2.12 Provisions

Provisions are recognised when the Company
has a present obligation (legal or constructive)

as a result of a past event and it is probable that
an outflow of resources embodying economic
benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of
the obligation. When the Company expects some
or all of a provision to be reimbursed, for example,
under an insurance contract, the reimbursement
is recognised as a separate asset, but only
when the reimbursement is virtually certain.
The expense relating to a provision is presented
in the Statement of Profit and Loss net of any
reimbursement. If the effect of the time value
of money is material, provisions are discounted
using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision
due to the passage of time is recognised as a
finance cost.

2.12.1 Sales related obligations

The estimated liability for sales related obligations
is recorded when products are sold. These
estimates are established using historical
information on the nature, frequency and average
cost of obligations and management estimates
regarding possible future incidence based on
corrective actions on product failure. The timing
of outflows will vary as and when the obligation
will arise - being typically up to three to seven
years. Initial recognition is based on historical
experience. The initial estimate of sales related
obligations (related costs) is revised annually.

2.12.2 Decommissioning liability

The Company records a provision for
decommissioning costs of land taken on lease
at one of the manufacturing facility for the
production of tyres. Decommissioning costs
are provided at the present value of expected
costs to settle the obligation using estimated
cash flows and are recognised as part of the
cost of the particular asset. The cash flows are
discounted at a current pre-tax rate that reflects
the risks specific to the decommissioning liability.
The unwinding of the discount is expensed as
incurred and recognised in the Statement of
Profit and Loss as a finance cost. The estimated
future costs of decommissioning are reviewed
annually and adjusted as appropriate. Changes
in the estimated future costs or in the discount
rate applied are added to or deducted from the
cost of the asset.

The Company is party to various lawsuits that
are at administrative or judicial level or in their
initial stages, involving tax and civil matters.
The Company contests all claims in the court/
tribunals/appellate authority levels and based
on their assessment and that of their legal
counsel, records a provision when the risk or loss
is considered probable. The outflow is expected
on cessations of the respective events.

2.13 Employee benefits2.13.1 Defined contribution plan

Retirement benefit in the form of Provident Fund,
Superannuation, Employees State Insurance
Contribution and Labour Welfare fund are defined
contribution scheme. The Company has no
obligation, other than the contribution payable
to the above mentioned funds. The Company
recognises contribution payable to these funds/
schemes as an expense when an employee
renders the related service. If the contribution
payable to the scheme for service received before
the Balance Sheet date exceeds the contribution
already paid, the deficit payable is recognised as
a liability after deducting the contribution already
paid. If the contribution already paid exceeds the
contribution due for services received before the
Balance Sheet date, then excess is recognised as
an asset to the extent that the pre-payment will
lead to, for example, a reduction in future payment
or a cash refund.

2.13.2 Defined benefit plan

For defined benefit plans, the amount recognised
as 'Employee benefit expenses' in the Statement
of Profit and Loss is the cost of accruing employee
benefits promised to employees over the year
and the costs of individual events such as past/
future service benefit changes and settlements
(such events are recognised immediately in
the Statement of Profit and Loss). The amount
of net interest expense calculated by applying
the liability discount rate to the net defined
benefit liability or asset is charged or credited
to 'Finance costs' in the Statement of Profit and
Loss. Any differences between the expected
interest income on plan assets and the return
achieved, and any changes in the liabilities over
the year due to changes in actuarial assumptions
or experience adjustments within the plans, are
recognised immediately in OCI and subsequently
not reclassified to the Statement of Profit and Loss.

The defined benefit plan surplus or deficit on the
Balance Sheet date comprises fair value of plan
assets less the present value of the defined benefit
liabilities using a discount rate by reference to
market yields on Government bonds at the end
of the reporting period.

All defined benefit plans obligations are
determined based on valuations, as at the
Balance Sheet date, made by independent
actuary using the projected unit credit method.
The classification of the Company's net obligation
into current and non-current is as per the actuarial
valuation report.

When the benefits of a plan are changed or
when a plan is curtailed, the resulting change in
benefit that relates to past service ('past service
cost' or 'past service gain') or the gain or loss on
curtailment is recognised immediately in profit or
loss. The Company recognizes gains and losses
on the settlement of a defined benefit plan when
the settlement occurs.

2.13.3 Termination benefits

Termination benefits, in the nature of voluntary
retirement benefits or termination benefits
arising from restructuring are recognised in
the Statement of Profit and Loss. The Company
recognises termination benefits at the earlier of
the following dates:

• When the Company can no longer withdraw the
offer of those benefits; or

• When the Company recognises costs for a
restructuring that is within the scope of Ind
AS 37: Provisions, Contingent Liabilities and
Contingent Assets and involves the payment
of termination benefits.

Benefits falling due more than 12 months after the
end of the reporting period are discounted to their
present value.

2.14 Financial instruments

A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

2.14.1 Financial assets

Financial assets are recognised when the
Company becomes a party to the contractual
provisions of the instrument.

2.14.1.1 Initial recognition and measurement

On initial recognition, a financial asset is
recognised at fair value. In case of financial assets
which are recognised at fair value through profit
and loss (FVTPL) except for trade receivables
without financing component which are
measured at transaction price, its transaction cost
is recognised in the Statement of Profit and Loss. In
other cases, the transaction cost is attributed to
the acquisition value of the financial asset.

2.14.1.2 Subsequent measurement

For purposes of subsequent measurement,
financial assets are classified in two categories:

2.14.1.2.1 Debt instruments at amortised cost

2.14.1.2.2 Equity instruments measured at FVTOCI

2.14.1.2.1 Debt instruments at amortised cost

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

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

• Contractual terms of the asset give rise on
specified dates to cash flows that are Solely
Payments of Principal and Interest ('SPPI') on
the principal amount outstanding.

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

2.14.1.2.2 Equity instruments

All investments in equity instruments within
the scope of Ind AS 109 are initially measured
at fair value. Equity instruments which are
held for trading are classified as FVTPL. For all
other equity instruments, the Company may
make an irrevocable election to present in the
OCI subsequent changes in the fair value. The
Company makes such election on an instrument-
by-instrument basis. The classification is made on
initial recognition and is irrevocable.

