Balkrishna Industries Ltd

Dear Shareholders,

Your directors are pleased to present the 62^nd Annual Report of Balkrishna Industries Limited (the "Company") along with the audited Financial Statements for the financial year ended 31^st March, 2024. The consolidated performance of the Company and its subsidiaries for the year ended 31^st March, 2024 has been referred to wherever required.

1. FINANCIAL RESULTS:

( Rs. in Lakhs)

2. INDUSTRY STRUCTURE AND DEVELOPMENT:

Your Company is one of the world's leading manufacture of "Off- Highway Tires". It has the widest product range with more than 3,200 SKU's (Stock Keeping Units). Your Company has made its mark in speciality segments like Agricultural, Mining, Construction, Industrial, Earthmover, Port, ATV (All-Terrain Vehicle), and Turf care applications in both cross ply and radial construction.

Your Company is always paying close attention when it comes to latest market trends as well as the technological developments. While the global economic slowdown and ongoing conflict have created pressures on exports, it's encouraging to hear that we can see some signs of improvement. We expect demand to increase in the coming quarters, coupled with expectations of reduced inflation. Managing these factors effectively will be crucial for navigating through these challenging times.

3. OPERATIONS AND STATE OF AFFAIRS:

Standalone: During the year under consideration on Standalone basis, your Company achieved Revenue from Operations of

Rs. 9,29,870 Lakhs as against Rs. 9,81,052 Lakhs during the previous financial year. EBITDA has increased to Rs. 2,65,180 Lakhs from

Rs. 2,05,342 Lakhs during previous financial year and Net profit has increased to Rs. 1,43,761 Lakhs from Rs. 1,07,871 Lakhs during previous financial year. The revenue from exports is about 73%.

Consolidated: During the year under consideration on Consolidated basis, your Company achieved Revenue from operations

Rs. 9,36,887 Lakhs as against Rs. 9,75,953 Lakhs during the previous financial year. EBITDA has increased to Rs. 2,70,459 Lakhs from

Rs. 2,05,364 Lakhs during previous financial year, and Net profit has increased to Rs. 1,47,149 Lakhs from Rs. 1,05,740 Lakhs during previous financial year.

4. EXPORT HOUSE AND AUTHORISED ECONOMIC OPERATOR STATUS:

In accordance with provisions of Foreign Trade Policy, your Company continues to enjoy "the Five Star Export House" status w.e.f .September 2021. Your Company is also an Authorised Economic Operator (AEO) Tier III which helps your company in faster processing and clearance of cargo, deferred payment of duty, direct port delivery/entry and other benefits.

5. PROJECTS AND EXPANSION:

Bhuj Plant: The advanced carbon black project of 30,000 MTP and mould manufacturing facility at Bhuj is progressing well and is expected to be completed by H1and Q1 of FY 2024-25 respectively.

6. DIVIDEND:

You are aware of the consistent track record of dividend payment by your Company over last three decades. In keeping with this trend, the Board of Directors are pleased to recommend a Final Dividend of Rs. 4 (200%) per equity share for the financial year 2023-2024. This is in addition to 3 interim dividends each of Rs.4 (200%) per equity share aggregating to Rs.12 (600%) per equity share. The aggregate dividend for the year thus works out to Rs.16 (800%) per equity share. The final dividend is subject to approval of the Shareholders at the ensuing Annual General Meeting of the Company Scheduled to be held on 19^th July, 2024. The final dividend once approved by Shareholders will be paid within the stipulated time after deduction of applicable tax at source. The Record Date for the purpose of payment of final dividend will be 6^thJuly, 2024.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015"), the Dividend Distribution Policy can be accessed at the Company's website at: https://www.bkt-tires.com/in/en/investors-desk.

7. SHARE CAPITAL:

The paid-up Share Capital of the Company as on 31^st March, 2024 remains unchanged at Rs. 3,866 Lakhs. The Company has neither issued shares with differential voting rights, nor granted stock options, nor sweat equity and none of the Directors of the Company hold any shares with differential voting rights or convertible instruments.

8. RESERVES:

The Company proposes to transfer 40,000 Lakhs to General Reserves.

