Other income. Our other income decreased by ` 46.11 million, or 20.69%, from ` 176.71 million in Fiscal 2013

to ` 222.82 million in Fiscal 2012. This decrease was principally due to a decrease in interest income from bank

deposits and income from foreign exchange fluctuations.

Total expenses. Our total expenses increased by ` 2,280.65 million, or 4.91%, from ` 46,476.28 million in

Fiscal 2012 to ` 48,756.93 million in Fiscal 2013. This was principally due to a 24.38% increase in employee

benefits expense, a 10.74% increase in depreciation and amortization and a 24.16% increase in other expenses.

However, as a percentage of total revenue, the Group’s total expenses decreased from 99.41% in Fiscal 2012 to

96.17% in Fiscal 2013.

Consumption of raw materials, traded goods and increase/decrease in stock. Our expenses in relation to

consumption of raw materials, traded goods and increase/decrease in stock increased by ` 133.06 million, or

0.38%, from ` 34,624.54 million in Fiscal 2012 to ` 34,757.60 million in Fiscal 2013. This increase reflects an

increase in the volume of raw materials consumed as our production and sales increased in Fiscal 2013. As a

percentage of total revenue, expenses in relation to consumption of raw materials, traded goods and

increase/decrease in stock decreased from 74.06% in Fiscal 2012 to 68.56% in Fiscal 2013. This decrease

reflects the overall decline in the prices of natural and synthetic rubber during Fiscal 2013 offset in part by

marginal price increases in most other raw materials.

Employee benefits expense. Employee benefits expense increased by ` 544.79 million, or 24.38%, from `

113

2,275.60 million in Fiscal 2012 to ` 2,830.39 million in Fiscal 2013. As a percentage of total revenue, employee

benefits expense increased from 4.87% in Fiscal 2012 to 5.58% in Fiscal 2013. The overall increase in

employee benefits expense was due to increase in the average number of employees, higher incentives and wage

increments as well as higher retirement benefits.

Finance costs. The Group’s finance costs decreased by ` 149.92 million, or 7.66%, from ` 1,958.02 million in

Fiscal 2012 to ` 1,808.10 million in Fiscal 2013. As a percentage of total revenue, finance costs decreased from

4.19% in Fiscal 2012 to 3.57% in Fiscal 2013. This was principally due to lower borrowings, lower hedging

cost, and reduction in interest rates. The Group’s finance costs of ` 1,958.02 million in Fiscal 2012 included

bank charges. These bank charges have been considered as part of other expenses for Fiscal 2013 and Fiscal

2014.

Depreciation and amortization expense. The Group’s depreciation and amortization expense increased by `

78.18 million, or 10.74%, from ` 728.02 million in Fiscal 2012 to ` 806.20 million in Fiscal 2013. This increase

was primarily to additional capital expenditure undertaken by the Group.

Other expenses. The Group’s other expenses increased by ` 1,664.55 million, or 24.16%, from ` 6,890.09

million in Fiscal 2012 to ` 8,554.64 million in Fiscal 2013. As a percentage of total revenue, the Group’s other

expenses increased from 14.74% in Fiscal 2012 to 16.87% in Fiscal 2013. The overall increase was principally

due to the growth of the Group’s business in Fiscal 2013 as well as the following:

Conversion charges increased by 22.35% from ` 1,211.56 million in Fiscal 2012 to ` 1,482.39 million

in Fiscal 2013 primarily due to an increase in volume of two wheeler tyres outsourced to vendors in

Fiscal 2013.

Freight and delivery charges increased by 20.76% from ` 1,334.27 million in Fiscal 2012 to ` 1,611.32

million in Fiscal 2013 primarily due to overall increase in sales volume in Fiscal 2013.

Power and fuel charges increased by 9.94% from ` 1,575.49 million in Fiscal 2012 to ` 1,732.09

million in Fiscal 2013 primarily due to overall increase in production volume in Fiscal 2013.

Advertisement and sales promotion expenses increased by 68.23% from ` 441.38 million in Fiscal

2012 to ` 742.53 million in Fiscal 2013 primarily due to higher expenditure on the passenger car

product category branding in line with our strategy in Fiscal 2013.

Profit before tax and exceptional items. For the reasons discussed above, profit before tax and exceptional items

increased by ` 1,668.31 million, or 609.72%, from ` 273.62 million in Fiscal 2012 to ` 1,941.93 million in

Fiscal 2013.

Exceptional items. We had exceptional items of ` 31.56 million in Fiscal 2012 and ` 276.96 million in Fiscal

2013. During Fiscal 2013, the Group’s exceptional items included:

payments pursuant to the Voluntary Retirement Scheme (VRS) for our employees of ` 136.53 million

in Fiscal 2013 as compared to ` 31.56 million in Fiscal 2012; and

provisions of ` 140.42 million in relation to a change in the method of recognizing warranty claims

from a cash basis of actual claims incurred to an annual expected cost basis.

Profit before tax. Our profit before tax increased by ` 1,422.92 million, or 587.84%, from ` 242.06 million in

Fiscal 2012 to ` 1,664.98 million in Fiscal 2013.

Tax expense. The Group’s tax expense increased by ` 402.87 million, or 669.11%, from ` 60.21 million in

Fiscal 2012 to ` 463.08 million in Fiscal 2013 mainly due to increase in profit before tax by 587.84% in Fiscal

2013.

Minority interest. There was no adjustment for minority interest in Fiscal 2013 or Fiscal 2012.

Profit for the year. For the reasons discussed above, the Group’s profit for the year increased by ` 1,020.04

million, or 560.92%, from ` 181.85 million in Fiscal 2012 to ` 1,201.90 million in Fiscal 2013. As a percentage

of the Group’s total revenue, profit for the year increased from 0.39% in Fiscal 2012 to 2.37% in Fiscal 2013.

114

Liquidity and Capital Resources

Our net worth as of March 31, 2014 was ` 10,195.98 million as compared to ` 7,728.14 million as of March 31,

2013. On July 24, 2013, the Company has converted 1,712,176 warrants of face value ` 10/- each into equity

shares issued to Instant Holdings Limited, an entity belonging to the Promoter of the Group at a price of ` 85.03

per warrant which includes a premium of ` 75.03 per share on preferential basis in accordance with the terms of

the issue.

Historically, the Group’s primary funding requirements have been to finance its working capital needs and

capital expenditures. The Group’s business requires a significant amount of working capital and capital

expenditure. To fund these costs, the Group has relied on working capital borrowings, long-term borrowings and

cash flows from operating activities.

The Group continues to focus on judicious management of its working capital. Receivables, inventories and

other working capital parameters are kept under strict control and continuous monitoring. During Fiscal 2014,

incremental short-term working capital finance was deployed to finance strategic buying decisions related to

natural rubber and other key raw materials. The Group also deferred a certain portion of its current maturities of

long-term debt through fresh long-term funds, thereby improving the current ratio compared to Fiscal 2013.

Our debt to equity ratio has shown an improvement from 1.32 in Fiscal 2013 to 1.14 in Fiscal 2014 despite

increased operations and working capital requirements.

Cash Flows

The table below sets forth the Group’s cash flows for the periods indicated:

(` in million)

Particulars Six months ended

September 30, 2014

Fiscal

2014

Fiscal

2013

Fiscal

2012

Net cash flow from operating activities 3,939.76 1,965.81 5,844.33 169.35

Net cash flow received from investing

activities

(1,075.86) (1,417.15) (529.21) (1,396.20)

Net cash flow received from / (used in)

financing activities

(3,319.88) (392.70) (4,642.85) 1,081.70

Net increase / (decrease) in cash and

cash equivalents

(455.99) 155.96 672.28 (145.16)

Cash flow from operating activities

Net cash flows from operating activities for the six months ended September 30, 2014 stands at Rs 3,939.76

million.

Net cash flows from operating activities for Fiscal 2014 consisted of net profit before tax of ` 4,032.35 million

as (i) adjusted for non-cash items namely depreciation of ` 865.43 million, (ii) increased by interest expense of

` 1,418.47 million, provision for doubtful debts and advances of ` 40.24 million, advance/bad debts written off

of ` 3.28 million, net loss on sale of fixed assets of ` 5.81 million, foreign currency translation reserve on

consolidation of ` 55.49 million, net unrealized exchange variation of ` 1.97 million and other borrowing cost

of ` 301.98 million, (iii) decreased by interest income of ` 60.50 million, dividend income of ` 5.47 million,

profit on sale of investments of ` 2.68 million, and (iv) further adjusted for changes in working capital

amounting to ` 3,799.91 million and decreased by direct taxes paid amounting to ` 890.65 million.

Net cash flows from operating activities for Fiscal 2013 consisted of net profit before tax of ` 1,664.98 million

as (i) adjusted for non-cash items namely depreciation of ` 806.20 million, (ii) increased by interest expense of

` 1,501.16 million, provision for doubtful debts and advances of ` 35.50 million, advance/bad debts written off

of ` 3.64 million, impairment of assets of ` 1.32 million, net loss on sale of fixed assets of ` 4.30 million,

foreign currency translation reserve on consolidation of ` 29.25 million, net unrealized exchange variation of `

4.55 million and other borrowing cost of ` 306.94 million, (iii) decreased by interest income of ` 70.62 million,

dividend income of ` 15.87 million, profit on sale of investments of ` 0.05 million, and (iv) further adjusted for

changes in working capital amounting to ` 1,955.12 million and decreased by direct taxes paid amounting to `

115

382.06 million.

Net cash flows from operating activities for Fiscal 2012 consisted of net profit before tax of ` 242.06 million as

(i) adjusted for non-cash items namely depreciation of ` 728.02 million, (ii) increased by interest expense of `

1,560.08 million, provision for doubtful debts of ` 27.15 million, advance/bad debts written off of ` 45.42

million, net loss on sale of fixed assets of ` 5.43 million and other borrowing cost of ` 207.39 million, (iii)

decreased by interest income of ` 59.55 million, net unrealized exchange variation of ` 3.66 million, dividend

income of ` 13.55 million, foreign currency translation reserve on consolidation of ` 21.02 million, provision

for doubtful debts written back of ` 1.10 million, impairment of assets of ` 1.75 million, and (iv) further

adjusted for changes in working capital amounting to ` 2,472.28 million and decreased by direct taxes paid

amounting to ` 73.29 million.

Cash flow from investing activities

Net cash flows from investing activities for the six months ended September 30, 2014 stands at Rs (1,075.86)

million.

Net cash flows from investing activities for Fiscal 2014 consisted of outflows in the form of purchase of fixed

assets of ` 1,478.42 million, purchase of non-current investments of ` 0.04 million, investment in bank deposits

having original maturity of more than three months of ` 508.43 million and investment in margin money deposit

of ` 6.78 million. Inflows from investing activities included proceeds from sale of fixed assets of ` 32.87

million, net sale of current investments of ` 2.68 million, withdrawal of bank deposits having original maturity

of more than three months of ` 84.64 million, withdrawal of margin money deposit of ` 25.57 million, interest

received of ` 57.90 million, dividend received of ` 5.47 million and proceeds from sale of investment in

subsidiaries in the amount of ` 367.39 million.


assets of ` 847.74 million, investment in bank deposits having original maturity of more than three months of `

36.64 million, investment in margin money deposit of ` 15.00 million and loans and advances to related parties

of ` 6.50 million. Inflows from investing activities included proceeds from sale of fixed assets of ` 0.98 million,

net sale of current investments of ` 303.24 million, interest received of ` 56.57 million and dividend received of

` 15.87 million.


assets of ` 1,523.07 million, loans and advances to related parties of ` 15.00 million, purchase of current

investments of ` 4,685.04 million, investment in associates of ` 1.71 million, investment in bank deposits

having original maturity of more than three months of ` 0.93 million and investment in margin money deposit of

` 52.04 million. Inflows from investing activities included proceeds from sale of fixed assets of ` 4.05 million,

net sale of current investments of ` 4,807.22 million, interest received of ` 56.77 million and dividend received

of ` 13.55 million.

Cash flow from financing activities

Net cash flows from financing activities for the six months ended September 30, 2014 stands at Rs (3,319.88)

million.

Net cash flows from financing activities for Fiscal 2014 consisted of outflows in the form of interest paid of `

1,421.52 million, other borrowing cost paid of ` 301.52 million, repayment of short-term buyers credit of `

10,837.10 million, repayment of long-term borrowings of ` 2,421.54 million, dividend paid of ` 143.82 million,

dividend distribution tax paid of ` 23.40 million and redemption of preference shares of ` 0.81 million. Inflows

from financing activities included proceeds from issuance of equity capital of ` 109.19 million, net change in

short-term borrowings of ` 2,366.11 million, proceeds from short-term buyers’ credit of ` 10,398.37 million and

proceeds from long-term borrowings of ` 1,883.34 million.


1,525.88 million, other borrowing cost paid of ` 306.94 million, net change in short-term borrowings of `

516.58 million, repayment of short-term buyers credit of ` 9,071.02 million, repayment of long-term borrowings

of ` 1589.00 million, dividend paid of ` 34.24 million, dividend distribution tax paid of ` 5.56 million,

redemption of preference shares of ` 0.70 million and preference dividend paid of ` 0.39 million. Inflows from

116

financing activities included proceeds from short-term buyers’ credit of ` 8,407.47 million.


1,512.22 million, other borrowing cost paid of ` 207.39 million, repayment of short-term buyers credit of `

7,214.62 million, repayment of long-term borrowings of ` 724.06 million, dividend paid of ` 68.49 million,

dividend distribution tax paid of ` 11.11 million, redemption of preference shares of ` 0.79 million and

preference dividend paid of ` 0.55 million. Inflows from financing activities included proceeds from issue of

convertible warrants of ` 36.40 million, net change in short-term borrowings of ` 516.96 million, proceeds from

short-term buyers credit of ` 8,745.36 million, proceeds from long-term borrowings of ` 1,519.14 million and

increase in long term liability of ` 3.07 million.

Fixed Assets

Our tangible assets are comprised of (i) owned assets that include land, buildings, plants and equipment,

furniture and fixtures, office equipment and vehicles and (ii) leased assets, which include land, plants and

equipment. Our intangible assets are comprised of software, brands and technical know-how. As of September

30, 2014 and March 31, 2014, we had tangible assets of ` 14,567.42 million and ` 14,801.62 million, intangible

assets of ` 592.83 million and ` 621.99 million and capital work in progress of ` 1,133.88 million and ` 823.15

million, respectively.

Capital Expenditures

We need to make investments in capital equipment and expansion of our operations on a recurring basis. In the

six months ended September 30, 2014, the Group’s expenditure on fixed assets was ` 707.33 million. In Fiscal

2014, the Group’s expenditure on fixed assets was ` 1,265.81 million. In Fiscal 2014, our Halol plant achieved

around 75% utilization capacity. We announced further expansion of Halol plant’s capacity by 120 MT by

second quarter of Fiscal 2016 that will require an investment of approximately ` 6,500.00 million. We also

develop our Bangladesh project, and we expect production to start at Bangladesh plant by the end of September

2015. In addition, we approved an investment of ` 4,200.00 million for setting up a plant to manufacture two-

and three-wheeler tyres with a capacity of 120 tonnes per day and an investment of ` 500.00 million for

implementing a project of manufacturing specialty tyres (including off-the-road tyres).

Indebtedness

As at September 30, 2014 and as at March 31, 2014, our total long-term borrowings were ` 3,734.34 million and

` 4,233.32 million respectively. As at September 30, 2014 and as at March 31, 2014, our total short-term

borrowings were ` 4,179.64 million and ` 5,968.61 million respectively.

As at March 31, 2014, our secured and unsecured borrowings aggregated to ` 3,286.17 million and ` 947.15

million respectively.

Most of the Group’s financing arrangements are secured by movable and immovable assets. Many of the

Group’s financing agreements also include numerous conditions and covenants that require us to obtain lender

consents prior to carrying out certain activities and entering into certain transactions. Failure to obtain these

consents could have significant consequences on the Group’s business and operations. Specifically, we require

lender consents to incur additional debt, issue equity, change our capital structure, incur capital expenditure

beyond certain agreed thresholds, undertake any expansion, provide additional guarantees, change our

management structure, and merge with or acquire other companies, whether or not there is any failure by us to

comply with the other terms of the agreements. Furthermore, under certain of these agreements, in an event of

default, the Group is also required to obtain the consent of the relevant lender to pay dividends.

Interest Coverage

Our interest coverage ratio (equal to the total of net profit, depreciation and amortization expense and finance

costs divided by finance costs) as of September 30, 2014 and March 31, 2014, 2013 and 2012 is set forth in the

table below:

Particulars September 30,

2014 March 31, 2014 March 31, 2013 March 31, 2012

117

Interest Coverage Ratio 3.41 3.08 2.11 1.46

Contingent Liabilities

The Group’s contingent liabilities consist of (i) direct and indirect taxation matters (including income tax,

wealth tax, excise duty / service tax and sales tax matters), (ii) show cause notices, (iii) bills discounted with

banks, and (iv) corporate guarantee. As of September 30, 2014 and March 31, 2014, the Group had the

following contingent liabilities:

(` in million)

Contingent Liabilities As of September 30, 2014 As of March 31, 2014

Direct and indirect taxation matters, including:

Income tax 243.62 1277.16

Wealth tax 0.67 0.67

Excise duty / service tax 310.34 417.63

Sales tax 393.63 347.94

Show cause notices 1607.55 1,551.00

Bills discounted with banks 544.46 612.65

Corporate guarantee 255.00 255.00

Off-balance sheet arrangements and financial instruments

See Notes on derivative instruments and unhedged foreign currency exposure in our financial statements

included in this Placement Document for details of off-balance sheet arrangements and financial instruments.

Related party transactions

We have entered into and expect to continue to enter into transactions with our related parties. For details, see

the section “Board of Directors and Senior Management-Related Party Transactions” on page 133 of this

Placement Document.

Quantitative and qualitative disclosure about market risk

Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk, foreign

exchange risk, inflation and commodity risk. We are exposed to different degrees of these risks in the normal

course of our business.

Foreign exchange risk

We are exposed to foreign exchange risk due to our import obligations, export realizations and long-term and

short-term foreign currency loans. In addition, the Group’s future purchases of raw materials and other inputs,

capital expenditures, including imported equipment and machinery, may be denominated in currencies other

than Indian Rupees. Therefore, decline in the value of Indian Rupee against such other currencies could increase

Indian Rupee cost of purchasing such raw materials, other inputs and equipment. Despite heavy depreciation of

Indian Rupee and bouts of high volatility, the Group manages its foreign exchange exposures prudently with a

minimal loss. In addition, we hedge our foreign exchange exposure in part through forward contracts at

inception to reduce the impact of fluctuations from currency movement.

Inflation

In recent years, although India has experienced fluctuation in inflation rates, inflation has not had material

impact on the Group’s business, results of operations or cash flows.

Commodity risk

We are exposed to commodity risk due to volatility of prices for raw materials we consume. We manage the risk

of volatility through a commodity desk that gathers intelligence on the market and guides procurement. Further,

we also implemented a robust vendor management system to maintain the confidence of its suppliers and

continue to engage new partners to widen our supplier base.

118

Equity price risk

Equity price risk arises when the Group is exposed to changes in the fair value of any traded equity instruments

that the Group may hold due to changes in the equity markets. The Group’s exposure to changes in equity prices

is not material to our financial position, results of operations or cash flows.

Seasonality of Business

The Group’s business operations are seasonal in respect of truck tyres sold during the monsoon months as truck

owners often delay replacement tyre purchases until the end of the monsoon.

In addition, our business operations may be materially and adversely affected by severe weather, which may

reduce the demand for commercial vehicle tyres. In addition, such weather may prevent the adequate and timely

supply of raw materials to our manufacturing facilities and the delivery of our products from our manufacturing

facilities to our customers. Any such disruptions could materially and adversely affect our business, financial

condition, results of operations or cash flows.

Changing Regulations

As Indian manufacturers import substantial amounts of natural rubber for tyres production from abroad,

government proposals to hike rubber import duty could have a negative impact on domestic tyre manufacturers.

Competitive Conditions

Refer to the sections titled “Our Business”, “Industry Overview” and “Risk Factors” in this Placement

Document regarding competition.

Unusual or Infrequent Events or Transactions

Except as described in this Placement Document, there have been no other events or transactions to the best of

our knowledge which may be described as “unusual” or “infrequent”.

Known Trends or Uncertainties

Except as described in the section titled “Risk Factors”, this section and elsewhere in this Placement Document,

to the best of our knowledge there are no known trends or uncertainties that have or had or expected to have any

material adverse impact on the Group’s revenues or income from continuing operations.

Future Relationship between Cost and Income

Except as described in the sections titled “Risk Factors”, “Our Business” and this section, to the best of our

knowledge there are no known factors that will have a material adverse impact on our operations and finances.

Significant Developments after September 30, 2014

Except as stated elsewhere in this Placement Document, to the best of our knowledge no circumstances have

arisen since September 30, 2014, which is the date of the last financial statements as disclosed in this Placement

Document, which materially and adversely affect or are likely to affect the Group’s operations or profitability,

or the value of its assets or its ability to pay any material liabilities within the next 12 months.

Changes in accounting policies during last three years and their effect on the profits and reserves of the

Company

Sr.

No.

Fiscal Change in accounting policy Impact

1. 2012 Presentation and Disclosure of

Financial Statements pursuant to

No Impact on recognition and measurement principles;

but impacts presentation and disclosures. Previous year

119

Sr.

No.

Fiscal Change in accounting policy Impact

notification of Revised Schedule VI

notified under the Companies Act,

1956

figures are also reclassified in accordance with the

requirements

2. 2013 Method of recognizing provision for

warranty from actual claim basis to

expected cost based

Accordingly company has recognized provision based

on such parameters as at the beginning of the year i.e.

April 1, 2012 amounting to ` 140.42 million has been

disclosed as an exceptional expense.

120

HISTORY AND OTHER CORPORATE MATTERS

Our Company was incorporated on March 10, 1958 in the name of CEAT Tyres of India Limited. Our Company

received the certificate for commencement of business on June 27, 1958. The name of the Company was

changed to CEAT Limited on January 10, 1990.

The Equity Shares of our Company are listed on the BSE and NSE.

The CIN of our Company is L25100MH1958PLC11041.

For the shareholding pattern of our company as of September 30, 2014, please see “Principal Shareholders

and Other Information” on page 134.

Recent Major events of our Company are:

Year Key Milestones

1999 We entered in a joint venture with Kelani Tyres Ltd for our operations in Srilanka.

2005 Merger of 3 wholly owned subsidiaries i.e. CEAT Holdings Limited, CEAT Ventures Limited

and Meteoric Industrial Finance Company Limited into our Company

2007 Demerger of investment undertaking of our Company to CHI Investments Limited

2010 Acquisition of world-wide rights for the Brand “CEAT”

2012 Entered into a joint venture with A. K. Khan & Co. Limited to set up a tyre manufacturing

facility in Bangladesh

Main Objects of the Company inter alia include the following:

1. To construct, produce, prepare, manufacture, press, vulcanize, repair, retread, purchase, sell, import,

export and generally to deal in tyres, semi-tyres for any type of vehicle for heavy, light and passengers

transports, cars, motorcycles, cycles, agricultural tractors, industrial tyres, aeroplanes, inner tubes,

flaps, repair materials in general, technical articles and other various appliances made with natural and

synthetic rubber, their derivatives and substitutes, rubber latex, synthetic resins and plastics in general;

furthermore all the products and by-products including textiles, metals and chemicals in general and all

the accessories relating to the industry and commerce of tyres.

Group Structure as of September 30, 2014

CEAT Limited

RADO Tyres Limited

(58.56%)

CEAT Bangladesh Limited

(70%)

Associated CEAT Holdings Company (Private) Limited

(100%)

CEAT-Kelani Holdings Company Private Limited

(50%) (joint venture)

Associated CEAT Private Limited

(100%)

CEAT Kelani International Tyres Private Limited

(100%)

Asian Tyres Private Limited

(100%)

CEAT Kelani Radials Private

Limited

(100%)

121

Subsidiaries of the Company

1. Associated CEAT Holdings Company (Private) Limited (“ACHL”)

ACHL was incorporated on January 06, 1999. It is a Private Limited Liability Company incorporated

under the Companies Act No. 17 of 1982 and re-registered under the Companies Act No. 7 of 2007 and

domiciled in Sri Lanka. Its Company Registration No. is PV 6934. Its registered office is located at

50/2, Sir James Peiris Mawatha, Colombo 2.

Its principal activity is investing.

As of March 31, 2014 its authorised share capital was Sri Lanka Rupees 300,000,000 and paid-up share

capital was Sri Lanka Rupees 100,000,000.

2. CEAT Bangladesh Limited (“CBL”)

CBL was incorporated on May 30, 2012. It has been incorporated as a public limited company under

the Companies Act, 1994 vide incorporation no. C-102115/12. Its registered office is located at 802

Shanta Western Tower, 186 Tejgaon I/A, Dhaka – 1208.

Its main objective is to carry on the business of designing, developing, constructing, producing,

repairing, purchasing, selling, importing, exporting and generally dealing in tyres, semi-tyres, tubes and

flaps for all types of vehicles used in heavy, medium and light passengers transports, cars scooters,

motorcycles and other two and three wheel vehicles.

As of March 31, 2014 its authorised share capital was Bangladeshi Taka 1,500,000,000 and paid-up

share capital was Bangladeshi Taka 1,500,000,000.

On November 15, 2014 CBL made an application to the Office of the Registrar of Joint Stock

Companies and Firms, Bangladesh for change of name to CEAT AKKHAN LTD.

3. RADO Tyres Limited (“RTL”)

RTL was incorporated on March 21, 1986. It has been incorporated as a public company incorporated

under the provisions of the Companies Act, 1956. Its CIN is U25111KL1986PLC0004449. Its

registered office is located at Building No. 39/3b, 3b1, opp. Krishna Hospital, Chittoor Road, Cochin –

682011, Kerela, India.

It is engaged in the business of an Automobile Tyre manufacturing.

As of March 31, 2014 its authorised share capital was ` 90,000,000 and paid-up share capital was `

64,316,200.

RTL was declared a sick industrial company in terms of section 3(1)(o) of the Sick Industrial

Companies (Special Provisions) Act, 1985 on May 10, 2010. The rehabilitation scheme was prepared

on April 29, 2013 for reviving RTL envisaged the following strategy for revival of RTL:

a. Reduction of equity share capital

It was proposed to reduce the face value of paid-up shares of RTL by 60 percent from ` 10 to ` 4

for each fully paid-up share. This would, consequently reduce the paid-up equity capital of RTL to

` 34.32 million from ` 85.79 million. The differential amount of ` 51.48 million shall be

transferred to the capital reserve fund.

b. Conversion of part of unsecured loan of our Company into equity and waiver of balance amount

Our Company had, in the past provided interest bearing unsecured loan to RTL. The outstanding

amount as at March 31, 2010 inclusive of interest due and not paid was ` 60.92 million. It was

proposed to:

122

i. Convert part of our Company’s unsecured loan of ` 30 million into equity by allotting

fully paid up 7,500,000 equity shares of ` 4 each towards the part settlement of its

unsecured loan; and

ii. To write off the balance amount of ` 30.92 million, which shall be transferred to capital

reduction account. Thus, the unsecured loan of our Company inclusive of interest payable

account will be deemed to be fully settled as at March 31, 2010.

c. Major Repairs/ Replacements

Rehabilitation strategy envisaged major repairs/ upgradation and replacements to some of the old/

critical plant and machineries. This investment would reduce the process losses, achieve

consistency in production and increase in the product quality. It would also help in higher

production of passenger car and motor cycles tyres which have better margin.

d. Capacity expansion

Rehabilitation strategy also envisaged expansion of capacity of motor cycle tyres and tubes to cater

the increased demand for these tyres from our Company.

e. Issue of shares on rights basis

Rehabilitation strategy envisaged issue of 419, 600 equity shares of ` 4 each for cash on rights

basis to the employees/ directors/ their associates.

Joint Venture of ACHL

CEAT Kelani Holdings Co. Pvt. Ltd. (“CKHL”)

CKHL was incorporated on June 17, 1999. It is a Private Limited Liability Company incorporated


domiciled in Sri Lanka. Its Company Registration No. is PV 3772/N (PVS) 23879. Its registered office

is located at P.O. Box 52, Nungamugoda, Kelaniya.

Its principal activity is investing.

Kelani Tyres PLC and Associated Ceat Holdings Company Private Limited are the Joint Venture

partners of CKHL. It has three subsidiaries which are: (i) Associated Ceat (Private) Limited; (ii) Ceat

Kelani International Tyres (Private) Limited; and (iii) Ceat Kelani Radials (Private) Limited.

As of March 31, 2014 its authorised share capital was Sri Lankan Rupees 500,000,000 and paid-up

share capital was Sri Lankan Rupees 200,000,000.

Subsidiaries of CKHL

1. Associated CEAT Private Limited (“ACPL”)

ACPL was incorporated on February 24, 1992. It is a Private Limited Liability Company incorporated



P.O. Box 52, Nungamugoda, Kelaniya.

Its principal activity is manufacturing of pneumatic tyres.



2. CEAT Kelani International Tyres Private Limited (“CKITL”)

123

CKITL was incorporated on June 17, 1999. It is a Private Limited Liability Company incorporated



Nungamugoda, Kelaniya.

Its principal activity is manufacturing of pneumatic tyres and flaps for the domestic and export market.



3. CEAT Kelani Radials Private Limited (“CKRL”)

CKRL was incorporated on September 9, 2005. It is a Private Limited Liability Company incorporated


domiciled in Sri Lanka. Its Company Registration No. is PV 784. Its registered office is located at P.O.

Box 52, Nungamugoda, Kelaniya.

Its principal activity is manufacturing of all types of pneumatic tyres, tubes and flaps for motor

vehicles.



Subsidiary of CKITL

Asian Tyres Private Limited (“ATL”)

ATL was incorporated on February 24, 1992. It is a Private Limited Liability Company incorporated

under the Companies Act No. 7 of 2007 and domiciled in Sri Lanka. Its Company Registration No. is

PV 89355. Its registered office is located at Nungamugoda, Kelaniya.

Its principal activity is manufacturing tyres and tubes.

As of March 31, 2014 its stated capital was Sri Lankan Rupees 70,000,000.

124

REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the

Government of India and other regulatory bodies that are applicable to our business. The information detailed

below has been obtained from various legislations, including rules and regulations promulgated by regulatory

bodies, and the bye laws of the respective local authorities that are available in the public domain. The

regulations set out below may not be exhaustive and are merely intended to provide general information to the

investors and are neither designed nor intended to substitute for professional legal advice. The statements below

are based on the current provisions of Indian law, which are subject to change or modification by subsequent

legislative, regulatory, administrative or judicial decisions.

Rubber Act, 1947

The rubber industry in India is regulated by the Rubber Act, 1947 (“Rubber Act”) and the rules framed

thereunder. The Rubber Act provides for the constitution of a Rubber Board with the purpose of development of

rubber industry. Under the Rubber Act, the central government has been conferred with the power to prohibit or

control imports and exports of rubber. Further, the Rubber Act provides that a person shall not possess, sell or

acquire rubber without a general or special license issued by the Rubber Board. Every general license is

published by the Rubber Board in the Official Gazette and in such newspapers as directed by the Rubber Board,

while the special license is accorded for a limited period and is subject to extension by the Rubber Board. In the

event of default of the provisions of the Rubber Act, the defaulter will be punishable with imprisonment for the

term which may extend to one year or with fine which may extend to one thousand rupees or both.

Importer Exporter Code

Under the Foreign Trade (Development and Regulation) Act, 1992, an importer – exporter code (“IEC”) granted

by the Director General of Foreign Trade will be required to be obtained in the event any import or export of the

product is envisaged. Failure to obtain the IEC number will attract a penalty of ` 1,000 or 5 times the value of

the goods in which contravention is made or attempted.

Central Motor Vehicles Rules, 1989

The Central Motor Vehicles Rules, 1989 (“Motor Vehicles Rules”) contains certain provisions regulating the

manufacture of tyres for agricultural tractors as well as other vehicles. The Motor Vehicles Rules direct the tyre

manufacturers to specify the load carrying capacity of the tyres, and further gives directions relating to aspects

such as the non-skid depth and size of the tyres.

Indian Explosives Act, 1884

A company has to inter alia take licence under the Explosive Act 1884 in certain cases for possession, use and

transport of Explosive. A license granted under Section 6-B may contain in addition to prescribed conditions

such other conditions as may be considered necessary by the licensing authority in any particular case.

Labour Laws

We are required to comply with certain labour and industrial laws, which includes the Factories Act, 1948,

Industries (Development and Regulation) Act, 1951, Industrial Disputes Act, 1947, the Employees’ Provident

Funds and Miscellaneous Provisions Act 1952, the Minimum Wages Act, 1948, the Payment of Bonus Act,

1965, Workmen Compensation Act, 1923, the Payment of Gratuity Act, 1972, Contract Labour (Regulation and

Abolition) Act, 1970, the Payment of Wages Act, 1948 and the amongst others.

Environmental Laws

Manufacturers must also ensure compliance with environmental legislation. Some of the important

environmental legislations that are applicable to us are the Water (Prevention and Control of Pollution) Act,

1974, the Air (Prevention and Control of Pollution) Act, 1981, the Water (Prevention and Control of Pollution)

Cess Act, 1977 and the Environment Protection Act, 1986. Prior to the undertaking of a project for construction,

development or modification of a plant, system or structure, our Company will be required to file an

Environment Impact Assessment with the State Pollution Control Board and the Ministry of Environment and

Forests. The relevant authority will assess the impact of the project on the environment before granting

clearance. The clearance may be granted subject to certain conditions / alterations required to be made in the

125

project.

Intellectual Property Laws

The law relating to intellectual property also applies to our Company.

1. The Trade Marks Act, 1999

The Trade Marks Act, 1999 which came into force on December 30, 1999 governs the law pertaining to

trade marks in India. A trade mark is essentially any mark capable of being represented graphically and

distinguishing goods or services of one person from those of others and includes a device, brand, heading,

label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours

or combination thereof. In India, trademarks enjoy protection under both statutory and common law.

Indian trademarks law permits the registration of trademarks for goods and services. Certification

trademarks and collective marks can also be registered under the Trademark Act. The Registrar of

Trademarks is the authority responsible for registration of the trademarks, settling opposition proceedings

and rectification of the register of trademarks.

