Eastern treads Annual report 2013-14

COMPANY INFORMATION

BOARD OF DIRECTORS

Mr. Navas M Meeran Chairman

Mr. M.E. Mohamed Managing Director

Mr. M.S. Ranganathan Director

Mr. M.S. Sebastian Director

Mr. Naiju Joseph Director

Mr. K.S Neelacanta Iyer Director

Mr. K.V. Rajagopalan Nair Director (Nominee of KSIDC)

CS. Baiju.T Company Secretary

REGISTERED & CORPORATE OFFICErd

3A, 3 Floor, Eastern Corporate Office, 34/137 E,

NH Bypass, Edappally, Kochi, Ernakulam-682 024, Kerala

CIN: L25119KL1993PLC007213

FACTORYOonnukal, Kothamangalam, Ernakulam

BANKERSThe Federal Bank Limited

AUDITORSJVR & Associates, Chartered Accountants

South of South Overbridge

39/3639, Valanjambalam Lane,

Kochi, Ernakulam 682016

REGISTRAR & SHARE TRANSFER AGENTSIntegrated Enterprises (India) Limited,

nd2 Floor, 'Kences Towers' No.1,

Ramakrishna Street,

North Usman Road, T.Nagar,

Chennai-600017

INVESTOR CORRESPONDENCEThe Company Secretary

Eastern Treads Limitedrd

3A, 3 Floor, Eastern Corporate Office,

34/137 E, NH Bypass, Edappally, Kochi,

Ernakulam-682 024, Kerala

CONTENTS

Notice ..............................................................................................3

Directors' Report ............................................................................11

Form A...........................................................................................17

Report of Corporate Governance....................................................18

Auditor's Certificate.........................................................................29

Management Discussion & Analysis...............................................30

Auditor's Report...............................................................................34

Balance Sheet.................................................................................39

Profit and Loss Statement...............................................................40

Notes to Financial Statements........................................................41

Cash Flow Statement......................................................................56

Dear shareholder,

Warm greetings to you!

It is my pleasure and privilege to communicate to you through this annual report. In spite of arduous defies on several fronts we are able to reform the year 2013-14 to another eventful and successful year in our passionate journey towards sustainable development. Our performance in totality has been encouraging and on the financial front, I'm proud to announce that despite the volatile market conditions, our revenue has grew by 37.31 % and we are able to report a quantum leap in net profit, by 54.05 %, the highest-ever net profit since its inception. This spectacular achievement is the result of our operational excellence and goal oriented efforts.

It is evident that our products has gained greater and wider acceptance which backed us to get orders from institutional buyers like Sate Road Transport Corporations. Besides the dealer networks, our services to cater indigenous retreading requirements have been further supported by franchise partners.Towards our international reach, we are able to explore various international markets like UAE, African Countries, Nepal, Bangladesh, Bhutan etc.

Since the tyre retreading gives better road performance than new tyres at an absolute minimum fiscal impact, this industry has gained greater acceptance and better position in tyre replacement market. Retreading has other distinct advantages like prolonged tyre life, prevention of premature disposal etc. which leads to saving of energy and natural resources. Hence tyre retreading effectively addresses the environmental apprehensions and has become an ecological as well as economical choice.

Currently Eastern Brand has emerged as a premier tyre retreading solution provider with quality products and manufacturing facility in tune with market necessities. We're equipped to cater the market requirements by supplying products to cover all stages of the retreading process of every tyre size of all vehicles. This has made our brand a favourite for major retreading companies and RTCs in our indigenous and international markets and now we are competing with multinational branded tyre manufacturers who have recently entered into this industry.

Similar to international scenario our native market is also moving towards branding of tyre retreading products and we have actively taken various brand building exercises like introduction of new face to our website and logo towards better brand visibility, fleet owner's campaigns, ads etc. In this dynamic industrial environment our future growth prospects are associated with our ability to cater our consumer expectations. In this juncture I'm confident that we have bright future and ability to deliver better results to all our stakeholders.

In this scenario, I would like to thank our biggest resource and asset, our employees for taking concomitant efforts to achieve our goals and targets through significant efforts, goal oriented hard-work and commitment. I'm confident that this young and dynamic Eastern Team will drive us towards greater heights notwithstanding the challenges that may arise in future.

Let me take this opportunity to express my sincere appreciation to my colleagues on Board for their immense contribution and cooperation in charting a road map. Before I conclude, let me also express my gratitude to our Customers, Business Associates, Suppliers, Bankers and Statutory Authorities. Let me thank all of you for your continued confidence and support.

With warm regards

Navas M Meeran

Chairman

EASTERN TREADS LIMITEDCIN: L25119KL1993PLC007213

3A, 3rd Floor, Eastern Corporate Office, 34/137 E,


NOTICE TO SHAREHOLDERS

stNOTICE is hereby given that the 21 Annual General Meeting of the members of Eastern Treads Limited th

will be held at Hotel Park Central, Kaloor, Ernakulam, Kochi - 682017, Kerala on Tuesday, 24 June 2014,

at 3.00 P.M to transact the following business:-

A) Ordinary Business:

st1. To receive, consider and adopt the Audited Balance sheet as at 31 March 2014 and the Profit and

Loss Statement for the year ended on that date together with the Reports of the Directors' and

Auditors' thereon.

2. To appoint a Director in place of Mr. Navas M Meeran, who retires by rotation and, being eligible, offers

himself for re-appointment.

3. To appoint Auditors for a period of 3 years and fix their remuneration, the retiring Auditors M/s. JVR &

Associates, Chartered Accountants, Kochi -16 are eligible for re-appointment.

B) Special Business:

4. To consider and if thought fit, to pass with or without modification, the following resolution as a special

resolution:-

th RESOLVED THAT in supersession of the Resolution No: 7 passed at the 15 Annual General

Meeting of the Company held on 29/09/2008 and pursuant to Section 180 (1) (c) and other applicable

provisions if any of the Companies Act, 2013, and the rules made thereunder (including any statutory

modification(s) or re-enactment thereof for the time being in force)consent of the members be and is

here by accorded to the Board of Directors of the Company for borrowing from time to time any sum of

money on such terms and conditions and with or without security as the Board may think fit which,

together with the money already borrowed by the Company (apart from the temporary loans obtained

or to be obtained from the Company's bankers in the ordinary course of business) may exceed the

aggregate of the paid up capital of the Company and its free reserves, that is to say reserves not set

apart for any specific purpose, provided that the total amount of money so borrowed shall not at any

time exceed the limit of Rs. 50 Crores (Rupees Fifty Crores).

st21 Annual Report 2013-14

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5.

6.

To consider and if thought fit, to pass with or without modification, the following resolution as a special resolution:-

RESOLVED THAT pursuant to Section 188 and other applicable provisions if any of the Companies Act, 2013 and The Companies (Meetings of Board and its Powers) Rules, 2014, (including any statutory modification(s) or re-enactment thereof for the time being in force) consent of the members be and arehere by accorded to enter into contracts for Sale, Purchase or Supply of Raw materials, Compounds and Finished Goods and availing and rendering of job works for a period of 5 years with effect from the date of execution of the contracts for an amount not exceeding Rupees Three Crores, per year with each of the following Related Parties namely 1) Alfa Rubbers, 2) Sahara Treads, 3) Rosekhan Industries, 4) Vazhakkulam Rubbers and 5) Eastern Retreads (P) Ltd.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds and things as may be necessary, desirable or expedient and to take all necessary steps, for and on behalf of the Company and is authorised and empowered to negotiate, fix the price and agree upon other terms and conditions and enter into legal agreement and contracts to the extent the Board of Directors may consider appropriate, as may be permitted or authorised in accordance with any provisions under the Companies Act, 2013.

