Dear Member,
Your Directors have the pleasure in presenting the 51st Annual Report on the business and operations of Apollo Tyres Ltd ('the Company'), together with the audited financial statements for the financial year ended March 31, 2024.
FINANCIAL PERFORMANCE
The financial performance of the Company for the financial year ended March 31, 2024 is summarised below:
(H Million)
OPERATIONS
The tyre industry plays a pivotal role in the automotive sector, particularly in the original equipment manufacturer (OEM) segment. Additionally, the replacement segment's performance is closely tied to the overall economic activity within the country. According to data from the Automotive Tyre Manufacturers Association (ATMA), the industry witnessed a modest growth of 4% over a six-month period from April 2023 to September 2023. Notably, scooters and motorcycle tyre categories emerged as the frontrunners, boasting growth rates of 9% and 7%, respectively. On the other hand, the commercial segment experienced significant traction, exhibiting a commendable growth rate of 5% with total sales reaching 16.65 million units. There was a decline of 3% in the passenger car tyre category during the six-month period.
According to data from the European Tyre and Rubber Manufacturers' Association (ETRMA) for CY23, every product category witnessed a negative trend compared to CY22. The replacement agricultural tyres segment was hit hardest, declining by 30%, followed by truck and bus tyres (-17%), motorcycle tyre (-11%) and consumer tyres (-8%).
The standalone revenue from operations of your Company was H175,393.30 million during FY24 as against Rs 173,010.19 million during the previous financial year. EBITDA (excluding other income) was at Rs 30,966.09 million as compared to H21,109.19 million during the previous financial year. The Net Profit for the year under review was H11,540.25 million, as against Rs 5,199.46 million in the previous fiscal.
The consolidated revenue from operations of your Company was Rs 253,777.15 million during FY24, as compared to Rs 245,681.30 million in FY23. The consolidated EBITDA (excluding other income) was Rs 44,473.45 million for FY24 as compared to Rs 33,136.53 million for the previous financial year. On consolidated basis, the Company earned a Net Profit of H17,218.66 million for FY24 as against H10,458.44 million for the previous financial year.
DIVIDEND
Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend the Dividend of H6.00 (600%) per Equity Share having face value of H1 each for FY24 for your approval.
The dividend, if approved, shall be payable to the Members holding shares as on cut-off date i.e. July 5, 2024.
RESERVES
The amount available for appropriations, including surplus from previous year amounted to Rs 103,759.14 million. Surplus of H8,391.05 million has been carried forward to the balance sheet. A general reserve of H17,006.63 million has been provided.
RAW MATERIALS
After a strong commodity upcycle and global inflationary trends in FY23, commodity prices started moderating in the beginning of FY24. The year overall witnessed ~ 12% reduction in the Raw material costs. First half of the year maintained a stable trend in Raw material costs. By the beginning of second half of the year, geopolitical development of instability, war in Middle East, Red Sea crisis coupled with sustained demand from US despite modest Chinese demand growth drove commodities prices to start rising.
The year 2023 observed some easing in inflation. However, interest rates continued to stay high at peak levels with implications on the global GDP growth rate. India has reported 8.4% GDP growth in October-December quarter, on the back of good performance by manufacturing and construction sectors.
Despite strong commitments from most countries to reduce dependence on fossil fuels, crude oil demand increased in the current year. Brent Crude oil rose by 5% on a year-on-year basis in FY24 on account of stable demand, geopolitical factors, production curbs announced by OPEC + countries, maritime disturbances in the Middle east and upbeat Q4 of FY24 Chinese economic data.
Ocean freight rates in the European-Asian sectors observed a notable increase in later part of the year due to the Red Sea crisis.
Availability of Natural Rubber experienced a shortfall globally including India against the requirement of the consuming industry. This was pronounced in January - March 24 quarter due to unfavourable weather conditions in major producing nations. With rising international prices, end of peak production season in India and the export incentive of Rs 5/kg contributed to Natural Rubber prices clocking Rs 185/kg in March 24 as against the level of Rs 150/kg in Q3 FY 24.
