MANAGEMENT DISCUSSION AND ANALYSIS

National Environment

In May 2014, a new Indian Government was elected with a resounding mandate, which infused hope in formulating of stable fiscal policies. A number of manufacturing-centric policies announced by the new government shall cascade into positive economic growth over the foreseeable future.

Economic and Business Scenario

Fiscal 2014-15 was indeed a challenging year for the Indian economy. There was a partial acceleration in some segments viz. mining, manufacturing, construction and services. Industrial sector grew at 2.8%. Inflationary brssures also eased considerably during the year. In addition, there was some softening of interest rates leading to hopes of higher economic growth. Consequently, this is expected to boost demand for automotive sectors specially for commercial vehicles. Since the demand for tyres is driven by overall growth of economy, particularly in automotive and transport sectors, this augurs well for the tyre industry in fiscal 2015-16.

Indian Automobile Industry

The Indian Automobile Industry posted overall sales growth of 7.8% during FY 2014-15.

The medium and heavy commercial vehicle segments which had hit a low in 2013-14, registered a production growth of 21.7% during the year. Passenger Car and Multi Utility Vehicle recorded a marginal turnaround with 6.8% growth compared to 4.4% de-growth in brvious year.

Low micro level economic activity has been reflected by a de-growth in the segments providing the last mile connect. As a result, Small Commercial Vehicles saw a sharp drop for the second year in succession, and Light Commercial Vehicle segment was also impacted registering a 4% de-growth.

The poor performance of the Agricultural sector reflected in the muted sales of Tractors.

Indian Tyre Industry

The Tyre Industry being the wheels of economy has a direct bearing on the Industry performance. The over-all demand for tyres for the 4-wheeler segment grew marginally.

The total Truck/Bus tyre segment grew by 6.3%. The level of radialization in the Indian domestic market has grown to a level of 33%, while in the OEM segment, radialisation was at a high 65%. Truck/Bus radial demand is growing substantially and will continue to be an Industry growth driver in the next few years. The non Truck tyre segments have recorded a moderate growth of 4%.

Despite thrust on 'Make in India' the scourge of Tyre imports specially from China remains unabated. The anomaly of inverted duty structure favouring finished goods over raw material was not corrected even in budget 2015-16. Currently, the import of Truck/Bus and Passenger Car radials constitutes as much as 26% and 24% respectively of the domestic sales.

Outlook

The Indian tyre industry's outlook is positive as growth in domestic tyre volume is expected to increase by around 8-10% during 2015-16 on the back of a pickup in auto demand, improving economy and stable raw material prices.

Following the US anti-dumping duty on Chinese tyres, imports into India increased to around Rs. 800 crores during 2014-15, which affected Indian tyre makers. On the other hand, capacity addition continued in anticipation of the recovery in auto demand.

Overview - JK Tyre (India)

JK Tyre achieved several landmarks during the year under review, these include:

¦ Maintained its number 1 position in the truck/bus radial segment.

¦ Strengthened its brsence in the passenger car radials segment.

¦ Introduced several brmium products in the commercial and passenger car categories.

¦ Expansion of TBR/passenger car tyre capacities at the All Radial Chennai Tyre Plant progressed well and expected to be completed during the current year.

¦ Expansion of the passenger car tyre capacity at JK Tornel (Mexico) is on its way to completion.

It is a matter of pride that JK Tyre was recently ranked highest in terms of customer satisfaction in the OE tyres segment as per the 'JD POWER 2015' India Tyre Customer Satisfaction Index. This performance was well above the overall industry average. It is the third time since the inception of the Survey that JK Tyre has received this recognition, which is a testimony to the Company's focus on Quality and Customer-orientation.

Segment-wise performance Truck/Bus radials

JK Tyre having a wide range of Truck/Bus Radials crossed yet another milestone by putting over nine million Truck/ Bus radials on the road globally, out of which, over seven million are on Indian roads. In order to meet customer needs, two new value added products were introduced, they include -10.00-R- 20 16 PR Jet Way JUH3+ and 10.00-R- 20 16 PR Jet Steel JDH3. With the objective of encouraging its customers, a National Fleet Conference was organized which is a dedicated interactive business platform for fleet owners, where amongst others, best practices are shared to strengthen the business relationship.

The network of 'JK Tyre Truck Wheels', providing services for maintenance and repair of tyres, is rapidly expanding. The initiative of 'Radial Baadshah' CRM, was recognised at the Asian Customer Engagement Awards.