In case of equity instrument classified as FVTOCI,
all fair value changes on the instrument, excluding
dividends, are recognised in the OCI. There is no
recycling of the amounts from OCI to the Statement
of Profit and Loss, even on derecognition of
investment. However, the Company may transfer
the cumulative gain or loss within equity.

Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognised in the Statement of Profit
and Loss.

2.14.1.3 Derecognition

A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily derecognised when:

• The rights to receive cash flows from the asset
have expired; or

• The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under
a 'pass-through' arrangement; and either (a)
the Company has transferred substantially all
the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.

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

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

In accordance with Ind AS 109, the Company
applies Expected Credit Loss ('ECL') model for
measurement and recognition of impairment
loss on the following financial assets and credit
risk exposure:

(i) Trade receivables

(ii) Financial assets measured at amortised cost
(other than trade receivables)

(iii) Financial assets measured at fair value
through other comprehensive income
(FVTOCI).

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

For recognition of impairment loss on other
financial assets [i.e. (ii) and (iii) above] and risk
exposure, the Company determines that whether
there has been a significant increase in the credit
risk since initial recognition. If credit risk has not
increased significantly, 12 month ECL is used to
provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used.
If, in a subsequent period, credit quality of the
instrument improves such that there is no longer
a significant increase in credit risk since initial
recognition, then the entity reverts to recognising
impairment loss allowance based on 12 month ECL.

Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The 12
month ECL is a portion of the lifetime ECL which
results from default events that are possible within
12 months after the reporting date.

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

• All contractual terms of the financial instrument
(including prepayment, extension, call and

similar options) over the expected life of
the financial instrument. However, in rare
cases when the expected life of the financial
instrument cannot be estimated reliably, then
the entity is required to use the remaining
contractual term of the financial instrument.

• Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.

As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables.
The provision matrix is based on its historically
observed default rates over the expected life of
the trade receivables and is adjusted for forward¬
looking estimates. At every reporting date, the
historical observed default rates and changes in
the forward-looking estimates are updated. For
assessing increase in credit risk and impairment
loss, the Company combines financial instruments
on the basis of shared credit risk characteristics
with the objective of facilitating an analysis that is
designed to enable significant increases in credit
risk to be identified on a timely basis.

ECL impairment loss allowance (or reversal)
recognised during the period is recognised as
income/expense in the Statement of Profit and
Loss. This amount is reflected under the head
'other expenses' in the Statement of Profit and Loss.

The Balance Sheet presentation for various
financial instruments is described below:

Financial assets measured at amortised cost and
contractual revenue receivables: ECL is presented
as an allowance, i.e. as an integral part of the
measurement of those assets in the Balance
Sheet. The allowance reduces the net carrying
amount. Until the asset meets write-off criteria, the
Company does not reduce impairment allowance
from the gross carrying amount.

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

2.14.2 Financial liabilities

2.14.2.1 Initial recognition and measurement

Financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instrument. All financial liabilities

are recognised initially at fair value and in the
case of borrowings net of directly attributable
transaction costs.

2.14.2.2 Subsequent measurement

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

2.14.2.2.1 Financial liabilities at amortised
cost (Borrowings)

This is the category most relevant to the Company.
After initial recognition, financial liabilities are
subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised
in the Statement of Profit and Loss when the
liabilities are derecognised as well as through the
EIR amortisation process.

Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance
costs in the Statement of Profit and Loss.

2.14.2.3 Derecognition

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

2.14.3 Derivative financial instruments and
hedge accounting

The Company uses derivative financial
instruments, such as forward currency contracts,
to manage its foreign currency risks. These
derivative instruments are designated as cash
flow, fair value or net investment hedges and
are entered into for period consistent with
currency. Such derivative financial instruments
are initially recognised at fair value on the date
on which a derivative contract is entered into
and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities
when the fair value is negative. Any gains or
losses arising from changes in the fair value of

derivatives are taken directly to the Statement of
Profit and Loss.

2.14.3.1 Cash flow hedges

The effective portion of the gain or loss on the
hedging instrument is recognised in OCI in the
cash flow hedge reserve, while any ineffective
portion is recognised immediately in the
Statement of Profit or Loss.

The Company uses forward currency contracts
as hedges of its exposure to foreign currency risk
in forecast transactions and firm commitments.
The ineffective portion relating to foreign currency
contracts is recognised in the Statement of Profit
and Loss.

Amounts recognised as OCI are transferred to the
Statement of Profit and Loss when the hedged
transaction affects profit and loss, i.e. when the
hedged financial income or financial expense is
recognised or when a forecast sale occurs. When
the hedged item is the cost of a non-financial asset
or non-financial liability, the amounts recognised
as OCI are transferred to the initial carrying
amount of the non-financial asset or liability.

If the hedging instrument expires or is sold,
terminated or exercised without replacement or
rollover (as part of the hedging strategy), or if its
designation as a hedge is revoked, or when the
hedge no longer meets the criteria

for hedge accounting, any cumulative gain or loss
previously recognised in OCI remains separately
in equity until the forecast transaction occurs or
the foreign currency firm commitment is met.

2.14.4 Fair value measurement

The Company measures derivatives instruments
like forward contracts at fair value at each Balance
Sheet date.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes
place either:

• In the principal market for the asset or liability; or

• In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial asset
takes into account a market participant's ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest
level input that is significant to the fair value
measurement as a whole:

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

• Level 2 — Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable

• Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

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

2.14.5 Offsetting of financial instruments

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

2.15 Cash and cash equivalents

Cash and cash equivalent in the Balance Sheet
comprises cash at banks and on hand. For the
purpose of cash flow statement, Cash & Cash
equivalent consists of cash & short term deposits
as defined above. The Cash flow statement is
prepared using indirect method.

2.16 Dividend distribution to equity
shareholders

The Company recognises a liability to pay dividend
to equity shareholders of the Company when the
distribution is authorised and the distribution is no
longer at the discretion of the Company. As per the
corporate laws in India, a distribution is authorised
when it is approved by the shareholders.

2.17 Foreign currencies

The Company's financial statements are
presented in f, which is also the Company's
functional currency.