9. OUTLOOK FOR THE FINANCIAL YEAR 2024-25:

Your Company is navigating through challenging global economic conditions but remains optimistic about growth opportunities, particularly in the "Off Highway Tire" segment. Some key points and considerations are as under: a. Global Economic Slowdown and Risks: The global economic slowdown, ongoing wars, and potential stagflation pose significant risks to various industries, including tire manufacturing. These factors can impact external demand, economic stability, and consumer confidence. b. Increased Demand in Automobile Industry: Despite the broader economic challenges, there has been a notable increase in demand for vehicles globally. This trend directly influences the demand for tires, presenting growth opportunities for your company. c. Focus on Off Highway Tire Segment: Your company is strategically focusing on the "Off Highway Tire" segment. This niche market can provide resilience against economic downturns affecting mainstream automotive sectors. It also suggests a targeted approach towards specific customer needs and market segments. d. Strength in Research and Development: Emphasizing your company's strength in research and development is crucial. This capability not only supports innovation but also enhances product differentiation and adaptation to market trends. It can be a competitive advantage in a dynamic industry landscape. e. Infrastructure Investments: The mention of the Carbon Black Plant and Captive Power Plant at Bhuj highlights strategic investments in infrastructure. These facilities are designed to hedge against energy costs and promote energy circularity, which is increasingly important in sustainable business practices. f. Customer-Centric Approach: Your company's commitment to a customer-centric approach underscores a focus on meeting evolving customer demands and enhancing satisfaction. This approach can contribute to maintaining or growing market share despite economic uncertainties.

In summary, while acknowledging the challenges posed by global economic conditions, your company appears well-positioned with a strategic focus on R&D, niche market segments like "Off Highway Tires," and investments in infrastructure and customer relationships. These elements collectively support the growth ambitions and resilience of your Company in a volatile market environment.

10. MATERIAL CHANGES AND COMMITMENTS:

In terms of Section 134(3)(l) of the Companies Act, 2013, there are no material changes and commitments affecting the financial position of your Company which have occurred between the close of the financial year of the Company on 31^st March, 2024 to which the Financial Statements relate and up to the date of this report.

Your Company operates in a segment characterized by a wide range of products but lower production volumes. This specialization allows you to cater to diverse needs and applications effectively.

Your Company's strong product portfolio has enabled gains in market leadership. This indicates a competitive edge in offering tailored solutions to various customer segments. c. Technological Stability and Demand Consistency:

The segment your Company operates in is stable in terms of technological obsolescence and demand fluctuations. This provides a more predictable business environment conducive to strategic planning and growth. d. Expansion into Niche Markets:

Initiatives like entering the Ultra Large Earthmovers & Mining Radial Tires market and transitioning from Bias to Radial Tires demonstrate proactive expansion into lucrative niche markets. This positions your Company to capitalize on evolving industry trends. e. Infrastructure and Capacity Expansion:

Setting up India's first Ultra Large size all-steel OTR Radial tire plant and expanding capacities reflect readiness to meet growing market demands, enhancing competitiveness and operational efficiency.

Threats: a. Competitive Pressures:

Competition within the industry poses a significant threat, affecting market share and pricing strategies. Continuous innovation and differentiation are crucial to mitigate this risk. b. Talent Management Issues:

Challenges such as talent attrition, employee retention, and labor disputes can impact operational continuity and efficiency. Effective human resource strategies are essential to address these issues. c. Raw Material Price Volatility and Availability:

Fluctuations in raw material prices and supply disruptions pose financial risks and operational challenges. Strategic sourcing and supply chain management are critical to mitigate these impacts. d. Economic Downturns and Market Demand:

Economic slowdowns, particularly in key markets like India and Europe, could lead to reduced demand and capacity utilization. This underscores the importance of diversification and resilience in market exposure. e. Geo-political and Regulatory Risks:

Geo-political uncertainties, regulatory changes, and volatile exchange rates can increase operational costs and affect profitability. Adapting to regulatory requirements and maintaining financial flexibility are essential for risk management.

In navigating these opportunities and threats, your Company's emphasis on innovation, market diversification, operational efficiency, and strategic investments in infrastructure and technology will be pivotal. Proactive management of risks, along with leveraging strengths in product differentiation and customer-centric approaches, will help sustain growth and competitiveness in the dynamic tire industry landscape.

12. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS & RETURN ON NET WORTH:

As per Schedule V read with Regulation 34(3) of Listing Regulations, details of significate changes (i.e change of 25% or more as compared to the immediate previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations thereof are provided in Note No. 52 of Standalone and Note No. 54 of Consolidated financial statement respectively forming part of the Annual report.

