FI NA NCI ALS

DIRECTORS REPORT

63

CORPORATE GOVERNANCE REPORT

70 83
83 86 87 88 89

STANDALONE ACCOUNTS
AUDITORS REPORT BALANCE SHEET PROFIT & LOSS ACCOUNT CASH FLOW STATEMENT SCHEDULES SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS

100

BALANCE SHEET ABSTRACT & COMPANYS GENERAL BUSINESS PROFILE

115

STATEMENT RELATING TO SUBSIDIARY COMPANIES

116

CONSOLIDATED ACCOUNTS
AUDITORS REPORT BALANCE SHEET PROFIT & LOSS ACCOUNT CASH FLOW STATEMENT SCHEDULES SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS

117
117 118 119 120 121

133

INFORMATION PERTAINING TO SUBSIDIARY COMPANIES U/S 212(8)

150

61

ANNUAL REPORT 09-10

D I R E C T O R S R E P O R T
Dear Member, Your Directors have pleasure in presenting the Annual Report along with the audited statement of accounts of your Company for the nancial year ended March 31, 2010.

FINANCIAL PERFORMANCE
Year Ended 31.03.2010 31.03.2009 Standalone Net Sales Other Income & Exceptional Items Operating Prot (EBIDTA) Less: Depreciation Interest Provision for Tax Net Prot 50,366 112 7,950 1,228 740 1,832 4,150 40,704 113 3,360 980 668 631 1,081

Rs/Million Year Ended 31.03.2010 31.03.2009 Consolidated* 81,207 1,088 12,836 2,542 1,154 2,606 6,534 49,841 230 4,392 1,285 973 742 1,392

*The consolidated gures for the year ended March 31, 2009 do not include Apollo Vredestein BV, a tyre company in the Netherlands, Europe, acquired on May 15, 2009.

OPERATIONS
During the nancial year ended March 31, 2010, your Company has scaled new heights and set benchmarks in terms of sales and protability. The Net Sales of India Operations increased from Rs 40,704 millions during the previous year to Rs 50,366 millions in the year under review, registering a growth of 23.7%. Operating Prot, before interest and depreciation, amounted to Rs 7,950 millions as against Rs 3,360 millions during the previous year. Net Prot, after providing for interest, depreciation and tax amounted to Rs 4,150 millions as against Rs 1,081 millions during the previous year, registering an increase of 284%. The amount available for appropriations, including surplus from previous year amounted to Rs 7,395 millions. Surplus of Rs 5,892 millions has been carried forward to the Balance Sheet after providing for Dividend of Rs 378 millions, Dividend Tax of Rs 63 millions, Debenture Redemption Reserve worth Rs 62 millions and General Reserve of Rs 1,000 millions. The consolidated gures of sales from operations in India, South Africa and Europe (post the recent acquisition of Apollo Vredestein BV based out of the Netherlands), amounted to Rs 81,207 millions and Net Prot, after providing for interest, depreciation and tax amounted to Rs 6,534 millions recording a growth of 63% in sales and 369% in Net Prot respectively. On a consolidated level, the break up of revenues across the three geographies is as follows: India 62%, Europe 24% and South Africa 14%. Your Company has recorded commendable growth during the year under review. Consistency across operations has strengthened Apollo's position as a leading global tyre manufacturing organisation headquartered in India.

PRODUCTION
During the year, your Company has achieved 19.4 % growth in production tonnage by registering production of 326,739 MT as against 273,575 MT in the previous year.

DIVIDEND
Your Directors recommend a dividend of Re 0.75 per equity share for FY2009-10 for your approval. There will be no tax deduction at source on Dividend Payments, but your Company will have to bear tax on dividend @ 16.6%, inclusive of surcharge. 63

The Dividend, if approved, shall be payable to the shareholders registered in the books of the Company and the benecial owners as per details furnished by the depositories, determined with reference to the book closure from July 16, 2010 to July 29, 2010 (both days inclusive).

BUY BACK OF SHARES

The Board of Directors at the meeting held on March 19, 2009 had approved buy back of equity shares at a price not exceeding Rs 25 per share upto an amount not exceeding Rs 1220 millions, representing approximately 10% of the Company's paid up equity share capital and free reserves as per last audited accounts. The Company could not buyback any shares because of the run-up in the market price of your Companys shares immediately after the commencement of buyback beyond Rs 25 per share i.e. maximum price xed for buyback. Therefore, the Company closed its buy-back offer on the due date for the closure i.e. March 18, 2010.

RAW MATERIALS
Natural Rubber continued its upward trend during the year as the prices moved from a level of Rs 100/kg in June, 2009 to Rs 140/kg in December, 2009. It recorded a new peak of around Rs 150/kg in March, 2010. The demand and supply gap in the India industry widened to 1,00,000 MT due to production shortfall and increased demand on the back of economic recovery. Natural Rubber imports continue to attract customs duty of 20% as against 10% duty on tyres. The production in Malaysia and Indonesia has been lower due to erratic weather conditions and the has also been impacted by the unrest in Thailand. International prices reached their all time high of US$ 3.5/kg. Crude oil remained steady in the band of US$ 7080/barrel but crude-based raw materials, like synthetic rubber, carbon black, and nylon tyre cord fabric, remained rm due to adverse demand-supply gap caused by plant shutdowns in highcost countries and revival of demand from emerging economies. The anti-dumping duty continued on nylon tyre cord fabric and rubber chemicals while during the year, anti-dumping duty was imposed on carbon black imported from Australia, China, Russia and Thailand. Your Company continued its approach of developing cost effective sources, renewed focus on global sourcing and vendor relationship management, while working capital management remained an area of focus throughout the year.

DOMESTIC MARKETING
The year under review has been a record year for the Company with the demand increasing in both the commercial vehicle and passenger vehicle tyre categories. India Operations achieved a new benchmark in sales turnover at Rs 50 billion. During the year, the company recorded a very healthy growth of 23.7% in overall sales value over the previous year. Seen category wise this translates to a number growth of 16% in heavy commercial vehicles, 26% in passenger car radials, 18% in light commercial vehicles, and maintaining sales volumes in tractor rear. The triumvirate of our marketing strategy, namely, Product Leadership, Customer Intimacy, and Operations Excellence, were pursued even more vigorously to create better differentiators in the market and gain consumer preference and market share. In the realm of passenger vehicle tyres, the year was witness to the launch of a new range of tubeless radials in the economy segment with the introduction of Amazer 3G and Amazer 3G Maxx. A new advertising and communication campaign was released on television with the central creative thought on Apollo tubeless radials The Road is a Friend. Branded tyre outlets Apollo Zones are also extending their footprint across major cities in the country and being very well received by our business partners who are coming forward to participate under this programme. The Zones, which display Apollos high-performance, technology-driven tyres and alloy wheels in a friendly and interactive fashion, are aimed at capturing the customers share of mind and heart. Their unique appeal lies in the visual dispaly, an in-store experience which promises comfort, convenience and best-in-class service. In the area of commercial vehicles tyres, your Company was able to gain market share and further consolidate its leadership position in truck-bus tyres. Our priority is to maintain the dominant leadership position in cross ply tyres, whilst leading radialisation in India. Apollo Tyres, in association with CV magazine, also announced the rst set of dedicated awards for the commercial vehicle segment in India Apollo CV Awards 2010. These awards recognise the best eets in India and are aimed at creating engagement value with commercial customers. India has emerged as a major OEM hub for passenger car tyres in view of a strong domestic market and also as a competitive export base with heavy order booking by Maruti Suzuki, Hyundai and Tata Motors. Our growth in the OE

64

ANNUAL REPORT 09-10

segment has also been consistent and we have now started supplying tyres to the Chevrolet Beat, Hyundai i20, Volkswagen Polo, Ford Figo, Tata Sumo Grande and Indigo Manza, in addition to the vast number of existing models where Apollo is a force to reckon with. Truly 2009-10 has concluded on a resounding note for the Company and the spirit remains unstoppable as ever.