The Company held its Natural Rubber Partners' Summit 2024 at Kochi, Kerala in February 24. The event saw participation from about 75 business associates. The contribution of the partners was recognised through Awards across business categories ranging from Sustainability, Quality, Service & Logistics and Innovation.
This was followed by another Global Partners' Summit at Thailand for International Natural Rubber Partners which was attended by more than 120 participants. The Company showcased its commitment to Sustainable Natural Rubber Practices in line with the policy components of Global Platform for Sustainable Natural Rubber (GPSNR) of which it is a member. The Natural Rubber Business Partners took the pledge to work with their supply chain on areas of Sustainability based on the ESG framework.
The Company continues as a founder member in the Government of India initiated Rubber Plantation programme of 200,000 hectares in the North Eastern states of India. This is a part of the Atmanirbhar Bharat initiative of the Honorable Prime Minister carried forward by ATMA together with Rubber Board as the implementation agency.
The Company has continued its efforts in Sustainability domain. As a part of annual assessment and renewal of ISO20400:2017 towards Sustainable Procurement standards, the Company's procurement processes were re-validated to assess compliance of the sustainability practices in raw material procurement and its upstream value chain. In raw materials, it has worked extensively to deepen engagement with supply network partners for various initiatives. During the year, it has continued the usage of Sustainable raw materials in its products, in line with its stated goal of reaching the target of 40% Sustainable materials usage by 2030.
PRODUCT & MARKETING
The Company continued to focus on its key regions — India, Europe and North America.
During the year, the Company focussed on strengthening its bottom line, improving its financial ratios and increasing its free cash flow. In FY24, the APMEA (Asia Pacific/Middle East/Africa) operation continued its focus on key themes for the Indian market consolidating its leadership position and expanding market share by introducing new products across segments. Committed investments in brand building, R&D, expanding the network continued and ensuring a stronger, premium product portfolio to fuel its journey of market leadership consolidation and profitable growth. The region has seen continued OEM approvals with high satisfaction as well as increased customer acknowledgements. For other countries in the APMEA region, it continued increasing the presence with country specific products, building brand salience and expanding distribution networks. The fiscal saw the Company posting a significant jump in the financial metrics - Operating margin, RoCE and Free Cashflow in line with the focus of the Company.
In FY24, the Company bolstered its dominance in the Passenger Car Radial (PCR) tyres market, solidifying its position as a market leader. Internal estimates are that the Company maintained its leadership in the replacement market for the fourth consecutive year.
The Company's Truck and Bus Radial (TBR) exhibited good growth, and this was attributed to the successful introduction of new products like the Endurace RA and Endutrax MD+. Their partnership with Tata Motors to enhance fuel efficiency, as showcased through its Fuel Efficient Endurace nRG range, further contributed to this success.
In the Truck Bus Bias (TBB) segment, the Company revamped its mining range and introduced Terra BT.
Celebrating 30 years at the forefront of the All-Season Segment in Europe, Apollo Tyres revamped a key product and broadened its size range in the Ultra High Performance (UHP) and Ultra Ultra High Performance (UUHP) strategic segments. The launch of the All Season UUHP &UHP tyre, Quatrac Pro+, in July 2023, tailored for Sportscars, marked a significant milestone.
In the OHT segment, the newly developed Vredestein VF Flotation Optimall received top ratings from the independent German test institute DLG, setting new benchmarks in trailer tyres with its outstanding soil pressure performance.
In the TBR segment, Apollo Tyres expanded its range of popular EnduRace RT2 truck trailer tyres, offering superior all-weather performance, rolling resistance, mileage, and durability.
A detailed analysis of the Company's key initiatives have been shared in the Management Discussion and Analysis section of the annual report.