Your Company emphasizes internal controls as a pillar of governance, providing a framework of checks and balances. This framework covers financial and operational functions, ensuring that transactions are properly authorized, recorded, and reported. b. Adherence to Policies and Procedures:

Your company has well-defined procedures, delegation of authority, and segregation of duties, which are essential for ensuring transparency and accountability in financial transactions.

IT policies and processes are robustly integrated to mitigate business risks. This includes implementing an ERP system supported by SAP software, ensuring credibility of data, compliance with regulations, and managing IT security risks. d. Continuous Improvement and Audit:

The company continuously improves its systems and processes through best practices, automation, and adoption of latest IT tools. Regular audits and reviews reinforce the effectiveness of internal controls. e. Cybersecurity and Data Privacy:

Recognizing the importance of cybersecurity, the company has adopted a Cyber Security and Data Privacy Policy. This safeguards IT assets and ensures responsible handling of personal and sensitive data in accordance with applicable laws. f. External Assessment and Audit Committee Review:

M/s. Deloitte Haskins & Sells LLP has been appointed to assess the effectiveness of internal financial controls. The Audit Committee reviews report from management and internal auditors, confirming the adequacy and effective operation of internal financial controls as of the assessment date.

Limitations and Future Considerations: a. Inherent Limitations of Internal Controls:

The company acknowledges that internal financial controls cannot provide absolute assurance due to inherent limitations. Changes in conditions or compliance may impact the effectiveness of controls over time. b. Risk Management and Compliance:

Managing risks associated with economic conditions, regulatory changes, and cybersecurity threats remains critical. Continuous adaptation and reinforcement of internal controls are necessary to mitigate these risks effectively. c. Future Adaptation and Enhancement:

As the business environment evolves, the company should remain proactive in adapting internal controls to new challenges and opportunities. This includes staying updated with regulatory requirements and technological advancements.

In conclusion, your company demonstrates a strong commitment to governance through its comprehensive internal control framework, IT integration, cybersecurity measures, and regular assessment processes. Moving forward, maintaining vigilance and agility in responding to emerging risks will be crucial for sustaining effective internal controls and ensuring long-term business resilience.

Your Company places a strong emphasis on its human capital as a cornerstone of its business strategy. Here are the key highlights and insights regarding BKT's approach to human resources and organizational culture:

BKT prioritizes respect, empathy, and dignity for its employees. The company's culture focuses on creating conditions for growth and development, enhancing capabilities through engagement, learning, and continuous development opportunities. b. Talent Management and Development:

The company invests significantly in talent management, emphasizing continuous learning, upskilling, and re-skilling. This approach ensures that employees are equipped with the skills needed for BKT's specialty product range and are prepared for evolving business demands. c. Wellbeing and Work-Life Balance:

BKT places a strong emphasis on the physical and mental health of its employees. Programs such as health surveys, medical check-ups, wellness sessions, and support for work-life balance contribute to a harmonious and productive work environment.

Effective communication channels and regular engagement activities, such as seminars, learning programs, and self-learning modules, foster a connected workforce. This helps in aligning employees with the company's vision and mission.

The management and leadership team not only establishes high-performance standards but also exemplifies the company's values and practices. They play a crucial role in creating a culture of trust, mutual respect, and continuous improvement.

BKT maintains cordial industrial relations across its plants, emphasizing trust, respect, and dignity in all interactions between workers and managers. This approach contributes to a positive work environment and organizational success.

The company believes in rewarding and recognizing its workforce through accelerated career paths and ensuring employees feel valued and motivated. This supports a high-performance culture and employee satisfaction.

As BKT grows, maintaining its strong employee-centric culture across diverse locations and increasing workforce will be crucial. Ensuring consistency in practices and values will be essential. b. Adapting to Changing Workforce Dynamics:

With a focus on young talent and succession planning, BKT needs to continuously adapt its talent management strategies to attract, retain, and develop top talent amidst industry competition. c. Economic and Industry Challenges:

External factors such as economic fluctuations and industry challenges may impact workforce dynamics and operational efficiency. BKT should remain agile in responding to these challenges while preserving its employee-centric approach.

