Download - EASTERN TREADS - Bombay Stock Exchange...EASTERN® TREADS An ISO 900 I -2015 Certified Company. Dated, 27thJuly, 2018 REF: ETLlBSE/AAR/18-19 The Corporate Relationship Department,

®EASTERNTREADS

An ISO 900 I - 2015 Certified Company.

Dated, 27th July, 2018REF: ETLlBSE/AAR/18-19

The Corporate Relationship Department,Bombay Stock Exchange Limited,Floor 25, PJ Towers, Dalal Street. MUMBAI - 400001.

Dear Sir,

Sub: Adopted Annual Report- FY 2017-18.

Pursuant to the Listing Agreement read with Regulation 34 of SEBI (LODR) Regulations, 2015,submitting herewith the Annual Report as adopted and approved in the Annual General Meeting of theCompany held on 20th July 2018.

Kindly take the information on your record.

Thanking you,Yours faithfully,

For Eastern Treads Limited

CS. BAIJU.TCompany Secretary

Eastern Treads Ltd.CIN : L251 19KL I993PLC0072 I3Reg. Office: 3 A, 3rd Floor. EasternCorporate Office. 34/137 E. N H Bye-Pass.Edappally PO .. Kochi. Kerala - 682 024. India.

Phone : +91 484 300 I 100Fax: +914843001 110E-mail : [email protected] : www.easterntreads.com

Factory: Oonnukal PO. KothamangalamErnakulam. Kerala - 686 693. Phone : +91 485 2855 448 / 338

MILESTONES

1993

1998-2005

1994-1997

2006-2012

2013-2015 2015-2018

Initiated Export OperationsProduction capacity -6,000 MT

IPO & Listing

Public Limited Company

Investment by KSIDC

Hot Press Process

Expanded to ROI.

Incorporation

Private Limited Company

Production capacity – 4,800 MT

Cold press Retread Process

Launched Franchisee-0perationsRetreading Machinery SupplyOwn Retreading Outlet

Dealer network in NepalProduction capacity - 12,000 MTSupply of AccessoriesTransition from a tread rubber manufacturer to enabler of tyre retreading ecosystem

ETL, a brand from the bouquet of the Eastern Group, focuses on manufacturing and marketing tyre-retreading materials

like pre-cured rubber, bonding gum, vulcanizing solutions and many other accessories. The Company has a national

presence across 17 States having tie-ups with 88 Dealers, 40 Exclusive Retreaders, 33 Infinity Zones and 2 own retreading

units which being serviced through 10 depots and 2 C&F’s across India. Its extensive product portfolio with Eastern Brand

are sold though domestic and international business networks. ETL is transitioning from a tread rubber manufacturer to a

leading enabler of tyre retreading ecosystem across the entire retreading value chain.

ANNUALREPORT2017-2018

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COMPANY INFORMATION

BOARD OF DIRECTORS

Mr. Navas M Meeran Chairman Mr. M.E. Mohamed Managing Director Mr. M.S. Ranganathan Director Mr. Naiju Joseph Director Mr. K.S. Neelakanta Iyer Director Mr. K.V. Rajagopalan Nair Director (Nominee of KSIDC) Mrs. Shereen Navaz Director

Mr. Rajesh S. Chief Executive Officer Mr. Mohammed Sherif Shah Chief Financial Officer CS Baiju T. Company Secretary

REGISTERED & CORPORATE OFFICE 3A, 3rd Floor, Eastern Corporate Office, 34/137 E NH Bypass, Edappally, Kochi,

Ernakulam - 682024, Kerala

INVESTOR CORRESPONDENCE The Company Secretary, Eastern Treads Limited 3A, 3rd Floor, Eastern Corporate Office, NH Bypass, Edappally, Kochi, Ernakulam - 682024, Kerala

OFFICIAL WEBSITE www.easterntreads.com

BANKERS The Federal Bank Limited, ICICI Bank Limited HDFC Bank Limited, IDBI Bank Limited

WORKS Oonnukal, Kothamangalam, Ernakulam

STATUTORY AUDITOR Walker Chandiok & Co LLP, Chartered Accountants,

7th Floor, Modayil Centre Point, Warriam Road Jn., M G Road,

Kochi 682 016, India

INTERNAL AUDITOR JVR & Associates, Chartered Accountants 39/2790A, Wilmont Park Business Centre Near St. George’s Church, Pallimuku, Kochi, Ernakulam – 682016

REGISTRAR & SHARE TRANSFER AGENT Integrated Registry Management Services Private Limited,

2nd Floor, ‘Kences Towers’ No.1, Ramakrishna Street, North Usman Road,

T. Nagar, Chennai – 600017

SECRETARIAL AUDITOR BVR & Associates Company Secretaries LLP, Swastika, First Floor, Chitteth House, PC Road, Vyttila P.O., Cochin - 682 019

CONTENTS

Notice 03 Directors’ Report 07 Corporate Governance Report 25 Management Discussion and Analysis 33 Auditors’ Report 39 Balance Sheet 45 Statement of Profit and Loss 46 Cash Flow Statement 47 Statement of Changes in Equity 48 Notes to Financial Statements 49

EASTERN TREADS LIMITEDCIN: L25119KL1993PLC007213

REPORTANNUAL2017-2018

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Dear Shareholder, I am privileged to get this opportunity to present you the financial and operating performance of Eastern Treads Limited (ETL) for the financial year 2017-18 and share our thoughts on the business outlook. Having started its journey 25 years ago, ETL has come a long way and today we are known as a highly reputed brand in the tyre retreading industry with a broad range of products that deliver excellent performance in diverse weather and road conditions. Over the years, we have successfully transitioned from a tread rubber manufacturer to a leading enabler of tyre retreading ecosystems in India. As you would be aware, 2017-18 has been a year of significant changes with structural reforms like GST being introduced, changing business modalities in the sector. The year was also marked by an increase in competitive intensity resulting in pricing pressure adversely affecting margins. In addition, fluctuations in rubber prices impacted the business. As a result, ETL registered a revenue (net of indirect taxes) growth of 4% in FY17-18 but profitability was adversely affected. We have seen these changes as an opportunity to adapt and create the levers of long-term growth. We are leveraging the transitioning operating environment and our strong industry position to expand long-term growth opportunities. The focus has been on expanding revenues from open market and franchisee sales that have higher margins compared to institutional sales. During the year, we announced renewal of supply agreement with Kerala State RTC, obtaining a repeat order to supply 1,375 MT of tyre retreading materials, we launched our Nepal operations and appointed our 73rd exclusive franchisee. We have also consolidated hot rubber tread production, previously partly outsourced to external small scale units. Apart from garnering a larger share of the domestic markets, we are also targeting several export markets, including developed countries, where supplies from our cost-efficient production can deliver substantial economic benefits. We anticipate this diversified contribution mix to start delivering higher volume growth on our existing base of manufacturing infrastructure. This we believe, will not only result in revenue expansion but also higher margin contribution based on improved utilization of capacity. The construction of national highways hit an all-time high of about 10,000 km in 2017-18, translating to 28km/day. To further boost road infrastructure the Government has announced to construct 83,000 km over the next five years with a target of 45 km/day. Higher investments in road infrastructure and improving economic activity are great positive factors for us. In addition, we see consolidation of opportunities for organized players like us and our strong presence across the entire retreading value chain is already delivering high quality retreading solutions to our customers. On this positive note, I would like to thank all our stakeholders for believing in us and being an integral part of our journey. I would also like to specially offer my appreciation to our Board for its continued guidance and for giving us the benefit of their rich experience. I also extend our gratitude to the investors, employees, vendors, business associates, customers bankers and legal authorities for placing their trust in the ETL nameplate. As a growing organisation I am optimistic about delivering a performance that is commensurate with our position as a leading tyre retreading solution provider.

With warm regards

Navas M. Meeran Chairman

ANNUALREPORT2017-2018NOTICE

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NOTICE is hereby given that the 25th Annual General Meeting of the members of Eastern Treads Limited will be held on Friday, 20th July 2018, at 3.30 PM at Hotel TGR Suites, Thannikal, Pukkattupady Road, Edappally Toll, Cochin, Ernakulam – 682024, Kerala to transact the following business:

Ordinary Business

1. To receive, consider and adopt the Audited Financial Statements of the Company for the Financial Year ended 31st

March 2018 together with the Reports of the Board of Directors and Auditor thereon. 2. To appoint a Director in place of Mrs. Shereen Navaz, having DIN: 00328770, who retires by rotation in compliance

with the provisions of Section 152 of the Companies Act, 2013 and being eligible, seeks reappointment. 3. To ratify the appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants, Kochi as the Auditors of the

Company to hold office till the conclusion of 29th Annual General Meeting in compliance with the provisions of Section 139 of the Companies Act, 2013 read with the resolution passed at the 24th Annual General Meeting and to authorise the Board of Directors to fix their remuneration from time to time.

By Order of the Board

For Eastern Treads Limited

Kochi CS Baiju T. 10/05/2018 Company Secretary

Notes

1. A member entitled to attend and vote at the meeting is entitled to appoint proxy/proxies to attend and vote on a poll instead of himself/herself and such proxy/proxies need not be a member of the Company. Duly completed instrument of proxies in order to be effective must be reached the registered office of the Company not less than 48 hours before the scheduled time of the meeting.

2. A person can act as proxy on behalf of members not exceeding fifty (50) and holding in the aggregate not more than 10% of the total share capital of the Company, provided a member holding more than 10%, of the total share capital may appoint a single person as proxy and such person shall not act as proxy for any other shareholder.

3. Corporate members intending to send their authorised representative to attend the meeting are requested to

ensure that the authorised representative carries a certified copy of the Board resolution, Power of Attorney or such other valid authorisations, authorising them to attend and vote on their behalf at the meeting.

4. The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, 14/07/2018

to Friday, 20/07/2018 (both days inclusive).

5. For the convenience of the Members and for proper conduct of the Meeting, entry to the place of the Meeting will be regulated by the Attendance Slip, annexed to the Proxy Form. Members/Proxies are requested to bring the attendance slip duly filled in and to affix their signature at the place provided on the Attendance Slip and hand it over at the counters at the venue.

6. Members who hold the shares in the dematerialized form are requested to incorporate their DP ID Number and Client ID Number in the Attendance Slip/Proxy Form, for easier identification of attendance at the Meeting.

7. Notice of this Annual General Meeting, Audited Financial Statements for 2017-18 along with Directors’ Report and Auditors’ Report are available on the website of the Company www.easterntreads.com.

8. Members and Proxies attending the meeting are requested to bring the annual report to the meeting as extra

copies will not be distributed.

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9. The Company is having agreements with NSDL and CDSL to enable Members to have the option of dealing and holding the shares of the Company in electronic form. Any member desirous to dematerialise his holding may do so through any of the depository participants. The ISIN of the equity shares of the Company is INE500D01015.

10. SEBI has mandated the submission of Permanent Account Number by every participant in securities market.

Members holding shares in electronic form are, therefore, requested to submit their PAN to their respective Depository Participants. Members holding shares in physical form can submit their PAN to the Company/RTA. SEBI has also mandated the submission of copy of the PAN card to the Company/RTA by the transferee(s) as well as transferor(s) for registration of transfer of securities.

11. Members are requested to address all correspondence, including change in their addresses, to the Company or

to the Registrar and Share Transfer Agent, Integrated Registry Management Services Private Limited, 2nd Floor, Kences Towers, No: 1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai - 600017. E-mail: [email protected]. Members whose shareholdings are in electronic mode are requested to approach their respective depository participants for effecting change of address.

12. The Shareholders are requested to update the contact address and e-mail address and are requested to notify

immediately any change in their address, exclusively on separate letter without clubbing it with any other request, for quicker attention directly to the Company's Share Transfer Agent.

13. Members who are holding shares in the same name or in the same order of names, under different folios, are

requested to notify the same to the Registrar and Share Transfer Agent for consolidation of their shareholding into a single folio.

14. Members desirous of getting any information on the Annual Accounts, at the Annual General Meeting, are

requested to write to the Company at least ten days in advance, so as to enable the Company to keep the information ready.

15. As per Section 72 of the Companies Act, 2013, shareholders are entitled to make nomination in respect of shares

held by them. Shareholders desirous of making nomination are requested to send their request in Form No: SH-13 (which will be made available on request) to the Company or Registrar and Share Transfer Agent. The said nomination form can also be downloaded from the Company’s website www.easterntreads.com.

16. At the ensuing Annual General Meeting, Mrs. Shereen Navaz, Director, having DIN: 00328770 retires by rotation

and seek reappointment. The information about the director as required to be provided pursuant to the Listing Agreement read with SEBI (LODR) Regulations, 2015 are furnished in the report on Corporate Governance.

17. In pursuance of Sections 124 of the Companies Act 2013 and other applicable provisions, if any the amount of

dividends that remain unclaimed/unpaid for a period of seven years from the date on which they were declared, is required to be transferred to the Investor Education and Protection Fund (IEPF). Shareholders, who have not claimed their dividend including interim dividend, if any, are requested to make their claims without any delay. The details of such unclaimed dividends are available on the Company’s website.

18. Pursuant to Section 101 and Section 136 of the Companies Act, 2013 read with relevant provisions of Companies

(Management and Administration) Rules, 2014, companies can serve annual reports and other communications through electronic mode to those members who have registered their e-mail address either with the company or with the depository. Hence, members are requested to provide their email address to the Company/the Registrar and Transfer Agent or update the same with their depositories to enable the Company to send the documents in electronic form.

19. Pursuant to the prohibition imposed vide Section 118 of the Companies Act, 2013 read with Secretarial Standard

on General Meetings (SS-2) issued by the Institute of Company Secretaries of India, no gifts/coupons shall be distributed at the Meeting.


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20. Voting through Electronic means

a) In compliance with Section 108 of the Companies Act, 2013, read with corresponding Rules and the Listing Agreement read with Regulation 44 of SEBI (LODR) Regulations 2015, the Company has provided a facility to its members to exercise their right to vote on resolutions proposed to be considered at the 25th Annual General Meeting by electronic means and the business may be transacted through e-Voting (“remote e-voting”) Service facilitated by National Securities Depository Limited (NSDL). The facility for voting through ballot paper shall be made available at the AGM and the members attending the meeting who have not cast their vote by remote e-voting shall be able to exercise their right at the meeting through ballot paper. The members who have cast their vote by remote e-voting prior to the AGM may also attend the AGM but shall not be entitled to cast their vote again. A person, whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cutoff date i.e. 14/07/2018 only shall be entitled to avail the facility of remote e-voting as well as voting at the AGM through ballot paper.

b) The remote e-voting period commences on 17/07/2018 (9:00 am) and ends on 19/07/2018 (5:00 pm). During this period members’ of the Company, holding shares either in physical form or in dematerialised form, as on the cutoff date may cast their vote by remote e-voting. The remote e-voting module shall be disabled by NSDL for voting thereafter. Once the vote on a resolution is cast by the member, the member shall not be allowed to change it subsequently.

c) The process and manner for remote e-voting are as under:

(i). In case a Member receives an email from NSDL {for members whose email IDs are registered with the Company/Depository Participants(s)} :

1) Open email and open PDF file viz; “Eastern Treads remote e-voting.pdf” with your Client ID or Folio No. as password. The said PDF file contains your user ID and password/PIN for remote e-voting. Please note that the password is an initial password.

2) Launch internet browser by typing the following URL: https://www.evoting.nsdl.com/

3) Click on “Shareholder – Login”

4) Put user ID and password as initial password/PIN noted in step (i) above. Click Login.

5) Password change menu appears. Change the password/PIN with new password of your choice with minimum 8 digits/characters or combination thereof. Note new password. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

6) Home page of remote e-voting opens. Click on remote e-voting: Active Voting Cycles.

7) Select “R EVEN” (Remote E-Voting Event Number) of Eastern Treads Limited

8) Now you are ready for remote e-voting as Cast Vote page opens.

9) Cast your vote by selecting appropriate option and click on “Submit” and also “Confirm” when prompted.

10) Upon confirmation, the message “Vote cast successfully” will be displayed.

11) Once you have voted on the resolution, you will not be allowed to modify your vote.

12) Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to send scanned copy (PDF/JPG Format) of the relevant Board Resolution/ Authority letter etc. together with attested specimen signature of the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail to [email protected] with a copy marked to [email protected]

(ii). In case a Member receives physical copy of the Notice of AGM [for members whose email IDs are not registered with the Company/Depository Participants(s) or requesting physical copy] :

1) Initial password is provided as below/at the bottom of the Attendance Slip for the AGM:

R EVEN (Remote e-voting Event Number) USER ID PASSWORD/PIN

2) Please follow all steps from Sl. No. (2) to Sl. No. (12) above, to cast vote.


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d) In case of any queries, you may refer the Frequently Asked Questions (FAQs) for Members and remote e-voting user manual for Members available at the download section of www.evoting.nsdl.com OR contact NSDL at the following Telephone No:022 24994600. If you are already registered with NSDL for remote e-voting then you can use your existing user ID and password/PIN for casting your vote. If you forgot your password, you can reset the same by using “Forgot User Details/Password” option available on www.evoting.nsdl.com or contact NSDL. You can also update your mobile number and e-mail id in the user profile details of the folio which may be used for sending future communication(s).

e) The voting rights of members shall be in proportion to their shares of the paid up equity share capital of the Company as on the cutoff date. Any person who acquires shares and become member of the Company after dispatch of the notice and holding shares as of the cutoff date may obtain the login ID and password by sending a request at [email protected] or [email protected]. However, if you are already registered with NSDL for remote e-voting then you can use your existing user ID and password for casting your vote.

f) CS. Satheesh Kumar N., Company Secretary (Membership No. 16543), Partner M/s. Satheesh & Remesh, Company Secretaries has been appointed for as the Scrutinizer for providing facility to the members of the Company to scrutinize the voting and remote e-voting process in a fair and transparent manner. The Chairman shall, at the AGM, at the end of discussion on the resolutions on which voting is to be held, allow voting with the assistance of scrutinizer, by use of “remote e-voting” or “Ballot Paper” for all those members who are present at the AGM but have not cast their votes by availing the remote e-voting facility.

g) The Scrutinizer shall after the conclusion of voting at the General Meeting, will first count the votes cast at the meeting and thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the Company and shall make, not later than three days of the conclusion of the AGM, a consolidated scrutinizer’s report of the total votes cast in favour or against, if any, to the Chairman or a person authorized by him in writing, who shall countersign the same and declare the result of the voting forthwith.

h) The results declared along with the report of the Scrutinizer shall be placed on the website of the Company http://www.easterntreads.com and on the website of NSDL immediately after the declaration of result by the Chairman or a person authorized by him in writing. The results shall also be immediately forwarded to the BSE Limited, Mumbai.

Route Map & Land Mark

25th AGM on Friday, 20th July 2018, at 3.30 PM Hotel TGR Suites,

Thannikal, Pukkattupady Road, Edappally Toll, Cochin, Ernakulam, Kerala. PIN 682024


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DIRECTORS’ REPORT

Dear Member, Your Directors have pleasure in presenting the 25th Annual Report on the business and operations of the Company and the audited Ind AS financial statements for the financial year ended 31st March, 2018 along with comparative Financial Statements for the financial year 2016-17 and opening Ind AS transition Balance Sheet as on 1st April 2016. Financial Highlights The Company has adopted the Indian Accounting Standards, notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017. Financial statements for the financial year 2016-17 have been restated to conform to Ind AS. The following table shows the operational results of the Company for the year 2017-18 as compared to that of the previous year.

(₹in lakhs) Year ended

31/03/18 31/03/17 Revenue from Operations 9,539.36 9,577.23 Other Income 22.32 70.48 Total Revenue 9,561.68 9,647.71 Expenditure 9,271.80 8,988.00 Profit before Interest, Depreciation and Tax 289.88 659.71 Financial Cost 326.92 296.67 Depreciation and Amortization 210.67 181.97 Profit (Loss) before Tax (247.71) 181.07 Profit (Loss) after Tax (229.39) 131.77 Other comprehensive income/ (loss) (net of tax expenses) (6.51) (12.44) Total comprehensive (loss)/income for the period (235.90) 119.33

FY 2017-18 was a challenging fiscal for the Company. The Company has addressed various issues on regulatory developments like implementation of GST, Ind AS etc. During the year the Company managed its revenue growth, the revenue (net of indirect taxes) has improved by 4%, when compared to the previous year. However the margin has impacted during the first half of the fiscal due to uncertainty caused by regulatory reforms as well as continuing industrial slowdown and managed the second half as effects of regulatory changes were absorbed. Due to the general slowdown of the industry during the year the Company has reported net loss for the year ended. Operational Highlights During the year, the drop in Natural Rubber price was favorable to the industry, however the shortage of other ingredients including Carbon Black and Chemicals has restrained the Company from generating margin as anticipated. The volatility of Synthetic Rubber price, hefty price and poor availability of Carbon Black and Chemicals has also affected profitability. Carbon Black prices had increased by more than 50% due to strong demand and tight supply. In addition to these cost escalations our consumers were not in a position to absorb the price hike as they were struggling to manage recent regulatory developments. The operations are exhaustively discussed in ‘Management Discussion and Analysis’ forming part of the annual report.

Dividend In view of the inadequacy of profit, your Directors are not in a position to recommend any dividend.