Truck/Bus Bias

This segment, which although has declined, still remains a high-value segment. Riding on the success of earlier rib tyres, a super-brmium mileage tyre 10.00-20 JET R Xtra Miles, was introduced. Various promotional as well as customer centric activities were pursued at select locations, which received an encouraging customer response.

Passenger Car Radial

Brand building, retail network expansion, customer engagement were the key elements of the passenger car radial strategy during the year. JK Tyre brand campaign was built around passenger tyres. JK Tyre's domestic passenger radial sales grew by 11% as against a single digit industry growth.

In order to expand geographical reach a large number of new 'JK Tyre Steel Wheels' were opened. In addition, multi-brand dealerships were awarded, thereby enabling dedicated displays and counter shares for JK Tyre. The concept was well received and a large number of such channel partners have been designated as 'Preferred Trade Partners'.

As much as it is important to communicate to customers, it is equally important to engage and reward loyal customers. Two major consumer offers of car and UV radials - 'Drive in Style' and 'Celebration on Wheels' were made during the year. Customers in Delhi NCR took part in the'JK Tyre Experience Zone' at the brstigious Buddh International Circuit during successive rounds of JK Racing Championship.

LCV and SCV

During the year, the Company connected with LCV/SCV customers through various attractive offers including a national campaign held in Delhi-NCR and other high potential markets.

Farm vehicles

In line with JK Tyre's 'Customer First' approach, the 'Kisan Mitra' campaign was undertaken for the welfare of customers in the rural markets. This campaign which facilitates them with agricultural services (soil testing, tractor tyre check-up and agri-counseling services) was organised across several States in the country. Through the campaign, several hundred villages were covered and a large number mechanics were reached.

JK Tyre also participated in numerous kisan melas. The kisan melaswere organised in the high-yielding agricultural states of India like Punjab, Uttar Pradesh, Haryana, Maharashtra, Madhya Pradesh, Rajasthan and Karnataka.

To improve the brand recall and develop positive perception among the tractor OEM franchise, visibility enhancing campaigns were organised in the top-11 agricultural states of India. This campaign enhanced customer awareness about the brmium range of tractor rear tyres, SONA 1 and strengthened relationships with our tractor dealerships as well as our OEM partners. More than 3,700 villages were covered and ties were forged with more than 35,000 customers.

OTR

The OTR segment was affected by the slowdown in mining and construction activities. New product introduction and customer education were thrust areas during the year. JK Tyre evolved as one of the brferred supplier for world's largest off-the-road OEM, Caterpillar, for supply of ultra large OTR tyres in size 27.00 49 for their 100 tonne rear dump trucks in India.

India's largest OTR tyre size 40.00 57 VEM045 68PR E4 TL was commercially launched at the 12th International Mining & Machinery Exhibition(IMME) in Kolkata. This, India's largest tyre, is yet another example of JK Tyre's undisputed leadership in R&D and Technology. Standing 12 feet high and weighing 3.7 tonnes, this tyre is specifically built for Country's biggest rigid dump-truck, having payload capacity of 240 tonnes. The JK Tyre stall at IMME was awarded for the best display.

Several new special application products were launched, for improving the life and productivity of reach-stackers, which promises massive tread design to optimize tread wear assuring longevity and mobility.

Specially developed cranes for Indian Navy rolled-out exclusively on specially developed JK Tyre, meeting their exacting standards.

Retread Business

The Company provides an end-to-end retreading solutions to customers through a wide product range including, br-cured rubber treads and allied materials. JK Treads expanded its franchisee network within India and Nepal. Its personnel have been trained to retread bias and radial tyres as per international standards. JK Treads now services various State Transport Corporation in India.

OEM and Institutional Business

JK Tyre has grown substantially in the OEM and STU segments during the year. Many new tyres have been approved at TATA, Escorts, New Holland, Ashok Leyland and Maruti Suzuki. Vendor recognition awards have been bestowed upon the Company by General Motors and Maruti Suzuki. International commercial vehicle manufacturer, Scania, which established a manufacturing facility in India has also approved JK Tyre products.

It is a matter of pride that JK Tyre has garnered a large share in the Bus radials segment purchased by State Transport Undertakings across India.

"Customer First" - At the Core

The philosophy of JK Tyre is 'Customer First' and to create brand differentiation by extending proactive tyre care. Such initiatives by the technical service team are an ongoing effort to guide end-users on tyre usage and safety, enabling them to derive superior tyre performance.