Once a mark is registered, it is valid in India only, for a period of 10 years and can be renewed from time

to time in perpetuity. Registration of a trademark grants the owner a right to exclusively use the

trademark as a mark of goods and services and prevents the fraudulent use of deceptively similar marks

by any third party.

2. The Patents Act, 1970

The Patents Act, 1970 governs the patent regime in India. India is a signatory to the Trade Related

Agreement on Intellectual Property Rights; India recognizes both product as well as process patents. The

new regime provides for:

Patent protection period of 20 years;

Patent protections allowed on imported products; and

Under certain circumstances, the burden of proof in case of infringement of process patents may be

transferred to the alleged infringer.

An application for a patent can be filed in any of the 4 patent offices in India.

3. The Design Act, 2000

The Designs Act, 2000 came into force in May 2001 to consolidate and amend the law relating to

protection of designs. A design refers to the features of shape, configuration, pattern, ornamentation or

composition of lines or colors applied to any article, in two or three dimensional or both forms. In order

to register a design, it must be new and original and must not be disclosed to the public anywhere in India

or any other country by publication in tangible form or in any other way prior to the filing date. A design

should be significantly distinguishable from known designs or combination of known designs in order for

it to be registerable. A registered design is valid for a period of 10 years after which can be renewed for a

second period of 5 years, before the expiration of the original period of 10 years. After such period the

design is made available to the public by placing it in the public domain.

Others

Shops and Establishments legislations in various states

The provisions of various Shops and Establishments legislations, as applicable in the states in which

establishments are set up, regulate the conditions of work and employment in shops and commercial

establishments and generally prescribe obligations in respect of inter alia registration, opening and closing

hours, daily and weekly working hours, holidays, leave, health and safety measures and wages for overtime

work.

In addition to the laws mentioned above, taxation statutes including the Income Tax Act, 1961, Central Excise

Act, 1944, Customs Act, 1962 and Central Sales Tax Act, 1956 apply to our Company.

126

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

The general supervision, direction and management of our Company, its operations and business are vested in

the Board, which exercises its power subject to Memorandum and Articles of our Company and the

requirements of the applicable laws. The Articles set out that the number of Directors in our Company shall not

be less than three and not more than fifteen.

The composition of the Board is in conformity with section 149 of the Companies Act, 2013 and clause 49 of

the Listing Agreements entered into with the Stock Exchanges on which our Company’s Equity Shares are

listed. As on date our Company has 12 Directors with a non-executive Chairman. Of the 12 Directors, 2 are

Executive Directors, 3 are Non-Executive Non Independent Directors and 7 are Independent Directors.

The following table sets forth details regarding the Board at the date of this Placement Document:

Name, Occupation,

Term and

Nationality

Age Position

Director

Identification

Number

Address

Mr. Harsh Vardhan

Goenka

Occupation: Business

Term: Liable to retire

by rotation

Nationality: Indian

57 Chairman

00026726 14/15-A, IL-Palazzo, B.G.

Kher Marg, Mumbai 400

006, Maharashtra, India

Mr. Anant Vardhan

Goenka

Occupation: Service

Term: Up to March

31, 2017

Nationality: Indian

32 Managing Director

02089850 14/15-A, IL-Palazzo, B.G.

Kher Marg, Mumbai 400

006, Maharashtra, India

Mr. Arnab Banerjee

Occupation: Service

Term: Up to May 06,

2018

Nationality: Indian

50 Whole-Time Director

06559516 202-B, Aditya, S.V. Patel

Nagar, Andheri (West),

Mumbai 400053,

Maharashtra, India

Mr. Paras K.

Chowdhary

Occupation: Service


by rotation

Nationality: Indian

62 Non-Executive Non

Independent Director

00076807 74/84, Clover Park

Royale, Lane N 7,

Koregaon Park, Pune,

411001, Maharashtra,

India

Mr. Hari L. Mundra

Occupation: Service


64 Non-Executive Non

Independent Director

00287029 A-61, Twin Towers, Off

Veer Savarkar Marg,

Prabhadevi, Mumbai,


India

127

Name, Occupation,

Term and

Nationality

Age Position

Director

Identification

Number

Address

by rotation

Nationality: Indian

Mr. Vinay Bansal

Occupation:

Management

Consultant

Term: Up to

September 25, 2019

Nationality: Indian

69 Independent Director

01674284 7S, Dilwara, M Karve

Road, Mumbai 400021,

Maharashtra, India

Mr. Atul C. Choksey

Occupation:

Industrialist

Term: Up to

September 25, 2019

Nationality: Indian


00002102 Geetanjali, 9 N Gamadia

Road, Off Peddar Road,

Mumbai, 400026,

Maharashtra, India

Mr. S. Doreswamy

Occupation:

Consultant

Term: Up to

September 25, 2019

Nationality: Indian


00042897 Topaz-302, Esteem

Heritage Rose Garden

Road, JP Nagar-5th

Phase,

Bangalore 560078,

Karnataka, India

Mr. Mahesh S. Gupta

Occupation: Service

Term: Up to

September 25, 2019

Nationality: Indian


00046810 402, Ashok House, Beach

House CHS, Gandhigram

Road, Juhu, Mumbai,


India

Mr. Haigreve Khaitan

Occupation:

Advocate

Term: Up to

September 25, 2019

Nationality: Indian


00005290 1104 Sterling Seaface, Dr.

Annie Besant Road,

Worli, Mumbai-400018,

Maharashtra, India

Ms. Punita Lal

Occupation:

Independent

Consultant

Term: Up to

September 25, 2019

Nationality: Indian


03412604 909 B, The Aralias,

DLF Golf Links,

Gurgaon, 122009

Haryana, India

128

Name, Occupation,

Term and

Nationality

Age Position

Director

Identification

Number

Address

Mr. Kantikumar R.

Podar

Occupation:

Industrialist

Term: Up to

September 25, 2019

Nationality: Indian


00086038 Podar House, A Road,

Marine Drive,

Churchgate, Mumbai,


India

Brief Biographies of the Directors

Mr. Harsh Vardhan Goenka

Mr. Harsh Vardhan Goenka is the chairman of our Company. He has been associated with our Company for a

period of 33 years.

Mr. Anant Vardhan Goenka

Mr. Anant Vardhan Goenka is the managing director of our Company. He has been associated with our

Company for a period of 5 years

Mr. Arnab Banerjee

Mr. Arnab Banerjee is a whole time director of our Company. He has been associated with our Company for a

period of 9 years and 5 months.

Mr. Paras K. Chowdhary

Mr. Paras K. Chowdhary is a non-executive and non-independent director of our Company. He has been

associated with our Company for a period of 13 years.

Mr. Hari L. Mundra

Mr. Hari L. Mundra is a non-executive and non-independent director of our Company. He has been associated

with our Company for a period of 19 years.

Mr. Vinay Bansal

Mr. Vinay Bansal is an independent director of our Company. He has been associated with our Company for a

period of 5 years.

Mr. Atul C. Choksey

Mr. Atul C. Choksey is an independent director of our Company. He has been associated with our Company for

a period of 14 years.

Mr. S. Doreswamy

Mr. S. Doreswamy is an independent director of our Company. He has been associated with our Company for a

period of 14 years.

Mr Mahesh S. Gupta

Mr. Mahesh S. Gupta is an independent director of our Company. He has been associated with our Company for


129

Mr. Haigreve Khaitan

Mr. Haigreve Khaitan is an independent director of our Company. He has been associated with our Company for


Ms. Punita Lal

Ms. Punita Lal is an independent director of our Company. She has been associated with our Company for a

period of 6 months.

Mr. Kantikumar R. Podar

Mr. K. R. Podar is an independent director of our Company. He has been associated with our Company for a

period of 30 years.

Compensation of Directors

The Nomination and Remuneration Committee determines and recommends to the Board, the compensation to

Directors. The Board of Directors or the shareholders as the case may be approve the compensation to Directors.

The table below sets forth the details of the remuneration (including sitting fees, salaries, commission and

perquisites) paid to the Directors for the current financial period and the last three financial years:

(in ` million)

Name

From April 1, 2014

to October 31,

2014

Fiscal 2014 Fiscal 2013 Fiscal 2012

Mr. Harsh Vardhan

Goenka

0.25 34.48 15.50 2.71

Mr. Anant Vardhan

Goenka

22.78 24.93 19.63 11.79

Mr. Arnab Banerjee*** 14.04 16.44 Nil Nil

Mr. Paras Chowdhary 0.36 0.48 27.60 29.31

Mr. Mahesh S. Gupta 0.35 0.54* 0.35

* 0.26

*

Mr. Atul C. Choksey 0.23 0.42 0.26 0.16

Mr. S. Doreswamy 0.45 0.53* 0.31

* 0.25

*

Mr. Haigreve Khaitan 0.23 0.44 0.24 0.10

Mr. Hari L. Mundra 0.32 0.48* 0.33

* 0.26

*

Mr. Kantikumar R. Podar 0.25 0.44 0.24 0.14

Mr. Vinay Bansal 0.33 0.48 0.30 0.18

Ms. Punita Lal**

0.30 Nil Nil Nil

* Includes sitting fees for attending Audit Committee Meetings and Remuneration Committee Meetings. Sitting

Fees for attending meetings of Shareholders/Investors Grievance Committee have been waived by the Directors

on the said Committee.

** Ms. Punita Lal joined our Company in the Financial Year 2014-2015

***Mr. Arnab Banerjee was appointed as director in the Financial Year 2013-14

Terms and Conditions of employment of Managing Directors

Mr. Anant Vardhan Goenka

Mr. Anant Vardhan Goenka was appointed for a period of 5 years, with effect from April 1, 2012 as the

Managing Director of our Company. The remuneration payable for the FY 2014-15 shall be as mentioned

below:

Sr. No. Category Remuneration

1. Salary ` 6.10 million per annum

2. Management allowance ` 5.82 million per annum

130


3. Other allowance `10.83 million per annum

4. Perquisites Reimbursement of medical expenses of ` 0.52 million per annum and

others ` 0.55 million per annum

5. Retirals Provident fund of ` 0.73 million per annum, superannuation fund of `

0.92 million per annum and gratuity fund of ` 0.29 million per annum

6. Performance bonus ` 8.13 million per annum

Mr. Arnab Banerjee

Mr. Arnab Banerjee was appointed for a period of 5 years, with effect from May 7, 2013 as the Whole-Time

Director of our Company. The remuneration payable for the FY 2014-15 shall be as mentioned below:


1. Salary ` 4.74 million per annum

2. Management allowance ` 4.18 million per annum

3. Other allowance ` 6.36 million per annum

4. Perquisites Reimbursement of medical expenses as per Company rules and others `

0.04 million per annum

5. Retirals Provident fund of ` 0.57 million per annum and gratuity fund of ` 0.23

million per annum

6. Performance bonus ` 4.90 million per annum

Relationship with other Directors

Following directors are related to each other:

Name of Director Nature of relationship

Mr. Harsh Vardhan Goenka and Mr. Anant Vardhan

Goenka

Father and son

Borrowing powers of the Board

The Board of Directors are authorized to borrow money upon such terms and conditions as the Board may think

fit an aggregate amount not exceeding ` 10,000 million over and above the aggregate of paid up share capital

and free reserves of our Company.

Interest of Directors

All of the Directors, other than the Managing Director and Whole time Director, may be deemed to be interested

to the extent of fees payable to them for attending Board or Board committee meetings and commission as well

as to the extent of reimbursement of expenses payable to them. The Managing Director and Whole time Director

may be deemed to be interested to the extent of remuneration paid to him for services rendered as the officer of

our Company.

Our Directors may also be regarded as interested in the Equity Shares held by them, if any, or that may be

subscribed by or allotted to their relatives or the companies, firms or trusts, in which they are interested as

directors, members, partners, trustees or promoters. Our Directors may also be deemed to be interested to the

extent of any dividend payable to them and other distributions in respect of the said Equity Shares.

Mr. Hari Mundra, our non-executive non independent director may be regarded as interested in the appointment

of Mr Kunal Mundra (son of Mr. Hari Mundra), holding place of profit as vice president, specialty in our

Company and receiving remuneration and reimbursement of expenses as per approval of shareholders’ and

Central Government under the relevant provisions of the Companies Act.

Also, Mr. Haigreve Khaitan is a Partner, Khaitan & Co, the legal counsel to the Issue for the purposes of this

Issue. Khaitan & Co shall be entitled to receive fees for the services rendered for the purposes of this Issue,

which shall not constitute a material interest in the Issue.

131

Except as disclosed in this Placement Document, and except to the extent of shareholding in our Company, our

Directors do not have any economic interest in our Company. As of March 31, 2014, there were no outstanding

transactions other than in the ordinary course of business undertaken by our Company in which the Directors

were interested parties.

For details relating to contracts, agreements or arrangements entered into by our Company during the last three

Fiscals, in which the Directors are interested directly or indirectly and for payments made to them in respect of

such contracts, agreements or arrangements and for other interest of Directors in respect to other related party

transactions, see “Board of Directors and Senior Management-Related Party Transactions” on page 133.

Shareholding of Directors

As on September 30, 2014, following Directors hold Equity Shares of our Company:

Names of Directors Number of Equity Shares held

Mr. Harsh Vardhan Goenka 133,933

Mr. Paras K. Chowdhary 3,000

Mr. Anant Vardhan Goenka 14,185

Mr. Arnab Banerjee 7

Except as otherwise stated in this Placement Document, our Company has not entered into any contract,

agreement or arrangement during the preceding two years from the date of this Placement Document in which

any of the Directors are interested, directly or indirectly, and no payments have been made to them in respect of

any such contracts, agreements, arrangements which are proposed to be made with them. Further, as on

September 30, 2014, no Director has taken any loans from our Company.

Corporate Governance

Our Company believes that good corporate governance is an important constituent in enhancing stakeholder

value. Our Company has in place processes and systems whereby our Company complies with the requirements

on Corporate Governance provided in Clause 49 of the Listing Agreement issued by the Stock Exchanges. Our

Company is committed in its responsibility towards the community and environment in which it operates,

towards its employees and business partners and towards society in general. The corporate governance

framework is based on an effective independent Board, separation of the supervisory role of the Board from the

executive management team and constitution of the committees of the Board, as required under applicable law.

Our Company believes that its Board is constituted in compliance with the Companies Act, 2013 and the Listing

Agreements which are currently in force. The Board functions either as a full Board or through various

committees constituted to oversee specific operational areas.

Committees of Board of Directors

1. Audit Committee

Audit Committee was last reconstituted on April 8, 2014. The terms of reference of this committee were

last amended on April 8, 2014. The Audit Committee comprises of three members; Mr. Mahesh S.

Gupta, Mr. Hari L. Mundra and Mr. S. Doreswamy. Mr. Mahesh S. Gupta is the Chairman of the Audit

Committee.

2. Stakeholders Relationship Committee (“SRC”)

SRC was last reconstituted on April 08, 2014. The terms of reference of this committee were last

amended on April 8, 2014. The Stakeholders Relationship Committee comprises of three members; Mr.

S. Doreswamy, Mr. Mahesh S. Gupta and Mr. Paras K. Chowdhary. Mr. S.

Doreswamy is the Chairman of SRC.

132

3. Nomination and Remuneration Committee (“NRC”)

NRC was constituted on April 8, 2014. The terms of reference of this committee were last amended on

April 08, 2014. NRC comprises of three members; Mr. Mahesh S. Gupta, Mr. S. Doreswamy and Mr.

Paras K. Chowdhary. Mr. Mahesh S. Gupta is the Chairman of NRC.

4. Corporate Social Responsibility Committee (“CSR”)

CSR was constituted on April 8, 2014. The terms of reference of this committee were last amended on

April 08, 2014. CSR comprises of three members; Mr. Anant Vardhan Goenka, Mr. Hari L. Mundra

and Mr. Vinay Bansal. Mr. Anant Vardhan Goenka is the Chairman of the CSR Committee.

Key managerial personnel of our Company

Our operations are overseen by a professional management team. Our senior management team has the

requisite experience and the qualification for their respective responsibilities. In addition to the Managing

Director and Whole-Time Director as set forth above, the following are the key managerial personnel:

Mr. Subba Rao A, Chief Financial Officer

Mr. Subba Rao A, is the Chief Financial Officer of our Company. He has been associated with our Company

for a period of one year and 3 months.

Mr. H. N. Singh Rajpoot, Company Secretary and Compliance Officer

Mr. H. N. Singh Rajpoot, is the Company Secretary and Compliance Officer of our Company. He has been


Senior management personnel of our Company

Mr. Tom Thomas, is the Executive Director-Technology & Projects of our Company. He has been


Compensation of our Company’s key managerial personnel

During the year ended March 31, 2014, our Company paid a total remuneration of ` 60.32 million to its key

managerial personnel.

Bonus or profit sharing plan of the key managerial personnel

Other than the performance bonus fixed by the remuneration committee for our Managing Director and

Whole-Time Director, our Company does not have any bonus or profit sharing plan with the key managerial

personnel.

Interest of key managerial personnel

Other than Mr. Anant Vardhan Goenka who is also the Promoter of our Company and has indirect interest in

our Company, none of the key managerial personnel of our Company have any interest in our Company other

than to the extent of their shareholding in our Company, if any, the remuneration or benefits of which they

are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the

ordinary course of business.

None of our key managerial personnel have been paid any consideration of any nature from our Company,

other than their remuneration.

Payment or Benefit to Officers of our Company

Except statutory benefits upon termination of their employment in our Company or superannuation, no

officer of our Company is entitled to any other benefit upon termination of his employment in our Company.

133

Shareholding of our Company’s key managerial personnel

Other than Mr. Anant Vardhan Goenka and Mr. Arnab Banerjee, who are holding shares in our Company as

mentioned above, none of the key managerial personnel are holding any shares in our Company.

Other Confirmations

Except as otherwise stated above in “Interest of Directors”. None of the Directors, Promoters or key managerial

personnel of our Company have any financial or other material interest in the Issue and there is no effect of such

interest in so far as it is different from the interests of other persons. Also, Mr. Haigreve Khaitan is a Partner

Khaitan & Co, the domestic legal counsel to the Issue for the purposes of this Issue. Khaitan & Co shall be

entitled to receive fees for the services rendered for the purposes of this Issue, which shall not constitute a

material interest in the Issue.

Related Party Transactions

For details in relation to the related party transactions entered by our Company during the last three Fiscals, as

per the requirements under “Accounting Standard 18 – Related Party Transactions” specified under the

Companies Act, see the section "Financial Information" on pages 204, F-1 to F-156.

134

PRINCIPAL SHAREHOLDERS AND OTHER INFORMATION

The following table presents information regarding the ownership of Equity Shares by the Shareholders as of

September 30, 2014:

Cate

gory

code

Category of

Shareholder

Number of

shareholde

rs

Total

number of

shares

Number of

shares held

in

dematerial

ised form

Total Shareholding

as a percentage of

total number of

shares

Shares pledged or

otherwise encumbered

(I) (II) (III) (IV) (V) As a

percenta

ge of

(A+B)

(VI)

As a

percenta

ge of

(A+B+C)

(VII)

Number

of

shares

(VIII)

As a

percentage

(VIII)/(IV)*1

00

(A) Shareholding of

Promoter and

Promoter Group

(1) Indian

(a) Individuals / Hindu

Undivided Family

5 148,118 148,118 0.41 0.41 0 0.00

(b) Central Government / State Governments(s)

0 0 0 0.00 0.00

(c) Bodies Corporate 8 18,603,272 18,603,272 51.74 51.74

(d) Financial Institutions /

Banks

0 0 0 0.00 0.00

(e) Any Other 0 0 0 0.00 0.00

Sub-Total (A) (1) 13 18751390 18751390 52.15 52.15 0 0.00

(2) Foreign

(a) Individuals (Non-

Resident Individuals / Foreign Individuals)

0 0 0 0.00 0.00

(b) Bodies Corporate 1 1782348 0 4.96 4.96 0

(c) Institutions 0 0 0 0.00 0.00

(d) Qualified Foreign

Investor

0 0 0 0.00 0.00

(e) Any Other (specify) 0 0 0 0.00 0.00

Sub-Total (A) (2) 1 1782348 0 4.96 4.96 0 0

Total Shareholding of Promoter

and Promoter Group (A) =

(A)(1)+(A)(2)

14 20533738 18751390 57.11 57.11 0 0.00

(B) Public Shareholding N.A. N.A.

(1) Institutions

(a) Mutual Funds / UTI 21 1,509,415 1,496,865 4.20 4.20 - -

(b) Financial Institutions /

Banks

48 33,438 28,325 0.09 0.09 - -

(c) Central Government / State Governments(s)

2 9,700 0 0.03 0.03 - -

(d) Venture Capital Funds 0 0 0 0.00 0.00 - -

(e) Insurance Companies 3 810,986 810,911 2.26 2.26 - -

(f) Foreign Institutional

Investors

60 5,627,884 5,620,274 15.65 15.65 - -

(g) Foreign Venture Capital Investors

0 0 0 0.00 0.00 - -

(h) Qualified Foreign

Investor

0 0 0 0.00 0.00 - -

(i) Any Other 0 0 0 0.00 0.00 - -

Sub-Total (B) (1) 134 7991423 7956375 22.23 22.23 N.A. N.A.

(2) Non-Institutions

(a) Bodies Corporate 1,069 1,581,086 1,559,092 4.40 4.40 - -

(b) Individuals -

135

Cate

gory

code

Category of

Shareholder

Number of

shareholde

rs

Total

number of

shares

Number of

shares held

in

dematerial

ised form

Total Shareholding

as a percentage of

total number of

shares

Shares pledged or

otherwise encumbered

(I) (II) (III) (IV) (V) As a

percenta

ge of

(A+B)

(VI)

As a

percenta

ge of

(A+B+C)

(VII)

Number

of

shares

(VIII)

As a

percentage

(VIII)/(IV)*1

00

i Individual shareholders

holding nominal share

capital upto ` 1 lakh

54,813 4,382,015 3,659,939 12.19 12.19 - -

ii Individual shareholders holding nominal share

capital in excess of ` 1

lakh

38 1,320,150 1,320,150 3.67 3.67 - -

(c) Qualified Foreign

Investor

0 0 0 0.00 0.00 - -

(d) Any Other

i Trusts 5 3,604 3,604 0.01 0.01 - -

ii Unclaimed Securities

Suspense Account

2 140,657 140,582 0.39 0.39 - -

iii Directors & Relatives 1 3,000 3,000 0.01 0.01 - -

iv Foreign Company 1 37 0 0.00 0.00 -

Sub-total (B) (2) 55,929 7,430,549 6,686,367 20.67 20.67 - -

Total Public Shareholding (B) =

(B)(1)+(B)(2)

56063 15421972 14642742 42.89 42.89 N.A. N.A.

TOTAL (A)+(B) 56077 35955710 33394132 100.00 100.00 N.A. N.A.

(C) Shares held by

Custodians and against which Depository

Receipts have been

issued

0 0 0 0.00 0.00

(1) Promoter and

Promoter Group

0 0 0 0.00 0.00

(2) Public 0 0 0 0.00 0.00

GRAND TOTAL (A)+(B)+(C) 56077 35955710 33394132 100.00 100.00 N.A. N.A.

The table below gives details of shareholdings of the Promoters as on September 30, 2014

(I)(b) Statement showing holding of securities (including shares, warrants, convertible securities) of

persons belonging to the category "Promoter and Promoter Group"

Sr.

No.

(I)

Name of the

shareholder

(II)

Details of Shares

held

Encumbered shares (*) Details of Shares held Details of

convertible

securities

Total shares

(including

underlying

shares

assuming full

conversion of

warrants

and

convertible

securities) as

a % of

diluted share

capital

Number

(III)

As a

% of

grand

total

(A)+(B

No.

(V)

As a

perce

ntage

(VI)

As a % of

grand

total (A)

+ (B) +

(C) of

Number

of

warrants

held

As a %

total

number

of

warrants

Numb

er of

conve

rtible

securi

As a %

total

number of

convertible

securities

136

)+(C)

(IV)

= (V)

/

(III)*

100

sub-

clause

(I)(a)

(VII)

(VIII) of the

same

class

(IX)

ties

held

(X)

of the same

class

(XI)

(XII)

1 Anant Vardhan

Goenka

14,185 0.04 NIL - - - - 0.04

2 Chattarpati Investments

Limited

275,876 0.77 NIL - - - - 0.77

3 Harsh Vardhan

Goenka

1 0.00 NIL - - - - 0.00

4 Harsh Vardhan

Goenka

10,133 0.03 NIL - - - - 0.03

5 Harsh Vardhan

Goenka

3,799 0.01 NIL - - - - 0.01

6 Harshvardhan

Goenka

120,000 0.33 NIL - - - - 0.33

7 Instant

Holdings Limited

4,826,467 13.42 NIL 13.42

8 Instant

Holdings Limited

2,528,602 7.03 NIL - - - - 7.03

9 Instant

Holdings

Limited

4,155,743 11.56 NIL - - - - 11.56

10 Societe Ceat D

Investissemente

n Asie S A

1,782,348 4.96 NIL - - - - 4.96

11 STEL Holdings

Limited

1,372,835 3.82 NIL 3.82

12 Summit

Securities Limited

959,125 2.67 NIL - - - - 2.67

13 Swallow

Associates LLP

59,524 0.17 NIL - - - - 0.17

14 Swallow Associates LLP

4425100 12.31 NIL - - - - 12.31

TOTAL 20533738 57.11 NIL - - - - 57.11

(*) The term “encumbrance” has the same meaning as assigned to it in regulation 28(3) of the SAST Regulations, 2011

The table below is a list of the Shareholders in the public category holding more than 1% of the paid-up capital

of our Company as on September 30, 2014:

(I)(c)(i) Statement showing holding of securities (including shares, warrants, convertible securities) of

persons belonging to the category "Public" and holding more than 1% of the total number of shares

Sr.

No.

Name of the shareholder Number

of shares

held

Shares as a

percentage

of total

number of

shares {i.e.,

Grand

Total

(A)+(B)+(C)

indicated in

Statement

at para

(I)(a)

above}

Details of warrants Details of convertible

securities

Total shares (including

underlying shares

assuming full

conversion of warrants

and convertible

securities) as a % of

diluted share capital

Number

of

warrants

held

As a %

total

number

of

warrants

of the

same

class

Number of

convertible

securities

held

% w.r.t

total

number of

convertible

securities

of the

same class

1 Kotak Mahindra

(International) Limited

1,828,310 5.08 - - - - 5.08

2 Prusik Asian Smaller Companies Fund Plc

570,000 1.59 - - - - 1.59

3 Uti-Mid Cap Fund 526,966 1.47 - - - - 1.47

4 Reliance Capital Trustee Co. Ltd-A/C Reliancesmall Cap

Fund

429,097 1.19 - - - - 1.19

5 The New India Assurance Company Limited

415,873 1.16 - - - - 1.16

137

Sr.

No.

Name of the shareholder Number

of shares

held

Shares as a

percentage

of total

number of

shares {i.e.,

Grand

Total

(A)+(B)+(C)

indicated in

Statement

at para

(I)(a)

above}


securities

Total shares (including

underlying shares

assuming full

conversion of warrants

and convertible

securities) as a % of

diluted share capital

Number

of

warrants

held

As a %

total

number

of

warrants

of the

same

class

Number of

convertible

securities

held

% w.r.t

total

number of

convertible

securities

of the

same class

6 General Insurance

Corporation Of India

395,038 1.10 - - - - 1.10

7 Dsp Blackrock Micro Cap Fund

379,040 1.05 - - - - 1.05

8 Mv SCIF Mauritius 375,754 1.05 - - - - 1.05

TOTAL 4,920,078 13.68 - - - - 13.68

The table below is a list of the Shareholders in the public category holding more than 5% of the paid-up capital

of our Company as on September 30, 2014:

(I)(c)(ii) Statement showing holding of securities (including shares, warrants, convertible securities) of

persons (together with PAC) belonging to the category "Public" and holding more than 5% of the total

number of shares of the company

Sr.

No.

Name(s) of the

shareholder(s) and the

Persons Acting in

Concert (PAC) with

them

Number of

shares

Shares as a

percentage

of total

number of

shares {i.e.,

Grand

Total

(A)+(B)+(C)

indicated in

Statement

at para

(I)(a)

above}


securities

Total shares

(including

underlying

shares

assuming full

conversion of

warrants and

convertible

securities) as a

% of diluted

share capital

Number

of

warrants

As a %

total

number

of

warrants

of the

same

class

Number of

convertible

securities

held

% w.r.t

total

number of

convertible

securities

of the

same class

1 Kotak Mahindra

(International) Limited

1,828,310 5.08 - - - - 5.08

TOTAL 1,828,310 5.08 - - - - 5.08

The table below is a list of the locked-in shares of our Company as on September 30, 2014:

(I)(d) Statement showing details of locked-in shares

Sr.

No.

Name of the

Shareholder

Number of

locked-in

shares

Locked-in shares as a (%) percentage of total number of

shares {i.e., Grand Total (A)+(B)+(C) indicated in

statement at para (I)(a) above)

Promoter / Promoter Group /

Public

1 Instant Holdings

Limited

1,712,176 4.76 Promoter

TOTAL 1,712,176 4.76

The table below is a list of depository receipts issued by our Company as on September 30, 2014:

(II)(a) Statement showing details of depository receipts

The table below is a list of the holding of depository receipts, where underlying shares held by

"Promoter/Promoter group" are in excess of 1% of the total number shares as on September 30, 2014:

138

Sr. No. Name of

the DR

Holder

Type of

outstanding DR

(ADRs, GDRs,

SDRs,etc.)

Number of Shares

underlying

outstanding DRs

Shares underlying outstanding DRs as a percentage of total

number of shares {i.e., Grand Total (A)+(B)+(C) indicated in


N.A.

TOTAL

(II)(b) Statement showing Holding of Depository Receipts (DRs), where underlying shares held by

"Promoter/Promoter group" are in excess of 1% of the total number shares.

Sr. No. Name of

the DR

Holder

Type of

outstanding DR

(ADRs, GDRs,

SDRs,etc.)

Number of Shares

underlying

outstanding DRs

Shares underlying outstanding DRs as a percentage of total

number of shares {i.e., Grand Total (A)+(B)+(C) indicated in


N.A.

TOTAL

(III) (a) Statement showing the voting pattern of shareholders, if more than one class of shares / securities

is issued by the issuer.

Category

code

Category of

Shareholder

Number of Voting Rights

held in each class of securities

Total Voting

Rights

(III+IV+V)

Total Voting Rights i.e. (VI)

Class X Class

Y

Class Z As a percentage of (A+B) As a

percentage of

(A+B+C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII)

(A) Shareholding of

Promoter and

Promoter Group

NA NA

(1) Indian

(a) Individuals / Hindu Undivided Family

148118 148118 0.41 0.41

(b) Cental Government /

State Governments(s)

0 0 0.00 0.00

(c) Bodies Corporate 18603272 18603272 51.94 51.94

(d) Financial Institutions / Banks

0 0 0.00 0.00

(e) Any Other (specify ) 0 0 0.00 0.00

Sub-Total (A) (1) 18751390 0 0 18751390 52.35 52.35

(2) Foreign NA NA

(a) Individuals (Non-Resident Individuals /

Foreign Individuals)

0 0 0.00 0.00

(b) Bodies Corporate 1782348 1782348 4.98 4.98

(c) Institutions 0 0 0.00 0.00

(d) Qualified Foreign Investor

0 0 0.00 0.00

(e) Any Other (specify) 0 0 0.00 0.00

Sub-Total (A) (2) 1782348 0 0 1782348 4.98 4.98

Total Shareholding of Promoter

and Promoter Group (A) =

(A)(1)+(A)(2)

20533738 0 0 20533738 57.33 57.33

(B) Public Shareholding NA NA

139

Category

code

Category of

Shareholder

Number of Voting Rights

held in each class of securities

Total Voting

Rights

(III+IV+V)

Total Voting Rights i.e. (VI)

Class X Class

Y

Class Z As a percentage of (A+B) As a

percentage of

(A+B+C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII)

(1) Institutions

(a) Mutual Funds / UTI 1509415 1509415 4.21 4.21

(b) Financial Institutions /

Banks

33438 33438 0.09 0.09

(c) Cental Government / State Governments(s)

9700 9700 0.03 0.03

(d) Venture Capital Funds 0 0 0.00 0.00

(e) Insurance Companies 810986 810986 2.26 2.26

(f) Foreign Institutional

Investors

5627884 5627884 15.71 15.71

(g) Foreign Venture Capital Investors

0 0 0.00 0.00

(h) Qualified Foreign

Investor

0 0 0.00 0.00

(i) Any Other (specify) 0 0 0.00 0.00

Sub-Total (B) (1) 7991423 0 0 7991423 22.31 22.31

(2) Non-Institutions NA NA

(a) Bodies Corporate 1581086 1581086 4.42 4.42

(b) Individuals -

i Individual shareholders

holding nominal share

capital upto ` 1 lakh

4382015 4382015 12.24 12.24

ii Individual shareholders holding nominal share

capital in excess of ` 1

lakh

1320150 1320150 3.69 3.69

(c) Qualified Foreign

Investor

0 0 0.00 0.00

(d) Any Other (specify)

i Trusts 3604 3604 0.01 0.01

ii Directors & their

relatives

3000 3000 0.01 0.01

iii Foreign Company 37 37 0.00 0.00

Sub-total (B) (2) 7289892 0 0 7289892 20.37 20.37

Total Public Shareholding (B) =

(B)(1)+(B)(2)

15281315 0 0 15281315 42.67 42.67

TOTAL (A)+(B) 35815053 0 0 35815053 100.00 100.00

(C) Shares held by

Custodians and against

which Depository Receips have been

issued

NA NA 0 0.00 0.00

GRAND TOTAL (A)+(B)+(C) 35815053 0 0 35815053 100.00 100.00

As 140657 shares are transferred to unclaimed and suspense account and do not carry voting rights as per Clause 5A of the Listing Agreement, the

voting rights has been calculated on the reduced capital.

140

ISSUE PROCEDURE

Below is a summary intended to present a general outline of the procedure relating to the bidding, payment,

Allocation and Allotment of the Equity Shares. The procedure followed in this Issue may differ from the one

mentioned below and the prospective investors are assumed to have appraised themselves of the same from our

Company or the BRLMs.