In conclusion, BKT's commitment to its employees as invaluable assets, coupled with a strong culture of respect, engagement, and development, positions it well for sustained growth and success. By nurturing talent, prioritizing wellbeing, and maintaining strong industrial relations, BKT creates a conducive environment for both employee satisfaction and organizational performance.

15. SUBSIDIARY COMPANIES:

At the end of the year under review, the Company had one Domestic and four Overseas Wholly Owned Subsidiary Companies (WOS). The domestic WOS is known as BKT Tires Limited and the Overseas WOS are BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT TIRES INC. The Company does not have any material subsidiary as per the thresholds laid down under the Listing Regulations, 2015 A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company and can be accessed at: https://www.bkt-tires.com/ww/us/investors-desk.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure I.

Update on Merger:

A. BKT Tires Inc has been merged with BKT Exim US, Inc for simplification and ease of regulatory compliance and the name of the surviving Company has been changed to BKT Tires Inc.

B. Merger of BKT Tyres Limited with Balkrishna Industries Limited.

Your Directors at their meeting held on 24^th January, 2024 has approved the Scheme of Amalgamation of BKT Tyres Limited with Balkrishna Industries Limited and their respective shareholders under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Company has already filed the Company Application before the Hon'ble National Company Law Tribunal.

16. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief, make the following statements that: (i) that in the preparation of the annual accounts for the year ended 31^st March, 2024, the applicable accounting standards have been followed and there are no material departures from the same; (ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2024 and the Statement of Profit and Loss of the Company for the financial year ended 31^st March, 2024; (iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the Directors have prepared the annual accounts of the Company on a "Going Concern" basis;

(v) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and (vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.

17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an arm's length basis. During the year, the Company has not entered into any contracts /arrangements / transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.

The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board and can be accessed on the Company's website at https://www.bkt-tires.com/ww/us/investors-desk. The details of transactions / contracts / arrangements entered by the Company with related parties during the financial year are set out in the notes to the Financial Statement.

The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and proposed to be entered in the ordinary course of business and at arm's length during the financial year. All related party transactions are placed before the Audit Committee for review and approval.

18. CORPORATE SOCIAL RESPONSIBILITY:

The Company's social initiatives empower society at a large and provide a holistic growth platform. The Company believes that Corporate Social Responsibility (CSR) projects undertaken by it should be sustainable with the long-term purpose of improving the quality of livelihood of the less privileged. The funds on CSR projects / activities are spent very carefully to ensure that the desired objectives are achieved. CSR activities has been segregated as to have a reach in different areas such as promoting education, improving healthcare, sustainability, rural development.

The Board of Directors of the Company has approved a Corporate Social Responsibility (CSR) Policy based on the recommendation of the CSR Committee. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-II. The Board of Directors has formed a committee on CSR in accordance with the

Companies Act, 2013. The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, composition and attendance of the Directors during the financial year ended 31^st March, 2024 are given separately in the Corporate Governance Report. During FY 2022-23, the Company had spent excess CSR amount of Rs. 0.07 Lakhs. During the year under review, the Company was required to spend Rs. 3,133.51 Lakhs and considering the past excess CSR amount the Company was required to spend Rs. 3,133.45 Lakhs during FY 2023-24. The Company had identified various CSR projects having a total commitment of

Rs. 3,406.52 Lakhs The company has spent Rs. 3,406.52 lakhs for FY 2023-24, hence Company has spent excess amount exceeding

Rs. 273.07 Lakhs for 2023-24. In terms of Amendment to Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the CSR Rules 2021") effective from 22^nd January, 2021, the Company in FY 2021-22 had identified Ongoing Project upto Rs. 75 lakhs of which Company had spent Rs. 72 lakhs till 31^st March, 2022 and had deposited Rs. 3 lakhs in separate Bank account opened with a Scheduled Bank in Compliance with CSR Rules 2021 and out of Rs. 3 lakhs, Company had spent Rs. 1.5 lakhs towards ongoing Project in FY 2022-23 and has spent remaining Rs. 1.5 lakhs in FY 2023-24 in Compliance with CSR Rules 2021.

The CSR policy of the Company is available on the Company's website and can be accessed at:https://www.bkt-tires.com/in/en/investors-desk.