EXPORTS
The demand outlook in international markets saw a revival at the start of year 2009-10, from the lows of the previous years closing. The severe dip in all-around demand had put considerable strain in despatches out of India, however the Companys exports ended on a satisfactory note. Exports of passenger car radial tyres continued to be the highest amongst the Indian tyre producers. The exports of truck and bus tyres were better than the previous year, though enhanced focus on exploiting surging demand in the domestic market led to controlled despatches for exports. On the marketing front, efforts were made for enhancing brand Apollo, across geographies, by conducting successful programmes like Apollo Vista, Safe Drive and technical training sessions for tyre specialists and dealers. The year also witnessed the coming together of high-performing business partners for two conclaves - one in China for the passenger car radial partners and the other in India for the truck and bus tyre partners, where they were felicitated and their bonds with Apollo strengthened further.

EXPANSION PROGRAMME/FUTURE OUTLOOK

State of the art radial facility at Chennai went on stream as per schedule. After the initial trial production, in September 2009, regular marketable production of passenger car radials (PCR) commenced on March 11, 2010. Whereas on successful completion of trial production of truck-bus radials (TBR) in March 2010, their regular marketable production commenced on May 11, 2010. Further expansion of TBR and PCR capacity is in progress to meet projected market requirements. Cross ply and radial farm tyre capacity augmentation was done in Perambra thereby increasing the plant capacity by approximately 48,000 units/year in rear tractor and 34,000 units/year in front tractor on an annualised basis.

ACQUISITION OF VREDESTEIN BANDEN BV, NETHERLANDS

On May 15 2009, your Company completed its second international acquisition of Vredestein Banden BV, an European tyre manufacturing Company, headquartered in the Netherlands, with a production capacity of 5.5 million tyres per annum, thus taking another step towards realising its goal of becoming a global player. The acquisition was done through a Special Purpose Vehicle and was funded through internal accruals and external debt. The acquisition has beneted your Company by providing access to the high-end passenger car radial technology and a well-established distribution network for entry into Europe. The acquisition would also benet our combined operations through reduced raw material costs as a result of consolidated purchase and access to cost competitive manufacturing base in the future. The integration efforts have started and your Company has nalised its plan of launching the brand Apollo tyres in Europe. These integration initiatives will favourably position the Company for growth and improved protability in the coming years.

SUBSIDIARY COMPANIES
During the year under review, Apollo (Mauritius) Holdings Pvt. Ltd., your Companys subsidiary has incorporated Apollo Tyres Co-operatief U.A. w.e.f. May 1, 2009 and Apollo Tyres (Cyprus) Pvt. Ltd. w.e.f August 14, 2009 as its wholly owned subsidiaries. Apollo Tyres Co-operatief U.A acquired Vredestein Banden BV, a company based in the Netherlands w.e.f. May 15, 2009 along with its various subsidiaries, which are primarily marketing and sales ofces, in Europe. The name of Vredestein Banden BV was subsequently changed to Apollo Vredestein BV in order to synergise the corporate name with Apollo Group. Apollo Tyres South Africa (Pty.) Ltd., your Companys subsidiary, has acquired Pollock & Aitken (Pty) Ltd, a Company owning property in Durban, on February 8, 2010 from the old Dunlop Staff Provident Fund, which went into voluntary liquidation. 65

For operational purposes, the Board has made certain restructuring changes in respect of the following subsidiaries: - The shares of Apollo Tyres AG (Switzerland) held by Apollo Tyres Ltd. have been transferred in favour of Apollo Tyres (Cyprus) Pvt. Ltd. as on 31.3.2010. - Apollo Tyres Zrt (Hungary), a wholly owned subsidiary of Apollo Tyres AG (Switzerland) has applied for reduction of capital and voluntary dissolution during the year. The reduction of capital was approved vide order of the Court dated January 4, 2010. - Apollo Tyres GmbH (Germany), a wholly owned subsidiary of Apollo Tyres AG (Switzerland) has been merged with Vredestein GmbH (Germany). The merger has been registered on April 7, 2010 effective from October 1, 2009. The members may refer to the statement under Section 212(3) of the Companies Act, 1956, forming part of accounts, for further information on the Companys subsidiaries. The Company has applied to the Central Government for its approval under Section 212 (8) of the Companies Act, 1956, exempting the Company from attaching the accounts of the subsidiary companies. The information regarding subsidiaries in terms of the order of Central Government u/s 212(8) shall be made part of the Annual Report. The consolidated accounts are attached along with accounts of your Company. In view of the ongoing economic uncertainty in Zimbabwe and the long term restriction on nancial repatriation, the accounts of Zimbabwe based entities have not been consolidated under accounting standard (AS 21) Consolidated Financial Statements. Please refer to note 2 (c) of schedule 12 of consolidated accounts. The copy of the Annual Report of the subsidiary companies will be made available to shareholders on request and will also be kept for inspection by any shareholder at the Registered Ofce and Corporate Ofce of your Company, and its subsidiary companies. You may refer to the Management Discussion and Analysis report and other sections for a more detailed analysis of Europe and South Africa operations.

FIXED DEPOSITS
Your Company is not accepting xed deposits from the public/shareholders. In respect of xed deposit issued earlier, cheques had been issued for the deposit amount and interest thereon amounting to Rs 1.31 millions, which remained unencashed as on March 31, 2010. Out of this amount, no amount has remained unclaimed for more than 7 years, and no amount has been transferred to Investor Education and Protection Fund on March 31, 2010.

AUDITORS REPORT
The comments on the statement of accounts referred to in the report of the auditors are self explanatory.

COST AUDIT
M/s N P Gopalakrishnan & Co., cost accountants, has been appointed to conduct cost audit for the year ended March 31, 2010. They will submit their report to the Board of Directors before forwarding it to the Ministry of Corporate Affairs, Government of India.

BOARD OF DIRECTORS
The Government of Kerala nominated Mr P Prabakaran in place of Mr L C Goyal on the Board of the Company w.e.f. January 29, 2010. The Board places on record its appreciation for the contribution made by Mr L C Goyal during his tenure of Directorship. Mr Shardul S Shroff resigned from the Directorship of the Company w.e.f. March 25, 2010. The Board places on record its appreciation for the contribution made by Mr Shardul S Shroff during his tenure of Directorship. Mr Raaja Kanwar resigned from the Directorship of the Company w.e.f. May 17, 2010. The Board places on record its appreciation for the contribution made by Mr Raaja Kanwar during his tenure of Directorship. Mr M J Hankinson, Dr S Narayan and Mr Nimesh N Kampani retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. None of the Directors are disqualied under Section 274 (1) (g) of the Companies Act, 1956. 66

ANNUAL REPORT 09-10

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

The information as required u/s 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-A to this report.

CORPORATE GOVERNANCE REPORT

A detailed report on corporate governance, duly certied by the auditors, is given in Annexure-B to this report. Ministry of Corporate Affairs has proposed Corporate Governance Voluntary Guidelines 2009 and Corporate Social Responsibility Voluntary Guidelines 2009 during December, 2009 for voluntary adoption by all listed companies. Your Company is committed to the highest standards of compliance and in all feasible cases, action is being instituted to ensure we remain benchmarked in these areas.

AUDITORS
M/s Deloitte Haskins & Sells, Chartered Accountants, the auditors of your Company, will retire at the ensuing Annual General Meeting and are eligible for reappointment.

PARTICULARS OF EMPLOYEES
Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in Annexure-C of this report.

DIRECTORS RESPONSIBILITY STATEMENT

As required by Section 217 (2AA) of the Companies Act, 1956, your Directors state that: i) In preparation of the annual accounts for the year ended March 31, 2010, the applicable accounting standards have been followed and there has been no material departure; ii) The selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of March 31, 2010, and of the prot of the company for the year ended as on date; iii) Proper and sufcient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT
Your Directors would like to express their appreciation to the State Governments of Kerala, Gujarat, Haryana, Tamil Nadu, and the national Governments of India, the Netherlands and South Africa as also all the bankers, nancial institutions, consumers, vendors, members and other stakeholders for their valuable support and patronage during the year under review. The Board further wishes to place on record their deep sense of appreciation for the committed services and contribution made by employees towards the growth of the Company. For and on behalf of the Board of Directors

Place: Gurgaon. Date : May 28, 2010.