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Deposits The Company has not accepted any fixed deposits during the year to which the provisions of Section 73 of the Companies Act, 2013 are applicable. Directors and Key Managerial Personnel Mr. Rajesh S., Chief Executive Officer, Mr. Mohamed Sherif Shah, Chief Financial Officer and CS. Baiju T., Company Secretary are the Whole-time Key Managerial Personnel of the Company. Mr. M.E. Mohamed, Managing Director has vacated his office as the Whole-time KMP on 25th July, 2017 and continued as Managing Director. Mr. Rajesh S., and Mr. Mohamed Sherif Shah, were appointed by the Board as Chief Executive Officer and Chief Financial Officer respectively on 25th July, 2017. Earlier Mr. Rajesh S was appointed as Chief Financial Officer of the Company. Mrs. Shereen Navaz, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offer herself for re-appointment. The Board recommends her appointment. The Board is in the process of making necessary appointment in the vacancy of an Independent Director. The Board has considered the declarations given by independent directors under Section 149 (6) and the Company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes and independence of a director. The Board has annually evaluated the performance of the Board, its committees and individual directors. None of the Directors is disqualified under Section 164 of the Companies Act, 2013. Board Meetings Six Board meetings were held during the year. Details of Board meetings are included in Corporate Governance Report. Directors’ Responsibility Statement Pursuant to the requirement of Section 134 (3) and (5) of the Companies Act, 2013, your Directors confirm that:-

(a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that there are no material departures.

(b) 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 your Company at the end of the financial year and of the profit of the Company for that year.

(c) Taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities.

(d) Prepared the Annual Accounts on a going concern basis.

(e) Had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(f) Devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors & Audit Observations M/s. Walker Chandiok & Co LLP, Chartered Accountants, Kochi, were appointed as the Auditors of the Company at the Annual General Meeting held on 6th July 2017 to hold office for a period of 5 consecutive years. Necessary certificate has been obtained from the Auditors as per Section 139(1) of the Companies Act, 2013. The Auditor’s observations are suitably explained in notes to the Accounts and are self-explanatory.


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Cost Audit Report

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 the Cost Audit Report is not mandatorily applicable to our Company for the financial year, hence, no such audit has been carried out during the year.

Secretarial Audit Report The secretarial audit report on the compliance of the applicable Acts, Laws, Rules, Regulations, Guidelines, Listing Agreement, Standards etc. as stipulated by Section 204 of the Companies Act 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of this report as Annexure - A. The findings of the audit have been satisfactory. Public Shareholding About 34.66% of the paid up equity share capital of the Company are held by a large number of public shareholders. The category-wise shareholdings are reported in the “Extract of Annual Return” forming part of the annual report. Listing and Dematerialisation The equity shares of the Company are listed on the Bombay Stock Exchange Ltd. Shareholders are requested to convert their holdings to dematerialized form to derive its benefits by availing the demat facility provided by NSDL and CDSL. Extract of Annual Return Extract of Annual Return pursuant to Section 92 of Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is annexed herewith as Annexure - B. Audit committee The details pertaining to the composition of the audit committee are included in the Corporate Governance Report. Related Party Transactions There were no materially significant related party transactions which could have had a potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business on arm’s length and are periodically placed before the Audit Committee and Board for its approvals and the particulars of contracts entered during the year, in Form AOC-2 is enclosed as Annexure - C. The Board of Directors, as recommended by the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy has been uploaded on the website of the Company. There has been no change in the policy since the last fiscal year. Conservation of Energy, Technology Absorption, Foreign Exchange Inflow & Outflow Your Company continues its efforts to improve energy conservation and utilization most efficiently to nurture and preserve the environment and to exploit all its avenues to adopt latest technology in its operations. The information 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, Foreign Exchange Inflow and Outflow are given in Annexure - D to this report.

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Corporate Governance Your Company has been complying with the principles of good Corporate Governance over the years and is committed to the highest standards of compliance. Pursuant to the Listing Agreement read with Regulation 15(2) of the SEBI (LODR) Regulations 2015, the compliance with the corporate governance provisions as specified in regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and para C , D and E of Schedule V shall not apply the Company. However, as a good Corporate Governance practice the Company has generally complied with the Corporate Governance requirements and a report on Corporate Governance is annexed as Annexure - E and forms part of this Report. As required under SEBI (LODR) Regulations 2015 the Management Discussion and Analysis Report is annexed as Annexure – F and forms part of this Report. Personnel None of the employees is in receipt of remuneration in excess of the limit laid down under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors are annexed as Annexure - G and forms part of this Report. Corporate Social Responsibility Company has generally taken corporate social responsibility (CSR) initiatives. However, the present financial position of the Company does not mandate the implementation of CSR activities pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013. Vigil Mechanism A Vigil Mechanism for directors and employees to report genuine concerns has been established as required under the provisions of Section 177 of the Companies Act, 2013. The Vigil Mechanism Policy has been uploaded on the website of the Company. Particulars of Loans, Guarantees or Investments Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statement. Company has availed Line of Credit facility offered by IDBI Bank Ltd to the extent of ₹850 Lakhs in the form of Bill discounting facility to the Company’s approved vendors supplying raw materials to the Company and has guaranteed for its repayment. Risk Management Company has developed and implemented a risk management policy, and formed a Risk Management Committee to address and evaluate various risks impacting the Company and a report on risk management is provided in this Annual Report in Management Discussion and Analysis.

Internal Financial Controls Internal financial control and their adequacy are included in the Management Discussion and Analysis, forming part of this report. Material Changes and Commitments No material changes and commitments, affecting the financial position of the Company has been occurred between the end of the financial year 2017-18 and till the date of this report.

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Statutory Orders No significant and material orders were passed by Courts, Tribunals and other Regulatory Authorities affecting the going concern status of the Company’s operations. Employee Wellbeing and Safety Your Company has implemented policies and procedures with the objective of ensuring employee safety, security and wellbeing at the workplace. As stated in our Code of Conduct, we are committed to provide a gender friendly workplace, equal opportunities for men and women, prevent/redress sexual harassment and institute good employment practices. The Company has adopted policy on prevention of sexual harassment in line with the requirements of the Sexual Harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints. The Company has not received any complaint under this policy during the year 2017-18. Acknowledgement Your Directors wish to place on record their gratitude to Bankers, Share Transfer Agents, Auditors, Customers, Suppliers and Regulatory Authorities for their timely and valuable assistance and support. The Board values and appreciates the professionalism, commitment and dedication displayed by employees at all levels. Your Directors are thankful to the shareholders for their continued support and confidence.

For and on behalf of the Board Kochi Navas M Meeran 10/05/2018 Chairman

Din : 00128692


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Annexure – A

Form No. MR-3

SECRETARIAL AUDIT REPORT

For the Financial year ended 31st March 2018

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]

To The Members Eastern Treads Limited CIN: L25119KL1993PLC007213.

We, BVR & Associates Company Secretaries LLP, have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Eastern Treads Limited [CIN: L25119KL1993PLC007213] (hereinafter called the Company). The Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of Eastern Treads Limited’s books, papers, minutes book, forms and returns filed and other records produced to us and according to the information and explanations given to us by the Company, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31/03/2018 complied with the provisions of the Companies Act, 2013 (Act) and the Rules made there under, the Memorandum and Articles of Association of the Company and also applicable provisions of the aforesaid laws, standards, guidelines, agreements, etc. We have examined the books, papers, minute books, forms and returns filed and other records maintained by Eastern Treads Limited (“the Company”) for the financial year ended on 31/03/2018 according to the provisions of:

1. The Companies Act, 2013 and the Rules made there under.

2. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the Rules made there under.

3. The Depositories Act, 1996 and the Regulations and Bye-laws framed there under.

4. Foreign Exchange Management Act, 1999 and the applicable rules and regulations made there under.

5. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’).

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 & 2015.

c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

d) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008.

e) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

f) The Securities and Exchange Board of India (Depositories And Participants) Regulations, 1996

g) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.


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h) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993.

i) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998

6. The Listing Agreement has been entered into by the Company with Bombay Stock Exchange.

As informed to us the following other Laws specifically applicable to the Company as under:

1. The Factories Act, 1948.

2. The Competition Act, 2002.

3. The Kerala Panchayat Raj Act, 1994.

4. Sexual Harassment of Women at the Work Place (Prevention, Prohibition and Redressal) Act, 2013.

5. The Petroleum Act, 1934

6. The Rubber Act 1947

We have also examined compliance with the applicable clauses of the following:

Secretarial Standards issued by The Institute of Company Secretaries of India.

During the period under review the company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the observations noted against each legislation.

In respect of other laws specifically applicable to the Company, we have relied on information/ records produced by the Company during the course of our audit and the reporting is limited to that extent.

We report that, during the year under review:

1. The status of the Company during the financial year has been that of a Listed Public Company.

2. The Company has not been a holding or subsidiary of another company. The Company is a Listed Public Company.

3. The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Woman Director. However, regarding the composition of Independent Directors in the Board, it has been noted Mr. M.S Sebastian resigned on 13/04/2016 as Independent Director and we have been informed by the Company that as on the date of this report appointment of Independent Director has not been made to the vacancy so arisen. The Board is in the process of making the necessary appointments and compliances with respect to Independent Directors, as have been informed. Adequate notice is given to all directors to schedule the Board Meetings, and agenda and detailed notes on agenda are sent at least seven days in advance, a system exists for seeking and obtaining further information and clarifications on the agenda items before the meetings and for meaningful participation at the meetings. Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.

4. The Directors have complied with the disclosure requirements in respect of their eligibility of appointment, their being independent and compliance with the code of Business Conduct & Ethics for Directors and Management Personnel.

5. The Directors have complied with the requirements as to disclosure of interests and concerns in contracts and arrangements, shareholdings/debenture holdings and directorships in other companies and interests in other entities.

6. The Company has not advanced loans, given guarantees and provided securities to directors and/or persons or firms or companies in which directors were interested.


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7. The Company has made loans and investments or provided securities. The Company given guarantees to other business entities during the previous financial year and the same was continuing in this financial year also, and the Company has complied with the provisions of the Companies Act, 2013 and any other statutes as may be applicable.

8. The amount borrowed by the Company from its directors, members, bank(s)/ financial institution(s) and others were within the borrowing limits of the Company. Such borrowings were made by the Company in compliance with applicable laws.

9. The Company has not defaulted in the repayment of unsecured loans, facilities granted by bank(s)/financial institution(s) or non-banking financial companies. The Company has not issued Debentures / collected Public Deposits.

10. The Company has created /modified or satisfied charges on the assets of the Company and complied with the applicable provisions of Companies Act 2013 and other Laws.

11. All registrations under the various States and Local Laws as applicable to the Company are valid.

12. The Company has not issued and allotted the securities during the period under scrutiny.

13. The Company has declared and paid dividends to its shareholders during the period under scrutiny and complied with the provisions of the Act.

14. The Company has not issued debentures and not accepted fixed deposits.

15. The Company has paid all its statutory dues and satisfactory arrangements have been made for arrears of any such dues.

16. The Company being a listed entity has complied with the provisions of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

17. The Company has provided a list of statutes in addition to the laws as mentioned above and it has been observed that there are proper systems in place to ensure compliance of all laws applicable to the company.

We further report that:

1. The Company has followed the Secretarial Standards issued by the Institute of Company Secretaries of India.

2. The Company has complied with the provisions of Equity listing Agreements and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 entered into with Bombay Stock Exchange.

3. The provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 are not applicable for the company during the period under scrutiny.

4. The Company has complied with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and 2015 including the provisions with regard to disclosures and maintenance of records required under the Regulations.

5. The provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 are not applicable for the company during the period under scrutiny.

6. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 with regard to grant of Stock Options and implementation of the Schemes are not applicable for the company during the period under scrutiny.

7. The provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 are not applicable for the company during the period under scrutiny.

8. The Company has complied with the provisions of the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993.


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9. The provisions of the Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 with regard to buy back of Equity Shares are not applicable for the Company during the period under scrutiny.

10. The Company has complied with the provisions of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 including the provisions with regard to disclosures and maintenance of records required under the Regulations;

11. The Company had complied with the provisions of The Competition Act, 2002 with regard to prohibition of anti -competitive agreements, abuse of dominance and ensuring of competition advocacy. As per the verification, the Company is ensuring fair competition in the market among its competitors.

We further report that the compliance with regard to the following Acts is as pointed out below:

1. The Factories Act, 1948

Factory license valid as on the report date, till 31st December 2018. Statutory registers as per Factories Act has been maintained.

2. The Competition Act 2002

Overall Compliance under the Act complied by the Company.

3. The Kerala Panchayat Raj Act 1994.

The Panchayati Raj License is valid up to 31/03/2018. The License to Dangerous and Offensive Trades is valid up to 31/03/2018 and the Company has complied with the provisions of this Act. Necessary steps were taken by the Company for renewing the License.

4. Sexual Harassment of Women at the Work Place (Prevention, Prohibition and Redressal) Act, 2013

The Company has a Policy and has constituted a committee against the Sexual Harassment of Women at Work Place and the policy has been published in the website of the company. As per the information and records available from the Company there were no complaints during the financial year in this regard and the Company ensures protection to the women employees.

5. The Petroleum Act, 1934

Overall Compliance under the Act complied by the Company. The Company has obtained a valid license from the Petroleum & explosives safety organization and the license is valid up to 31/12/2018

6. The Rubber Act 1947

Overall Compliance under the Act complied by the Company. The License from Rubber Board for acquisition and sale is valid till 31/03/2023.

7. The Company has obtained integrated consent to operate license from Kerala State Pollution Control Board and the same is valid up to 30/06/2018.

We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

For BVR & Associates Company Secretaries LLP Ernakulam 23/04/2018

CS N Balasubramanian

Designated Partner, FCS No. F6439 C P No.: 4996


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To The Members EASTERN TREADS LIMITED

Our report of even date is to be read along with this letter.

1. Maintenance of Secretarial records is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records.

3. The verification was done on test basis to ensure that correct facts are reflected in Secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion.

4. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

5. Wherever required, we have obtained the Management representation about the Compliance of Laws, Rules and Regulations and happening of events etc.

6. The Compliance of the provisions of Corporate and other applicable Laws, Rules, Regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis.

7. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

For BVR & Associates Company Secretaries LLP Ernakulam 23/04/2018

CS N Balasubramanian

Designated Partner, FCS No. F6439 C P No.: 4996

ANNEXURE ANNUALREPORT2017-2018

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Annexure - B

Form No: MGT 9 EXTRACT OF ANNUAL RETURN

As on the financial year ended on 31/03/2018

[Pursuant to Section 92(3) of Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014]

1) Registration and other Details:

1 CIN : L25119KL1993PLC007213 2 Registration Date : 02/07/1993 3 Name of the Company : EASTERN TREADS LIMITED 4 Category / Sub-Category of the

Company : Public Company / Company having Share Capital

5 Address of the Registered office and contact details

: 3A, 3rd Floor, Eastern Corporate Office, 34/137 E, NH Bye-pass, Edappally, Kochi-682024, Ph: 0484 3001100, Fax: 3001110, Email: [email protected], www.easterntreads.com

6 Whether listed Company : Yes 7 Registrar and Transfer Agency : Integrated Registry Management Services Private Limited 2nd Floor, Kences Towers, No:1, Ramakrishna Street,

North Usman Road, T. Nagar, Chennai- 600017 [email protected]

2) Principal Business Activities of the Company

All the business activities contributing 10% or more of the total turnover of the Company shall be stated:-

Sl. No Name and Description of main products / services

NIC Code Product/ service

% to total turnover of the Company

1 Tread Rubber 2211 71% 2 Rubber Compounds 2211 14%

3) Particulars of Holding, Subsidiary and Associate Companies Nil

4) Share Holding Pattern (Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year %

Change Demat Physical Total

% of Total Share

Demat Physical Total % of Total Share

A. Promoters (1) Indian

a) Individual 2811999 --- 2811999 53.75 2803500 --- 2803500 53.58 (0.17) b) Bodies Corp. 615000 -- 615000 11.75 615000 -- 615000 11.75 -- Sub-total (A)(1) 3426999 -- 3426999 65.50 3418500 -- 3418500 65.33 (0.17)

(2) Foreign --- --- --- --- --- --- --- --- --- Sub-total (A)(2) --- --- --- --- --- --- --- --- ---

Total shareholding of Promoter (A)=(A)(1)+(A)(2) 3426999 --- 3426999 65.50 3418500 --- 3418500 65.33 (0.17)


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B. Public Shareholding 1. Institutions --- --- --- --- --- --- --- --- --- Sub -total (B) (1) --- --- --- --- --- --- --- --- --- 2.Non-Institutions a) Body Crop.

i) Indian 155725 68900 224625 4.29 141865 68900 209765 4.01 -0.28 ii) Overseas --- 50000 50000 0.96 --- 50000 50000 0.96 ---

b) Individuals i) Individual shareholders holding nominal share capital up to ₹ 1 lakh

474593 561300 1035893 19.80 470211 543700 1013911 19.38 -0.42

ii) Individual Shareholder holding nominal share capital exceeding ₹1lakh

425781 23600 449381 8.59 467997 23600 491597 9.40 0.81

c) Others (specify) 45102 --- 45102 0.86 47227 --- 47227 0.90 0.04 Sub -total (B) (2) 1101201 703800 1805001 34.50 1127300 686200 1813500 34.66 0.16 Total public shareholding (B) =(B)(1)+ (B) (2)

1101201 703800 1805001 34.50 1127300 686200 1813500 34.66 0.16

C. Shares held by custodian for GDR & ADR

--- --- --- --- --- --- --- --- ---

Grand Total (A+B+C) 4528200 703800 5232000 100.00 4545800 686200 5232000 100.00 ---

(ii) Shareholding of Promoters

Shareholder’s Name

Shareholding at beginning of the year Shareholding at the end of the year % change in

shareholding during the

year

No. of Shares

% of total shares of

the Company

% of shares pledge/

encumbered to total shares

No. of Shares


the Company

% of shares pledge/encumbered to

total shares 1 Firoz Meeran 1350550 25.82 --- 1350550 25.82 --- --- 2 Navas Meeran 1321750 25.26 --- 1321750 25.26 --- ---

3 Kerala State Industrial Development Corp. 615000 11.75 --- 615000 11.75 --- ---

4 Mohamed M E 8500 0.16 --- 8500 0.16 --- 5 Nabeesa Meeran 34000 0.65 --- 34000 0.65 --- 6 Soyamol Anwar Sajith 48499 0.93 --- 40000 0.76 --- (0.17) 7 Niza Zakir 48700 0.93 --- 48700 0.93 ---

Total 3426999 65.50 --- 3418500 65.33 --- (0.17)

(iii) Change in promoter’s Shareholding (please specify, if there is no change)

Promoters Shareholding Cumulative Shareholding

No. of Shares % of total shares

No. of Shares % of total shares

1 Firoz Meeran At the beginning of the year 1350550 25.82 1350550 25.82 At the end of the year 1350550 25.82 1350550 25.82 2 Navas Meeran At the beginning of the year 1321750 25.26 1321750 25.26 At the end of the year 1321750 25.26 1321750 25.26 3 Kerala State Industrial Development Corp.Ltd At the beginning of the year 615000 11.75 615000 11.75 At the end of the year 615000 11.75 615000 11.75 4 Mohamed M E At the beginning of the year 8500 0.16 8500 0.16 At the end of the year 8500 0.16 8500 0.16


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5 Nabeesa Meeran At the beginning of the year 34000 0.65 34000 0.65 At the end of the year 34000 0.65 34000 0.65 6 Soyamol Anwar Sajith At the beginning of the year 48499 0.93 48499 0.93 Transfer/Sale (26/12/17) 141 0.00 48358 0.92 Transfer/Sale (27/12/17) 859 -0.02 47499 0.91 Transfer/Sale (29/12/17) 2000 -0.04 45499 0.87 Transfer/Sale (02/01/18) 100 0.00 45399 0.87 Transfer/Sale (03/01/18) 111 0.00 45288 0.87 Transfer/Sale (04/01/18) 15 0.00 45273 0.87 Transfer/Sale (06/01/18) 3773 -0.07 41500 0.79 Transfer/Sale (09/01/18) 1206 -0.02 40294 0.77 Transfer/Sale (12/01/18) 294 -0.01 40000 0.76 At the end of the year 40000 0.76 40000 0.76 7 Niza Zakir At the beginning of the year 48700 0.93 48700 0.93 At the end of the year 48700 0.93 48700 0.93

(iv) Shareholding Pattern of top ten Shareholders (Other than Directors, Promoters and Holders of GDRs and ADRs)