Transactions in foreign currencies are initially
recorded by the Company at f spot rate at the
date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency spot rates of exchange at
the reporting date.

Exchange differences arising on settlement or
translation of monetary items are recognised in
the Statement of Profit and Loss.

Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date
when the fair value is determined. The gain or
loss arising on translation of non-monetary items
measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair

value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised
in OCI or profit and loss are also recognised in OCI
or the Statement of Profit and Loss, respectively).

2.18 Earnings Per Share ('EPS')

Basic EPS amounts are calculated by dividing the
profit for the year attributable to equity holders of
the Company by the weighted average number of
equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing
the profit attributable to equity holders of the
Company after adjusting impact of dilution shares
by the weighted average number of equity shares
outstanding during the year plus the weighted
average number of equity shares that would be
issued on conversion of all the dilutive potential
equity shares into equity shares.

2.19 Segment Reporting

The Executive Management Committee evaluates
the Company's performance and allocates
the resources based on an analysis of various
performance indicators by business segments.

The Company prepares its segment information in
conformity with the accounting policies adopted
for preparing and presenting the financial
statements of the Company as a whole.

2.20 Contingent liabilities

A contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed by the occurrence or non—occurrence
of one or more uncertain future events not wholly
within the control of the Company or a present
obligation that is not recognised because it is
not probable that an outflow of resources will
be required to settle the obligation. A contingent
liability also arises in extremely rare cases where
there is a liability that cannot be recognised
because it cannot be measured reliably. The
Company does not recognise a contingent
liability but discloses its existence in the
financial statements.

2.21 Treasury shares

The Company has created an CEAT Employees
Welfare Benefit Trust ('Trust') for providing share-
based payment to its employees. The Company
uses trust as a vehicle for distributing shares to
employees under the employee remuneration
schemes. The trust buys shares of the Company
from the market, for giving shares to employees
on exercise of equity settled ESOP. Share options
exercised during the reporting period are satisfied
with treasury shares. The Company treats trust as
its extension and shares held by trust are treated
as treasury shares.

Own equity instruments that are reacquired
(treasury shares) are recognised at cost
and deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale,
issue or cancellation of the Company's own equity
instruments. Any difference between the carrying
amount and the consideration, if reissued, is
recognised in Capital reserve.

2.22 Share-based payments

Employees (including senior executives) of the
Company receive remuneration in the form of
share-based payments, whereby employees
render services as consideration for equity
instruments (equity-settled transactions).

The cost of equity-settled transactions is
determined by the fair value at the date when
the grant is made using an appropriate valuation
model. Further details are given in note 46.

That cost is recognised, together with a
corresponding increase in share-based payment
(SBP) reserves in equity, over the period in which
the performance and/or service conditions are
fulfilled in employee benefits expense.

The cumulative expense recognised for equity-
settled transactions at each reporting date
until the vesting date reflects the extent to
which the vesting period has expired and the
Company's best estimate of the number of equity
instruments that will ultimately vest. The expense
or credit in the P&L for a period represents the
movement in cumulative expense recognised as
at the beginning and end of that period and is
recognised in employee benefits expense.

Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part
of the Company's best estimate of the number of
equity instruments that will ultimately vest. Market
performance conditions are reflected within

the grant date fair value. Any other conditions
attached to an award, but without an associated
service requirement, are considered to be non¬
vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to
an immediate expensing of an award unless there
are also service and/or performance conditions.

No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/
or service conditions are satisfied.

When the terms of an equity-settled award are
modified, the minimum expense recognised is
the grant date fair value of the unmodified award,
provided the original vesting terms of the award
are met. An additional expense, measured as at
the date of modification, is recognised for any
modification that increases the total fair value
of the share-based payment transaction, or is
otherwise beneficial to the employee. Where
an award is cancelled by the entity or by the
counterparty, any remaining element of the fair
value of the award is expensed immediately
through profit or loss.

2.23 Business combination

The Company applies the acquisition method
in accounting for business combinations. The
consideration transferred by the Company to
obtain control of a business is calculated as
the sum of the fair values of assets transferred,
liabilities incurred and the equity interests issued
by the Company as at the acquisition date i.e.
date on which it obtains control of the acquiree
which includes the fair value of any asset or
liability arising from a contingent consideration
arrangement. Acquisition-related costs are
recognised in the Statement of Profit and Loss as
incurred, except to the extent related to the issue
of debt or equity securities.

A business combination involving entities or
businesses under common control is a business
combination in which all of the combining entities
or businesses are ultimately controlled by the
same party or parties both before and after the
business combination and the control is not
transitory. The transactions between entities

under common control are specifically covered
by Ind AS 103. Such transactions are accounted for
using the pooling of-interest method. The assets
and liabilities of the acquired entity are recognised
at their carrying amounts of the Company's
financial statements. The components of equity of
the acquired companies are added to the same
components within the Company's equity. The
financial statements in respect of prior periods
have been restated as if the business combination
had occurred from the beginning of the preceding
period in the financial statements.

Identifiable assets acquired and liabilities
assumed in a business combination are measured
initially at their fair values on acquisition-date.

Intangible Assets acquired in a Business
Combination and recognised separately from
Goodwill are initially recognised at their fair value
at the acquisition date (which is regarded as their
cost). Subsequent to initial recognition, intangible
Assets acquired in a Business Combination are
reported at cost less accumulated amortisation
and accumulated impairment losses, on the
same basis as intangible assets that are acquired
separately.

2.24 Significant accounting judgments,
estimates and assumptions

The preparation of the financial statements requires
management to make judgments, estimates and
assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities,
and the accompanying disclosures, and the
disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could
result in outcomes that require an adjustment to
the carrying amount of assets or liabilities in future
periods. Difference between actual results and
estimates are recognised in the periods in which
the results are known/materialised.

The key assumptions concerning the future and
other key sources of estimation uncertainty at
the reporting date, that have a significant risk of
causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year, are described below. The Company
has based its assumptions and estimates
on parameters available when the financial
statements were prepared. Existing circumstances
and assumptions about future developments,
however, may change due to market changes or

circumstances arising that are beyond the control
of the Company. Such changes are reflected in the
assumptions when they occur.