RESOLVED FURTHER THAT the Board of Directors be and is hereby authorised to take such steps as the Board may consider necessary or expedient to give effect to this resolution.

By Order of the BoardFor Eastern Treads Limited

Kochi Baiju. T17/05/2014 Company Secretary

To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution:-

RESOLVED THAT pursuant to Section 148(3) and other applicable provisions if any of the Compa-nies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, (including any statutory modifi-cation(s) or re-enactment thereof for the time being in force) and subject to such guidelines and approval as may be required from the Central Government the reappointment of Mr. K.A Felix, Proprietor, M/s. K.A Felix & Co., Cost Accountants, Cochin as the cost auditor(s) of the Company to conduct audit of cost accounting records maintained by the Company for the year ending on 2014-15 on a remuneration of Rs. 50,000/- plus service tax be and is hereby ratified.

Notes:-

1. A member entitled to attend and vote at the meeting is entitled to appoint a 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.

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 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. The enclosed proxy form, if intended to be used, must reach the registered office of the Company duly

completed not less than 48 hours before the scheduled time of the meeting.

4. 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.

5. The required Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 in respect

of the items under Special Business is annexed herewith.

6. The Register of Members and Share Transfer Books of the Company will remain closed from

Tuesday, 17/06/2014 to Tuesday, 24/06/2014 (both days inclusive).

7. 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, which is 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.

8. 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.

9. Members and Proxies attending the meeting are requested to bring the annual report to the meeting

as extra copies will not be distributed.

10. 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 / her holding may do so through any of the depository participants. The ISIN of the

equity shares of the Company is INE500D01015.


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11. Members may note that transferees of shares of the Company in physical form shall furnish copy of

PAN card to the Company/RTAs for registration of such transfer of shares.

12. Members are requested to address all correspondences, including change in their addresses, to the

Company or to the Registrar and Share Transfer Agents, M/s. Integrated Enterprises (India) Limited, nd

2 Floor, Kences Towers, No:1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai -

600017. Email: [email protected]. Members whose shareholding are in electronic mode

are requested to approach their respective depository participants for effecting change of address.

13. If any of the members are holding shares in the same name or in the same order of names, under

different folios, then members are requested to notify the same to the Registrar and Share Transfer

Agents 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 10 days in advance, so as to enable the Company to

keep the information ready.

15. Notice of this Annual General Meeting, Audited Financial Statements for 2013-14 along with

Directors' Report and Auditors Report are available on the website of the Company,

www.easterntreads.com.

16. 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

Rregistrar and Share Transfer Agent. The said nomination form can also be downloaded from the

Company's website www.easterntreads.com.

17. As per Circulars issued by the Ministry of Corporate Affairs, Members are requested to provide their

email address to the Company/ the Registrar and Transfer Agents or update the same with their

depositories to enable the Company to send the documents in electronic form.

18. Voting through Electronic means

a) In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the

Companies (Management and Administration) Rules, 2014, the Company is pleased to provide st

members facility to exercise their right to vote at the 21 Annual General Meeting (AGM) by

electronic means and the business may be transacted through e-Voting Services provided by

National Securities Depository Limited (NSDL). The instructions for e-voting are as under:

A. In case a Member receives an email from NSDL {for members whose email IDs are

registered with the Company/Depository Participants(s)}:

(i) Open email and open PDF file viz; Eastern Treads e-Voting.pdf with your Client ID or

Folio No. as password. The said PDF file contains your user ID and password/PIN for

e-voting. Please note that the password is an initial password.


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

(iii) Click on Shareholder - Login

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

(v) 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.

(vi) Home page of e-voting opens. Click on e-Voting: Active Voting Cycles.

(vii) Select EVEN of Eastern Treads Limited.

(viii) Now you are ready for e-voting as Cast Vote page opens.

(ix) Cast your vote by selecting appropriate option and click on Submit and also

Confirm when prompted.

(x) Upon confirmation, the message Vote cast successfully will be displayed.

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

(xii) 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]

B. 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} :

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

EVEN (E Voting Event Number) USER ID PASSWORD/PIN(ii) Please follow all steps from Sl. No. (ii) to Sl. No. (xii) above, to cast vote.

b) In case of any queries, you may refer the Frequently Asked Questions (FAQs) for Shareholders

and e-voting user manual for Shareholders available at the Downloads section of

www.evoting.nsdl.com

c) If you are already registered with NSDL for e-voting then you can use your existing user ID and

password/PIN for casting your vote.

d) 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 e-voting period commences on 18/06/2014 (9:00 am) and ends on 20/06/2014 (6:00 pm).

During this period shareholders of the Company, holding shares either in physical form or in

dematerialized form, as on the cut-off date of 16/05/2014, may cast their vote electronically.


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voting The e module shall be disabled by NSDL for voting thereafter. Once the vote on a resolution

is cast by the shareholder, the shareholder shall not be allowed to change it subsequently.

f) The voting rights of shareholders shall be in proportion to their shares of the paid up equity share

capital of the Company as on the cut-off date of 16/05/2014.

g) CS. Satheesh Kumar. N, Company Secretary (Membership No. 16543), Partner M/s. Satheesh &

Remesh, Company Secretaries has been appointed as the Scrutiniser to scrutinise the e-voting

process in a fair and transparent manner.

h) The Scrutinizer shall within a period not exceeding three (3) working days from the conclusion of

the e-voting period unblock the votes in the presence of at least two (2) witnesses not in the

employment of the Company and make a Scrutinizer's Report of the votes cast in favour or

against, if any, forthwith to the Chairman of the Company.

i) The results shall be declared on or after the AGM of the Company. The results declared along with

the Scrutiniser's Report shall be placed on the Company's website http://www.easterntreads.com

and on the website of NSDL within two (2) days of passing of the resolutions at the AGM of the

Company and communicated to Bombay Stock Exchange, Cochin Stock Exchange and Madras

Stock Exchange.

19. Details of the Director seeking reappointment at the Annual General Meeting as required under

Clause 49 of the Listing Agreement is as follows:-

The Chairman of the Company, Mr. Navas M Meeran, aged 45 years, joined the Board of Directors of

the Company on 26/08/1997. He is a Post Graduate in Business Management. He is the recipient of

'Kamal Patra' award from the Indian Junior Chamber for being an outstanding young entrepreneur of

the year in 1994. He hails from a respectable business family in Adimali renowned for manufacturing

and exporting of spices and curry powder. He has been involved in the business of spices for the last

27 years and having immense practical experience in tyre retreading industry. Presently he is the

Chairman of Eastern Group of Companies and Confederation of Indian Industries (CII), Southern

Region Council. Earlier he was the Deputy Chairman of CII, Southern Region Council. He has also

held the position of the Chairman of the CII, Kerala Chapter. Presently he is the Director of the

following other public limited companies:

1. Adimali Industries Limited

2. Kerala State Industrial Development Corporation Ltd

3. Mather Projects and Constructions Ltd

He is not a Chairman or Member in Committees of Directors in other public limited companies. He

holds 6,20,800 Equity Shares and 6,00,000 Preference Shares in the Company. His Director

Identification No. is 00128692. He is not related any of the Directors of the Company, except with Mr.