For Each of the Top 10 Shareholders Shareholding Cumulative

Shareholding No. of Shares

% of total shares

No. of Shares

% of total shares

1 Biju Job At the beginning of the year 182780 3.49 182780 3.49 Transfer/Sale (18/08/17) 5000 -0.09 177780 3.30 At the end of the year 177780 3.40 177780 3.40 2 Equity Intelligence India Private Limited At the beginning of the year 100000 1.91 100000 1.91 At the end of the year 100000 1.91 100000 1.91 3 Thomas George Muthoot. At the beginning of the year 70811 1.35 70811 1.35 Transfer/Sale (14/04/17) 1000 -0.02 69811 1.33 Transfer/Sale (21/04/17) 1500 -0.03 68311 1.31 Transfer/Sale (28/04/17) 5545 -0.11 62766 1.20 Transfer/Sale (05/05/17) 1955 -0.04 60811 1.16 At the end of the year 60811 1.16 60811 1.16 4 White Label Enterprises Ltd At the beginning of the year 50000 0.96 50000 0.96 At the end of the year 50000 0.96 50000 0.96 5 Ritu Garg At the beginning of the year --- --- --- --- Transfer/ Purchase (07/10/17) 652 0.01 652 0.01 Transfer/ Purchase (13/10/17) 89 0.00 741 0.01 Transfer/ Purchase (20/10/17) 1259 0.02 2000 0.04 Transfer/ Purchase (27/10/17) 68 0.00 2068 0.04 Transfer/ Purchase (31/10/17) 1316 0.03 3384 0.07 Transfer/ Purchase (03/11/17) 833 0.02 4217 0.08 Transfer/ Purchase (10/11/17) 8565 0.16 12782 0.24 Transfer/ Purchase (17/11/17) 4445 0.09 17227 0.33 Transfer/ Purchase (24/11/17) 5368 0.10 22595 0.43 Transfer/ Purchase (01/12/17) 8757 0.17 31352 0.60 Transfer/ Purchase (29/12/17) 148 0.00 31500 0.60 Transfer/ Purchase (23/03/18) 18500 0.35 50000 0.96 At the end of the year 50000 0.956 50000 0.96


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6 Foresight Finl Svcs Ltd A/C Pms At the beginning of the year 49300 0.94 49300 0.94 At the end of the year 49300 0.94 49300 0.94 7 Manishkumar Sumatilal Mehta

At the beginning of the year 10831 0.21 Transfer/ Purchase (08/09/17) 2199 0.04 13030 0.25

Transfer/Sale (15/09/17) 10526 -0.20 2504 0.05

Transfer/ Purchase (30/03/18) 32106 0.61 34610 0.66 At the end of the year 34610 0.66 34610 0.66 8 Jasila Ajit Moopan

At the beginning of the year 20000 0.38 20000 0.38

Transfer/Purchase (21/04/17) 1250 0.02 21250 0.41 Transfer/Purchase (28/04/17) 2400 0.05 23650 0.45 Transfer/Purchase (05/05/17) 1350 0.03 25000 0.48

Transfer/Purchase (12/05/17) 119 0.00 25119 0.48 Transfer/Purchase (09/06/17) 1533 0.03 26652 0.51

Transfer/Purchase (16/06/17) 1048 0.02 27700 0.53 Transfer/Purchase (23/06/17) 36 0.00 27736 0.53

Transfer/Purchase (07/07/17) 2264 0.04 30000 0.57

At the end of the year 30000 0.57 30000 0.57 9 Adesh Enterprises LLP

At the beginning of the year 36702 0.70 36702 0.70 Transfer/Sale (07/04/17) 3573 -0.07 33129 0.63 Transfer/Sale (14/04/17) 1320 -0.03 31809 0.61 Transfer/Sale (21/04/17) 1000 -0.02 30809 0.59 Transfer/Sale (28/04/17) 658 -0.01 30151 0.58 Transfer/Sale (05/05/17) 492 -0.01 29659 0.57 At the end of the year 29659 0.57 29659 0.57

10 Aleema Aliyar At the beginning of the year 25200 0.48 25200 0.48

At the end of the year 25200 0.48 25200 0.48 (v) Shareholding of Directors and Key Managerial Personnel

Sl No For Each of the Directors & KMP

Shareholding Cumulative Shareholding

No. of Shares % of total shares of

the Company No. of Shares


the Company 1 Navas M Meeran (Chairman) At the beginning of the year 1321750 25.26 1321750 25.26

1321750 25.26 1321750 25.26 At the end of the year 2 M.E. Mohamed (Managing Director) At the beginning of the year 8500 0.16 8500 0.16 At the end of the year 8500 0.16 8500 0.16 3 M.S. Ranganathan (Director) At the beginning of the year --- --- --- --- At the end of the year --- --- --- --- 4 Naiju Joseph (Director) At the beginning of the year 3100 0.06 3100 0.06 At the end of the year 3100 0.06 3100 0.06 5 K.S. Neelakanta Iyer (Director) At the beginning of the year --- --- --- --- At the end of the year --- --- --- --- 6 K.V. Rajagopalan Nair (Director) At the beginning of the year --- --- --- --- At the end of the year --- --- --- ---


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7 Shereen Navaz (Director) At the beginning of the year --- --- --- --- At the end of the year --- --- --- --- 8 Baiju T. (Company Secretary) At the beginning of the year 1000 0.02 1000 0.02 At the end of the year 1000 0.02 1000 0.02 9 Rajesh S. (CEO) At the beginning of the year 643 0.01 643 0.01 Transfer/Purchase (25/08/17) 3919 0.08 4562 0.09 Transfer/Purchase (01/09/17) 271 0.01 4833 0.09 Transfer/Sale (08/09/17) 1000 -0.02 3833 0.07 Transfer/Sale (22/09/17) 2521 -0.05 1312 0.03 Transfer/Sale (27/10/17) 1000 -0.02 312 0.01 At the end of the year 312 0.01 312 0.01 10 Mohammed Sherif Shah (CFO) ** At the beginning of the year 4934 0.09 4934 0.09 Transfer/Purchase (02/02/18) 700 0.01 5634 0.11 At the end of the year 5634 0.11 5634 0.11 ** As a Joint Shareholder

5) Indebtedness- Indebtedness of the Company including interest outstanding/accrued but not due for payment (₹ in Lakhs)

For the financial year 2017-18 Secured Loans Excluding Deposits

Unsecured Loans Deposits Total

Indebtedness Indebtedness at the beginning i) Principal Amount 1581 25 --- 1606 ii) Interest due but not paid --- --- --- --- iii) Interest accrued but not due --- --- --- --- Total (i+ii+iii) 1581 25 --- 1606 Change in Indebtedness during year Addition 593 --- --- 593 Reduction 206 --- --- 206 Net Change 387 --- --- 387 Indebtedness at the end i) Principal Amount 1968 25 --- 1993 ii) Interest due but not paid --- --- --- iii) Interest accrued but not due --- --- --- Total (i+ii+iii) 1968 25 --- 1993

6) Remuneration of Directors and Key Managerial Personnel A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Sl No. Particulars of Remuneration

Name of MD/ WTD/ Manager Total

Amount Mr. M.E Mohamed (Managing Director)

1 Gross salary (a) Salary as per provisions contained in Section 17(1) of the Income-tax Act,1961

--- ---

(b) Value of perquisites u/s17(2) Income-tax Act,1961 --- --- (c) Profits in lieu of salary under Section 17(3) Income-tax Act, 1961 --- ---

2 Stock Option --- --- 3 Sweat Equity --- --- 4 Commission - as % of profit, and Others --- --- 5 Others, please specify --- --- Total (A) --- ---

Ceiling as per the Act --- ---


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B. Remuneration to other Directors: (₹ in Lakhs)

Particulars of Remuneration Name of Director Total Amount

1. Independent Directors M.S Ranganathan K.S Neelakanta Iyer Fee for attending board committee meetings

--- 0.30 0.30

Commission --- --- --- Others, please specify --- --- ---

Total (1) --- 0.30 0.30 2. Other Non-Executive

Directors Navas M Meeran Naiju Joseph KV Rajagopalan Nair Shereen Navaz

Fee for attending board committee meetings

--- 0.30 0.10 --- 0.40

Commission --- --- --- --- --- Others, please specify --- --- --- --- ---

Total (2) --- 0.30 0.10 --- 0.40 Total (B)= (1+2) 0.70 Total Managerial Remuneration 0.70 Overall Ceiling as per the Act Remuneration is within the limit specified under the Companies Act, 2013

C. Remuneration to Key Managerial Personnel Other Than MD/Manager/WTD

(Amount in ₹ in Lakhs)

Sl No Particulars of Remuneration

Key Managerial Personnel

Rajesh S (CEO)

KA Mohamed

Sherif Shah CFO

Baiju T (CS) Total

1 Gross salary (a) Salary as per provisions contained in Section 17(1)of the

Income-tax Act,1961 24.18 14.66 10.42 49.26

(b) Value of perquisites u/s17(2) Income-tax Act,1961 0.09 0.11 --- 0.20 (c) Profits in lieu of salary under Section 17(3) Income-tax Act,

1961 --- --- ---

2 Stock Option --- --- --- 3 Sweat Equity --- --- --- 4 Commission - as % of profit, others, specify… --- --- ---

5 Others - Performance Incentive (Payable) ** --- 0.79 0.46 1.43 Total 24.27 15.56 10.88 50.89 ** Provisioning only, actual disbursement will be linked with the Individual and Company performance as per the

remuneration policy and at the discretion of the management. 7) Penalties / Punishment/ Compounding of Offences

Type Section of the Companies

Act

Brief Description

Details of Penalty/Punishment compounding fee imposed

Authority (RD/NCLT/ COURT)

Appeal made, if any

Company, Directors, Other Officers in Default

Penalty None Punishment

Compounding


23

Annexure - C

FORM NO. AOC-2

(Pursuant to Clause (h) of Sub-Section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in Sub-Section (1) of Section 188 of the Companies Act, 2013 including certain arm’s length transactions under third

proviso thereto

Details of contracts or arrangements or transactions not at arm’s length basis: Nil

(a) Name(s) of the related party and nature of relationship : NA (b) Nature of contracts/arrangements/transactions : NA (c) Duration of the contracts / arrangements/transactions : NA (d) Salient terms of the contracts or arrangements or transactions including the value, if any : NA (e) Justification for entering into such contracts or arrangements or transactions : NA (f) Date(s) of approval by the Board : NA (g) Amount paid as advances, if any: : NA (h) Date on which the special resolution was passed in general meeting as required under first

proviso to Section 188 : NA

Details of material contracts or arrangement or transactions at arm’s length basis:

(a) Name(s) of the related party Eastern Condiments (P) Ltd

Eastea Chai (P) Ltd

Eastern Retreads (P) Ltd

Nature of relationship Two Directors are interested

Two Directors are interested

Two Directors are interested

(b) Nature of contracts/ arrangements/ transactions By agreement By agreement By agreement (c) Duration of the contracts / arrangements/

transactions 01/04/2016 to

31/03/2018 01/04/2017 to

31/03/2018 01/04/2014 to

31/03/2019 (d) Salient terms of the contracts or arrangements or

transactions

Sharing of Expenses and

Lease Rent

Purchase and Lease Rent

Sharing of Expenses, Sale

of Goods Value, if any: (₹ in lakhs) 11.95 0.37 223.61

(e) Date(s) of approval by the Board, if any: 13/04/2016 09/02/2017 28/04/2014 (f) Amount paid as advances, if any: (₹ in lakhs) Nil Nil 72.90

(a) Vazhakkulam Rubbers Alfa Rubbers Rosekhan Industries Sahara Treads Two Directors are

interested One Director is interested One Director is interested One Director is interested

(b) By agreement By agreement By agreement By agreement (c) 01/04/2017 to 31/03/2018 01/04/2017 to 31/03/2018 01/04/2017 to 31/03/2018 01/04/2017 to 31/03/2018 (d) Sales & Purchase of

Goods, and Job works Sales & Purchase of

Goods and Job works Purchase of Goods and

Job works Sales & Purchase of

Goods and Job works 107.37 142.31 771.40 665.98

(e) 04/05/2017 04/05/2017 04/05/2017 04/05/2017 (f) 74.30 Nil 40.86 Nil

For and on behalf of the Board of Directors

Kochi Navas M Meeran 10/05/2018 Chairman

Din : 00128692


24

Annexure - D

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As per Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014

A. Conservation of Energy

(i). Steps taken or impact on conservation of energy

The Company has been continually working on efficient utilization of all kinds of energy sources and kept top priority for energy conservation. The Company has successfully expanded its manufacturing operations by about two fold with the same infrastructure of Energy sources.

With focused improvements in operational techniques, maintenance and distribution systems, we have reduced the energy utilization. Increased the outflow of products by minimizing all kinds of process wastages.

The Company has been using fire wood as the fuel for thermic fluid heater saving fossil fuels. However, the Company couldn’t utilize any alternate sources of energy in its operations. The capital investment for energy conservation was around ₹ 5 lakhs, most of the projects were done without much capital investment.

(ii). Steps taken by the Company for utilising alternate sources of energy

(iii). Capital investment on energy conservation equipment.

B. Technology Absorption

As an integral part of continuous improvements in productivity and cost effectiveness, the Company has successfully implemented “Lip System” in Extrusion Process along with line modification through PLC based synchronization. For enhancing customer satisfaction, the Company has developed and successfully established application specific compounds in pre cured tread rubber like applications in severe road conditions, heavy load applications as well as in lighter tread categories. The R& D department is further working on new polymers, materials and compounds to meet the international requirements competitive to leading global brands.

The Company’s products has been recently approved by European Experts. The Company would undertake appropriate R&D activities depending up on the future requirements too. The Company use latest technology and operates at international standards. No technology has been imported by the Company during the period.

C. Foreign exchange earnings and Outgo

The Foreign Exchange inflows and outgo during the year are as follows:-

Particulars (₹ in Lakhs) Foreign exchange inflows 274.16 Foreign exchange outgo 55.81


25

Annexure - E

CORPORATE GOVERNANCE REPORT

Your Company is generally complying with the requirements of the Corporate Governance practices. Pursuant to the Listing Agreement read with Regulation 15(2) of the SEBI (LODR) Regulations 2015, the requirement of compliance with the corporate governance provisions as specified in regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and para C , D and E of Schedule V is not mandatory to the Company. However, as a good Corporate Governance practice a report on the implementation of the Corporate Governance provisions by your Company is furnished below:-

Company’s Philosophy on Corporate Governance

The Company is a part of the Eastern Group which has established a reputation for honesty and integrity. While focusing on Corporate Governance, we practice the highest standards of ethical and responsible business culture and thereby enhance the value of all stakeholders. It is a combination of voluntary practices and compliance with laws and regulations in all areas of its operations and in its interactions with the stakeholders. It provides direction and control to the affairs of the Company.

Your Company is fully committed to practice sound Corporate Governance and uphold the highest business standards in conducting business. The Company has always worked towards building trust with all its stakeholders based on the principles of good corporate governance. Your Company is guided by a key set of values for all its internal and external interactions. The Company is open, accessible and consistent with its communication.

Board of Directors

The Board is made up of one Executive Director and Six Non-executive Directors that includes one Woman Director and two Independent Directors. The Chairman of the Board is a Non-executive Director. The Composition, category and attendance of each Director at the Board and Annual General Meeting and Number of other Directorship and Chairmanship / Membership of Committee of each Director in various companies is as follows:-

Name of the Director Category Attendance Particulars

No. of other Directorships

Committee membership

Board Meetings

Last AGM

Director# Chairman Member Chairman

Mr. Navas M Meeran P, C & NE 5 Yes 13 2 None None Mr. M.E. Mohamed MD & ED 6 Yes 3 None None None Mrs. Shereen Navaz P&NE 4 No 5 None None None Mr. M.S. Ranganathan NE & I 6 Yes 2 None None None Mr. K.S. Neelakanta Iyer NE & I 6 Yes 1 None None None Mr. Naiju Joseph NE 6 Yes 1 None None None Mr. K.V. Rajagopalan Nair NE & N 2 No 1 None None None

C: Chairman; P: Promoter; E: Executive Director; N: Nominee Director (Nominee of KSIDC) I: Independent Director; NE: Non-Executive Director; MD: Managing Director;

# Includes directorships in Public and Private Ltd companies. Mrs. Shereen Navaz, wife of Mr. Navas M Meeran, Chairman occupy the position of woman director in the Board. Regarding the details of number of shares held by non-executive directors please refer the Extract of Annual Return, annexed with the Directors report.


26

Details of Directors seeking reappointment at the AGM

Name of Director : Mrs. Shereen Navaz DIN : 00328770 Date of Birth : 28th October 1977 Date of appointment : 31st March 2015 Qualifications : Graduate in English Literature Expertise in specific functional area

: She occupy the position of woman director in the Board. She is actively involving in the business of the group and occupying directorship in various companies and has wide expertise in administration. She has involved in the growth and development of various educational institutions.

Details of other Directorship : Sheram Treads (P) Ltd Nasher Properties (P) Ltd Shenaz Properties (P) Ltd M.E Meeran Management (P) Ltd Auditplus Business Solutions (P) Ltd

Membership/Chairmanship of committees of other companies

: NIL

Number of shares held in the Company

: NIL

Number and date of Board meetings held

Six Board meetings were held during the year. The Board meets at least once in a quarter with a gap of not more than one hundred and twenty days between any two meetings. The details of the Board meetings are as under.

Sl.No. Date Board Strength Directors present Sl.No. Date Board Strength Directors present 1 04/05/2017 7 7 4 06/10/2017 7 4 2 25/07/2017 7 7 5 14/12/2017 7 6 3 13/09/2017 7 6 6 14/02/2018 7 5

Independent Directors

The Company has complied with provisions of Listing Agreement read with SEBI (LODR) Regulations 2015 and the Provisions of Section 149(6) Companies Act, 2013 with respect to the appointment of Independent Directors, except in case of appointment of Independent Director in this casual vacancy caused by the resignation Mr. M.S Sebastian, Independent Director, the Board is in the process of making necessary appointment in this casual vacancy. The Company has also obtained declarations from all the Independent Directors pursuant to Section 149(7) of the Companies Act, 2013.

Appropriate orientation sessions were given to Directors to get involvement on Company’s culture, organization structure, business, constitution, board procedures and risks and management strategy of the Company. The familiarization programmes imparted to independent directors is disclosed in the Company’s website: www.easterntreads.com. The appointment letters of Independent Directors has been placed on the Company’s website. The Board evaluated the performance of Non-executive and Independent Directors. All the Directors are eminent personalities having wide experience in the field of business, industry and administration. Their presence on the Board is advantageous and fruitful in taking business decisions.

The Independent Directors held a meeting on 26th March, 2018, without the attendance of Non-Independent Directors and members of Management. All Independent Directors were present at the meeting and they have reviewed the performance of non-independent directors and the Board, performance of the Chairman and information flow structure of the Company.


27

Audit Committee

The Audit Committee is duly constituted in accordance with the Listing Agreement read with SEBI (LODR) Regulations 2015 and of Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014. It adheres to the terms of reference, prepared in compliance with Section 177 of the Companies Act, 2013, and SEBI (LODR) Regulations 2015. The Members of the Committee are:-

Name Category Position Mr. K.S. Neelakanta Iyer Non-Executive Independent Director Chairman Mr. M.S. Ranganathan Non-Executive Independent Director Member Mr. M.E. Mohamed Managing Director Member

Two third of the members are Independent Directors and all the members are financially literate. The composition, role, functions and powers of the Audit Committee are in line with the requirements of applicable laws and regulations. The Audit Committee shall oversee financial reporting process and disclosures, review financial statements, internal audit reports, related party transactions, financial and risk management policies, auditors qualifications, compliance with Accounting Standards etc. and oversee compliance with Stock Exchanges and legal requirements concerning financial statements and fixation of audit fee as well as payment for other services etc.

Five Audit Committee meetings were held during the year 2017-18 at the Registered Office of the Company on 02/05/2017, 25/07/2017, 13/09/2017, 13/12/2017 and 12/02/2018. All the meetings were attended by the Chairman and all the members of the Committee, representatives of Internal and Statutory Auditors, Chief Financial Officer and Chief Executive Officer. The Company Secretary acts as Secretary to the Audit Committee and no personnel has been denied access to the audit committee. The Chairman of the Audit Committee was present at the Company’s Annual General Meeting held on 06/07/2017 to answer the shareholders’ queries.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is constituted in compliance with the requirements of Listing Agreement read with SEBI (LODR) Regulations 2015 and Section 178 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014. The Company Secretary acts as the Secretary to the Committee and the Committee Members are:

Name Category Position Mr. M.S. Ranganathan Non-Executive Independent Director Chairman Mr. K.S. Neelakanta Iyer Non-Executive Independent Director Member Mr. Naiju Joseph Non-Executive Director Member

The Committee formulates criteria for determining qualifications, positive attributes and independence of a director and recommends to the Board the policy relating to the remuneration for the directors, Key Managerial Personnel and other employees and evaluation of Independent Directors and the Board. It identifies persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal and carry out evaluation of every director’s performance. The Nomination and Remuneration Committee held meetings on 25/07/2017 and 26/03/2018 and all the committee members were present at the meeting. The Chairman of the Committee was present at the Company’s Annual General Meeting held on 06/07/2017 to answer the shareholders’ queries.

Remuneration Policy

The remuneration policy is in consonance with the existing industry practice and also with the provisions of the Companies Act, 2013. The Board of Directors has adopted a Remuneration Policy for Directors, Key Managerial Personnel and other employees. The Company’s remuneration policy is driven by the success and performance of the individual employee and the performance of the Company. Through its compensation programme, the Company endeavors to attract, retain, develop and motivate a high performance workforce. The said policy is available on the website of the company, www.easterntreads.com.


28

The details of remuneration/sitting fee paid to Directors during the financial year are given in the Extract of Annual Return. There is no other pecuniary relationship or transactions between the Company and the non-executive directors. Even though the terms of appointment of Mr. M.E. Mohamed as the Managing Director include the payment of remuneration, he has waived his right to remuneration. Hence, no remuneration has been paid to Managing Director during the financial year.