The prospective investors are advised to inform themselves of any restrictions or limitations that may be

applicable to them. Investors that apply in the Issue will be required to confirm and will be deemed to have

represented to our Company, the BRLMs and their respective directors, officers, agents, affiliates and

representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to

acquire the Equity Shares. Our Company and the BRLMs and their respective directors, officers, agents,

affiliates and representatives accept no responsibility or liability for advising any investor on whether such

investor is eligible to acquire the Equity Shares. Also see “Selling and Transfer Restrictions” on page 152.

Qualified Institutions Placements

This Issue is being made to QIBs in reliance upon Chapter VIII of the SEBI ICDR Regulations and section 42 of

the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules,

2014, through the mechanism of Qualified Institutions Placement (“QIP”) wherein a listed company in India

may issue and allot equity shares/fully convertible debentures/partly convertible debentures/non-convertible

debentures with warrants or any other security (other than warrants) which are convertible into or exchangeable

with equity shares at a later date to QIBs on a private placement basis, provided that:

a special resolution approving the QIP has been passed by its shareholders. Such special resolution must

specify that the allotment of equity shares is proposed to be pursuant to a QIP at the relevant date;

equity shares of the same class of such company which are proposed to be allotted through the QIP or

pursuant to conversion or exchange of eligible securities, are listed on a stock exchange in India that has

nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its

shareholders for convening the meeting to pass the special resolution;

the aggregate of the proposed issue and all previous qualified institutions placements made by the issuer in

the same financial year does not exceed five times the net worth (as defined in the SEBI ICDR Regulations)

of the issuer as per the audited balance sheet of the previous financial year

such company complies with the minimum public shareholding requirements set out in the Securities

Contract Regulation Rules, 1957 (“SCRR”);

the issuer shall have completed allotments with respect to any offer or invitation made earlier by the issuer

or shall have withdrawn or abandoned any invitation or offer made earlier by the issuer;

the value of such offer or invitation per QIB shall be with an investment size of not less than ` 20,000 of

face value of the securities;

the payment to be made for subscription to the securities shall be made from the bank account of the person

subscribing to such securities and in case of securities to be held by joint holders, the payment for

subscription to the securities shall be paid from the bank account of the person whose name appears first in

the application;

at least 10% of equity shares issued to QIB’s must be allotted to mutual funds, provided that, if this position

or any part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs;

QIB has been specifically defined under Regulation 2(1) of the SEBI ICDR Regulations and not otherwise

excluded pursuant to Regulation 86(1)(b); and

investors are not allowed to withdraw their bids after the closure of this Issue.

Additionally, there is a minimum pricing requirement for pricing equity shares, offered in a QIP, under the SEBI

ICDR Regulations. The issue price of the equity shares shall not be less than the average of the weekly high and

low of the closing prices of the equity shares of the same class quoted on the stock exchange during the two

141

weeks preceding the relevant date. Pursuant to amendment to the ICDR Regulations, an issuer may offer a

discount of not more than 5% on the price calculated for the QIP as above, subject to the approval of the

shareholders by a special resolution pursuant to Regulation 82(a) of the ICDR Regulations.

The “relevant date” referred to above means the date of the meeting in which the board of directors or the

committee of directors, duly authorized by the board of directors, decides to open the proposed issue and “stock

exchange” means any of the recognized stock exchanges in India on which the equity shares of the issuer of the

same class are listed and on which the highest trading volume in such equity shares has been recorded during the

two weeks immediately preceding the relevant date.

Equity shares must be allotted within 12 months from the date of the shareholders resolution approving the QIP.

The equity shares issued pursuant to the QIP must be issued on the basis of a placement document that shall

contain all material information including the information specified in Schedule XVIII of the SEBI ICDR

Regulations and Form PAS- 4 as prescribed under Rule 14 of the Companies (Prospectus and Allotment of

Securities) Rules, 2014.

Pursuant to the provisions of Section 42 of the Companies Act, 2013 and the rules made thereunder for a

transaction that is not a public offering (i.e. a private placement), an invitation or offer may be made to such

number of persons not exceeding two hundred, excluding QIBs and employees of a company. Hence, there is no

restriction on the number of QIBs that may apply in this Issue. The Placement Document is a private document,

provided to only QIBs interested in applying in this Issue, through serially numbered copies and is required to

be placed on the website of the concerned stock exchange and of the Issuer with a disclaimer to the effect that it

is in connection with an issue to QIBs and no offer is being made to the public or to any category of investors.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of

allotment except on a recognized stock exchange in India.

The minimum number of allottees for each QIP shall not be less than:

Two, where the issue size is less than or equal to ` 250 million; and

Five, where the issue size is greater than ` 250 million.

No single allottee shall be allotted more than 50% of the issue size. QIBs that belong to the same group or that

are under common control shall be deemed to be a single allottee for this purpose.

The Issuer is required to furnish a copy of the placement document to each stock exchange on which its equity

shares are listed. Accordingly, our Company has filed copy of the Preliminary Placement Document and the

Placement Document with the Stock Exchanges, SEBI and RoC.

The aggregate of the proposed QIP and all previous QIPs made in the same financial year shall not exceed five

times the net worth of the Issuer as per its audited balance sheet of the previous financial year.

Our Company has received the in-principle approval of the BSE and NSE dated November 24, 2014 under

Clause 24 (a) of its Equity Listing Agreements for the Issue. Our company has filed a copy of the Preliminary

Placement Document and this Placement Document with the Stock exchanges. Our company will file a copy of

the PD with the stock exchanges. The board of directors of our Company has authorised the Issue pursuant to a

resolution passed at its meeting held on August 26, 2014. The shareholders of our Company at Extraordinary

General Meeting held on September 26, 2014 have authorised the Issue by a special resolution. Further, the QIP

committee was constituted pursuant to a resolution passed at the board meeting held on October 30, 2014.

Issue Procedure

1. Our Company and the BRLMs shall circulate serially numbered copies of the Preliminary Placement

Document, Placement Document and the serially numbered Application Form, either in electronic form

or physical form to Eligible QIBs and the Application Form shall be specifically addressed to such

QIBs. In terms of section 42(7) of the Companies Act, 2013 our Company shall maintain complete

record of the QIBs to whom the Preliminary Placement Document and the serially numbered

Application Form have been dispatched. Our Company will make the requisite filings with the RoC

and with SEBI within the stipulated time period as required under the Companies Act, 2013 and the

rules made thereunder.

142

2. The list of Eligible QIBs to whom the Application Form is delivered shall be determined by the

BRLMs at their sole discretion. Unless a serially numbered Preliminary Placement Document

along with the Application Form is addressed to a particular QIB, no invitation to subscribe shall

be deemed to have been made to such QIB. Even if such documentation were to come into the

possession of any person other than the intended recipient, no offer or invitation to offer shall be

deemed to have been made to such other person and any application that does not comply with this

requirement shall be treated as invalid.

3. Eligible QIBs may submit the Application Form, including any revisions thereof, during the Bidding

Period to the BRLMs.

4. Bidders shall submit Bids for, and our Company shall issue and allot to each successful Allottee at least

such number of Equity Shares in the Issue which would aggregate to ` 20,000 calculated at the face

value of the Equity Shares.

5. Eligible QIBs will be required to indicate the following in the Application Form:

(a) name of the Eligible QIB to whom Equity Shares are to be Allotted;

(b) number of Equity Shares Bid for;

(c) price at which they offer to apply for the Equity Shares provided that Eligible QIBs may also

indicate that they are agreeable to submit a bid in respect of the Equity Shares which shall be

any price as may be determined by our Company in consultation with the BRLMs at or above

the Floor Price net of such discount as approved by the shareholders of our Company;

(d) a representation that it is either (i) outside the United States and is acquiring the Equity Shares

in an offshore transaction in reliance on Regulation S under the U.S. Securities Act; or (ii) a

qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act)

purchasing the Equity Shares pursuant to Section 4(a)(2) of the Securities Act, and it has

agreed to certain other representations set forth in the Application Form;

(e) the details of the depository account(s) to which the Equity Shares should be credited.

Note: Each sub – account of an FII other than a sub – account which is a foreign corporate or a

foreign individual will be considered as an individual QIB and separate Application Forms would

be required from each such sub – account for submitting Bids. FIIs or sub-accounts of FIIs are

required to indicate SEBI FII/ sub-account registration number in the Application Form.

6. Once a duly filled in Application Form is submitted by the Eligible QIB, such Application Form

constitutes an irrevocable offer and the same cannot be withdrawn after the Issue Closing Date.

7. The Eligible Issue Closing Date shall be notified to the Stock Exchanges and the Eligible QIBs shall be

deemed to have been given notice of such date after the receipt of the Application Form.

8. The Bids made by asset management companies or custodians of mutual funds shall specifically state

the names of the concerned schemes for which the Bids are made. In case of a mutual fund, a separate

Bid can be made in respect of each scheme of the mutual fund registered with SEBI.

9. Upon the receipt of the Application Form, our Company in consultation with the BRLMs shall decide

both the Issue Price and the number of Equity Shares to be issued. On determination of the Issue Price,

the BRLMs will send the Confirmation of Allocation Note (“CAN”) to the Eligible QIBs who have

been Allocated Equity Shares along with serially numbered Placement Documents. The dispatch of the

CANs shall be deemed a valid, binding and irrevocable contract for the Eligible QIBs to pay the entire

Issue Price for all the Equity Shares Allocated to such Eligible QIB. The CAN shall contain details like

the number of Equity Shares Allocated to the Eligible QIB and payment instructions including the

details of the amounts payable by the Eligible QIB for Allotment of the Equity Shares in its name and

the Pay-In Date as applicable to the respective Eligible QIBs.

143

Pursuant to receiving the CAN, the Eligible QIBs would have to make the payment of the entire

application monies for the Equity Shares indicated in the CAN at the Issue Price through electronic

transfer to the Escrow Account by the Pay-In Date as specified in the CAN sent to the respective

Eligible QIB. Please note that the allocation shall be at the absolute discretion of our Company

and will be based on the recommendation of the BRLMs.

10. No payment shall be made by QIBs in cash. Please note that nay payment of application monies for the

Equity Shares shall be made from the bank accounts of the relevant QIBs applying for the Equity

Shares. Monies payable on Equity Shares to be held by joint holders shall be paid from the bank

account of the person whose name appears first in the application. Pending allotment, all movies

received for subscription of the Equity Shares shall be kept by our Company in a separate bank account

with a scheduled bank and shall be utilized only for the purposes permitted under the Companies Act,

2013.

11. Upon receipt of the application monies from the Eligible QIBs, our Company shall issue and allot

Equity Shares as per the details in the CAN to the Eligible QIBs. Our Company will intimate the details

of the Allotment to the Stock Exchanges.

12. After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository

participant accounts of the successful bidders, our Company shall apply to the Stock Exchanges for

listing.

13. After receipt of the listing approvals from the BSE and the NSE, our Company shall credit the Equity

Shares into the Depository Participant accounts of the respective Eligible QIB.

14. Our Company shall then apply for the final trading and listing permissions from the Stock Exchanges.

15. The Equity Shares that have been credited to the beneficiary account with the Depository Participant of

the Eligible QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of final

listing and trading approvals from BSE and the NSE.

16. Upon receipt of intimation of final listing and trading approval from BSE and the NSE, our Company

may inform the Eligible QIBs who have received an Allotment of the receipt of such approval. Our

Company and the BRLMs shall not be responsible for any delay or non-receipt of the communication

of the final listing and trading permissions from the BSE and the NSE or any loss arising from such

delay or non-receipt. Final listing and trading approvals granted by the BSE and the NSE are also

placed on their respective websites. Eligible QIBs are advised to apprise themselves of the status of the

receipt of the permissions from the Stock Exchanges or our Company.

Eligible Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations and not otherwise excluded

pursuant to Regulation 86(1)(b) of Chapter VIII of the SEBI ICDR Regulations are eligible to invest. Under

Regulation 86(1)(b) of the SEBI ICDR Regulations, no Allotment shall be made, either directly or indirectly, to

any QIB who is a Promoter or any person related to the Promoters. Currently these include:

Alternate investment funds registered with SEBI;

Eligible FPIs;

Foreign venture capital investors registered with SEBI;

Insurance companies registered with Insurance Regulatory and Development Authority;

Insurance funds set up and managed by the army, navy, or air force of the Union of India;

Insurance funds set up and managed by the Department of Posts, India;

Multilateral and bilateral development financial institutions;

Mutual funds registered with SEBI;

Pension Funds with minimum corpus of ` 25 million;

Provident Funds with minimum corpus of ` 25 million;

Public financial institutions as defined in section 2(72) of the Companies Act, 2013;

Scheduled commercial banks;

State industrial development corporations;

144

National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of

Government of India published in the Gazette of India; and

Venture capital funds registered with SEBI;

FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs

shall participate in this Issue under Schedule 2 and Schedule 2A of FEMA 20, respectively. FIIs and

Eligible FPIs are permitted to participate in the Issue subject to compliance with all applicable laws and

such that the shareholding of the FPIs and FIIs does not exceed specified limits as prescribed under

applicable laws in this regard. Other eligible non-resident QIBs shall participate in the Issue under

Schedule 1 of the FEMA 20 and shall make the payment of application money through the foreign

currency non-resident (FCNR) account and not through the special non-resident rupee (SNRR) account.

In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which

means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to be

10.00% or above of our post-Issue Equity Share capital. Further, in terms of the FEMA 20, the total holding by

each FPI shall be below 10.00% of our total paid-up Equity Share capital and the total holdings of all FPIs put

together shall not exceed 24.00% of our paid-up Equity Share capital. The aggregate limit of 24.00% may be

increased up to the sectoral cap by way of a resolution passed by the Board of Directors followed by a special

resolution passed by the shareholders of our Company. On October 10, 2014 our Board of Directors passed a

resolution for increasing the FII/FPI limit from 24% to 45% of the paid up equity share capital of our Company

and subsequently, the shareholders vide resolution dated November 24, 2014 approved the increase in FII/FPI

limit. Further, our Company vide letter dated November 24, 2014, intimated RBI of the increase in limits of

shareholding of FII/FPIs in our Company, pursuant to Foreign Exchange Management (Transfer or Issue of

Security by a Person Resident Outside India) Regulations, 2000, as amended.

Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions

which may be specified by the Government from time to time.

An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of

the block of three years for which fees have been paid as per the SEBI FII Regulations. Subject to trailing

condition, an FII or sub-account of an FII may participate in the Issue, until the expiry of its registration as a FII

or sub-account, or until it obtains a certificate of registration as FPI, whichever is earlier. If the registration of

the FII or sub-account has expired or is about to expire, such FII or sub-account may, subject to payment of

conversion fees under the SEBI FPI Regulations, participate in the Issue. An FII or sub-account shall not be

eligible to invest as an FII after registering as an FPI under the SEBI FPI Regulations.

In terms of FEMA 20, for calculating the aggregate holding of FPIs in a company, holding of all registered FPIs

as well as holding of FIIs (being deemed FPIs) shall be included.

Under Regulation 86(1)(b) of the SEBI ICDR Regulations, no allotment shall be made pursuant to this Issue,

either directly or indirectly, to any Eligible QIB being our Promoter or any person related to our Promoter.

Eligible QIBs, who have all or any of the following rights shall be deemed to be a person related to the

Promoter:

(a) rights under a shareholders’ agreement or voting agreement entered into with our Promoter or persons

related to our Promoter; or

(b) veto rights; or

(c) right to appoint any nominee director on our Board.

Provided that a Eligible QIB who does not hold any shares in our Company and who has acquired the said rights

in the capacity of a lender shall not be deemed to be person related to our Promoter.

Our Company and the BRLMs and any of their respective directors, officers, counsel, advisors,

representatives, agents or affiliates are not liable for any amendments or modification or changes in

applicable laws or regulations, which may occur after the date of this Placement Document. Eligible QIBs

are advised to make their independent investigations and satisfy themselves that they are eligible to apply.

Eligible QIBs are advised to ensure that any single Application Form from them does not exceed the

investment limits or maximum number of Equity Shares that can be held by them under applicable law

or regulation or as specified in this Placement Document. Further, Eligible QIBs are required to satisfy

themselves that any requisite compliance pursuant to this Allotment such as public disclosures under

145

applicable laws is complied with. Eligible QIBs are advised to consult their advisers in this regard.

Furthermore, Eligible QIBs are required to satisfy themselves that their Application Form would not

eventually result in triggering a tender offer under the Takeover Code.

Note: Affiliates or associates of the BRLMs who are Eligible QIBs may participate in this Issue subject to

compliance with applicable laws.

Allotments made to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are

applicable to each of them respectively, including in relation to lock-in requirements.

A minimum of 10 per cent of the Equity Shares offered in the Issue shall be Allotted to Mutual Funds. If no

Mutual Fund is agreeable to take up the minimum portion as specified above, such minimum portion or part

thereof may be Allotted to other QIBs.

Bid Process

Application Form

Eligible QIBs are permitted to only use the serially numbered Application Forms (which is addressed to the

QIB) supplied by the BRLMs in either electronic form or by physical delivery for the purpose of making a Bid

(including any revision of a Bid) in terms of the Preliminary Placement Document and this Placement

Document.

By making a Bid (including revisions thereof) for Equity Shares pursuant to the terms of the Preliminary

Placement Document, each Eligible QIB will be deemed to have made the following representations and

warranties, and the representations, warranties and agreements made under “Representations By Investors”. The

representations listed in this section shall be included in the Application Form:

1. The Eligible QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI ICDR

Regulations and has a valid and existing registration under the applicable laws of India and is eligible

to participate in this Issue and is not excluded under Regulation 86 of the SEBI ICDR Regulations;

2. The Eligible QIB confirms that it is not a promoter of the Issuer and is not a person related to the

Promoter of the Issuer, either directly or indirectly and its Application does not directly or indirectly

represent the Promoter or Promoter Group or a person related to the Promoter of our Company;

3. The Eligible QIB confirms that it has no rights under a shareholders’ agreement or voting agreement

with the Promoter or persons related to the Promoter, no veto rights or right to appoint any nominee

director on the Board of the Issuer other than such rights acquired in the capacity of a lender (not

holding any Equity Shares) which shall not be deemed to be a person related to the Promoter;

4. The Eligible QIB has no right to withdraw its Bid after the Issue Closing Date;

5. The Eligible QIB confirms that if Equity Shares are Allotted pursuant to this Issue, it shall not, for a

period of one year from Allotment, sell such Equity Shares otherwise than on the floor of the Stock

Exchanges;

6. The Eligible QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted and

together with any Equity Shares held by the QIB prior to this Issue. The Eligible QIB further confirms

that its holding of the Equity Shares does not and shall not, exceed the level permissible as per any

applicable regulations applicable to the QIB;

7. The Eligible QIB confirms that the Bids will not eventually result in triggering an open offer under the

Takeover Code;

8. The Eligible QIB confirms that to the best of its knowledge and belief together with other Eligible

QIBs in this Issue that belongs to the same group or are under common control, the Allotment to the

QIB shall not exceed 50% of the Issue Size. For the purposes of this statement:

(a) The expression “belongs to the same group” shall derive meaning from the concept of

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“companies under the same group” as provided in sub-section (11) of Section 372 of the

Companies Act, 1956; and

(b) “Control” shall have the same meaning as is assigned to it by sub-clause (e) of clause 1

Regulation 2 of the Takeover Code;

9. The Eligible QIBs shall not undertake any trade in the Equity Shares credited to its Depository

Participant account until such time that the final listing and trading approvals for the Equity Shares are

issued by BSE and the NSE; and

10. The Eligible QIB represents that it is either (i) outside the United States and is acquiring the Equity

Shares in an offshore transaction in reliance on Regulation S under the U.S. Securities Act; or (ii) a

qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act) purchasing the

Equity Shares pursuant to Section 4(a)(2) of the U.S. Securities Act, and it has agreed to certain other

representations set forth in the Application Form.

ELIGIBLE QIBs MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR

DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION

NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. ELIGIBLE

QIBs MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE

SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE,

ELIGIBLE SUB-ACCOUNTs OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT

ELIGIBLE QIB.

IF SO REQUIRED BY THE BRLM’s, THE ELIGIBLE QIB SUBMITTING A BID, ALONG WITH

THE APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO

BRLM’s TO EVIDENCE THEIR STATUS AS A “QIB” AS DEFINED HEREINABOVE.

Demographic details like address and bank account will be obtained from the Depositories as per the Depository

Participant account details given above.

The submission of an Application Form by the Eligible QIB shall be deemed a valid, binding and irrevocable

offer for the Eligible QIB to pay the entire Issue Price for its share of Allotment (as indicated by the CAN) and

becomes a binding contract on the Eligible QIB, upon issuance of the CAN by the Issuer in favour of the

Eligible QIB.

Submission of Application Form

All Application Forms shall be required to be duly completed with information including the name of the

Eligible QIB, the price and the number of Equity Shares applied. The Application Form shall be submitted to

the BRLMs either through electronic form or through physical delivery at the following addresses:

Name of the

BRLMs Address Contact Person Email Phone

JM Financial

Institutional

Securities Limited

7th

Floor, Cnergy,

Appasaheb Marathe

Marg, Prabhadevi,

Mumbai - 400025

Mr. Chitresh

Mody / Mr.

Kailash Soni

[email protected] +91 22 6630

3112 /+91 22

6630 3266

Standard Chartered

Securities (India)

Limited

2nd Floor, 23-25 M.

G. Road, Fort,

Mumbai - 400 001,

India

Ms. Roselyn

Pereira / Mr.

Pramath Verma

[email protected] +91 22 4205

6110

The BRLMs shall not be required to provide any written acknowledgement of the same.

Permanent Account Number or PAN

Each Eligible QIB should mention its Permanent Account Number (“PAN”) allotted under the IT Act. The copy

of the PAN card or PAN allotment letter is required to be submitted with the Application Form. Bids

without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted

147

that applicant should not submit the GIR number instead of the PAN as the Application Form is liable to be

rejected on this ground.

Pricing and Allocation

Build-up of the book

The Eligible QIBs shall submit their Bids (including the revision thereof) through the Application Form within

the Bidding Period to the BRLMs. The book shall be maintained by the BRLMs.

Price discovery and Allocation

Our Company, in consultation with the BRLMs, shall finalize the Issue Price for the Equity Shares, which shall

be at or above the Floor Price. The Issuer may offer a discount of not more than 5% on the Floor Price in terms

of Regulation 85 of the ICDR Regulations. After finalization of the Issue Price, our Company shall update the

Preliminary Placement Document with the details of the Issue and file this Placement Document with the Stock

Exchanges.

After finalisation of the Issue Price, our Company shall update the Preliminary Placement Document with the

Issue details and file the same with Stock Exchanges as Placement Document.

Method of Allocation

Our Company shall determine the Allocation in consultation with the BRLMs on a discretionary basis and in

compliance with Chapter VIII of the SEBI ICDR Regulations.

Application Forms received from the Eligible QIBs at or above the Issue Price shall be grouped together to

determine the total demand. The Allocation to all such Eligible QIBs will be made at the Issue Price. Allocation

to Mutual Funds for up to a minimum of 10% of the Issue Size shall be undertaken subject to valid Application

Form being received at or above the Issue Price.

THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BRLMs IN RESPECT OF

ALLOCATION SHALL BE FINAL AND BINDING ON ALL ELIGIBLE QIBs. ELIGIBLE QIBs MAY

NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE

DISCRETION OF OUR COMPANY IN CONSULTATION WITH THE BRLMs AND ELIGIBLE QIBs

MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID

APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE. NEITHER OUR COMPANY NOR THE

BRLMs ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION.

Number of Allottees

The minimum number of Allottees in the Issue shall not be less than:

(a) two, where the Issue Size is less than or equal to ` 2,500 million; or

(b) five, where the Issue Size is greater than ` 2,500 million;

Provided that no single Allottee shall be Allotted more than 50 per cent of the aggregate amount of the Issue

Size, and provided further that QIBs belonging to the same group or those who are under common control shall

be deemed to be a single Allottee for the purpose of this clause. For details of what constitutes “same group” or

“control”, please refer to - “Bid Process - Application Form”.

The Equity Shares will be Allotted within 12 months from the date of the shareholders resolution approving this

Issue.

CAN

Based on the Application Forms received, our Company in consultation with the BRLMs will, in its sole and

absolute discretion, decide the list of Eligible QIBs to whom the serially numbered CAN shall be sent, pursuant

to which the details of the Equity Shares Allocated to them and the details of the amounts payable for Allotment

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of the same in their respective names shall be notified to such Eligible QIBs. Additionally, the CAN would

include details of Escrow Account into which such payments would need to be made, Pay-In Date as well as the

probable designated date (“Designated Date”), being the date of credit of the Equity Shares to the Eligible

QIB’s account, as applicable to the respective Eligible QIBs.

The Eligible QIBs would also be sent a serially numbered Placement Document either in electronic form or by

physical delivery along with the serially numbered CAN.

The dispatch of the serially numbered Placement Document and the CAN to the Eligible QIB shall be deemed a

valid, binding and irrevocable contract for the Eligible QIB to furnish all details that may be required by the

BRLMs and our Company and to pay the entire Issue Price for all the Equity Shares Allocated to such Eligible

QIB.

ELIGIBLE QIBs ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO

ACCEPT THE EQUITY SHARES THAT MAY BE ALLOCATED / ALLOTTED TO THEM

PURSUANT TO THE ISSUE.

Bank Account for the Payment of Bid Money

Our Company has opened an escrow account titled “CEAT Limited – QIP Escrow Account” (“Escrow

Account”) with the Escrow Bank in terms of the arrangements between our Company, the BRLMs, Yes Bank

Limited (acting as the Escrow Bank). The Eligible QIBs will be required to deposit the entire amount payable

for the Equity Shares Allocated to it by the Pay-In Date as mentioned in their respective CAN.

Payments are to be made only through electronic fund transfer.

Note: Payments through cheques are liable to be rejected.

If the payment is not made favouring the Escrow Account within the time stipulated in the CAN, the

Application Form and the CAN of the Eligible QIB are liable to be cancelled.

In case of cancellations or default by the Eligible QIBs, our Company and the BRLMs has the right to reallocate

the Equity Shares at the Issue Price among existing or new Eligible QIBs at their sole and absolute discretion,

subject to the compliance with the requirements of the Companies Act, 2013 and the SEBI ICDR Regulations.

Our Company undertakes to utilize the amount in the Escrow Account only for the purposes of (i) adjustments

against Allotment of Equity Shares in the Issue; or (ii) repayment of application money if our Company is not

able to Allot Equity Shares in the Issue.

Designated Date and Allotment of Equity Shares

1. The Equity Shares will not be Allotted unless the Eligible QIBs pay the Issue Price to the Escrow

Account as stated above.

2. Subject to the satisfaction of the terms and conditions of the Placement Agreement, our Company will

ensure that the Allotment of the Equity Shares is completed by the Designated Date provided in the

CAN for the Eligible QIBs who have paid the aggregate subscription amounts as stipulated in the

CAN.

3. In accordance with the SEBI ICDR Regulations, Equity Shares will be issued and Allotment shall be

made only in the dematerialised form to the Allottees. Allottees will have the option to re-materialize

the Equity Shares, if they so desire, as per the provisions of the Companies Act, 2013 and the

Depositories Act.

4. Our Company reserves the right to cancel this Issue at any time up to Allotment without assigning any

reasons whatsoever.

5. Post receipt of the listing approvals of the BSE and the NSE, the Issuer shall credit the Equity Shares

into the Depository Participant account of the Eligible QIBs.

6. Following the Allotment and credit of Equity Shares into the Eligible QIBs Depository Participant

149

account, our Company will apply for final listing and trading approvals for trading on BSE and the

NSE.

7. In the event that we are unable to issue and Allot the Equity Shares offered in the Issue or on

cancellation of the Issue, within 60 days from the date of receipt of application money, in accordance

with section 42 of the Companies Act, 2013 we shall repay the application money within 15 days from

expiry of 60 days, failing which we shall repay that money with interest at the rate of 12% per annum

from expiry of the 60th

day. The application money to be refunded by us shall be refunded to the same

bank account from which application money was remitted by the QIBs.

8. The Escrow Bank shall release the monies lying to the credit of the Escrow Bank Account to our

Company after allotment of Equity Shares to the QIBs.

9. In case of QIBs who have been Allotted more than 5% of the Equity Shares in the Issue, our Company

shall disclose the name and the number of the Equity Shares Allotted to such QIB to the Stock

Exchanges and the Stock Exchanges shall make the same available on their website.

Other Instructions

Our Right to Reject Bids

Our Company, in consultation with the BRLMs, may reject Bids, in part or in full, without assigning any

reasons whatsoever. The decision of our Company and the BRLMs in relation to the rejection of Bids shall be

final and binding.

Equity Shares in dematerialised form with NSDL or CDSL

1. The Allotment of the Equity Shares in this Issue shall be only in dematerialized form, (i.e., not in the

form of physical certificates but be fungible and be represented by the statement issued through the

electronic mode).

2. An Eligible QIB applying for Equity Shares must have at least one beneficiary account with a

Depository Participant of either NSDL or CDSL prior to making the Bid.

3. Allotment to a successful Eligible QIB will be credited in electronic form directly to the beneficiary

account (with the Depository Participant) of the Eligible QIB.

4. Equity Shares in electronic form can be traded only on the Stock Exchanges having electronic

connectivity with NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL

and CDSL.

5. The trading of the Equity Shares would be in dematerialised form only for all Eligible QIBs in the

demat segment of the respective Stock Exchanges.

6. Our Company will not be responsible or liable for the delay in the credit of Equity Shares due to errors

in the Application Form or on part of the Eligible QIBs.

Compliance officer

Mr. H. N. Singh Rajpoot

Tel: +91 22 25292152-55(B), 25292156(D)

Fax: +91 22 25292158

Email: [email protected]/[email protected]

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PLACEMENT AGREEMENT

Placement Agreement

The BRLMs has entered into a Placement Agreement dated November 24, 2014 with our Company, pursuant to

which, the BRLMs has agreed, subject to certain conditions, to place the Equity Shares of our Company, on

reasonable efforts basis, pursuant to Chapter VIII of the SEBI (ICDR) Regulations and section 42 of the

Companies Act, 2013.

The Placement Agreement contains customary representations and warranties, as well as indemnities from our

Company and the issue is subject to satisfaction of certain conditions and subject to termination in accordance

with the terms contained therein.

Applications shall be made to list the Equity Shares and admit them to trading on the Stock Exchange. No

assurance can be given as to the liquidity or sustainability of the trading market for Equity Shares, the ability of

holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be

able to sell their Equity Shares.

This Placement Document has not been, and will not be, registered as a prospectus with the Registrar of

Companies in India and that, with the exception of QIBs, no Equity Shares will be offered in India or overseas

to the public or any members of the public in India or any other class of investors other than QIBs.

The Equity Shares have not been and will not be registered under the U.S Securities Act, and they may not be

offered, sold or delivered within the United States, except pursuant to an exemption from, or in a transaction not

subject to, the registration requirements of U.S Securities Act and applicable state securities law. Accordingly,

the Equity Shares are being offered, sold and delivered (i) in the United States only to qualified institutional

buyers (as defined in Rule 144A under the U.S. Securities Act) pursuant to section 4(a)(2) under the U.S.

Securities Act or another available exemption from the registration requirements of the U.S. Securities Act, and

(ii) to QIBs (as defined in SEBI ICDR Regulations) outside the United States in offshore transactions in reliance

on Regulation S. The Equity Shares are transferable only in accordance with the restrictions described in the

section titled “Selling and Transfer Restrictions”. All purchasers are required to make representation set forth in

“Representations By Investors”.

In connection with the Issue, the BRLMs (or its affiliates) may, for its own accounts, enter into asset swaps,

credit derivatives or other derivative transactions relating to the Equity Shares at the same time as the offer and

sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the BRLMs may

hold long or short positions in such Equity Shares. These transactions may comprise of a substantial portion of

the Issue and no specific disclosure will be made of such positions. Affiliates of the BRLMs who are Eligible

QIBs may purchase Equity Shares and be allocated Equity Shares for proprietary purposes and not with a view

to distribution or in connection with the issuance of offshore derivative instruments.

The BRLMs and certain of their affiliates have in past provided, currently provide and may in the future from

time to time provide, investment banking general financing and banking and advisory services to our company

and our affiliates for which they have in the past received, currently receive and may in the future receive,

customary fees.

Lock-up

Our Company has agreed that it will not for a period of 90 days from the date of Allotment under the QIP,

without the prior written consent of the Book Running Lead Managers, directly or indirectly, (a) offer, issue,

contract to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant

any option, right or warrant to purchase, or otherwise transfer or dispose of, any Equity Shares or any securities

convertible into or exercisable for Equity Shares (including, without limitation, securities convertible into or

exercisable or exchangeable for Equity Shares which may be deemed to be beneficially owned), or file any

registration statement under the U.S. Securities Act of 1933, as amended, with respect to any of the foregoing,

or (b) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or

indirectly, any of the economic consequences associated with the ownership of any of the Equity Shares or any

securities convertible into or exercisable or exchangeable for Equity Shares (regardless of whether any of the

transactions described in clause (a) or (b) is to be settled by the delivery of Equity Shares or such other

securities, in cash or otherwise), or (c) deposit Equity Shares with any other depositary in connection with a

151

depositary receipt facility, or (d) publicly announce any intention to enter into any transaction falling within (a)

to (c) above or enter into any transaction (including a transaction involving derivatives) having an economic

effect similar to that of an issue or offer or deposit of Equity Shares in any depositary receipt facility or publicly

announce any intention to enter into any transaction falling within (a) to (c) above; provided, however, that the

foregoing restrictions do not apply to any issue or offer to the extent such issue or offer is required by Indian

law.

