Boards' / Directors' Report Dear Member, Your Directors are delighted to present the report on the business and operations of the Company for the year ended December 31, 2014: 1. THE COMPANIES ACT, 2013 The Ministry of Corporate Affairs ("MCA") has notified 282 sections of the Companies Act, 2013 in tranches in September 2013 and March 2014 with majority of the sections as well as rules being notified in March 2014. The Companies Act, 1956 continues to be in force to the extent of the corresponding provisions of the Companies Act, 2013, which are yet to be notified. MCA vide its Circular dated April 4, 2014 has clarified that the financial statements (and documents attached thereto), auditors' report and Board's report in respect of financial years that commenced earlier than 1 April, 2014 shall be governed by the relevant provisions/ Schedules/ rules of the Companies Act, 1956. Accordingly the Company has prepared this Board's Report in accordance with the provisions of the Companies Act, 1956, however, the Company has made such disclosures under the Companies Act 2013, as considered appropriate. 3. DIVIDEND Your Board recommends a dividend @ Rs 10 per equity share for the year 2014. The recommended dividend will absorb a sum of Rs. 2307 lakhs and tax on dividend will be Rs. 472 lakhs. Out of the surplus, an amount of Rs. 1020 lakhs is transferred to General Reserve and balance carried to the Balance Sheet as at December 31, 2014 is Rs. 6325 lakhs. 4. OPERATIONS The Company manufactures automotive bias tyres viz. farm tyres and commercial truck tyres at its Ballabgarh plant and also trades in "Goodyear" branded tyres [including radial passenger and Off The Road (OTR) bias tyres] manufactured by Goodyear South Asia Tyres Private Limited (GSATPL), Aurangabad. The other products in which the Company markets and sells include tubes, flaps and Radial OTR imported tyres Your Company has been conferred second consecutive global recognition as a Partner-level supplier by John Deere. This is also the highest level global award in their achieving excellence program. The honor is in recognition of your Company's dedication to providing products and service of outstanding quality as well as commitment to continuous improvement. Your Company has been re-certified as being a Class A S&OP (Sales and Operations Planning) entity by Goodyear's internal global audit team. This certification reinforces the commitment of the business towards process orientation and a drive towards continuous improvement. This year also saw the introduction of Assurance Triple Max tyres catering to the need of consumers who are looking for safety (braking ability being a key driver) as a key requirement from their tyres. We have also strengthened our presence and portfolio in SUV segment with launch of Wrangler ATSA tyres. In our Consumer business we have been able to increase contribution from higher rim sizes, thereby improving overall profitability and adding market share. 5. FINANCE AND ACCOUNTS During the year, additions to fixed assets amounted to Rs. 5,855 lakhs as against Rs. 3,807 lakhs in the previous year. The Capital expenditure incurred amounted to Rs.4,120 lakhs. The interest and other finance cost during the year was Rs. 341 lakhs. As of the end of December 2014, an amount of NIL matured deposits remained unclaimed. The Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as on the balance sheet date. 6. FINANCIAL STATEMENTS (Full & Abridged) In terms of Clause 32 of the Listing Agreement, your Company shall supply: (i) Soft copies of full Annual Reports containing its Balance Sheet, Profit & Loss account and Directors' Report to all those shareholder(s) who have registered their email address(es) for the purpose. (ii) Hard copy of Abridged Annual Report containing the salient features of all the documents, as prescribed in Section 219 of the Companies Act, 1956 to those shareholder(s) who have not so registered their email address(es); and (iii) Hard copies of full Annual Reports to those shareholders, who request the same. The Board of Directors has decided to circulate the abridged Annual Report containing salient features of the Balance Sheet and Profit And Loss account to the shareholders for the financial year 2014. A Full version of the Annual Report will be available on Company's website www.goodyear.co.in <http://www.goodyear.co.in> and will also be made available to investors upon request. 7. DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 134 (3) (c) OF COMPANIES ACT, 2013 CORRESPONDING TO SECTION 217 (2AA) OF COMPANIES ACT, 1956 READ WITH CLAUSE 49 (III) (D) (4) (A) OF LISTING AGREEMENT Your Directors state that the annual accounts of the Company have been prepared in conformity, in all material respects, with the generally accepted accounting standards in India and supported by reasonable and prudent judgments and statements so as to give a true and fair view of the state of affairs of the Company and of the results of the operations of the Company. Significant accounting policies followed and other disclosures are appearing in Note 2 to the Notes of the financial statements. These financial statements of the Company have been audited by Price Waterhouse & Co., Bangalore LLP (FRN: 007567S/ S-200012). A reference may be made to their report dated February 27, 2015 to the members together with Annexure thereto containing information per requirement under the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment), Order, 2004 attached with these annual accounts. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the applicable laws for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. The internal control system including internal financial controls of the Company is monitored by an independent internal audit team, which encompasses examination/ periodic reviews to ascertain adequacy of internal controls and compliance to Company's policies. Weaknesses noted along with agreed upon action plans are shared with audit committee, which ensures orderly and efficient conduct of the business and effectiveness of the system of internal control. Internal auditors, Audit Committee members and Statutory Auditors have full and free access to all the 'Clause 49 (III)(D)(4)(A) of the Listing Agreement mandates that Director's R Companies Act, 2013 information and records considered necessary to carry out the assigned responsibilities. The issues raised from time to time are suitably acted upon and followed up at different levels of management. The annual accounts have been prepared on a going concern basis. Directors have laid down internal financial controls to be followed by the Company; through periodic internal audits they monitor compliance to the internal financial controls to ascertain whether they are adequate and operating effectively. The Directors have devised appropriate systems to ensure compliance with the provisions of all applicable laws and they monitor adequacy and operating effectiveness of the same on periodically. 8. FUTURE OUTLOOK Indian tractor penetration still lags behind the global average (19 vs. 21 per 1000 hectares) (Source: CRISIL Research 2013). Tractor growth in India is likely to remain robust in future. With the current shortage of labor, there is an increasing trend towards mechanization, which will boost the tractor demand in the future. Mid term outlook seems positive with better winter crop expected leading to better disposable income. Long term outlook remains robust based on industry and macro trends (Source: CRISIL Research 2015). The passenger tyre industry is likely to register a modest recovery in the year 2015. Your Company will continue to work closely with OEMs for the introduction of new products from their dealerships. We shall also be focusing on increasing distribution reach and presence in branded retail segment in the market. 9. DIRECTORS Mr Daniel Lawrence Smytka, Chairman is retiring by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offers himself for reappointment. The information relating to his reappointment is also appearing under the head 'Directors' in the Corporate Governance Report. The Board of Directors, at its meeting held on June 6, 2014, had appointed Ms Sudha Ravi as an Additional Director in the capacity of an Independent Director of the Company with effect from June 7 2014. The Board at its Meeting held on November 5, 2014 also proposed the re - appointment of its existing Independent Directors Mr Ravi Vira Gupta and Mr. C Dasgupta in terms of the Companies Act, 2013. The said appointment of Ms Sudha Ravi and reappointment of existing Independent Directors is being proposed for approval of Members via postal ballot notice dated January 16, 2015, the results of which will be announced on March 12, 2015. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under subsection (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. During the year ended on December 31, 2014, Five (5) Board Meetings were held on February 27, 2014, May 15, 2014, June 6, 2014, July 30, 2014 and November 5, 2014. ability Statement shall include matters required as per Section 134(3)(c) of the The details regarding Company's remuneration policy, evaluation of Board and the Directors is mentioned in the Corporate Governance Report forming part of this Director's Report. 