(Onkar S Kanwar) Chairman & Managing Director

67

ANNEXURE TO DIRECTORS REPORT

The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

Annexure-A

Information under Section 217 (1) (e) of the Companies Act,1956 read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended March 31, 2010 A)

CONSERVATION OF ENERGY:
(a) Measures taken for conservation of energy: Your Company continues to invest in the latest energy efcient technologies for maintaining the competitive edge. Project for recovery of waste heat, in partnership with GAIL (Gas Authority of India), is progressing at a fast pace. In addition, investments have been made in various systems for reduction in lighting cost and in steam consumption. (b) Additional investment and proposal for reduction of energy usage: Your Company proposes to increase the usage of renewable sources of energy like solar energy, process reengineering and continual investment into energy efcient systems. (c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The above measures have enabled the Company to achieve reduction in power and fuel consumption per unit of production. (d) Total energy consumption and energy consumption per unit of production

FORM A
PARTICULARS A. POWER/FUEL CONSUMPTION 1. Electricity a. Purchased Units Total Amount Rate Per Unit b. Own Generation i) Total Captive Generation - Units - Units/Ltr of Diesel/Furnace oil - Cost/Unit ii) Through steam turbine/generator - Units - Units/Ltr of Diesel/Furnace oil - Cost / Unit 2. Coal Quantity Total Amount Average Rate 3. Furnace oil/LSHS Quantity Total Amount Average rate 4. Other/internal generation B. CONSUMPTION PER UNIT OF PRODUCTION Electricity Furnace Oil/LSHS Coal & Others (KWH/MT) (Ltrs/MT) (Kg/MT) 684.60 146.12 0.002 587.95 157.37 Unit Measure (in Mill) (Rs/Mill) (Rs) Total 2009-10 138.46 532.26 3.84 2008-09 81.74 386.05 4.72

(in Mill) (Rs) (in Mill) (Rs) (MT) (Rs/Mill) (Rs/Kg ) (K Ltrs) (Rs/Mill) (Rs) -

27.63 4.01 6.37 34.84 5.49 3.00 480.00 1.94 4.05 42,887.52 830.09 19.36 -

32.64 4.09 7.27 29.93 5.61 5.08 38,622.88 721.63 18.68 -

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ANNUAL REPORT 09-10

B)

C)

Efforts made in technology absorption as per form B I) Research & Development (1) Specic areas in which R&D is carried out by the Company: During the year under review, efforts and activities of R&D centre were governed by Companys 3i approach; i.e. Invent, Innovate and Implement, and were aimed at developing products meeting various international legislations. The pro-active development in the material and processing front resulted in better-cost control in an era of highly volatile raw material prices. Advanced Tyre Research resulted in substantial improvement in structural durability, bead endurance, mileage and low rolling resistance for truck-bus radial tyres, which are the most important performance requirements for Indian service conditions. In passenger car radial segment, the specic area was product development for key applications in global markets. This years focus has been on new product lines for Europe including winter tyre ranges, and new introductions for Indian market, meeting the stringent norms of rolling resistance and noise. In off-the-road segment, compounds suitable for different applications are developed. In cross ply tyre manufacturing processes, reengineering enhanced manufacturing capabilities resulted in reduction of indirect materials. (2) Benets derived as a result of R&D: R&D helps in innovation in the areas of cost effective new raw materials and compound development, which are required to meet extremely tough and demanding performance norms. This makes our products more competitive and preferred brand of choice and ensures our success rate with addition of more and more multinational OEMs projects. It has been able to raise the bar in terms of overall performance of our projects vis--vis best in each category through benchmarking process. In short span of time, Company has achieved the capabilities of producing most of (~80%) the ultra large category sizes (off-the-road) of the entire domestic market requirements. The largest size presently being manufactured is 30.00-51 for 120-tonne dump truck. Specic size requirements of defence department and other customers are also being met through re-designing of machine tools. (3) Future Plan of Action: We have plans to augment our product range for the European market both in the summer and winter tyre categories. More additions in ultra high performance segments are slated for entire global market. TBR technology is geared up for development of tyres with high wet traction, super single tyres, chip resistant tyre for off-road application, improved noise level and improved winter traction. The Company has plans to develop off the road radial tyre and cut and chip resistant off the road tyres. (4) Expenditure on R&D: (Rs/Million) (a) Capital (b) Deferred revenue expenditure (c) Revenue 229.27 (d) Total 229.27 (e) Total R&D expenditure as a % of turn over 0.46% II) Technology absorption, adaptation and innovation (1) Efforts towards technology absorption, adaptation and innovation: Several projects have been initiated to absorb and adopt modern technology. These steps include the speeding up of all operations to reduce the cycle time, minimisation of components in the tyres, compilation of process to reduce handling time and man power, standardisation of material and processes, new technological approach in mixing, extrusion, tyre building and curing of tyres to improve productivity and quality. We have also initiated an innovative project of replacing imported synthetic rubber with modied natural rubber. (2) Benets derived as a result of the above efforts: We have made signicant improvement in productivity in several areas of operation, improved performance of products, gained customer condence, reduced wastage and saved energy. (3) Technology imported: a) No technology was imported during this nancial year. b) Year of import not applicable. c) Has the technology been fully absorbed we are focusing on the development of our own technology through in house R&D efforts. d) The present technology is based on our own R&D efforts. FOREIGN EXCHANGE EARNINGS AND OUTGO The Company exports directly and also through Apollo International Ltd., an associate Company. i) Foreign Exchange Earnings: (Rs/Million) - On account of direct-export sales from Apollo Tyres Ltd. (FOB value) 3,135.72 - On account of export sales of Fixed Assets 2.52 ii) Foreign Exchange Outgo (other than CIF value of imports) 382.61 69

TECHNOLOGY ABSORPTION

CORPORATE GOVERNANCE REPORT

Annexure-B

In compliance with Clause 49 of the Listing Agreement, your Company has implemented good Corporate Governance practices in true spirit. A report on the implementation of the Corporate Governance Code of the listing agreement by your Company is furnished below: 1. Companys philosophy on Corporate Governance At Apollo Tyres Ltd. (the Company), Corporate Governance brings direction and control to the affairs of the Company in a fashion that ensures optimum return for stakeholders. Corporate Governance is a broad framework, which denes the way Company functions and interacts with its environment. It is compliance with laws and regulations in each of the markets the Company operates in, leading to effective management of the organisation. The Company is guided by a key set of values for all its internal and external interactions. These are enshrined in the acronym CREATE which stands for care for customer, respect for associates, excellence through teamwork, always learning, trust mutually and ethical practices. Simultaneously, in keeping with best practices, your Company seeks to execute the practices of Corporate Governance by maintaining strong business fundamentals and by delivering high performance through relentless focus on the following: (a) Transparency by classifying and explaining the Company's policies and actions to those towards whom it has responsibilities, including its employees. This implies the maximum possible disclosures without hampering the interests of the Company and those of its shareholders. (b) Accountability is a key pillar, where there cannot be a compromise in any aspect of accountability and full responsibility, even as the management pursues protable growth for the Company. (c) Professionalisation ensures that management teams at all levels are qualied for their positions, have a clear understanding of their roles and are capable of exercising their own judgement, keeping in view the Company's interests, without being subject to undue inuence from any external or internal pressures. (d) Trusteeship brings into focus the duciary role of the management to align and direct the actions of the organisation towards creating wealth and shareholder value in the Companys quest to establish a global network, while abiding with global norms and cultures. (e) Corporate Social Responsibility ensures the promotion of ethical values and setting up exemplary standards of ethical behaviour in our conduct towards our business partners, colleagues, shareholders and general public. Through this, the Company also ensures that it contributes to the society's overall welfare by undertaking not-for-prot activities which would benet all or any of its stakeholders in the society. (f) Safeguarding integrity ensures independent verication and truthful presentation of the Company's nancial position. For this purpose, the Company has also constituted an Audit Committee which pays particular attention to the nancial management process. (g) Continuous focus on training and development of employees and workers to achieve the overall corporate objectives, while ensuring employee integration across national boundaries. Your Company is open, accessible and consistent with its communication. Apollo Tyres Ltd shares a long term perspective and rmly believes that good Corporate Governance practices underscore its drive towards competitive strength and sustained performance. Thus, overall Corporate Governance norms have been institutionalised as an enabling and facilitating business process at the Board, Management and at all operational levels. 2. Board of Directors (a) Composition of Board: The Company has a broad-based Board and meets the composition criteria. As on March 31, 2010 the Companys Board of Directors consist of 14 Executive and Non Executive Directors, including leading professionals in their respective elds. The following is the percentage of Executive and Non Executive Directors of the Company: Category of Directors Executive Non Executive: Independent Directors Others 9 1 14 65 7 100 No. of Directors 4 % of Total No. of Directors 28