With a view to create awareness among the student & schools, and other educational institutes & authorities, and bus drivers, a special programme -'Mission Back to School' was conducted, highlighting the importance of proper tyre care and maintenance to ensure road safety.

JK Tyre works closely with OEM customers and participates in their service campaign for enlightening their customers on better tyre care and maintenance, as also receiving their first hand performance feedback.

Brand Building

A high-impact nationwide brand campaign, woven around a passenger-centric theme was executed across the electronic, new-age digital and social media platforms.

Market Coverage

Widening distribution channels with higher coverage and penetration was a thrust area during the year under review. The Company's network of branded retail sales and service outlets - 'JK Tyre Steel Wheels' for passenger tyres and 'JK Tyre Truck Wheels' for truck/bus tyres - was expanded. The existing channel partner network was enlarged, quantitatively and qualitatively.

Future Perspective

JK Tyre as a brand enjoys immense consumer confidence and has a strong brand recall. This has been possible due to a multifaceted approach in brand, building a distribution network comprising of over 4,000 dealers, 116 JK Tyre Steel Wheels and 17 JK Tyre Truck Wheels. This reach has enabled JK Tyre to entrench itself as a market leader. The various innovative consumer outreach programmes further enhancing consumer loyalty and brand admiration.

Exports

During the year, conditions in the export markets became tougher following the geopolitical tensions in the Middle East, Bangladesh and an economic collapse in Nigeria and Venezuela following a crash in global oil prices. The Company raked in export revenues of H 844 crores during the year under review.

The Company re-strategised its export efforts and strengthened its brsence in various growing markets with a view to enlarge its passenger and truck radial exports.

Review of the Financial Performance

The Company crossed another milestone by achieving a turnover of H 6,799 crores. The profit has grown significantly on account of improvement in all-round efficiencies, various cost-cutting measures, as well as softer raw material prices.

JK Tornel

JK Tornel (Mexico) recorded a turnover of H 1,287 crores despite a continued slowdown in the US and South America and collapse of a key market like Brazil during the latter part of the year.

It recorded a PBT of H 109 crores during the year. The plants in Mexico manufacture 'JKTyre', 'Vikrant' and 'Tornel' tyre brands. A PCR capacity expansion is on its way to completion during the current year; trial runs commenced and production is expected to start shortly.

R&D and Technology

JK Tyre's R&D and technology activities allow continuous product and process improvement in addition to sustainable development. Innovation and creativity are driving the Company's research and technology initiatives.

JK Tyre's continuous efforts to serve customers with technologically superior products catalyse its research and development initiative to manufacture value-added products that address diverse market needs. These activities have helped to strengthen the Company's business model in addition to accelerating market responsiveness and environment-friendliness.

JK Tyre alongwith 'Hari Shankar Singhania Elastomer and Tyre Research Institute' (HASETRI), a brmier 'Scientific and Industrial Research Organisation', and 'RPS Centre of Excellence' for Tyre and Vehicle Mechanics is working in the area of advanced & alternative materials, nanotechnology, process and product simulation, brdictive technologies, advanced tyre mechanics and tyre characterisation (including material reduction, recycling and efficient use). The Company has developed an ultra-low rolling resistance tyre, which is expected to majorly contribute to CO2 emission reduction.

HASETRI is also conducting research in retreading solutions to improve total retreaded tyre life and fuel efficiency to address the Company's 'Total Control' mission.

Motorsports

The Company made significant strides to catalyse motorsport visibility in India over the last year. JK Tyre Superbike Cup was a new addition to the JK Tyre Racing Championship, enlarging the Company's motorsport footprint within the country.

JK Tyre Racing Championship(17th year) and JK Tyre National Rotax Karting Championship (11th year) gained new ground. JK Tyre widened its brsence in the North-East, organising the annual Hornbill Rally in Nagaland. The third JK Tyre Himalayan Drive (four-day event) attracted participation from adventure enthusiasts and numerous high-ranking state officials. Presented by JK Tyre, the fourth season of Mahindra Spice Challenge saw vehicles maneuvering the challenging 500 kilometre-long route from Trivandrum to Kochi across two days. The year saw the second Tata Motors 'T1 Truck Racing' partnered by your Company; the Company manufactured another batch of special truck racing tyres, reinforcing its position as the only manufacturer of these tyres in India.