Share Transfer Committee

The Share Transfer Committee was constituted on 25/06/1996 in compliance with the requirements of Listing Agreement. The Company Secretary acts as the Secretary to the Committee and the Compliance Officer. The members of the Committee are:

Name Category Position Mr. Navas M Meeran Promoter / Non-Executive Director Chairman Mr. M.E. Mohamed Managing Director / Executive Director Member Mr. M.S Ranganathan Non-Executive Independent Director Member

Share Transfer Committee meetings were held in every month to approve the transfer of shares, to issue duplicate share certificates and review matters connected with the transfer of shares.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee was constituted in compliance with the requirements of the Listing Agreement and Section 178 of the Companies Act, 2013. CS Baiju T. Company Secretary is the Compliance officer, who acts as the Secretary to the Committee and the Members of the Committee are:

Name Category Position Mr. Naiju Joseph Non-Executive Director Chairman Mr. M.S. Ranganathan Non-Executive Independent Director Member Mr. K.S. Neelakanta Iyer Non-Executive Independent Director Member

The Stakeholders Relationship Committee looks into shareholders’ complaints relates to transfer of shares, non-receipts of balance sheet besides complaints from SEBI, Stock Exchanges, Court and various Investor Forums. It oversees the performance of the Registrars and Transfer Agent, and recommends measures for overall improvement in the quality of investor services. The Company is in compliance with the SCORES, which has initiated by SEBI for processing the investor complaints in a centralized web based redress system and online redressal of all the shareholders complaints. No shareholders complaints received during the financial year and there were no outstanding complaints as on 31/03/2018.

Risk Management Committee The Risk Management Committee was constituted in compliance with the requirements of the Listing Agreement. The Company Secretary acts as the Secretary to the Committee and the members of the Committee are:-

Name Category Position Mr. M.S. Ranganathan Non-Executive Independent Director Chairman Mr. M.E. Mohamed Managing Director / Executive Director Member

The Risk Management Committee reviewed the risk management plan of the Company and its status of its implementation. The risk management plans and procedure implemented by the Company in its operation are adequate with respect to the operational risks in the business of the Company.


29

Plant Location

Oonnukal P.O, Kothamangalam, Ernakulam District, Kerala

General Body Meetings

The location and time for last three Annual General Meetings are as follows:-

Year Venue Date Day Time Whether Special Resolution passed

16-17 Holiday Inn Cochin, Ernakulam 06/07/17 Thursday 3 PM No 15-16 Gokulam Park Hotel and Convention Centre, Ernakulam 04/06/16 Saturday 3 PM No 14-15 Broad Bean Hotels & Resorts, Ernakulam 28/07/15 Tuesday 3 PM Yes

No Extraordinary General Meeting was held during the financial year and no special resolutions were put through postal ballot last year.

Related party transactions

During the year, the Company had not entered into any transaction of a material nature with any of the related parties which may have potential conflict with the interest of the Company. The transactions of purchase/sale of finished goods, raw materials and job work with related parties have been made in the ordinary course of business and at arm’s length. The Register of Contracts containing transactions, in which Directors are interested, is placed before the board regularly. Full disclosures of related party transactions are given in notes to the Financial Statements as well as in Form AOC-2 in Annexure – C of this report.

Compliance by the Company

The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets. No penalties or strictures imposed on the Company by Stock Exchanges or SEBI and other Statutory Authorities on matters related to capital markets during the last three years. The Board quarterly reviews the compliance report on applicable laws to the Company as well as steps taken by the Company to rectify the instances of non-compliance, if any.

Means of Communication

The quarterly financial results, after their approval by the Board of Directors, are promptly issued to the Stock Exchange (BSE). These Quarterly Financial Results are normally published in Business Line, Deepika and are also posted on the Company’s website: www.easterntreads.com. The Company’s website also displays all official news releases, if any. All material information about the Company is promptly sent to the Stock Exchanges.

Code of Conduct

The Board approved and adopted the Code of Conduct including Code of Conduct for Prevention of Insider Trading and Whistle Blower Policy as applicable to the Board Members and the Senior Management Personnel of the Company. The Code has been posted on the website of the Company. All Board Members and Senior Management Personnel have affirmed compliance with the Code and a declaration to this effect signed by the Managing Director is annexed to this report.

Annual General Meeting Book Closure Date Date and Time : 20/07/2018 at 3.30 P.M Venue : Hotel TGR Suites, Thannikal,

Pukkattupady Road, Edappally Toll, Cochin, Ernakulam – 682024, Kerala

Saturday, 14/07/2018 to Friday, 20/07/2018

(both days inclusive)


30


Financial Calendar (Tentative)

Annual General Meeting : 20/07/2018 1st, 2nd and 3rd Quarterly Financial Results : Within 45 days of the end of each quarter Audited yearly results for the year ended 31/03/19 : Within 60 days of the end of the financial year

Listing on Stock Exchange

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd (BSE). The Company has paid the annual listing fees for the year 2018-19 to Bombay Stock Exchange and the annual custodial fee to National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) will be paid with in the due dates.

Stock Code & Demat ISIN Number Registrar and Share Transfer Agent

Scrip Code No. : 531346

Trading Symbol : EASTRED

Demat ISIN Number : INE500D01015

Integrated Registry Management Services (P) Ltd 2nd Floor, ‘Kences Towers’, No.1, Ramakrishna Street,

North Usman Road, T.Nagar, Chennai-600017 Phone: 044 28140801, 28140803, Fax; 044 – 28143378, 28142479

E-mail: [email protected]

Market Price Data: High, Low during Each Month in Last Financial Year Amount in ₹

Month BSE

High Price Low Price April, 2017 130.00 113.05 May, 2017 122.00 98.00 June, 2017 114.95 97.60 July, 2017 114.00 99.15 August, 2017 108.95 82.00 September, 2017 118.70 88.00 October, 2017 108.00 94.00 November, 2017 100.75 88.95 December, 2017 117.00 91.00 January, 2018 115.00 93.00 February, 2018 104.30 85.60 March, 2018 99.95 75.70

Performance in Comparison to Broad-based Indices such as BSE Sensex

29000

31000

33000

35000

37000

80

90

100

110

120

130

140

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

BSE

Sen

sex

Hig

h

ETL

Hig

h Pr

ice

Finacial Year 2017-18

ETL Price BSE Sensex

31

Share Transfer System

The Board has delegated the authority for approving transfer, transmission, etc. of the Company’s securities to the Share Transfer Committee of the Board of Directors constituted for this purpose. A summary of transfer / transmission of the securities of the Company so approved by the Share Transfer Committee have placed at every Board meeting. Presently the shares are transferred both in physical and dematerialised form and request for re-materialisation and / or transfer of shares in physical mode is also attended within the stipulated time.

The physical share transfers were processed and the share certificates returned within a period of 15 days from the date of receipt, subject to the documents being valid and complete in all respects and confirmation is given to NSDL and CDSL. No request for share transfer was pending as on 31/03/2018. Shares held in dematerialized form are electronically traded and the Registrars and Share Transfer Agent of the Company periodically receive from the Depository, the beneficiary holdings so as to enable them to update their records. Company obtained half yearly certificate on compliance with the share transfer formalities as required under Regulation 40(9) of the SEBI (LODR) Regulations 2015 from a Company Secretary in practice and submitted the certificate with the Stock Exchanges within the prescribed time limit.

Distribution of Shareholding as on 31/03/2018

Category No. of

shareholders % of

shareholders No. of shares

holding % Shares

Equity Up to 500 1640 77.58 324585 6.20

501 – 1000 287 13.58 247367 4.73 1001 – 2000 77 3.64 116931 2.23 2001 – 3000 41 1.94 106156 2.03 3001 – 4000 13 0.61 46029 0.88 4001 – 5000 12 0.57 57850 1.11

5001 – 10000 19 0.90 158006 3.02 Above 10000 25 1.18 4175076 79.80

Total 2114 100.00 5232000 100.00 Preference

Above 10000 2 100.00 900000 100.00 Total 2 100.00 900000 100.00

Shareholding Pattern as on 31/03/2018

Category Equity Preference No. of holders % No. of shares % No of shares %

Promoters 7 0.33 3418500 65.34 900000 100 Body Corporate 28 1.32 210765 4.03 --- --- NRI / OCB 45 2.13 71324 1.36 --- --- Public 2017 95.41 1484184 28.37 --- --- Others (Clearing Member) 16 0.76 17568 0.34 Others (LLP) 1 0.05 29659 0.57 --- --- Total : 2114 100.00 5232000 100.00 900000 100

Dematerialization of Shares and Liquidity

As on 31st March 2018, 86.88% of the Company’s total paid up equity capital representing 4545800 equity shares as in dematerialised form. The balance 13.12% equity representing 686200 shares are held in physical form. Presently the Company's shares are transferred both in physical and dematerialised form and are traded on BSE.


32

Convertible Instruments

Outstanding GDRs, ADRs, Warrants, Convertible instruments, conversion date and likely impact on equity are not applicable

Investor Correspondence

For share transfer, communication regarding share certificates, change of address and any other query relating to the shares or Annual Report of the Company, the members may contact in the following addresses:-

Integrated Registry Management Services (P) Ltd 2nd Floor, ‘Kences Towers’ No.1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai-600017 Phone: 044 28140801, 28140803, Fax; 044 – 28143378, 28142479 E-mail: [email protected]

The Company Secretary Eastern Treads Limited, 3A, 3rd Floor, Eastern Corporate Office, 34/137 E, NH Bypass, Edappally, Kochi, Ernakulam-682 024, Kerala. Phone: 0484 3001247, Fax: 0484 3001110 Email : [email protected]

Secretarial Certifications

As stipulated by SEBI, a qualified Company Secretary in practice conducts the Audit for the purpose of reconciliation of total admitted capital with the National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd (CDSL) and the total issued and listed capital of the Company.

The Audit is carried out every quarter and the report thereon is submitted to the Stock Exchanges and is also placed before the Board of Directors. The audit, inter-alia, confirms that the total listed and paid up capital of the Company is in agreement with the aggregate of the total number of shares in dematerialised form (held with NSDL and CDSL) and total number of shares in physical form.

Demat Suspense Account/ Unclaimed Suspense Account

The Company does not have any shares in the demat suspense account or unclaimed suspense account.

DECLARATION ON CODE OF CONDUCT

To the best of my knowledge and belief and on the basis of declarations given to me by the Directors and the Senior Management Personnel of the Company, I hereby affirm that a Code of Conduct for the Board Members and the Senior Management Personnel of the Company which includes Code of Conduct for Prevention of Insider Trading and Whistle Blower Policy has been approved by the Board of Directors and all Directors and the Senior Management Personnel have fully complied with the provisions of the Code of Conduct of the Company.

For and on behalf of the Board of Directors

Kochi M.E. Mohamed10/05/2018 Managing Director

Din : 00129005


33

Annexure - F

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure and Developments

Infrastructure is a key driver for the Indian economy and is being accorded increasing importance in the country’s long-term development plans. The Indian Government has been committing more resources to infrastructure sector projects, including highways, renewable energy and urban transport to enhance economic growth. In the Union Budget for 2018-19, there is a massive push to the infrastructure sector with allocations of ₹5.97 lakh crore, up 21% over the previous year.

India already has one of the largest road networks in the world, spanning a total of 5.6 million km. The planned outlay under the Union Budget 2018-19 for the roads sector is ₹1.21 lakh crore. Moreover, ₹ 71,000 crore have been allocated specifically for the development of national highways in the country. With the Government permitting 100% Foreign Direct Investment (FDI) in the roads sector, several foreign companies have formed partnerships with Indian players to capitalise on the sector's growth, which should provide a further boost to the ever-growing roads infrastructure in the country. Eastern Treads Limited (ETL), operating in the emerging tyre retreading industry, is positioned to benefit from the expanding roads network in the country that allows expansion in road freight volumes and demand for the company’s products.

The implementation of GST augurs well for the organized retreading sector and the overall market is already seeing consolidation to the benefit of high quality players. Presently, about one-third of the Indian retreading market is with the unorganized sector. Tax avoidance previously allowed unorganized players to offer 20% lower cost – however, quality and safety preferences are already moving customers to industry leaders. More radial tyres and larger share of market with large fleet owners also leads to consolidation to organized retreaders. ETL expects benefit from this trend and, in addition, is also engaging with unorganized players to integrate them with its nationwide network.

Following global trends, retreading is gaining stronger traction in India based on both monetary advantages as well as environmental considerations. Also, improving highway and city road conditions is expected to lead to greater radialisation of truck tyres. Retreading a radial tyre consumes ~10% more tread rubber and needs more sophisticated capabilities. With about 31 radial patterns already in production, ETL is well equipped for future demand for retreading radial tyres. Our objective is to innovate more patterns with time and we have a strong focus in place on R&D.

ETL is present across 17 states through 88 dealers servicing to more than 1500 multi-brand retreaders, 40 exclusive retreaders, and 33 branded franchisees (Infinity Zones). Our capacity at Oonnukal, Kerala stands at 1000 tons per month and the current capacity utilization stands at 50%.

2017-18 has been a game changing year following the implementation of several structural reforms transitioning the operating environment. ETL has instituted several initiatives with the objective of benefiting from these changes and expanding its long-term growth opportunities. However, the year was also marked by demand weakness and there has been an increase in competitive intensity resulting in margin pressures. In addition, lower rubber prices resulted in some impact on profitability due to lower inventory valuation. Defying these headwinds, ETL continued to deliver stable operational and financial progress.

During the year, we announced renewal of supply agreement with Kerala State RTC and obtained repeat order to supply 1,375 MT of tyre retreading materials, launch of our Nepal operations and appointment of our 67 th exclusive franchise. We anticipate this diversified contribution mix to start delivering high volumes which should not only see revenue expansion but also improve capacity utilization in our existing manufacturing set up.

ETL aims to be the leading retreading player in India. The company targets growth from several segments, including higher share of open market sales, expansion of branded franchisee network, road transport corporation business and opening up lucrative export markets.


34

Opportunities and Threats

With the effects of demonetization and GST dissipating, along with certain structural reforms being introduced by the Government, there is wide expectation of continuing improvement in the country’s economic scenario. This, clubbed along with infrastructure impetus from higher spending, growth in the mining and industrial sectors along with robust CV sales will help in improving prospects for the retreading industry.

The retreading industry in India, unlike developed nations, is highly fragmented. Customers are willing to ent rust the quality and safety of their tyres to even road side repairers and retreaders whose technical competency and quality of equipment/materials used are highly susceptible. However, implementation of GST is bringing in greater consolidation along with pricing parity for organized sector players. This is a key positive for companies such as ETL.

CV Industry has bounced back strongly after initial disruptions led by BS IV transition and demonetization and it is set to witness overall positive changes in FY 18. Previously, peak CV sales were seen in 2012-13 and this mark is yet to be surpassed leaving ample scope for growth. Recent CV sales numbers have been driven by pent up demand post -GST. The smart uptick in sales numbers has come about due to the overall improved market sentiment, higher infrastructure spend, demand from the mining segment, rural India’s improved fortunes. Demand for trucks has been upbeat and is expected to grow with pick up in construction, infrastructure and e-commerce activity. Replacement demand coming from overloading ban especially in the North East will push growth. CV’s can be expected to continue their growth momentum in double-digits at 10-12%, with M&HCVs up by 9-11% and light commercial vehicles growing at 10-12% in 2018-19. However, a slower than anticipated growth could hamper these prospects.

India has experienced more radialisation of tyres in recent times, including in the truck tyre segment which is on the rise and likely to reach 50% in the next couple of years. Radial tyres have 20% longer life, provide better riding comfort and can be successfully retreaded multiple times compared to bias-ply tyres. Retreading these tyres requires a greater degree of sophistication, which is a positive for organized players like ETL. Thus, expansion of radial tyre usage will have a positive impact on the overall market, and also on the company’s performance. Another factor in favour is the fall in tyre imports from China following the levy of antidumping duty.

Increasing competition is a key challenge faced by tyre retreaders, due to which ETL has been unable to immediately pass on increasing rubber prices to its customers, creating higher margin pressure. To counter this, higher raw material inventories have been maintained, which requires higher working capital and increases interest costs.

Branded tyre majors have also entered the retreading industry. This has led to higher competition and at the same time improved awareness about retreading and its benefits, helping grow the overall market. ETL is the pioneer in manufacturing and marketing of tread rubber used for retreading tyres. The company has developed several distinct strengths such as a robust brand image, best-in-class services capability and a wide portfolio of products. ETL is the proud winner of numerous awards and accolades which are a testament of its capabilities. Given these attributes, we are confident of maintaining a strong position in the market.

Segment-wise or product-wise performance

The Company manufactures quality tread rubber (pre-cured tread rubber, conventional tread), Rubber compounds, cushion/bonding gum and black vulcanizing cement. The contribution of these products to the current year’s turnover is 71%, 14%, 9% and 4% respectively.

Outlook

The retreading industry is gaining prominence in the domestic market whereas it is an established business in key global markets. Improving road network, increased economic activity, higher radialisation and implementation of GST are all positives for long term growth of the sector. Also monetary advantages and environmental considerations are aiding popularity of retreaded tyres.


35


ETL aims to be the leading retreading player in India and also exports to key markets worldwide. We are at the forefront of building a comprehensive ecosystem across the entire retreading value chain, having transformed from a tread rubber manufacturer. We are on the path to build comprehensive and industry leading capabilities that would generate long term opportunities in India and globally. With an increasing distribution presence, high quality products and services, ETL is hopeful of enhancing its share of the various markets it addresses. Our main objective is to become a one-stop shop for our customers’ requirements and deliver substantial economic returns to their businesses.

ETL aspires to deliver superior operational performance through value enhancement initiatives for its customers along with economies of scale that aid long-term volume growth. The manufacturing processes are supported by a technically talented workforce. We have limited capex requirement for expansion over next 2-3 years, as sizeable production capacities are available currently. However, we will continue to invest in R&D initiatives for new product development to remain at the forefront of the industry.

Over the years, ETL has invested aggressively in educating and growing the market, benefits of which will be seen in the medium to long term. We have achieved pan-India presence with an extensive network across 17 Indian states and are further expanding our distribution footprint. We also have presence in overseas markets such as the Middle East, Africa, South America and South Asia, catering to higher global demand for tread rubber. All these initiatives are expected to give ETL the platform from which we can achieve success in expanding our business.

Risks and Concerns

The Company’s performance primarily depends on the performance of the tyre replacement market. This market has several growth levers like growth of the economy, development of infrastructure, commercial vehicle sales and other trends relating to the transportation sector. The company’s business is exposed to many internal and external risks and it has consequently put in place robust systems and processes, along with appropriate review mechanisms to actively monitor, manage and mitigate these risks. The main risks and the steps undertaken to mitigate these risks are mentioned below:

Financial Risk

In the course of its business, ETL is exposed to certain financial risks namely interest risk, currency risk and liquidity risk. The financial risks are managed in accordance with the risk management policy which has been approved by the Board. We use cash and carry, advance payments and bank guarantees to mitigate credit risk on account of material supplied to customers and payments received. There is an ongoing follow-up which arrests any delay of payments from State Transport Corporations and other customers.

Fluctuation in Raw Material Price and Other Input Costs

Unexpected changes in commodity prices can impact margins. During the year, prices of natural dropped from its high price, but other key raw materials like carbon black, synthetic rubber and chemicals have shown an uptrend. However, we have actively maintained higher raw material inventories to mitigate this risk which adversely impacted working capital and put pressure on interest costs. We generally factor in normal variations of raw material prices and input costs when fixing product prices with customer but any exceptional fluctuations in input costs may have an adverse impact on profitability. We expect that the Government will remove of antidumping duty and allow the import of carbon black to increase its availability.

Changes in Governments’ Policies

Unanticipated changes in Government policies may affect the company’s financial position.

Operational Risk

Preventive maintenance is carried out periodically to achieve increased machine availability. Adequate inventory of stocks at each stage of operation is maintained to run production schedules uninterrupted.

Product Risk

Research and development efforts are undertaken to continuously develop new products categories and expand the portfolio, along with improved service and value to our customers.

36

Internal Control System and their Adequacy

ETL has a comprehensive internal control structure to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, all transactions are authorised, recorded and reported correctly and that operations are conducted in an efficient and cost effective manner. The internal control is supplemented by an extensive audit by internal and external audit teams and periodic review by the top management, Audit Committee and Board of Directors. The statutory auditors, as part of their audit process, carry out a systems and process audit to ensure that the ERP and other IT systems used for transaction processing have adequate internal controls embedded to ensure preventive and detective controls.

The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records.

During the period external agencies were appointed as internal Auditors. The internal audit reports were reviewed quarterly by Audit Committee as well as by the Board. Internal audit evaluates legal and compliance issues and supports in assessment of Internal Control Systems and identification of other important issues as a powerful tool for risk control and governance. The system is designed to adequately ensure the reliability of financial and other records for preparing financial information and other data and for maintaining accountability of our assets. Further, the Board reviews the effectiveness of the Company’s internal control system.

The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. The external auditors have evaluated the system of internal controls in the Company and have reported that the same is adequate and commensurate with the size of the Company and the nature of its business. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report.