M.E Mohamed, Managing Director.


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Explanatory Statement pursuant to Section 102 of the Companies Act, 2013:-

Item No.04

Pursuant to Section 180 (1) (c) of the Companies Act 2013, the Board of Directors cannot except with the

consent of the Company by special resolution borrow money apart from temporary loans obtained from

the Company's bankers in the ordinary course of business, in excess of the aggregate of paid up capital

and free reserves of the Company, that is to say, reserves not set apart for specific purpose.

thAt the 15 Annual General Meeting of the Company held on 29/09/2008 the shareholders had authorized

the Board to borrow money up to `25 Crores (Rupees Twenty Five Crores) at any time in excess of the aggregate of the paid up capital of the Company and its free reserves.

In view of the growing operations, the Company requires additional funds and as an abundant caution it is

proposed to increase the power of borrowing from ` 25 Crores (Rupees Twenty Five Crores) to ` 50 Crores

(Rupees Fifty Crores).

Accordingly, the consent of the shareholders by way of special resolution pursuant to Section 180 (1) (c) of

the Companies Act, 2013 is being requested to enable the Board to borrow to the extent of `50 Crores (Rupees Fifty Crores) in supersession of the earlier resolution passed on 29/09/2008.

None of the Directors is interested or concerned in the said resolution.

Item No.05

Pursuant to Section 188 of the Companies Act, 2013 and The Companies (Meetings of Board and its

Powers) Rules, 2014, no contracts or arrangement with a related party with respect to the transactions

specified in that Section can be entered by our Company, other than transactions which are entered in the

ordinary course of business on an arm's length basis without the consent of the shareholders by special

resolution.

In view of the growing operations, the Company requires to trade, avail and render job works with following

Related Parties namely 1) Alfa Rubbers, 2) Sahara Treads, 3) Rosekhan Industries, 4) Vazhakkulam

Rubbers and 5) Eastern Retreads (P) Ltd.

Even

Finished Goods and to avail and render job works with the above Related Parties for a period of 5 years

though the transactions will be entered in the ordinary course of business of the Company on arms

length basis, as good Corporate Governance the consent of the shareholders by way of special resolution

pursuant to Section 188 of the Companies Act, 2013 and the Rules made thereunder is being requested to

enable the Board to enter into contracts for Sale, Purchase or Supply of Raw materials, Compounds and


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effect from the date of execution of the contracts for an amount not exceeding Rupees Three Crores per

withyear with each Related Party.

Mr. Navas M Meeran, Chairman, and Mr. Naiju Joseph Director are interested or concerned in the said resolution as they are having following interests in the Related Parties.

SlNo Name Entity Interested Director Nature of Interest

1 Alfa Rubbers Proprietorship Mr. Navas M Meeran Wife is Proprietor

2 Sahara Treads Proprietorship Mr. Navas M Meeran Mother is Proprietor

3 Rosekhan Industries Proprietorship Mr. Navas M Meeran Brother is Proprietor

4 Vazhakkulam Rubbers Partnership Mr. Navas M Meeran & Both are Partners Mr. Naiju Joseph

5 Eastern Retreads (P) Ltd Company Mr. Navas M Meeran & Both are Directors and Mr. Naiju Joseph Members

Item No.06

A proposal for appointment of Cost Auditor for 2014-15 was recommended by the Audit Committee to the Board. It was proposed to re-appoint M/s. K.A Felix & Co., Cost Accountants, Cochin as Cost Auditors. Certificate dated 28/04/2014 issued by the above firm regarding their eligibility for appointment as Cost Auditors will be available for inspection at the registered office of the Company during 11.00 A.M to 1.00 P.M and shall also available at the meeting.

As per Rule 14 of Companies (Audit and Auditors) Rules 2014, the appointment and remuneration paya-ble to the Cost Auditors is to be ratified by the Shareholders. Hence this resolution is put for the consider-ation of the shareholders.

None of the Directors and Key Managerial personnel or relatives of them are interested in the above resolution. The Board of Directors recommends the resolution for your approval.


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EASTERN TREADS LIMITEDCIN: L25119KL1993PLC007213

rd3A, 3 Floor, Eastern Corporate Office, 34/137 E,


DIRECTORS' REPORT

Dear Member,

Your Directors have pleasure in presenting the Annual Report along with the audited statements of st

accounts of your Company for the financial year ended 31 March, 2014.

Financial Highlights

The performance of your Company has been satisfactory. The following table shows the operational

results of the Company for the year 2013-14 as compared to that of the previous year.

Operations

stYour Company has reported a revenue growth of 37.31 % during financial year ended 31 March 2014.

The revenue has augmented from `6,499.80 Lakhs to `8,924.72 Lakhs and the PBIDT amounted to `409.36 Lakhs as against `267.11 Lakhs during the previous year, registering an increase by 53.26%. During this year your Company has posted a quantum leap in net profit by reporting a growth by 54.05 %,

the highest-ever net profit since its inception. The net profit amounted to `164.09 Lakhs as against `106.52 Lakhs during the previous year.

Revenue from Operations 8,924.72 6499.80

Other Income 32.62 3.81

Total Revenue 8,957.34 6503.61

Expenditure 8,547.98 6236.50

Profit before Interest, Depreciation and Tax 409.36 267.11

Financial Cost 82.59 58.41

Depreciation and Amortization 79.09 58.52

Profit before tax 247.68 150.18

Profit after tax 164.09 106.52

(` in lakhs)

Year ended

31/03/2014 31/03/2013

This spectacular achievement is the result of goal oriented workings, cost effective production, increase

in operational efficiency and better working capital management. Furthermore, major orders from Road

Transport Corporations, International Markets and healthier support by franchise partners are important

backings to our remarkable achievement. Now your Company is aiming to pursue higher levels by

expanding its activities in international and domestic markets especially in institutional buyers markets.

Dividend

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

Current Scenario

Our Company and the tyre retreading industry in general show healthy signs during this financial year.

Various factors like cost advantage, increasing number of vehicles, demand by tyre replacement market,

logistic network, improvement in quality of roads, overloading norms, increasing level of radialisation etc.

drive retreading and it helped our Company to grow further.

The changes in consumer behavior due to monetary benefits, technological innovations and

advancement in manufacturing systems are important factors which helped the retreading to emerge as a

part of overall tyre management program. Now the retreading holds out as an economically viable option

for fleet owners. Hence, your Company is enthusiastic in its development prospects.

The Company has gone through a challenging year which has showed volatility in raw material prices.

Even though the rubber price has declined from its peak level other input costs like labour, power and

other raw materials continued its increasing trend and has affected the profitability. However the volatile

market condition has forced the Company to offer further reduction in price to its finished goods. To face

this challenge we strive to save cost in all areas of production to offer better competitive price. Our

continuous improvement in production process, cutting edge technology, good customer care, vendor

development and better utilization of resources also helped the Company to achieve our remarkable

growth in profitability.