19. RISKS RELATED TO BUSINESS:

Risk is an integral and unavoidable component of business. BKT's nature and scale of the business operations calls for a robust risk mechanism framework to deal with impacts of external and internal environment. In today's challenging and competitive environment, mitigating risks is imperative. The key risks include volatile commodity prices, talent attrition, growing demand of customers, cybersecurity risks, etc. Common risks include changing regulations, competition, business risk, technology obsolescence, investments. Business risk, inter alia, further includes financial risk, social risk, political risk, environmental risk and legal risk. These ranges of risks have been meticulously addressed through a comprehensive risk management process. For managing risks more efficiently, the Company has undertaken a detailed risk management exercise and has identified key risks that can have a critical impact on the Company's performance. Risks, once identified, are periodically monitored, along with emerging risks on the dual scale of impact of probability. The Company has inter alia identified the following key risks: Operational Risk:

Operational risks like equipment obsolescence can impact production. To mitigate such risks, the Company continuously monitors equipment obsolescence and upgrades equipment from time to time and undertakes preventive maintenance measures. The Company has also made significant investment in equipment modernisation.

The Company's major raw material is Natural and Synthetic Rubber, Carbon Black and Nylon fabric. Due to the high demand of all the major raw materials and shutting down of some raw material manufacturers, the prices and the supply have been adversely affected. In view of this we have experienced that an increase in cost gets set off by an increase in prices over a period of time.

Market Risk:

Your Company manages market risk by expanding its presence in different markets, deeper penetration into existing markets and by launching new products. Furthermore, the Company spends requisite amount on marketing and promotional activities to ensure customer retention and brand-building. Company has also invested in building larger network of distributors and dealers across the market to avoid the risk in case of fluctuations in market.

Talent Attrition and retention of skilled manpower:

Like other players in the industry, the Company is also exposed to this risk, more particularly when there is shortage of skilled manpower in the industry.

Additionally, the manufacturing process of the Company is labour intensive, it requires lot of skilled as well as un-skilled workers. Maintaining a huge work force is a challenging task. In order to mitigate the said risk, the Company follows good HR practices to promote the welfare and safety of its workmen and maintain a cordial working environment. All workers are paid more than government stipulated wages and company provides various opportunities to its employees for career development.

Currency Fluctuation:

The Company revenues are mainly through exports. Further, since most of the raw materials and capital equipment are imported, the Company is exposed to foreign currency risk. However, it enjoys natural hedge as most of its revenues are in foreign currency. However, since, the Company is a net foreign exchange earner and hedges most of its net exposure in advance by way of forward contracts, it is immune to a large extent from the fluctuation in currencies.

Cyber Security / Technology Risk:

Due to growing digitalisation the company is exposed to vulnerability to cyber-attacks. To mitigate such risks your company has implemented policies and procedure for Cyber Security and data privacy. Also, adaptation of Security operations control and technologies to safeguard IT data and applications. Focus is also maintained on mandatory employee training on cybersecurity awareness.

Hazard risks arise from property loss or business interruption, shortcomings or failures in employee safety or environmental management systems.

Climate Risk:

Assessing climate change risks is essential for our company to manage potential impacts and capitalize on emerging opportunities proactively. Understanding the physical, transition, and supply chain risks associated with climate change, we can develop robust strategies to enhance our resilience, ensure business continuity, and contribute to a more sustainable future. Hence, we are in the process of undertaking a comprehensive assessment to outline the critical climate change risks specific to our business and propose strategies to build resilience and sustainability.

This comprehensive assessment will serve as a foundational guide for integrating climate change considerations into our business strategy, fostering innovation, and ensuring our company's long-term success in an evolving global landscape.

RISK MANAGEMENT AND MITIGATION:

‘Risk Management' is the identification, assessment, and prioritisation of risks followed by coordinated and economical application of resources to minimise, monitor and control the probability and/or impact of uncertain events or to maximise the realisation of opportunities. Risk management also provides a system for the setting of priorities when there are competing demands on limited resources. Risk management also attempts to identify and manage threats that could severely impact or bring down the organisation. With an endeavor to augment the risk mitigation efforts, your Company has formulated and implemented a detailed Business Continuity Plan during the year. An overarching coverage of the same is also available on the company's website.