Financial Performance and Operational Performance

Over the past 25 years, ETL has sustainably created value by setting increasingly higher standards of performance. We witnessed gross margin pressure from increasing rubber prices, some of which was managed by actively maintaining higher raw material inventories. This has resulted in higher interest costs due to a transitional increase in working capital. The same is expected to normalize in the ensuing year. ETL continues to undertake cost saving initiatives and is moving into more profitable areas of business, based on higher value-addition to customers. Significant financial highlights in FY2018 are as follows:-

Revenue

Total Revenue reported ₹9561.68 lakhs compared to the previous year’s figure of ₹9,647.71 lakhs. Revenues (net of indirect taxes) grew by 4% YoY.

Earnings Before interest, Tax, Depreciation and Amortisation (EBITDA)

During the fiscal 2017-18, ETL reported EBIDTA of ₹289.88 lakhs when compared to the previous year’s figure of ₹659.71lakhs.

Profit Before Tax (PBT)

PBT was at ₹(-)247.71 lakhs in 2017-18, compared with previous year’s ₹181.07 lakhs.

Profit After Tax (PAT)

PAT stood at ₹(-)229.39 lakhs in 2017-18 as compared to ₹131.77 lakhs in 2016-17.

Earnings Per Share (EPS)

EPS in 2017-18 stood at ₹(-)4.51 per share compared to EPS of ₹2.28 per share in fiscal 2016-17.


37


Overall, we see consolidation of opportunities for organized players like us. Our strong presence across the entire retreading value chain would be expected to deliver high-quality retreading solutions to our entire range of customers. In a major spur to developing an integrated logistics framework, the Government has granted infrastructure status to the logistics sector, enabling the industry to access cheaper finances. As a result, Infrastructure related vehicles will see robust demand. Normal monsoon forecasts for 2018 will stimulate CV sales led by an uptick in rural consumption. These factors put together will be conducive for our industry and our business as we have market-leading attributes and a strong brand reputation that has already enabled better acceptance in both domestic and international markets.

ETL is today a leading provider of tyre retreading services across the entire retreading value chain. We are at the forefront of building a comprehensive ecosystem and have developed a robust distribution infrastructure to penetrate the market further and establish a pan India presence. In addition, domestic B2B opportunities are being pursued by engaging with several state road transportation corporations.

Human Resource Development and Industrial Relations

Human workforce plays a pivotal role is shaping the company’s progress. Skilled and motivated employees are the key ingredient for driving transformation. The company’s strength is derived from the employee’s involvement and team orientation. We believe that a committed and motivated workforce constitutes the most important factor in achieving business goals. We pursue management practices designed to enrich the quality of life of our employees, developing their potential and maximizing their productivity. Cordial and harmonious relationship is maintained between the management and employees at every location. We continue to organize various training programs with experts engaged to interact with our employees at various levels. We follow best practices in recruiting people and undertake their learning and development, employee engagement, employee feedback and rewards and recognition with a holistic development perspective. ETL had total employee strength of 333 employees as on 31st March 2018.

Cautionary Statement

Some of the statements in this management discussion and analysis describing the Company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Company’s operations include global and domestic supply and demand conditions affecting selling prices of products downtrend in industry, significant changes in political and economic environment in India, tax laws, import duties, litigation and labor and industrial relations. The Company assumes no responsibility in respect of the forward-looking statements, which may undergo changes in future on the basis of subsequent developments, information or events.

38

Annexure - G ANNUALREPORT2017-2018

DIRECTORS’/ EMPLOYEES REMUNERATION

[Pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

1) Ratio of the remuneration of each Director to the median remuneration of the employees and the percentage

increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary in the financial year 2017-18 are as follows: Name of Director / KMP Designation Ratio of remuneration of each

Director / to median remuneration of employees *

% increase in remuneration of Directors* & KMP in the FY 2017-18

Mr. M.E Mohamed Managing Director --- --- Mr. Rajesh S Chief Executive Officer NA -16% Mr. Mohammed Sherif Shah Chief Financial Officer NA 8% CS. Baiju T Company Secretary NA 6%

* None of the Directors received any remuneration other than sitting fees during the financial year 17-18. * Mr. Rajesh S. and Mr. Mohammed Sherif Shah were designated as was designated as CEO and CFO

respectively on 25/07/2017. Till that date Mr. Rajesh S was designated as CFO. ** The remuneration to KMP includes the provision for performance incentive, the actual disbursement of which

will be linked with the Individual and Company performance as per the remuneration policy and at the discretion of the management.

2) In the financial year, there was an increase of 4% in the median remuneration of employees.

3) There were 196 permanent employees on the rolls of Company as on 31st March, 2018.

4) Average percentile increase made in the salaries of employees other than the managerial personnel in the

financial year 2017-18 was 9%, whereas the percentile increase in the managerial remuneration for the same financial year was 7%. The increase in remuneration was in line with the performance of the Company, industrial standards and individual employee’s performance.

5) It is hereby affirmed that the remuneration paid during the year 2017-18 is as per the Remuneration Policy of the Company.

39


INDEPENDENT AUDITOR’S REPORT

To the Members of Eastern Treads Limited Report on the Financial Statements

1. We have audited the accompanying financial statements of Eastern Treads Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (‘the Act’) with respect to the preparation of these financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these standalone financial statements.

40


Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2018, and its profit, its cash flows and the changes in equity for the year ended on that date.

Other Matter

9. The comparative financial information for the year ended 31 March 2017 and the transition date opening balance sheet as at 1 April 2016 prepared in accordance with Ind AS included in these standalone financial statements, are based on the previously issued statutory financial statements for the year ended 31 March 2017 and 31 March 2016 respectively prepared in accordance with Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended), which were audited by the predecessor auditor whose reports dated 4 May 2017 and 13 April 2016 respectively expressed unmodified opinion on those financial statements, and have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

11. Further to our comments in Annexure I, as required by Section 143(3) of the Act, we report that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the financial statements dealt with by this report are in agreement with the books of account;

d) in our opinion, the aforesaid financial statements comply with Ind AS specified under Section 133 of the Act;

e) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164(2) of the Act;

f) we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 31 March 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date and our report dated 10 May 2018 as per Annexure II expressed unmodified opinion; and

g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. the Company, as detailed in Note 2.29 to the financial statements, has disclosed the impact of pending litigations on its financial position;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;

41


iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016 which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.

For Walker Chandiok & Co LLP Chartered Accountants Firm’s Registration No.: 001076N/N500013 per Krishnakumar Ananthasivan Partner Membership No. 206229 Kochi 10 May 2018

Annexure I to the Independent Auditor’s Report of even date to the members of Eastern Treads Limited, on the financial statements for the year ended 31 March 2018

Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head ‘Property, plant and equipment’) are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and material discrepancies noticed on physical verification have been properly dealt with in the books of account.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion, the Company has not entered into any transaction covered under Section 185 and 186 of the Act. Accordingly, the provisions of clause 3(iv) of the order are not applicable.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company’s products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

42


Annexure I to the Independent Auditor’s Report of even date to the members of Eastern Treads Limited, on the financial statements for the year ended 31 March 2018 (cont’d.)

(vii) (a) Undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax,

service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax, sales-tax, service-tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:

Statement of Disputed Dues:

Name of the statute

Nature of dues

Amount

(₹

Lakhs)

Amount paid under Protest

(₹ Lakhs)

Period to which the amount

relates

Forum where dispute is pending

Central Sales Tax Act, 1956

Central Sales Tax

1.76 1.76 FY 2004-05

Deputy Commissioner of Sales Tax (Appeals)

Central Sales Tax Act, 1956

Central Sales Tax

7.88

2.78 FY 2010-11 and 2011-12


Kerala Value Added Tax Act, 2003

Value Added Tax

3.80

1.25 FY 2008-09, 2009-10, 2011-12,2013-14 and 2015-16


Kerala Value Added Tax Act, 2003

Value Added Tax

0.66

0.66

FY 2015-16

Assessing Officer of Sales Tax

Income-tax Act, 1961

Income tax 20.97

- AY 2012-13

Assessing Officer, Income Tax

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank during the year. The Company

has no loans or borrowings payable to a financial institution or government and no dues payable to debenture-holders during the year.

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) The Company has not paid or provided for any managerial remuneration. Accordingly, the provisions of Clause 3(xi) of the order are not applicable.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.

43


Annexure I to the Independent Auditor’s Report of even date to the members of Eastern Treads Limited, on the financial statements for the year ended 31 March 2018 (cont’d.) (xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or

partly convertible debentures.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. For Walker Chandiok & Co LLP Chartered Accountants Firm’s Registration No.: 001076N/N500013 per Krishnakumar Ananthasivan Partner Membership No. 206229 Kochi 10 May 2018

Annexure II to the Independent Auditor’s Report of even date to the members of Eastern Treads Limited on the financial statements for the year ended 31 March 2018

Annexure II

Independent Auditor’s Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’) 1. In conjunction with our audit of the financial statements of Eastern Treads Limited (‘the Company’) as at and for

the year ended 31 March 2018, we have audited the internal financial controls over financial reporting (‘IFCoFR’) of the Company as at that date.

Management’s Responsibility for Internal Financial Controls

2. The Company’s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the Company’s business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

44


Independent Auditor’s Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’) (cont’d.)

Auditor’s Responsibility

3. Our responsibility is to express an opinion on the Company's IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India (‘ICAI’) and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (‘the Guidance Note’) issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate IFCoFR were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's IFCoFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's IFCoFR include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. Because of the inherent limitations of IFCoFR, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the IFCoFR to future periods are subject to the risk that the IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such controls were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by ICAI.

For Walker Chandiok & Co LLP Chartered Accountants Firm’s Registration No.: 001076N/N500013

per Krishnakumar Ananthasivan Partner Membership No.: 206229

Kochi 10 May 2018

45


BALANCE SHEET AS AT 31ST MARCH 2018

(All amounts in ₹ lakhs, unless otherwise stated)

Note As at As at As at

31 March 2018 31 March 2017 1 April 2016 ASSETS Non-Current Assets (a) Property, Plant and Equipment 2.1 1,571.52 1,584.07 1,246.59 (b) Capital Work in Progress 2.1 252.64 35.99 26.15 (c) Intangible Assets 2.2 17.33 11.51 13.91 (d) Financial Assets

(i) Trade Receivables 2.7 5.76 11.99 13.37 (ii) Loans 2.3 1.57 12.20 20.61 (iii) Other Financial Assets 2.4 88.40 80.01 75.57

(e) Other Non-Current Assets 2.5 28.28 32.72 155.48 1,965.50 1,768.49 1,551.68 Current Assets (a) Inventories 2.6 812.83 1,014.47 686.22 (b) Financial Assets

(i) Trade Receivables 2.7 2,567.17 2,401.08 1,479.55 (ii) Cash and Cash Equivalents 2.8 122.25 94.62 31.13 (iii) Other Bank Balances 2.9 27.06 25.48 23.05 (iv) Loans 2.3 8.14 8.77 6.98 (v) Other Financial Assets 2.4 4.93 2.03 3.80

(c) Current Tax Asset (Net) 27.01 -- -- (d) Other Current Assets 2.5 53.85 31.26 57.06 3,623.24 3,577.71 2,287.79

Total Assets 5,588.74 5,346.20 3,839.47 EQUITY AND LIABILITIES Equity (a) Equity Share Capital 2.10 541.18 541.18 541.18 (b) Other Equity 2.11 448.99 716.39 628.55 990.17 1,257.57 1,169.73 Liabilities Non-Current Liabilities (a) Financial Liabilities

(i) Borrowings 2.12 826.87 869.01 814.15 (ii) Other Financial Liabilities 2.13 8.66 6.28 --

(b) Provisions 2.14 69.23 59.77 57.87 (c) Deferred Tax Liabilities (Net) 2.15 157.46 179.23 210.72 (d) Other Non-Current Liabilities 2.17 18.14 25.51 15.43

1,080.36 1,139.80 1,098.17 Current Liabilities (a) Financial Liabilities

(i) Borrowings 2.12 1,580.32 1,052.03 289.63 (ii) Trade Payables 2.16 1,476.99 1,279.91 829.95 (iii) Other Financial Liabilities 2.13 408.08 507.87 390.25

(b) Provisions 2.14 6.33 3.56 -- (c) Current Tax Liability (Net) -- 8.79 7.66 (d) Other Current Liabilities 2.17 46.49 96.67 54.08

3,518.21 2,948.83 1,571.57 Total Equity and Liabilities 5,588.74 5,346.20 3,839.47

See accompanying notes forming part to these Financial Statements. This is the Balance Sheet referred to in our report of even date.

For Walker Chandiok & Co LLP Chartered Accountants

For and on behalf of the Board of Directors of Eastern Treads Limited

Per Krishnakumar Ananthasivan Rajesh S. Mohammed Sherif Shah Baiju T. Navas M. Meeran Partner Chief Executive

Officer Chief Financial

Officer Company Secretary

Chairman Din: 00128692

Kochi, 10 May 2018

46


STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2018


Year Ended Year Ended

Note 31 March 2018 31 March 2017 I Revenue from Operations 2.18 9,539.36 9,577.23 II Other Income 2.19 22.32 70.48 III Total Income (I+II) 9,561.68 9,647.71 IV Expenses

Cost of Materials Consumed 2.20 5,425.21 3,990.33 Purchases of Stock-in-Trade 1,504.87 2,763.22 Decrease/(Increase) in Inventories of Finished Goods, Traded Goods and Work-in-Progress 2.21 81.43 (244.40) Excise Duty on Sales 100.84 517.78 Employee Benefits Expense 2.22 848.08 754.99 Finance Cost 2.23 326.92 296.67 Depreciation and Amortisation Expense 2.24 210.67 181.97 Other Expenses 2.25 1,311.37 1,206.08

Total Expenses (IV) 9,809.39 9,466.64 V (Loss)/Profit before Tax (247.71) 181.07 VI Tax Expense:

Current Tax - 74.22 Deferred Tax (18.32) (24.92)

VII (Loss)/Profit for the Year (229.39) 131.77 VIII Other Comprehensive Income / (Loss)

(i) Items that will not be reclassified to Profit or Loss: (a) Re-measurement Gains/(Loss) in defined Benefit Plans (9.95) (19.02)

(ii) Income Tax relating to items that will not be reclassified to Profit and Loss

3.44 6.58

Other Comprehensive (Loss), net of Tax (6.51) (12.44) IX Total Comprehensive (Loss) / Income for the Year (235.90) 119.33 X Earnings /(Loss) Per Equity Share 2.26

Basic and Diluted (4.51) 2.28

See accompanying notes to these Financial Statements

This is the Statement of Profit and Loss referred to in our report of even date.







Kochi 10 May 2018

47


STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

(All amounts in ₹ lakhs, unless otherwise stated) Year Ended Year Ended

31 March 2018 31 March 2017 A. Cash flow from Operating Activities

Net (Loss) / profit before Tax (247.71) 181.07 Adjustments for: Depreciation and Amortisation Expense 210.67 181.97 Finance Costs 326.92 296.67 Bad Debts written off 1.31 - Provision for Doubtful Debts 2.94 - Provision for Doubtful Debts no longer required, written back - (37.86) Loss on sale of Property, Plant and Equipment /Assets written off 2.52 3.90 Interest Income (4.05) (8.76) Operating Profit before Working Capital Changes 292.60 616.99 Adjustments for Working Capital Changes Decrease / (Increase) in Inventories 201.64 (328.25) (Increase) in Trade Receivables and Other Receivables (178.57) (853.49) Increase in Trade and Other Payables 68.93 602.74 Increase/(decrease) in provisions 2.28 (13.56) Cash Generated from Operations 386.88 24.43 Net Income Tax Paid (35.81) (73.08)

Net Cash Generated from /(used in) operating activities (A) 351.07 (48.65)

B. Cash Flow from Investing Activities Payments for Purchase of Property, Plant and Equipment (421.72) (415.72) Payments for Purchase of Intangible Assets (10.51) (1.70) Proceeds from sale of Property, Plant and Equipment 4.88 - Movement in Other Bank Balances (1.58) (2.42) Interest Received 3.86 7.86

Net Cash used in Investing Activities (B) (425.07) (411.98)

C. Cash Flow from Financing Activities Long-term Borrowings (net of repayments) (136.49) 119.21 Short-term Borrowings (net of repayments) 528.30 762.39 Interest Paid (260.50) (227.48) Dividend Paid including Dividend Distribution Tax (29.68) (30.00) Redemption of Preference Shares - (100.00)

Net Cash Flow from Financing Activities (C) 101.63 524.12

Net Increase in Cash and Cash Equivalents (A+B+C) 27.63 63.48 Cash and Cash Equivalents at the beginning of the year 94.62 31.13 Cash and Cash Equivalents at the end of the Year 122.25 94.62

See accompanying notes forming part to these Financial Statements This is the Cash Flow statement referred to in our report of even date.







Kochi 10 May 2018

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2018

(All amounts in ₹ lakhs, unless otherwise stated) a) Equity Share Capital

Equity Shares of ₹10 each, fully paid-up Equity Shares

Number in Lakhs Amount *

Balance as at 01 April 2016 52.32 541.18 Changes in equity share capital during the year - - Balance as at 31 March 2017 52.32 541.18 Changes in equity share capital during the year - - Balance as at 31 March 2018 52.32 541.18

* Including forfeited shares balance ₹17.98 lakhs b) Other Equity

Particulars Reserves and Surplus Total

Capital Reserve

Other Equity

General Reserves

Retained Earnings

Balance as at 1 April 2016 - 744.41 97.46 (213.32) 628.55 Profit for the Year - - - 131.77 131.77 Payment of final dividend including dividend distribution tax - - - (31.49) (31.49) Other Comprehensive Loss, net of Tax - - - (12.44) (12.44) Transfer to Capital Reserve (on Redemption of Preference Shares) 100.00 - - (100.00) - Balance as at 31 March 2017 100.00 744.41 97.46 (225.48) 716.39 Payment of final dividend including dividend distribution tax - - - (31.50) (31.50) Loss for the Year - - - (229.39) (229.39) Other Comprehensive Loss, net of tax - - - (6.51) (6.51) Balance as at 31 March 2018 100.00 744.41 97.46 (492.88) 448.99

See accompanying notes to these Financial Statements This is the Statement of Changes in Equity referred to in our report of even date.







Kochi 10 May 2018

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION FOR THE YEAR ENDED 31 MARCH 2018


General Information:

Eastern Treads Limited (the 'Company'/ 'ETL') was incorporated on 02/07/1993 (CIN:L25119KL1993PLC007213) with its registered office at 3A, 3rd Floor, Eastern Corporate Office, 34/137 E, NH Bypass, Edappally, Kochi, Ernakulam - 682 024, Kerala. Its shares are listed in Bombay Stock Exchange. The Company is primarily engaged in the business of manufacturing and dealing of tread rubber, rubber based adhesives, tyre retreading accessories and retreading services.

1. Summary of Significant Accounting Policies

Statement of Compliance

Financial statements have been prepared in accordance with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) prescribed under the Section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Accounting Standards) Amendment Rules, 2016. The aforesaid financial statements have been approved by the Board of Directors in the meeting held on 10 May 2018.

For all periods up to and including the period ended 31 March 2017, the Company prepared its financial statements in accordance with requirements of the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”). These are the first Ind AS financial statements of the Company. The date of transition to Ind AS is 1 April 2016. Refer note no. 2.36 for the details of first-time adoption exemptions availed by the Company, reconciliations and descriptions of the effect of the transition.

1.1. Basis of Preparation

In accordance with the notification issued by the Ministry of Corporate Affairs, the Company is required to prepare its financial statements as per the Indian Accounting Standards (‘Ind AS’) prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Accounting Standards) Amendment Rules, 2016 with effect from 1 April, 2017. Accordingly, the Company has prepared these financial statements which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss, the Statements of Cash Flows and the Statement of Changes in Equity for the period ended 31 March 2018, and accounting policies and other explanatory information (together hereinafter referred to as" financial statements”). The financial statements have been prepared on the historical cost basis except for certain financial instruments measured at fair values at the end of each reporting period, as explained in the accounting policies below.

1.2. Use of Estimates and Judgements

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period, if the revision affects current and future period.

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Summary of Significant Accounting Policies and other Explanatory Information for the Year ended 31 March 2018 (cont'd) (All amounts in ₹ lakhs, unless otherwise stated)

Significant Management Judgements

The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.

Classification of Leases

The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialised nature of the leased asset.

Recognition of Deferred Tax Assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry forward can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Evaluation of Indicators for Impairment of Assets

The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets. In assessing impairment, management estimates the recoverable amount of each asset or cash generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate. Recoverability of Advances / Receivables At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances. Useful Lives of Depreciable / Amortisable Assets Management reviews its estimate of the useful lives of depreciable / amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain items of property, plant and equipment. Defined Benefit Obligation (DBO) Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Fair Value Measurements

Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

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1.3. Revenue Recognition

(a) Sale of Goods

(i) Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added taxes, goods and service tax and amounts collected on behalf of third parties.

(ii) Revenue from sales is recognised when all significant risks and rewards of ownership of the goods sold are transferred to the customer which generally coincides with delivery /at the point of dispatch to the customers depend on the terms with the customers.

(iii) The amount of revenue can be measured reliably and it is possible that the economic benefits associated with the transaction will flow to the entity.

(b) Rendering of Services

Revenue from job work and retreading services are recognised at the completion of the agreed services.

(c) Interest and Other Income

(i) Lease rentals are recognised as income at the time when they accrue as per the agreements entered into with the customers.

(ii) Export benefits are accounted on recognition of export sales. (iii) Interest income is recognised on an accrual basis using effective rate of interest method.