Total

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ANNUAL REPORT 09-10

(b) The constitution of the Board and attendance record of Directors is given below: Name/Designation of Director
Mr Onkar S Kanwar Chairman & Managing Director Mr Neeraj Kanwar Vice Chairman & Managing Director Mr A K Purwar Mr K Jacob Thomas Mr M R B Punja Mr M J Hankinson Mr Nimesh N Kampani Mr P Prabakaran* Nominee Director Govt. of Kerala (Equity Investor) Mr Robert Steinmetz Mr Sunam Sarkar Chief Financial Ofcer and Whole Time Director Dr S Narayan Mr T Balakrishnan Nominee Director Govt. of Kerala (Equity Investor) Mr U S Oberoi Chief (Corporate Affairs) and Whole Time Director

Executive/Non-Executive/ Independent
Promoter-Executive

No. of Positions held No. of Board Attendance at in Other Companies Meetings Attended last AGM Board# Committee##
5 2 4 Yes

Executive

Yes

Non-Executive Independent Non-Executive Independent Non-Executive Independent Non-Executive Independent Non-Executive Independent Non-Executive Independent

8 3 6 5 7

5 1 3 3 -

4 3 4 2 1 Nil

Yes No Yes Yes No N.A.

Non-Executive Independent Executive

4 4

Yes Yes

Non-Executive Independent Non-Executive Independent

7 14

1 1

3 2

Yes No

Executive

Yes

Ceased to be Director Mr L C Goyal * Nominee Director Govt. of Kerala (Equity Investor) Mr Shardul S Shroff (Resigned w.e.f March 25, 2010) @ Mr Raaja Kanwar (Resigned w.e.f. May 17, 2010) Non-Executive Independent 2 N.A Nil No

Non-Executive Independent

No

Non-Executive

No

#This includes Directorships held in Public Ltd. companies and subsidiaries of Public Ltd. companies and excludes Directorships in Private Limited companies and overseas companies. ##For the purpose of committees of Board of Directors, only Audit and Shareholders Grievance committees in other Public Ltd. companies and subsidiaries of Public Ltd. companies are considered. *Government of Kerala has nominated Mr P Prabakaran as director of the Company in place of Mr L C Goyal w.e.f. January 29, 2010 @ Mr Shardul S Shroff is a senior partner of M/s. Amarchand & Mangaldas & Suresh A Shroff & Co., carrying out the practice of solicitors and advocates on record, to whom the Company has paid fee of Rs 5.75 millions for the year 2009-2010 for professional advice rendered by the rm in which he is interested. The Board has determined that such payment in the context of overall expenditure by the Company, is not signicant and does not affect his independence. None of the Directors of your Company is a member of more than 10 committees or is the Chairman of more than ve committees across all the companies in which they are Directors.

71

(c) Relationship amongst Directors Mr Neeraj Kanwar, Vice Chairman & Managing Director is son of Mr Onkar S Kanwar, Chairman & Managing Director. (d) Prole of the Chairman Mr Onkar S Kanwar, Chairman & Managing Director is chief architect of the Company's vision, setting the pace for its growth. Under his leadership in the 1980s and 90s, Apollo became a professionally-run and competitive tyre manufacturer, and began implementing a global growth path in the last decade. Innovation, quality and exclusivity are his guiding principles. He is a member on various Government of India Advisory Committees, on the Board of leading educational institutes and the Past President of the Federation of Indian Chambers of Commerce & Industry (FICCI). A science and administration graduate from the University of California, Mr Onkar S Kanwar is a widely travelled industrialist and a keen student of modern management practices and their successful application in business. Mr Kanwar has also held the ofce of Chairman of Automotive Tyres Manufacturing Association (ATMA), the apex body of the Indian tyre industry and is a past President of the Indian arm of the International Chamber of Commerce. (e) Prole of the Vice-Chairman Mr Neeraj Kanwar, Vice Chairman & Managing Director, Apollo Tyres Ltd, is a young and dynamic thirdgeneration entrepreneur. Under his leadership, Apollo Tyres began the journey of moving into new product segments and markets, expanding its operations at a rapid pace, while investing heavily in the three key areas of Quality, Technology and People. He began his career with Apollo Tyres in 1995 as Manager, Product & Strategic Planning, and steadily rose up the ranks to become the Chief of Manufacturing in 1998, the COO in 2002 and eventually Vice Chairman and Managing Director in 2009. Mr Neeraj Kanwar graduated from Lehigh University, USA, with a focus on Industrial Engineering and Management Systems. Recently, Mr Neeraj Kanwar had the unique distinction of being elected as the youngest Chairman of Automotive Tyres Manufacturers' Association (ATMA), the apex body of the Indian tyre industry. (f) During the year, four board meetings were held on the following dates: April 29, 2009 July 23, 2009 October 20, 2009 January 29, 2010 The gap between any two meetings never exceeded four months as per the requirements of clause 49 of the listing agreement. All the required information was suitably placed before the Board to the extent possible at the Board Meetings. 3. Audit Committee a) Constitution and Composition of Committee: The Board of Directors constituted an audit committee in the year 1992. The present audit committee comprises of following three Non-Executive and Independent Directors and one Whole time Director who have nancial/ accounting acumen to specically look into the internal controls and audit procedures: Name of Director Mr M R B Punja Mr K Jacob Thomas Dr S Narayan Mr U S Oberoi Chief (Corporate Affairs) & Whole-time Director (appointed w.e.f. July 23, 2009) Designation Chairman Member Member Member Category of Director Non- Executive Independent Non- Executive Independent Non- Executive Independent Executive No. of Meetings Attended 4 3 3 2

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ANNUAL REPORT 09-10

b)

c) d)

e)

In addition to the members of the audit committee, these meetings are attended by the Chief Financial Ofcer, Heads of Accounts & Finance and other respective functional heads, Internal Auditors, Cost Auditors and Statutory Auditors of the Company, wherever necessary, and those executives of the Company who are considered necessary for providing inputs to the committee. Members have discussions with the Statutory Auditors during the meetings of the committee and the quarterly/half-yearly and annual audited nancials of the Company are reviewed by the audit committee before consideration and approval by the Board of Directors. The committee also reviews the Internal Control Systems, IT Systems and conduct of the Internal Audit. Meetings: During the nancial year, the audit committee met four times on the following dates: April 29, 2009 July 22, 2009 October 20, 2009 January 29, 2010 Mr P N Wahal, Company Secretary, acts as secretary of the committee. Role of Internal Auditors The organisation considers the Internal Audit Department as a powerful tool with clear focus on risk control and Governance. Internal Auditing assesses and promotes strong ethics and values within the organisation and serves as an educational resource regarding changes and trends in the business and regulatory environment. At Apollo, the Internal Audit Team aims at audit of the organisation which is reected by quality review of all major functional areas-Production, Marketing, Sales, Technical, Commercial and Finance. Besides legal and compliance issues, Internal Audit function supports in evaluation of Internal Control Systems and locating all other important issues, which contribute to organisational objectives of customer delight, employee satisfaction, operating prot margin increase and revenue growth. Internal Audit also provides objective assurance to the Board on all the major ndings during their audit. Terms of reference: The audit committee has been entrusted with the following main responsibilities:- Overview of the Companys nancial reporting process and disclosure of its nancial information. - Recommend the appointment/removal of External Auditors, nature and scope of audit and their fee. - Review with the management, the quarterly/half yearly and annual nancial statements before submission to the board. - Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conict with the interests of Company at large. - Discussion and review of the Internal Audit Reports and the Reports of the External Auditors with the management and follow up thereon. - Review of the adequacy and effectiveness of internal audit function, the internal control system of the Company, compliance with the Companys policies and applicable laws and regulations. - Discussions with External Auditors about the scope of audit including the observations of the auditors. - The audit committee may also review such matters as are considered appropriate by it or referred to it by the board.