Information about critical judgments in applying
accounting policies, as well as estimates and
assumptions that have the most significant effect
to the carrying amounts of assets and liabilities
within the next financial year, are included in the
following notes:

(a) Measurement of defined benefit obligations
- note 38

(b) Measurement and likelihood of occurrence of
provisions and contingencies - note 21

(c) Recognition of current tax and deferred tax
assets - note 22

(d) Key assumptions used in fair valuations -
note 44

(e) Measurement of lease liabilities and right-of-
use asset - note 4

(f) Assumptions and models used for estimating
fair value of share-based payment - note 46

2.25 Recent Accounting Pronouncements:

Ministry of Corporate Affairs ("MCA") notifies
new standards or amendments to the existing
standards under Companies (Indian Accounting
Standards) Rules as issued from time to time.

In May 2025, MCA notified amendments to Ind AS
21 - The Effects of Changes in Foreign Exchange
Rates, applicable w.e.f. April 1, 2025. The Company

has reviewed the amendment and based on its
evaluation has determined that it does not have
any significant impact in its financial statements.

In August 2025, MCA notified the following
amendments to:

1. Ind AS 1, Presentation of Financial Statements,
applicable w.e.f. April 1, 2025 - The amendment
relates to classification of liabilities as current
or non-current and non-current liabilities
with covenants. In the context of classifying a
liability as current, it removes the requirement
of existence of a right to defer settlement for
at least 12 months after the reporting date
and instead requires that the said right
should exist on the reporting date and have
substance. The amendment also introduces
guidance on classification of liabilities with
covenants. The Company has no impact
of these amendments in its classification
criteria of current and non-current liabilities.

2. Ind AS 7, Statement of Cash Flows and Ind
AS 107, Financial Instruments: Disclosures,
applicable w.e.f. April 1, 2025 - The amendment
in Ind AS 7 requires to inform users of financial
statements of the existence of supplier
finance arrangements and explain the nature
of the arrangements, the carrying amount
of liabilities and the range of payment due
dates. Ind AS 107 has been amended to add
supplier finance arrangements as a factor
that may cause concentration of liquidity risk.
The Company has reviewed the amendment
and based on its evaluation has determined
that it does not have any significant impact
in its financial statements.

Notes:

a) The rate used for discounting is in range of 7-10%.

b) Refer note 43 for information about fair value measurement and note 45(c) for information about liquidity
risk relating to lease liabilities.

c) Significant Judgements in determining the lease term of contracts with renewal and termination options:

The Company determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has several lease contracts that include extension and termination options. The Company
applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to
renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for
it to exercise either the renewal or termination. After the commencement date, the Company reassesses the
lease term if there is a significant event or change in circumstances that is within its control and affects its
ability to exercise or not to exercise the option to renew or to terminate.

The Company included the renewal period as part of the lease term for leases of buildings and other with
shorter non-cancellable period. The Company typically exercises its option to renew for these leases because
there will be a significant negative effect on the operations if a replacement asset is not readily available. The
renewal periods for leases of building and others with longer non-cancellable periods are not included as
part of the lease term as these are not reasonably certain to be exercised. Furthermore, the periods covered
by termination options are included as part of the lease term only when they are reasonably certain not to
be exercised.

d) The Company has lease contracts for plant & machinery that contains variable payments amounting to
f 25,076 lakhs (March 31, 2025: f 19,435 lakhs) shown under other expenses.

e) The Company has recognised f 1,438 lakhs as miscellaneous expenses during the year (March 31, 2025:
f 1,035 lakhs) which pertains to short term lease/low value asset which was not recognised as part of ROU.

Note 5: Intangible assets (Contd..)

The capacity expansions undertaken is modular in nature, wherein major upstream capex are incurred, followed
by downstream capex to ramp up production in line with anticipated market demand. Based on long-term
demand and supply planning, management estimates the annual capex requirement and project timelines
which are approved by the Board. There are no projects which are overdue based on such timelines or which
have exceeded cost compared to plans.

Note:

a) During the previous year, the Company assessed the carrying amount of an intangible asset under
development. Pursuant to this assessment, an impairment loss of f 1,365 lakhs was recognised.

Note 6: InvestmentsNote 6(a): Investments in subsidiaries

Refer note 2.4 for accounting policy on Investments in subsidiaries.

a) The difference between Issued Share Capital and Subscribed and Paid-up share capital is 688 equity shares
which were offered on right basis and kept in abeyance since 2006.

b) Terms/rights attached to equity shares:

The Company has only one class of equity shares having face value of f 10 per share. Each holder of equity
shares is entitled to one vote per equity share. Dividend is recommended by the Board of Directors and is
subject to the approval of the members at the ensuing Annual General Meeting except interim dividend.
The Board of Directors have a right to deduct from the dividend payable to any member, any sum due from
him to the Company.

In the event of winding-up, the holders of equity shares shall be entitled to receive remaining assets of the
Company after distribution of all preferential amounts. The distribution will be in proportion to the number
of equity shares held by shareholders.

The shareholders have all other rights as available to equity shareholders as per the provision of the
Companies Act, applicable in India read together with the Memorandum of Association and Articles of
Association of the Company, as applicable.

Refer Statement of Changes in Equity

a) Securities premium

Amount received on issue of shares in excess of the par value has been classified as security share premium.

b) Capital reserve

Capital reserve includes profit on amalgamation of entities.

c) Capital redemption reserve

Capital redemption reserve represents amount transferred from profit and loss account on redemption of
preference shares during FY 1998-99.

d) Effective portion of cash flow hedges

It represents mark-to-market valuation of effective hedges as required by Ind AS 109.

e) General Reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriations
purposes. As the general reserve is created by a transfer from one component of equity to another and is
not an item of other comprehensive income, items included in the general reserve will not be reclassified
subsequently to the Statement of Profit and Loss.

f) Retained earnings

Retained earnings are the profits that the Company has earned till date less any transfers to reserves,
dividends or other distributions paid to shareholders.

g) Equity settled share-based payment reserve

This represents the fair value of the stock options granted by the Company under the employee stock option
plan accumulated over the grant and the vesting period. The reserve will be utilized on exercise of the options.

h) Treasury shares

This represents the cost incurred by the Company to purchase its own equity shares from secondary market
through the Company's ESOP Trust for issuing the shares to the eligible employees on exercise of stock
options granted.