Our Promoters have agreed that they will not for a period of 90 days from the date of Allotment under the QIP,

without the prior written consent of the Book Running Lead Managers directly or indirectly, offer, lend, sell,

contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,

right or warrant to purchase, or otherwise transfer or dispose of, any promoter shares or, subject to clause (d)(ii)

hereof, any securities convertible into or exercisable for promoter shares or file any registration statement under

the U.S. Securities Act of 1933, as amended, with respect to any of the foregoing, or (b) enter into any swap or

other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic

consequences associated with the ownership of any of the promoter shares or any securities convertible into or

exercisable or exchangeable for promoter shares (regardless of whether any of the transactions described in

clause (a) or (b) is to be settled by the delivery of promoter shares or such other securities, in cash or otherwise),

or (c) deposit promoter shares with any other depositary in connection with a depositary receipt facility, or (d)

publicly announce any intention to enter into any transaction falling within (a) to (c) above or enter into any

transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or

deposit of promoter shares in any depositary receipt facility or publicly announce any intention to enter into any

transaction falling within (a) to (c) above. Provided, however, that the foregoing restrictions: (a) shall only be

applicable to any such transactions relating to promoter shares aggregating more than 3% of the share capital of

the Company immediately after the QIP; (b) do not apply to any sale, transfer or disposition of promoter shares

by our Promoters with prior notice to the Book Running Lead Managers to the extent such sale, transfer or

disposition is required by Indian law; and (c) do not apply to any bona fide pledge of promoter shares held by

our promoters, as collateral for loans as normal commercial terms entered into, in the ordinary course of

business.

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SELLING AND TRANSFER RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares in this Issue is

restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document or any

offering material are advised to take legal advice with regard to any restrictions that may be applicable to them

and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale

in any circumstances in which such offer or sale is not authorised or permitted.

SELLING RESTRICTIONS

General

No action has been taken or will be taken by the Company or the Book Running Lead Managers that would

permit a public offering of the Equity Shares to occur in any jurisdiction, or the possession, circulation or

distribution of this Placement Document or any other material relating to the Company or the Equity Shares in

any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares may not be offered or

sold, directly or indirectly, and neither this Placement Document nor any offering materials or advertisements in

connection with the Equity Shares may be distributed or published in or from any country or jurisdiction except

under circumstances that will result in compliance with any applicable rules and regulations of any such country

or jurisdiction. The Issue will be made in compliance with the applicable SEBI ICDR Regulations. Each

purchaser of the Equity Shares in this Issue will be deemed to have made acknowledgments and agreements as

described under “Notice to Investors”, “Representations by Investors” and “Selling and Transfer Restrictions”.

Australia

This Placement Document is not a disclosure document under Chapter 6D of the Corporations Act 2001 (Cth)

(the “Australian Corporations Act”), has not been lodged with the Australian Securities and Investments

Commission and does not purport to include the information required of a disclosure document under Chapter

6D of the Australian Corporations Act. Accordingly, (i) the offer of the Equity Shares under this Placement

Document is only made to “Sophisticated investors” within the meaning of Section 708(8) of the Australian

Corporations Act or “Professional Investors” within the meaning of section 708(11) of the Australian

Corporations Act, who in each case are also “wholesale clients” for the purposes of Chapter 7 of the Australian

Corporations Act, (ii) this Placement Document is made available in Australia only to persons as set forth in

clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree is such a person as set

forth in clause (i) above, and agrees not to sell or offer for sale within Australia any Equity Share sold to the

offeree within 12 months after their issue or transfer to the offeree under this Placement Document.

The Company is not licensed to provide financial product advice in Australia in relation to the Equity Shares.

This Placement Document is intended to provide general information only and has been prepared without taking

into account any particular person’s objectives, financial situation or needs. Investors should, before acting on

this information, consider the appropriateness of this information having regard to their personal objectives,

financial situation or needs. No cooling off period applies in relation to this offer under the Australian

Corporations Act.

Bahrain

The Issue is a private placement. It is not subject to the regulations of the Central Bank of Bahrain that apply to

public offerings of securities, and the extensive disclosure requirements and other protections that these

regulations contain. This Placement Document is therefore intended only for accredited investors. The financial

instruments offered by way of private placement may only be offered in minimum subscriptions of $100,000 (or

equivalent in other currencies). The Central Bank of Bahrain assumes no responsibility for the accuracy and

completeness of the statements and information contained in this document and expressly disclaims any liability

whatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents of this

document. The board of directors and the management of the Company accept responsibility for the information

contained in this document. To the best of the knowledge and belief of the board of directors and the

management, who have taken all reasonable care to ensure that such is the case, the information contained in

this document is in accordance with the facts and does not omit anything likely to affect the reliability of such

information.

Notice to Prospective Investors in the Dubai International Financial Centre

153

This Placement Document relates to an exempt offer (an “Exempt Offer”) in accordance with the Offered

Securities Rules of the Dubai Financial Services Authority (the “DFSA”). This Placement Document is intended

for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any

other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with

Exempt Offers. The DFSA has not approved this Placement Document nor taken steps to verify the information

set out in it, and has no responsibility for it. The Equity Shares to which this Placement Document relates may

be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Equity Shares offered

should conduct their own due diligence on the Equity Shares. If you do not understand the contents of this

Placement Document, you should consult an authorised financial adviser. For the avoidance of doubt, the Equity

Shares are not interests in a “fund” or a ‘‘collective investment scheme’’ within the meaning of either the

Collective Investment Law (DIFC Law No. 2 of 2010) or the Collective Investment Rules Module of the Dubai

Financial Services Authority Rulebook.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus

Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus

Directive is or was implemented in that Relevant Member State (the “Relevant Implementation Date”), the

Equity Shares may not be offered or sold to the public in that Relevant Member State prior to the publication of

a prospectus in relation to the Equity Shares which has been approved by the competent authority in that

Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the

competent authority in that Relevant Member State, all in accordance with the Prospectus Directive and the

2010 Amending Directive, except that the Equity Shares, with effect from and including the Relevant

Implementation Date, may be offered to the public in that Relevant Member State at any time:

to persons or entities that are “qualified investors” as defined in the Prospectus Directive or, if that

Relevant Member State has implemented the 2010 Amending Directive, as defined in the 2010

Amending Directive;

to (i) fewer than 100 natural or legal persons (other than "qualified investors" as defined in the

Prospectus Directive); or (ii) if that Relevant Member State has implemented the 2010 Amending

Directive, fewer than 150 natural or legal persons (other than "qualified investors" as defined in the

2010 Amending Directive), in each case subject to obtaining the prior consent of the Underwriters; or

in any circumstances falling within Article 3(2) of the Prospectus Directive as amended (to the extent

implemented in that Relevant Member State) by Article 1(3) of the 2010 Amending Directive,

provided that no such offering of Equity Shares shall result in a requirement for the publication by the Company

or the Underwriters of a prospectus pursuant to Article 3 of the Prospectus Directive as amended (to the extent

implemented in that Relevant Member State) by Article 1(3) of the 2010 Amending Directive.

For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any

Equity Shares in any Relevant Member State means the communication in any form and by any means of

sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to

decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any

measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive”

means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State

and the expression “2010 Amending Directive” means Directive 2010/73/EU and includes any relevant

implementing measure in each Relevant Member State.

In the case of any Equity Shares being offered to a financial intermediary, as that term is used in Article 3(2) of

the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged

and agreed that the Equity Shares acquired by it in the Issue have not been acquired on a non-discretionary basis

on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which

may give rise to an offer of any Equity Shares to the public other than their offer or resale in a Relevant Member

State to “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (as amended, to

the extent implemented in a Relevant Member State, by the 2010 Amending Directive) or in circumstances in

which the prior consent of the Underwriters has been obtained to each such proposed offer or resale. The

Company, the Underwriters and their respective affiliates will rely upon the truth and accuracy of the foregoing

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representation, acknowledgement and agreement. Notwithstanding the above, a person who is not a “qualified

investor” as so defined and who has notified the Underwriters of such fact in writing may, with the consent of

the Underwriters, be permitted to subscribe for or purchase Equity Shares in the Issue subject to compliance at

all times by the Company and the Underwriters with the provisions of Article 3(2) of the Prospectus Directive as

amended (to the extent implemented) by Article 1(3) of the 2010 Amending Directive.

Hong Kong

No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong, by

means of any document, other than to “professional investors” as defined in the Securities and Futures

Ordinance, Chapter 571 of the laws of Hong Kong (“Securities and Futures Ordinance”) and any rules made

under that Ordinance; or in other circumstances which do not result in the document being a “prospectus” as

defined in the Companies Ordinance, Chapter 622 of the laws of Hong Kong (“Companies Ordinance”); or

which do not constitute an offer to the public within the meaning of the Companies Ordinance. No document,

invitation or advertisement relating to the Equity Shares has been issued or may be issued, which is directed at,

or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under

the securities laws of Hong Kong) other than with respect to Equity Shares which are intended to be disposed of

only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures

Ordinance and any rules made under that Ordinance. This Placement Document and the Equity Shares have not

been and will not be registered with the Securities and Futures Commission of Hong Kong and/or the Stock

Exchange of Hong Kong. There are no public markets or platforms in Hong Kong for the purchase or disposal

of the Equity Shares. If you are in doubt as to the contents of this Placement Document, you must immediately

seek legal and investment advice from your solicitor, accountant and/or professional advisors.

Japan

The Equity Shares have not been and will not be registered under the Financial Instruments and Exchange Law

of Japan (Law. No. 25 of 1948 as amended) (the “FIEL”). The Equity Shares may not be offered or sold,

directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan or to others for re-offering or re-

sale, directly or indirectly, in Japan or to, or for the benefit of any resident of Japan, except pursuant to an

exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other

applicable laws, regulations and ministerial guidelines of Japan. As used in this paragraph, a ”resident of Japan”

means any natural person residing in Japan and business offices located in Japan, including any corporation or

other entity organised under the laws of Japan.

Republic of Korea

This Placement Document is not, and under no circumstances is to be considered as, a public offering of

securities in Korea for the purposes of the Financial Investment Services and Capital Market Act of Korea (the

“FSCMA”). Neither the Company nor any Underwriter may make any representation with respect to the

eligibility of any recipients of this Placement Document to acquire the Equity Shares offered hereby under the

laws of Korea, including but without limitation the Foreign Exchange Transaction Act of Korea and the

regulations thereunder (the “FETA”). The Equity Shares offered hereby have not been registered under the

FSCMA and the Equity Shares may not be offered, sold or delivered, directly or indirectly, or offered or sold to

any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea (as defined in the

FETA), except otherwise permitted by applicable laws and regulations of Korea, including, without limitation,

the FSCMA and the FETA.

Kuwait

The Issue has not been approved by the Kuwait Central Bank or the Kuwait Ministry of Commerce and

Industry, nor has the Company received authorisation or licensing from the Kuwait Central Bank or the Kuwait

Ministry of Commerce and Industry to market or sell the Equity Shares within Kuwait. Therefore, no services

relating to the offering, including the receipt of applications and/or the allotment of Equity Shares, may be

rendered within Kuwait by the Company or persons representing the Company.

Oman

This Placement Document and the Equity Shares offered under it are issued and governed by the laws of India.

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No offer or marketing of any securities or financial products including the Equity Shares has been or will be

made by the Company from within the Sultanate of Oman and no subscription to any securities or financial

products may or will be effected or undertaken within the Sultanate of Oman. The Company does not have a

presence or representation in the Sultanate of Oman and any purchase of the Equity Shares will be deemed to be

made in and under the laws of India.

By receiving this Placement Document, the person or entity to whom it has been issued understands,

acknowledges and agrees that this document has not been registered or approved by the Central Bank of Oman,

the Oman Ministry of Commerce and Industry, the Oman Capital Market Authority or any other authority in the

Sultanate of Oman, nor is the Company authorised or licensed by the Central Bank of Oman, the Oman Ministry

of Commerce and Industry, the Oman Capital Market Authority or any other authority in the Sultanate of Oman,

to market or sell the Equity Shares within the Sultanate of Oman.

The Equity Shares offered under this document have not and will not be listed on any stock exchange in the

Sultanate of Oman.

The Underwriters are not brokers, dealers, financial advisors or investment advisors licensed under the laws

applicable in the Sultanate of Oman, and, as such, do not advise residents of the Sultanate of Oman as to the

appropriateness of investing in or purchasing or selling securities or other financial products.

Nothing contained in this Placement Document is intended to constitute investment, legal, tax, accounting or

other professional advice in, or in respect of, the Sultanate of Oman. This Placement Document is confidential

and for your information only and nothing in this Placement Document is intended to endorse or recommend a

particular course of action.

You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

Qatar

This Placement Document does not, and is not intended to, constitute an invitation or an offer of securities in the

State of Qatar (including the Qatar Financial Centre) and accordingly should not be construed as such. The

Equity Shares have not been, and shall not be, offered, sold or delivered at any time, directly or indirectly, in the

State of Qatar. Any offering of the Equity Shares shall not constitute a public offer of securities in the State of

Qatar.

By receiving this Placement Document, the person or entity to whom it has been provided to understands,

acknowledges and agrees that: (a) neither this Placement Document nor the Equity Shares have been registered,

considered, authorised or approved by the Qatar Central Bank, the Qatar Financial Markets Authority, the Qatar

Financial Centre Regulatory Authority or any other authority or agency in the State of Qatar; (b) neither the

Company nor persons representing the Company are authorised or licensed by the Qatar Central Bank, the Qatar

Financial Markets Authority, the Qatar Financial Centre Regulatory Authority, or any other authority or agency

in the State of Qatar, to market or sell the Equity Shares within the State of Qatar; (c) this Placement Document

may not be provided to any person other than the original recipient and is not for general circulation in the State

of Qatar; and (d) no agreement relating to the sale of the Equity Shares shall be consummated within the State of

Qatar.

No marketing of the Equity Shares has been or will be made from within the State of Qatar and no subscription

to the Equity Shares may or will be consummated within the State of Qatar. Any applications to invest in the

Equity Shares shall be received from outside of Qatar. This Placement Document shall not form the basis of, or

be relied on in connection with, any contract in Qatar. Neither the Company nor persons representing the

Company are, by distributing this document, advising individuals resident in the State of Qatar as to the

appropriateness of investing in or purchasing or selling securities or other financial products. Nothing contained

in this document is intended to constitute investment, legal, tax, accounting or other professional advice in, or in

respect of, the State of Qatar.

Saudi Arabia

This Placement Document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are

permitted under the Offers of Securities Regulations issued by the Capital Market Authority in the Kingdom of

Saudi Arabia.

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The Capital Market Authority does not make any representation as to the accuracy or completeness of this

Placement Document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in

reliance upon, any part of this document. Prospective purchasers of the Equity Shares offered hereby should

conduct their own due diligence on the accuracy of the information relating to the Equity Shares. If you do not

understand the contents of this Placement Document you should consult an authorised financial adviser.

Singapore

This Placement Document has not been and will not be registered as a prospectus with the Monetary Authority

of Singapore. Accordingly, this Placement Document and any other document or material in connection with the

offer or sale, or invitation for subscription or purchase, of the Equity Shares may not be circulated or distributed,

nor may the Equity Shares be offered or sold, or be made the subject of an invitation for subscription or

purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor

pursuant to Section 274 of the Securities and Future Act (Chapter 289) of Singapore (the “SFA”), (ii) to a

relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions

specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any

other applicable provision of the SFA.

Unless otherwise permitted under the SFA, where the Equity Shares are acquired by a person pursuant to

Section 274 or 275 of the SFA, such Equity Shares shall not be transferable for six months after that person has

acquired the Equity Shares, except (i) to another person who is an institutional investor or a relevant person, or

(ii) pursuant to Section 275(1A) of the SFA.

Unless otherwise permitted under the SFA, where the Equity Shares are subscribed or purchased pursuant to

Section 275 of the SFA by a relevant person who is:

a corporation which is not an accredited investor (as defined in Section 4A of the SFA) the sole

business of which is to hold investments and the entire share capital of which is owned by one or more

individuals, each of whom is an accredited investor; or

a trust (where the trustee is not an accredited investor) the sole purpose of which is to hold investments

and each beneficiary of the trust is an individual who is an accredited investor,

shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest

in that trust shall not be transferable for six months after that corporation or that trust has acquired the Equity

Shares pursuant to an offer made under Section 275 of the SFA except: (i) to an institutional investor or to a

relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on the

terms that such shares, debentures and units of shares and debentures of that corporation or such rights and

interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign

currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or

other assets, in accordance with the conditions, specified in Section 275 of the SFA as applicable; (ii) where no

consideration is given for the transfer; or (iii) by operation of law.

Taiwan

The Equity Shares have not been and will not be registered with the Financial Supervisory Commission of

Taiwan and are not being offered for subscription or sold and may not be offered for subscription or sold,

directly or indirectly, in Taiwan or to, or for the benefit of, any resident of Taiwan.

United Arab Emirates

This Placement Document does not, and shall not, constitute an invitation, offer, sale or delivery of shares or

other securities under the laws of the United Arab Emirates (the “UAE”) (including the laws of the Dubai

International Financial Centre (the “DIFC”)) and accordingly shall not be construed as such. Neither the Equity

Shares nor interests therein offered nor the Issue are regulated under the laws of the UAE (including the laws of

the DIFC) relating to securities, investments or otherwise. Neither the Issue nor this Placement Document is

approved or licensed by, or registered with, the UAE Central Bank, the Dubai Financial Services Authority

(“DFSA”), or any other relevant licensing or regulatory authorities or governmental agencies in the UAE

(including in the DIFC). The Equity Shares have not been and will not be registered under Federal Law No. 4 of

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2000 Concerning the Emirates Securities and Commodities Authority and the Emirates Security and Commodity

Exchange, or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities market or with

any other UAE or DIFC exchange.

The Issue, the Equity Shares and interests therein do not constitute a public offer of securities or an

advertisement or solicitation to the general public in the UAE in accordance with the Commercial Companies

Law, Federal Law No. 8 of 1984 (as amended) or otherwise, or an offer of securities in the DIFC in accordance

with the Markets Law, DIFC Law No. 12 of 2004. This Placement Document is strictly private and confidential

and is being distributed to a limited number of selected institutional and/or sophisticated investors and must not

be provided to any person other than the original recipient, and may not be reproduced or used for any other

purpose. The interests in the Equity Shares may not be offered or sold directly or indirectly to retail investors or

the public in the UAE (including in the DIFC) and no sale of securities or other investment products is intended

to be consummated within the UAE or the DIFC. The Underwriters are not licensed brokers, dealers, financial

advisors or investment advisors under the laws applicable in UAE and the DIFC, and do not advise individuals

resident in the UAE or the DIFC as to the appropriateness of investing in or purchasing or selling securities or

other financial products. Nothing contained in this Placement Document is intended to constitute investment,

legal, tax, accounting or other professional advice in, or in respect of, the UAE or the DIFC. This document is

confidential and for your information only and nothing in this Placement Document is intended to endorse or

recommend a particular course of action. Prospective investors should conduct their own due diligence on the

Issue and the Equity Shares. You should consult an appropriate professional for specific advice rendered on the

basis of your situation.

United Kingdom

The Equity Shares cannot be promoted in the United Kingdom to the general public. The contents of this

Placement Document have not been approved by an authorised person within the meaning of FSMA. The

Underwriters (a) may only communicate or cause to be communicated and will only communicate or cause to be

communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of

the Financial Services and Markets Act 2000, as amended (the “FSMA”), to persons who (i) are investment

professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)

Order 2005, as amended (the “Financial Promotion Order”), or (ii) fall within any of the categories of persons

described in article 49(2)(a) to (d) of the Financial Promotion Order or otherwise in circumstances in which

section 21(1) of the FSMA does not apply to the Company; and (b) has complied and will comply with all

applicable provisions of the FSMA with respect to anything done by it in relation to the Equity Shares in, from

or otherwise involving the United Kingdom. Any invitation or inducement to engage in investment activity

(within the meaning of Section 21 of FSMA) in connection with, or relating to, the sale or purchase of any

Equity Shares, may only be communicated or caused to be communicated in circumstances in which Section

21(1) of the FSMA does not apply. It is the responsibility of all persons under whose control or into whose

possession this document comes to inform themselves about and to ensure observance of all applicable

provisions of FSMA in respect of anything done in relation to an investment in Equity Shares in, from or

otherwise involving, the United Kingdom.

United States

The Equity Shares have not been and will not be registered under the U.S. Securities Act or the securities laws

of any state of the United States and may not be offered, sold or delivered within the United States, except

pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S.

Securities Act and applicable U.S. state securities laws. The BRLMs have advised us that the Equity Shares will

be offered, sold and delivered (i) in the United States by broker-dealers registered as such under the U.S.

Exchange Act of 1934, as amended, only to qualified institutional buyers (as defined in Rule 144A under the

U.S. Securities Act) pursuant to Section 4(a)(2) under the U.S. Securities Act or another available exemption

from registration under the U.S. Securities Act and (ii) to QIBs (ss defined in SEBI ICDR Regulations) outside

the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.

In addition, until 40 days after the commencement of the Issue, an offer or sale of the Equity Shares within the

United States by a dealer (whether or not participating in the Issue) may violate the registration requirements of

the U.S. Securities Act if such offer or sale is made otherwise than pursuant to an exemption from, or in a

transaction not subject to, the registration requirements of the U.S. Securities Act.

The Equity Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission,

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any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the

foregoing authorities passed upon or endorsed the merits of the Issue or the accuracy or adequacy of this

Placement Document. Any representation to the contrary is a criminal offense in the United States. See also the

section “Selling and Transfer Restrictions – Transfer Restrictions” below. If you purchase the Equity Shares in

the Issue, you will be deemed to have made the representations and agreements described in the section

“Representations by Investors” and in this section with respect to that purchase.

Notice to New Hampshire residents

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED

STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS

EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW

HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW

HAMPSHIRE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B OF THE NEW

HAMPSHIRE REVISED STATUTES IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER

ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR

A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW

HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR

RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT

IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,

CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF

THIS PARAGRAPH.

TRANSFER RESTRICTIONS

Because of the following restrictions, you are advised to consult legal counsel prior to making any offer, resale,

pledge or other transfer of Equity Shares. Terms that are defined in Rule I44A or Regulation S under the U.S.

Securities Act are used herein as defined therein.

.

Until 40 days after the commencement of the Issue, an offer or sale of the Equity Shares within the United

States by a dealer (whether or not participating in the Issue) may violate the registration requirements of the

U.S. Securities Act if such offer or sale is made otherwise than pursuant to an exemption from, or in a

transaction not subject to, the registration requirements of the U.S. Securities Act.

Notice to Investors in the United States

Each investor in the United States purchasing the Equity Shares in the Issue in reliance on an exemption from

the registration requirements of the U.S. Securities Act, by accepting the delivery of this Placement Document,

will be deemed to have represented and agreed as follows:

It acknowledges and agrees (or if it is a broker-dealer acting as an agent on behalf of a customer, its

customer has confirmed to it that such customer acknowledges and agrees) that such Equity Shares

have not been and will not be registered under the U.S. Securities Act or any state securities laws in the

United States;

It is a qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act), is aware

(and each beneficial owner has been advised) that the sale to it is being made in a transaction exempt

from the registration requirements of the U.S. Securities Act and is acquiring such Equity Shares for its

own account or for the account of a qualified institutional buyer;

It is aware that the Equity Shares are being offered in the United States in a transaction not involving

any public offering in the United States within the meaning of the U.S. Securities Act;

It acknowledges and agrees that if, in the future, it decides to offer, resell, pledge or otherwise transfer

such Equity Shares, or any economic interest therein, such Equity Shares or any economic interest

therein may be offered, sold, pledged or otherwise transferred only (A) in the United States (i) to a

person whom you reasonably believe is a qualified institutional buyer in a transaction meeting the

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requirements of Rule 144A, (ii) pursuant to an exemption from the registration requirements under the

U.S. Securities Act provided by Rule 144 thereunder (if available); (iii) pursuant to another available

exemption from the registration requirements of the U.S. Securities Act, or (iv) pursuant to an effective

registration statement under the U.S. Securities Act, or (B) outside the United States in an offshore

transaction in accordance with Regulation S under the U.S. Securities Act, in each case in accordance

with any applicable securities laws of any state of the United States or any other jurisdiction;

It acknowledges that the Equity Shares are “restricted securities” within the meaning of Rule 144(a)(3)

under the U.S. Securities Act and no representation is made as to the availability of the exemption

provided by Rule 144 for re-sales of any Equity Shares;

It agrees not to deposit or cause to be deposited such Equity Shares into any depositary receipt facility

established or maintained by a depositary bank other than a Rule 144A restricted depositary receipt

facility, so long as such Equity Shares are “restricted securities” within the meaning of Rule 144(a)(3)

under the U.S. Securities Act;

It acknowledges and understands that the Equity Shares sold within the United States (to the extent

they are in certificated form), unless we determine otherwise in accordance with applicable law, will

bear a legend to the following effect:

“THESE SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S

SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR UNDER ANY

STATE SECURITIES LAWS OR WITH ANY SECURITIES REGULATORY AUTHORITY OF

ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE

OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN

ACCORDANCE WITH RULE 144A UNDER THE U.S. SECURITIES ACT TO A PERSON THAT

THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A

QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A,

PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED

INSTITUTIONAL BUYER, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH

REGULATION S UNDER THE U.S. SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION

FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT PROVIDED BY

RULE 144 THEREUNDER (IF AVAILABLE), (4) PURSUANT TO ANOTHER AVAILABLE

EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT,

OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE

U.S. SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE

SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN

BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144

UNDER THE U.S. SECURITIES ACT FOR RESALES OF THESE SHARES.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE SHARES

MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY

IN RESPECT OF THE SHARES ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK.”

It acknowledges that any resale or other transfer, or attempted resale or other transfer, made other than

in compliance with the above-stated restrictions will not be recognized by us; and

It acknowledges that we, the BRLMs and our respective affiliates, and others will rely upon the truth

and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if

any of such acknowledgements, representations or agreements deemed to have been made by virtue of

its purchase of the Equity Shares are no longer accurate, it will promptly notify us.

Notice to Investors outside the United States

Each investor outside the United States purchasing the Equity Shares in the Issue in reliance on Regulation S, by

accepting the delivery of this Placement Document, will be deemed to have represented and agreed as follows:

It acknowledges and agrees (or if it is a broker-dealer acting as an agent on behalf of a customer, its

customer has confirmed to it that such customer acknowledges and agrees) that such Equity Shares

have not been and will not be registered under the U.S. Securities Act or any state securities laws in the

United States;

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It certifies that either (A) it is, or at the time the Equity Shares are purchased will be, the beneficial

owner of the Equity Shares and is located outside the United States (within the meaning of Regulation

S) or (B) it is a broker-dealer acting as an agent on behalf of its customer and its customer has

confirmed to it that (i) such customer is, or at the time the Equity Shares are purchased will be, the

beneficial owner of the Equity Shares, and (ii) such customer is located outside the United States

(within the meaning of Regulation S);

It agrees that it will not offer, sell, pledge or otherwise transfer such Equity Shares except in an

offshore transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other

available exemption from the registration requirements of the U.S. Securities Act and in accordance

with all applicable securities laws of the states of the United States and any other jurisdiction, including

India; and

It acknowledges that any resale or other transfer, or attempted resale or other transfer, made other than

in compliance with the above-stated restrictions will not be recognized by us.

Notice to All Investors

Each purchaser of the Equity Shares in the Issue, wherever located, by accepting the delivery of this Placement

Document, will also be deemed to have represented and agreed as follows:

It is authorized to consummate the purchase of the Equity Shares in compliance with all applicable

laws and regulations;

It is not an affiliate (as defined in Rule 405 of the U.S. Securities Act) of our Company or a person

acting on behalf of such affiliate; and it is not in the business of buying and selling securities or, if it is

in such business, it did not acquire the Equity Shares from our Company or an affiliate (as defined in

Rule 405 of the U.S. Securities Act) thereof in the initial distribution of the Equity Shares; and

It acknowledges that we, the BRLMs and our respective affiliates (as defined in Rule 405 under the

U.S. Securities Act), and others will rely upon the truth and accuracy of the foregoing

acknowledgements, representations and agreements and agrees that, if any of such acknowledgements,

representations or agreements deemed to have been made by virtue of its purchase of the Equity Shares

are no longer accurate, it will promptly notify us.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the website of SEBI and the

Stock Exchanges and has not been prepared or independently verified by our Company or the BRLMs or any of

their respective affiliates or advisors.

The Indian securities market

India has a long history of organized securities trading. In 1875, the first stock exchange was established in

Mumbai.

Indian Stock Exchanges

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the

Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the

“SCRA”) and the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”). On June 20, 2012, SEBI, in

exercise of its powers under the SCRA and the Securities and Exchange Board of India Act, 1992, as amended

from time to time (the “SEBI Act”), notified the Securities Contracts (Regulation) (Stock Exchanges and

Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate inter alia the recognition,

ownership and internal governance of stock exchanges and clearing corporations in India together with

providing for minimum capitalization requirements for stock exchanges. The SCRA, the SCRR and the SCR

(SECC) Rules along with various rules, bye-laws and regulations of the respective stock exchanges, regulate the

recognition of stock exchanges, the qualifications for membership thereof and the manner, in which contracts

are entered into, settled and enforced between members of the stock exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and

intermediaries in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent

and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public

companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies,

buy-backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, Mutual

Funds, FIIs, FPIs, credit rating agencies and other capital market participants have been notified by the relevant

regulatory authority.

As on July 2, 2014, there are 15 recognized stock exchanges in India. Most of the stock exchanges have their

own governing board for self-regulation. The BSE and the NSE together hold a dominant position among the

stock exchanges in terms of the number of listed companies, market capitalization and trading activity.

Listing of Securities

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws

including the Companies Act, 2013, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations

issued by SEBI and the listing agreements of the respective stock exchanges. The SCRA empowers the

governing body of each recognised stock exchange to suspend trading of or withdraw admission to dealings in a

listed security for breach of or non-compliance with any conditions or breach of company’s obligations under

such listing agreement or for any reason, subject to the issuer receiving prior written notice of the intent of the

exchange and upon granting of a hearing in the matter. SEBI also has the power to amend such equity listing

agreements and bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and

withdraw recognition of a recognized stock exchange.

All listed companies are required to ensure a minimum public shareholding at 25%. Further, where the public

shareholding in a listed company falls below 25% at any time, such company is required to bring the public

shareholding to 25% within a maximum period of 12 months from the date of such fall. Consequently, a listed

company may be delisted from the stock exchanges for not complying with the above-mentioned requirement.

Our Company is in compliance with this minimum public shareholding requirement.

Delisting

SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in

relation to the voluntary and compulsory delisting of equity shares from the stock exchanges. In addition, certain

amendments to the SCRR have also been notified in relation to delisting.

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Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to

apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index

based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index

movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading

halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by

movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached

earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise

price bands of up to 20% movements either up or down. However, no price bands are applicable on scrips on

which derivative products are available or scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.

Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

Established in 1875, it is the oldest stock exchange in India. In 1956, it became the first stock exchange in India

to obtain permanent recognition from the Government under the SCRA.

NSE

The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked,

screen-based trading facilities with market-makers and electronic clearing and settlement for securities including

government securities, debentures, public sector bonds and units. The NSE was recognised as a stock exchange

under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994.

The capital market (equities) segment commenced operations in November 1994 and operations in the

derivatives segment commenced in June 2000. NSE launched the NSE 50 Index, now known as S&P CNX

NIFTY, on April 22, 1996 and the Mid-cap Index on January 1, 1996. The securities in the NSE 50 Index are

highly liquid.

CSE

Established in 1908, CSE is one of the oldest stock exchanges in India. In 1997, CSE replaced the old manual

trading system with completely computerized on-line trading & reporting system known as C-STAR (CSE

Screen Based Trading And Reporting).

Internet-based Securities Trading and Services

Internet trading takes place through order routing systems, which route client orders to exchange trading

systems for execution. Stockbrokers interested in providing this service are required to apply for permission to

the relevant stock exchange and also have to comply with certain minimum conditions stipulated under

applicable law. The NSE became the first exchange to grant approval to its members for providing internet

based trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments

of the NSE. The NSE became the first exchange to grant approval to its members for providing internet-based

trading services. Internet trading is possible on both the “equities” and the “derivatives” segments of the NSE.

Trading Hours

Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST

(excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on

public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash

and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.;

and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the

trading hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (or

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“BOLT”) facility in 1995. This totally automated screen based trading in securities was put into practice

nationwide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement

cycles and improving efficiency in back-office work.

NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or

“NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided

depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the

spreads.

Takeover Regulations

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011,

as amended (“Takeover Regulations”), which provides specific regulations in relation to substantial acquisition

of shares and takeover. The Takeover Regulations came into effect on October 22, 2011 and replaced the

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

(“Takeover Code 1997”). Once the equity shares of a company are listed on a stock exchange in India, the

provisions of the Takeover Regulations will apply to any acquisition of the company’s shares/voting

rights/control. The Takeover Regulations prescribes certain thresholds or trigger points in the shareholding a

person or entity has in the listed Indian company, which give rise to certain obligations on part of the acquirer.

Acquisitions up to a certain threshold prescribed under the Takeover Regulations mandate specific disclosure

requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an

open offer of the shares of the target company. The Takeover Regulations also provides for the possibility of

indirect acquisitions, imposing specific obligations on the acquirer in case of such indirect acquisition.

The key changes from the Takeover Code 1997 under the Takeover Code include:

the trigger for making a public offer upon acquisition of shares or voting rights has been increased from

15% to 25%;

every public offer has to be made for at least 26% of all the shares held by other shareholders;

creeping acquisition of up to 5% is permitted up to a limit of 75% of the shares or voting rights of a

company;

acquisition of control in a target company triggers the requirement to make a public offer regardless of

the level of shareholding and the acquisition of shares; and

if the indirect acquisition of a target company is a predominant part of the business or entity being

acquired, it would be treated as a direct acquisition.

Insider Trading Regulations

The Insider Trading Regulations have been notified by SEBI to prohibit and penalize insider trading in India.

An insider is, among other things, prohibited from dealing either on his own behalf or on behalf of any other

person, in the securities of a listed company when in possession of unpublished price sensitive information.

The Insider Trading Regulations also provide disclosure obligations for shareholders holding more than a

predefined percentage, and directors and officers, with respect to their shareholding in the company, and the

changes therein. The definition of “insider” includes any person who has received or has had access to

unpublished price sensitive information in relation to securities of a company or any person reasonably expected

to have access to unpublished price sensitive information in relation to securities of a company and who is or

was connected with the company or is deemed to have been connected with the company.

Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership

details and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, among other

things, the formation and registration of such depositories, the registration of participants as well as the rights

and obligations of the depositories, participants, companies and beneficial owners. The depository system has

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significantly improved the operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in

February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA.

Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a

separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock

exchange functions as a self-regulatory organisation under the supervision of the SEBI

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DESCRIPTION OF EQUITY SHARES

The following is information relating to the Equity Shares including a brief summary of the Memorandum and

Articles of Association, and the sections of the Companies Act, 2013. Prospective investors are urged to read

the Memorandum and Articles of Association carefully, and consult with their advisers, as the Memorandum

and Articles of Association and applicable Indian law, and not this summary, govern the rights attached to the

Equity Shares.

Share Capital

Our Company’s authorized Share Capital is ` 600 million divided into 46,100,000 Equity Shares, 3,900,000

Preference Shares and 10,000,000 Unclassified Shares. As on date the issued capital is ` 359.56 million divided

into 35,956,398 Equity Shares and subscribed and paid up capital is ` 359.56 million divided into 35,955,710

Equity Shares. For further details on share capital, please see “Capital Structure” on page 68.

Dividends

Under Indian law, a company pays final dividend upon a recommendation by its board of directors and approval

by a majority of the shareholders at the AGM of shareholders held each financial year. Under the Companies

Act, 2013 unless the board of directors of a company recommends the payment of final dividend, the

shareholders at a general meeting have no power to declare any dividend. Subject to certain conditions specified

under Section 123 of the Companies Act, 2013 and the rules made thereunder no dividend can be declared or

paid by a company for any financial year except (a) out of the profits of the company for that year, calculated in

accordance with the provisions of the Companies Act, 2013; or (b) out of the profits of the company for any

previous financial year(s) arrived at in accordance with the Companies Act, 2013 and remaining undistributed;

or (c) out of both; or (d) out of money provided by the Central Government or a state Government for payment

of dividend by our Company in pursuance of a guarantee given by that Government.

The profits of our Company, subject to provisions of the Articles, shall be divisible among the members in

proportion of the amount of capital paid up on the shares held by them respectively. Provided always that any

capital paid up on a share during the period in respect of which a dividend is declared, shall unless the terms of

the issue otherwise provide, only entitle the holder of such share to an apportioned amount of such dividend

proportionate to the capital from time to time paid up during such period on such time.

However, our Board may retain any dividends on which our Company may have a lien and may apply the same

towards the satisfaction of the debts or liabilities in respect of which the lien exists. All dividends shall be

apportioned and paid proportionately to the amounts paid or credited as paid on the Shares during any portion or

portions of the period in respect of which the dividend is paid but if any Share is issued on terms providing that

it shall rank for dividends as from a particular date, such Share shall rank for dividend accordingly. No member

shall be entitled to receive payment of any interest or dividend or bonus in respect of his Shares while any

money may be due or owing from him to the company and our Board may deduct from the interest or dividend

to any member all such sums of money so due from him to our Company. A transfer of Shares shall not pass the

right to any dividend declared therein before the registration of the transfer.

The Articles of Association provide that our Company in its general meeting may declare dividends to be paid

to the members according to their respective rights and interest in the profits. The dividend shall not exceed the

amount recommended by our Board. Further, our Board may from time to time pay the members interim

dividend as may appear to them to be justified.

Capitalisation of Reserves and Issue of Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, the

Companies Act, 2013 permits the board of directors, if so approved by the shareholders in a general meeting, to

capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares, which are similar to stock

dividend. The Companies Act, 2013 permits the issue of fully paid up bonus shares from its free reserves,

securities premium account or capital redemption reserve account, provided that bonus shares shall not be issued

by capitalising reserves created by revaluation of assets. These bonus Equity Shares must be distributed to

shareholders in proportion to the number of Equity Shares owned by them as recommended by the board of

directors.

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Any issue of bonus shares by a listed company would be subject to the SEBI ICDR Regulations. The relevant

SEBI ICDR Regulations prescribe that no company shall make a bonus issue of equity shares if it has

outstanding fully or partly convertible debt instruments at the time of making the bonus issue, unless it has made

reservation of the equity shares in the same class in favour of the holders of the outstanding convertible debt

instruments in proportion to the convertible part thereof and the equity shares reserved for the holders of fully or

partly convertible debt instruments shall be issued at the time of conversion of such convertible debt instruments

on the same terms or same proportion on which the bonds were issued. Further, for issuance of such bonus

shares, a company should not have defaulted in the payment of interest or principal in respect of fixed deposits

and interest on existing debentures or principal on redemption of such debentures. The declaration of bonus

shares in lieu of a dividend cannot be made. The bonus issuance shall be made out of free reserves built out of

genuine profits or share premium collected in cash only. The reserves created by revaluation of fixed assets

cannot be capitalised. Further, a company should have sufficient reason to believe that it has not defaulted in

respect of the payment of statutory dues of the employees, such as contributions to provident funds, gratuities

and/or bonuses.

Our Company in General Meeting may resolve that any moneys, investments or other assets forming part of the

undivided profits of our Company standing to the credit of the Reserve Fund, or any Capital Redemption

Reserve Account, or in the hands of our Company and available for dividend (or representing premium received

on the issue of shares and standing to the credit of the Shares Premium Account) be capitalized and distributed

among such of the shareholders as would be entitled to receive the same if distributed by way of dividend and in

the same proportions on the footing that they become entitled thereto as capital and that all or any part of such

capitalized fund be applied on behalf of such shareholders in paying up in full either at par or at such premium

as the resolution may provide, any unissued shares or debentures or debenture-stock of our Company which

shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares or

debentures or debenture-stock and that such distribution or payment shall be accepted by such shareholders in

full satisfaction of their interest in the said capitalized sum, provided that a Share Premium Account and a

Capital Redemption Reserve Account may, for the purposes of this Article, only be applied in the paying of any

unissued shares to be issued to members of our Company as fully paid bonus shares.

Alteration of Share Capital

Subject to the provisions of the Companies Act, 2013 our Company may increase its share capital by issuing

new shares on such terms and with such rights as it, by action of its shareholders in a General Meeting may

determine. According to Section 62(1)(a) of the Companies Act, 2013 such new shares shall be offered to

existing shareholders in proportion to the paid up share capital on those shares at that date. The offer shall be

made by notice specifying the number of shares offered and the date (being not less than 15 days and not

exceeding 30 days from the date of the offer) within which the offer, if not accepted, will be deemed to have

been declined. After such date or on receipt of earlier intimation from the persons to whom such notice is given

that they decline to accept the shares offered, the Board may dispose of the shares offered in respect of which no

acceptance has been received in a manner which shall not be disadvantageous to the shareholders of our

Company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares

offered to him in favour of any other person. Private Placement and Public Issues shall be undertaken pursuant

to Chapter III the Companies Act, 2013.

Under the provisions of Section 62(1)(c) of the Companies Act, 2013 and the Companies (Share Capital and

Debentures) Rules, 2014, new shares may be offered to any persons whether or not those persons include

existing shareholders or employees to whom shares are allotted under a scheme of employees stock options,

either for cash or for consideration other than cash, if a special resolution to that effect is passed by our

Company’s shareholders in a general meeting. Our Company may, by a resolution passed in a general meeting,

from time to time, increase the share capital by the creation of new Shares of such amount as may be deemed

expedient and specified in the resolution. Such increase in the share capital shall be subject to compliance with

the provision of the Companies Act, 2013 and of any other laws that may be in force. New Shares shall be

issued upon such terms and conditions and with such rights and privileges attached thereto as are consistent with

provisions of the Companies Act, 2013 and which the general meeting, resolving upon the creation thereof shall

direct and if no direction be given, as our Board shall determine, and in particular such Shares may be issued

with a preferential or qualified right to dividends and in the distribution of assets of our Company and with a

special or without any right of voting, subject to the conditions prescribed under the Companies Act, 2013.

Our Company may by Ordinary Resolution:

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(i) Consolidate and divide all or any of its share capital into Shares of larger amount than its existing

Shares;

(ii) Subdivide its existing Shares or any of them into Shares of smaller amount than is fixed originally by

the Memorandum of Association, such that in the subdivision, the proportion between the amount paid

and the amount unpaid if any, on each reduced Share be the same as it was in the case of the Share

from which the reduced Share is derived;

(iii) Cancel Shares which at the date of the passing of the ordinary resolution, have not been taken or agreed

to be taken by any person and also may diminish the amount of its Share capital by the amount of the

Shares so cancelled.

Further, our Company may, from time to time, by special resolution, reduce its share capital or any share

premium account in any manner, subject to any incident authorized and consent required by law.

General Meetings of Shareholders

Every year our Company is required to hold an annual general meeting in addition to any other meetings.

Further, our Board may, whenever it thinks fit, call an extraordinary general meeting and shall, on the

requisition of a number of members who constitute not less than one-tenth of the paid-up capital of our

Company, proceed to call an extraordinary general meeting. Not less than 21 days' clear notice in writing of the

general meeting is to be given, but shorter notice may be given if consent in writing is accorded by all the

members entitled to vote and in case of any other meetings, with the consent of members holding not less than

95 per cent of such part of the paid-up Share capital of our Company which gives a right to vote at the meeting.

An explanatory statement shall be annexed to every notice of a general meeting. The quorum requirements for a

general meeting are as prescribed under Section 103 of the Companies Act, 2013, and no business is to be

transacted at the general meeting unless the requisite quorum is present at the commencement of the same. If the

quorum is not present within half an hour of the time appointed for a meeting, the meeting, if convened upon

such requisition as aforesaid, shall be dissolved; but in any other case it shall stand adjourned to the same day in

the next week at the same time and place. The Articles of Association further provide that no business shall be

transacted at any adjourned meeting other than the business left unfinished at the meeting from which the

adjournment took place.

The Directors may elect a Chairman of their meetings and determine the period for which he is to hold office

and unless otherwise determined the Chairman shall be elected annually. The Directors may appoint a Vice-

Chairman of the Board of Directors, to preside at meetings of the Directors at which the Chairman shall not be

present. The Chairman of our Board shall be entitled to take the chair at every general meeting or, if there is no

such chairman, or if at any general meeting he is not present within fifteen minutes after the time appointed for

holding such general meeting or is unwilling to act as chairman, the Vice Chairman of our Board shall be

entitled to take the chair at the general meeting or if he is unwilling to act as chairman, the Directors present

shall elect one of them to be the chairman of the meeting. If no Director is present or if all the Directors present

decline to take the chair, then the members present shall choose one amongst themselves to be chairman of the

general meeting.

Voting Rights

Subject to the provisions of the Companies Act, 2013 and the Articles, votes may be given either personally or

by proxy, or in the case of a body corporate, a duly authorised representative under Section 113 of the

Companies Act, 2013.

Every member present in person shall have one vote on a show of hands, and on poll, the member present in

person or by proxy shall have one vote for each Share of our Company held by him, subject to any rights or

restrictions for the time being attached to any class or classes of Equity Shares. The Articles of Association

provide that votes may be given by proxies in a manner as authorized under the Articles of Association.

The instrument appointing a proxy is required to be lodged at the registered office at least 48 hours before the

time of the meeting. No proxy shall be entitled to vote on a show of hands. A vote given in accordance with the

terms of an instrument appointing a proxy shall be valid notwithstanding the previous death or insanity of the

principal or revocation of the instrument or transfer of the Share in respect of which the vote is given provided

no intimation in writing of the death or insanity, revocation or transfer shall have been received at the office of

our Company before the general meeting. Provided never the less that the chairman of any general meeting shall

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be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of

proxy and that the same has not been revoked.

Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require

that the votes cast in favour of the resolution must be at least three times the votes cast against the resolution.

The Companies Act, 2013 provides that to amend the Articles a special resolution is required to be passed in a

general meeting.

Directors

The Articles of Association provide that the number of Directors shall not be less than three and not be more

than fifteen. The Directors shall be appointed by our Company in the general meeting subject to the provisions

of the Companies Act, 2013 and the Articles of Association. The Directors to retire by rotation at every annual

general meeting shall be those who have been longest in office since their last appointment but as between

persons who became Directors on the same day those to retire shall in default of being subject to any agreement

among themselves, be determined by lot.

The Directors have the power to appoint any other persons as an addition to our Board but any Director so

appointed shall hold office only up to the date of the next following annual general meeting of our Company and

the total number of Directors shall not at any time exceed the maximum strength prescribed under the Articles

of Association. Our Board shall also have the power to appoint any person to act as an alternate Director for a

Director during the latter's absence for a period of not less than three months from the state in which the

meetings of our Board are ordinarily held.

Our Board is required to meet at least once in every three calendar months for the dispatch of business, adjourn

and otherwise regulate its meetings and proceedings as it thinks fit provided that at least four such meetings

shall be held in every year. The quorum for a meeting of our Board is one-third of its total strength (any fraction

contained in that one-third being rounded off as one) or two Directors, whichever is higher. However, where it

involves a decision on an affirmative vote item, the quorum is required to include an investor Director.

Transfer of Shares

An application for registration of a transfer of the Shares in our Company may be made either by the transferor

or the transferee. Where the application is made by the transferor and relates to partly paid Shares, the transfer

shall not be registered unless our Company gives notice of the application to the transferee and the transferee

makes no objection to the transfer within two weeks from the receipt of the notice. A notice to the transferee

shall be deemed to have been duly given if it is dispatched by prepaid registered post to the transferee at the

address given in the instrument of transfer and shall be deemed to have been duly delivered in the ordinary

course of post.

Our Company is required to comply with the rules, regulations and requirements of the stock exchange or the

rules made under the Companies Act, 2013 or the rules made under the Securities Contracts (Regulation) Act,

1956, as amended ("SCRA"), or any other law or rules applicable, relating to the transfer or transmission of

Shares or debentures.

Buy-back

Our Company may buy back its own Shares or other specified securities subject to the provisions of the

Companies Act, 2013 and any related SEBI guidelines issued in connection therewith.

Liquidation Rights

In the event that our Company is wound up, and the assets available for distribution among the members as such

are insufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may

be the losses shall be borne by the members in proportion to the capital paid up or which ought to have been

paid up at the commencement of the winding up on the Shares held by them respectively. And if in a winding up

the assets available for distribution among the members shall be more than sufficient to repay the whole of the

paid up capital at the commencement of the winding up the excess shall be distributed amongst the members but

this shall be without prejudice to the rights of member registered in respect of Shares issued upon special terms

and conditions.

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INDEPENDENT AUDITORS

Our Company’s consolidated financial statements for the Fiscal Years ended March 31 2014, 2013, and 2012

have been included in this Placement Document. The Financial Statements are prepared in accordance with

Indian GAAP as applicable to us.

S R B C & CO LLP, our Statutory Auditors, have reviewed our unaudited interim condensed consolidated

financial statements and notes thereto for the six months ended September 30, 2014 (half year Fiscal 2015). S.

R. Batliboi & Associates, LLP, Chartered Accountants, Mumbai, have audited our Financial Statements as of

and for the Fiscal Years ended March 31 2014 and 2013. N M Raiji & Co, Chartered Accountants, Mumbai,

have audited our Financial Statements for the Fiscal Year ended March 31, 2012.

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STATEMENT OF TAX BENEFITS

Statement of possible tax benefits which may be applicable to the Company and its shareholders

To

The Board of Directors

CEAT Limited

463, RPG House, 3rd

Floor, Dr. Annie Besant Road,

Worli, Mumbai- 400030, India

Dear Sirs,

Sub: Statement of possible tax benefits which may be applicable to the Company / and its shareholders

We hereby confirm that the enclosed annexure, prepared by CEAT Limited (the “Company”), states the possible

tax benefits which may be applicable to the Company and the shareholders of the Company under the Income-

tax Act, 1961 (‘Act’), the Wealth Tax Act, 1957, (as amended by Finance (No. 2) Act, 2014) presently in force

in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions

prescribed under the relevant provisions of the Act. Hence, the ability of the Company or its shareholders to

avail the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the

Company or its shareholders may or may not choose to fulfill.

The benefits discussed in the annexure are not exhaustive and the preparation of the contents stated is the

responsibility of the Company’s management. We are informed that this statement is only intended to provide

general information to the investors and hence is neither designed nor intended to be a substitute for professional

tax advice. The availing of tax benefits is dependent upon specific facts in each individual case. This statement

of tax benefits is not meant to provide any opinion on the tax or any other consequences resulting from

participation in the issue. In view of the individual nature of the tax consequences, the changing tax laws, each

investor is strictly advised to consult his or her own tax consultant with respect to the specific tax implications

arising out of their participation in the issue.

Our confirmation is based on the information, explanations and representations obtained from the Company and

on the basis of our understanding of the business activities and operations of the Company and our interpretation

of the prevailing income tax law in force in India.

We do not express any opinion or provide any assurance as to whether:

the Company or its shareholders will continue to obtain these benefits in future; or

the conditions prescribed for availing the tax benefits, where applicable have been/ would be met by the

Company/ shareholders.

The revenue authorities/courts will concur with the views expressed herein

This certificate and the enclosed statement is intended solely for your information and for inclusion in the

preliminary placement document / placement document in connection with the proposed Qualified Institutions

Placement of the Company and is not to be used, referred to or distributed for any other purpose without our

prior written consent.

For S R B C & CO LLP

Chartered Accountants

Firm Registration Number: 324982E

per Vinayak Pujare

Partner

M.No. 101143

Mumbai

Date: 21st November 2014

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ANNEXURE TO STATEMENT OF POSSIBLE TAX BENEFITS WHICH MAY BE APPLICABLE TO

CEAT LIMITED AND ITS SHAREHOLDERS

Outlined below are the possible benefits which may be applicable to the Company and its shareholders under the

current direct tax laws i.e. the Income-tax Act, 1961 (Amended as per the Finance (No. 2) Act, 2014) (‘the

Act’), the Wealth Tax Act, 1957 and the Gift Tax Act, 1958 in India for the Financial Year 2014-15.

A. Benefits to the Company under the Act

1. Tax holiday benefits available to the company

Company is not presently availing any Tax holiday benefits under the Act.

2. General tax benefits

2.1 Business Income

2.1.1 Depreciation

Subject to compliance with certain conditions laid down in section 32 of the Act, the Company will be

entitled to deduction for depreciation:

2.1.1.1 In respect of tangible assets (being buildings, machinery, plant or furniture) and intangible assets (being

know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial

rights of similar nature acquired on or after 1st day of April, 1998) at the rates prescribed under the

Income-tax Rules, 1962 (‘Rules’);

2.1.1.2 The Company is further entitled to additional depreciation at the rate of 20% of the actual cost of any

new plant and machinery (other than ships and aircraft) acquired on or after 31st day of March 2005 in

the year of purchase of such plant or machinery.

2.1.1.3 As per section 32(2) of the Act, unabsorbed depreciation if any, for an Assessment Year (AY) can be

carried forward and set off against any source of income in subsequent AYs, subject to the provisions

of sub-section (2) of section 72 and sub-section (3) of section 73 of the Act.

2.1.2 Allowance and deduction/ weighted deduction of expenses

2.1.2.1 Investment Allowance

As per the provision of section 32AC of the Act, a company will be entitled for deduction of 15% of

the actual cost of new assets subject to fulfilment of certain conditions mentioned such as:

a. the company is engaged in the manufacture of any article or thing,

b. the company acquires and installs new assets during the eligible period ie 1 April 2014 to 31

March 2017;

c. the amount of actual cost of new assets acquired and installed exceeds INR 25,00,00,000,

The deduction under section 32AC would be in addition to the depreciation allowance under section 32

of the Act.

2.1.2.2 Expenditure on scientific research

a. Under section 35 (1)(iv) of the Act

The company is entitled to deduction to the extent of 100% of any expenditure of capital nature on

scientific research related to business of the company, subject to fulfilment of prescribed conditions.

b. Under section 35 (2AB) of the Act

We have been informed that the company has a unit approved by Department of Scientific And

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Industrial Research for undertaking research relating to the business of the company. Any expenditure

(not being expenditure in the nature of cost of any land or building) incurred for in-house research is

eligible for weighted deduction of 200% of expenditure in the year of incurring such expenditure.

2.1.2.3 Preliminary expenditure

As per the provisions of section 35D of the Act, any specified preliminary expenditure incurred by an

Indian company before commencement of business or after commencement of business in connection

with extension of an undertaking or setting up a new unit shall be allowed a deduction equivalent to

one-fifth of such expenditure for each of the five successive previous years beginning with the previous

year in which the business is commenced/ extended. However, any deduction in excess of 5% of cost of

project/ capital employed would be ignored.

2.1.2.4 Expenditure under Voluntary Retirement Scheme (‘VRS’).

As per provision of section 35DDA, the company is eligible for deduction of any expenditure incurred

on voluntary retirement of its employees subject to conditions. Such expenditure will be allowed as

deduction in five equal instalments from the year in which such expenditure has been incurred.

2.1.2.5 Deduction of Securities Transaction Tax (‘STT’)

STT paid will be allowed as a deduction in the computation of business income arising from the trading

in securities. It is laid down that the STT paid during the year shall be allowed as a deduction under

section 36(1)(xv) on the condition that the income from taxable securities transaction is included under

the head, ‘profits and gains of business or profession’. When such deduction is claimed, no further

deduction in respect of the said amount is allowed while determining the income chargeable to tax as

capital gains.

2.1.3 Other provisions

2.1.3.1 As per the provisions of section 35DD of the Act, any expenditure incurred by an Indian Company,

wholly and exclusively for the purpose of amalgamation/ demerger of an undertaking shall be allowed

as deduction to the extent of one-fifth of such expenditure for each of five successive previous years

beginning with the previous year in which the amalgamation/ demerger takes place.

2.1.3.2 As per the provisions of section 72A of the Act, pursuant to business re-organisations (such as

amalgamation, demerger, etc), the successor company shall be allowed to carry forward any

accumulated tax losses/ unabsorbed depreciation of the predecessor company subject to fulfilment of

prescribed conditions.

2.1.3.3 As per section 10(34A) of the Act, any income arising to a shareholder, on account of buy back of

shares (not being listed on a recognized stock exchange) by a company, will be exempt from tax. This

exemption is available to shareholders only in case where the company pays buy back tax under the

provisions of section 115QA of the Act. Such income is also exempt from tax while computing book

profit for the purpose of determination of MAT liability. However, in case of buyback of listed

securities, it will be liable to capital gains tax.

2.1.3.4 As per the provision of section 80JJAA of the Act, subject to fulfilment of conditions, the company will

be entitled to deduction to the extent of 30% for additional wages paid to new regular workmen

employed in factory during the previous year. Further, such deduction is allowed for three subsequent

years including the year in which the additional employment was provided.

2.1.4 Business losses

Business losses, if any, for an assessment year can be carried forward and set off against business

profits for eight subsequent years in terms of the provisions of section 72 of the Act.

2.1.5 Minimum Alternate Tax (‘MAT’) credit

2.1.5.1 In terms of section 115JAA(1A) of the Act, the Company is eligible to claim credit for any tax paid as

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MAT under section 115JB of the Act for any Assessment Year commencing on or after 1 April 2006

against income tax liabilities incurred in subsequent years as prescribed.

2.1.5.2 MAT credit eligible in subsequent years is the difference between MAT paid and the tax computed as

per the normal provisions of the Act.

2.1.5.3 MAT credit can be set off in a year when tax is payable under the normal provisions of the Act. MAT

credit to be allowed shall be the difference between MAT payable and the tax computed as per the

normal provisions of the Act for that assessment year. Such MAT credit is available to set-off up to ten

years succeeding the assessment year in which the MAT credit arises.

2.1.6 Dividends exempt under sections 10(34) and 10(35) of the Act

2.1.6.1 Dividend (whether interim or final) received by the Company from its investment in shares of another

domestic company would be exempted in the hands of the Company as per the provisions of

section 10(34) read with section 115-O of the Act. The domestic company distributing dividends will

be liable to pay dividend distribution tax at the rate of 15% on net basis on the amount of dividend

payable till 30 September 2014 (plus a surcharge of 10% on the dividend distribution tax and education

cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend

distribution tax and surcharge thereon).

2.1.6.2 However, dividends received by the Company from its overseas subsidiary (wherein the shareholding

of the Company is minimum 26%), not being subject to the provisions of section 115-O of the Act, are

taxable in the hands of the Company at the rate of 15%(plus a surcharge of 10% on the dividend

distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively

on the amount of dividend distribution tax and surcharge thereon).

2.1.6.3 Further w.e.f 1 October 2014, Finance (No. 2) Act 2014, has amended section 115-O in order to

provide that for the purpose of determining the tax on distributed profits payable in accordance with the

section 115-O, any amount by way of dividends referred to in sub-section (1) of the said section, as

reduced by the amount referred to in sub-section (1A) [referred to as net distributed profits], shall be

increased to such amount as would, after reduction of the tax on such increased amount at the rate

specified in sub- section (1), be equal to the net distributed profits.

2.1.6.4 Thus, where the amount of dividend paid or distributed by a company is INR 85, then Dividend

Distribution Tax (‘DDT’) under the amended provision would be calculated as follows:

Dividend amount distributed = INR 85

Increase by INR 15 [i.e. (85*0.15)/(1-0.15)]

Increased amount = INR 100

DDT @ 15% of INR 100 = INR 15

Tax payable under section 115-O is INR 15

Dividend distributed to shareholders = INR 85

So DDT payable will be INR 15 before surcharge and education cess and higher education cess.

Further, it may be noted that the surcharge and education cess and secondary and higher education cess

applicable remains unchanged.

2.1.6.5 As per section 94(7) of the Act, losses arising from sale/ transfer of shares, where such shares are

purchased within three months prior to the record date and sold within three months from the record

date, will be disallowed to the extent such loss does not exceed the amount of dividend claimed

exempt.

2.1.6.6 In terms of section 10(35) of the Act, any income received from units of Mutual Fund specified under

section 10(23D) of the Act is exempt from tax, subject to such income not arising from the transfer of

units in such Mutual Fund.

2.1.6.7 Section 14A of the Act read with Rule 8D of the Rules restricts claim for deduction of expenses

incurred in relation to income which does not form part of the total income under the Act. Thus, any

expenditure incurred to earn the said tax free income will not be tax deductible expenditure. Further,

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the Central Board of Direct Taxes (‘CBDT’) has prescribed the methodology for disallowance under

Rule 8D of the Rules. The prescribed methodology becomes applicable where the Indian Revenue

authorities are not satisfied with the correctness of the taxpayer`s claim having regard to its accounts.

2.1.6.8 Further, if the company being a holding company, has received any dividend from its domestic

subsidiary on which dividend distribution tax has been paid by such subsidiary, then for the same year,

the company will not be required to pay dividend distribution tax to the extent for such dividend has

been paid by such domestic subsidiary company.

2.1.6.9 For removing the cascading effect of dividend distribution tax, the dividend received from a foreign

subsidiary [in which it has minimum 26% shareholding], on which income-tax has been paid by the

domestic company under section 115BBD of the Act, shall be reduced while computing the amount of

dividend distribution tax payable by a domestic company.

2.2 Capital gains

2.2.1 Computation of capital gains

2.2.1.1 Capital assets are to be categorized into short-term capital assets and long-term capital assets based on

the period of holding. All capital assets [except a security (other than a unit) listed in a recognized stock

exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity oriented fund and zero

coupon bonds] are considered to be long-term capital assets, if they are held for a period exceeding

thirty-six months. Security (other than a unit) listed in a recognized stock exchange of India or units of

UTI or a unit of an equity oriented fund and zero coupon bonds are considered as long-term capital

assets, if these are held for a period exceeding twelve months. The Finance (No.2) Act 2014 has

however inserted second proviso to section 2(42A) w.e.f 1 April 2014 which provides that in the case

of capital assets representing shares held in a company not being shares listed on a recognized stock

exchange or units of Mutual Fund specified under clause (23D) of section 10 which is transferred

between 1 April 2014 and 10 July 2014 are treated as short-term capital assets if they are not held for

more than twelve months.

2.2.1.2 As per the provisions of section 10(38) of the Act, long-term capital gains arising to the Company from

transfer of a long-term capital asset being an equity share in a company listed on a recognized stock

exchange in India or unit of equity oriented mutual fund shall be exempt from tax, if the transaction is

chargeable to STT.

2.2.1.3 However, such long-term capital gains will be included while computing book profits for the purpose

of payment of MAT under the provisions of section 115JB of the Act.

2.2.1.4 As per provisions of section 48 of the Act, long-term capital gains arising on transfer of capital assets,

other than bonds and debentures (excluding capital indexed bonds issued by the Government) and

depreciable assets, is computed by deducting the indexed cost of acquisition and indexed cost of

improvement from the net value of consideration (i.e. Full value of consideration minus expenses

incurred wholly and exclusively in connection with such transfer).

2.2.1.5 STT shall not be allowed as deduction in computing the income chargeable under the head ‘Capital

gains’.

2.2.1.6 As per the provisions of section 112 of the Act, long-term capital gains (other than those covered under

section 10(38) of the Act) are subject to tax at a rate of 20%. However, proviso to section 112(1)

specifies that if the long-term capital gains (other than those covered under section 10(38) of the Act)

arising on transfer of listed securities (other than a unit) or zero coupon bond, calculated at the rate of

20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation

benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit.

Second proviso to section 112(1) specifies that in respect of long-term capital gains (other than those

covered under section 10(38) of the Act) arising on account of transfer of unit of a mutual fund

specified under section 10(23D) between 1 April 2014 and 10 July 2014 exceeds the capital gains

computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at

the rate of 10% without indexation benefit.

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2.2.1.7 As per provisions of section 111A of the Act, short-term capital gains arising from transfer of short-

term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall

be taxable at the rate of 15%, if the transaction is chargeable to STT.

2.2.1.8 The tax rates mentioned above stand increased by surcharge payable as under:

Taxable income of the domestic company Rate of surcharge

Exceeds INR 1,00,00,000 5%

Exceeds INR 10,00,00,000 10%

Further, education cess and secondary and higher education cess on the tax on total income and

surcharge at the rate of 2% and 1% respectively is payable by all categories of taxpayers.

2.2.1.9 As per provisions of section 70 read with section 74 of the Act, short-term capital loss arising during a

year is allowed to be set-off against short-term as well as long-term capital gains. Balance loss, if any,

shall be carried forward and set-off against any capital gains arising during subsequent eight assessment

years in terms of the provisions of section 74 of the Act.

2.2.1.10 As per provisions of section 70 read with section 74 of the Act, long-term capital loss arising during a

year is allowed to be set-off only against long-term capital gains. Balance loss, if any, shall be carried

forward and set-off against long-term capital gains arising during subsequent eight assessment years in

terms of the provisions of section 74 of the Act. Long term capital loss arising on sale of shares or units

of equity oriented fund subject to STT may not be carried forward for set off.

2.2.2 Computation of capital gains in case of depreciable assets

As per section 50 of the Act, where a capital asset is forming part of block of assets in respect of which

depreciation has been allowed under the Act, capital gains shall be computed in the following manner:

a. where full value of consideration on account of transfer of any asset forming part of block of asset,

as reduced by expenditure incurred wholly or exclusively in connection with transfer, exceeds the

written down value of block of assets and actual cost of assets acquired during the year, such

excess shall be deemed to be short-term capital gains and taxed accordingly.

b. where any block of assets ceases to exist, for the reason that all the assets in that block are

transferred, the difference between the consideration arising on result of transfer and the written

down value of block of assets and the actual cost of assets acquired during the year, shall be

deemed to be short-term capital gains/ (losses) and taxed accordingly.

2.2.3 Exemption in respect of capital gains

2.2.3.1 As per the provisions of section 54EC of the Act and subject to the conditions specified therein capital

gains arising to the Company on transfer of a long-term capital asset (other than those covered under

section 10(38) of the Act) shall not be chargeable to tax to the extent such capital gains are invested in

certain notified bonds within six months from the date of transfer subject to maximum of INR

50,00,000. If only part of such capital gain is invested, the exemption shall be proportionately reduced.

2.2.3.2 However, if the Company transfers or converts the notified bonds into money (as stipulated therein)

within a period of three years from the date of their acquisition, the amount of capital gains exempted

earlier would become chargeable in such year. The bonds specified for this section are bonds issued on

or after 1 April 2007 by National Highways Authority of India (the ‘NHAI’) and the Rural

Electrification Corporation Limited (the ‘REC’). The Act has restricted the maximum investment in

such bonds up to INR 50,00,000 per assessee during any financial year and the subsequent financial

years.

2.2.3.3 The characterization of the gain/ losses, arising from sale/ transfer of shares/ units as business income

or capital gains would depend on the nature of holding and various other factors.

B. Benefits to the Resident shareholders of the Company under the Act

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3. Dividends exempt under section 10(34) of the Act

Dividend (whether interim or final) received by a resident shareholder from its investment in shares of

a domestic company would be exempt in the hands of the resident shareholder as per the provisions of

section 10(34) read with section 115-O of the Act.

Section 14A of the Act read with Rule 8D of the Rules restricts claim for deduction of expenses


expenditure incurred to earn the said tax free income will not be tax deductible expenditure.

4. Computation of capital gains

4.1 Capital assets are to be categorized into short-term capital assets and long-term capital assets based on

the period of holding. All capital assets [except a security (other than a unit) listed in a recognized stock

exchange of India or units of UTI or a unit of an equity oriented fund and zero coupon bonds] are

considered to be long-term capital assets, if they are held for a period exceeding thirty-six months.

Security (other than a unit) listed in a recognized stock exchange of India or units of UTI or a unit of an

equity oriented fund and zero coupon bonds are considered as long-term capital assets, if these are held

for a period exceeding twelve months. The Finance (No.2) Act 2014 has however inserted second

proviso to section 2(42A) w.e.f 1 April 2014 which provides that in the case of capital assets

representing shares held in a company not being shares listed on a recognized stock exchange or units

of Mutual Fund specified under clause (23D) of section 10 which is transferred between 1 April 2014

and 10 July 2014 are treated as short-term capital assets if they are not held for more than twelve

months.

4.2 As per the provisions of section 48 of the Act, the amount of capital gain shall be computed by

deducting from the sale consideration, the cost of acquisition and expenses incurred in connection with

the transfer of a capital asset. However, in respect of long-term capital gains arising to a resident

shareholder, a benefit is permitted to substitute the cost of acquisition/ improvement with the indexed

cost of acquisition/ improvement. The indexed cost of acquisition/ improvement, adjusts the cost of

acquisition/ improvement by a cost inflation index, as prescribed from time to time

4.3 STT shall not be allowed as deduction in computing the income chargeable under the head ‘Capital

gains’.

4.4 As per provisions of section 48 of the Act, long-term capital gains arising on transfer of capital assets,

other than bonds and debentures (excluding capital indexed bonds issued by the Government) and

depreciable assets, is computed by deducting the indexed cost of acquisition and indexed cost of

improvement from the full value of consideration.