One of the highlights was JK Tyre Formula Design Challenge 2015, a unique race-car designing competition, where thousands of students - the future engineers - were exposed to the challenges faced by professional formula racing teams. JK Tyre earned considerable goodwill by supporting budding race drivers and a large number of engineers-in-the-making.

Human Resource Development

JK Tyre recognises people as the crucial source of its competitiveness, and continues to focus on people development. The Company firmly believes that talented and engaged employees are the critical differentiators as they provide the competitive advantage for sustaining and growing the business in the environment of global competition. As such, it has been continually focusing on the means to achieve the company's goals of meeting growth targets through acquisition of external talent and by improving the capabilities of existing people through people development initiatives. It fosters a culture of ongoing coaching and feedback for all employees and on-the-job development.

The Company has been bestowed with number of awards in recognition of its human resources development initiatives such as CII's National Award 2014 for significant achievement in HR Excellence, Golden Peacock Award for HR Excellence-Special Commendation.

Risk and Concerns

Every business is marked by a variety of risks. The Company identifies and assesses risks associated with its business and correspondingly undertakes strategic measures to minimise losses and maximise realisations.

Industry risk

A downturn in user industries could affect growth

The Indian auto sector has shown signs of improvement which has cascaded down to the tyre sector as well. The sector's growth is driven by an improved economy, infrastructural growth and higher incomes.

Marketing risk

inability to address customer needs may affect market share

The Company offers a range of tyres across vehicle segments. The Company's product range comprises tyres for truck/bus bias & radial, passenger car radials, LCV/SCV bias & radials, farm & industrial vehicles, specialty vehicles, off-the-road applications, military & defence and racing. The Company offers a wide sectoral network of over 4,000 retail outlets. Backed by strong R&D, the Company makes periodic product introductions, widening choice.

The Company enjoys a leading market share in the truck/bus radial segment and a growing share across the passenger radials, truck bias, LCV, SCV, OTR and tractor segments.

The Company established a greenfield facility in Chennai to address the growing demand for radial tyres with an initial capacity of 4 lac TBRs and 25 lac PCRs. This capacity is now being expanded by 8 lac TBRs and 15 lac PCRs.

Brand risk

inability to keep pace with evolving brferences could affect growth

The Company focused its branding around longevity, control and safety. The Company embarked on a 360-degree brand building exercise comprising successful promotions, engaging customers across multiple points. The Company engaged with influencers (dealers) to understand customer needs and brferences.

Liquidity risk

Insufficient funds could impact operations and growth

The Company is adequately funded in terms of working capital through a consortium of several banks. The Company enjoyed a comfortable debt-equity ratio of 2.39 at the close of 2014-15 (2.81 in the brvious year).

Quality risk

Any deviation from quality standards could affect the brand JK Tyre invested in world-class manufacturing technologies.

All the Company's units are ISO 9001-certified. Its manufacturing facilities are certified for TPM, ISO/TS - 16949, ISO - 14001 and OHSAS 18001.The Company was the first tyre company in the world to be certified for ISO 9001 across its entire operations and the first in the world to be certified for QS 9000 for multi-location operations across the entire product range.

Internal Control Systems

The Company has, since inception, laid down systems of internal control which are commensurate with the size and nature of business. Adequate and effective checks are in place to ensure that financial data is accurate and reliable. The internal control systems also ensure that the assets and interest of the Company are well protected.

The internal audit is carried out throughout the year based on a systematic plan covering all functions and aspects of the business. The internal audit reports are reviewed by the Senior Management and are placed before the Audit Committee of the Board of Directors along with actions taken. The Audit Committee undertakes a detailed review of the audit observations and actions, in order to ensure that the internal audit system is effectively functioning. The recommended actions by audit are monitored and improvements are implemented which are regularly reviewed by Senior Management.

The IT system of the Company are based on a robust ERP system ensuring seamless connectivity of Plants, Sales Offices and Head Office facilitating faster and most reliable processing of transactions as well as generating reports for faster decision making.

The Company also has a strong Budgetary Control system and Management Reporting system which serve as the backbone of the monitoring system of operations to ensure that business results are achieved and continuous improvement projects are undertaken.

Cautionary Statement

The Management Discussion and Analysis Report contains forward-looking statements, which may be identified by the use of words in that direction, or connoting the same. All statements that address expectations or projections about the future including but not limited to statements about your Company's strategy for growth, product development, market position, expenditures and financial results are forward looking statements.

Your Company's actual results, performance or achievements could thus differ materially from those projected in such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.