4.

Remuneration Committee a) Constitution and Composition of the Committee The Board of Directors had constituted a Remuneration Committee in the year 2003. The present composition of the Remuneration Committee is as follows:Name of Director Mr M R B Punja Dr S Narayan Mr K Jacob Thomas Designation Chairman Member Member Category of Director Non- Executive, Independent Non- Executive, Independent Non- Executive, Independent No. of meetings attended 2 1 2

b) Meetings of the Committee During the nancial year, the Remuneration Committee met on April 29, 2009 and October 20, 2009. c) Mr P N Wahal, Company Secretary, acts as the secretary of the Committee. 73

d) Terms of Reference The Remuneration Committee has been entrusted with the following responsibilities: - To review and grant annual increments, vary and/or modify the terms and conditions of appointment/ re-appointment including remuneration and perquisites, commission etc. payable to Managing Directors within the overall ceiling of remuneration as approved by the members. e) Payment of remuneration/sitting fee to the Directors Remuneration paid/payable to directors during the nancial year 2009-2010 is given below:i) Executives (Rs/Million) Name of Director Mr Onkar S Kanwar Mr Neeraj Kanwar Mr U S Oberoi Mr Sunam Sarkar Salary 36.00 7.01 2.66 2.94 48.61 Contribution to PF/ Superannuation 29.76 2.66 1.06 1.03 34.51 Commission/ Performance Bonus 185.00 61.50 3.53 4.57 254.60 Perquisites 46.19 12.08 3.25 4.88 66.40 Total Remuneration 296.95 83.25 10.50 13.42 404.12

The remuneration policy of the Company is to remain competitive in the industry to attract and retain talent and appropriately reward them on their contribution towards growth of the Company. The criteria for payment of remuneration to the Executive Directors takes into account the business plans and market conditions. ii) Non-Executives: Sitting fee and commission paid/to be paid to the Non-Executive Directors is in pursuance of the resolution passed by the Board/shareholders. During the year, the following fee/commission was paid to the Non-Executive Directors:Name of Director Sitting fee (Rs/Million) Commission provided for the year 2009-10 (Rs/Million) 0.91 No. of Shares held as on March 31, 2010 Stock Option, if any N.A.

Mr A K Purwar @Mr L C Goyal* Mr T Balakrishnan* Mr P Prabakaran* Mr K Jacob Thomas Mr M R B Punja Mr M J Hankinson Mr Nimesh N Kampani +Mr Raaja Kanwar Mr Robert Steinmetz #Mr Shardul S.Shroff Dr S Narayan

0.08

0.04 0.20 0.20 0.04 0.02 0.06 0.08 0.04 0.14

1.82 0.91 0.91 0.91 0.91 0.91 0.91 0.90 0.91

4,42,050 1,80,880 -

N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

*Commission payable to Government of Kerala @ Resigned w.e.f. January 29, 2010. # Resigned w.e.f March 25, 2010. + Resigned w.e.f. May 17, 2010.

5.

Shareholders/Investors Transfer/Grievance Committee (a) Constitution and Composition of the Committee The Board of Directors had constituted a Shareholders/Investors Transfer/Grievance Committee comprising of the following members:Name of Director Mr K Jacob Thomas Mr Neeraj Kanwar *Mr Shardul S Shroff Mr Sunam Sarkar Mr U S Oberoi
*Ceased to be member w.e.f. March 25, 2010.

Designation Chairman Member Member Member Member

No. of meetings attended 2 4 1 4 4

Mr P N Wahal, Company Secretary, acts as Secretary of the Committee. 74

ANNUAL REPORT 09-10

(b) Terms of reference This Committee has been formed with a view to undertake the following: Approval of transfer/transmission of shares/debentures issued by the Company, issue of duplicate certicates and certicates after split/consolidation/replacement. Looking into the redressal of shareholders and investors complaints. (c) Meetings During the year, ve meetings of the Shareholders/Investors Transfer/Grievance Committee were held on the following dates:April 29, 2009 July 22, 2009 October 20, 2009 December 18, 2009 and March 4, 2010 (d) Compliance Ofcer Mr P N Wahal, Company Secretary, has been designated as the compliance ofcer. (e) No. of shareholders complaints received During the year 2009-2010, the Company received 35 complaints. As on date, no complaints are pending other than those, which are under litigation, disputes or court orders. All other complaints were attended and resolved to the satisfaction of the shareholders. General Body Meetings and Dividend declared a) The last three AGMs were held as under: Year 2008-2009 Venue Kerala Fine Arts Theatre, Fine Arts Avenue, Foreshore Road, Ernakulam, Kochi (Kerala) - do - do Special Resolution passed - No Special Resolution was passed - Employees Stock Option Scheme - Increase the limit of FIIs holding upto 30% Date 23.07.2009 Time 10.00 A.M.

6.

2007-2008 2006-2007 Year 2008-2009 2007-2008 2006-2007

18.07.2008 26.07.2007

10.00 A.M 10.00 A.M

b) Special Resolutions passed during the previous three AGMs:-

c) Resolutions passed last year through postal ballot During the year 2009-2010, the following resolutions were passed through postal ballot on March 23, 2010: Authorisation for borrowings up to Rs 25000 millions under Section 293 (1) (d) of the Companies Act, 1956. Authorisation for creation of securities upto Rs 25000 millions under Section 293 (1) (a) of the Companies Act, 1956 Details of voting pattern of the resolutions passed through Postal Ballot are as under:Resolution No.1 - Ordinary Resolution Authorisation for borrowings under Section 293(1)(d) of the Companies Act, 1956 Number of Postal Ballots received Total number of votes Votes cast in favour of the Resolution Votes cast against the Resolution Votes required for carrying the Resolution as an Ordinary Resolution Majority of votes received in favour of the Resolution Number of invalid Postal Ballots Number of invalid votes 3,608 25,71,46,304 25,68,37,776 71,992 71,993 25,67,65,784 40 13,711 75

Result:- The Resolution No.1 for authorisation for borrowings under Section 293(1)(d) of the Companie Act, 1956 is passed as an ordinary resolution as the votes cast in favour of the resolution exceed the votes cast against the resolution. Resolution No.2 - Ordinary Resolution Authorisation for creation of security under Section 293(1) (a) of the Companies Act, 1956 Number of Postal Ballots received Total number of valid votes cast Votes cast in favour of the Resolution Votes cast against the Resolution Votes required for carrying the Resolution as an Ordinary Resolution Majority of votes received in favour of the Resolution Number of invalid Postal Ballots Number of invalid votes 3,608 25,71,46,304 25,67,73,484 65,268 65,269 25,67,08,216 40 13,711

Result:- The Resolution No.2 for creation of security under Section 293(1) (a) of the Companies Act, 1956 is passed as an ordinary resolution as the votes cast in favour of the resolution exceed the votes cast against the resolution. d) Dividend declared in last three annual general meetings. Financial Year Ended 31.03.2009 31.03.2008 31.03.2007 7. Disclosures a) Related Party Transactions Related Parties transactions with them as required under Accounting Standard (AS-18) are furnished under Note No. B-21 of the Notes on Accounts attached with the nancial statements for the year ended March 31, 2010. No transaction of material nature has been entered into by the Company with its Promoters, the Directors or the Management, their subsidiary or relatives etc. that may have a potential conict with the interests of the Company. The Register of Contracts containing transactions, in which Directors are interested, is placed before the board regularly. b) Risk Management Procedure In terms of sub-clause IV.C of Clause 49 of the Listing Agreement, the Company has made its Risk Charter and Risk Register etc. on the basis of comprehensive study undertaken by Deloitte Touche Tohmatsu Private Limited to frame a risk management policy/internal control frame work. The Board/Audit Committee periodically reviews the risks and opportunities and plans to mitigate the same. c) Compliance by the Company There has been no instance of non-compliance by the Company on any matter related to capital markets during the last three years. A Statutory Compliance Dashboard system has been introduced to create a centralised repository for all evidence of compliance. 8. Means of communication The quarterly/half yearly and annual nancial results of the Company are normally published in Financial Express/Business Standard/Hindustan Times/Mint (national dailies) and Kerala Kumudi/Matrubhumi (regional dailies). In addition to the above, quarterly and annual results are displayed at our website at www.apollotyres.com for the information of all shareholders. All material information about the Company is promptly sent to the stock exchanges and the Company regularly updates the media and investor community about its nancial as well as other organisational developments. Dividend 45% 50% 45 %

9.