FUTURE OUTLOOK
The economic outlook for FY25 continues to be one of uncertainty as the Russian-Ukraine and Middle East conflict shows no sign of resolution and hence chances of economic disruptions will still be prevalent.
According to estimates by IMF, the world economy is forecasted to maintain a 3.2% growth rate in both 2024 and 2025, similar to 2023. While advanced economies may accelerate slightly, from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025, emerging market and developing economies might experience a modest slowdown from 4.3% in 2023 to 4.2% in both 2024 and 2025. In terms of inflation, a steady decline is expected, with global inflation decreasing from 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025.
The Euro Area is anticipated to see a significant growth uptick, doubling from 0.4% to 0.8%. India's economy is poised to expand by 6.8% in the current fiscal year, with public investment serving as the primary driver of this growth.
Amid such uncertain economic and geopolitical conditions, Apollo Tyres has adopted a prudent fiscal approach. The focus continues to be on investing in good costs and cutting down bad costs, employee safety and conserving cash. The Company will focus on sustainable profitable growth as it focusses to achieve its Vision targets by FY26 especially on the metrics of Profitability, RoCE and Balance Sheet leveraging.
BOARD OF DIRECTORS
A) Changes in Directors and Key Managerial Personnel
During the year under review and between the end of the financial year and date of this report, following are the changes in Directors and Key Managerial Personnel of the Company: -
(i) Members of the Company at the AGM held on August 2, 2023 had approved the fixation of tenure of Mr. Onkar Kanwar (DIN: 00058921) as Non-Executive Director designated as Chairman for a period of 5 years with effect from February 1, 2023 to January 31, 2028.
(ii) Mr. Neeraj Kanwar (DIN: 00058951), Managing Director was re-appointed for a period 5 years with effect from April 1, 2024 till March 31, 2029 at the AGM held on August 2, 2023. The Company has received approval of Central Government dated February 27, 2024 for appointment of Mr. Neeraj Kanwar as Managing Director of the Company.
(iii) Mr. Satish Sharma (DIN: 07527148), Whole-time Director was re-appointed for a period 5 years with effect from April 1, 2024 till March 31, 2029, at the AGM held on August 2, 2023.
(iv) General Bikram Singh (Retd.) (DIN: 07259060) ceased to be the Director with effect from the close of business hours on August 10, 2023 consequent to end of his second term as an Independent Director.
(v) Mr. Robert Steinmetz (DIN: 00178792) had submitted his resignation as a Non-Executive Non-Independent Director of the Company with effect from the close of business hours on March 21, 2024, due to personal reasons.
(vi) Ms. Pallavi Shroff (DIN: 00013580) ceased to be the Director with effect from the close of business hours on May 14, 2024 consequent to end of her second term as an Independent Director.
(vii) Mr. Satish Sharma (DIN: 07527148) had submitted his resignation as a Whole-time Director of the Company with effect from the close of business hours on May 14, 2024 citing early retirement to pursue his personal interests. He will continue as President (APMEA) till close of the business hours of May 31, 2024 for smooth transition of his role and responsibilities.
(viii) The Board of Directors at their meeting held on May 14, 2024, had approved and recommended to the Members, the appointment of Mr. Gaurav Kumar (DIN: 10196754), Chief Financial Officer as Whole- time Director (categorised as Additional Director) for a period of 5 years with effect from June 1, 2024 to May 31, 2029.
The Board of Directors at their meeting held on May 14, 2024, had approved and recommended to the Members at the ensuing AGM the appointment of Mr. Sumit Dayal (DIN: 10248835) and Mr. Berjis Desai (DIN: 00153675) as Independent Directors of the Company, not liable to retire by rotation, to hold office for a term of 5 consecutive years with effect from August 6, 2024 to August 5, 2029.
The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and hold highest standards of integrity.