The Company's Board of Directors has an overall responsibility for the establishment and overseeing of the Company risk management framework. Pursuant to Regulation 21 of Listing Regulations, 2015 Risk Management Committee was constituted comprising of Mr. Pannkaj Ghadiali, an Independent Director as Chairman of the Committee, Mr. Arvind Poddar and Mr. Vipul Shah, Directors of the Company are members of the Committee. The primary objective of the Committee is to control the various risks that the Company is exposed to, with a view to prevent unacceptable losses, to provide an effective means of identifying, measuring and monitoring credit exposure risks by the Company and to keep such risk at or below predetermined levels. The Company has framed an Enterprise Risk Management Policy (the "Policy") to realise the following benefits for the Company: a. Augment risk management for the organization including strategy setting. b. Facilitate risk-based decision making. c. Improve governance and accountability. d. Enhance credibility with key stakeholders such as investors, employees, government, regulators, society, etc. e. Create, protect and enrich stakeholder value.

The policy contains the objectives of risk management, company's approach to risk management and the risk organization structure for identification, management and reporting of risks. The policy specifies the roles and responsibilities of key stakeholders and other key personnel of the Company with regards to risk management. The policy also aims to ensure and identify process of risk identification and management in compliance with the provisions of the Companies Act, 2013.

Following objectives are achieved through the Risk Management program of the Company viz: a. Enable organizational sustainability taking cognizance of the impact of its products, services & operations on society and the environment b. Reduce potential gaps in achieving company's objectives c. Align and integrate existing risk management practices in the organization d. Build confidence of investment community and stakeholders e. Enhance Corporate Governance f. Successfully respond to changing business environment Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's Activities. The Company has exercised Statutory Safety, Occupational Health and Environmental, Fire Safety, Electrical Safety Audits. For the year under review, your Company achieved substantial improvements in the results of Safety index and Fire Safety index by adopting new initiatives. Focused drive was taken on critical processes and operations.

Rising awareness in the supplier community was initiated to encourage their consultation and participation in order to enable them to overcome current and future business risks.

The Audit Committee oversees how management monitors compliance with the Company's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit Committee.

There are no risks, which in the opinion of the Board threaten the existence of the Company.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Your Directors are pleased to inform that based on the recommendations of the Nomination and Remuneration Committee as well as Board of Directors, the Shareholders by passing Ordinary resolution through Postal Ballot dated 29^th December, 2023 have re-appointed Mr. Rajiv Poddar, as Joint Managing Director of the Company for a period of further five years with effect from 22^nd January, 2024 and Mrs. Shruti Shah has been reappointed for a second term of five years from 8^th February, 2024 to 7^th February, 2029 which was approved by the Members by way of Special Resolution on 29th December, 2023 (via Postal Ballot). During the year, Mr. Sandeep Junnarkar (DIN:00003534) and Mr. Rajendra Hingwala (DIN:00160602) ceased to be a Director of the Company with effect from 28^th March, 2024 upon completion of their term as an Independent Director. Your Directors place on record their appreciation of the guidance given and services rendered by Mr. Sandeep Junnarkar and Mr. Rajendra Hingwala during their tenure as Independent Director of the Company.

During the year under review, based on the recommendations of the Nomination and Remuneration Committee, the Board had appointed two New Directors Mr. Laxmidas Merchant (DIN: 00007722) and Mr. Rahul Dutt (DIN: 08872616) as an Director (Non-Executive, Independent) of the Company w.e.f 28^th March, 2024 by passing special resolution through Postal Ballot dated 29^th December, 2023.

Mrs. Vijaylaxmi Poddar (DIN 00160484) retires by rotation and being eligible, offers herself for re-appointment. A resolution seeking Shareholders' approval for her re-appointment along with other required details forms part of the Notice.

The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 as well as Regulation 16(1)(b) of the Listing Regulations, 2015.

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirement set out by the SEBI. The Company has complied with the requirements of Corporate Governance as stipulated under the Listing Regulations, 2015 and accordingly, the Report on Corporate Governance forms part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of the Corporate Governance is attached to the Report on Corporate Governance.

21. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of Directors, Key Managerial Personnel and remuneration of other employees including senior management employees who have the capacity and ability to lead the Company towards achieving sustainable development. The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of the Board's Report.

The Criteria for appointment and remuneration of Directors is as under:

(i) Criteria for Appointment of Managing Director / Whole Time Director/ Director:

The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tire Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.

(ii) Criteria for Appointment of Independent Director:

The Independent Director shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.

22. PERFORMANCE EVALUATION:

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to applicable provisions of the Act and the corporate governance requirements as prescribed by applicable regulations of Listing Regulations 2015.