1.4. Leases

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

a) Company as a Lessor

The rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight- line basis over the lease term.

Company has entered into operating lease agreements with the customers for permitting the use of fixed assets. The lease term ranges from 3- 5 years. As per the terms of lease agreements, the agreements are cancellable at the option of both the parties by serving due notice. The residual value as per the lease agreements has been considered as the amount guaranteed by the lessees at the end of the lease period and the depreciation on leased assets has been computed accordingly after considering the guaranteed value.

b) Company as a Lessee

Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis over the lease term.

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1.5. Employee Benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences. Expenses and liabilities in respect of employee benefits are recorded in accordance with Ind AS 19, Employee Benefits. a) Short-term Employee Benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, performance incentives which are expected to occur in next twelve months. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.

b) Defined Contribution Plans

The Company has defined contribution plans for employees comprising of Provident Fund and Employee’s State Insurance. The contributions paid/payable to these plans during the year are charged to the Statement of Profit and Loss for the year.

c) Defined Benefit Plans

The Company has a defined benefit plan (the “Gratuity Plan”). The Gratuity Plan provides a lump sum payment to employees who have completed five years or more of service at retirement, disability or termination of employment, being an amount based on the respective employee’s last drawn salary and the number of years of employment with the Company. Presently the Company’s gratuity plan is unfunded. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets if any. This cost is included in employee benefit expense in the statement of profit and loss. The liability or asset recognised in the balance sheet in respect of gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets if any. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income and are never reclassified to profit or loss. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit and loss as past service cost.

The present value of the defined benefit obligation denominated in ₹ is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. Service and interest cost on the Company’s defined benefit plan is included in employee benefits expense. Employee contributions, all of which are independent of the number of years of service, are treated as a reduction of service cost.

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Summary of Significant Accounting Policies and other Explanatory Information for the Year ended 31 March 2018 (cont'd)


1.6. Foreign Currency Transactions

The functional currency of the Company is the Indian Rupee (INR). These financial statements are presented in INR (₹). In the financial statements of the Company, transactions in currencies other than the functional currency are translated into the functional currency at the exchange rates ruling at the date of the transaction.

Monetary assets and liabilities denominated in other currencies are translated into the functional currency at exchange rates prevailing on the reporting date. Non-monetary assets and liabilities denominated in other currencies and measured at historical cost or fair value are translated at the exchange rates prevailing on the dates on which such values were determined.

All exchange differences are included in the statement of profit and loss except any exchange differences on monetary items designated as an effective hedging instrument of the currency risk of designated forecasted sales or purchases, which are recognized in the other comprehensive income.

1.7. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

1.8. Government Grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is treated as deferred income and released to the statement of profit and loss over the expected useful lives of the assets concerned. When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to statement of profit and loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.

1.9. Taxation

a) Income Tax Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the Taxation Authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

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Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

b) Deferred Tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except when it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

1.10. Property, Plant and Equipment

The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognized in its Previous GAAP financial statements as deemed cost at the transition date, viz., 1 April 2016.

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalised until the property, plant and equipment are ready for use, as intended by management.

Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are incurred. Major inspection and overhaul expenditure is capitalized if the recognition criteria are met.

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Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within other income/other expenses in statement of profit and loss.

An item of property, plant and equipment and any significant part initially recognised is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss, when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

1.11. Capital Work in Progress

Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalised when the asset is available for use but incapable of operating at normal levels unti l the period of commissioning has been completed. Revenue generated from production during the trial period is credited to capital work in progress.

1.12. Depreciation

Assets in the course of development or construction and freehold land are not depreciated. Other property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairment. Depreciation commences when the assets are ready for their intended use.

Depreciation is calculated on the depreciable amount, which is the cost of an asset less its residual value. Depreciation on tangible assets has been provided under Straight Line Method over the useful life of the assets estimated by the management (determined based on technical estimates), which is in line with the terms prescribed in Schedule II to The Companies Act, 2013. Depreciation for assets purchased/sold during the period is proportionately charged. The management estimates the useful life of the Property, Plant and Equipment as follows:

Asset Category Useful Life a) Buildings 30 Years b) Roads - Non RCC 5 Years c) Plant and machinery at Factory 8-15 Years d) Plant and machinery at Branches 15 Years e) Plant and machinery given for Lease 3-5 Years f) Manufacturing tools 7 Years g) Furniture and fixtures 10 Years h) Computers 3 Years i) Vehicles 8 Years j) Office equipment 5 Years

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The Company has evaluated the applicability of component accounting as prescribed under Ind AS 16 and Schedule II of the Companies Act, 2013. The management has not identified any significant component having different useful lives as the company's assets are not capable of being accounted separately as components. Schedule II requires the Company to identify and depreciate significant components with different useful lives separately.

Note: The useful life of plant & equipment given under lease is taken as 3 years and 5 years based on the lease agreements. The residual value of the same has been considered as the amount guaranteed by the lessees as per the lease agreements at the end of the lease period. Hence the useful lives and residual values for these assets are different from the useful lives/residual value as prescribed under Part C of Schedule II of the Companies Act 2013. The useful life of vehicles given to employees as per the car policy scheme approved by the Company is taken as 3 years to 5 years based on the tenure of scheme availed by the employee. Depreciation methods, useful lives and residual values are reviewed at each financial year end and changes in estimates, if any, are accounted for prospectively.

1.13. Intangible Assets

The Company has elected to continue with the carrying value for all of its intangible assets as recognised in its Previous GAAP financial statements as deemed cost at the transition date, viz., 1 April 2016.

Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortisation and impairment. Advances paid towards the acquisition of intangible assets outstanding at each Balance Sheet date are disclosed as other non-current assets and the cost of intangible assets not ready for their intended use before such date are disclosed as intangible assets under development.

The Company amortises intangible over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:

Asset Category Useful lives (in years) Computer software 5

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

The residual values, useful lives and methods of amortisation of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

1.14. Impairment of non - Financial Assets

The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing the value in use; the estimated future cash flows are discounted to the present value using the weighted average cost of capital.

1.15. Inventories

Inventories are valued at the lower of cost and net realisable value item wise. Cost includes indirect cost also. Costs incurred in bringing the inventory to its present location and condition are accounted for as follows:

(i) Raw materials: Cost includes cost of purchase net of duties, taxes that are recoverable from the Government and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on FIFO basis using weighted average rate.

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(ii) Finished goods and work in progress: Cost includes cost of direct materials and labour and a proportion of

manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost is determined on weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

1.16. Provisions and Contingent Liabilities

The assessments undertaken in recognising provisions and contingencies have been made in accordance with the applicable Ind AS. Provisions represent liabilities to the Company for which the amount or timing is uncertain. Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognized in the statement of profit and loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the Company involved, it is not expected that such contingencies will have a material effect on its financial position or profitability. Contingent assets are not recognised but disclosed in the financial statements when an inflow of economic benefits is probable.

1.17. Financial Instruments

A) Financial Assets

a) Initial Recognition and Measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through statement of profit and loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

b) Subsequent Measurement

Subsequent measurement of financial assets is described below:

(i) Debt Instruments at Amortised Cost

A 'debt instrument' is measured at the amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

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b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments

of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.

(ii) Debt Instrument at Fair Value through Other Comprehensive Income (FVTOCI)

A debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:

a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and

b) The asset’s contractual cash flows represent solely payments of principal and interest (SPPI). Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI).

However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the Effective Interest Rate (EIR) method.

(iii) Debt Instrument at Fair Value through Profit or Loss (FVTPL)

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch’). The Company has designated its investments in debt instruments as FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.

c) Financial Assets – Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company’s balance sheet) when:

1) The rights to receive cash flows from the asset have expired, or

2) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass through’ arrangement; and either

a) the Company has transferred substantially all the risks and rewards of the asset, or

b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

d) Impairment of Financial Assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.

The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month ECL. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head 'other expenses' in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:

1) Financial Assets Measured as at Amortised Cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

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2) Debt Instruments Measured at FVTPL: Since financial assets are already reflected at fair value,

impairment allowance is not further reduced from its value. The change in fair value is taken to the statement of Profit and Loss.

3) Debt Instruments Measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as accumulated impairment amount' in the OCI.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.

B) Financial Liabilities

a) Recognition and Measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.

The measurement of financial liabilities depends on their classification, as described below:

1) Financial Liabilities at Fair Value through Statement of Profit and Loss

Financial liabilities at fair value through statement of profit and loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through statement of profit and loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

2) Gains or Losses on Liabilities held for Trading are Recognised in the Statement of Profit and Loss

Financial liabilities designated upon initial recognition at fair value through statement of profit and loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.

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3) Liabilities Designated as FVTPL

Fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to statement of profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at fair value through statement of profit and loss.

b) Financial Liabilities - Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in carrying amounts the respective is recognised in the statement of profit and loss.

C) Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Initial Recognition and Subsequent Measurement

In order to hedge its exposure to foreign exchange, interest rate, and commodity price risks, the Company enters into forward, futures and other derivative financial instruments. The Company does not hold derivative financial instruments for speculative purposes.

Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income and later reclassified to statement of profit and loss when the hedge item affects profit and loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability. For the purpose of hedge accounting, hedges are classified as:

1) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment.

2) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company’s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

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D) Loans and Borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (hereinafter referred as EIR) method. Gains and losses are recognized in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

1.18. Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

a) Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities

b) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

c) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

1.19. Cash and Cash Equivalents Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.

1.20. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. The Company is engaged in the business of manufacture and sale of Quality tread rubber (pre-cured tread rubber, conventional tread), Rubber compounds, cushion/ bonding gum and black vulcanizing cement, which form broadly part of one product group and hence constitute a single business segment.

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1.21. Earnings/ (Loss) per Share (EPS)

The Company presents basic and diluted earnings per share (“EPS”) data for its equity shares. Basic EPS is calculated by dividing the profit and loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit and loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.

1.22. Recent Accounting Pronouncements Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration:

On 28 March 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment will come into force from 1 April 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.

Ind AS 115, Revenue from Contract with Customers:

On 28 March 2018, MCA has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. The standard permits two possible methods of transition: Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting policies, changes in accounting estimates and errors. Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April 2018. The Company will adopt the standard on 1 April 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended 31 March 2018 will not be retrospectively adjusted. The Company is still in the process of evaluating the impact on application of Ind AS 115. The Company has evaluated the disclosure requirements of the amendment and the effect on the financial statements is not expected to be material.

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2.1. Property, Plant and Equipment

Land - freehold

Buildings Plant and Machinery

Plant and machinery

under lease

Furniture and

fixtures

Office Equipment

Computers Vehicles Manufacturing Tools

Total Capital work in

progress

Deemed Cost: Balance as at 1 April 2016

9.00 243.33 654.31 112.97 20.76 4.54 13.59 34.48 153.61 1,246.59 26.15

Additions 127.60 28.40 139.15 104.07 0.85 - 4.31 88.07 26.80 519.25 166.65 Disposals (3.90) - - - - - - - - (3.90) (156.82) Balance as at 31 March 2017

132.70 271.73 793.47 217.04 21.61 4.54 17.90 122.55 180.41 1,761.94 35.99

Additions - - 150.46 15.17 - - 1.65 26.32 7.24 200.84 358.98 Disposals - - - (8.43) - - - - - (8.43) - Capitalised during the Year

- - - - - - - - - - (142.32)

Balance as at 31 March 2018

132.70 271.73 943.92 223.78 21.61 4.54 19.55 148.87 187.65 1,954.35 252.64

Accumulated Depreciation

Depreciation Charge for the Year

- 12.09 92.71 14.87 2.47 1.38 7.66 15.40 31.29 177.87 -

Disposals - - - - - - - - - - - Balance as at 31 March 2017

- 12.09 92.71 14.87 2.47 1.38 7.66 15.40 31.29 177.87 -

Depreciation Charge for the Year

- 12.99 104.13 19.29 2.45 1.29 5.42 27.72 32.70 205.98 -

Disposals - - - (1.03) - - - - - (1.03) - Balance as at 31 March 2018

- 25.08 196.84 33.13 4.92 2.67 13.08 43.12 63.99 382.83 -

Net Block Balance as at 1 April 2016

9.00 243.33 654.31 112.97 20.76 4.54 13.59 34.48 153.61 1,246.59 26.15


132.70 259.64 700.75 202.17 19.14 3.16 10.24 107.15 149.12 1,584.07 35.99


132.70 246.65 747.08 190.65 16.68 1.87 6.47 105.76 123.66 1,571.52 252.64

Notes:

a) Deemed Carrying Cost

For property, plant and equipment existing as on the date of transition to Ind AS, i.e., 1 April 2016, the Company has used Previous GAAP carrying value as deemed costs.

b) Contractual Obligations

Refer note 2.29

c) Capitalised Borrowing Cost

There is no borrowing costs capitalised during the year ended 31 March 2018 (31 March 2017: Nil).

d) Property, Plant and Equipment Pledged as Security

Refer note 2.12 and 2.27

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2.2. Intangible Assets

Software Total Gross block Balance as at 1 April 2016 13.91 13.91

Additions 1.70 1.70 Disposals - -

Balance as at 31 March 2017 15.61 15.61 Additions 10.51 10.51 Disposals - -

Balance as at 31 March 2018 26.12 26.12 Accumulated Amortisation Balance as at 1 April 2016 - -

Amortisation charge for the year 4.10 4.10 Disposals - -

Balance as at 31 March 2017 4.10 4.10 Amortisation charge for the year 4.69 4.69 Disposals - -

Balance as at 31 March 2018 8.79 8.79 Net block Balance as at 1 April 2016 13.91 13.91 Balance as at 31 March 2017 11.51 11.51 Balance as at 31 March 2018 17.33 17.33

2.3. Loans

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current (Unsecured, considered good) Loans and Advances 1.57 12.20 20.61

1.57 12.20 20.61 Current (Unsecured, considered good) Loans and Advances 8.14 8.77 6.98

8.14 8.77 6.98

2.4. Other Financials Assets

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current

Security Deposits 69.73 79.11 71.88 Margin Money Deposits with banks against bank guarantees 18.67 0.90 3.69

88.40 80.01 75.57 Current

Interest accrued on Margin Money 1.54 1.35 0.45 Other Financial Assets 3.39 0.68 3.35

4.93 2.03 3.80

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2.5. Other Assets

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current (Unsecured, Considered Good) Prepaid Expenses 0.82 1.58 0.76 Duties and Taxes Recoverable 22.98 27.03 27.03 Capital Advance a) Related Party - - 75.75 b) Others 4.48 4.11 51.94 28.28 32.72 155.48 Current (Unsecured, Considered Good) Duties and Taxes Recoverable 15.80 1.63 3.37 Prepaid Expenses 14.57 13.60 17.01 Advance for Expenses 16.05 4.34 28.77 Other Current Assets 7.43 11.69 7.91 53.85 31.26 57.06

2.6. Inventories

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Raw Materials 96.08 222.51 135.57 Work in Progress 74.67 39.00 124.16 Finished Goods 613.32 705.46 366.99 Goods in Transit ( Finished Goods) 0.11 25.05 33.98 Packing Materials 11.20 5.58 8.89 Fuel & Oil 7.66 2.90 1.65 Tools & Spares 9.79 13.97 14.98 812.83 1,014.47 686.22

2.7. Trade Receivables

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non- Current Unsecured, Considered Good 5.76 11.99 13.37 5.76 11.99 13.37 Current Unsecured, Considered Good 2,567.17 2,401.08 1,479.55 Unsecured, Considered Doubtful 2.94 - 37.86 2,570.11 2,401.08 1,517.41 Less: Provision for Doubtful Receivables (2.94) - (37.86) 2,567.17 2,401.08 1,479.55

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2.8. Cash and Cash Equivalents

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Cash on Hand 0.78 1.08 2.08 Balances with Banks

- on Current Accounts 121.47 93.54 29.05 122.25 94.62 31.13

2.9. Other Bank Balances

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Unpaid Dividend accounts 7.90 6.08 4.59 Margin Money Deposits with banks against bank guarantees [ref note (a) below]

19.16 19.40 18.46

27.06 25.48 23.05

(a) The amount classified under Margin money accounts consists of amount deposited with banks towards margin money for Bank Guarantee, Letter of Credit and Vendor bill discounting facilities.

2.10. Equity Share capital

(a) Authorised Equity Capital

As at 31 March 2018 As at 31 March 2017 As at 1 April 2016 Number (In Lakhs)

Amount Number (In Lakhs)


Amount

Equity shares of ₹ 10 each 60.00 600.00 60.00 600.00 60.00 600.00 60.00 600.00 60.00 600.00 60.00 600.00

(b) Issued, Subscribed and Paid-up Capital

As at 31 March 2018 As at 31 March 2017 As at 1 April 2016 Number (In Lakhs)



Amount

Equity shares of ₹ 10 each, fully paid up 52.32 523.20 52.32 523.20 52.32 523.20 Shares Forfeited - 17.98 - 17.98 - 17.98 52.32 541.18 52.32 541.18 52.32 541.18

(c) Reconciliation of the Number of Shares and Amount Outstanding at the beginning and at the end of the reporting period:

As at 31 March 2018 As at 31 March 2017 As at 1 April 2016 Number

(In Lakhs) Amount Number

(In Lakhs) Amount Number

(In Lakhs) Amount

Equity Shares of ₹ 10 each, par value Balances as at the beginning of the year 52.32 523.20 52.32 523.20 52.32 523.20 Add: Issued and Subscribed during the Year - - - - - - Shares Forfeited - 17.98 - 17.98 - 17.98 Balance at the end of the Year 52.32 541.18 52.32 541.18 52.32 541.18

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(d) Details of Shareholders Holding more than 5% Shares:

Particulars As at 31 March 2018 As at 31 March 2017 As at 1 April 2016 Number (In Lakhs)

Percentage Number (In Lakhs)

Percentage Number (In Lakhs)

Percentage

Equity shares of ₹10 each, par value Feroz Meeran 13.51 25.81% 13.51 25.81% 13.51 25.81% Navas Meeran 13.22 25.26% 13.22 25.26% 13.22 25.26% Kerala State Industrial Development Corporation Limited

6.15 11.75% 6.15 11.75% 6.15 11.75%

(e) Terms Rights, Attached to Equity Shares

The Company has only one class of shares referred to as equity shares with a face value of ₹10 each. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularisation of the shareholders’ in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

(f) Issue of Bonus Shares

There has been no issuance of bonus shares or share buyback during five years immediately preceding 31 March 2018.

2.11. Other Equity

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Capital Reserve 100.00 100.00 - Other Equity 744.41 744.41 744.41 General Reserves 97.46 97.46 97.46 Retained Earnings (492.88) (225.48) (213.32) 448.99 716.39 628.55

Capital Reserve:

The Company had redeemed 100,000 nos of Zero coupon cumulative Redeemable Preference Shares of ₹100/- each amounting to ₹1 Crore during the FY 2016-17 and the amount equal to the face value of such number of shares has been transferred to Capital reserve.

2.12. Borrowings

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current (Secured) Term Loan 323.13 465.68 420.03 Vehicle Loan 88.04 84.06 11.88 (Unsecured) Liability Component of Cumulative Redeemable Preference Shares

596.76 532.82 565.02

1,007.93 1,082.56 996.93 Amount disclosed under "Other Current Financial Liabilities" (refer note 2.13)

(181.06) (213.55) (182.78)

826.87 869.01 814.15

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2.12. Borrowings (Cont’d)

As at

31 March 2018 As at

31 March 2017 As at

1 April 2016 Current (Secured) Cash Credit 1,555.32 1,027.03 289.63

1,555.32 1,027.03 289.63 (Unsecured) Loan from Director 25.00 25.00 - 25.00 25.00 - 1,580.32 1,052.03 289.63

Notes:

(i) Term Loans from Banks

a) Term loan from The Federal Bank Ltd is secured by way of first charge on the movable fixed assets and are further guaranteed by the Promoter Directors of the Company. The above loans are further secured by Collateral security by deposit of title deeds of the land and building of the Company.

b) These loans are repayable ranging from a period of 36 months to 60 months with equal monthly installments ranging from ₹2.00 lakhs to ₹6.00 lakhs. The rate of interest ranges from 9.25% to 13.20% p.a.

(ii) Vehicle Loan

a) The vehicle loans are secured by hypothecation of the vehicle with HDFC Bank Limited.

b) These loans are repayable ranging from a period of 36 months to 60 months with equal monthly installments ranging from ₹10,241 to ₹57,181.The rate of interest ranges from 9.50 % to 11.50% p.a.

(iii) Liability Component of Cumulative Redeemable Preference Shares

(a) The Company had issued 10 lakhs Zero Coupon Cumulative Redeemable Preference Shares of ₹100 each to the promoters, which are redeemable after 5 years from the date of allotment subject to achieving net worth of ₹100 lakhs (without considering the said preference shares).

(b) The Board Meeting held on 22 July 2016 had approved the redemption plan of the Preference Shares. Ten Lakhs Redeemable Preference Shares of ₹100/- each shall be redeemed out of the profits of the Company in not more than 10 annual installments of a minimum of 100,000 Preference Shares of ₹100/ - each aggregating to ₹1 crore per year. During the FY 16-17, the Company had redeemed 100,000 nos of Zero coupon cumulative redeemable Preference Shares of ₹100/- each valued at ₹1 Crore. In accordance with Ind AS 32, these preference shares are classified as amortised cost liability as the preference shares provides for redemption on specific date or at the option of the holder.