Pursuant to the provisions of Section 152(6) of the Companies Act, 2013, Mr. Francesco Gori (DIN: 07413105) and Mr. Vishal Mahadevia (DIN: 01035771), Directors of the Company, who retired by rotation, were re-appointed by the Members of the Company at the Annual General Meeting held during the year under review. Further, Mr. Sunam Sarkar (DIN: 00058859), Director of the Company, is liable to retire by rotation and being eligible offers himself for re-appointment at the 51st Annual General Meeting of the Company.
None of the aforesaid Directors are disqualified under Section 164(2) of the Companies Act, 2013. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.
B) Declaration by Independent Directors
In terms with Section 149(7) of the Companies Act, 2013 read with Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Independent Directors of the Company have submitted declarations that they meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(I)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Independent Directors have also complied with the Code for Independent Directors as per Schedule IV of the Companies Act, 2013. All our Independent Directors are registered on the Independent Directors Databank.
C) Formal Annual Evaluation
Pursuant to the provisions of the Companies Act, 2013 and applicable Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board is required to carry out annual evaluation of its own performance and that of its Committees and individual Directors. The Nomination and Remuneration Committee (NRC) of the Board also carries out evaluation of every Director's performance. Accordingly, the Board, Independent Directors and NRC of your Company have carried out the performance evaluation during the year under review.
For annual performance evaluation of the Board as a whole, it's Committee(s) and individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. Every Director has to fill the questionnaire related to the performance of the Board, its Committees and individual Directors except himself by rating the performance on each question on the scale of 1 to 5, 1 being Unacceptable and 5 being Exceptionally Good.
On the basis of the response to the questionnaire, a matrix reflecting the ratings was formulated and placed before the Board for formal annual evaluation by the Board of its own performance and that of its Committees and individual Directors. The Board was satisfied with the evaluation results.
D) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on February 7, 2024.
The Independent Directors at the meeting, inter alia, reviewed the following: - •
• Performance of Non-Independent Directors and Board as a whole.
• Performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors.
• Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
E) Nomination & Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee, laid down a Nomination & Remuneration Policy for selection and appointment of the Directors, Key Managerial Personnel and Senior Management and their remuneration. The extract of the Nomination and Remuneration Policy covering the salient features are provided in the Corporate Governance Report forming part of Board's Report.
The Nomination & Remuneration Policy of the Company is available on the website of the Company and the web link is: https://corporate.apollotyres.com/content/dam/orbit/apollo-corporate/investors/corporate-governance/codes- policies/codes-policies/nrc-policy.pdf
F) Code of Conduct for Directors and Senior Management
The Company has formulated a Code of Conduct for Directors and Senior Management Personnel and has complied with all the requirements mentioned in the aforesaid code. For further details, please refer the Corporate Governance Report.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
The Competition Commission of India (CCI) issued an order on February 2, 2022 mentioning that it has held five tyre manufacturers and Automotive Tyre Manufactures Association (ATMA) guilty of contravention of the provisions of Section 3 of the Competition Act, 2002 and imposed a penalty of Rs 425.53 Crores on the Company.
The Company filed an appeal against the aforesaid order before the National Company Law Appellate Tribunal, New Delhi ('NCLAT"). NCLAT through its judgement dated December 1, 2022 disposed off the appeals by remanding back the case to CCI for review. CCI has filed an appeal in the Supreme Court against the Order passed by the NCLAT. Hearing to consider admission of appeal is likely to come in July 2024.
Other than the aforesaid, no significant and material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of your Company during the year under review.
INTERNAL FINANCIAL CONTROLS
Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The Company's internal financial control framework is commensurate with the size, nature and complexity of its operations and is in line with the requirements of the Companies Act 2013. The Company has identified and documented key internal financial controls as part of standard operating procedures (SOPs). The SOPs are designed for critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The SOPs cover the standard processes, risks, key controls, and each process is identified to a process owner. In addition, the Company has a well-defined Financial Delegation of Authority (FDOA), which ensures approval of financial transaction by appropriate personnel.