Your Company has grown over the years and is widely recognized as a world class manufacturer of tyre

retreading materials. Now Eastern Treads has a brand image closely associated with tyre retreading

industry and the Company is arming towards a bright future.

Marketing Strategy

Over the years we built our Eastern brand and recognition as a premier tyre retreading solution provider.

Your Company is one of the market leaders in the production of tyre retreading materials and has proven

to the market that we are firmly committed to supply quality products. We provide premium quality

retreading products that can offer better value and more strength by producing reliable retreads that have

good characteristics in mileage, heat dispersion and traction. Now we earned reputation as a specialist

in producing comprehensive range of tyre retreading materials that can excel in all weather and road

conditions.


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Our extensive product portfolio with Eastern brand are sold through our domestic and international

business networks. This brand reputation with quality products facilitated us to get acceptance in

institutional buyers like large retreading companies and Road Transport Corporations. This abetted us to

get the order from KSRTC to cater their entire retreading requirement and major orders from MSRTC

during this year. Moreover our retreading services have been further supported by our franchise partners,

reflecting strong growth in our priority markets. Our healthy network and brand presence have enabled us

to further expand our presence internationally. Now we are growing our presence in various export

markets like UAE, African Countries, Nepal, Bangladesh, Bhutan etc. and are exploring various

international markets.

Now we emphasis to further intensify our customer base by better market penetration in existing as well as

new geographies and to further strengthen and establish a long standing association with our consumers

by providing total tyre retreading solutions. As there is a growing demand for quality products in domestic

and international markets, with our brand image on well performing products and with more than two

decades of manufacturing experience in retreading industry we are on the move to capture our market

share globally by offering premium range retreading materials.

Raw Materials

Even though the prices of key raw materials like natural and synthetic rubber come down from its peak

level prices of other inputs have increased due its supply deficit. Import of such inputs became inevitable

but imports are become expensive as inflation remained above manageable level. Since this industry is

highly raw material intensive, the volatility in input costs has affected the profitability of the Company.

Your Company has managed the situation by developing reliable, efficient and sustainable raw material

supply sources of national and International level. The Company has maintained good relationship with

its suppliers by working closely with them through which the raw material procurement system has

functioned effectively.

Quality

The Company is always keen on maintaining quality and productivity. Your Company has built its brand

with its commitment to total quality management. The products are tested at every stage of manufacturing

to ensure that the very best is made available to the market that provides the exact customer requirement.

The Company's policy of best manufacturing practices has been bestowed with various quality

certifications and accreditations to its credit.

To cater for the different needs of the market our research and development team is committed to

understand the customer demands and to develop products that make value and satisfaction to the

customers. This made the Company to keep its competitive edge in the market by producing products

which can provide superior performance, safety and comfort under different and extreme road

conditions. In addition to give high quality products we provide after sale services and expert technological

assistance aiming to serve complete service to our customers.


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Public Shareholding

Your Directors have given in principle approval to waive the interest on allotment money due and to issue

final notice to shareholders holding partly paid shares to pay the allotment money due, ` 5/- per share, and

in the event of non-payment thereof to proceed to forfeit the partly paid equity shares, subject to approvals

by SEBI including exemptions under SEBI (SAST) Regulations, 2011 and approvals from other Statutory

Authorities required if any. Your Directors request to the members, who have not yet paid their allotment

money, to pay the same at the earliest and make the shares fully paid.

Listing and Dematerialisation

The equity shares of the Company are listed in the Bombay Stock Exchange, Cochin Stock Exchange

and Madras Stock Exchange. The facility to demat the shares is made available with both the depositories

in India, NSDL and CDSL to give a choice to shareholders in selecting depository participant. Your

Directors earnestly request you to convert your holdings to dematerialized form and derive the benefits of

holding the shares in electronic form.

Fixed Deposits

The Company has not accepted any fixed deposits during the year to which the provisions of Section 58A

of Companies Act, 1956 and Section 73 of the Companies Act, 2013 are applicable.

Conservation of Energy, Technology Absorption, Foreign Exchange Inflow & Outflow

In pursuit of continual improvement towards energy conservation and compliance with environmental

regulations, efforts have been taken to utilise the energy most efficiently and to nurture and preserve the

environment. The Company has taken all possible efforts to conserve energy and absorb latest

technology. The information required under Section 217(1) (e) of the Companies Act, 1956 read with Rule

2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988,regarding

Conservation of Energy, Technology Absorption, Foreign Exchange Inflow and Outflow are given in

Annexure A to this report.

Corporate Governance

The Company's Equity Shares are listed with Bombay Stock Exchange, Cochin Stock Exchange and

Madras Stock Exchange. Your Company has been complying with the principles of good Corporate

Governance over the years and is committed to the highest standards of compliance. The Company has

complied with the Corporate Governance requirements, as stipulated under Clause 49 of the Listing

Agreement.

A separate section on Corporate Governance along with a certificate from the Auditors of the Company

confirming the compliance is annexed as Annexure Band forms part of this Report.


14

The Report on Management Discussion and Analysis is forming part of Director's Report and is given in

Annexure C.

Auditors

M/s. JVR & Associates, Chartered Accountants, Kochi-16, were reappointed as the Auditors of the

Company at the previous Annual General Meeting. They hold office until the conclusion of the ensuing

Annual General Meeting. They are eligible for re-appointment for a period of 3 years and the proposal has

been placed before the Members. Necessary certificate has been obtained from the Auditors as per

Section 139 (1) of the Companies Act, 2013

Cost Audit Report

The Company has submitted the Cost Compliance Report for the year 2012-13 duly certified by a Cost

Accountant to the Central Government within the due date. M/s. K.A Felix & Co., Cost Accountants,

Cochin were appointed with the approval of the Central Government to carry out the cost audit in respect

of the Company for the financial year 2013-14 and they have submitted their report to the Board of

Directors, and will submit the report to the Ministry of Corporate Affairs, Government of India within the

due date. Based on the recommendation of the Audit Committee, M/s. K.A Felix & Co., Cost Accountants,

Cochin, being eligible have also been appointed by the Board as the Cost Auditors for the financial year

2014-15.

Board of Directors

Mr. Navas M Meeran, Chairman,retire by rotation at the ensuing Annual General Meeting and being

eligible, offer himself for reappointment. The Board recommends his reappointment. None of the

Directors is disqualified under Section 274(1) (g) of the Companies Act, 1956 and Section 164 of the

Companies Act, 2013.

Directors' Responsibility Statement

Pursuant to the requirement of Sub-Section 2AA of Section 217 of the Companies Act, 1956, 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

accordance with the provisions of the Companies Act,1956 for safeguarding the assets of your

in


15

Company and for preventing and detecting fraud and other irregularities;

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

Reconciliation of Share Capital Audit

As directed by Securities and Exchange Board of India (SEBI), Reconciliation of Share capital Audit is

being carried out at the specified periodicity by a Practicing Company Secretary. The findings of the Audit

have been satisfactory.