Management Discussion &Analysis A detailed Management Discussion & Analysis is provided in the Annual Report.

76

ANNUAL REPORT 09-10

10. General Shareholder Information a) Registered Ofce : 6th Floor Cherupushpam Building Shanmugham Road Kochi 682 031 (Kerala) July 29, 2010 Thursday 10.00 A.M. Kerala Fine Arts Theatre Fine Arts Avenue Foreshore Road Ernakulam, Kochi (Kerala). : : : : On or before Aug 15,2010 On or before Nov 15,2010 On or before Feb 15,2011 AprilMay, 2011

b) Annual General Meeting: - Date - Day - Time - Venue

: : : :

c) Financial Calendar for Financial Year 2010-2011 Financial Reporting for the quarter ending June 30, 2010 Financial Reporting for the quarter ending September 30, 2010 Financial Reporting for the quarter ending December 31, 2010 Financial Reporting for the quarter ending March 31, 2011

d) Dates of Book-Closure The dates of the book closure shall be from July 16, 2010 to July 29, 2010 (both days inclusive). e) Dividend Payment The dividend of Re 0.75 per equity share for the nancial year 2009-10, subject to approval from shareholders, has been recommended by the Board of Directors. The same shall be paid on or after July 29, 2010 but within the statutory time limit. f) Listing at Stock Exchanges 1. Cochin Stock Exchange Ltd. MES, Dr P K Abdul Gafoor Memorial Cultural Complex, 36/1565, 4th Floor Judges Avenue, Kaloor Kochi682017 T: 0484-2400044, 2401898 Fax: 0484-2400330 E-mail: cse1@vsnl.com National Stock Exchange of India Ltd Exchange Plaza, Bandra Kurla Complex Bandra (E), Mumbai 400 051 Ph.: 022-26598100-14 Fax: 022-26598237-38 E-mail: cmlist@nse.co.in The annual listing fee for the year 2010-2011 has been paid to all the aforesaid stock exchanges. g) Stock Code Bombay Stock Exchange Ltd. National Stock Exchange of India Ltd. 2. Bombay Stock Exchange Ltd. Phiroze Jeejeebhoy Towers 1st Floor, Dalal Street Mumbai 400001 T: 022-22721233/34 Fax: 022-22721919/3027 E-mail : corp.relations@bseindia.com

3.

500877 APOLLOTYRE

77

h)

Stock Market Price Data for the year 2009-2010 ATL share price on NSE and Nifty Index Month High (Rs) April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010 23.85 33.45 37.40 41.20 44.30 50.25 57.20 57.60 50.50 57.40 59.95 79.80 NSE Low (Rs) 17.80 21.85 28.25 28.00 37.00 41.00 42.80 46.15 45.15 48.75 50.90 57.85 Nifty Index Volume (in million) 16.25 35.95 116.61 94.00 62.85 68.86 84.83 60.42 60.40 52.22 54.79 157.94 High 3517.25 4509.40 4693.20 4669.75 4743.75 5087.60 5181.95 5138.00 5221.85 5310.85 4992.00 5329.55 Low 2965.70 3478.70 4143.25 3918.75 4353.45 4576.60 4687.50 4538.50 4943.95 4766.00 4675.40 4935.35

ATL share price on BSE and Sensex Month High (Rs) April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010 23.90 33.50 36.70 41.20 44.20 50.00 57.20 56.60 50.25 57.35 59.90 79.80 BSE Low (Rs) 17.75 21.40 28.25 28.60 37.50 40.65 39.00 46.20 46.00 48.80 50.75 57.80 Sensex Volume (in million) 5.95 22.57 80.39 48.76 26.20 30.29 37.56 21.62 23.40 19.08 19.70 45.39 High 11,492.10 14,930.54 15,600.30 15,732.81 16,002.46 17,142.52 17,493.17 17,290.48 17,530.94 17,790.33 16,669.25 17,793.01 Low 9,546.29 11,621.30 14,016.95 13,219.99 14,684.45 15,356.72 15,805.20 15,330.56 16,577.78 15,982.08 15,651.99 16,438.45

78

ANNUAL REPORT 09-10

i)

Shares Traded during April 1, 2009 to March 31, 2010 BSE No. of Shares traded (in million) Highest Share Price (in Rs) Lowest Share Price (in Rs) Closing Share Price (in Rs) (as on March 31, 2010) Market Capitalisation (in million) (as on March 31, 2010) 380.90 79.80 17.75 70.95 35760.56 NSE 865.12 79.80 17.80 70.90 35735.36

j)

Distribution of Shareholding The following is the distribution of shareholding of equity shares of the Company as on March 31, 2010:Category 1-2500 2501-5000 5001-10000 10001-20000 20001-30000 30001-40000 40001-50000 50001-100000 100001 and above Total No. of Shareholders 114023 1553 641 244 107 45 27 52 220 116912 % of Shareholders 97.53 1.33 0.55 0.21 0.09 0.04 0.02 0.04 0.19 100.00 No. of Shares Held 38522463 5833620 4845562 3565334 2723012 1609394 1252744 3918571 441754070 504024770 % of Shareholding 7.64 1.16 0.96 0.71 0.54 0.32 0.25 0.78 87.64 100.00

Group for inter-se transfer of shares As required under Clause 3(a) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the following entities constitute Group (within the meaning as dened in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of Regulation 10 to 12 of the aforesaid SEBI Regulations: Apollo Finance Ltd., Sunrays Properties & Investment Co. Pvt. Ltd., Ganga Kaveri Credit & Holding Co. Pvt. Ltd., Sacred Heart Investment Co. Pvt. Ltd., Kenstar Investment & Finance Pvt. Ltd., Neeraj Consultants Ltd., Constructive Finance Pvt. Ltd., Motlay Finance Pvt. Ltd., Indus Valley Investment & Finance Pvt. Ltd., Sargam Consultants Pvt. Ltd., Global Capital Ltd., Apollo International Ltd., OSK Holdings Pvt. Ltd., Classic Auto Tubes Ltd., PTL Enterprises Ltd. and Mr Onkar S Kanwar along with his family members. The above entities, along with the family members hold 198.31 million shares constituting 39.35% of the share capital of the Company as on March 31, 2010. k) Share Transfer System To expedite the share transfer in physical segment, Shareholders/Investors Transfer/Grievances Committee has authorised Whole-time Director and Company Secretary to approve transfer of securities upto 10,000 received from individuals and transfers pertaining to shares of notied parties lodged by the Ofce of Custodian on weekly basis. In case of approval of transfer of securities over 10,000, the Shareholders/Investors Transfer/Grievances Committee meets at periodical intervals. In any case, all share transfers are completed within the prescribed time limit from the date of receipt, if document meets the stipulated requirement of statutory provisions in all respects. In reference to SEBI directives, the Company is providing the facility for transfer and dematerialization of securities simultaneously. The total no. of shares transferred during the year were 1,90,650. All the transfers were completed within stipulated time. l) Dematerialisation of Shares and Liquidity The equity shares of the Company are being traded under compulsorily demat form as per SEBI notication. The Companys shares are tradable compulsorily in electronic form and are available for trading in the depository systems of both National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). The International Securities Identication Number (ISIN) of the Company, as allotted by NSDL and CDSL, is INE438A01022. As on March 31, 2010, 96.54 % of the share capital stands dematerialised. BSE and NSE have permitted trading of Apollo Tyres share into future and option (F&O) segment w.e.f. February 19, 2010.