The Company uses SAP-ERP to process financial transactions and maintain its books of accounts. The SAP has been setup to ensure adequacy of financial transactions and integrity & reliability of financial reporting. SAP was implemented in the European operations in year 2016. SAP was also implemented at Company's Greenfield plants in Hungary and Andhra Pradesh.
The financial controls are evaluated for operating effectiveness through management's ongoing monitoring and review process and independently by Internal Audit. The testing of controls by Internal Audit are divided into three separate categories viz. a) automated controls within SAP, b) segregation of duties within SAP and restricted access to key transactions, c) manual process controls.
In our view, the SOPs, FDOA, SAP-ERP and independent reviews by the Internal Audit help in establishing adequate internal financial controls with reference to the financial statements and such internal financial controls are operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.
SUBSIDIARY/ ASSOCIATE COMPANIES
As the Company follows its vision to become a global tyre brand of choice, it has multiple Subsidiaries for facilitating these operations in various countries. As on March 31, 2024, your Company had 33 Overseas Subsidiary Companies (including step subsidiaries), 2 wholly owned Subsidiaries in India, 2 Associate Companies and 1 Joint Venture.
Trusted Mobility Services Limited (TMSL), a wholly owned subsidiary of the Company was incorporated in India on June 9, 2023 with initial paid-up share capital of Rs 30 million. For the purpose of meeting the funding and business-related requirements of the TMSL including but not limited to funding business growth, capital expenditure, expansion, exploring new initiatives and for other general corporate purposes, the Company has subscribed to the equity shares of TMSL amounting to Rs 200 million through issue of partly paid-up shares on rights basis.
Apollo Tyres (Malaysia) Sdn. Bhd. (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) is in the process of liquidation from the Companies Commission of Malaysia as the Company had changed its business model in Malaysia from multiple dealer network to Distributor model.
MATERIAL SUBSIDIARIES
Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 defines a 'material Subsidiary' to mean a Subsidiary whose income or net worth exceeds ten percent of the consolidated income or net worth respectively, of the listed Company and its subsidiaries in the immediately preceding financial year.
In addition to the above, Regulation 24(1) of the abovementioned regulations requires that at least one Independent Director on the Board of Directors of the listed Company to be a Director on the Board of Directors of unlisted material Subsidiary, whether incorporated in India or not. For this provision, material Subsidiary means a Subsidiary whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its Subsidiaries in the immediately preceding financial year. Basis this definition, your Company has following 5 (five) material unlisted Subsidiaries viz. Apollo Tyres (NL) B.V., Apollo Tyres (Hungary) Kft., Apollo Tyres (Europe) B.V., Apollo Tyres Cooperatief U.A. and Apollo Tyres Holdings (Singapore) Pte Ltd. as on March 31, 2024.
Mr. Akshay Chudasama, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (NL) B.V., Apollo Tyres (Hungary) Kft., Apollo Tyres Holdings (Singapore) Pte Ltd. with effect from April 1, 2019.
Further, Ms. Pallavi Shroff, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (Europe) B.V & Apollo Tyres Cooperatief U.A, with effect from April 1, 2019. Consequent to the end of the tenure of Ms. Pallavi Shroff as an Independent Director w.e.f. May 14, 2024 on the Board of the Company, Mr. Vinod Rai is nominated as an Independent Director of the Company on the Board of Apollo Tyres (Europe) B.V & Apollo Tyres Cooperatief U.A.
Other requirements of Regulation 24 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with regard to Corporate Governance for Subsidiary Companies have been complied with.
a) Apollo Tyres (NL) B.V.
Apollo Tyres (NL) B.V. is a 100% subsidiary of Apollo Tyres (Europe) B.V. and ultimately held by Apollo Tyres Ltd, India, a listed multinational organisation, and a global tyre manufacturer.