Personnel

None of the employees is in receipt of remuneration in excess of the limit laid down under Section 217(2A)

of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

Human Resource Development and Industrial Relations

In a competitive economy, the proper utilisation of human resources plays a crucial role. Towards this

your Company took various initiatives for human resource development and has maintained healthy and

harmonious industrial relations at all locations. Your Company organized various training programs to

equip our human assets. This active process of learning made the employees competent and motivated.

Your Company has recruited high quality human resource, the solid foundation on which the company can

build itself up. With this solid foundation your Company is now looking for a global reach.

Acknowledgement

Your Directors wish to take this opportunity to place on record their gratitude and sincere appreciation for

the timely and valuable assistance and support received from Bankers, Share Transfer Agents,

Customers, Suppliers and Regulatory Authorities. The Board values and appreciates the valuable

committed services of the employees towards performance of your Company, without which it would not

have been possible to achieve all round progress and growth. Your Directors are thankful to the

shareholders for their continued patronage.

For and on behalf of the Board

Kochi Navas M Meeran

17/05/2014 Chairman


16

ANNEXURE A TO THE DIRECTORS' REPORT

Information as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of

particulars in the report of Board of Directors) Rules 1988 and forming part of the Directors' report.

(A) Conservation of Energy Form A

Power and fuel consumption 2013-14 2012-131. Electricity

(a) Purchased

Unit (Kwh) 24,77,394.00 16,45,008.00

Total Amount ( ) 1,34,09,936.00 90,98,191.00`

Rate/Unit (Average) ( ) 5.41 5.53`

(b) Own generation

Through diesel generator

Unit (Kwh) 46,500.00 45,228.00

Unit per litre of Diesel Oil 2.18 2.54

Rate/Unit ( ) 26.00 19.08`

2. Others 0.00 0.00

Consumption per unit of production Products (with details) unit

Tread Rubber (MT) 2741.767 2,037.360

Bonding Gum (MT) 129.464 75.030

Vulcanizing Solution (KL) 434.610 269.270

Master Batch Compound (MT) 212.529 177.420

Conventional Tread (MT) 301.526 355.960

Job work done (MT) 1305.310 1,303.160

Electricity (KWH) 492.447 400.700

Others (Specify) 0.000 0.000

(B) Research & Development, Technology Absorption

In order to cater the customer specific requirements your Company has developed and successfully

introduced a range of compounds and is working on new compounds, raw materials etc to improve

the productivity further. To improve the quality and productivity new batch-off unit, curing press etc

were installed. The Company would undertake appropriate R & D activities depending up on the

future requirements. The Company use the latest technology and operates to the highest possible

standards. No technology has been imported by the Company during the period.


17

(C) Foreign Exchange Earnings and Outgo

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

` In Lakhs

2013-14 2012-13Foreign Exchange Earnings 431.21 124.42

Foreign Exchange Outgo 26.28 0.90


18

Annexure B to the Directors' Report

CORPORATE GOVERNANCE REPORT

Eastern Treads Limited is committed to ensure good Corporate Governance practice. Your Company has

complied in all material respects, with the requirements of the Corporate Governance Code as per Clause

49 of the listing agreement with the Stock Exchanges. A report on the implementation of the Corporate

Governance Code of the listing agreement 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.

The Company believes that by focusing on good Corporate Governance we practice the highest

standards of ethical and responsible business culture and thereby enhance the value of all its

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 to 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.


19

Attendance

Particulars

No. of other

Directorships

Committee

membership Name of the Director Cate gory

Board

Meetings

Last

AGM

Director Chairman Member Chairman

Mr. Navas M Meeran P, C & NE 5 Yes 16 None None None

Mr. M.E. Mohamed MD & ED 5 Yes 4 None None None

Mr. M.S. Sebastian NE & I 5 Yes 1 None None None

Mr. M.S. Ranganathan NE & I 4 Yes 3 None None None

Mr. Naiju Joseph NE 5 Yes 1 None None None

Mr. K.S. Neelacanta Iyer NE & I 4 Yes 2 None None None

Mr. K.V. Rajagopalan Nair

(Nominee of KSIDC)

NE & N 3 No 1 None None None

Number and date of Board meetings held

Five Board meetings were held during the year. The Board meets at least once in a quarter with a gap of

not more than four months between any two meetings. The details of the Board meetings are as under.

Sl. No. Date Board Strength No. of Directors present

1 10/04/2013 & 29/04/2013 * 7 7

2 13/08/2013 7 6

3 13/11/2013 7 6

4 13/02/2014 7 7

5 31/03/2014 7 5

*Meeting held on 10/04/13 was adjourned and adjourned meeting held on 29/04/13

C: Chairman; P: Promoter; E: Executive Director; N: Nominee Director (Nominee of KSIDC) I: Independent Director;

NE: Non-Executive Director; MD: Managing Director;

# This includes directorships in Public and Private Ltd companies.

#

Board of Directors

The Board is made up of one Executive Director and six Non-executive Directors, of whom three are

independent. The Chairman of the Board is a Non-executive Director. The Composition, category and

attendance of each Director at the Board meetings, last Annual General Meeting and Number of other

Directorship and Chairmanship / Membership of Committee of each Director in various companies is as

follows:

Audit Committee

The Audit Committee is duly constituted in accordance with Clause 49 II (C) and (D) of the Listing

Agreement and Section 292A of the Companies Act, 1956 and Section 177 of the Companies Act,

2013.The Members of the Committee are:

Name Category Position

Mr. K.S. Neelacanta Iyer Non-Executive Independent Director Chairman

Mr. M.S. Ranganathan Non-Executive Independent Director Member

Mr.Naiju Joseph* Non-Executive Director Member

Mr. M.E. Mohamed Managing Director Member

*resigned from the committee w.e.f 28/04/14


20

Two third of the members are Independent Directors and all the members of the Audit Committee 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 annual financial statements, review related party transactions, review

financial and risk management policies, oversee compliance with Stock Exchanges and legal

requirements concerning financial statements, review auditors qualifications, compliance with Accounting

Standards, fixation of audit fee and also approval for the payment of any other services etc.

The Audit Committee meetings are usually held at the Registered Office of the Company and are usually

attended by the Chairman and the members of the Committee, representatives of Internal and Statutory

Auditors and Chief Financial Officer. The Company Secretary acts as Secretary to the Audit Committee.

The Chairman of the Audit Committee was present at the Company's Annual General Meeting held on

26/06/2013 to answer the shareholders' queries.

The Audit Committee strictly adheres to the terms of reference which is prepared in compliance with

Section 292A of the Companies Act, 1956, Section 177 of the Companies Act, 2013, and Clause 49 of the

Listing Agreement.

Five Audit Committee meetings were held during the year 2013-14. The dates on which the meetings were

held are 10/04/2013 & 29/04/2013 (adjourned meeting), 13/08/2013, 13/11/2013, 13/02/2014,31/03/2014.

The number of meetings attended by each committee members of the Audit Committee is as follows:

Name No. of meetings held Number of meetings attendedMr. K.S. Neelacanta Iyer 5 5

Mr. M.S. Ranganathan 5 4

Mr. Naiju Joseph 5 5

Mr. M.E. Mohamed 5 5

Remuneration Committee

The Remuneration Committee was constituted in compliance with the requirements of Clause 49 of the

Listing Agreement. The Committee analyses and recommend to the Board of Directors regarding the

remuneration payable to Board members including Executive Directors and Managing Director, sitting

fees payable to Directors and remuneration payable to the employees working at the senior management

level.