The Board as a whole functions cohesively. The Committees function well in their respective areas, and the recommendations of the Committees are considered and have been accepted by the Board. The Directors bring to the table their knowledge and experience. Independent Directors are rated high in understanding your Company's business and expressing their views freely during deliberations. The Non-Executive Directors score well in all aspects. Executive Directors are action-oriented and good in implementing Board decisions. The Chairman leads the Board effectively and encourages active participation and contribution from all the Board members.

The performance of the Board was evaluated after seeking inputs from all the Directors present in the meeting based on criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The Nomination and Remuneration Committee had evaluated the performance of individual Directors based on criteria such as the contribution of the individual Director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

Performance evaluation of Independent Directors was carried out by the entire board. A meeting of the Independent Director for the 2023-24, with Mr. Pannkaj Ghadiali as the Chairman, was held on 19^th March, 2024, to review the performance of the Non-Independent Directors, the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. The same were discussed in the board meeting that followed the meeting of the Independent Directors, at which the performance of the board, its committees, and individual Directors were also discussed. The Directors expressed their satisfaction with the evaluation process.

23. AUDITORS: Statutory Auditor:

Pursuant to Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the members of the Company at its AGM held on 7^th July, 2022 had approved the appointment of M/s Jayantilal Thakkar & Co. (Firm Registration Number 104133W) as the Statutory Auditors for a period of 5 (five) consecutive financial years from the conclusion of 60^th AGM till the conclusion of the 65^th AGM. Pursuant to amendments in section 139 of the Companies Act, 2013, the requirements to place the matter relating to such appointment for ratification by members at every AGM, is not required. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.

The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report do not contain any qualification, reservation, adverse remark or disclaimer.

Internal Auditor:

The Board has appointed M/s. RTD & Associates, Chartered Accountants as Internal Auditors for a period of 1 (One) year for Financial Year 2024-25 under Section 138 of the Companies Act, 2013 and they have completed the Internal Audit as per the scope as defined by the Audit Committee.

Secretarial Auditor:

The Company has appointed Mr. G.B.B Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2024-25 as required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. Further, pursuant to SEBI Circular CIR/CFD/ CMD1/27/2019 dated 8^th February, 2019, Mr. G.B.B Babuji, has also conducted the Annual Secretarial Compliance. The Secretarial Audit Report for the financial year ended 31^st March, 2024 is annexed herewith marked as Annexure – III.

Cost Auditor:

Your Company is required to make and maintain cost records as specified by the Central Government under sub-section (1) of section 148 of the Act. Accordingly, your Company has been making and maintaining such cost records as per the requirements. The cost records are maintained in such manner which enable the Company to exercise, to the extent possible, control over the various operating costs to achieve optimum economies in utilization of resources.

During the year, Company's revenue from exports, in foreign exchange, does not exceeds 75% per cent of the Company's total revenue and pursuant to Rule 4 of Cost Records Rules of Companies Act, 2013 as amended from time to time, Cost Audit is applicable to the Company for the financial year 2023-24.

In terms of Section 148 of the Act read with Companies (Cost Records and Audits) Rules, 2014, the Audit Committee recommended and the Board of Directors appointed M/s. RA and Co., Cost Accountants (Registration No. 000242) being eligible, as Cost Auditors of the Company, to carry out the cost audit of products manufactured by the Company in relation to the financial year ending 31^st March 2024. Your Company has received their written consent that the appointment is in accordance with the applicable provisions of the Act and Rules framed thereunder. The Cost Auditor have confirmed that their appointment is within the limits of section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act, 2013. The Audit Committee has also received a Certificate from the Cost Auditors certifying their independence and arm's length relationship with the Company.The remuneration of Cost Auditors has been approved by the Board of Directors on the recommendation of the Audit Committee. As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. In terms of the Act and Rules thereunder requisite resolution for ratification of remuneration of the Cost Auditors by the members has been set out in the Notice of the 62nd AGM of your Company. In the opinion of the Directors, considering the limited scope of audit, the proposed remuneration payable to the Cost Auditors would be reasonable and fair and commensurate with the scope of work carried out by them.

24. AUDITOR'S QUALIFICATION:

There are no qualifications in the reports of the Statutory Auditors and Secretarial Auditor. There was no instance of fraud during the year under review, which is required to be reported by Statutory Auditors in their reports as mentioned under sub-section (12) of Section 143 of the Act.