MANAGEMENT DISCUSSION AND ANALYSIS

National Environment

In May 2014, a new Indian Government was elected with a resounding mandate, which infused hope in formulating of stable fiscal policies. A number of manufacturing-centric policies announced by the new government shall cascade into positive economic growth over the foreseeable future.

Economic and Business Scenario

Fiscal 2014-15 was indeed a challenging year for the Indian economy. There was a partial acceleration in some segments viz. mining, manufacturing, construction and services. Industrial sector grew at 2.8%. Inflationary brssures also eased considerably during the year. In addition, there was some softening of interest rates leading to hopes of higher economic growth. Consequently, this is expected to boost demand for automotive sectors specially for commercial vehicles. Since the demand for tyres is driven by overall growth of economy, particularly in automotive and transport sectors, this augurs well for the tyre industry in fiscal 2015-16.

Indian Automobile Industry

The Indian Automobile Industry posted overall sales growth of 7.8% during FY 2014-15.

The medium and heavy commercial vehicle segments which had hit a low in 2013-14, registered a production growth of 21.7% during the year. Passenger Car and Multi Utility Vehicle recorded a marginal turnaround with 6.8% growth compared to 4.4% de-growth in brvious year.

Low micro level economic activity has been reflected by a de-growth in the segments providing the last mile connect. As a result, Small Commercial Vehicles saw a sharp drop for the second year in succession, and Light Commercial Vehicle segment was also impacted registering a 4% de-growth.

The poor performance of the Agricultural sector reflected in the muted sales of Tractors.

Indian Tyre Industry

The Tyre Industry being the wheels of economy has a direct bearing on the Industry performance. The over-all demand for tyres for the 4-wheeler segment grew marginally.

The total Truck/Bus tyre segment grew by 6.3%. The level of radialization in the Indian domestic market has grown to a level of 33%, while in the OEM segment, radialisation was at a high 65%. Truck/Bus radial demand is growing substantially and will continue to be an Industry growth driver in the next few years. The non Truck tyre segments have recorded a moderate growth of 4%.

Despite thrust on 'Make in India' the scourge of Tyre imports specially from China remains unabated. The anomaly of inverted duty structure favouring finished goods over raw material was not corrected even in budget 2015-16. Currently, the import of Truck/Bus and Passenger Car radials constitutes as much as 26% and 24% respectively of the domestic sales.

Outlook

The Indian tyre industry's outlook is positive as growth in domestic tyre volume is expected to increase by around 8-10% during 2015-16 on the back of a pickup in auto demand, improving economy and stable raw material prices.

Following the US anti-dumping duty on Chinese tyres, imports into India increased to around Rs. 800 crores during 2014-15, which affected Indian tyre makers. On the other hand, capacity addition continued in anticipation of the recovery in auto demand.

Overview - JK Tyre (India)

JK Tyre achieved several landmarks during the year under review, these include:

¦ Maintained its number 1 position in the truck/bus radial segment.

¦ Strengthened its brsence in the passenger car radials segment.

¦ Introduced several brmium products in the commercial and passenger car categories.

¦ Expansion of TBR/passenger car tyre capacities at the All Radial Chennai Tyre Plant progressed well and expected to be completed during the current year.

¦ Expansion of the passenger car tyre capacity at JK Tornel (Mexico) is on its way to completion.

It is a matter of pride that JK Tyre was recently ranked highest in terms of customer satisfaction in the OE tyres segment as per the 'JD POWER 2015' India Tyre Customer Satisfaction Index. This performance was well above the overall industry average. It is the third time since the inception of the Survey that JK Tyre has received this recognition, which is a testimony to the Company's focus on Quality and Customer-orientation.

Segment-wise performance Truck/Bus radials

JK Tyre having a wide range of Truck/Bus Radials crossed yet another milestone by putting over nine million Truck/ Bus radials on the road globally, out of which, over seven million are on Indian roads. In order to meet customer needs, two new value added products were introduced, they include -10.00-R- 20 16 PR Jet Way JUH3+ and 10.00-R- 20 16 PR Jet Steel JDH3. With the objective of encouraging its customers, a National Fleet Conference was organized which is a dedicated interactive business platform for fleet owners, where amongst others, best practices are shared to strengthen the business relationship.

The network of 'JK Tyre Truck Wheels', providing services for maintenance and repair of tyres, is rapidly expanding. The initiative of 'Radial Baadshah' CRM, was recognised at the Asian Customer Engagement Awards.