Notes to Borrowings:

1. Non-Convertible Debentures ("NCDs") f 40,000 Lakhs as on March 31, 2026 (March 31, 2025: f 25,000 lakhs)
allotted on September 19, 2022 (NCD Series 3), and December 30, 2025 (NCD Series 4) on private placement
basis. NCD Series 3 and NCD Series 4 are un-secured. As at March 31, 2026, the NCDs carry an interest at 7.99%
p.a. (NCD Series 3) and 7.20% p.a. (NCD Series 4) and is repayable as under:

- NCD Series 3: f 15,000 lakhs repayable on September 19, 2026.

- NCD Series 4: f 25,000 lakhs repayable on December 30, 2030.

2. Term loan from Kotak Mahindra Bank Limited f 13,200 lakhs as on March 31, 2026 (March 31, 2025: f 18,000
lakhs) is secured by first pari passu charge over the immovable and movable fixed assets situated at Halol,
Nashik, Nagpur and Chennai Plant. It is repayable as under:

b) Provision for sales related obligation

A provision is recognised for expected sales related obligation on product sold during the last 3-7 years,
based on the warranty period of various categories. It is expected that significant portion of these costs will
be incurred in the next financial year and within three years from the reporting date. Assumptions used to
calculate the provision for sales related obligation were based on current sales levels and current information
available about returns based on the last 3-7 years period for all products sold. The rate used for discounting
provision for sales related obligation is 8.25%. The table below gives information about movement in provision
for sales related obligation.

c) Provision for decommissioning liability

The Company has recognised a provision for decommissioning obligations associated with a land taken
on lease at Nashik manufacturing facility for the production of tyres. In determining the fair value of the
provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle
and remove the plant from the site and the expected timing of those costs. The Company estimates that
the costs would be realised in year 2066 at the expiration of the lease and calculates the provision using the
Discounted Cash Flow (DCF) method based on the following assumptions:

• Estimated range of cost per square meter: f 45 - f 50

• Discount rate: 11.50%

a) Cash credit facilities and working capital demand loan from banks are part of working capital facilities
availed from consortium of banks secured by way of first pari passu charge on the current assets of the
Company carrying interest in the range of 6.12% p.a. to 9.31% p.a. (March 31, 2025: 7.14% p.a. to 9.90% p.a.)

b) The Company issued commercial papers (total available limit: 1,00,000 lakhs) at regular intervals for working
capital purposes with interest ranging from 5.90% p.a. to 7.58% p.a. (March 31, 2025: 7.21% p.a. to 7.70% p.a.)

c) Quarterly returns and statements of current assets filed by the Company with banks or financial institutions
are in agreement with the books of accounts.

d) Refer note 45(c) for information about liquidity risk relating to borrowings.

There were no significant non-cash changes in the carrying amount of the trade payables or liabilities under
the supplier finance arrangement included in the Company's supplier finance arrangement other than
included in above balance.

*The Company has not provided comparative information in respect of the amendments to Ind AS 7 and Ind AS 107
relating to supplier finance arrangements, as it has applied the transitional relief available on initial adoption of these
amendments, which allows entities not to present comparative disclosures for prior periods.

a. The Government of India notified the four Labour Codes ('New Labour Codes') effective November 21, 2025.
The Ministry of Labour & Employment has also issued draft Central Rules and FAQS to help assess the financial
impact of these changes. The Company has ascertained its estimated obligations under the New Labour
Codes. Accordingly, the Company has recognised incremental estimated obligations aggregating f 5,781
lakhs as an exceptional item on account of employees past services, based on actuarial valuation and best
estimate in accordance with Ind AS 19 - 'Employee Benefits' and consistent with guidance provided by the
Institute of Chartered Accountants of India. The Company is in the process of reassessing and implementing
policy changes to its existing employee benefit policies. The Company continues to monitor the finalisation
of Central and State Rules and clarifications from the Government on other aspects of the New Labour Codes
and would provide appropriate accounting effect on the basis of such developments, as needed.

b. The Company had introduced VRS for employees across the Company. During the year, 34 employees (March
31, 2025: 119 employees) opted for the VRS.

c. The Company had purchased the licenses to fulfil its EPR obligations, accordingly Rs. 1,150 lakhs was written
back during the previous year ended March 31, 2025.

Note 37: Earnings per share ('EPS')

Refer note 2.18 for accounting policy on Earnings per share

Basic EPS amounts are calculated by dividing profit for the year attributable to equity holders of the Company
by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of equity shares outstanding during the year plus the weighted average number of
equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

Note 38: Post-retirements benefit plan

Refer to note 2.13 for accounting policy on employee benefits

a) Defined contribution plan

Refer note 31 for Company's contribution to the defined contribution plans with respect to provident fund and
other funds.

b) Defined benefit plan - Gratuity
Description of plan

The Company has a defined benefit gratuity plan which is funded with an Insurance Company in the form
of a qualifying Insurance policy. The Company's defined benefit gratuity plan is a salary plan for employees
which requires contributions to be made to a separate administrative fund. The gratuity plan is governed
by the Payment of Gratuity Act, 1972. Under the act, every employee who has completed five years of service
gets a gratuity on separation at 15 days of last drawn salary for each completed year of service.

Governance

The fund has the form of a trust and it is governed by the Board of Trustees, which consists of employer and
employee representatives. The Board of Trustees is responsible for the administration of the plan assets and
for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding.

Investment Strategy

The Board of trustees have appointed LIC of India, Birla Sun Life Insurance, India First Life Insurance, Kotak
Mahindra Life Insurance & HDFC Life Insurance to manage its funds. The Board of Trustees aim to keep
annual contributions relatively stable at a level such that no plan deficits (based on valuation performed)
will arise. Every year, the insurance Company carries out a funding valuation based on the latest employee
data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the
Company. In case of death, while in service, the gratuity is payable irrespective of vesting.