4.5 As per the provisions of section 10(38) of the Act, long-term capital gains arising to a resident

shareholder from transfer of a long-term capital asset or units of equity oriented mutual fund being an

equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if

the transaction is chargeable to STT.

4.6 As per provisions of section 70 read with section 74 of the Act, short-term capital loss arising during a


shall be carried forward and set-off against any capital gains arising during subsequent eight assessment

years in terms of the provisions of section 74 of the Act

4.7 As per provisions of section 70 read with section 74 of the Act, long-term capital loss arising during a



terms of the provisions of section 74 of the Act

4.8 As per provisions of section 111A of the Act, short-term capital gains arising from transfer of short-



4.9 As per the provisions of section 112 of the Act, long-term capital gains (other than those covered under

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section 10(38) of the Act) are subject to tax at a rate of 20%. However, proviso to section 112(1)

specifies that if the long-term capital gains [other than those covered under section 10(38) of the Act]

arising on transfer of listed securities (other than a unit) or zero coupon bond, calculated at the rate of

20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation

benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit.

Second proviso to section 112(1) specifies that in respect of long-term capital gain arising on account

of transfer of unit of a mutual fund specified under section 10(23D) between 1 April 2014 and 10 July

2014 exceeds the capital gains computed at the rate of 10% without indexation benefit, then such

capital gains are chargeable to tax at the rate of 10% without indexation benefit.

4.10 The tax rates mentioned above stand increased by surcharge payable as under:

Taxable income of the domestic company Rate of surcharge

Exceeds INR 1,00,00,000 5%

Exceeds INR 10,00,00,000 10%

For the shareholders, not being a domestic company or foreign company, the surcharge is payable at the

rate of 10% where the taxable income exceeds INR 1,00,00,000.

Further, education cess and secondary and higher education cess on the tax on total income and


5. Exemption in respect of capital gains

5.1 As per the provisions of section 54EC of the Act and subject to the conditions specified therein capital

gains arising to a resident shareholder on transfer of a long-term capital asset (other than those covered

under section 10(38) of the Act) shall not be chargeable to tax to the extent such capital gains are

invested in certain notified bonds within six months from the date of transfer. If only part of such

capital gain is invested, the exemption shall be proportionately reduced.

5.2 However, if the resident shareholder transfers or converts the notified bonds into money (as stipulated

therein) within a period of three years from the date of their acquisition, the amount of capital gains

exempted earlier would become chargeable in such year. The bonds specified for this section are bonds

issued on or after 1 April 2007 by National Highways Authority of India (the ‘NHAI’) and the Rural

Electrification Corporation Limited (the ‘REC’). The Act has restricted the maximum investment in

such bonds up to INR 50,00,000 per assessee during any financial year or in the subsequent financial

years.

5.3 Further, as per the provisions of section 54F of the Act and subject to conditions specified therein,

long-term capital gains (other than capital gains arising on sale of resident house and those covered

under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (‘HUF’) on

transfer of shares of the Company will be exempt, if the net consideration from such shares are used for

either purchase of one residential house property in India within a period of one year before or two

years after the date on which the transfer took place, or for construction of one residential house

property in India within a period of three years after the date of transfer.

6. Deduction of STT paid

STT paid will be allowed as deduction in the computation of business income arising from trading in

securities. It is laid down that the STT paid during the year shall be allowed as a deduction under

section 36 (1)(xv) on the condition that the income from taxable securities transaction is included under

the head, ‘profits and gains of business or profession’. When such deduction is claimed, no further

deduction in respect of the said amount is allowed while determining the income chargeable to tax as

capital gains.

7. Benefit of basic exemption

In case of an individual or HUF, where the total taxable income as reduced by capital gains is below the

basic exemption limit, the capital gains will be reduced to the extent of the shortfall and only the

balance long-term capital gains or short-term capital gains will be subjected to such tax in accordance

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with the proviso sections 111A(1) and 112(1) of the Act.

8. Income from other source

As per provisions of section 56(2)(vii) of the Act and subject to exception provided in second proviso

therein, where an individual or HUF receives shares and securities without consideration or for a

consideration which is less than the aggregate fair market value of the shares and securities by an

amount exceeding INR 50,000, the excess of fair market value of such shares and securities over the

said consideration is chargeable to tax under the head 'income from other sources'. However, the said

section is not applicable in case the shares and securities are received under instances specified under

the proviso thereon.

C. Benefits to the Non-resident shareholders of the Company other than Foreign Institutional

Investors (‘FII’)


Dividend (whether interim or final) received by a non-resident shareholder from its investment in

shares of a domestic company would be exempt in the hands of the non-resident shareholder as per the

provisions of section 10(34) read with section 115-O of the Act.




10. Computation of capital gains

10.1 Capital assets are to be categorized into short-term capital assets and long-term capital assets based on

the period of holding. All capital assets [except a security (other than a unit) listed in a recognized

stock exchange of India or units of UTI or a unit of an equity oriented fund and zero coupon bonds] are

considered to be long-term capital assets, if they are held for a period exceeding thirty-six months.

Security (other than a unit) listed in a recognized stock exchange of India or units of UTI or a unit of an

equity oriented fund and zero coupon bonds are considered as long-term capital assets, if these are held

for a period exceeding twelve months. The Finance (No.2) Act 2014 has, however, inserted second

proviso to section 2(42A) w.e.f 1 April 2014 which provides that in the case of capital assets

representing shares held in a company, not being shares listed on a recognized stock exchange, or, units

of Mutual Fund specified under clause (23D) of section 10, which is transferred between 1 April 2014

and 10 July 2014 are treated as short-term capital assets if they are not held for more than twelve

months.

10.2 As per the provisions of section 48 of the Act, the amount of capital gains shall be computed by

deducting from the sale the consideration, the cost of acquisition and expenses incurred in connection

with the transfer of a capital asset. Under first proviso to section 48 of the Act, the taxable capital gains

arising on the transfer of capital assets being shares or debentures of an Indian company need to be

computed by converting the cost of acquisition, expenditure in connection with such transfer and full

value of the consideration received or accruing as a result of the transfer into the same foreign currency

in which the shares were originally purchased. The resultant gains, thereafter, need to be reconverted

into Indian currency. The conversion needs to be done at the prescribed rates prevailing on dates

stipulated. Hence, in computing such gains, the benefit of indexation is not available to non-resident

shareholders.

10.3 STT shall not be allowed as deduction in computing the income chargeable under the head ‘Capital

gains’.

10.4 As per the provisions of section 10(38) of the Act, long-term capital gain arising to a non-resident

shareholder from transfer of a long-term capital asset, being an equity share in a company listed on a

recognized stock exchange in India, or, units of equity oriented mutual fund, shall be exempt from tax,

if the transaction is chargeable to STT.

10.5 In case of an individual or HUF, where the total taxable income as reduced by capital gains is below the

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basic exemption limit, the capital gains will be reduced to the extent of the shortfall and only the

balance long-term capital gains or short-term capital gains will be subjected to such tax in accordance

with the proviso to sub-section (1) of sections 111A and 112 of the Act.



be taxable @ 15%, if the transaction is chargeable to STT.

10.7 The tax rates mentioned above stand increased by surcharge payable as under:

Taxable income of company, other than domestic company Rate of surcharge

Exceeds INR 1,00,00,000 2%

Exceeds INR 10,00,00,000 5%

For the shareholders, not being a domestic company or foreign company, the surcharge is payable at the

rate of 10% where the taxable income exceeds INR 1,00,00,000.

In addition, education cess and secondary and higher education cess on the tax on total income and


10.8 As per provisions of section 70 read with section 74 of the Act, short-term capital loss arising during a


shall be carried forward and set-off against any capital gains arising during subsequent eight

assessment years in terms of the provisions of section 74 of the Act

10.9 As per provisions of section 70 read with section 74 of the Act, long-term capital loss arising during a



terms of the provisions of section 74 of the Act

11. Exemption in respect of capital gains

As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital

gains arising to a non-resident shareholder on transfer of a long-term capital asset (other than those

covered under section 10(38) of the Act) shall not be chargeable to tax to the extent such capital gains

are invested in certain notified bonds within six months from the date of transfer. If only part of such

capital gain is invested, the exemption shall be proportionately reduced.

However, if the non-resident shareholder transfers or converts the notified bonds into money (as

stipulated therein) within a period of three years from the date of their acquisition, the amount of capital

gains exempted earlier would become chargeable in such year. The bonds specified for this section are

bonds issued on or after 1 April 2007 by NHAI and REC. The Act has restricted the maximum

investment in such bonds up to INR 50,00,000 per assessee during any financial year and subsequent

financial years.

12. Income from other sources

As per provisions of section 56(2)(vii) of the Act and subject to exception provided in second proviso

therein, where an individual or HUF receives shares and securities without consideration or for a

consideration which is less than the aggregate fair market value of the shares and securities by an

amount exceeding INR 50,000, the excess of fair market value of such shares and securities over the

said consideration is chargeable to tax under the head 'income from other sources'. However, the said

section is not applicable in case the shares and securities are received under instances specified under

the proviso thereon.

13. Tax Treaty Benefits

13.1 Under the provisions of section 90(2) of the Act, a non-resident will be governed by the provisions for

the Agreement for Avoidance of Double Taxation (DTAA) between India and the country of residence

of the non-residence and the provisions of Act apply only to the extent they are more beneficial to the

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assesse. It needs to be noted that a non-resident is required to hold a valid tax residency certificate

containing the particulars prescribed under Notification No. 57 of 2013 dated 1 August 2013 issued by

the CBDT in order to claim benefits under the applicable tax treaty. However, it may be noted that Tax

Authorities may ask for other information and supporting documents if required.

13.2 Further, CBDT vide notification no. 86/2013 has specified ‘Cyprus’ as notified jurisdictional area. The

implications of such a Notification are summarized as under:

13.2.1 If an assessee enters into a transaction with a person in Cyprus, then all the parties to the transaction

shall be treated as associated enterprises and the transaction shall be treated as an international

transaction resulting in application of transfer-pricing regulations including maintenance of

documentations [section 94A(2)].

13.2.2 No deduction in respect of any payment made to any financial institution in Cyrus shall be allowed

unless the assessee furnishes an authorization allowing for seeking relevant information from the said

financial institution [section 94A(3)(a) read with Rule 21AC of the Rules and Form 10FC].

13.2.3 No deduction in respect of any other expenditure or allowance arising from the transaction with a

person located in Cyprus shall be allowed unless the assessee maintains and furnishes the prescribed

information [section 94A (3)(b) read with Rule 21AC of the Rules].

13.2.4 If any sum is received from a person located in Cyprus, then the onus is on the assessee to satisfactorily

explain the source of such money in the hands of such person or in the hands of the beneficial owner,

and in case of his failure to do so, the amount shall be deemed to be the income of the assessee

[section 94A(4)].

13.2.5 Any payment made to a person located in Cyprus shall be liable for withholding tax at 30 per cent or a

rate prescribed in Act, whichever is higher [section 94A(5)].

14. Taxation of Non-resident Indians (‘NRI’)

14.1 Special provisions in case of NRI in respect of income/ long-term capital gains from specified foreign

exchange assets under Chapter XII-A of the Act are as follows:

NRI means a citizen of India or a person of Indian origin who is not a resident. A person is deemed to be of

Indian origin if he, or either of his parents or any of his grandparents, were born in undivided India.

14.2 Specified foreign exchange assets include shares of an Indian company which are acquired/ purchased/

subscribed by NRI in convertible foreign exchange.

14.3 As per provisions of section 115E of the Act, long-term capital gains arising to a NRI from transfer of

specified foreign exchange assets as duly mentioned in section 115C(f) of the Act is taxable at the rate

of 10%. As per the Finance Act 2013, a surcharge of 10% is applicable in case income of the NRI

exceeds INR 1,00,00,000. Further, education cess and secondary & higher education cess of 2% and

1% respectively will be applicable on taxable payable including surcharge applicable, if any.

14.4 As per provisions of section 115E of the Act, income (other than dividend which is exempt under

section 10(34)) from investments and long-term capital gains (other than gain exempt under

section 10(38)) from assets (other than specified foreign exchange assets under section 115C(f)) arising

to a NRI is taxable at the rate of 20%. As per the Finance Act 2013, a surcharge of 10% is applicable in

case income of the NRI exceeds INR 1,00,00,000. Further, education cess and secondary & higher

education cess of 2% and 1% respectively will be applicable on taxable payable including surcharge

applicable, if any. No deduction is allowed from such income in respect of any expenditure or

allowance or deductions under Chapter VI-A of the Act.

14.5 As per provisions of section 115F of the Act, long-term capital gains arising to a NRI on transfer of a

foreign exchange asset is exempt from tax if the net consideration from such transfer is invested in the

specified assets or savings certificates within six months from the date of such transfer, subject to the

extent and conditions specified in that section. If only part of the net consideration is so reinvested, the

exemption will be proportionately reduced. However the amount so exempted will be chargeable to tax

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subsequently, if the specified assets are transferred or converted into money within three years from the

date of their acquisition.

14.6 As per provisions of section 115G of the Act, where the total income of a NRI consists only of income/

long-term capital gains from such foreign exchange asset/ specified asset and tax thereon has been

deducted at source in accordance with the Act, the NRI is not required to file a return of income.

14.7 As per provisions of section 115H of the Act, where a person who is a NRI in any previous year,

becomes assessable as a resident in India in respect of the total income of any subsequent year, he/ she

may furnish a declaration in writing to the assessing officer, along with his/ her return of income under

section 139 of the Act for the assessment year in which he/ she is first assessable as a resident, to the

effect that the provisions of the Chapter XII-A shall continue to apply to him/ her in relation to

investment income derived from the specified assets for that year and subsequent years until such assets

are transferred or converted into money.

14.8 As per provisions of section 115I of the Act, a NRI can opt not to be governed by the provisions of

Chapter XII-A for any assessment year by furnishing return of income for that assessment year under

section 139 of the Act, declaring therein that the provisions of the chapter shall not apply for that

assessment year. In such a situation, the other provisions of the Act shall be applicable while

determining the taxable income and tax liability arising thereon.

14.9 The Finance Act 2013, any income arising to shareholders on account of buy-back of shares as referred

to in section 115QA of the Act (buy-back of shares by unlisted companies) shall be exempt in the

hands of the shareholders.

D. Benefits to FIIs


Dividend (whether interim or final) received by FIIs from its investment in shares of a domestic

company would be exempt in the hands of the FIIs as per the provisions of section 10(34) read with

section 115-O of the Act.




16. Long term capital gains exempt under section 10(38) of the Act

As per the provisions of section 10(38) of the Act, long-term capital gain arising to the FIIs from

transfer of a long-term capital asset being an equity share in a company listed on a recognized stock

exchange in India or units of equity oriented mutual fund, shall be exempt from tax, if the transaction is

chargeable to STT.

17. Capital gains

17.1 As per the provisions of section 115AD of the Act, FIIs are taxed on the capital gains income at the

following rates:

Nature of Income Rate of Tax

Long term capital gain 10 %

Short term capital gains covered under section 111A 15%

Other Short term capital gains 30%

17.2 For corporate FIIs, the tax rates mentioned above stand increased by a surcharge as under:

Taxable income Rate of surcharge

Exceeds INR 1,00,00,000 2%

Exceeds INR 10,00,00,000 5%

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For the non-corporate FIIs, the surcharge is payable at the rate of 10% where the taxable income

exceeds INR 1,00,00,000.

In addition, education cess and secondary and higher education cess on the tax on total income and

surcharge at the rate of 2% and 1% respectively is payable.

17.3 The benefits of foreign currency fluctuation protection and indexation as provided by section 48 of the

Act are not available to FIIs.

17.4 Tax is not required to be withheld at source on income by way of capital gains, in case the same arises

in the hands of residents. As per section 195 of the Act, any income payable to non-resident, may fall

within the ambit of with-holding tax provisions, subject to the provisions of the relevant tax treaty.

Accordingly, income tax may have to be deducted at source in the case of purchase of shares from a

non-resident at the rate prescribed under the domestic tax laws or under the tax treaty, whichever is

beneficial to the assessee unless a lower withholding certificate is obtained from the tax authorities.

17.5 As per provisions of Section 115AD of the Act, income (other than income by way of dividends

referred to Section 115-O) received in respect of securities (other than units referred to in Section

115AB) is taxable at the rate of 20% (plus applicable surcharge and education cess and secondary &

higher education cess). No deduction is allowed from such income in respect of any expenditure or

allowance or deductions under Chapter VI-A of the Act. Finance (No.2) Act, 2014 has inserted a

provision that the amount of income tax calculated on the income by way of interest referred in section

194LD shall be at the rate of five percent.

17.6 Any interest income arising to FIIs in respect of investment in rupee denominated bonds of an Indian

company or a Government security between 1 June 2013 and 1 June 2015 would be subject to tax

deduction at source at 5% under section 194LD.

17.7 As per the provisions of section 10(38) of the Act, long-term capital gain arising to FII from transfer of

a long-term capital asset being an equity share in a company listed on a recognized stock exchange in

India or units of equity oriented mutual fund, shall be exempt from tax, if the transaction is chargeable

to STT.




17.9 The benefit of exemption under section 54EC of the Act mentioned above in case of the Company

(refer to para 2.2.3) is also available to FIIs.

17.10 As per the provisions of section 10(34A) of the Act, any income arising to shareholders on account of

buy-back of unlisted shares shall be exempt in the hands of the shareholders. This exemption is

available to shareholders only in case where the company pays buy back tax under the provisions of

section 115QA of the Act.

18. Tax Treaty Benefits

18.1 Under the provisions of section 90(2) of the Act, a non-resident will be governed by the provisions for

the Agreement for Avoidance of Double Taxation (DTAA) between India and the country of residence

of the non-residence and the provisions of Act apply only to the extent they are more beneficial to the

assesse. It needs to be noted that a non-resident is required to hold a valid tax residency certificate

containing the particulars prescribed under Notification No. 57 of 2013 dated 1 August 2013 issued by

the CBDT in order to claim benefits under the applicable tax treaty. However, it may be noted that Tax

Authorities may ask for other information and supporting documents if required

18.2 Further, CBDT vide notification no. 86/2013 has specified ‘Cyprus’ as notified jurisdictional area. The

implications of such a Notification are summarized as under:

18.2.1 If an assessee enters into a transaction with a person in Cyprus, then all the parties to the transaction

shall be treated as associated enterprises and the transaction shall be treated as an international

transaction resulting in application of transfer-pricing regulations including maintenance of

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documentations [section 94A(2)].

18.2.2 No deduction in respect of any payment made to any financial institution in Cyrus shall be allowed

unless the assessee furnishes an authorization allowing for seeking relevant information from the said

financial institution [section 94A(3)(a) read with Rule 21AC of the Rules and Form 10FC].

18.2.3 No deduction in respect of any other expenditure or allowance arising from the transaction with a

person located in Cyprus shall be allowed unless the assessee maintains and furnishes the prescribed

information [section 94A(3)(b) read with Rule 21AC of the Rules].

18.2.4 If any sum is received from a person located in Cyprus, then the onus is on the assessee to satisfactorily

explain the source of such money in the hands of such person or in the hands of the beneficial owner,

and in case of his failure to do so, the amount shall be deemed to be the income of the assessee

[section 94A(4)].

18.2.5 Any payment made to a person located in Cyprus shall be liable for withholding tax at 30 per cent or a

rate prescribed in Act, whichever is higher [section 94A(5)].

E. Benefits to Venture Capital Companies/ Funds under the Act

In terms of section 10(23FB) of the Act, all Venture Capital Companies/ Funds registered with

Securities and Exchange of India, subject to the conditions specified, are eligible for exemption from

income tax on all their income, including profit on sale of shares of the Company. However, the

income distributed by the Venture Capital Companies/ Funds to its investors would be taxable in the

hands of the recipient.

F. Benefits to the Mutual Funds

As per the provisions of section 10(23D) of the Act, any income of the Mutual Funds registered under

the Securities and Exchange Board of India Act, 1992 or regulations made thereunder, Mutual Funds

set up by public sector banks or public financial institutions or Mutual Funds authorised by the Reserve

Bank of India, would be exempt from income tax, subject to the prescribed conditions.

G. Under the Wealth-tax Act, 1957 (Common to all)

Asset, as defined under section 2(ea) of the Wealth-tax Act, 1957, does not include shares in

companies. Hence, shares are not liable to wealth tax.

H. Under the Gift Tax Act, 1958

Gift Tax is not leviable in respect of any gifts made on or after 1st October, 1998. Therefore, any gifts

of shares will not attract gift-tax. However any transfer of shares made on or after 1 October 2009,

without consideration, or, for inadequate consideration, to an individual or HUF will be taxable in the

hands of receiver under clause (vii) of section 56(2) of the Act, subject to the prescribed condition and

valuation rules.

Notes:

a. All the above benefits are as per the prevailing Act.

b. If the provisions of Chapter X-A of the Act relating to General Anti Avoidance Rules are invoked, the

tax benefits listed hereinabove may no longer available.

c. The stated benefits will be available only to the sole/ first named holder in case the shares are held by

joint holders.

d. In respect of non-residents, the tax rates and the consequent taxation mentioned above will be further

subject to any benefits available under the relevant DTAA, if any, between India and the country in

which the non-resident has fiscal domicile.

e. The above statement of possible direct tax benefits sets out the provisions of law in a summary manner

only and is not a complete analysis or listing of all potential tax consequences of the purchase,

ownership and disposal of equity shares.

f. In view of the individual nature of tax consequences, each investor is strictly advised to consult his/her

own tax advisor with respect to specific tax consequences of his/her participation in the scheme.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

In General

The following is a summary of the material U.S. Federal income tax considerations of purchasing, owning and

disposing of Equity Shares. It is not a comprehensive description of all of the U.S. Federal income tax

considerations that may be relevant to a particular person’s decision to acquire Equity Shares. You should

consult your own tax advisor concerning the U.S. Federal income tax consequences to you of purchasing,

owning and disposing of Equity Shares based on your particular circumstances. This discussion applies to you

only if you acquire the Equity Shares in the Issue and you hold the Equity Shares as capital assets for U.S.

Federal income tax purposes (generally, for investment). This section does not apply to you if you are subject to

special rules under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), including if you are:

a dealer in securities or foreign currencies;

a trader in securities that elects to use a mark-to-market method of accounting for your securities

holdings;

a bank or financial institution;

a retirement plan;

a tax-exempt organization;

a regulated investment company, real estate investment trust, S corporation or partnership;

a life insurance company;

a holder liable for alternative minimum tax;

a holder that actually or constructively owns 10% or more of the Company’s voting stock;

a holder that is a U.S. expatriate or former long-term resident of the United States;

a holder that holds Equity Shares as part of a straddle or a hedging or conversion transaction; or

a U.S. Holder whose functional currency is not the U.S. Dollar.

This section is based on the Code, its legislative history, existing and proposed U.S. Treasury Regulations, the

Convention Between the Government of the United States of America and the Government of the Republic of

India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on

Income, signed September 12, 1989 (the “India-U.S. Tax Convention”), as amended, published rulings of the

U.S. Internal Revenue Service (the “IRS”) and U.S. court decisions, all as in effect on the date of this document.

These laws are subject to change or different interpretation, possibly on a retroactive basis. The discussion

below also is based on the accuracy of certain factual representations made by the Company and could be

materially incorrect if such factual representations prove to be incorrect.

You are a “U.S. Holder” if you are a beneficial owner of Equity Shares and you are:

a citizen or resident (including a “green card” holder) of the United States;

a U.S. corporation or other entity treated as a U.S. corporation for U.S. Federal income tax purposes;

an estate whose income is subject to U.S. Federal income tax regardless of its source; or

a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more

U.S. persons are authorized to control all substantial decisions of the trust.

If a partnership (including an entity treated as a partnership for U.S. Federal income tax purposes) is an owner of

the Equity Shares, the U.S. Federal income tax treatment of a partner in the partnership generally will depend on

the status of the partner and the activities of the partnership. Each holder of the Equity Shares that is an entity

treated as a partnership or a partner in such partnership should consult its own tax advisors about the U.S.

Federal income tax consequences of purchasing, owning and disposing of Equity Shares.

A “non-U.S. Holder” is a beneficial owner of Equity Shares that is not a U.S. Holder.

Passive Foreign Investment Company Considerations

Based on the Company’s current operations and projections, the Company does not believe that it is, or will

become in the foreseeable future, a PFIC. However, the matter is not free from doubt due, in part, to the fact that

the Company’s PFIC status is determined annually based on the type of income we earn and the value of our

assets. The Company based the expectation that it is not a PFIC on, among other things, provisions in U.S.

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Treasury Regulations under the PFIC rules, the nature of its business activities, and the composition of its

income and assets. Since the composition of our income and assets will vary over time, there can be no

assurance that we will not be considered a PFIC for any fiscal year.

If the Company were a PFIC for any year during a U.S. Holder’s holding period, then certain potentially adverse

rules may affect the U.S. Federal income tax consequences to a U.S. Holder resulting from the acquisition,

ownership and disposition of Equity Shares. In addition, for taxable years in which the Company is classified as

a PFIC, such U.S. Holder generally would be required to file an annual report with the IRS containing such

information as Treasury Regulations and/or other IRS guidelines may require.

The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company

for such tax year is passive income (the “income test”) or (b) 50% or more of the value of its average quarterly

assets held by the Company either produce passive income or are held for the production of passive income,

based on the fair market value of such assets (the “asset test”). “Gross income” generally means all sales

revenues less the cost of goods sold, and “passive income” includes, for example, dividends, interest, certain

rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities

transactions except for gross income qualifying for an exception provided in the PFIC rules for income derived

from an active banking business.

In addition, for purposes of the PFIC income test and asset test described above, if the Company owns, directly

or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will

be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a

proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test

and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that

are received or accrued by the Company from a “related person” (as defined in Section 954(d)(3) of the Code),

to the extent such items are properly allocable to the income of such related person that is not passive income.

If the Company were a PFIC in any tax year and a U.S. Holder held Equity Shares, such U.S. Holder generally

would be subject to special rules with respect to “excess distributions” made by the Company on the Equity

Shares and with respect to gain from the disposition of Equity Shares. An “excess distribution” generally is

defined as the excess of distributions with respect to the Equity Shares received by a U.S Holder in any tax year

over 125% of the average annual distributions such U.S. Holder has received from the Company during the

shorter of the three preceding tax years, or such U.S. Holder’s holding period for the Equity Shares. Generally, a

U.S. Holder would be required to allocate any excess distribution or gain from the disposition of the Equity

Shares ratably over its holding period for the Equity Shares. Such amounts allocated to the year of the

disposition or excess distribution would be taxed as ordinary income, and amounts allocated to prior tax years

would be taxed as ordinary income at the highest tax rate in effect for each such year and an interest charge at a

rate applicable to underpayments of tax would apply.

While there are U.S. Federal income tax elections that sometimes can be made to mitigate these adverse tax

consequences (including, without limitation, the “QEF Election” and the “Mark-to-Market Election”), such

elections are available in limited circumstances and must be made in a timely manner. U.S. Holders should be

aware that, for each tax year, if any, that the Company is a PFIC, the Company will not satisfy the record

keeping requirements or make available to U.S. Holders the information such U.S. Holders require to make a

QEF Election under Section 1295 of the Code with respect of the Company. U.S. Holders should consult their

own tax advisors regarding the potential application of the PFIC rules to the ownership and disposition of Equity

Shares, and the availability of certain U.S. tax elections under the PFIC rules.

Distributions

U.S. Holders. Subject to the discussion above under “—Passive Foreign Investment Company Considerations,”

a U.S. Holder that receives a distribution, including a constructive distribution, with respect to an Equity Share

will be required to include the amount of such distribution in gross income as a dividend to the extent of the

current or accumulated “earnings and profits” of our Company, as computed for U.S. Federal income tax

purposes. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of our

Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax

basis in the Equity Shares and thereafter as gain from the sale or exchange of such Equity Shares (see “Sale or

Other Taxable Disposition of Equity Shares” below.) However, our Company does not intend to maintain the

calculations of earnings and profits in accordance with U.S. Federal income tax principles, and each U.S. Holder

should therefore assume that any distribution by our Company with respect to the Equity Shares will constitute

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ordinary dividend income. Dividends received on Equity Shares generally will not be eligible for the “dividends

received deduction.”

Subject to potential application of the PFIC rules above, a dividend paid by our Company to a U.S. Holder who

is an individual, estate or trust generally will be taxed at the preferential tax rates applicable to long-term capital

gains if our Company is a “qualified foreign corporation” (a “QFC”) and certain holding period requirements for

the Equity Shares are met. Our Company generally will be a QFC if it is eligible for the benefits of the income

tax treaty between the United States and India.

Dividends received generally will be income from non-U.S. sources for foreign tax credit limitation purposes.

Such non-U.S.-source income generally will be “passive income” which is treated separately from other types of

income for purposes of computing the foreign tax credit allowable to you. You should consult your own tax

advisors to determine the foreign tax credit implications of owning Equity Shares.

The amount of the dividend distribution that you must include in your income as a U.S. Holder will be the U.S.

Dollar value of the Rupee payments made, determined at the spot Rupee to U.S. Dollar exchange rate on the

date the dividend distribution is includible in your income, regardless of whether the payment is in fact

converted into U.S. Dollars. Generally, any gain or loss resulting from currency exchange fluctuations during

the period from the date you include the dividend payment in income to the date you convert the payment into

U.S. Dollars will be treated as ordinary income or loss. Such gain or loss generally will be income or loss from

U.S. sources for foreign tax credit limitation purposes.

If the preferential tax rates discussed above do not apply, a dividend paid by our Company to a U.S. Holder

generally will be taxed at ordinary income tax rates. The rules applicable to dividends are complex, and each

U.S. Holder should consult its own tax advisors regarding the application of such rules.

Non-U.S. Holders. Dividends paid to Non-U.S. Holders generally will not be subject to U.S. Federal income tax

unless the dividends are “effectively connected” with such Non-U.S. Holder's conduct of a trade or business

within the United States and the dividends are attributable to a permanent establishment maintained in the

United States, if required by an applicable income tax treaty as a condition for subjecting you to U.S. Federal

income taxation on a net income basis. In such cases, a Non-U.S. Holder generally will be subject to U.S.

Federal income tax in the same manner as a U.S. Holder. If you are a corporate Non-U.S. Holder, “effectively

connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a

30% rate or a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Sale, Exchange or Other Disposition of Equity Shares

U.S. Holders. Subject to the discussion above under “—Passive Foreign Investment Company Considerations,”

if you are a U.S. Holder and you sell or otherwise dispose of your Equity Shares, you will recognize capital gain

or loss for U.S. Federal income tax purposes equal to the difference between the U.S. Dollar value of the amount

that you realize and your tax basis, determined in U.S. Dollars, in your Equity Shares. Gain or loss recognized

on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or

other disposition, the Equity Shares have been held for more than one year. Preferential rates apply to long-term

capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates

for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to

significant limitations under the Code. The gain or loss generally will be income or loss from U.S.-sources for

foreign tax credit purposes. Capital gains realized by a U.S. Holder upon the sale of Equity Shares may be

subject to certain taxes in India. Due to limitations on foreign tax credits, however, a U.S. Holder may be unable

to utilize such taxes as a credit against the U.S. Holder's Federal income tax liability on such capital gains. The

foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisors regarding

the availability and application of the foreign tax credit rules to such U.S. Holder.

Non-U.S. Holders. If you are a Non-U.S. Holder, you will not be subject to U.S. Federal income tax on gain

recognized on the sale or other disposition of your Equity Shares unless:

the gain is “effectively connected” with your conduct of a trade or business in the United States and the

gain is attributable to a permanent establishment that you maintain in the United States, if that is

required by an applicable income tax treaty as a condition for subjecting you to U.S. Federal income

taxation on a net income basis; or

you are an individual present in the United States for 183 or more days in the taxable year of the sale

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and certain other conditions are met.

In the first case, the Non-U.S. Holder generally will be subject to U.S. Federal income tax in the same manner as

a U.S. Holder. In the second case, the Non-U.S. Holder generally will be subject to U.S. Federal income tax at a

rate of 30% on the amount by which such Non-U.S. Holder's U.S.-source capital gains exceed such Non-U.S.

Holder's U.S.-source capital losses.

If you are a corporate Non-U.S. Holder, “effectively connected” gains that you recognize may also, under

certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are

eligible for the benefits of an income tax treaty that provides for a lower rate.

Backup Withholding and Information Reporting

Under U.S. Federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file

information returns with respect to their investment in, or involvement in, a foreign corporation. For example,

recently enacted legislation generally imposes new U.S. return disclosure obligations (and related penalties) on

U.S. Holders that hold certain specified foreign financial assets in excess of $50,000. The definition of specified

foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also,

unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person,

any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S.

person and any interest in a foreign entity. U.S. Holders may be subject to these reporting requirements unless

their Equity Shares are held in an account at a U.S. domestic financial institution. Penalties for failure to file

certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors

regarding the requirements of filing information returns.

If you are a non-corporate U.S. Holder, information reporting requirements generally will apply to:

dividend payments or other taxable distributions made to you within the United States; and

the payment of proceeds to you from the sale of Equity Shares effected at a U.S. office of a broker.

Additionally, backup withholding at a current rate of 28% (and increasing to 31% for payments made after

December 31, 2010) may apply to such payments if you are a non-corporate U.S. Holder that:

fails to provide a valid taxpayer identification number;

is notified by the IRS that you have failed to report all interest and dividends required to be shown on

your U.S. Federal income tax returns; or

in certain circumstances, fails to comply with applicable certification requirements.

If you are a non-U.S. Holder, you are generally exempt from U.S. backup withholding and information reporting

requirements with respect to dividend payments made to you outside the United States by the Company or

another non-U.S. payor and other dividend payments and the payment of the proceeds from the sale of Equity

Shares effected at a U.S. office of a broker, as long as:

the income associated with such payments is otherwise exempt from U.S. Federal income tax; and

the payor or broker does not have actual knowledge or reason to know that you are a U.S. person and

you have furnished the payor or broker with:

- an IRS Form W-8BEN or an acceptable substitute form upon which you certify, under

penalties of perjury, that you are a non-U.S. person; or

- other documentation upon which it may rely to treat the payments as made to a non-U.S.

person in accordance with U.S. Treasury Regulations; or

you otherwise establish an exemption.