25. INDUSTRIAL RELATIONS:

The industrial relations with staff and workers during the year under review continue to be cordial.

26. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

There is no change in the nature of business of your Company during the year under review.

27. DISCLOSURES: i. Vigil Mechanism /Whistle Blower Policy:

The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of SEBI (Listing Obligations and Disclosure Requirements), 2015 deals with instances of fraud and mismanagement, if any. Adequate safeguards have been provided against victimization of persons who use the vigil mechanism. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at: https://www.bkt-tires.com/ww/us/investors-desk. ii. Audit Committee:

During the year, Mr. Sandeep Junnarkar (DIN:00003534) and Mr. Rajendra Hingwala (DIN:00160602) has completed their tenure as Independent Director of the Company and accordingly, the Audit Committee was reconstituted with Mr. Pannkaj Ghadiali an Independent Director as Chairman, Mrs. Shruti Shah, Mr. Laxmidas Merchant, Mr. Rahul Dutt Independent Directors as the members.

All the recommendations made by the Audit Committee have been accepted by the Board. All the members have relevant experience in financial matters. iii. Number of Board Meetings:

The Board of Directors of the Company met six times in the year, the details of which are provided in the Corporate Governance Report. iv. Particulars of loans given, investment made, guarantees given and securities provided:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in Note Nos. 5,10,14, 46 and 48 to the financial statement forming part of this Annual Report. v. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - IV and forms an integral part of this report. vi. Annual Return:

Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copies of the Annual Returns of the Company prepared in accordance with Section 92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014 may be accessed on the Company's website at: https://www.bkt-tires.com/ww/us/investors-desk. vii. Particulars of Employees and related disclosures:

The information required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - V.

A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.

However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/ corporate office of the Company. The aforesaid information is available for inspection 21 days before and up to the date of the ensuing AGM during the business hours on working days.

viii. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:

The Company has formulated and implemented a policy of prevention of sexual harassment at the workplace with mechanism of loading/redressal complaints. During the year under review, there were no complaints reported to the Board. ix. Business Responsibility and Sustainability Committee Report:

Your Company does business that delivers long-term shareholder value and benefits the society. Your Company continue to focus on its commitments which are aligned with national priorities and United Nations Sustainability Development Goals. With regard to sustainability, various initiatives being taken under the ambit of Environment, Social and Governance (‘ESG') are more particularly described under the relevant sections as reported in this Annual Report as well as the Business Responsibility and Sustainability Report.

In terms of Regulation 34 of the Listing Regulations, 2015 read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under "Business Responsibility and Sustainability Report" (‘BRSR'). The BRSR seeks disclosure on the performance of the Company against nine principles of the "National Guidelines on Responsible Business Conduct' (‘NGRBCs'). Accordingly, for the financial year ended 31^st March, 2024, your Company is publishing Business Responsibility Report. BRSR describes the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure – VI and forms an integral part of the Annual Report. x. Compliance with the Institute of Company Secretaries of India ("ICSI") Secretarial Standards:

The relevant Secretarial Standards issued by the ICSI related to the Board Meetings and General Meeting have been complied with by the Company.

No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review: a. Details relating to deposit and unclaimed deposits or interest thereon. b. Issue of equity shares with differential rights as to dividend or voting. c. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme. d. None of the managerial personnel i.e. Managing Director, Joint Managing Director and Whole-time Director of the Company are in receipt of remuneration / commission from Subsidiary Companies of the Company. e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Company's operation in future. xi. IBC Code & One-time Settlement:

There is no proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (IBC Code). There has not been any instance of one-time settlement of the Company with any bank or financial institution.

28. CAUTIONARY STATEMENTS:

Certain statements in the "Director's Report & Management Discussion and Analysis" describing the Company's views about the Industry, expectations/ predictions, objectives etc., may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the Statement. Company's operations may inter-alia affect with the supply and demand stipulations, input prices and their availability, changes in Government regulations, taxes, exchange fluctuations and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.

29. APPRECIATION:

Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilization of the Company's resources for sustainable and profitable growth.

The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the dedicated and committed services by the Company's executives, staff and workers.

Last but not the least, your Directors wish to place on record their warm appreciation to you for your continuous support and encouragement.