The Committee approves the minimum remuneration payable to the Managing Director/ Executive

Directors in the event of loss or inadequate profits in any year, within the limits and subject to the

parameters as prescribed in Schedule XIII of the Companies Act, 1956. The Chairman of the

Remuneration Committee was present at the Company's Annual General Meeting held on 26/06/2013 to

answer the shareholders' queries.

The Committee Members are:

Name Category Position

Mr. M.S. Ranganathan Non-Executive Independent Director Chairman

Mr. K.S. Neelacanta Iyer Non-Executive Independent Director Member

Mr. Naiju Joseph Non-Executive Director Member

The Company Secretary acts as the Secretary to the Committee.

Remuneration Policy

The remuneration policy is in consonance with the existing industry practice and also with the provisions of

The Companies Act, 1956 and The Companies Act,2013. The Company's remuneration policy is driven by

success and performance of the individual employee of the Company. Through its compensation

programme, the Company endeavors to attract, retain, develop and motivate a high performance

workforce. Individual performances of the employees are measured through annual appraisal process.

The details of remuneration/sitting fee paid to Directors during the financial year are given below.

Name Salary Perquisites Commission Sitting Fees*Mr. M.E. Mohamed 0.00 0.00 0.00 0.00

Mr. Naiju Joseph 0.00 0.00 0.00 4,944.00

Mr. K.S. Neelacanta Iyer 0.00 0.00 0.00 3,708.00

Mr. K.V. Rajagopalan Nair 0.00 0.00 0.00 3,708.00

* Inclusive of Service Tax

Even though the terms of appointment of Mr. M.E. Mohamed as the Managing Director include the

payment

to Mr. M.E. Mohamed, Managing Director during the financial year.

of remuneration, he has waived his right to remuneration. Hence no remuneration has been paid


21

Share Transfer Committee

The Share Transfer Committee was constituted on 25/06/1996 in compliance with the requirements of

Clause 49 of the Listing Agreement. The members of the Committee are:

Name Category PositionMr. 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

The Company Secretary acts as the secretary to the Committee.

Two Share Transfer Committee meetings were held in every month to approve the transfer of shares and

issue of duplicate share certificates and oversee and review matters connected with the transfer of

shares.

Shareholders'/Investors' Grievance Committee

The Shareholders'/Investor's Grievance Committee was constituted in compliance with the requirements

of Clause 49 of the Listing Agreement. The Members of the Committee are:

Name Category PositionMr. Naiju Joseph Non-Executive Director Chairman

Mr. M.S. Ranganathan Non-Executive Independent Director Member

Mr. K.S. Neelacanta Iyer Non-Executive Independent Director Member

The Shareholders' Grievance Committee looks into shareholders' complaints like non-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 agents, and recommends

measures for overall improvement in the quality of investor services. The Company Secretary acts as the

secretary to the Committee.

During the year under review, no complaints received from the shareholders and there were no

outstanding complaints as on 31/03/2014. No request for share transfer was pending as on 31/03/2014.

General Body Meetings

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

Year Location Date Day Time

2012-2013 Hotel Park Central, Ernakulam 26/06/2013 Wednesday 03.00 PM

2011-2012 Hotel Park Central, Ernakulam 23/08/2012 Thursday 03.00 PM

2010-2011 Hotel Amruthaa International, Ernakulam 28/09/2011 Wednesday 10.30 AM

No

through postal ballot last year and no proposal for the same this year.

Extraordinary General Meeting was held during the financial year and no special resolutions were put


22

Disclosures

(a) Related party transactions

The transactions of purchase/sale of finished goods, raw materials and job work with concerns in

which Directors/relatives of Directors have interest have been made in the ordinary course of

business at prices which are reasonable having regard to quality and prevailing market prices or

prices at which transactions of similar goods or services have been made with other parties.

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. All transactions

with the related parties were in the ordinary course of business and at arms length. The Register of

Contracts containing transactions, in which Directors are interested, is placed before the board

regularly.Full disclosure of related party transactions as per Accounting Standard -18 is given under

Note no: 30 of Notes to the Financial Statements.

(b) 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, 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 Exchanges with whom the Company has listing arrangements. These Quarterly Financial Results

are normally published in Business Line, Deepika or New Age and are also posted on the Company's

website: www.easterntreads.com.

The Company's web site also displays all official news releases, if any. All material information about the

Company is promptly sent to the Stock Exchanges. The Management Discussion and Analysis forms part

of the Annual Report.

Code of Conduct

The Board approved the code of conduct applicable to the Board Members and the Senior Management

Personnel of the Company at its meeting held on 28/04/2009. The Code has been posted on the website

of

the Code and a declaration to this effect signed by the Managing Director is annexed to this report.

the Company. All Board Members and Senior Management Personnel have affirmed compliance with


23

General Shareholder Information

(a) Annual General Meeting

Date and Time : Tuesday, 24/06/2014 at 3.00 P.M Venue : Hotel Park Central, Kaloor, Kochi, Ernakulam

(b) Financial Calendar (Tentative)

Annual General Meeting : 24th June 2014

Financial results for the quarter ending 30/06/14 : First week of August 2014

Financial results for the quarter ending 30/09/14 : First week of November 2014

Financial results for the quarter ending 31/12/14 : First week of February 2014

Financial results for the quarter ending 31/03/15 : First week of May 2015

(c) Book Closure Date

Tuesday, 17/06/2014 to Tuesday, 24/06/2014 (both days inclusive)

(d) Listing of Equity Shares on Stock Exchanges

The Equity Shares of the Company are listed in Bombay Stock Exchange, Cochin Stock Exchange

and Madras Stock Exchange.

Listing fees for the financial year 2013-14and 2014-15 have been paid to all the Stock Exchanges.

The Company has also paid the annual custodial fee for the year 2013-14 and 2014-15 to both the

depositories namely, National Securities Depository Limited and Central Depository Services

(India) Limited.

(e) Stock Code

Scrip Code No. : Bombay Stock Exchange - 531346

Trading Symbol : Cochin Stock Exchange - ETD

Trading Symbol : Madras Stock Exchange - EASTETREAD

(f) Demat ISIN Number INE500D01015


24

(g) Market Price Data: High, Low during each month in last financial year

BSEMonth High Price Low Price

April 2013 18.00 18.00

May 2013 17.15 15.25

June 2013 15.50 14.05

July 2013 14.10 10.36

August 2013 11.00 9.60

September 2013 13.20 11.55

October 2013

November 2013 15.05 12.90

December 2013 15.00 14.20

January 2014 15.00 13.50

February 2014 15.00 12.75

March 2014 14.60 12.20

(h) Performance in comparison to broad-based indices such as BSE Sensex:

(i) Registrar and Share Transfer Agents Integrated Enterprises (India) Limited

nd2 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]


25

ETL

Hig

h Pr

ice

BSE

Sens

ex H

igh


26

(j) Share transfer system

During the financial year 2013-14, the share transfers which are received in physical form are

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. Shares held in dematerialised form

are electronically traded and the Registrars and Share Transfer Agents of the Company periodically

receive from the Depository, the beneficiary holdings so as to enable them to update their records.