Payment of the proceeds from the sale of Equity Shares effected at a foreign office of a broker generally will not

be subject to information reporting or backup withholding. However, a sale of Equity Shares that is effected at a

foreign office of a broker will be subject to information reporting and backup withholding if:

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the proceeds are transferred to an account maintained by you in the United States;

the payment of proceeds or the confirmation of the sale is mailed to you at a United States address; or

the sale has some other specified connection with the United States as provided in U.S. Treasury

Regulations,

unless the broker does not have actual knowledge or reason to know that you are a U.S. person and the

documentation requirements described above are met or you otherwise establish an exemption.

In addition, a sale of Equity Shares effected at a foreign office of a broker will be subject to information

reporting if the broker is:

a U.S. person;

a controlled foreign corporation for U.S. Federal income tax purposes;

a foreign person 50% or more of whose gross income is effectively connected with the conduct of a

U.S. trade or business for a specified three-year period; or

a foreign partnership, if at any time during its tax year:

- one or more of its partners are “U.S. persons,” as defined in U.S. Treasury Regulations, who

in the aggregate hold more than 50% of the income or capital interest in the partnership; or

- such foreign partnership is engaged in the conduct of a U.S. trade or business,

unless the broker does not have actual knowledge or reason to know that you are a U.S. person and the

documentation requirements described above are met or you otherwise establish an exemption. Backup

withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that

you are a U.S. person.

A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules that

exceed its U.S. Federal income tax liability by filing a refund claim with the IRS.

Additional Tax on Passive Income

Certain individuals, estates and trusts whose income exceeds certain thresholds will be required to pay a 3.8%

surtax on “net investment income” including, among other things, dividends and net gain from disposition of

property (other than property held in a trade or business). U.S. Holders should consult their own tax advisors

regarding the application, if any, of this tax on their ownership and disposition of Equity Shares.

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LEGAL PROCEEDINGS

Our Company, our Subsidiaries and the Joint Ventures are subject to various legal proceedings from time to

time, mostly arising in the ordinary course of their business. Except as described below, we are not involved in

any legal proceedings and we are not aware of any proceedings that are threatened, which if determined

adversely, may have, or have had, a material adverse effect on our business, properties, financial condition or

results or operations. Other than as disclosed in this chapter, our Company has no outstanding defaults in

relation to statutory dues payable, dues payable to holders of any debentures and interest thereon, and in

respect of deposits and interest thereon, defaults in repayment of loans from any bank or financial institution. There are no litigations or legal actions pending or taken by any Ministry or Department of the Government or

a statutory authority against any promoter of our Company during the last three years immediately preceding

the date of the Placement Document and no directions have been issued by any such Ministry or Department or

statutory authority. Further, there are no inquiries, inspections or investigations initiated or conducted under

the Companies Act, 2013 or any previous company law in the last three years immediately preceding the date if

the Placement Document against our Company and all of its Subsidiaries.

In order to determine materiality, we have disclosed the legal proceedings above the value 1% of the standalone

profit after tax for Fiscal 2014 which is ` 25 million and certain other litigations we consider material,

including criminal litigations (other than section 138 cases under the Negotiable Instruments Act, 1881) against

our Company, Subsidiaries and Directors as set forth below.

Litigations against our Company

Criminal cases

1. Mr. Bighneshwar Laxman Sahu (“Complainant”), an ex-employee of our Company has filed a criminal

complaint number C.C. No. 64/M/2012 dated April 9, 2012 (“Complaint”) before the Court of

Metropolitan Magistrate, Mumbai (“Court”) against our Company, Mr. Paras K. Chowdhary and Mr.

Ghanshyam M. Mhatre alleging charges under sections 420, 406, 465, 467, 468, 471 read with section 34 of

the Indian Penal Code, 1860. The Complaint was filed alleging that the Accused had tried to dupe and cheat

the Complainant by getting him to sign receipt against post retirement payments and filing the same with

High Court of Bombay stating it is the full and final settlement of all his claims including the claims of back

wages in respect of which there is writ petition pending before the Hon’ble Bombay High Court being no.

921 of 2006, which the Complainant has disputed. The Complainant further prays that the Court be pleased

to charge the Accused under section 420, 406, 465, 467, 468, 471 read with section 34 of the Indian Penal

Code, 1860 and for giving directions to Bhandup police to register an FIR. The matter is currently pending.

Civil cases

1. The Central Government through the Department of Company Affairs (“Complainant”) had filed a

complaint dated December 7, 1992 (“Complaint”) before the erstwhile Monopolies and Restrictive Trade

Practices Commission (“MRTP Commission”) against initially MRF Limited, Modi Rubber Limited,

Dunlop India Limited, Automotive Tyres Manufacturers and our Company (together referred to as the

“Respondents”). Subsequently few other Tyre Companies were impleaded. The complaint was filed inter-

alia alleging the Respondents of indulging in restrictive trade practices of collusive price behaviour as

defined under section 2(o) and section 33 (1) (d) of the Monopolies and Restrictive Trade Practices Act,

1969 (“Act”) considering the direction and magnitude of price increases, timing of the announcement of

price increase within a short span and general practices adopted for the period 1990-91,fixing the selling

price based on anticipated increase in prices of raw materials after one year. The complaint was filed

praying that the MRTP commission to institute an enquiry against the Respondents and pass appropriate

orders. Subsequently, a notice of Enquiry dated March 22, 1993 ( Enquiry No. 147/92) was instituted by the

MRTP Commission against the Respondents for restrictive trade practice under section 33 (1) (d) read with

section 2 (o) of the Act. Our Company filed a reply dated December 6, 1993 and prayed that notice of

enquiry ought to be discharged with costs. Pursuant to the repeal of the Act and the introduction of the

Competition Act 2002, the old matters stand transferred to the Competition Appellate Tribunal (COMPAT).

Fresh proceedings have commenced and the Company has filed its Affidavit of Evidence dated January 24,

2014 justifying from a costing perspective the increase effected. The matter is currently pending.

2. Ricoh India Limited (“Plaintiff”) filed a suit bearing suit no. 4289 of 2000 dated October 21, 2000(“Suit”)

before the High Court of Bombay (“Court”) against our Company. The Plaintiff has filed the Suit claiming

a sum of ` 29.38 million along with interest at the rate of 18 percent from our Company towards the supply

of machines, rendering maintenance and after sales services and for various different liabilities of our

Company which were discharged by the Plaintiff. Our Company has filed its written statement and counter

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claim dated April 16, 2008 denying all allegations and making a counter claim for ` 62.52 million together

with further interest at the rate of 16.5 percent per annum from the date of the counter claim. The matter is

currently pending.

3. Delhi Transport Corporation (“Claimant”) filed a statement of claim dated July 05, 2007 (“Claim”) in

Arbitration Case No. 58 of 2007 before Justice R. C. Chopra, Sole Arbitrator (“Arbitrator”) against our

Company. The Claim was filed alleging that our Company has breached the terms of the contract and the

Claimant has claimed a sum of ` 44.60 million towards the Company’s failure to supply tyres against a

concluded tender with the Claimant along with interest and cost. Our Company has filed its reply and

counter claim dated September 20, 2007 before the Arbitrator for a sum of ` 5 million on account of loss of

reputation. The Company vide an application under Order VI Rule 17 read with section 151 of the Code of

Civil Procedure, 1908 amended the counter claim and revised the sum of counter claim from ` 5 million to

` 76.86 million. Subsequently, the Arbitrator vide award dated January 11, 2012 passed an order allowing

the application for amendment of the counter claim. The matter is currently pending.

4. Amiruddin Azizpasha Jagirddar & Ors (“Petitioners”) has filed a writ petition number 3214 of 2012

(currently 568 of 2013) (“Petition”) before the High Court of Judicature, Mumbai (“High Court”) against

State of Maharashtra (“Respondent 1”), our Company (“Respondent 2”) and Commissioner of Labour

(“Respondent 3”) (“Respondents”). The Petitioner alleged that, the Respondent 1 has granted permission

to Respondent 2 to sell a part of the factory land which was acquired by the Respondent 1 under avowed

object of public purpose at a nominal cost, without following the due process of law and in violation of the

principles of natural justice. The Petition was filed inter-alia praying that the High court be pleased to issue

a writ of mandamus or any other writ calling for records for grant of permission by Respondent 1 to

Respondent 2 to sell/develop the impugned land at Bhandup and after ascertaining the legality, quash and

set aside the same, direct the Respondent 1 to investigate the illegal and inappropriate sale of public land for

commercial purpose, to direct Respondent 2 to desist from shifting workmen and machinery from Bhandup

plant, direct Respondent 2 to deposit with the High Court the proceeds of sale of public land allowed to be

sold illegally by Respondent 1 in the year 2008, cancel transfer of land by Respondent 2 and reclaim the

same for public purpose, stay the operation of permission granted by Respondent 1 to Respondent 2 to

sell/develop the impugned land till hearing of the Petition etc. Subsequently, Ashford Infotech Private

Limited was impleaded as a party to the Petition. The matter is currently pending.

Subsequently, Elson Joseph Fernandis and others filed a writ petition bearing number 1728 of 2013 before

the High Court of Judicature, Mumbai (“High court”) against State of Maharashtra (“Respondent 1”), our

Company (“Respondent 2”) and Ashford Infotech Private Limited (“Respondent 3”)(together referred to

as the “Respondents”) praying that the Court be pleased to issue a writ of mandamus or any other writ

calling for records for grant of permission by Respondent 1 to Respondent 2 to sell/develop the impugned

land at Bhandup and after ascertaining the legality, quash and set aside the same, to cancel transfer of land

stated by Respondent 2 as excess and reclaim the same for said public purpose, restore the impugned land

to Respondent 1, to direct the Respondent no.3 not to create third party interest. The High Court vide order

dated August 16, 2013 held that the writ petition will be taken along with writ petition number 568 of 2013.

The matter is currently pending.

Tax Litigations

1. Our Company filed its return of income declaring the total loss of ` 145.93 million and showing the deemed

income under section 115JB at ` (30.88) million for the assessment year 2005-2006. Subsequently, the

assessing officer vides order dated November 29, 2007 (“Order 1”) passed under section 143 (3) of the

Income Tax Act, 1961 (“Act”) disallowed ` 28.11 million under section 14A of the Act. Later, on appeal,

the Commissioner of Income Tax (Appeals) (“CIT A”) vide order dated October 12, 2009 (“Order 2”)

partly allowed the appeal of the assesse with the direction to assessing officer to rework the proportionate

amount of expenditure incurred in relation to the exempt income by the method prescribed in Rule 8 D and

disallowed the amount under section 14 A of the Act. Aggrieved by Order 2, the assesse filed an appeal

before the Income Tax Appellate Tribunal (“ITAT”). The ITAT vide order dated March 29, 2012 (“Order

3”) restored the matter to the file of the assessing officer to the decide the same afresh in the light of

principles laid down in the case of Godrej & Boyce Manufacturing Company Limited v. DCIT.

Subsequently, the Commissioner of Income Tax 6 (“Authority”), filed an appeal before the High Court of

Judicature at Bombay against Order 3. The High Court vide order dated January 21, 2013 (“Order 4”)

dismissed the appeal. Subsequently, our Company filed a caveat before the Supreme Court and later came

to know that the Supreme Court vide order dated August 05, 2013 has granted leave to a special leave

petition filed by the Authority. The matter is currently pending.

2. Our Company filed its return of income declaring the total loss of ` nil for the assessment year 2006-2007.

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Subsequently, the assessing officer vides order dated November 29, 2007 (“Order 1”) passed under section

143 (3) of the Income Tax Act, 1961 (“Act”) disallowed ` 73.50 million under section 14A of the Act.

Later, on appeal, the Commissioner of Income Tax (Appeals) (“CIT A”) vide order dated October 12, 2009

(“Order 2”) partly allowed the appeal of the assesse with the direction to assessing officer to rework the

proportionate amount of expenditure incurred in relation to the exempt income by the method prescribed in

Rule 8 D and disallowed the amount under section 14 A of the Act. Aggrieved by Order 2, the assesse filed

an appeal before the Income Tax Appellate Tribunal (“ITAT”). The ITAT vide order dated March 29, 2012

(“Order 3”) restored the matter to the file of the assessing officer to the decide the same afresh in the light

of principles laid down in the case of Godrej & Boyce Manufacturing Company Limited v. DCIT.

Subsequently, the Commissioner of Income Tax 6 (“Authority”), filed an appeal before the High Court of

Judicature at Bombay against Order 3. The High Court vide order dated January 21, 2013 (“Order 4”)

dismissed the appeal. Subsequently, our Company filed a caveat before the Supreme Court and later came

to know that the Supreme Court vide order dated August 05, 2013 has granted leave to a special leave

petition filed by the Authority. The matter is currently pending.

3. Our Company had filed an appeal number 2269/Mum-2013 dated March 20, 2013 (“ITAT Appeal”) before

the Income Tax Appellate Tribunal, Mumbai (“ITAT”) against the order dated January 25, 2013 (“Order”)

passed by the Deputy Commissioner of Income Tax, Mumbai. Our Company filed the ITAT Appeal, inter

alia, on the ground that the Commissioner of Income Tax (Appeals) (“CIT-A”) erred in disallowing

unabsorbed depreciation claim of ` 216.94 million claimed as set off in the assessment year 2006-07.

Subsequently, the ITAT Appeal was filed praying that the Order be set aside. The matter is currently

pending.

Show cause notices

1. The Commissioner of Central Excise, Mumbai (“Commissioner”) issued a show cause cum demand notice

number F.No.V.Adj/SCN/15-27/Comm/BDN/M-III/09/1172 dated January 28, 2010 (“Show Cause

Notice”) to our Company, to show cause as to why service tax credit (including cess) totally amounting to `

149.52 million should not be denied and service tax credit (including cess) totally amounting to ` 149.52

million which was availed and utilized should not be demanded and recovered from our Company under

Rule 14 of the CENVAT Credit Rules, 2004 (“Cenvat Rules”) read with the proviso to section 11A(1) of

the Central Excise Act, 1944 (“Act”), why interest under Rule 14 of the Cenvat Rules read with section

11AB of the Act should not be charged and recovered from them at the appropriate rate on the said amount

of ` 149.52 million and why penalty should not be imposed under Rule 15 and/or 15A of the Cenvat Rules

read with section 11AC of the Act. Our Company has filed its reply dated June 4, 2010 denying all the

contentions taken in the Show Cause Notice. The matter is currently pending.

2. The Commissioner of Central Excise, Mumbai (“Commissioner”) issued eight show cause notices (“Show

Cause Notices”) to our Company, wherein it is proposed to demand and recover excise duty of ` 100.04

million on the amount of deductions claimed on account of primary/ secondary cost of transportation from

the sale price under proviso (i) of section 11A of the Central Excise Act, 1944 (“Act”) during the period

July 2000 to February 2003. Our Company has filed its replies denying all the contentions in the Show

Cause Notices. The matter is currently pending.

3. The Commissioner of Central Excise & Customs, Nashik (“Commissioner”) issued a show cause notice

number F.No. V(40)15-167/Adj/Nsk-III/05 dated December 2, 2005 (“Show Cause Notice”) to our

Company to show cause wherein it is proposed to demand and recover excise duty of as to why central

excise duty of ` 28.75 million on the amount of deductions claimed on account of primary/ secondary cost

of transportation from the sale price under proviso (i) of section 11A of the Central Excise Act, 1944

(“Act”) during the period July 2000 to February 2003 along with penalty equal to the amount of duty

determined and interest at the rates applicable. Our Company has filed its reply dated January 17, 2006

denying all the contentions in the Show Cause Notice. The matter is currently pending. Authorized officer

of the Company to argue the matter.

4. The commissioner of Customs (Export), Mumbai has issued 16 show cause notices against our Company

demanding an amount of ` 836.80 million, on the ground that the input stage credit (MODVAT) has been

availed on indigenously procured inputs used in the manufacture of export goods and thus contravening the

provisions of section 11 (O) of the Customs Act, consequent to violation of condition of notification

number 203/92 Cus read with provisions contained in Foreign Trade (Development and Regulation) Act

1992 and Rules made thereunder. Our Company has replied to the show cause notices. The matter is

currently pending.

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Litigations by our Company

Criminal cases

1. Our Company has filed a criminal complaint C.C. No. 137/SW of 2014 dated August 27, 2014

(“Complaint’) before the Court of Metropolitan Magistrate, Mumbai against Mr. Pasumarthy L. Murthy,

an ex-employee of our Company alleging charges under sections 408, 419, 465, 468, 471, 477-A of the

Indian Penal Code, 1860 for misappropriation of funds to the tune of ` 1.97 million, inter alia including and

siphoning of funds from the bank accounts of our Company to the tune of ` 0.55 million. The matter is

currently pending.

2. Our Company has filed a criminal complaint number C.C. No. 94/SW/2012 dated June 19, 2012

(“Complaint”) before the Court of Additional Chief Magistrate, Mumbai against Stanford Stanislaus Pinto

and Mr. Ebrahim E. Rampurwala (together referred to as the “Accused”) alleging charges under sections

403, 406, 418, 420, 425, 427, 465, 467 and 471 read with section 120-B of the Indian Penal Code, 1860.

Our Company claims that the Accused has wrongfully misappropriated money belonging to our Company

to the tune of ` 0.11 million. The Complaint was filed praying that the court be pleased to issue process

under the above sections and the Accused be punished with maximum sentence and fine. The matter is

currently pending.

3. Our Company has filed a criminal complaint bearing C.C. No. 1203/Misc/2006 dated November 28, 2006

(currently the case number is C.C. No.556/SS/2009) (“Complaint”) before the Court of Metropolitan

Magistrate, Mumbai (“Court”) against Ramesh Diddee, Mrs. Sabita Diddee, Rajan Diddee and Mrs. Simran

Diddee (together referred to as the “Accused”)alleging charges under sections 425 and 448 read with

section 120-B of the Indian Penal Code, 1860 for trespass and illegal occupation of the property owned by

our Company. The Complaint was filed praying that the Court be pleased to take cognizance of the

Complaint and issue process against the Accused and sentence the Accused to maximum punishment and

fine. The matter is currently pending.

4. Our Company has filed a criminal complaint bearing C.C. No. 70 / SW / 2012 dated April 25, 2012

(“Complaint”) before the 29th Additional Chief Metropolitan Magistrate, Mumbai (“Court”) against Mr.

Aditya Nayar and Mr. Vishal Khanna (since deceased) (together referred to as the “Accused”) alleging

criminal breach of trust, cheating, forgery and falsification of documents under sections 406, 418, 420, 427,

465, 467, 468, 471 read with section 120-B of the Indian Penal Code, 1860 to the tune of ` 2.61 million.

The Complaint prayed that the Court to take cognizance of the Complaint and sentence the Accused to

maximum sentence and fine. The Court has directed the Senior Police Inspector of Worli Police Station to

investigate under section-202 of the Criminal Procedure Code, 1973. The matter is currently pending.

Tax litigations

5. Our Company has filed an appeal dated May 17, 2013 (“Appeal”) before the Commissioner of Central

Excise, Mumbai-III against the order number 35/12-13 dated March 18, 2013 (“Order”) passed by the

Deputy Commissioner of Central Excise, Mumbai for the assessment year 2011-12. Pursuant to the Order,

the claims of our Company with regard to deductions in respect of octroi and discounts were rejected on the

ground that transaction wise details were not submitted and hence on the basis of the information available,

the differential duty was determined as ` 77.80 million out of which our Company had paid ` 7.02 million

which would be adjusted with the duty payable. Our Company filed the Appeal, inter alia, praying for

setting aside the Order, staying the operations of the Order and to waive the pre-deposit of duty and stay its

recovery till the disposal of Appeal. The matter is currently pending.

6. Our Company has filed an appeal number E/317 of 2012 (“Appeal”) before the Customs, Excise and

Service Tax Appellate Tribunal, Mumbai against the order number 17/COMMR/PKA/2011-12/9064 dated

November 29, 2011 (“Order”) passed by the Commissioner of Central Excise, Mumbai III. Our Company

had received a show cause notice dated December 16, 2010 from the excise department proposing to deny

the CENVAT credit of `13.00 million taken on the basis of invoices issued by M/s SRF Limited (“SRF”)

for the period April 2009 to August 2009. Subsequently, the Commissioner of Central Excise, Mumbai III

vide Order confirmed the demand to pay ` 13.00 million being the CENVAT credit along with a penalty of

` 13.00 million and interest. Our Company filed the Appeal to set aside the Order. The matter is currently

pending.

7. Our Company filed an appeal (“Appeal”) before the Customs Excise & Service Tax Appellate Tribunal,

Mumbai (“Tribunal”) against the order dated November 01, 2013 (“Order”) passed by the Commissioner

of Central Excise Mumbai III (“Authority”). The Authority vide Order confirmed the demand and recovery

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of Cenvat Credit of ` 65.94 million wrongly utilised by our company for the payment of basic excise duty

for the month of April, 2007 along with interest and penalty of ` 5 million. Our Company filed the Appeal

along with the stay application. Tribunal vide order number S/320/14/EB/C-II dated June 12, 2014 (“Order

1”) rejected the stay application and directed our Company to pre-deposit the entire duty demand of ` 65.94

million within a period of eight weeks. On such compliance, interest and penalty shall stand waived and

recovery stayed during the pendency of Appeal. Aggrieved by order 1, our Company filed an appeal

number 250 of 2014 dated August 12, 2014 (“Appeal”) before the High Court of Judicature, Bombay

(“High Court”) for staying the operation of Order 1 and for deciding on substantial questions of law raised.

The matter is currently pending before the Tribunal and the stay application is pending before High Court.

8. Our Company has filed an appeal number 315 of 2014 dated September 25, 2014 (“Appeal”) before the

Bombay High Court against the order number A/487/14/EB/C-II dated June 26, 2014 (“Final Order”)

passed by the Customs Excise and Service Tax Appellate Tribunal (“Tribunal”). Our Company received a

show cause notice dated March 31, 2000 (“SCN”) proposing that the dipped fabrics cannot be cleared to

Nashik factory without payment of duty under Rule 57F(4) as there is no job work undertaken by Bhandup

factory. The show cause notice alleged that there is a sale and purchase transaction between the Bhandup

factory and Nashik factory of our Company and therefore Bhandup factory is required to pay duty on DTFC

cleared to Nashik factory. The SCN proposed to demand duty amounting to ` 1,020.3 million. The

Commissioner of Central Excise, Mumbai (“Commissioner”) vide order dated May 25, 2002 (“Order”)

confirmed the entire duty demanded in the SCN. The Commissioner also imposed equal amount of penalty

on our Company. Our Company filed an appeal along with the stay application before the Appellate

Tribunal. The Appellate Tribunal vide order number C-II/1670-1672/WZB/2003 dated July 1, 2003 set

aside the Order to the extent the demand of duty on DTFC cleared to Nashik factory under Annexure II

challans; amount of Modvat credit availed by our Nashik Unit and remanded the matter back to the

Commissioner on the ground of alleged clandestine removal of DTCF from Bandhup factory for an amount

of ` 290 million. Subsequently, the Commissioner vide order dated October 31, 2003 dropped the entire

amount of duty proposed to be demanded in the SCN. Subsequently, the Revenue filed an appeal before the

Tribunal for a revised amount of ` 104.59 million, as the Department concluded that there were arithmetical

errors and the duty demand of ` 290 million was not tenable. The Tribunal vide its Final Order remanded

the matter back to the Commissioner for re-adjudication. Our Company has filed the Appeal, inter alia,

praying for quashing and setting aside the Final Order to the extent it is against our Company and grant stay

of operation of the Final Order pending final disposal of the Appeal. The matter is currently pending.

9. Our Company has filed an appeal number JC/APP-IV/BST-58/10-11/B-28,29 dated November 01, 2013

(“Appeal”) before the Maharashtra Sales Tax Tribunal, Mumbai against the order number BST-

58/2010.11/B-28 dated November 1, 2013 (“Order”) passed by the Joint Commissioner of Sales Tax,

Aurangabad Division (Appeals) (“Joint Commissioner”). Our Company was assessed by the Deputy

Commissioner of sales tax, Aurangabad for the period September 1, 1994 to September 29, 1994 vide order

dated March 30, 2009 (“Assessment Order”). The Assessment Order resulted in the demand of ` 326.14

million. Aggrieved by the Assessment Order, our Company filed an appeal before the Joint Commissioner.

The Joint Commissioner passed the Order partly allowing the appeal and confirmed the interest under

section 36(3)(b) of the Bombay Sales Tax Act, 1959 at ` 78.15 million, resulting in total dues of ` 149.50

million. Our Company filed the Appeal inter-alia praying for setting aside the Assessment Order, deletion

of enhancement made by the assessing officer, removal of tax levied on the sale of going concern, return

figures be accepted in toto and full remittance of interest. The matter is currently pending.

10. Our Company has filed an appeal number CIT(A)-12/ACIT 6(2)/28/12-13 dated June 20, 2012 (“Appeal”)

before Commissioner of Income Tax (Appeals) XII, Mumbai (“CIT-A”) against the order dated March 26,

2012 (“Assessment Order”) passed by the Assistant Commissioner of Income Tax, Mumbai (“ACIT”) for

the assessment year 1999-2000. Our Company filed the Appeal, inter alia, on grounds that the ACIT erred

in making disallowance in respect of discounting charges paid/payable to foreign banks of ` 17.26 million,

ACIT erred in taxing on MODVAT credit on opening stock of ` 26.32 million, ACIT erred in not allowing

expenses relating to exempt income under section 14A of the Income Tax Act, 1961 (“IT Act”) of ` 21.44

millionand ACIT erred in confirming the addition of ` 21.44 million under section 14A of the IT Act for the

purpose of section 115JA of the IT Act. The matter is currently pending.

11. Our Company has filed an appeal number CIT (A)-12/ACIT 6(2)/27/12-13 dated June 20, 2012 (“Appeal”)



the assessment year 2000-01. Our Company filed the Appeal, inter alia, on grounds that the ACIT erred in

making disallowance in respect of discounting charges paid/payable to foreign banks of ` 15.25 million,

ACIT erred in allowing expenses under section 14A of the Income Tax Act, 1961 (“IT Act”) to the extent

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of ` 0.6 million and disallowing the balance of ` 16.48 million under section 14A of the IT Act and ACIT

erred in confirming the addition of ` 1.64 crore under section 14A of the IT Act for the purpose of section

115JA of the IT Act. Subsequently, the Appeal was filed for setting aside the Assessment Order and for

allowing the deductions claimed by our Company. The matter is currently pending.

12. Our Company has filed an appeal number CIT (A)-12/ACIT 6(2)/26/12-13 dated June 20, 2012 (“Appeal”)



the assessment year 2001-02. Our Company filed the Appeal, inter alia, on grounds that the ACIT erred in

making disallowance in respect of discounting charges paid/payable to foreign banks of ` 22.05 million and

ACIT erred in allowing relief to the extent of ` 32.46 million disallowing the balance of ` 6.04 million

under section 14A of the Income Tax Act, 1961. The matter is currently pending.

13. Our Company has filed an appeal (“Appeal”) before the Income Tax Appellate Tribunal (“ITAT”), against

the order dated December 21, 2012 ( “Order”) passed by the Commissioner of Income Tax, Appeals -12

(“CIT (A)”) for the assessment year 2007-08. Our Company filed the Appeal, inter alia, on grounds that the

CIT(A) erred in disallowing unabsorbed depreciation claim of ` 145.93 million claimed as set off in

assessment year 2007-08, the CIT(A) erred in disallowing unabsorbed depreciation of assessment year

2005-06 against profits of assessment year 2007-08. The Appeal was filed praying that the Order be set

aside. The matter is currently pending.

14. Our Company has filed an appeal number 824/Mum/2012 dated February 1, 2012 (“Appeal”) before

Income Tax Appellate Tribunal, Mumbai (“ITAT”) against the order dated October 13, 2011 (“Order”)

passed by the Commissioner of Income Tax (Appeals), Mumbai (“CIT-A”) for the assessment year 2008-

09. Our Company filed the Appeal, inter alia, on grounds that the CIT-A erred in disallowing expenditure

amounting to ` 4.22 mllion in terms of Rule 8D of the Income Tax Act, 1961 (“IT Act”), the CIT-A erred

in making addition to the extent of ` 53.32 million in the closing stock, the CIT-A erred in disallowing the

expenditure in respect of guest houses and residential flats amounting to ` 11.14 million, the CIT-A erred in

disallowing exemption claimed in respect of dividend income earned from subsidiary based in Sri Lanka

and that the CIT-A erred in remanding the matter for consideration of the assessing officer with regards to

brought forward depreciation worth ` 263.65 million while re-computing total income. The matter is

currently pending.

15. Our Company has filed a writ petition bearing number 980 of 2014 dated June 03, 2014 (“Writ Petition”)

before the High Court of Judicature, Mumbai to challenge two notices dated March 08, 2013 and March 25,

2013 issued under section 148 of the Income Tax Act, 1961 by the assessing officer seeking to reopen the

assessment for the assessment year 2008-2009. The High Court vide order dated July 14, 2014 set aside the

order dated March 03, 2014 and directed our Company to file its consolidated objection to the grounds in

support of the impugned notices furnished by the assessing officer and disposed of the Writ Petition. The

matter is currently pending before adjudication officer

16. Our Company has filed an appeal number 7056/Mum-2013 dated November 29, 2013 (“Appeal”) before

Income Tax Appellate Tribunal (“ITAT”) against the order dated September 6, 2013 (“Order”) passed by

the Commissioner of Income Tax (Appeals), Mumbai (“CIT-A”) for the assessment year 2009-10. Our

Company filed the Appeal, inter alia, on grounds that the CIT-A erred in disallowing interest expenditure

under section 14A of the Income Tax Act, 1961 (“IT Act”) read with Rule 8D amounting to ` 16.03

million, the CIT-A erred in upholding the addition made to closing stock to the extent of ` 58.81 million,

the CIT-A erred in disallowing the expenditure in respect of guest house expenses to the extent of ` 40.38

million and the CIT-A erred in imposing penalty of ` 0.10 million. Subsequently, the Appeal was filed to

set aside the Order. The matter is currently pending.

17. Our Company has filed an appeal dated April 10, 2014 (“Appeal”) before Commissioner of Income Tax

(Appeals)-12, Mumbai (“CIT-A”) against the order dated March 7, 2013 (“Assessment Order”) passed by

the Deputy Commissioner of Income Tax, Mumbai (“DCIT”) for the assessment year 2010-11. Our

Company filed the Appeal, inter alia, on grounds that the DCIT erred in disallowing an amount of gratuity

contribution of ` 17.67 million under section 43B of the Income Tax Act, 1961, (“IT Act”), the DCIT erred

in disallowing an amount of ` 17.66 million under section 14A read with Rule 8D of the IT Act, the DCIT

erred in holding that depreciation on UPS is to be allowed at 15% as against 60% claimed by the appellant

and thus disallowing depreciation on UPS amounting to ` 0.12 million, the DCIT erred in disallowing an

amount of ` 8.47 million under section 40(a)(ia) of the IT Act and the DCIT erred in disallowing rent paid

amounting to ` 24.74 million under section 40(a)(ia) of the IT Act. The matter is currently pending.

18. Our South Asia Tyres Limited (an erstwhile joint venture of our Company and Goodyear) has filed a

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counter affidavit C.A.No. D1258 of 2003 before the Supreme Court of India (“Supreme Court”) against

appeal filed by the Commissioner of Central Excise, Aurangabad against the order dated July 31, 2002

(“Order”) passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (“CEGAT”).

The CEGAT vide Order set aside the order of the Commissioner confirming the demand of ` 87.69 million

on the ground that South Asia Tyres Limited on the one hand and our Company and Goodyear on the other

are not related persons. Against the order of the Tribunal, the Department has filed an SLP before the

Supreme Court. South Asia Tyres Private Limited vide latter dated March 21, 2003 has determined the

liability of our Company at ` 51.94 million. The matter is currently pending before the Supreme Court.

19. Our Company has filed an appeal dated February 26, 2014 (“Appeal”) before the Additional Commissioner

of Sales Tax, Cuttack (“ACST”) against the order dated December 28, 2013 (“Order”) passed by the Joint

Commissioner of Sales Tax, Bhubaneshwar (“JCST”) for the tax periods from April 1, 2011 to March 31,

2013. Our Company filed the Appeal alleging that the Assessing Authority erred in passing the Order on an

incorrect interpretation of section 2(j) of the Orissa Entry Tax Act, 1999. Our Company had simultaneously

filed a stay petition (“Petition”) challenging the conditional order dated March 25, 2013 passed by the

ACST wherein the ACST while disposing the stay petition directed our Company to deposit ` 5.10 million

by march 30, 2014 and after the assessment was completed by the JCST, a demand of ` 30.62 million was

raised. The Petition was filed for full stay of the disputed dues pending the disposal of the Appeal. The

Commissioner of Commercial Taxes, Cuttack passed an order number 9443/CT. BH-241/2013-14 dated

June 10, 2014 staying the disputed dues till the disposal of the Appeal. The matter is currently pending.

20. Our Company has filed an appeal dated February 26, 2014 (“Appeal”) before the Additional Commissioner

of Sales Tax, Cuttack (“ACST”) against the order dated December 28, 2013 (“Order”) passed by the Joint

Commissioner of Sales Tax, Bhubaneshwar (“JCST”) for the period April 1, 2011 to March 31, 2013. Our

Company filed the Appeal alleging that the Assessing Authority erred in passing the Order under 42 of the

Orissa Value Added Tax Act, 2004. Our Company had simultaneously filed a stay petition (“Petition”)

challenging the conditional order dated March 24, 2013 passed by the ACST wherein the ACST while

disposing the stay petition directed our Company to deposit ` 4.88 million by March 30, 2014 and after the

assessment was completed by the JCST, a demand of ` 29.27 million was raised. The Petition was filed for

full stay of the disputed dues pending the disposal of the Appeal. The Commissioner of Commercial Taxes,

Cuttack passed an order number 9445/CT. BH-242/2013-14 dated June 10, 2014 staying the disputed dues

till the disposal of the Appeal. The matter is currently pending.

21. Our Company has filed an appeal/revision/review petition (“Appeal”) before the Senior Joint

Commissioner of Sales Tax, Kolkata (“SJCST”) against the order dated June 27, 2013 (“Order”) passed by

the Joint Commissioner of Sales Tax, Bhubaneshwar (“JCST”) for the tax period April 1, 2010 to March

31, 2011 determining an amount of ` 31.68 million as due and payable by our Company under the West

Bengal Value Added Tax Act, 2003. Subsequently, the Appeal was filed praying that SJCST be pleased to

set aside the Order. The matter is currently pending.