Truck/Bus Bias

This segment, which although has declined, still remains a high-value segment. Riding on the success of earlier rib tyres, a super-brmium mileage tyre 10.00-20 JET R Xtra Miles, was introduced. Various promotional as well as customer centric activities were pursued at select locations, which received an encouraging customer response.

Passenger Car Radial

Brand building, retail network expansion, customer engagement were the key elements of the passenger car radial strategy during the year. JK Tyre brand campaign was built around passenger tyres. JK Tyre's domestic passenger radial sales grew by 11% as against a single digit industry growth.

In order to expand geographical reach a large number of new 'JK Tyre Steel Wheels' were opened. In addition, multi-brand dealerships were awarded, thereby enabling dedicated displays and counter shares for JK Tyre. The concept was well received and a large number of such channel partners have been designated as 'Preferred Trade Partners'.

As much as it is important to communicate to customers, it is equally important to engage and reward loyal customers. Two major consumer offers of car and UV radials - 'Drive in Style' and 'Celebration on Wheels' were made during the year. Customers in Delhi NCR took part in the'JK Tyre Experience Zone' at the brstigious Buddh International Circuit during successive rounds of JK Racing Championship.

LCV and SCV

During the year, the Company connected with LCV/SCV customers through various attractive offers including a national campaign held in Delhi-NCR and other high potential markets.

Farm vehicles

In line with JK Tyre's 'Customer First' approach, the 'Kisan Mitra' campaign was undertaken for the welfare of customers in the rural markets. This campaign which facilitates them with agricultural services (soil testing, tractor tyre check-up and agri-counseling services) was organised across several States in the country. Through the campaign, several hundred villages were covered and a large number mechanics were reached.

JK Tyre also participated in numerous kisan melas. The kisan melaswere organised in the high-yielding agricultural states of India like Punjab, Uttar Pradesh, Haryana, Maharashtra, Madhya Pradesh, Rajasthan and Karnataka.

To improve the brand recall and develop positive perception among the tractor OEM franchise, visibility enhancing campaigns were organised in the top-11 agricultural states of India. This campaign enhanced customer awareness about the brmium range of tractor rear tyres, SONA 1 and strengthened relationships with our tractor dealerships as well as our OEM partners. More than 3,700 villages were covered and ties were forged with more than 35,000 customers.

OTR

The OTR segment was affected by the slowdown in mining and construction activities. New product introduction and customer education were thrust areas during the year. JK Tyre evolved as one of the brferred supplier for world's largest off-the-road OEM, Caterpillar, for supply of ultra large OTR tyres in size 27.00 49 for their 100 tonne rear dump trucks in India.

India's largest OTR tyre size 40.00 57 VEM045 68PR E4 TL was commercially launched at the 12th International Mining & Machinery Exhibition(IMME) in Kolkata. This, India's largest tyre, is yet another example of JK Tyre's undisputed leadership in R&D and Technology. Standing 12 feet high and weighing 3.7 tonnes, this tyre is specifically built for Country's biggest rigid dump-truck, having payload capacity of 240 tonnes. The JK Tyre stall at IMME was awarded for the best display.

Several new special application products were launched, for improving the life and productivity of reach-stackers, which promises massive tread design to optimize tread wear assuring longevity and mobility.

Specially developed cranes for Indian Navy rolled-out exclusively on specially developed JK Tyre, meeting their exacting standards.

Retread Business

The Company provides an end-to-end retreading solutions to customers through a wide product range including, br-cured rubber treads and allied materials. JK Treads expanded its franchisee network within India and Nepal. Its personnel have been trained to retread bias and radial tyres as per international standards. JK Treads now services various State Transport Corporation in India.

OEM and Institutional Business

JK Tyre has grown substantially in the OEM and STU segments during the year. Many new tyres have been approved at TATA, Escorts, New Holland, Ashok Leyland and Maruti Suzuki. Vendor recognition awards have been bestowed upon the Company by General Motors and Maruti Suzuki. International commercial vehicle manufacturer, Scania, which established a manufacturing facility in India has also approved JK Tyre products.

It is a matter of pride that JK Tyre has garnered a large share in the Bus radials segment purchased by State Transport Undertakings across India.

"Customer First" - At the Core

The philosophy of JK Tyre is 'Customer First' and to create brand differentiation by extending proactive tyre care. Such initiatives by the technical service team are an ongoing effort to guide end-users on tyre usage and safety, enabling them to derive superior tyre performance.