79

m) Share Transfer/Demat Registry work All share transfers/demat are being processed in house. The Company has established direct connectivity with NSDL/CDSL for carrying out demat completely in house. n) Share Transfer Department All Communications regarding change of address for shares held in physical form, dividend etc. should be sent at the Companys corporate ofce at:Apollo Tyres Ltd. Apollo House, 7, Institutional Area Sector-32, Gurgaon122 001(Haryana) T: (0124) 238 3002-10 Fax: (0124) 238 3351 E-Mail: investors@apollotyres.com o) ECS Mandate All shareholders are requested to update their bank account details with their respective depositories urgently. This would facilitate transfer of dividend directly to the bank account of the shareholders. p) Plant Location 1. Perambra, P.O.Chalakudy Trichur680 689(Kerala) 2. Limda, Taluka Waghodia Dist. Vadodara391 760 (Gujarat) 3. SIPCOT Industrial Growth Centre Oragadam (Tamil Nadu) q) Address for correspondence : Secretarial Department for share transfer/demat Apollo Tyres Ltd. of shares, payment of dividend Apollo House, 7, Institutional Area and any other query relating Sector-32, Gurgaon. to shares T: 0124-238 3002-10 r) The non-mandatory requirements of clause 49 of the listing agreement and voluntary guidelines issued by the Ministry of Corporate Affairs in December, 2009, have been complied with, wherever possible. 11. Additional Information a) Investor Relations Section The Investors Relations Section is located at the Corporate Ofce of the Company. Contact person : Mr P N Wahal, Compliance Ofcer Time : 10.00 A.M. to 6.00 P.M. on all working days of the Company (Saturdays and Sundays closed) Phone No. : (0124) 238300210 Fax No. : (0124) 2383351 E-mail : investors@apollotyres.com b) Bankers State Bank of India State Bank of Mysore State Bank of Patiala Union Bank of India BNP Paribas Bank of India Canara Bank Punjab National Bank ICICI Bank Ltd. IDBI Bank Ltd. Standard Chartered Bank State Bank of Travancore Axis Bank Yes Bank Dhanalakshmi Bank 80

ANNUAL REPORT 09-10

c) Auditors Deloitte Haskins & Sells, Chartered Accountants d) Cost Auditors N P Gopalakrishnan & Co., Cost Accountants e) Secretarial Audit As stipulated by SEBI, a qualied Company Secretary in practice conducts the Secretarial Audit of the Company for the purpose of reconciliation of total admitted capital with the Depositories, i.e. NSDL and CDSL, and the total issued and listed capital of the Company. The Company Secretary in practice conducts such Secretarial Audit in every quarter and issues a Secretarial Audit Certicate to this effect to the Company. f) Code of Conduct of Insider Trading Apollo Tyres Ltd. has a Code of Conduct for Prevention of Insider Trading in the securities of the Company. The Code of Conduct prohibits the purchase/ sale of shares of the Company by employees in possession of unpublished price sensitive information pertaining to the Company. Mr P N Wahal, Company Secretary, has been appointed as Compliance Ofcer. This Code of Conduct is applicable to all the Directors, Departmental Chiefs and Heads and such other employees of the Company who are expected to have access to unpublished price sensitive information. g) Code of Corporate Disclosure Practices The Code lays down broad standards of compliance and ethics, as required by the listing agreement(s) and other applicable SEBI regulations. The Code is required to be complied in respect of all corporate disclosures in respect of ATL and/or its subsidiary companies, including overseas subsidiaries, namely, Apollo Tyres South Africa (Pty) Ltd., South Africa and Apollo Vredestein BV, Netherlands. The Code is applicable to the designated ofcers of the Company. The Company Secretary is the compliance ofcer. h) Code of Conduct for Directors and Senior Management Apollo Tyres has a code of business conduct called The Code of Conduct for Directors and Senior Management. The Code envisages that Board of Directors and Senior Management must act within the bounds of the authority conferred upon them and with a duty to make and keep themselves informed about the development in the industry in which the Company is involved and the legal requirements to be fullled. The Code is applicable to all the Directors and Senior Management of the Company. The Company Secretary is the compliance ofcer. Declaration Afrming Compliance of provisions of the Code of Conduct To the best of my knowledge and belief and on the basis of declarations given to me, I hereby afrm that all the Board members and the senior management personnel have fully complied with the provisions of the Code of Conduct for Directors and Senior Management Personnel during the nancial year ended March 31, 2010. For Apollo Tyres Ltd.

Place: Gurgaon. Date : May 28, 2010.

(Onkar S Kanwar) Chairman & Managing Director

81

COMPLIANCE:
The certicate dated May 28, 2010 obtained from statutory auditors, M/s. Deloitte Haskins & Sells, forms part of this annual report and the same is given herein: AUDITORS CERTIFICATE AS PER CLAUSE 49 OF THE LISTING AGREEMENT

CERTIFICATE To the Members of Apollo Tyres Ltd. We have examined the compliance of conditions of Corporate Governance by Apollo Tyres Ltd. (the Company)for the year ended on March 31, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on nancial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efciency or effectiveness with which the management has conducted the affairs of the Company.

For DELOITTE HASKINS & SELLS CHARTERED ACCOUNTANTS (Registration No. 008072S) sd/Geetha Suryanarayanan Place: Gurgaon. Date : May 28, 2010. PARTNER (Membership No. 29519)

82

ANNUAL REPORT 09-10

AUDITORS REPORT
TO THE MEMBERS OF APOLLO TYRES LTD.
1. We have audited the attached Balance Sheet of APOLLO TYRES LTD. (the Company) as at March 31, 2010, the Prot and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These nancial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the nancial statements. An audit also includes assessing the accounting principles used and the signicant estimates made by the Management, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specied in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Prot and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, the Prot and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; (ii) in the case of the Prot and Loss Account, of the prot of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash ows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2010 taken on record by the Board of Directors, none of the Directors is disqualied as on March 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.008072S) sd/Geetha Suryanarayanan Place: Gurgaon. Date : May 28, 2010. Partner (Membership No.29519)

2.

3.

4.

83

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date) (i) In respect of its xed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the xed assets. (b) The xed assets were physically veried during the year by the Management in accordance with a regular programme of verication which, in our opinion, provides for physical verication of all the xed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verication. (c) The xed assets disposed off during the year, in our opinion, do not constitute a substantial part of the xed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (ii) In respect of its inventory: (a) As explained to us, the inventories were physically veried during the year by the Management at reasonable intervals. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verication of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verication. (iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, rms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and xed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. (v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered. (b) Where each of such transaction is in excess of Rs 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time. (vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. (vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of manufacture of automobile tyres and tubes and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company. (ix) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2010 for a period of more than six months from the date they became payable.

84

ANNUAL REPORT 09-10

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on March 31, 2010 on account of disputes are given below: Name of the statute Custom Act, 1982 Nature of dues Custom Duty Amount (Rs in Million) 23.50 Period to which the amount relates Assessment Years 1989-90 & 1994-95 Forum where dispute is pending Assistant/Deputy commissioner of Customs/Supreme Court

Sales Tax Act applicable to various States Central Excise Act, 1944

Sales Tax

91.50*

Assessment Years Various Appellate 1990-91 to Authorities/ 2003-04 & 2005-06 Revenue Board/ High Court 1995-96 to 2002-03 Various Appellate Authorities/ High Court

Excise Duty and Additional Excise Duty

588.45

* Net of deposits Rs 16.74 Million (x) The Company does not have any accumulated losses at the end of the nancial year. The Company has not incurred cash losses during the current nancial year and in the immediately preceding nancial year. (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, nancial institutions and debenture holders. (xii) According to the information and explanations given to us and based on our examination of documents and records, we are of the opinion that no loans or advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities. (xiii) The Company is not a chit fund or a nidhi/mutual benet fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. (xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and nancial institutions are not, prima facie, prejudicial to the interests of the Company including the bank deposits pledged by the Company as referred to in Schedule 6 to the nancial statements. (xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application. (xvii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long- term investment. (xviii) According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. (xix) The Company has created security in respect of the debentures issued. (xx) The Company has not raised any money by public issues during the year. (xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.008072S) sd/Geetha Suryanarayanan Partner Place: Gurgaon Date : May 28, 2010 (Membership No.29519) 85