The Board has delegated the authority for approving transfer, transmission, etc. of the Companys

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 Company's shares are transferred both in physical and dematerialised form and are

traded on the Stock Exchanges. Any request for rematerialisation and / or transfer of shares in

physical mode is also attended within the stipulated time. The Company obtains from a Company

Secretary in practice half yearly certificate of compliance with the share transfer formalities as

required under Clause 47(c) of the Listing Agreement with the Stock Exchanges and files a copy of

the certificate with the Stock Exchanges within the prescribed time limit.

(k) Dematerialization of shares and liquidity

st More than 73.66% of the Company's paid-up equity share capital has been dematerialised up to 31

March 2014. Presently the Company's shares are transferred both in physical and dematerialised

form and are traded on the Stock Exchanges.

(l) Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity

Not Applicable

Equity Preferenc e Category No. of shares % No of shares %

Promoters 3427500 61.30 1000000 100 Body Corporate 280678 5.02 Nil Nil NRI 7901

0.14 Nil

Nil

Public 1874210

33.52 Nil

Nil

Others (Clearing Member) 1211

0.02 Nil

Nil

Total : 5591500 100.00 1000000 100

(m) Shareholding pattern as on 31st March, 2014

(n) Distribution of Shareholding as on 31st March, 2014

Equity

Category No. of shareholders % of

shareholders No. of shares

holding % Shares

Up to 500 1177 63.79 367711 6.58

501 1000 490 26.56 441215 7.89

1001 2000 66 3.58 100700 1.80

2001 3000 42 2.28 106964 1.91

3001 4000 14 0.76 50212 0.90

4001 5000 12 0.65 57450 1.03

5001 10000 16 0.87 138200 2.47

Above 10000 28 1.52 4329048 77.42

Total 1845 100.00 5591500 100.00

PreferenceAbove 10000 2 100.00 1000000 100.00

Total 2 100.00 1000000 100.00


27

(o) Plant Location

Oonnukal P.O, Kothamangalam, Ernakulam District, Kerala

(p) 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)

Integrated Enterprises (India) Limited, The Company Secretary nd

2 Floor, 'Kences Towers' No.1, Eastern Treads Limited,

rd

Ramakrishna Street, 3A, 3 Floor, Eastern Corporate Office,

North Usman Road, 34/137 E, NH Bypass, Edappally, Kochi,

T. Nagar, Chennai-600017 Ernakulam-682 024, Kerala.

Phone: 044 28140801, 28140803, Phone: (0484) 3001247

Fax; 044 28143378, 28142479 Fax: (0484) 3001110

E-mail: [email protected] Email : [email protected]


28

(q) Secretarial Certification

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.

DECLARATION ON CODE OF CONDUCT

To the best of my knowledge and belief and on the basis of declarations given to me by the Board

Members and the Senior Management Personnel of the Company, as required by Clause 49 (ID) of

the Listing Agreement, I hereby affirm that all the Board members 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

Kochi M.E Mohamed

17/05/2014 Managing Director


29

To the members of Eastern Treads Limited,

We have examined the relevant documents of Eastern Treads Limited for the year ended 31/03/14 for

certifying the compliance with conditions of the corporate governance under clause 49 of the listing

agreement of the said company with the Stock Exchanges. The compliance of conditions of corporate

governance is the responsibility of the management.

Our examination was limited to procedures and implementation thereof, adopted by the company for

ensuring the compliance of the conditions of corporate governance. It is neither an audit nor an expres-

sion of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanation given to us, and the

representation made by the management, we certify that the company has complied with the conditions

of corporate governance as stipulated in Clause 49 of the above mentioned listing agreement. As

required by the guidance note on certification of corporate governance issued by the Institute of Char-

tered Accountants of India, we state that the share registry department of the company has certified that

as at 31st March, 2014 there were no investor grievance remaining unattended/pending for more than

thirty days.

We state that compliance is neither an assurance as to the future viability of the company nor the

efficiency or effectiveness with which the management has conducted the affairs of the company.

For JVR & Associates

Chartered Accountants

(F.R.No. 011121s)

Jomon K. George

Partner

M.No. 202144

Kochi - 16,

17/05/2014

Auditors Certificate on compliance with the conditions of

Corporate Governance under clause 49 of the Listing Agreement

Annexure C to the Directors' Report

MANAGEMENT DISCUSSION AND ANALYSIS

a) Industry Structure and Developments

Similar to the tyre industry, the tyre replacement market has a vital role for the growth of tyre

retreading industry, because around 85% of the tyre demand is for replacement. Hence, this market is

the backbone to the tyre retreading industry. The tyre retreading has reported healthy growth in past

few years. Its cost advantage when compared with the cost of new tyre is the prime reason for this

growth. Secondary factors like growth in transportation, agriculture, industry, vehicle demand,

infrastructure development, has also influenced in this growth.

In the international markets, branded tyre manufacturers play a key role in the re-treading business.

However, Indian scenario was different and it was fragmented and unorganised. However, the recent

entry of tyre brands in retreading environment in India is an indication that Indian market is also

surging towards branding. Your Company has actively taken various brand building exercises in

domestic and international markets. Several welcome steps have been taken towards this direction

including new face to our website and logo for better brand visibility, fleet owner's campaigns etc.

The technological improvements and quality of tyre retreading materials resulted in an increased

service life of tyres. As retreading prolongs the tyre life, it is the way to reduce fleet owners operating

cost. This cost savings facilitated the tyre retreading to gain greater acceptance and has placed the

retreaders in a better position than the tyre industry in tyre replacement market. In fact, retreading has

not only cost less but is a comprehensive ecological choice which provides considerable

environmental sustainability and thereby addresses social concerns due to energy savings and

diminution in pollution.

Our Easten branded products covers all stages of the retreading process and we are committed to put

constant endeavour to ensure continuous improvement in quality, durability and reliability with

minimum economy.

b) Opportunities and Threats

While analyzing fleet operating costs, the tyres outlays third stage right after labour and fuel. Here the

tyre retreading has emerged as a good tyre management program, which limits the fleet operating

cost to an absolute minimum. Since around 85% of the tyre demand is for replacement, retreading

could have a detrimental impact on replacement demand for tyres.

Tyre retreading is having good future with the introduction of radialisation, better quality road networks

and increased share of multi-axle trucks. Even though the radial tyres have improved mileage, rolling

resistance and less tread wear compared to bias-ply tyres which will impact retreading, it is a blessing to

tyre retreading as radial tyres give high quality casings that can be successfully retreaded multiple times

a

higher level retreading and Eastern Treads aims to capitalize this opportunity.

nd the quality retreaded tyres will build customer confidence. This gives a range of opportunities for


30


31

The advantages of Eastern Treads in tyre retreading industry are its vast experience, prompt after

sales service, good customer relations and network, awards and recognitions to prove consistent

quality, judicious purchase of materials, reputation and brand image of its quality products, talented

technical and marketing personnel and supporting management which gives leadership and

acceptability in the market.