The following set out the amounts recognised in the Company's financial statements as at March 31, 2026
and March 31, 2025.

The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is
based on the yields/rates available on applicable bonds as on the current valuation date.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation,
seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company's best estimate of contribution during the next year is f 3,163 lakhs.

ix) Sensitivity analysis of the defined benefit obligation

The sensitivity analysis below have been determined based on reasonably possible change of the
assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The results of sensitivity analysis is given below:

c) Sales tax cases includes disputes pertaining mainly on account of input tax credit mismatch, VAT
applicability on royalty/security deposits/octroi and other issues.

d) The Company has reviewed all its pending litigations and proceedings and has adequately provided
for where provisions are required and disclosed as contingent liabilities where applicable, in its financial
statements. The Company does not expect the outcome of these proceedings to have a materially
adverse effect on its financial position.

*in respect of above matters, future cash outflows are determinable only on receipt of judgements pending at various
forums/authorities.

Note:

a) Income tax cases primarily involve dispute related to the adjustment of brought forward losses and the
disallowance of expenses.

b) Excise/Service tax/GST cases include disputes pertaining to availment of CENVAT credit/input tax credit
and other matters. Customs case includes dispute pertaining to MODVAT reversal (import under Value
based Advance License).

The Company has entered into a binding agreement for acquisition of "CAMSO" brand, with the capital
commitment amounting to USD 44 million, payable after 3 years from the date of acquisition.

c. Material demands and disputes removed from "Remote" by the Company

The Company was served with 4 Show Cause cum Demand Notice from the DGCEI (Directorate General
of Central Excise Intelligence) Mumbai, on the ground that, the activity of making tyre set, i.e. inserting
Tubes and Flaps inside the Tyres and tied up through Polypropylene Straps, amounts to manufacture/pre-
packaged commodity under Section 2(f)(iii) of Central Excise Act, read with Section 2(l) of the Legal Metrology
Act, 2009. Accordingly, the authorities worked out the differential duty amounting to f 27,672 lakhs. i.e., the
difference between the amount of duty already paid on the basis of transaction value and duty payable
on the basis of MRP under Section 4A, for the period from April 2011 to June 2017. The Company believes that
Set of TT/TTF (Tyre and Tube/Tyre, Tube and Flap) is not a pre-packaged commodity in terms of provisions
of Legal Metrology Act, 2009 read with Central Excise Act and Rules made thereunder. The Company has a
strong case on the ground that, the said issue has been clarified by the Controller of the Legal Metrology
Department vide its letter dated May 01, 1991 that "Tyre with tube & flaps tied with three thin polythene strips
may not be treated as a pre-packed commodity within the meaning of rule 2(l) of the Standards of Weights
and Measures (Packaged Commodities), Rules, 1977". The above clarification has been re-affirmed vide letter
dated November 16, 1992 by the Legal Metrology authorities.

The matter has now been adjudicated in favor of the Company as competent authority vide order dated
April 24, 2026 has quashed the proceedings initiated vide these 4 SCNs without any tax demand or interest
or penal consequences.

Note 40: Related party transactionsa) Names of related parties and related party relationship
Related parties where control exists

• Associated CEAT Holdings Company (Pvt.) Limited ("ACHL") (Subsidiary Company)

• CEAT AKKHAN Limited (Subsidiary Company)

• Rado Tyres Limited("Rado") (Subsidiary Company)

• CEAT Tires Inc. (formerly known as CEAT Specialty Tires. Revised name w.e.f from December 11, 2025) ("CSTI")
(Subsidiary Company)

• CEAT Tyres B.V. (formerly known as CEAT Specialty Tyres B.V. Revised name w.e.f from December 18, 2025)
("CSTBV") (Subsidiary Company)

• CEAT Auto Components Limited (Subsidiary Company)

• Taabi Mobility Limited ("Taabi") (Subsidiary Company)

• TYRESNMORE Online Pvt Ltd. ("TNM") (Subsidiary Company) w.e.f. August 04,2023

• CEAT Brazil Holding Ltda (formerly known as CEAT Brazil Tires Services Ltda. Revised name w.e.f December
17, 2025) (Subsidiary Company) w.e.f. October 02, 2023

• PT CEAT Tyres Indonesia (Subsidiary Company) w.e.f. February 03,2025

• CEAT OHT Lanka (Private) Limited (Subsidiary Company) w.e.f. March 03,2025

• CEAT International UK Ltd. (Subsidiary Company) w.e.f. January 12,2026

• CEAT OHT Ventures (Private) Limited (Step down subsidiary) w.e.f. March 3, 2025

Related parties with whom transactions have taken place during the current year and
previous year

• RPG Enterprises Limited ("RPGE") (Directors, KMP or their close member are interested)

• RPG Lifesciences Limited ("RPGLS") (Directors, KMP or their close member are interested)

• Zensar Technologies Limited("Zensar") (Directors, KMP or their close member are interested)

• Raychem RPG (Pvt.) Limited ("Raychem") (Directors, KMP or their close member are interested)

• KEC International Limited ("KEC") (Directors, KMP or their close member are interested)

• KEC Spur Infrastructure Private Limited ("KEC Spur") (Directors, KMP or their close member are interested)

• B.N. Elias & Co. LLP ("B.N. Elias") (Directors, KMP or their close member are interested)

• Chattarpati Apartments LLP ("Chattarpati") (Directors, KMP or their close member are interested)

• RPG Foundation (Directors, KMP or their close member are interested)

• RPG Art Foundation (Directors, KMP or their close member are interested)

• Harrisons Malayalam Limited ("HML") (Group Company)

• CEAT Limited Superannuation Scheme ("Superannuation Scheme")(Post employment benefit fund)

• CEAT Limited Employees Gratuity Fund ("Gratuity trust")(Post employment benefit fund)

• CEAT Employees Welfare Trust ("ESOP trust")

• Artemis ventures Limited ("Artemis") (Directors, KMP or their close member are interested)

• CEAT Tires Inc. (formerly known as CEAT Specialty Tires effective December 11, 2025) ("CSTI")
(Subsidiary Company)