With a view to create awareness among the student & schools, and other educational institutes & authorities, and bus drivers, a special programme -'Mission Back to School' was conducted, highlighting the importance of proper tyre care and maintenance to ensure road safety.

JK Tyre works closely with OEM customers and participates in their service campaign for enlightening their customers on better tyre care and maintenance, as also receiving their first hand performance feedback.

Brand Building

A high-impact nationwide brand campaign, woven around a passenger-centric theme was executed across the electronic, new-age digital and social media platforms.

Market Coverage

Widening distribution channels with higher coverage and penetration was a thrust area during the year under review. The Company's network of branded retail sales and service outlets - 'JK Tyre Steel Wheels' for passenger tyres and 'JK Tyre Truck Wheels' for truck/bus tyres - was expanded. The existing channel partner network was enlarged, quantitatively and qualitatively.

Future Perspective

JK Tyre as a brand enjoys immense consumer confidence and has a strong brand recall. This has been possible due to a multifaceted approach in brand, building a distribution network comprising of over 4,000 dealers, 116 JK Tyre Steel Wheels and 17 JK Tyre Truck Wheels. This reach has enabled JK Tyre to entrench itself as a market leader. The various innovative consumer outreach programmes further enhancing consumer loyalty and brand admiration.

Exports

During the year, conditions in the export markets became tougher following the geopolitical tensions in the Middle East, Bangladesh and an economic collapse in Nigeria and Venezuela following a crash in global oil prices. The Company raked in export revenues of H 844 crores during the year under review.

The Company re-strategised its export efforts and strengthened its brsence in various growing markets with a view to enlarge its passenger and truck radial exports.

Review of the Financial Performance

The Company crossed another milestone by achieving a turnover of H 6,799 crores. The profit has grown significantly on account of improvement in all-round efficiencies, various cost-cutting measures, as well as softer raw material prices.

JK Tornel

JK Tornel (Mexico) recorded a turnover of H 1,287 crores despite a continued slowdown in the US and South America and collapse of a key market like Brazil during the latter part of the year.

It recorded a PBT of H 109 crores during the year. The plants in Mexico manufacture 'JKTyre', 'Vikrant' and 'Tornel' tyre brands. A PCR capacity expansion is on its way to completion during the current year; trial runs commenced and production is expected to start shortly.

R&D and Technology

JK Tyre's R&D and technology activities allow continuous product and process improvement in addition to sustainable development. Innovation and creativity are driving the Company's research and technology initiatives.

JK Tyre's continuous efforts to serve customers with technologically superior products catalyse its research and development initiative to manufacture value-added products that address diverse market needs. These activities have helped to strengthen the Company's business model in addition to accelerating market responsiveness and environment-friendliness.

JK Tyre alongwith 'Hari Shankar Singhania Elastomer and Tyre Research Institute' (HASETRI), a brmier 'Scientific and Industrial Research Organisation', and 'RPS Centre of Excellence' for Tyre and Vehicle Mechanics is working in the area of advanced & alternative materials, nanotechnology, process and product simulation, brdictive technologies, advanced tyre mechanics and tyre characterisation (including material reduction, recycling and efficient use). The Company has developed an ultra-low rolling resistance tyre, which is expected to majorly contribute to CO2 emission reduction.

HASETRI is also conducting research in retreading solutions to improve total retreaded tyre life and fuel efficiency to address the Company's 'Total Control' mission.

Motorsports

The Company made significant strides to catalyse motorsport visibility in India over the last year. JK Tyre Superbike Cup was a new addition to the JK Tyre Racing Championship, enlarging the Company's motorsport footprint within the country.

JK Tyre Racing Championship(17th year) and JK Tyre National Rotax Karting Championship (11th year) gained new ground. JK Tyre widened its brsence in the North-East, organising the annual Hornbill Rally in Nagaland. The third JK Tyre Himalayan Drive (four-day event) attracted participation from adventure enthusiasts and numerous high-ranking state officials. Presented by JK Tyre, the fourth season of Mahindra Spice Challenge saw vehicles maneuvering the challenging 500 kilometre-long route from Trivandrum to Kochi across two days. The year saw the second Tata Motors 'T1 Truck Racing' partnered by your Company; the Company manufactured another batch of special truck racing tyres, reinforcing its position as the only manufacturer of these tyres in India.