The entry of branded tyre majors including multinational corporations in retreading industry may be a

threat to the Company, however, it creates awareness in the customers about retreading and its

quality. Since the ability of the retreading sector to capture potential replacement demand would

depend on the awareness among customers of the quality and benefits of retreading, as the

customers further know tyre retreading, the market will expand at a fabulous speed.

Another area of concern for retreading industry is the unhealthy competition from small and

unorganized players who are producing poor quality retreads which may hurt the consumer

confidence in retreading. We are confident that customers have faith in our products and we shall be

able to get reasonable market share in the short term.

c) Outlook

With the advancement of technology and economies of scale, retreading has reached a level of quality

and sophistication unprecedented in its history, and now it has overcome its past reputation and

become part of established fleet management practice for commercial and utility operations. Since

the mentality of the market towards retreading has changed and it became an integral element of the

tyre market, the scope for our business expansion is high.

Retreading is not only cost effective, but dependable, reliable, safe and environment friendly. We are

of the view that Eastern Treads can use this opportunity to continue its passionate journey towards

customer delight and loyalty. We have developed business plans to exploit the market to become the

most successful retreader with the highest quality products, delivering the best possible return on

investment to the fleets.

d) Risks and Concerns

Our growth is fully depending on tyre replacement market, which depends on various factors like

economic growth, infrastructural development, growth in the automobile industry and transportation

etc. The Company is exposed to various risks which are normal in any business enterprise. The main

ones and the steps undertaken to mitigate these risks are mentioned below:

Financial Risk

Credit risk on account of material supplied to customers has been reduced by the introduction of cash

and carry policy, advance and bank guarantee from the customers. The risk of delayed payment from

State Transport Corporations is controlled and managed by continuous follow-up.


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Increase in Raw Material Price

Normal fluctuations in raw material prices are generally considered while fixing product prices to the

customers. However the unprecedented fluctuations have serious impact on profitability till prices are

revised to meet the costs, especially in case of exports and supply to Sate Transport Corporations and

others, based on fixed price contracts.

The petroleum based raw material prices are linked to the movement in crude oil prices and the

Natural rubber price is subject to production volatility resulting from speculating activities and natural

causes. While demand of tyre retreading materials in the industry is expected to be healthy, cost

pressures remains as a challenge. With the rupee depreciating against the US dollar, the expensive

raw material import has emerged as the biggest concern.

Changes in Government Policies

Changes in government policies will affect the Company's financial position or investments.

Operational Risk

Preventive maintenance has been carried out to achieve high level of machine availability. Adequate

inventory of stocks at each stage of operation is maintained to keep production going on in case of any

breakdown.

Product Risk Research and development is being undertaken to deliver better products, service and value to the

customers.

e) Internal Control System and their Adequacy

Your Company has a proper and adequate system of internal controls, to ensure that all assets are

safeguarded and protected against loss from unauthorized use or disposal and that the transactions

are authorised, recorded and reported correctly. The internal control is supplemented by an extensive

programme of internal, external audits and periodic review by the top management and by the Audit

Committee of the Board of Directors.

We have our own internal audit department which 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. 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.


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f) Discussion on Financial Performance with respect to Operational Performance

(Please refer to Directors' Report on Operations)

g) Material Developments in Human Resources and Industrial Relations

The dedication and hard work of productive and dynamic goal oriented team is the key factor to the

success of our Company. We believe that hiring the right personnel and proper retaining is the

decisive factor for this success. To keep the Company and its human resource competitive, experts

were engaged to train the employees at various levels.

We have actively involved to empower our employees through greater knowledge, team spirit and to

develop greater sense of accountability. The Company lays greater prominence on augmenting

people performance through various people processes. It begins with best practices in recruiting

people and moves through learning and development, engagement, employee feedback and rewards

and recognition.

The Company conducts programs such as TQM to create team synergy. Our quality circles meet to

exchange their experiences and to offer suggestions and improvements for the system. Our intensive

training programs encourage team work and develop the employees to face future challenges. The

Company expects an exponential growth, because of this Total Employee Involvement Programme.

The Company has 405 employees in its rolls as on 31/03/2014. Employee relations remained cordial

and the work atmosphere remained congenial during the year.

(h) 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.


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INDEPENDENT AUDITOR'S REPORTThe Members ofEASTERN TREADS LIMITEDKochi

Report on the Financial Statements

We have audited the accompanying financial statements of EASTERN TREADS LIMITED, which

comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss and Cash Flow

Statement for the year then ended, and a summary of significant accounting policies and other

explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view

of the financial position, financial performance and cash flows of the Company in accordance with the

Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 th

dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies

Act, 2013. This responsibility includes the design, implementation and maintenance of internal control

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

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

conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered

Accountants of India. Those Standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company's

preparation and fair presentation of the financial statements in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies

used and the reasonableness of the accounting estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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:


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b)

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2014;

In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government

of India in terms of sub-Section (4A) of Section 227 of the Act, we give in the Annexure a statement

on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a. We have 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 appears from our examination of those books.

c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by

this Report are in agreement with the books of account.

d. In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the

Accounting Standards, notified under the Companies Act, 1956 read with the General

Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of

Section 133 of the Companies Act, 2013;

e. On the basis of written representations received from the directors as on March 31, 2014,

and taken on record by the Board of Directors, none of the directors is disqualified as on

March 31,2014 from being appointed as a director in terms of Clause (g) of sub-Section (1) of

Section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess

is to be paid under Section 441A of the Companies Act, 1956 nor has it issued any Rules

under the said Section, prescribing the manner in which such cess is to be paid, no cess is

due and payable by the Company.

For JVR& ASSOCIATES Chartered Accountants

(F. R. No. 011121S)

JOMON K GEORGE Partner

M.No.202144

Kochi-1617/05/2014


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The Annexure referred to in paragraph 1 of the our Report of even date to the members of Eastern Treads Limited on the accounts of the Company for the year ended 31st March, 2014.

In terms of Companies (Auditor's Report) Order 2003, issued by the Government of India, in terms of

Section 227 (4A) of The Companies Act, 1956, we further report, on the matters specified in paragraph 4

and 5 of the said Order, to the extent applicable to the Company, that:-

1. (i) The Company has maintained proper records showing full particulars including quantitative

details and situation of its fixed assets, which requires to be updated.

(ii) The fixed assets have been physically verified by the management during the year. We are

informed that no serious discrepancies have been noticed by the management on such

verification as compared to the aforesaid records of fixed assets.

(iii) During the year, there was no major disposal of fixed assets.

2. (i) The management has carried out physical verification of stocks at reasonable intervals during the

year.

(ii) In our opinion, the procedure of verification of stocks followed by the Company are reasonable

and adequate having regard to the size of the company and the nature of its business.

(iii) On the basis of our examination of the records of inventory, we are of the opinion that the

Company has a proper system of maintaining records of inventory. We are informed that the

discrepancies between the stock records and the physical stocks are not material.

3. (i) The Company has not granted loans to any party covered in the register maintained under

Section 301 of The Companies Act, 1956.

(ii) The Company has not taken loans from any party covered in the register maintained under

Section 301 of The Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate

internal control systems commensurate with the size of the Company and the n

Eastern treads Annual report 2013-14

Documents

Transcript of Eastern treads Annual report 2013-14