The Company focuses on developing and manufacturing of various categories of passenger and agriculture tyres. The Company has its production facility based in Enschede, Netherlands.
b) Apollo Tyres (Hungary) Kft.
Apollo Tyres (Hungary) Kft. is one of the latest manufacturing facility within Apollo Tyres group. The Company continued to ramp up its production capacity during the year for passenger car tyres.
During FY24, the Company has made required investments and used digital solutions to debottleneck the capacity utilisation in passenger car tyre production.
c) Apollo Tyres Holdings (Singapore) Pte. Ltd.
The principal activities of the Company are of sourcing raw materials for Apollo Tyres manufacturing plants in India and Europe besides other Corporate Supervisory Services to the group. 54% of the raw material procurement was Natural Rubber in the year FY24. Major sourcing countries were Thailand and Indonesia. Besides Raw Material sourcing, procurement team also manages Supply Chain Assessment, New Development, and Sustainable Procurement initiatives. In addition, team is also responsible for outsourcing of finished goods for APMEA and Europe regions for certain specific tyre categories.
Global Supply Chain team based out of Singapore consolidates and manages Global Ocean Freight, Offtake activities, Supply Chain Cost Analysis, Mould Management and Certification Projects.
Corporate HR team, based out of Singapore, is managing and facilitating the effective deployment of HR systems and policies, in key areas such as Talent Acquisition, Rewards & Mobility, Talent Management and core HR processes, which are aligned to the business objectives of Apollo Tyres with the mandate of enhancing organizational effectiveness and human capital utilization.
d) Apollo Tyres (Europe) B.V.
Apollo Tyres (Europe) B.V. incorporated in Netherlands is a Holding Company with two Subsidiaries, Apollo Tyres (NL) B.V. and Apollo Tyres (Hungary) Kft. The Company focuses on developing, sourcing, marketing, sales and distribution of tyres across various categories including passenger car, truck & bus, agriculture, industrial vehicles and bicycles. The group sells tyres under two brands, Vredestein and Apollo. The Company has its headquarters base at Amsterdam, Netherlands. Sales operations are managed by various subsidiary companies across Europe.
e) Apollo Tyres Cooperatief U.A.
Apollo Tyres Cooperatief U.A., a direct Subsidiary of the Company, was incorporated in the Netherlands. The Company is primarily acting as a Holding Company for all overseas operations.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements, together with Auditors' Report, form part of the Annual Report.
As per the provisions of Section 129 of the Companies Act, 2013, the consolidated financial statements of the Company, its Subsidiaries and Associates are attached in the Annual Report. The annual accounts of Subsidiaries and Associates will be made available to shareholders on request and will also be kept for inspection by any shareholder at the Registered Office and Corporate Office of your Company. A statement in Form AOC-1 containing the salient features of the financial statements of the Company's Subsidiaries, Associates and Joint Venture for the year ended March 31, 2024 is also attached with financial statements.
DEPOSITS
During the year under review, your Company did not accept deposits covered under Chapter V of the Companies Act, 2013.
AUDITORS
M/s. S.R. Batliboi & Co. LLP (Firm Registration No. 301003E/ E300005), Chartered Accountants (Member firm of Ernst & Young Global) were appointed as the Statutory Auditors of the Company for a period of 5 years, from the conclusion of 49th AGM until the conclusion of the 54th AGM, at the AGM held on July 11, 2022.
AUDITORS? REPORT
The report given by M/s. S.R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors on financial statements of the Company for FY24 is part of the Annual Report. The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditors' Report does not contain any qualification, reservation or adverse remark.
During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
COST AUDITOR
M/s. N.P. Gopalakrishnan & Co., Cost Accountants, were appointed with the approval of the Board to carry out the cost audit in respect of the Company's plants at Perambra (Kerala), Limda (Gujarat), Chennai (Tamil Nadu) and Chinnapandur (Andhra Pradesh) as well as Company's leased operated plant at Kalamassery (Kerala) for FY24.