• CEAT Tyres B.V. (formerly known as CEAT Specialty Tyres B.V effective December 18, 2025) ("CSTBV")
(Subsidiary Company)

• CEAT International UK Ltd. ("CEAT UK") (Subsidiary Company) w.e.f. January 12,2026

• PT CEAT Tyres Indonesia ("CEAT Indonesia") (Subsidiary Company) w.e.f. February 03,2025

• Associated CEAT Holdings (Pvt.) Limited ("ACHL") (Subsidiary Company)

• Ceat-Kelani International Tyres (Pvt.) Limited ("CKITL") (Subsidiary of CKHL) **

• Associated CEAT (Pvt.) Limited ("ACPL") (Subsidiary of CKHL)

• TYRESNMORE Online Pvt Ltd. ("TNM") (Subsidiary Company) w.e.f. August 04,2023

• CEAT AKKHAN Limited (Subsidiary Company)

• Rado Tyres Limited ("Rado") (Subsidiary Company)

• CEAT OHT Lanka (Private) Limited ("OHT Lanka") (Subsidiary Company) w.e.f. March 03,2025

• CEAT Brazil Holding Ltda ("CEAT Brazil") (formerly known as CEAT Brazil Tires Services Ltda effective December
17, 2025) (Subsidiary Company) w.e.f. October 02,2023

Key Management Personnel (KMP):

• Mr. Harsh Vardhan Goenka, Chairman

• Mr. Anant Vardhan Goenka, Vice Chairman

• Mr. Arnab Banerjee, Managing Director and Chief Executive Officer

• Mr. Kumar Subbiah, Chief Financial Officer

• Ms. Vallari Gupte, Company Secretary (resigned w.e.f 07.05.2024)

• Mr. Paras K. Chowdhary, Non-Executive - Non-Independent Director

• Mr. Atul Choksey, Independent Director (resigned w.e.f 26.09.2024)

• Mr. Mahesh Gupta, Independent Director (resigned w.e.f 26.09.2024)

• Mr. Haigreve Khaitan, Independent Director (resigned w.e.f 26.09.2024)

• Ms. Priya Nair, Independent Director (resigned w.e.f 01.04.2024)

• Mr. Milind Sarwate, Independent Director

• Ms. Sukanya Kripalu, Independent Director

• Ms. Daisy Chittilapilly, Independent Director (appointed w.e.f 02.05.2024)

• Mr. Praveen Pardeshi, Independent Director (appointed w.e.f 17.06.2024 & resigned w.e.f 10.04.2025)

• Mr. Gaurav Tongia, Company Secretary (appointed w.e.f 01.07.2024)

• Dr. Santrupt Misra, Independent Director (appointed w.e.f 18.03.2025)

• Mr. Apurva Chandra, Independent Director (appointed w.e.f 17.10.2025)

Terms and conditions of transactions with related parties

The sales to and purchases and other transactions with related parties are made on terms equivalent to
those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured and
interest free and settlement occurs in cash.

Managerial remuneration is computed as per the provisions of section 198 of the Companies Act, 2013. The
amount outstanding are unsecured and will be settled in cash.

f) Capital commitments with related parties

The estimated amount of contracts remaining to be executed on Capital account and not provided for (net
of advance payments) pertaining to the related parties are as follows:

Cash flow hedges
Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments
in cash flow hedges of committed future purchases and highly probable forecast sales.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and
purchases and changes in foreign exchange forward rates.

During the financial year 2025-26 and 2024-25, no single external customer has generated revenue of 10% or
more of the Company's total revenue.

During the financial year 2025-26 and 2024-25, no single country outside India has given revenue of more than
10% of total revenue.

Note 42: Hedging activities and derivatives
Derivatives designated as hedging instruments

The Company uses derivative financial instruments such as foreign currency forward contracts to hedge foreign
currency risk arising from future transactions in respect of which firm commitments are made or which are highly
probable forecast transactions. All these instruments are designated as hedging instruments and the necessary
documentation for the same is made as per Ind AS 109.

The cash flow hedges as at March 31,2026 were assessed to be highly effective and a net unrealised gain of E 11,074 lakhs, with
a deferred tax liability of E 2,787 lakhs relating to the hedging instruments, is included in OCI. Comparatively, the cash flow
hedges as at March 31, 2025 were assessed to be highly effective and a net unrealised loss of E2,810 lakhs, with a deferred tax
asset of E 707 lakhs relating to the hedging instruments, was included in OCI.

Note 43: Fair values

The management considers that the carrying value of financial assets and financial liabilities which are recognised
at amortised cost are a reasonable approximation of their fair values.

Note 44: Fair value hierarchy

The fair value of financial instruments as referred to in note 43 above have been classified into three categories
depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices
in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable
inputs (Level 3 measurements).

The categories used are as follows:

• Level 1: Quoted prices for identical instruments in an active market;

• Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and

• Level 3: Inputs which are not based on observable market data.

Note 45: Financial risk management objectives and policies

Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other
payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's
principal financial assets include trade and other receivables, cash and cash equivalents that derive directly
from its operations. The Company also enters into derivative transactions.

The Company's financial risk activities are governed by appropriate policies and procedures and that financial
risks are identified, measured and managed in accordance with the Company's policies and risk objectives. All
derivative activities for risk management purposes are carried out by specialist teams that have the appropriate
skills, experience and supervision. The Board of Directors through its Risk Management Committee reviews and
agrees policies for managing each of these risks, which are summarised below.

a) Market risk

The Company's size and operations result in it being exposed to the following market risks that arise from its
use of financial instruments:

• Interest rate risk;

• Foreign currency risk;

• Equity price risk; and

• Commodity risk

The above risks may affect the Company's income and expenses, or the value of its financial instruments. The
Company's exposure to and management of these risks are explained below.

The sensitivity of the relevant Statement of Profit or Loss item is the effect of the assumed changes in respective
market risks. This is based on the financial assets and financial liabilities held at March 31, 2026 and March 31,
2025 including the effect of hedge accounting.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on
that portion of loans and borrowings affected, after the impact of hedge accounting. With all other
variables held constant, the Company's profit before tax is affected through the impact on floating rate
borrowings, as follows:

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD and EURO rates,
with all other variables held constant. The impact on the Company's profit before tax is due to changes
in the fair value of monetary assets and liabilities. The Company's exposure to foreign currency changes
for all other currencies is not material.