(iv) Cash Credit

(a) The Cash Credit from The Federal Bank Ltd is secured by way of first charge on the floating assets and second charge on the fixed assets of the Company and are further guaranteed by the Promoter Directors of the Company. The above loans are further secured by collateral security by deposit of title deeds of the land and building of the Company.

(b) The rate of interest for the Cash credit facility with Federal Bank Limited is 9.95% p.a.

(v) Loan from Director

(a) The interest free unsecured loan was accepted from director by the Company to meet working capital requirements.

(b) As per the terms of borrowings the Company reserves the right to repay either the full amount or part of the unsecured loan in case it does not require the same to meet its working capital requirements. Hence the loan will be repaid on demand and hence classified as short term borrowings.

2.13. Other Financial Liabilities

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current Deposit from Employees 8.66 6.28 -

8.66 6.28 - Current Current maturities of Long Term Borrowings 181.06 213.55 182.78 Security Deposit /Retention Money Payable 162.11 216.77 107.57 Due to Employees 42.21 60.54 75.90 Creditors for Capital Goods 14.80 10.93 19.41 Unpaid Dividends 7.90 6.08 4.59 408.08 507.87 390.25

2.14. Provisions

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current Provision for Employee Benefits 69.23 59.77 57.87

69.23 59.77 57.87 Current Provision for Employee Benefits 6.33 3.56 -

6.33 3.56 -

2.15. Deferred Tax Liabilities, Net

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Deferred Tax Liability On excess of net book value over Income Tax written down value of fixed assets 66.27 66.27 71.87 Deferred Tax impact on fair value changes 103.02 124.79 148.88

169.29 191.06 220.75 Deferred Tax Assets On Provisions (11.83) (11.83) (10.03) Deferred Tax Liabilities, net 157.46 179.23 210.72

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2.16. Trade Payables

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Dues to Micro Enterprises and Small Enterprises (Refer Note (a) below)

41.33 60.31 11.72

Dues to others 1,435.66 1,219.60 818.23 1,476.99 1,279.91 829.95

(a) Dues to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development Act (MSMED), 2006 to the extent identified and information available with the Company pursuant to Section 22 of the Micro, Small and Medium Enterprises Development Act (MSMED), 2006, details are mentioned below:

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

i) Principal amount remaining unpaid (but within due date as per the Micro, Small and Medium Enterprises Development Act, 2006)

41.33 60.31 11.72

ii) Interest due thereon remaining unpaid iii) Interest paid by the Company in terms of Section 16 of the

Micro, Small and Medium Enterprises Development Act, 2006, along-with the amount of the payment made to the supplier beyond the appointed day during the period.

- - -

iv) Interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the period) but without adding interest specified under the Micro, Small and Medium Enterprises Act, 2006

- - -

v) Interest accrued and remaining unpaid - - - vi) Interest remaining due and payable even in the succeeding

years, until such date when the interest dues as above are actually paid to the small enterprises

- - -

Total 41.33 60.31 11.72

2.17. Other Liabilities

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Non-current Advance Lease Rent 15.84 23.12 15.43 Others 2.30 2.39 -

18.14 25.51 15.43 Current

Advance Lease Rent 7.55 8.71 - Advances from Customers 20.95 36.79 22.07 Other Payables 17.99 51.17 32.01

46.49 96.67 54.08

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2.18. Revenue from Operations

Year ended

31 March 2018 Year ended

31 March 2017 Sale of Products

Gross Sales 9,344.76 9,297.96 Other Operating Revenue

Sale of Scrap and Waste 6.77 20.30 Job Work Receipts 35.04 172.63 Retreading Charges 125.80 65.48 Lease Rent Received 26.99 20.86

194.60 279.27 9,539.36 9,577.23

Gross sales includes excise duty paid ₹100.84 lakhs for the current year and ₹517.78 lakhs for the previous financial year

2.19. Other Income

Year ended Year ended 31 March 2018 31 March 2017

Interest Income 4.05 8.76 Provision for Doubtful Debts no longer required, written back - 37.86 Other Income 18.27 23.86 22.32 70.48

2.20. Cost of Materials Consumed


Opening Inventory 222.51 135.57 Add: Purchases 5,298.78 4,077.27 Less: Closing Inventory (96.08) (222.51) 5,425.21 3,990.33

2.21. Decrease/(Increase) in Inventories of Finished Goods, Traded Goods and Work-in-Progress


Closing Stock Finished Goods 613.42 730.52 Work-in-Progress 74.67 39.00

688.09 769.52 Less: Opening Stock

Finished Goods 730.52 400.96 Work-in-Progress 39.00 124.16

769.52 525.12 81.43 (244.40)

2.22. Employee Benefits Expense


Salaries, Wages and Bonus 732.43 658.43 Contributions to Provident and other Funds [refer note (a) and (b)] 70.35 52.37 Staff Welfare Expenses 45.30 44.19 848.08 754.99

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(a) Eligible employees of the Company receive benefits under the Provident Fund which is a defined contribution plan wherein both the employee and the Company make monthly contributions equal to a specific percentage of covered employees' salary. These contributions are made to the Fund administered and managed by the Government of India and the Company has no further obligation beyond making its contribution. The Company's monthly contributions are charged to Statement of Profit and Loss in the period in which they are incurred:


Employer's contribution to Provident Fund 46.74 44.58 Employer's contribution to ESI 11.88 2.30

(b) In accordance with the payment of gratuity under ‘Payment of Gratuity Act, 1972’ of India, the Company provides for gratuity, a defined retirement benefit plan covering eligible employees. Liability with regard to such gratuity is determined by an independent actuarial valuation using the Projected Unit Credit method and is charged to the Statement of Profit and Loss in the year. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the Balance Sheet. The following table set out the status of the gratuity plan as required under Ind AS 19, Employee Benefits:

Change in defined Benefit Obligations Year ended Year ended 31 March 2018 31 March 2017

Present value of defined benefit obligations at the beginning of the year 56.82 30.70 Current service cost 5.96 4.47 Interest cost 4.48 2.63 Benefits settled - - Actuarial (gain)/ loss 9.95 19.02 Present value of defined benefit obligations at the end of the year 77.21 56.82

Reconciliation of present value of Obligation and the fair value of assets


Present value of the defined benefit obligation at the end of the year 77.21 56.82 Fair Value of plan assets 1.76 0.46 Liability / (asset) recognised in the Balance Sheet 75.45 56.36 Change in defined Benefit Obligations Year ended Year ended

31 March 2018 31 March 2017 Fair Value of the Plan Assets at the beginning of the period 0.46 0.37 Expected Return on Plan assets - - Contributions by employer 1.30 - Benefits paid from the fund - - Actual return - 0.09 Fair Value of the Plan Assets at the end of the period 1.76 0.46

Components of net Gratuity Cost Year ended Year ended 31 March 2018 31 March 2017

Current service cost 5.96 4.47 Interest cost 4.48 2.54 Net gratuity costs charged to profit or loss 10.44 7.01 Components Actuarial Losses/(Gains) in Other Comprehensive Income


Actuarial (gain) / loss due to demographic assumption changes in defined benefit obligations

- -

Actuarial (gain) / losses due to financial assumption changes in defined benefit obligations

- -

Actuarial (gain) / losses due to experience on defined benefit obligations (9.95) (19.02) Total actuarial (gain) / loss included in other comprehensive income (9.95) (19.02)

74


Assumptions Used Discount Rate 8.00% 7.50% Salary escalation rate * 3.00% 3.00% Retirement age 58 58

* Estimates of future salary increases takes into account inflation, seniority, promotions and other relevant factors such as supply and demand in employment market.

Sensitivity Analysis

Description of Risk Exposures

Valuations are performed on certain basic set of pre-determined assumptions which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit which are as follows:

Interest Rate Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of liability (as shown in financial statements).

Liquidity Risk

This is the risk that the Company is not able to meet the short term benefit payouts. This may arise due to non-availability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Salary Escalation Risks

The present value of the above benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.

Regulatory Risk

Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (for example, increase in the maximum liability on gratuity of ₹2,000,000).

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. A quantitative sensitivity analysis for significant assumption is as shown below:

Assumption Year ended 31 March 2018 Year ended 31 March 2017 Increase Decrease Increase Decrease

Discount rate (- / + 1%) (5.79) 10.00 (12.13) 7.64 Salary growth rate (- / + 1%) 9.21 (5.47) (0.33) (11.93) Attrition rate (- / + 1%) 41.67 (38.62) 23.07 (36.11)

Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. There are no changes from the previous period in the methods and assumptions used in preparing the sensitivity analysis.


2.23. Finance Costs


Interest Expense 249.92 209.07 Interest on Income tax 3.53 0.67 Other Borrowing Costs 73.47 86.93 326.92 296.67

2.24. Depreciation and Amortisation Expense


Depreciation on Tangible Assets (refer note 2.1) 205.98 177.87 Amortisation of Intangible Assets (refer note 2.2) 4.69 4.10 210.67 181.97

2.25. Other Expenses


Repairs and Maintenance: Building 3.11 1.30 Plant and Machinery 9.41 5.24 Others 32.85 31.21

Rent 70.22 67.69 Insurance 14.78 17.39 Professional Charges 29.36 26.88 Payments to the auditor (refer note 2.25.1 ) 10.93 9.27 Travelling Expenses 107.95 114.69 Business Promotion Expenses 110.25 142.02 Freight Charges 146.39 117.39 Claim Settlement 4.49 16.05 Tools and Spares Consumed 15.55 12.83 Commission 25.65 22.46 Power and Fuel 273.69 239.91 Rates and Taxes excluding Taxes on Income 50.76 123.38 Job Work Charges 109.28 20.09 Consumables 35.47 32.92 Packing Materials Consumed 141.79 79.50 General Factory Expenses 68.25 70.98 Provision for Doubtful Debts 2.94 - Miscellaneous Expenses 48.25 54.88 1,311.37 1,206.08

2.25.1. Payments to the Auditor

Statutory audit fees 10.00 7.00 Taxation matters (including tax audit) - 1.00 Others - 1.00 Reimbursement of expenses 0.93 0.27

2.26. Earning Per Share


Net profit/(loss) after tax for the year (235.90) 119.33 Weighted number of ordinary shares for basic EPS in lakhs 52.32 52.32 Nominal value of ordinary share (in ₹ per share) 10.00 10.00 Basic and Diluted earnings for ordinary shares (in ₹ per share) (4.51) 2.28

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2.27. Assets pledged as Security

The carrying amounts of assets pledged as security for current and non-current borrowings are:

As at As at 31 March 2018 31 March 2017

Current First Charge Financial Assets

Trade Receivables 2,567.17 2,401.08 Cash and Cash Equivalents 122.25 94.62 Bank Balances other than Cash and Cash Equivalents 27.06 25.48 Other Financial Assets 4.93 2.03

Inventories 812.83 1,014.47 Other Current Assets 53.85 31.26 Total Current Assets Pledged as Securities 3,588.09 3,568.94 Non-Current First Charge Property, Plant and Equipment (PPE) and Capital Work in Progress 1,824.16 1,620.06 Total Non-Current Assets Pledged as Securities 1,824.16 1,620.06 Total Assets Pledged as Security 5,412.24 5,189.00

2.28. Related Party Disclosures

(A) Name of the related party and nature of relationship where control exists

Key Management Personnel (KMP)

Navas M. Meeran Chairman M.E. Mohamed Managing Director Rajesh S. CEO (w.e.f 25.07.2017) Mohammed Sherif Shah CFO (w.e.f 25.07.2017) Baiju T. Company Secretary

Entities where significant influence is exercised by the director, KMP and/or their relatives having transactions with the Company

1. Eastern Condiments Private Limited 2. Eastern Mattresses Private Limited 3. Eastern Retreads Private Limited 4. Eastea Chai Private Limited 5. Feroz Treads Private Limited 6. Sheram Treads Private Limited 7. Sumo Treads Private Limited

8. Vazhakkulam Rubbers 9. Alfa Rubbers 10. Rosekhan Industries 11. Sahara Treads 12. Soya Rubbers Private Limited 13. Nilima Treads Private Limited

(B) Transactions with Related Parties as per the books of account during the period

Nature of Transaction

Entities where significant influence is exercised by the director, KMP and/or their relatives having transactions with

the Company

Key Managerial Person (KMP)

Year ended 31 March 2018




Eastern Condiments Private Limited Sharing of Expenses 11.95 7.09 - -

Eastern Mattresses Private Limited Sale of Finished Goods - 0.02 - -

Eastern Retreads Private Limited Sale of Finished Goods 223.07 14.30 - - Purchase of Goods 0.03 - - - Sharing of Expenses 0.51 0.75 - -

Eastea Chai Private Limited Sharing of Expenses 0.37 0.37 - -

Feroz Treads Private Limited Purchase of Goods 130.32 138.84 - - Sale of Raw Materials - 120.27 - - Sale of Finished Goods 4.56 - - - Job Work Receipt 2.87 17.05 - -

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Vazhakulam Rubbers Purchase of Goods 37.13 127.83 - - Sale of Finished Goods 69.97 329.91 - - Sharing of Expenses - 0.43 - - Job Work Payment 0.27 0.80 - - Job Work Receipt - 5.12 - -

Sumo Treads Private Limited Purchase of Goods 28.45 45.57 - - Sale of Raw Materials 0.02 - - - Job Work Receipt 0.65 3.06 - -

Soya Rubbers Private Limited Security Services provided 7.12 5.91 - -

Nilima Treads Private Limited Purchase of Goods 1.30 135.64 Job Work Receipt - 7.82

Alfa Rubbers Purchase of Goods 134.40 136.56 - - Sale of Raw Materials - 76.59 - - Sale of Finished Goods 4.71 - - - Job Work Receipt 3.20 11.49 - - Job Work Payment - 2.38 - -

Rosekhan Industries Purchase of Goods 366.39 123.28 - - Sale of Raw Materials 259.64 104.40 - - Job Work Payment 75.24 0.18 - - Job Work Receipt 3.31 12.17 - - Sale of Finished Goods& scrap 66.82 - - -

Sahara Treads Purchase of Goods 385.98 136.85 - - Sale of Raw Materials 226.78 139.68 - - Job Work Payment 44.76 - - -

Sale of Finished Goods 5.81 - - - Job Work Receipt 2.65 9.78 - - Remuneration

Rajesh S - - 26.22 33.48 Baiju T. - - 11.10 9.97 K.A. Mohammed Sherif Shah* * Remuneration for the full financial year. - - 17.82 -

Loan Accepted Navas Meeran - - - 25.00

(C) Amount Outstanding as at end of each reporting periods

Amount receivables/ (payables): As at As at As at 31 March 2018 31 March 2017 1 April 2016

Entities where significant influence is exercised by the director, KMP and/or their relatives having transactions with the Company

Eastern Retreads Private Limited 72.90 6.37 (0.15) Feroz Treads Private Limited - 42.30 12.96 Eastern Mattresses Private Limited - - 75.75 Sumo Treads Private Limited - (29.75) 13.30 Vazhakulam Rubbers 74.30 119.57 32.84 Nilima Treads Private Limited - (20.95) 5.90 Soya Rubbers Private Limited 7.41 7.41 7.99 Rosekhan Industries 40.86 - -

Key Management Personnel Navas Meeran (25.00) (25.00) - Rajesh S - (5.00) (10.00) Baiju T (0.46) (0.53) (1.43) Mohammed Sherif Shah (0.79) - -

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2.29. Contingent Liabilities And Commitments (To The Extent Not Provided For)

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

a) Claims against the company not acknowledged as debt i) Sales Tax matters 14.10 14.10 13.72 ii) Income Tax matters 20.97 - - iii) Bank Guarantees outstanding 91.38 74.48 124.91 iv) Guarantee provided to IDBI Bank Limited for Vendor bill

Discounting facility 750.00 750.00 750.00

b) Capital Commitments i) Estimated amounts of contracts remaining to be executed not

provided for 7.09 14.13 530.40

2.30. Financial Risk Management

The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on it's financial performance. The Company's exposure to credit risk is influenced mainly by the individual characteristic of each customer. The Company's risk management activity focuses on actively securing the Company’s short to medium-term cash flows by minimising the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns. The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below.

A. Credit Risk Analysis

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk for receivables, cash and cash equivalents, short term investments and financial guarantee.

Cash and cash equivalents and short term investments

The Company considers factors such as track record, size of institution, market reputation and service standard to select the banks with which deposits are maintained. Generally the balances are maintained with the institutions with which the Company has also availed borrowings. The Company does not maintain significant deposit balances other than those required for its day to day operations.

Trade receivables

The Company is exposed to credit risk from its operating activities primarily from trade receivables amounting to ₹2,572.93 and ₹2,413.07 as of 31 March 2018 and 31 March 2017 respectively. The Company has standard operating procedure for obtaining sufficient security like bank guarantees where appropriate, as a means of mitigating the risk of financial loss from defaults. No customers accounted for 10% or more of revenue during the reporting periods covered.

The credit quality of the Company’s customers is monitored on an ongoing basis and assessed for impairment where indicators of such impairment exist. The history of trade receivables shows a negligible provision for bad and doubtful debts. The solvency of customers and their ability to repay the receivable is considered in assessing receivables for impairment. Therefore, the Company does not expect any material risk on account of nonperformance by any of the Company’s counterparties. Where receivables are impaired, the Company actively seeks to recover the amounts in question and enforce the compliance with credit terms.

B. Liquidity Risk

The Company requires funds both for short-term operational needs as well as for long-term growth projects. The Company generates sufficient cash flows from the current operations which together with the available cash and cash equivalents provide liquidity both in the short-term as well as in the long-term. In addition, Company has also availed short term / long term finance from banks as and when required. The Company has been rated by CRISIL Limited (CRISIL) for its banking facilities in line with Basel II norms with a rating of Long term - CRISIL BB/ Stable and short term A4+.

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(All amounts in ₹ lakhs, unless otherwise stated) The Company remains committed to maintaining a healthy liquidity, gearing ratio and strengthening the balance sheet. The maturity profile of the Company’s financial liabilities based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Company.

Maturities of financial liabilities

As at 31 March 2018 < 1year 1-5 years >5years Total Borrowings 1,761.38 232.11 - 1,993.49 Preference Share Redemption 200.00 500.00 200.00 900.00 Other Financial Liabilities 227.03 8.66 - 235.69 Trade Payables 1,476.99 - - 1,476.99

3,665.40 740.77 200.00 4,606.17 As at 31 March 2017 < 1year 1-5 years >5years Total

Borrowings 1,265.58 340.27 - 1,605.85 Preference Share Redemption 100.00 500.00 300.00 900.00 Other Financial Liabilities 294.31 6.28 - 300.59 Trade Payables 1,279.91 - - 1,279.91

2,939.80 846.55 300.00 4,086.35 As at 1 April 2016 < 1year 1-5 years >5years Total

Borrowings 472.41 254.60 0.00 727.01 Preference Share Redemption 100.00 500.00 400.00 1000.00 Other Financial Liabilities 207.47 - - 207.47 Trade Payables 829.95 - - 829.95

1,609.83 754.60 400.00 2,764.43 C. Interest Rate Risk

The Company is exposed to interest rate risk on short-term (cash credit) and long-term (term loans). All the vehicle loans of the company are fixed rate borrowings. The borrowings of the Company are principally denominated in Indian Rupees. These exposures are reviewed by appropriate levels of management on a regular basis. There are no foreign currency borrowings made by the company during the reporting periods. The impact on the Companies profit before tax due to change in interest rate is given below:

Interest Sensitivity: Change in interest rate

Effect on Profit before Tax 31 March 2018 31 March 2017

Interest rates – increase by 100 basis points (100 bps) 1.00% (18.78) (14.93) Interest rates – decrease by 100 basis points (100 bps) -1.00% 18.78 14.93

2.31. Capital Management

The Company’s objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth and maximise the shareholders value. The Company’s overall strategy remains unchanged from previous year. The Company sets the amount of capital required on the basis of annual business and long-term operating plans. The Company’s policy is to use short term and long-term borrowings to meet anticipated funding requirements. For the purpose of calculating gearing ratio, debt is defined as non-current and current borrowings (excluding derivatives). Equity includes all capital and reserves of the Company attributable to equity holders of the Company.

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As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

Short Term Borrowings 1,580.32 1,052.03 289.63 Long term borrowings 826.87 869.01 814.15 Current maturities of long term borrowings 181.06 213.55 182.78 Less: Cash and cash equivalents (122.25) (94.62) (31.13) Less: Bank balances other than cash and cash equivalents (27.06) (25.48) (23.05) Net Debt 2,438.94 2,014.48 1,232.38 Equity share capital 541.18 541.18 541.18 Other equity 448.99 716.39 628.55 Total capital (equity + net debt) 3,429.11 3,272.05 2,402.11 Gearing Ratio 71% 62% 51%

2.32. Disclosure with respect to Operating Leases

The lease expenses for cancellable operating leases during the year ended 31 March 2018 is ₹70.22 (31 March 2017: ₹67.69). The Company's significant leasing arrangements in respect of operating leases for office premises, which includes cancellable leases generally range between 11 months to 60 months and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent under note 2.25 to the financial statements.