Based on the recommendation of the Audit Committee, M/s. N.P. Gopalakrishnan & Co., Cost Accountants, being eligible, have also been appointed by the Board as the Cost Auditors for FY25 subject to Members' approval. 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. The remuneration to be paid to M/s. N.P. Gopalakrishnan & Co., for FY25 is subject to ratification of the shareholders at the ensuing AGM.
Cost records as specified by the Central Government under Sub- Section (1) of Section 148 of the Companies Act, 2013 are made and maintained by the Company.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 179 and 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had re-appointed M/s. PI & Associates, Company Secretaries as Secretarial Auditor of the Company for FY24 to undertake secretarial audit of the Company.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure I.
M/s. PI & Associates, Company Secretaries have been re-appointed to conduct the Secretarial Audit of the Company for FY25. They have confirmed that they are eligible for the said appointment as per the applicable provisions of the Companies Act, 2013.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of meetings is prepared and circulated in advance to the Directors. During the year, 5 (five) Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
AUDIT COMMITTEE
The details of the Audit Committee including its composition and terms of reference mentioned in the Corporate Governance Report form part of Board's Report.
The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.
VIGIL MECHANISM
The Company has formulated a vigil mechanism through Whistle Blower Policy to deal with instances of unethical behaviour, actual or suspected, fraud or violation of Company's code of conduct or ethics policy. The details of the policy are explained in the Corporate Governance Report and also posted on the website of the Company.
COMMITTEES OF BOARD
Pursuant to requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Business Responsibility and Sustainability Committee, Risk Management Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these Committees are mentioned in the Corporate Governance Report.
SHARE CAPITAL
During the year under review the issued, subscribed and paid- up Equity Share Capital of the Company was 635,100,946 equity shares of Rs 1/- each. There was no change in the capital structure of the Company.
a) Issue of equity shares with differential rights
Your Company has not issued any equity shares with differential rights during the year under review.
b) Issue of sweat equity shares
Your Company has not issued any sweat equity shares during the year under review.
c) Issue of employee stock options
Your Company has not issued any employee stock options during the year under review.
d) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees
Your Company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investments made during the year are given under notes to the financial statements.
RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company did not enter into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
Suitable disclosures as required by the Indian Accounting Standards have been made in the notes to the financial statements. The policy on related party transactions as approved by the Board is uploaded on the Company's website.
MANAGERIAL REMUNERATION
a) The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Corporate Governance Report.
b) During the year under review, Mr. Neeraj Kanwar (DIN: 00058951), Vice Chairman & Managing Director, also received remuneration from Apollo Tyres (UK) Holdings Ltd. (Formerly Apollo Tyres (UK) Pvt. Ltd.), wholly owned Subsidiary of the Company.
PARTICULARS OF EMPLOYEES
Particulars of employees as required in terms of the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available on your Company's website and can be accessed at the Web-link:https://corporate.apollotyres. com/investors/corporate-governance/#RsactiveTab=Others
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace and the Company has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. The Company conducts, from time to time, awareness sessions on prevention of sexual harassment at workplace for its employees.
During the year under review, over 25 awareness programs were conducted by the Company across locations to sensitize employees on the prevention, prohibition and redressal of sexual harassment at the workplace. For further details, please refer the Corporate Governance Report.
HEALTH, SAFETY AND ENVIRONMENT
As a firm commitment to Health, Safety and Environment (HSE), the year saw multiple initiatives to implement and review the HSE plans and achieve the defined KPIs. For details on HSE, please refer to Management Discussion and Analysis Report.
AWARDS AND RECOGNITIONS
In its constant quest for growth and excellence, your Company was honoured and recognised at various forums.
The Company has been certified as a Top Employer in four of our office locations - UK, The Netherlands, Hungary and Singapore. This prestigious certification reflects the Company's unwavering commitment to providing an outstanding work environment for its employees. The Company has been re-certified as a #GreatPlaceToWork by the Great Place To Work Institute in April 2023.