Litigations against our Directors

1. Shri A A P Jagirdar (“Complainant”) has filed a criminal complaint vide C.C. No. 11/SW of 2013 dated

January 10, 2013 (“Complaint”) before the Court of Metropolitan Magistrate, 27th Court, Mumbai

(“Court”) against Mr. Ganesh Naik, Mr. B. D. Sanap, Dr. R P Goenka, Mr. H V Goenka, Mr. Paras K

Chowdhary, Mr. Anant Vardhan Goenka, Mr. Vinay Bansal, Mr. Haigereve Khaitan, Mr. S Doreswamy,

Mr. Atul C Choksey, Mr. Mahesh S Gupta, Mr. Bansi S Mehta, Mr. Hari L Mundra, Mr. Kantikumar R

Podar, Mr Ketan Gogri and Mr. Hemkant Samant (together referred to as the “Accused”) alleging charges

under sections 120-B read with sections 420 and 409 of the Indian Penal Code, 1908. The Complainant

alleged the Accused of illegally transferring a portion of the factory land at Bhandup to a third party, which

was acquired allegedly for public purpose by the government and subsequently handed over to our

Company for establishing factory and staff quarters. The Complaint was filed praying, to issue process

against the Accused for offence under section 120 B read with sections 420, 409 of Indian Penal Code,

1860 and for further investigation in the matter. The Court vide order dated March 02, 2013 directed the

Bhandup police station to register the FIR and investigate the crime under section 156(3) of the Code of

Criminal Procedure Code, 1973. The matter is currently pending.

Further, the Complainant filed a criminal writ petition no. 1711 of 2013 against the Accused before the

Bombay High Court (“High Court”), inter alia, praying that the High Court pass an appropriate order or

direction directing for investigation to be carried out in the matter. The High Court dismissed the writ

petition vide order dated August 5, 2013.

2. Mr. S. Doreswamy, the director of our Company, and others (“Accused”) have filed a criminal

196

miscellaneous petition (“Petition”) before the High Court of Madhya Pradesh under section 482 of

Criminal Procedure Code, 1973 for quashing the criminal case number 20668/2008 (“Complaint”) and

order dated August 20, 2008 passed by the Special Judicial Magistrate, Indore (“SJM”). The Local Health

Authority, the Municipal Corporation of Indore filed the Complaint against the Accused alleging breach of

Rule 24 and proviso (b) of Rule 32 of the Prevention of Food Adulteration Rules, 1955 as the sample of

food item, namely, “N-Joi” collected from Big Bazaar, Indore contained a synthetic food colour “ponceau

4R” and there was no declaration on the label of the sample to this effect. It is also alleged that the product

was misbranded in violation of section 2(ix) (j) & (k) of the Prevention of Food Adulteration Act, 1954.

The matter is currently pending.

3. Mr. Doreswamy, director of our Company, along with other directors of Pantaloon Retail India Limited

(“Accused”) has filed a criminal miscellaneous petition number 1509/2009 dated February 18, 2009

(“Petition”) before the High Court of Madhya Pradesh under section 482 of the Code of Criminal

Procedure, 1973. The Local Health Authority, the Municipal Corporation of Indore had filed a criminal case

number 28689/2008 (“Complaint”) against the Accused before the Special Judicial Magistrate, Indore

alleging adulteration and misbranding of ‘Fresh & Pure Toast Biscuits’ in violation of section 7(i) read with

section 16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954. The Accused filed the Petition

praying, inter alia, that the Complaint should be quashed and to stay further proceeding of the Complaint

pending the final disposal of the case. The matter is currently pending.

4. Mr. S. Doreswamy, the director of our Company, along with Future Retail Limited and its other directors

(“Accused”) have filed a criminal petition number 447/2010 before the High Court of Guwahati (“Court”)

under section 482 of the Code of Criminal Procedure, 1973 for quashing the criminal case number 4557c of

2008 (“Complaint”) filed by the Local Health Authority through the Food Inspector, Guwahati before the

Additional Chief Judicial Magistrate, Kamrup and the order dated October 11, 2010 passed by the Chief

Judicial Magistrate, Kamrup. The Complaint was filed in relation to adulteration of food products, namely,

“Kalazira” seized from Big Bazaar at City Square, which was found to be polished with hydrocarbon oil in

breach of the provisions of the Prevention of Food Adulteration Act, 1954. The sample was also found to

contain excessive number of living insects in violation of rule 50 of the Prevention of Food Adulteration

Rules, 1955 and alleged an offence under sections 7 and 16 of the Prevention of Food Adulteration Act,

1954. Aggrieved, the Accused have filed the Petition and the Court has pursuant to its order dated

November 24, 2010 granted stay in the matter. The matter is currently pending.

5. Mr. S. Doreswamy, the director of our Company, and others have filed a criminal petition number 448/2010

under section 482 of the Code of Criminal Procedure, 1973 before the High Court of Gauhati for quashing

the criminal case number 4556c of 2008 (“Complaint”) filed by the Local Health Authority through the

Food Inspector, Gauhati and the order dated October 19, 2010 passed by the Chief Judicial Magistrate,

Gauhati. The Compaint was filed alleging adulteration of food products, namely, “Pure Cow Ghee” which

was allegedly found to be artificially coloured using “Beta Carotene”. It was also found that the sample

contained excessive numbers of living insects in violation of Rules 5 and 26 of the Prevention of Food

Adulteration Rules, 1955 and alleged an offence under the Prevention of Food Adulteration Act, 1954. The

matter is currently pending.

6. The Food and Drug Administrator (M.S.) Inspector, Thane (“Complainant”) has filed a criminal complaint

number 1184/2010 dated December 29, 2010 against Mr. S. Doreswamy, the director of our Company, and

others before the Judicial Magistrate of First Class, Navi Mumbai alleging charges under section 7(i) read

with section 2(ia)(a), 2(ia)(m) and section 7(v) of the Prevention of Food Adulteration Act, 1954 (“Act”)

read with Rules 39 and 42 of the Prevention of Food Adulteration Rules, 1955 which is punishable under

sections 16 and 17 of the Act. The Complainant alleged that the sample of ‘Power Horse’ energy drink

collected from Food Bazaar, City Centre, Vashi was found to be in violation of the standards and provisions

of the Act. The matter is currently pending.

7. Mr. S. Doreswamy, the director of our Company, (“Accused”) along with the others has filed a criminal

petition number 2606 of 2013 (“Criminal Petition”) before the High Court of Karnataka (“Court”) under

section 482 of the Code of Criminal Procedure, 1973 challenging the order dated February 16, 2012

(“Impugned Order”) passed by the Judicial Magistrate of First Class, Mangalore (“JMFC”) and the order

dated March 4, 2013 passed by the II Additional District and Sessions Judge, Mangalore (“ADSJ”). The

Inspector of Legal Metrology has filed a criminal case number 525/2012 alleging that two pre-packages of

Reebok shoes manufactured by Reebok India Company (with maximum retail price ` 1,990 and ` 2,999,

respectively) with size of the shoes and maximum retail price declared on additional sticker, which

constitutes an offence under the sections 18(1) and 31 of the Legal Metrology Act, 2009 and Rule 4 and

6(3) of the Legal Metrology (Packaged Commodities) Rules, 2011 and is punishable under section 36(1)

197

and 31 of the Legal Metrology Act, 2006. The JMFC passed the Impugned Order summoning the Accused

to appear on June 20, 2012. The Accused have filed a criminal revision petition number 73/2012 before the

ADSJ against the Accused seeking, inter alia, to set aside the Impugned Order and proceedings in the said

matter. The ADSJ pursuant to its order dated March 4, 2013 dismissed the petitions by confirming the

Impugned Order and remanding the matter to the JMFC. Aggrieved, the Accused filed the Petition and the

Court pursuant to its order dated April 26, 2013 granted a stay against the Impugned Order. The matter is

currently pending.

8. Mr. S. Doreswamy, the director of our Company, along with the others (“Accused”) has filed a criminal





Inspector of Legal Metrology has filed a criminal case number 526/2012 before the JMFC, against the

Accused alleging that two pre-packages of Knighthood shoes (size 8 and 9) market retail price ` 1,999

customer care telephone number was not declared and maximum retail price, date of manufactured / packed

month and year were declared on additional sticker, which constitutes an offence under the sections 18(1)

and 31 of the Legal Metrology Act, 2009 and Rule 4, 6(1)(a), 6(d) and 6(2) of the Legal Metrology

(Packaged Commodities) Rules, 2011 and is punishable under section 36(1) and 31 of the Legal Metrology

Act, 2006. The FCJM passed the Impugned Order summoning the Accused to appear on June 20, 2012. The

Accused have filed a criminal revision petition number 74/2012 before the ADSJ against the Inspector of

Legal Metrology seeking, inter alia, to set aside the Impugned Order and proceedings in the said matter.

The ADSJ pursuant to its order dated March 4, 2013 dismissed the petitions by confirming the Impugned

Order and remanding the matter to the FCJM. Aggrieved, the Accused filed the Petition and the Court

pursuant to its order dated April 26, 2013 granted a stay against the Impugned Order. The matter is

currently pending.






Inspector of Legal Metrology had filed a criminal case number 527/2012 before the JMFC, against the

Accused alleging that two packages of ROXX styling mug had additional sticker of date of

manufacture/packed month and year, which constitutes an offence under the sections 18(1) and 31 of the

Legal Metrology Act, 2009 and Rule 4 and 6(3) of the Legal Metrology (Packaged Commodities) Rules,

2011 and is punishable under section 36(1) and 31 of the Legal Metrology Act, 2006. The JMFC passed the

Impugned Order summoning the Accused to appear on June 20, 2012. The Accused have filed a criminal

revision petition number 75/2012 before the ADSJ against the Inspector of Legal Metrology seeking, inter

alia, to set aside the Impugned Order and proceedings in the said matter. The ADSJ pursuant to its order

dated March 4, 2013 dismissed the petitions by confirming the Impugned Order and remanding the matter

to the JMFC. Aggrieved, the Accused filed the Petition and the Court pursuant to its order dated April 26,

2013 granted a stay against the Impugned Order. The matter is currently pending.






Inspector of Legal Metrology has filed a criminal case number 528/2012 before the JMFC, against the

Accused alleging that two pre-packed packages of care mate, soft facial tissues, net content of 400 sheets

which were collected had maximum retail price declared on additional sticker, which constitutes an offence

under the sections 18(1) and 31 of the Legal Metrology Act, 2009 and Rule 4 and 6(3) of the Legal

Metrology (Packaged Commodities) Rules, 2011 and is punishable under section 36(1) and 31 of the Legal

Metrology Act, 2006. The JMFC passed the Impugned Order summoning the Accused to appear on June

20, 2012. The Accused have filed a criminal revision petition number 77/2012 before the ADSJ against the

Inspector of Legal Metrology seeking, inter alia, to set aside the Impugned Order and proceedings in the

said matter. The ADSJ pursuant to its order dated March 4, 2013 dismissed the petitions by confirming the

Impugned Order and remanding the matter to the JMFC. Aggrieved, the Accused filed the Petition and the

Court pursuant to its order dated April 26, 2013 granted a stay against the Impugned Order. The matter is

currently pending.

198






Inspector of Legal Metrology had filed a criminal case number 529/2012 before the JMFC, the Accused

alleging that two pre-packages of Wipro smart light, classic, 15watt, cool day light, compact fluorescent

lamp of buy 2 get 1 free, maximum retail price of ` 300, date of manufactured / packed month and year and

customer care telephone number was not declared, which constitutes an offence under the sections 18(1)

and 31 of the Legal Metrology Act, 2009 and Rule 4, 6(1)(a), 6(d) and 6(2) of the Legal Metrology

(Packaged Commodities) Rules, 2011 and is punishable under section 36(1) and 31 of the Legal Metrology

Act, 2006. FCJM passed the Impugned Order summoning the Accused to appear on June 20, 2012. The

Accused have filed a criminal revision petition number 76/2012 before the ADSJ against the Inspector of

Legal Metrology seeking, inter alia, to set aside the Impugned Order and proceedings in the said matter.

The ADSJ pursuant to its order dated March 4, 2013 dismissed the petitions by confirming the Impugned

Order and remanding the matter to the FCJM. Aggrieved, the Accused filed the Petition and the Court

pursuant to its order dated April 26, 2013 granted a stay against the Impugned Order. The matter is

currently pending.

12. Mr. Sudhir Chaudhary (“Petitioner”) has filed a petition (“Petition”) under section 397 read with section

399 of the Code of Criminal Procedure, 1973 before the Session Judge, New Delhi against Naveen Jindal

and others including Mr. Haigreve Khaitan (our Director) (“Respondents”). The Petitioner had filed a

criminal complaint number C.C. No. 9/1A/14 (“Complaint”) before the Additional Chief Metropolitan

Magistrate, New Delhi against the Respondents alleging charges under sections 499, 500, 501, 34 and 109

of the Indian Penal Code, 1860. The Complaint was filed alleging that the Respondents had deliberately and

grossly defamed the Petitioner. The Learned Metropolitan Magistrate, New Delhi passed an order dated

March 18, 2014 (“Order”) dismissing the Complaint. Aggrieved, the Petitioner filed the Petition praying,

inter alia, to set aside the Order. The matter is currently pending.

13. Kailash Shreeram Agarwal (“Complainant”) has filed a criminal complaint vide C.C. No. 30/SS/2013

dated January 15, 2013 before the Court of Metropolitan Magistrate, Mumbai (“Magistrate”) against Swan

Energy Limited and others including Mr. Mahesh Shrikrishna Gupta (our Director) (together referred to as

the “Accused”) alleging violation of provision of Maharashtra Ownership Flats Act, 1963 (“Act”) and

seeking to impose charges under sections 3, 4, 5, 7, 10, 11 and 13 of the Act. The Complainant prayed that

the Magistrate be pleased to issue process against the Accused and the Accused be dealt as per provisions of

law. Subsequently the Magistrate vide order dated August 7, 2013 (“Order”) issued process against the

Aggrieved, the Accused under section 3,4,5,7,10, 11 & 13 of the Act. Subsequently, the Accused filed a

revision application number 1247 of 2013 dated October 24, 2013 (“Revision Application”) before the

Court of Sessions, Mumbai (“Sessions Court”) against the Order. The Revision Application was filed

praying that records relating to Complaint be called for, quash the Order and stay further proceedings in

Complaint. The Sessions Court vide Order dated October 25, 2013 granted stay of proceedings pending

before the Magistrate. The matter is currently pending.

14. Rajesh Yaggopal Singh Chaddha (“Complainant”) has filed a criminal complaint vide C.C. No.

31/SS/2013 dated January 15, 2013 before the Court of Metropolitan Magistrate, Mumbai (“Magistrate”)

against Swan Energy Limited and others including Mr. Mahesh Shrikrishna Gupta (our Director) (together

referred to as the “Accused”) alleging violation of provision of Maharashtra Ownership Flats Act, 1963

(“Act”) and seeking to impose charges under sections 3, 4, 5, 7, 10, 11 and 13 of the Act. The Complainant

prayed that the Magistrate be pleased to issue process against the Accused and the Accused be dealt as per

provisions of law. Subsequently the Magistrate vide order dated August 7, 2013 (“Order”) issued process

against the Accused under section 3,4,5,7,10, 11 & 13 of the Act. Aggreived, the Accused filed a revision

application number 1248 of 2013 dated October 24, 2013 (“Revision Application”) before the Court of

Sessions, Mumbai (“Sessions Court”) against the Order. The Revision Application was filed praying that

records relating to Complaint be called for, quash the Order and stay further proceedings in Complaint. The

Sessions Court vide Order dated October 25, 2013 granted stay of proceedings pending before the

Magistrate. The matter is currently pending.

CEAT Bangladesh Limited

1. Forest BIT officer Hobirbari BIT, Bhaluka Range, Mymensing Forest Department (“Complainant”) has

filed a case number Case No. 77(3)/14 dated March 1, 2014 (“Complaint”) before the Forest Department

199

Bangladesh (“Court”) against Md. Masud Rana, employee of CEAT Bangladesh Limited (“Accused”)

alleging charges under section 26(1) of the Forest Act, 1927 (amended in 2000). The Complaint was

filed alleging that the Accused had tried to lead the other accused persons in this case to level the forest land

and install still boundary in plot no 1217 in the forest land at Dhamshur cs. The Complainant claims

damages for a sum of BDT 3,550,000. The Forest Court has sent a notice dated May 28, 2014 to the

Accused asking the Accused to submit a reply to the allegations set out against him by July 1, 2014. Ceat

Bangladesh Limited is not identified as party to the case proceedings. The matter is currently pending.

2. Forest BIT officer Hobirbari BIT, Bhaluka Range, Mymensing Forest Department (“Complainant”) has

filed a suit number 66/014 dated March 24, 2014 (“Complaint”) before the Additional District Magistrate

Court, Mymensingh (“Court”) against Md. Masud Rana, employee of CEAT Bangladesh Limited

(“Accused”) alleging charges under section 144 of the Code of Criminal Procedure. The Complaint was

filed alleging that the Accused tried to enter the Disputed Land by use of false and fabricated land deeds

thereby attempting to trespass on the said Land. On July 8, 2014 the Court passed an order suspending the

proceedings of the Complaint till the disposal of the civil case. Ceat Bangladesh Limited is not identified as

party to the case proceedings. The matter is currently pending.

Other Confirmations

There have been no litigation or legal action pending or taken by any ministry or department of the Government

or a statutory authority, in India, against the Promoter of our Company during the last three years immediately

preceding the year of the circulation of this Placement Document.

There have been no other instances of compounding of offences, prosecutions filed (whether pending or not)

fines imposed, compounding of offences in the last three years immediately preceding the year of the offer.

There have been no other inquiries, inspections or investigations initiated or conducted under the Companies

Act, 2013 or any previous company law in the last three years immediately preceding the year of circulation of

this Placement Document with respect to our Company.

Details of acts of material frauds committed against our Company in the last three years, if any, and if so,

the action taken by our Company

Sr.

No.

Financial

Year

Details of Fraud Action taken by the

Company

1. 2014-2013 Misappropriation of funds and theft of inventory of

finished goods by employees of our Company, to the

tune of ` 1 million and ` 2.6 million respectively, and

theft of inventory of finished goods by an agent of the

Company, aggregating to ` 2.87 million.

Our Company has initiated

legal proceedings

2. 2013-2012 NIL NIL 3. 2012-2011 NIL NIL

Details of default, if any, including therein the amount involved, duration of default and present status, in

repayment of:

As of date of this Placement Document, there is no outstanding default in payment of statutory dues (except on

account of disputes as stated below), repayment of debentures and interest thereon, repayment of deposits and

interest thereon and repayment of loan from any bank or financial institution and interest thereon.

For Fiscal 2014, the outstanding statutory dues of income-tax, sales-tax, wealth-tax, service tax, customs duty,

excise duty and cess on account of any dispute, are as follows:

(in ` million)

Department Period to which

the amounts

relates

Commiss

-ionerate

Appellate

authorities

and

tribunal

High

Court

Supreme

Court

Deposit

amount

Total

amount

Central

Excise Act

1978-2006 - 152.06 - 51.90 - 203.96

Income Tax

Act

1985-2009 1.56 1,259.03 16.57 - - 1,277.16

200

Department Period to which

the amounts

relates

Commiss

-ionerate

Appellate

authorities

and

tribunal

High

Court

Supreme

Court

Deposit

amount

Total

amount

Sales Tax 1987-2014 105.33 243.19 - - 21.10 327.41

Service Tax 1996-2013 - 211.11 2.57 - - 213.67

Wealth Tax 2002-2003 - 0.67 - - - 0.67

Grand

Total

106.89 1,866.06 19.13 51.90 21.10 2,022.88

Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years

immediately preceding the year of circulation of offer letter and of their impact on the financial statements

and financial position of our Company and the corrective steps taken and proposed to be taken by our

Company for each of the said reservations or qualifications or adverse remark

The table below sets out the remarks of the auditors as reported by the auditor under the Companies (Auditor’s

Report) Order, 2003 on the standalone financial statements of our Company in last five Fiscals:

Fiscal Reproduction of auditors remark from the audit report Mana

geme

nt’s

respo

nse

2010 According to the records made available to us and the information and explanations given by

the management, the details of the dues of Income tax/ Sales tax / Wealth tax / Service Tax /

Custom duty/ Excise duty / cess, which have not been deposited with the appropriate

authorities on account of any dispute, are given below:

Nature of

statute

Nature of

Dues

Amount

(` in

crores)

Financial year to

which the matter

pertains

Forum where

dispute is pending

The Central

Excise

Act,1944

Excise Duty 5.19 1997 - 1998 Supreme Court

36.69 1978-1979 to

2007-2008

CESTAT *

0.50 1996-1997 to

2007-2008

Commissioner

(Appeals)

Service Tax

(Chapter V of the

Finance Act,

1944)

Service Tax 0.02 2004-2005,2005-2006 Commissioner

(Appeals)

State and Central

Sales Tax Act

Tax, Interest

and Penalty

0.36 1987-1988 to

1989- 1990,

1994-1995,1999-2000,

2000-01,2002-03

Various High Courts

Tax, Interest

and Penalty

0.85 1988-1989,1995-1996,

1996-1997,1998-1999,

to 2003-04

Various Tribunals

Tax, Interest

and Penalty

57.83 1993-94 to 2006-07 Commissioner

(Appeals)

Income Tax

Act,1961

Tax 4.96 2006-07 Commissioner

(Appeals)

*The customs, excise and service tax appellate tribunal

These

are

dispute

d dues

which

are

pendin

g at

various

appeall

ate

levels

2011 According to the records made available to us and the information and explanations given by

the management, the details of the dues of Income tax/ Sales tax / Wealth tax / Service Tax /

Custom duty/ Excise duty / cess, which have not been deposited with the appropriate

authorities on account of any dispute, are given below:

Nature of

statute

Nature of

Dues

Amount

(` in

crores)

Financial year to

which the matter

pertains

Forum where

dispute is pending

The Central Cenvat Duty, 1.55 1997-2005, 2006- CESTAT *

These

are

dispute

d dues

which

are

pendin

g at

various

appeall

201


geme

nt’s

respo

nse

Excise

Act,1944

Interest and

Penalty

08,

2009-10

0.20 1996-97,

2004-05,

2007-08

Commissioner

(Appeals)

Central Sales

Tax Act,

1956 and

Sales Tax

Act

of various

States

Tax, Interest

and

Penalty

0.29 1999-2000 High Court

1.29 1987-90,

1998-2008

Tribunal

41.26 1993-2010 Commissioner

(Appeals)

Income Tax

Act,1961

Tax 3.36 2007-08 CIT (Appeals)

*The customs, excise and service tax appellate tribunal

ate

levels

2012 According to the records made available to us and the information and explanations given

by the management, the details of the dues of Income tax/Sales tax/Wealth tax/ Service Tax

/Custom duty/Excise duty/cess, which have not been deposited with the appropriate

authorities on account of any dispute:

Nature of

statute

Nature of

Dues

Amount

(` in

crores)

Financial year to which

the matter pertains

Forum where dispute

is pending

The Central

Excise

Act,1944

Cenvat

Duty,

Interest

and,

Penalty

4.38

0.72

1999-2000,2002-10

1996-97,2004-06,

2007-08,2009-11

CESTAT *

Commissioner

(Appeals)

Central Sales

Tax

Act, 1956 and

Sales

Tax Act of

various

States

Tax,

Interest

and

Penalty

1.37

41.17

1987-90,

1998-2008

1993-2009

Tribunal

Commissioner

(Appeals)

* The customs, excise and service tax appellate tribunal

These

are

dues

which

compa

ny has

dispute

d and

are

pendin

g at

various

appeall

ate

levels

2013 According to the records of the Company, the dues outstanding of income-tax, sales-tax,

wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as

follows:

(` in Lacs) Sr. Nature

of Dues

Period Authority with which

Appeal is pending

Disputed

Amount

Deposit

Amount

Net

Amount

1 Central

Excise

1978-

2006

Commissioner-High Court 45,91 - 45,91

2 Service

Tax

1996-

2012

Commissioner / Custom

Excise & Service Tax

Appellate Tribunal

11,65 - 11,65

3 Sales Tax 2000-

2012

Sales Tax Appellate

Tribunal

46,97 1,84 45,13

4 Income

Tax

1985-

2009

High Court 19,41 - 19,41

5 Wealth

Tax

2002-

2003

Income Tax Appellate

Tribunal

7 - 7

Total 124,01 1,84 122,17

These

are

dues

which

compa

ny has

dispute

d and

are

pendin

g at

various

appeall

ate

levels

202


geme

nt’s

respo

nse

2014 1. According to the information and explanations given to us, undisputed dues in respect of

provident fund, investor education and protection fund, employees’ state insurance,

income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty cess and other

material statutory dues which were outstanding, at the year end, for a period of more

than six months from the date they became payable, are as follows:

(` in Lacs) Name of

the

statute

Nature of the Dues Amount Period to

which

amount

relates

Due Date Date of

Payment

Finance

Act 2012

Service Tax 0.80 2013-14 April 2013

to

September

2013

21-04-2014

Income

Tax

Act,1961

TDS Section 195

(witholding Tax)

4.63 2013-14 30-04-2013 05-04-2014

Income

Tax

Act,1961

TDS Section 195

(witholding Tax)

0.71 2013-14 30-05-2013 05-04-2014

2. According to the records of the Company, the dues outstanding of income-tax, sales-tax,

wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute,

are as follows:

(` in Lacs) Department Period

to which

the

amounts

relates

Commi-

ssionerate

Appellate

authorities

and

Tribunal

High

Court

Supreme

Court

Deposit

Amount

Net

Amount

Central

Excise Act

1978-

2006

- 15,20.60 - 5,19.00 - 20,39.60

Income Tax

Act

1985-

2009

15.62 125,90.35 1,65.65 - - 127,71.62

Sales Tax 1987-

2014

10,53.26 24,31.88 - - 2,11.02 32,74.12

Service Tax 1996-

2013

- 21,11.05 25.69 - - 21,36.74

Wealth Tax 2002-

2003

- 6.73 - - - 6.73

Grand Total 10,68.88 186,60.61 1,91.34 5,19.00 2,11.02 202,28.81

3. There were certain instances of frauds detected by the Company, and investigations

relating to which have been completed, involving misappropriation of funds and theft of

inventory of finished goods by employees of our Company, to the tune of ` 1 million and

` 2.6 million respectively, and theft of inventory of finished goods by an agent of the

Company, aggregating to ` 2.87 million.

These

stautor

y dues

have

been

subseq

uently

paid

with

approp

riate

interest

These

are

dues

which

compa

ny has

dispute

d and

are

pendin

g at

various

appeall

ate

levels

Our

Compa

ny has

initiate

d legal

procee

dings

203

GENERAL INFORMATION

1. Our Company was incorporated on March 10, 1958 as a public limited company and received the

certificate for commencement of business on June 27, 1958. The CIN of our Company is

L25100MH1958PLC011041.

2. Details of the Compliance Officer:

Mr. H. N. Singh Rajpoot

Tel: +91 22 25292152-55(B), 25292156(D)

Fax: +91 22 25292158

Email: [email protected]/[email protected]

3. Our Equity Shares are listed on the BSE and the NSE. The Issue was authorised and approved by the

Board of Directors on August 26, 2014. The shareholders of our Company at Extraordinary General

Meeting held on September 26, 2014 have authorised the Issue by a special resolution.

4. We have received in-principle approval to list the Equity Shares to be issued pursuant to the Issue, from

the BSE and the NSE on November 24, 2014.

5. Copies of our Memorandum and Articles of Association will be available for inspection between 10:00

a.m. to 5:00 p.m. on any weekday (except Saturdays and public holidays) at our Registered Office.

6. We have obtained all consents, approvals and authorisations required in connection with this Issue.

7. Except as disclosed in this Placement Document, there has been no material change in our financial or

trading position since September 30, 2014, the date of the latest financial statements prepared in

accordance with Indian GAAP included in this Placement Document, except as disclosed herein.

8. S. R. Batliboi & Associates, LLP, Chartered Accountants, have audited the consolidated financial

statements as at and for the Financial Years ended March 31, 2014 and 2013 and N. M. Raiji & Co,

Chartered Accountants, have audited our consolidated financial statements as for the Financial Year

ended March 31, 2012, included in this Placement Document. Further, S R B C & CO LLP, our

Statutory Auditors, have reviewed our unaudited interim condensed consolidated financial statements

and notes thereto for the six months ended September 30, 2014 (half year Fiscal 2015).

9. Except as disclosed in this Placement Document, there are no litigation or arbitration proceedings

against or affecting us, or our assets or revenues, nor are we aware of any pending or threatened

litigation or arbitration proceedings, which are or might be material in the context of this Issue. For

details of litigations, see “Legal Proceedings” on page 189.

10. The Floor Price is ` 930.53 per Equity Share, calculated in accordance with the provisions of Chapter

VIII of the SEBI ICDR Regulations.

11. We may offer a discount of not more than 5% on the Floor Price in accordance with and in terms of

Regulation 85 of the SEBI ICDR Regulations.

12. Our Company confirms that it is in compliance with the minimum public shareholding requirements as

required under the terms of the Equity Listing Agreements with the Stock Exchanges.

204

FINANCIAL INFORMATION

Financial Statements Page No

Condensed financials as at and for the six months ended September 30, 2014 F-1

Financial Statements as at and for the year ended March 31, 2014 F-11



F-1

F-2

F-3

F-4

F-5

F-6

F-7

F-8

F-9

F-10

F-11

F-12

F-13

F-14

F-15

F-16

F-17

F-18

F-19

F-20

F-21

F-22

F-23

F-24

F-25

F-26

F-27

F-28

F-29

F-30

F-31

F-32

F-33

F-34

F-35

F-36

F-37

F-38

F-39

F-40

F-41

F-42

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F-47

F-48

F-49

F-50

F-51

F-52

F-53

F-54

F-55

F-56

F-57

F-58

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F-60

F-61

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F-63

F-64

F-65

F-66

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F-71

F-72

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F-74

F-75

F-76

F-77

F-78

F-79

F-80

F-81

F-82

F-83

F-84

F-85

F-86

F-87

F-88

F-89

F-90

F-91

F-92

F-93

F-94

F-95

F-96

F-97

F-98

F-99

F-100

F-101

F-102

F-103

F-104

F-105

F-106

F-107

F-108

F-109

F-110

F-111

F-112

F-113

F-114

F-115

F-116

F-117

F-118

F-119

F-120

F-121

F-122

F-123

F-124

F-125

F-126

F-127

F-128

F-129

F-130

F-131

F-132

F-133

F-134

F-135

F-136

F-137

F-138

F-139

F-140

F-141

F-142

F-143

F-144

F-145

F-146

F-147

F-148

F-149

F-150

F-151

F-152

F-153

F-154

F-155

F-156

205

DECLARATION

Our Company certifies that all relevant provisions of Chapter VIII and Schedule XVIII of the SEBI ICDR

Regulations have been complied with and no statement made in this Placement Document is contrary to the

provisions of Chapter VIII and Schedule XVIII of the SEBI ICDR Regulations and that all approvals and

permissions required to carry on our Company’s business have been obtained, are currently valid and have been

complied with. Our Company further certifies that all the statements in this Placement Document are true and

correct.

Signed by:

________________________ ________________________

Anant Vardhan Goenka Arnab Banerjee

Place: Mumbai

Date: November 26, 2014

206

DECLARATION

We, the Directors of the Company certify that:

(i) the Company has complied with the provisions of the Companies Act, 2013 and the rules made

thereunder;

(ii) the compliance with the Companies Act, 2013 and the rules does not imply that payment of dividend or

interest or repayment of debentures, if applicable, is guaranteed by the Central Government; and

(iii) the monies received under the offer shall be used only for the purposes and objects indicated in the

Placement Document (which includes disclosures prescribed under Form PAS-4).

Signed by:

________________________

Anant Vardhan Goenka

I am authorized by the QIP Committee of the Board of Directors of the Company, vide resolution dated October

30, 2014 to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made

thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with.

Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information

material to the subject matter of this form has been suppressed or concealed and is as per the original records

maintained by the promoters subscribing to the Memorandum of Association and the Articles of Association.

It is further declared and verified that all the required attachments have been completely, correctly and legibly

attached to this form.

Signed by:

________________________

Name: Anant Vardhan Goenka

Designation: Managing Director

Place: Mumbai

Date: November 26, 2014

207

ISSUER

CEAT Limited Registered Office of the Issuer,

463, Dr. Annie Besant Road,

Worli, Mumbai – 400030

Maharashtra, India

Website: www.ceat.in; CIN: L25100MH1958PLC011041,

Contact Person: H. N. Singh Rajpoot, Company Secretary and Compliance Officer

Details of Compliance Officer

Mr. H. N. Singh Rajpoot,

Company Secretary and Compliance Officer,

2nd Floor, 214, Bezzola Complex, Near Suman Nagar, 71,

Sion Trombay Road, Chembur East, Mumbai - 400071

Maharashtra, India

Tel: +91 22 25292152-55(B), 25292156(D); Fax: +91 22 25297241;

Email: [email protected]/[email protected]/ [email protected]

BOOK RUNNING LEAD MANAGERS

JM Financial Institutional Securities Limited

7th

Floor, Cnergy, Appasaheb Marathe Marg,

Prabhadevi, Mumbai – 400025

Maharashtra, India

Standard Chartered Securities (India) Limited

2nd Floor, 23-25 M. G. Road

Fort, Mumbai – 400 001,

Maharashtra, India

INDIAN LEGAL COUNSEL TO THE ISSUE

Khaitan & Co

One Indiabulls Center, 13th Floor, Tower 1,

841 Senapati Bapat Marg, Mumbai 400 013,

Maharashtra, India

INTERNATIONAL LEGAL COUNSEL TO THE BOOK RUNNING LEAD MANAGERS

Dorsey & Whitney LLP

50 South Sixth Street

Suite 1500

Minneapolis, Minnesota 55402

United States of America

AUDITORS TO OUR COMPANY

M/s. S R B C & CO LLP

14th Floor, The Ruby, 29 Senapati Bapat Marg,

Dadar (West), Mumbai 400 028, India