10. CHANGE IN FINANCIAL YEAR In compliance of applicable provisions of the Companies Act 2013, read with rules made thereunder, as amended, the Board of Directors of your Company at its meeting held on February 27, 2015 approved the change of the Financial Year from (January 1 to December 31) to (April 1 to March 31). In view of the above, for the first year of implementation, the Financial Year would be from January 1, 2015 to March 31, 2016 (i.e. 15 months) and thereafter, would be effective April 1 of that year to March 31 of next year. 11. STATUTORY AUDITORS M/s. Price Waterhouse & Co., Bangalore LLP (FRN: 007567S/ S-200012) [(formerly Price Waterhouse & Co., Bangalore, Firm Registration Number: 007567S)], the Statutory Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment as Statutory Auditors for Financial Year 201516 (15 Months) and to hold office till the conclusion of next Annual General Meeting to be held in the year 2016. In view of the above, a "written consent" and a "Certificate" to act as an auditor of the Company for a period beginning the date of ensuing Annual General Meeting till the conclusion of Annual General Meeting for the year ending on March 31, 2016 subject to the compliance of Section 139 of Companies Act, 2013 and other applicable provisions of the Act and Rules, as amended, has been received from M/s. Price Waterhouse & Co., Bangalore LLP (FRN: 007567S/ S-200012). 12. COST AUDITORS M/s Vijender Sharma & Co., Cost Accountants, 11, 3rd Floor, Hargovind Enclave, Vikas Marg, New Delhi - 110092 was appointed as cost auditor for conducting the cost audit for the year ending December 31, 2014. The due date for filing of the cost audit report with the Ministry of Corporate Affairs (MCA) for the year ended December 31, 2013 was June 29, 2014. The said report was filed on June 25, 2014. Based on the recommendation of audit committee, M/s Vijender Sharma & Co., Cost Accountants, being eligible, have also been appointed by the Board as the Cost Auditors of the Company for the Financial Year 2015-16 subject to ratification of remuneration by the Members. The Company has received a letter from them to the effect that their re-appointment would be within the limits prescribed under section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for such re-appointment within the meaning of section 141 of the Companies Act, 2013. 13. CORPORATE GOVERNANCE As per the applicable provisions of Clause 49 of the Listing Agreement, a detailed Corporate Governance Report together with the auditors' certificate on the compliance of conditions of Corporate Governance and a Management Discussion & Analysis Report form part of the Annual Report. In terms of Clause 49 (II)(F)(3) of Listing Agreement, the Company has formulated its whistle blower policy, the detail of which is mentioned in the Corporate Governance Report under the head Disclosures. The Corporate Governance also includes details of the various Committees of the Board. 14. HUMAN RESOURCES Industrial harmony was maintained during the year through cordial and productive employee relations. The Collective Bargaining Agreement (CBA) effective May 1, 2014 and valid till April 30, 2017 was under discussions with the Union and a Memorandum of Understanding (MoU) was reached with the Union on January 03, 2015. A formal tripartite settlement was signed before the Deputy Labour Commissioner, Faridabad, Haryana on February 05, 2015. This new settlement will help the Ballabgarh factory to improve productivity and operational efficiencies, which will offset the cost of the CBA. High priority was given by the management to training and development related to ethics and compliance, discipline, safety of the employees and environmental awareness. The total number of salaried and hourly paid associates, as of December 31, 2014, stood at 905. The statement of particulars of the employees of the Company, pursuant to section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, forming part of this Report as Annexure 'A'. In terms of the applicable provisions of the Companies Act, 2013, the abridged Annual Report has been sent to the shareholders excluding this annexure. 15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND FOREIGN OUTGO The particulars related to the conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988,are given in a separate Annexure 'B' and forming part of this report. 16. DETAILS OF NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL IN TERMS OF SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. None 17. ACKNOWLEDGEMENT Your Directors place on record their sincere thanks to the Company's esteemed shareholders, customers, suppliers, associates, bankers, the State Government and the Central Government etc. for their valuable contribution and continued support. Your Directors also wish to place on record their deep appreciation to The Goodyear Tire & Rubber Company, Akron, Ohio, USA and its subsidiaries for its continued support and contribution in all the spheres of operations. On behalf of the Board of Directors Rajeev Anand Vice Chairman & Managing Director (DIN: 00017410) R V Gupta Director (DIN: 02519876) Place : New Delhi Date : February 27, 2015 |