The movement in the pre-tax effect is a result of a change in the fair value of the financial asset/liability
due to the exchange rate movement. The derivatives which have not been designated in a hedge
relationship act as an economic hedge and will offset the underlying transactions when they occur. The
same derivatives are not covered in the above table.

In Management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange
risk because the exposure at the end of the reporting period does not reflect the exposure during
the year.

iii. Equity price risk

There is no material equity risk relating to the Company's equity investments which are detailed in note
6. The Company's equity investments majorly comprise of strategic investments rather than trading
purposes.

Export receivables are against Letter of Credit, bank guarantees, payment against documents. For open credit
exports insurance cover is taken. Generally deposits are taken from domestic debtors under replacement
segment. The carrying amount and fair value of security deposit from dealers amounts to f 64,545 lakhs
(March 31, 2025: f 59,130 lakhs) as it is payable on demand. The maximum exposure to credit risk at the
reporting date is the carrying value of each class of financial assets.

c) Liquidity risk

The Company prepares cash flow on a daily basis to monitor liquidity. Any shortfall is funded out of short term
loans. Any surplus is invested in appropriate mutual funds or bank deposits. The Company also monitors the
liquidity on a longer term wherein it is ensured that the long term assets are funded by long term liabilities.
The Company ensures that the duration of its current assets is in line with the current liabilities to ensure
adequate liquidity in the 3-6 months period.

The table below summarises the maturity profile of the Company's financial liabilities based on contractual
undiscounted payments.

b) Credit riskTrade receivables
Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss.

Risk Management:

Customer credit risk is managed by each business unit subject to the Company's established policy,
procedures and control relating to customer credit risk management.

Trade receivables are non-interest bearing and are generally on 27 days to 60 days credit term. Credit limits
are established for all customers based on internal rating criteria. Outstanding customer receivables are
regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for
major customers. In addition, a large number of minor receivables are grouped into homogenous groups
and assessed for impairment collectively. The Company has no concentration of credit risk as the customer
base is widely distributed both economically and geographically.

Note 46: Share Based Payments (Employee stock option plan) (Contd..)Fair value of options granted

The fair value of options has been calculated using the Black-Scholes option pricing formula.

The following table illustrates the model inputs for options granted during the year ended
March 31, 2026 and the resulting fair value of the optionsNote 46: Share Based Payments (Employee stock option plan)

The Board of Directors at its meeting held on March 18, 2025, approved an Employee Stock Options Plan Scheme
('ESOP 2025' or ' the Scheme'). Pursuant to the scheme equity shares of the face value of Rs. 10 each can be
issued in a manner provided in the SEBI (Share Based Employee Benefits) Regulations, 2014 as amended. The
shareholders of the Company vide their special resolution passed on May 11, 2025 approved the issue of equity
shares of the Company under Employee Stock Option Scheme.

Options granted under the Scheme shall vest not earlier than minimum vesting period of 1 (one) year and vesting
shall be staggered over the period of 3 (Three) years from the date of Grant, as per terms and conditions determined
by the Nomination and Remuneration Committee ('NRC' or 'the Committee') and is subject to achievement of
performance targets, set out in the Grant letter and/or the Scheme/prescribed by the Committee.

The Exercise Price per Option shall be at a discount of 15% (fifteen percent) from the Market Price of the Shares as
on the date of Grant. The Exercise Period for Vested Options shall be a maximum of 3 (three) years commencing
from the relevant date of Vesting of Options, or such other periods as may be prescribed by the Committee in
the Scheme at time of Grant.

The details of grants made as on March 31, 2026 are given in below tables as there were no grants made/options
outstanding as on March 31, 2025.

For the year ended March 31, 2026, the Company has accounted expense of f 450 lakhs as employee benefit
expenses (refer note 31) on the aforesaid employee stock option plan and the same balance is outstanding as
on March 31, 2026.

Note 47: Capital management

For the purpose of the Company's capital management, capital includes issued equity capital, share premium
and all other equity reserves attributable to the equity holders of the Company. The primary objective of the
Company's capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions
and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may
adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company
monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company
includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.

In order to achieve this overall objective, the Company's capital management, amongst other things, aims to
ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital
structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call
loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans
and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended
March 31, 2026 and March 31, 2025.

Note 48: Material foreseeable losses

The Company has a process whereby periodically all long term contracts (including derivative contracts) are
assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate
provision as required under any law/accounting standards for material foreseeable losses on such long term
contracts (including derivative contracts) has been made in the books of accounts.

Note 49: Business Combination — Acquisition of Intangible Assets relating to CAMSO brand
Off-Highway Tyres and Tracks Business from Michelin

On September 1, 2025 (the "Acquisition Date"), CEAT Limited (the "Company"), acquired intangible assets (Technical
Know-how) relating to CAMSO construction compact line business from Michelin Group entities (collectively,
"Michelin") pursuant to a definitive asset purchase agreement dated December 06, 2024.

The acquisition has been accounted for as a business combination in accordance with Ind AS 103 — Business
Combinations using the acquisition method, with the Company as the acquirer. The identifiable intangible assets
acquired have been recognised at their acquisition date fair values.

The total consideration transferred amounts to f 23,649 Lakhs. The consideration transferred is equal to the
aggregate fair value of the identified intangible assets acquired; accordingly, no goodwill has been recognised
on this acquisition.

Acquisition related costs of f 2,335 lakhs had been recognised under other expenses in the statement of profit
and loss.

Measurement of fair values : Specified Intangible Assets - Technical Know-how

Technical Know-how were valued based on an independent valuation using the Royalty for Relief method (RFR),
which values the intangible asset by reference to the discounted estimated amount of royalty the acquirer would
have had to pay in an arms length licensing arrangement to secure access to the same rights.

Note 50: Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off under section 248 of Companies
Act, 2013 or section 560 of Companies Act, 1956.

(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period,

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

Note 50: Other Statutory Information (Contd..)

(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding
Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961
such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.