Other prominent Awards are listed below for your reference.
RISK MANAGEMENT
The Company has constituted a Risk Management Committee (RMC) of the Board comprising of Directors and Senior Executives of the Company. The RMC has a Risk Management Charter and Policy that is intended to ensure that an effective Risk Management framework is established and implemented within the organisation. The Company has Internal Risk Committees (IRCs), which review risk registers for Asia Pacific Middle East Africa (APMEA) region including India, Europe region, United States (US) region and Corporate Functions headed by President (APMEA), President (Europe), Group Head (New Market & Channels) and Chief Financial Officer as Chairperson of the respective Committees. The IRCs review each risk on a quarterly basis and evaluate its impact and plans for mitigation. Further details about the RMC including its composition are mentioned in the Corporate Governance Report which forms part of the Board's Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company is committed to work towards the development of society since its inception, even before it became mandatory for corporates under Companies Act 2013. The Company's CSR policy is aligned with National Development Goals as well as Sustainable Development Goals (SDGs). The Apollo Tyres Foundation (ATF) is the non-profit arm of Apollo Tyres registered under Trust Act in 2008. All the CSR work are being implemented through ATF with close monitoring and guidance of the CSR committee. The CSR team work dedicatedly at ground to achieve the overall goals and set targets.
During FY24, the Company continued working on its core thematic initiatives such are Healthcare for Trucking Community, Solid Waste Management and Sanitation, Livelihood for Rural Women, Biodiversity Conservation and Local initiatives. These initiatives address the issues related to eradicating hunger and poverty, preventive health, promoting education, gender diversity and skill building, Furthermore, under Local initiatives, the Company continued its support for the watershed management related projects including solutions for portable drinking water and pond conservation.
Corporate Social responsibility Report, pursuant to clause (o) of sub section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 including composition of the Committee and salient features of CSR Policy of the Company forms part of this Report as Annexure II.
The CSR Policy of the Company is available on the website of the Company and the weblink is: - https://corporate.apollotyres. com/content/dam/orbit/apollo-corporate/investors/corporate- governance/codes-policies/codes-policies/atl-csr-policy.pdf
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, has mandated the top 1000 Listed Companies by market capitalisation to include Business Responsibility and Sustainability Report ('BRS Report') in their Annual Report.
Accordingly, a BRS Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Report as Annexure III.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure IV, forming part of this report.
ANNUAL RETURN
As per Section 134(3)(a) of the Companies Act, 2013, the Annual Return referred to in Section 92(3) has been placed on the website of the Company www.apollotyres.com under the Investors Section (Refer link: https://corporate.apollotyres.com/investors/ corporate-governance/#activeTab=Others ).
CORPORATE GOVERNANCE REPORT
Your Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation's corporate governance philosophy is directly linked to high performance.
The Company is committed to adopting and adhering to established world-class corporate governance practices. The Company understands and respects its fiduciary role and responsibility towards its stakeholders and society at large and strives to serve their interests, resulting in creation of value and wealth for all stakeholders.
The compliance report on corporate governance and a certificate from M/s. S.R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure V to this report.
DIRECTORS? RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) of the Companies Act, 2013, your Directors state that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively, and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
SECRETARIAL STANDARDS
During the year under review, your Company had complied with all the applicable Secretarial Standards.
ACKNOWLEDGEMENT
Your Company's organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilisation of the Company's resources for sustainable and profitable growth.
Your Directors wish to place on record their appreciation to the respective State Governments of Kerala, Gujarat, Haryana, Tamil Nadu and Andhra Pradesh and the National Governments of India, Netherlands and Hungary. We also thank our customers, business partners, members, bankers and other stakeholders for their continued support during the year. We place on record our appreciation for the contribution made by all employees towards the growth of your Company.