One of the highlights was JK Tyre Formula Design Challenge 2015, a unique race-car designing competition, where thousands of students - the future engineers - were exposed to the challenges faced by professional formula racing teams. JK Tyre earned considerable goodwill by supporting budding race drivers and a large number of engineers-in-the-making.

Human Resource Development

JK Tyre recognises people as the crucial source of its competitiveness, and continues to focus on people development. The Company firmly believes that talented and engaged employees are the critical differentiators as they provide the competitive advantage for sustaining and growing the business in the environment of global competition. As such, it has been continually focusing on the means to achieve the company's goals of meeting growth targets through acquisition of external talent and by improving the capabilities of existing people through people development initiatives. It fosters a culture of ongoing coaching and feedback for all employees and on-the-job development.

The Company has been bestowed with number of awards in recognition of its human resources development initiatives such as CII's National Award 2014 for significant achievement in HR Excellence, Golden Peacock Award for HR Excellence-Special Commendation.

Risk and Concerns

Every business is marked by a variety of risks. The Company identifies and assesses risks associated with its business and correspondingly undertakes strategic measures to minimise losses and maximise realisations.

Industry risk

A downturn in user industries could affect growth

The Indian auto sector has shown signs of improvement which has cascaded down to the tyre sector as well. The sector's growth is driven by an improved economy, infrastructural growth and higher incomes.

Marketing risk

inability to address customer needs may affect market share

The Company offers a range of tyres across vehicle segments. The Company's product range comprises tyres for truck/bus bias & radial, passenger car radials, LCV/SCV bias & radials, farm & industrial vehicles, specialty vehicles, off-the-road applications, military & defence and racing. The Company offers a wide sectoral network of over 4,000 retail outlets. Backed by strong R&D, the Company makes periodic product introductions, widening choice.

The Company enjoys a leading market share in the truck/bus radial segment and a growing share across the passenger radials, truck bias, LCV, SCV, OTR and tractor segments.

The Company established a greenfield facility in Chennai to address the growing demand for radial tyres with an initial capacity of 4 lac TBRs and 25 lac PCRs. This capacity is now being expanded by 8 lac TBRs and 15 lac PCRs.

Brand risk

inability to keep pace with evolving brferences could affect growth

The Company focused its branding around longevity, control and safety. The Company embarked on a 360-degree brand building exercise comprising successful promotions, engaging customers across multiple points. The Company engaged with influencers (dealers) to understand customer needs and brferences.

Liquidity risk

Insufficient funds could impact operations and growth

The Company is adequately funded in terms of working capital through a consortium of several banks. The Company enjoyed a comfortable debt-equity ratio of 2.39 at the close of 2014-15 (2.81 in the brvious year).

Quality risk

Any deviation from quality standards could affect the brand JK Tyre invested in world-class manufacturing technologies.

All the Company's units are ISO 9001-certified. Its manufacturing facilities are certified for TPM, ISO/TS - 16949, ISO - 14001 and OHSAS 18001.The Company was the first tyre company in the world to be certified for ISO 9001 across its entire operations and the first in the world to be certified for QS 9000 for multi-location operations across the entire product range.

Internal Control Systems

The Company has, since inception, laid down systems of internal control which are commensurate with the size and nature of business. Adequate and effective checks are in place to ensure that financial data is accurate and reliable. The internal control systems also ensure that the assets and interest of the Company are well protected.

The internal audit is carried out throughout the year based on a systematic plan covering all functions and aspects of the business. The internal audit reports are reviewed by the Senior Management and are placed before the Audit Committee of the Board of Directors along with actions taken. The Audit Committee undertakes a detailed review of the audit observations and actions, in order to ensure that the internal audit system is effectively functioning. The recommended actions by audit are monitored and improvements are implemented which are regularly reviewed by Senior Management.

The IT system of the Company are based on a robust ERP system ensuring seamless connectivity of Plants, Sales Offices and Head Office facilitating faster and most reliable processing of transactions as well as generating reports for faster decision making.

The Company also has a strong Budgetary Control system and Management Reporting system which serve as the backbone of the monitoring system of operations to ensure that business results are achieved and continuous improvement projects are undertaken.

Cautionary Statement

The Management Discussion and Analysis Report contains forward-looking statements, which may be identified by the use of words in that direction, or connoting the same. All statements that address expectations or projections about the future including but not limited to statements about your Company's strategy for growth, product development, market position, expenditures and financial results are forward looking statements.

Your Company's actual results, performance or achievements could thus differ materially from those projected in such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.