2.33. Income Tax



The major components of income tax expense are: Current income tax:

Current income tax charge - 74.22 Deferred tax credit

Relating to the origination and reversal of temporary differences (18.32) (24.92) Income tax expense reported in Statement of Profit and Loss (18.32) 49.29 Deferred tax related to items recognised in Other comprehensive income (OCI)

Income tax relating to re-measurement gains on defined benefit plans (3.44) (6.58)

Reconciliation of Deferred Tax (net)

As at

31 March 2018 As at

31 March 2017 Opening balance 179.22 210.72 Tax credit during the year recognized in statement of profit and loss (18.32) (24.92) Tax credit during the year recognised in OCI (3.44) (6.58) Closing balance 157.46 179.22

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Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate



Accounting (loss)/profit before tax and exceptional item (247.71) 181.07 Tax on accounting profit at statutory income tax rate [27.82% (2017: 33.063%)] (68.91) 59.87 Tax effects of amounts which are not deductible (taxable) in calculating taxable income: Non deductible expenses 5.99 1.84 Assets written off - 1.29 Change in tax rates (12.99) - Other disallowances - 13.70 Deferred tax assets not recognized on the loss for the year as there is no certainty of future taxable profit 57.59 - Tax charge for the year (18.32) 49.30 Income tax expense reported in the Statement of Profit and Loss (18.32) 49.30

2.34. Fair Value Measurements

(i) Financial Instruments by Category

The carrying value and fair value of financial instruments by categories are as follows:

Particulars 31 March 2018 31 March 2017 1 April 2016 Amortised

cost Financial assets /

liabilities at FVTPL

Financial assets /

liabilities at FVTOCI

Amortised cost

Financial assets / liabilities at FVTPL

Financial assets /


Amortised cost

Financial assets /

liabilities at FVTPL

Financial assets /


Financial Assets: Non-current i) Trade Receivables 5.76 - - 11.99 - - 13.37 - - ii) Loans 1.57 - - 12.20 - - 20.61 - - iii) Other Financial Assets 88.40 - - - - - 75.57 - - Current i) Trade Receivables 2,567.17 - - 2,401.08 - - 1,479.55 - - ii) Cash and Cash Equivalents 122.25 - - 94.62 - - 31.13 - - iii) Other Bank Balances 27.06 - - 25.48 - - 23.05 - - iv) Loans 8.14 - - 8.77 - - 6.98 - - v) Other Financial Assets 4.93 - - 2.03 - - 3.80 - - Total financial assets 2,825.28 - - 2,556.17 - - 1,654.06 - -

Financial Liabilities: Non-current i) Borrowings 826.87 - - 869.01 - - 814.15 - - ii) Other Financial Liabilities 8.66 - - 6.28 - - - - - Current i) Borrowings 1,580.32 - - 1,052.03 - - 289.63 - - ii) Trade Payables 1,476.99 - - 1,279.91 - - 829.95 - - iii) Other Financial Liabilities 408.08 - - 507.87 - - 390.25 - - Total Financial Liabilities 4,300.92 - - 3,715.09 - - 2,323.98 - -

The management assessed that the fair value of cash and cash equivalents, trade receivables, loans, other financial assets, trade payables, working capital loans and other financial liabilities approximate the carrying amount largely due to short-term maturity of this instruments.

(ii) Fair value of financial assets and liabilities measured at amortised cost The management assessed that for amortised cost instruments, fair value approximate largely to the carrying amount.

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2.35. Segment Information

The Company is engaged in the manufacture and sale of products which form part of one product group which represents one operating segment, as the Chief Operating Decision Maker (CODM), reviews business performance at an overall company level. Entity-wide disclosure as required by Ind AS 108 "Operating Segment" are as follows:

i) Revenues from external customers for each product or each group of similar products:

Particulars Year ended Year ended 31 March 2018 31 March 2017

Sales of products 9,344.76 9,297.96 9,344.76 9,297.96

ii) Revenues from external customers attributed to the Company’s country of domicile and attributed to all foreign countries from which the Company derives revenues:


India 9,032.86 9,035.39 Outside India 311.91 262.57 9,344.76 9,297.96

iii) Non-current assets (other than financial instruments and deferred tax assets) located in the Company’s country of domicile and in all foreign countries in which the Company holds assets:


India 1,869.77 1,664.29 Outside India - - 1,869.77 1,664.29

iv) The following table gives details in respect of percentage of revenues generated from top customer and revenues from transactions with customers amounts to 10 percent or more of Company’s revenues from product sale:


Revenue from top customer 730.00 848.38 Revenue from customers contributing 10% or more to the Company’s revenues from product sale

- -

2.36. First Time Adoption of Ind AS

These are the Company’s first financial statements for the year ended 31 March 2018 prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 - First Time adoption of Indian Accounting Standard, with 1 April 2016 as the transition date to the Ind AS. An explanation of the transition from previous GAAP to Ind AS and the Company’s financial position, financial performance and cash flows is set out in the following tables and notes. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Company’s date of transition).

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A. Ind AS Optional Exemptions

a) Deemed Cost for Property, Plant and Equipment and Intangible Assets Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

b) Lease

Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, Leases, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101, First-time Adoption of Indian Accounting Standards, provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts/arrangements.

B. Ind AS Mandatory Exemptions

B1. Estimates

In accordance with Ind AS, as at the date of transition to Ind AS an entity's estimates shall be consistent with the estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP except impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition this was not required under the previous GAAP.

B2. Classification and Measurement of Financial Assets and Liabilities

The classification and measurement of financial assets will be made considering whether the conditions as per Ind AS 109 Financial Instruments are met based on facts and circumstances existing at the date of transition.

Financial assets can be measured using effective interest method by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing at the date of transition and if it is impracticable to assess elements of modified time value of money i.e. the use of effective interest method, fair value of financial asset at the date of transition shall be the new carrying amount of that asset. The measurement exemption applies for financial liabilities as well.

Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so. It is impracticable to apply the changes retrospectively if:

a) The effects of the retrospective application or retrospective restatement are not determinable; or

b) The retrospective application or restatement requires assumptions about what management’s intent would have been in that period; or

c) The retrospective application or retrospective restatement requires significant estimates of amounts and it is impossible to distinguish objectively information about those estimates that existed at that time.

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B3. De-recognition of Financial Assets and Liabilities Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109, Financial Instruments, prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101, First-time Adoption of Indian Accounting Standards, allows a first-time adopter to apply the de-recognition requirements in Ind AS 109, Financial Instruments, retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109, Financial Instruments, to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109, Financial Instruments, prospectively from the date of transition to Ind AS.

C. Reconciliations between Previous GAAP and Ind AS

Ind AS 101 First-time Adoption of Indian Accounting Standards, requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS as at the periods specified below.

C1. Reconciliation of Total Equity as at 31 March 2017 and 1 April 2016

Particulars Note As At As At 31 March 2017 1 April 2016

Total equity as per previous GAAP 1,950.22 1,916.91 Adjustments to retained earnings 5 (28.44) (59.98) Restated equity as per previous GAAP 1,921.77 1,856.93

Adjustments: i) Measurement of financial assets and liabilities at amortised cost 1

- Long term borrowings 4.09 5.47 - Security deposits paid (0.21) (0.13) - Loans given to franchisees (5.78) (6.39) - Security deposits received from employees 0.06 -

ii) Reclassification of preference shares 2 (532.82) (565.01) iii) Revenue from credit sales recorded at fair value 3 (4.76) (3.75) iv) Reversal of proposed dividend 6 - 31.49 v) Deferred tax impact of above Ind AS adjustments (124.78) (148.88) Total Equity as per Ind AS 1,257.57 1,169.73

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C2. 1. Reconciliation of Balance Sheet as at 1 April 2016 (date of transition to Ind AS)

Notes Previous GAAP*

Adjustments Ind AS Adjustments

Ind AS

ASSETS Non-Current Assets

Property, Plant and Equipment 5 1,095.12 151.47 - 1,246.59 Capital Work in Progress 26.15 - - 26.15 Intangible Assets 13.26 0.65 - 13.91 Financial Assets

Trade Receivables 3 17.13 - (3.75) 13.37 Loans 1 25.23 - (4.62) 20.61 Other Financial Assets 1 78.79 - (3.22) 75.57

Other Non-Current Assets 1 198.98 (45.84) 2.34 155.48 1,454.66 106.28 (9.25) 1,551.68

Current Assets Inventories 5 824.27 (138.72) - 686.22 Financial Assets

Trade Receivables 1,479.55 - - 1,479.55 Cash and Cash Equivalents 31.13 - - 31.13 Other Bank Balances 23.05 - - 23.05 Loans 6.98 - - 6.98 Other Financial Assets 1 5.56 - (1.77) 3.80

Other Current Assets 1 56.30 - 0.76 57.06 2,427.51 (138.72) (1.01) 2,287.79

Total Assets 3,882.17 (32.44) (10.26) 3,839.47 EQUITY AND LIABILITIES Equity

Equity Share Capital 2 1,541.18 - (1,000.00) 541.18 Other Equity 11,5 375.73 (59.98) 312.80 628.55

1,916.91 (59.98) (687.20) 1,169.73 Liabilities Non-current Liabilities

Financial Liabilities Borrowings 1,2 254.60 - 559.55 814.15

Provisions 5 30.33 27.54 - 57.87 Deferred Tax Liabilities, net 7 61.84 - 148.88 210.72 Other Non-current Liabilities 15.43 - - 15.43

362.20 27.54 708.42 1,098.17 Current Liabilities

Financial Liabilities Borrowings 289.63 - - 289.63

Trade Payables 829.95 - - 829.95 Other Financial Liabilities 390.25 - - 390.25 Provisions 6 31.49 - (31.49) - Current Tax Liability (net) 7.66 - - 7.66 Other Current Liabilities 54.08 - - 54.08

1,603.06 - (31.49) 1,571.57 Total Equity and Liabilities 3,882.17 (32.44) (10.26) 3,839.47

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C3. 1. Reconciliation of Balance Sheet as at 31 March 2017

Notes Previous

GAAP* Adjustments Ind AS

Adjustments Ind AS

ASSETS Non-Current Assets

Property, Plant and Equipment 5 1,408.74 175.33 - 1,584.07 Capital Work in Progress 35.99 - - 35.99 Intangible Assets 11.61 (0.11) - 11.51 Financial Assets

Trade Receivables 3 16.75 - (4.76) 11.99 Loans 1 14.42 - (2.22) 12.20 Other Financial Assets 1 82.56 - (2.55) 80.01

Other Non-Current Assets 1 76.98 (45.84) 1.58 32.72 1,647.05 129.38 (7.95) 1,768.49

Current Assets Inventories 5 1,144.75 (130.28) - 1,014.47 Financial Assets

Trade Receivables 2,401.08 - - 2,401.08 Cash and Cash Equivalents 94.62 - - 94.62 Other Bank Balances 25.48 - - 25.48 Loans 8.77 - - 8.77 Other Financial Assets 1 5.60 - (3.56) 2.03

Other Current Assets 1 30.50 - 0.76 31.26 3,710.80 (130.28) (2.80) 3,577.71

5,357.85 (0.90) (10.75) 5,346.20 EQUITY AND LIABILITIES Equity

Equity Share Capital 2 1,441.18 - (900.00) 541.18 Other Equity 11,5 509.03 (28.44) 235.80 716.39

1,950.21 (28.44) (664.20) 1,257.57 Liabilities Non-current Liabilities

Financial Liabilities Borrowings 1,2 338.20 2.09 528.72 869.01 Other Financial Liabilities 1 9.40 - (3.11) 6.28

Provisions 5 32.23 27.54 - 59.77 Deferred Tax Liabilities, net 8 54.44 - 124.78 179.23 Other Non-current Liabilities 1 23.12 - 2.39 25.51

457.39 29.63 652.78 1,139.80 Current Liabilities

Financial Liabilities Borrowings 1,052.03 - - 1,052.03 Trade Payables 1,279.91 - - 1,279.91 Other Financial Liabilities 1 509.96 (2.09) - 507.87

Provisions 3.56 - - 3.56 Current Tax Liability (net) 8.79 - - 8.79 Other Current Liabilities 1 96.00 - 0.67 96.67

2,950.25 (2.09) 0.67 2,948.83 Total Equity and Liabilities 5,357.85 (0.90) (10.75) 5,346.20

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C4. Reconciliation of Statement of Profit and Loss for the year ended 31 March 2017

Particulars Notes Previous


Adjustments Ind AS

INCOME Revenue from Operations 3,7 9,063.60 - 513.64 9,577.23 Other Income 1,3 66.05 - 4.42 70.48

TOTAL 9,129.65 - 518.06 9,647.71 EXPENSES Cost of Materials Consumed 3,990.33 - - 3,990.33 Purchases of Stock-in-Trade 2,763.22 - - 2,763.22 Change in Inventories of Finished goods, traded goods and work-in-progress

(244.40) - - (244.40)

Excise duty on sales 7 - - 517.78 517.78 Employee benefits expense 1,4 774.31 - (19.32) 754.99 Finance cost 1,2 227.23 - 69.44 296.67 Depreciation and amortisation expense 213.51 (31.54) - 181.97 Other expenses 1 1,205.33 - 0.75 1,206.08

Total 8,929.53 (31.54) 568.65 9,466.65 Profit before tax 200.12 31.54 (50.59) 181.06 Tax expense: Current tax 74.22 - - 74.22 Deferred tax 8 (7.41) - (17.51) (24.92) Profit after tax 133.31 31.54 (33.08) 131.77 Other Comprehensive Income / (loss) (i) Items that will not be reclassified to profit or loss: (a) Re-measurement gains in defined benefit plans 9 - - (19.02) (19.02) (b)Income tax relating to items that will not be

reclassified to profit and loss 9 - - 6.58 6.58

Other Comprehensive income, net of Tax - - (12.44) (12.44) Total Comprehensive Income for the Year 133.31 31.54 (45.51) 119.33

C5. Reconciliation of cash flow statement for the year ended 31 March 2017

Particulars Notes Previous


Adjustments Ind AS

Net cash (used in)/generated from operating activities

5,10 (305.85) 257.20 - (48.65)

Net used in investing activities 5,10 (376.51) (35.47) - (411.98) Net cash generated from financing activities 10 748.29 (224.17) - 524.12 Net increase/(decrease) in cash and cash equivalents

65.93 (2.44) - 63.49

Cash and cash equivalents at the beginning of the year

10 54.18 (23.05) - 31.13

Cash and cash equivalents at the end of the year

120.11 (25.49) - 94.62

* The Indian GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.

C6. Notes

1. Financial Assets and Liabilities

Under Previous GAAP the financial assets and liabilities were carried at cost. However under Ind AS, all financial assets and liabilities are required to be recognised at fair value. Accordingly, the Company has recognised all financial assets and liabilities initially at fair value and measured them subsequently at amortised cost using the effective interest method.

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2. Issue of preference shares

The Company had issued 10 lakhs Zero Coupon Cumulative redeemable preference shares of ₹100 each to the promoters, which are redeemable after 5 years from the date of allotment subject to achieving net worth of ₹100 lakhs (without considering the said preference shares). Under the Previous GAAP, the preference shares were classified as equity and dividend payable thereon was treated as distribution of profit. Under Ind AS 32, Financial Instruments: Presentation, such instruments are separated into liability and equity components based on the terms of the contract. The difference between carrying value of financial liability and fair value on initial recognition has been considered as equity contribution by the Company and shown as part of ‘Other equity’. Interest expense on financial liability is charged to the Statement of Profit and Loss using the effective interest method.

3. Credit Sales

Under some franchisee agreements, the Company has made sale of machineries to the franchisees. In these cases the collections will be done in monthly installments over a period of 2-3 years. Under Previous GAAP the Company has recognised entire revenue upfront at the time of sale. However under Ind AS, revenue shall be recorded at fair value and interest income will be recognised in the statement of profit or loss in the subsequent periods using the effective interest method.

4. Defined benefit obligation

Both under the Previous GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re-measurements comprising of actuarial gains and losses are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is reduced by such amount with a corresponding adjustment on defined benefit plans has been recognized in the OCI net of tax.

5. Adjustments to retained earnings

i) Under the Previous GAAP the Company had erroneously charged an excess depreciation ₹31.54 in the previous financial year which has been adjusted in the statement of profit and loss for the year ended 31 March 2017.

ii) Under the Previous GAAP, the Company had erroneously not written off the amount paid under protest against the sales tax litigation amounting to ₹45.84 lakhs, considering the amount was not recoverable. Accordingly, the same has been recorded as an adjustment in the opening retained earnings.

iii) Under the Previous GAAP, the Company had erroneously recorded short provision of gratuity liability by ₹27.54 lakhs, the same has been recorded as an adjustment in the opening re tained earnings.

iv) Under the Previous GAAP, the Company had classified the Manufacturing tools as tools and spares under inventories and following the policy to charged 25% of the closing value of tools and spares to the statement of profit and loss. The management has revised the accounting policy and estimated the useful life of manufacturing tools as 7 years. And accordingly, the Company has included the Manufacturing Tools worth ₹153.61 lakhs (net of accumulated depreciation amounting to ₹44.91) as on 01 April 2016 to Property, plant and equipment. The effect of this change is an increase in total equity as at 01 April 2016 by ₹14.89 lakhs and decrease in Inventory by ₹138.72 lakhs which has been adjusted in the opening retained earnings and Inventory respectively.

v) Under the Previous GAAP, the Company had erroneously recorded short depreciation by ₹1.49 lakhs, the same has been recorded as an adjustment in the opening retained earnings.

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6. Adjustment for Proposed Dividend

Under the Previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings.

7. Excise Duty

Under the Previous GAAP, revenue from sale of goods was presented net of excise duty whereas under Ind AS the revenue from sale of goods is presented inclusive of excise duty. Accordingly, the excise duty has been included in revenue and expenses respectively.

8. Deferred Tax

Under the Previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under Ind AS 12, Income Tax, deferred taxes are recognised following the balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base.

9. Other Comprehensive Income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the Statement of Profit and Loss as ‘other comprehensive income’ includes re-measurements of defined benefit plans. The concept of other comprehensive income did not exist under the Previous GAAP.

10. Statement of Cash Flows

(i). Under the Previous GAAP, Interest received and Interest paid was erroneously disclosed under operating activity in the Statement of cash flows which has been included now under investing activities and financing activities respectively in the Statement of Cash Flows.

(ii). For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short -term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value as described in note 1.19 and the other bank balances are shown separately as Other bank balances, refer note 2.9.

11. Other Equity

Adjustments to retained earnings as at 31 March 2017 and 1 April 2016 has been adjusted consequent to the above Ind AS transition adjustments.

This is the summary of accounting policies and other explanatory information referred to in our report of even date.







Kochi 10 May 2018

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OUR BRANCHES BANGALORE No: 3/1 Roshan Bagh Road, Near Minerva Circle, V.V .Puram, Bangalore – 560004, Ph: 9341060794

COIMBATORE Opp. Kovai Diabetic Hospital, Balasundaram Layout, Vivekananda Road, Ramnagar, Coimbatore – 641009, Ph: 9363108658

CUTTACK Ground Floor, Khata No.25/134 Plot No.565/616, Bilateruan Canal Road, Harianta Tangi, Cuttack Ph: 9438249206

DELHI Shop No.-1, Ground Floor , CW-64, Sanjay Gandhi Transport Nagar, Delhi - 110042, Ph: 9873817106

GUWAHATI Nalapara, Kali Mandir Road, Bapujipath Bye Lane, Guwahati - 781034 Ph: 9127072802

HYDERABAD Plot No-36/37, Block No -36/A, Sy .No-96/1, Autonagar, Vanasthalipuram Hyderabad – 500070 Ph: 09052034157

KOLKATTA C1- 50/B/New B. B. T. Road, LST Kolkata Santhoshpur Govt Colony, P.O. Santhoshpur (M), South 24 Parganas, Kolkata, West Bengal – 700142, Ph: 8336989232

MADURAI Door No:25, Athimoolam Plillai Agraharam Simmakkal, Madurai – 625001 Ph: 9159906544

NEDUMANGAD Kollankavu, Pazhakutty P O Nedumangad, Trivandrum(DIST) Ph: 7593875465

RAIPUR Plot N 33, Kedia Business Park Tatibandh, Raipur, Durg, Chhattisgarh - 492099 Ph: 9370093131

SILIGURI Patharghata Road, Gaucharan Matigara, Siliguri, Darjeelin - 734010 Ph: 8336989236

TRICHY Door No.5, E B Road Trichy-620008, Tamilnadu Ph: 7593875494

VAZHAKULAM Avoly Panchayath, PM Road Vazhakulam - 686670 Ernakulam Ph: 09447178817

VIJAYAWADA Plot No-54-5-79 2nd Cross, 5th Road, Jawahar Autonagar, Vijayawada, Krishna District, Andhrapradesh - 520007, Ph : 09160574625

EASTERN INFINITY ZONE BANGALORE No. 63/A, Road No.5, Jigani Industrial Area, 2nd Stage, Anekal Taluk Bengaluru – 562106 Ph: 9538833554 Email : [email protected]

CHENNAI Door No. 12, Madhavaram – Redhills Road, Grand Line Village, Chennai, Tamilnadu – 600052 Ph: 8489908810 Email : [email protected]

ANNUAL REPORT2016-2017

Download - EASTERN TREADS - Bombay Stock Exchange...EASTERN® TREADS An ISO 900 I -2015 Certified Company. Dated, 27thJuly, 2018 REF: ETLlBSE/AAR/18-19 The Corporate Relationship Department,

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