BALANCE SHEET

AS AT MARCH 31, 2010

Schedule

As at March 31, 2010 Rs/Million

As at March 31, 2009 Rs/Million

SOURCES OF FUNDS: Shareholders' Funds: Share Capital Reserves and Surplus Loan Funds : Secured Unsecured Deferred Tax Liability (Net) ( Note - B 17 ) TOTAL APPLICATION OF FUNDS: Fixed Assets : Gross Block Less: Accumulated Depreciation Net Block Capital Work in Progress (Incl. Capital Advances) Investments Current Assets, Loans and Advances : Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Deferred Revenue Expenditure ( Note - B 10 ) TOTAL SIGNIFICANT ACCOUNTING POLICIES AND 12 NOTES ON ACCOUNTS The Schedules referred to above form an intergral part of the Balance Sheet
In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants GEETHA SURYANARAYANAN Partner Gurgaon May 28, 2010 SUNAM SARKAR Chief Financial Ofcer & Whole Time Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary ONKAR S. KANWAR Chairman & Managing Director NEERAJ KANWAR Vice Chairman & Managing Director A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

1 2 3

504.09 16,761.87 17,265.96 8,759.46 2,570.16 11,329.62 1,974.51 30,570.09

504.09 13,053.04 13,557.13 4,623.88 2,331.27 6,955.15 1,560.67 22,072.95

4 24,141.70 8,039.45 16,102.25 5,360.44 21,462.69 5 6 5,527.28 1,375.43 2,588.28 44.18 2,629.48 12,164.65 7 6,906.60 1,744.41 8,651.01 3,513.64 30,570.09 4,601.22 958.28 5,559.50 4,849.51 1.51 22,072.95 4,170.47 872.84 3,405.98 5.03 1,954.69 10,409.01 5,593.76 18,379.96 6,946.60 11,433.36 2,814.09 14,247.45 2,974.48

86

ANNUAL REPORT 09-10

PROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED MARCH 31 2010 Schedule Year Ended March 31, 2010 Rs/Million 54,256.38 3,890.77 8 50,365.61 111.83 50,477.44 EXPENDITURE Manufacturing and Other Expenses (Increase) / Decrease in Work-in-Process and Finished Goods Interest PROFIT BEFORE DEPRECIATION & TAX Depreciation PROFIT BEFORE TAX Provision for Tax - Current - Deferred - Fringe Benet Tax NET PROFIT ADD: PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR DEDUCT- APPROPRIATIONS: General Reserve Debenture Redemption Reserve Proposed Dividend Dividend Tax SURPLUS CARRIED TO SCHEDULE 2 BASIC AND DILUTED EARNINGS PER SHARE (Face Value of Re 1/- each) (Rs) SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS The Schedules referred to above form an intergral part of the Prot and Loss Account
In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants GEETHA SURYANARAYANAN Partner Gurgaon May 28, 2010 SUNAM SARKAR Chief Financial Ofcer & Whole Time Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary

Year Ended March 31, 2009 Rs/Million 45,496.32 4,791.91 40,704.41 112.47 40,816.88 37,190.87 265.86 668.43 38,125.16 2,691.72 980.07 1,711.65 439.30 148.67

INCOME Gross Sales Less : Excise Duty Other Income

9 10 11

42,754.97 (226.76) 739.46 43,267.67 7,209.77 1,227.82 5,981.95 1,418.23 413.84 1,832.07 4,149.88 3,245.33 7,395.21 1,000.00 62.50 378.02 62.78 1,503.30 5,891.91 8.23

42.50

630.47 1,081.18 2,992.01 4,073.19 500.00 62.50 226.81 38.55 827.86 3,245.33 2.15

12

ONKAR S. KANWAR Chairman & Managing Director

NEERAJ KANWAR Vice Chairman & Managing Director

A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

87

CASH-FLOW STATEMENT

FOR THE YEAR ENDED MARCH 31, 2010

A. CASH FLOW FROM OPERATING ACTIVITIES (i) Prot After Tax Add: - Provision For Tax Net Prot Before Tax Add: Depreciation (Prot) / Loss on Sale of Assets (Net) Income from Investments Diminution in the Value of Investments Provision for Doubtful Debts/Advances Provision for Doubtful Debts/Advances written back Unclaimed Credit Balances/Provisions written back Deferred Revenue Expenditure Amortized Interest (Net of Interest Capitalized) Forex Fluctuation Gain on Sale of Investment Unrealized Forex Fluctuation Loss/(Gain) on Reinstatement Bad Debts / Advances Written Off (ii) Operating Prot Before Working Capital Changes Add: Adjustments for: (Increase) / Decrease in Inventories (Increase) / Decrease in Sundry Debtors (Increase) / Decrease in Loans & Advances Increase / (Decrease) in Current Liabilities Increase / (Decrease) in Provisions (iii) Cash Generated from Operations Less: Direct Taxes Paid (Net of Refund) (iv) Net Cash From Operating Activities B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (Including Interest Capitalized) Proceeds from Sale of Fixed Assets Purchase of Investments Long Term Fixed Term Deposits Placed With Banks Proceeds from Sale of Investments Dividends Received Interest Received Net Cash Used in Investing Activities C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of Share Capital including Share Premium Long Term Borrowings Received / Issue of Debentures Repayment of Long Term Borrowings Unpaid Debentures Redeemed during the Year Bank Overdraft / Short Term Borrowings Payment of Dividends Interest Paid (Net of Interest Capitalized) Net Cash Flow From Financing Activities Net (Decrease) / Increase in Cash & Cash Equivalents Cash & Cash Equivalents as at Beginning of the year Less: Bank Deposits With Tenure Exceeding Three Months Adjusted Cash & Cash Equivalents as at Beginning of the year Cash & Cash Equivalents as at the end of the year Less: Bank Deposits With Tenure Exceeding Three Months Adjusted Cash & Cash Equivalents as at the end of the year In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants GEETHA SURYANARAYANAN Partner Gurgaon May 28, 2010 SUNAM SARKAR Chief Financial Ofcer & Whole Time Director ONKAR S. KANWAR Chairman & Managing Director

Year Ended March 31, 2010 Rs/Million 4,149.88 1,832.07 5,981.95 1,227.82 39.29 (0.11) 40.72 8.00 (41.12) (1.05) 1.51 739.46 (8.26) (50.35) 42.69 980.07 (12.16) (0.02) 38.87 (69.80) 1.08 668.43 (26.41) -

Year Ended March 31, 2009 Rs/Million 1,081.18 630.47 1,711.65

1,998.60 7,980.55

1,580.06 3,291.71

(1,356.81) (506.34) (795.91) 2,393.46 612.69

347.09 8,327.64 (1,301.06) 7,026.58

962.44 688.64 (304.48) (1,117.60) 124.71

353.71 3,645.42 (399.66) 3,245.76

(8,585.42) 103.07 (2,747.25) 577.62 95.51 0.11 25.17 (10,531.19) 4,624.82 (600.84) (0.85) 350.49 (264.17) (844.92) 3,264.53 (240.08) 3,405.98 679.74 2,726.24 2,588.28 102.12 2,486.16 NEERAJ KANWAR Vice Chairman & Managing Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary

(4,662.95) 101.28 (126.77) (522.99) 202.56 183.01 (4,825.86) 410.84 3,483.75 (623.36) (0.89) (511.75) (289.65) (664.38) 1,804.56 224.46 2,658.53 156.75 2,501.78 3,405.98 679.74 2,726.24 A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

88

ANNUAL REPORT 09-10

SCHEDULES

ANNEXED TO THE ACCOUNTS SCHEDULE 1 - SHARE CAPITAL

As at March 31, 2010 Rs/Million AUTHORISED 730,000,000 Nos. (730,000,000 Nos.) Equity Shares of Re.1/- each 200,000 Nos. (200,000 Nos.) Cumulative Redeemable Preference Shares of Rs.100/- each 750.00 ISSUED, SUBSCRIBED, CALLED AND PAID UP 504,024,770 Nos. (504,024,770 Nos.) Equity Shares of Re. 1/- each 504.02 504.02 750.00 730.00 20.00 730.00 20.00 As at March 31, 2009 Rs/Million

Add: Forfeited Shares

0.07 504.09

0.07 504.09

89

SCHEDULE 2 - RESERVES & SURPLUS

As at March 31, 2010 Rs/Million Capital Subsidy Fixed Assets Revaluation As per last Balance Sheet Less: Transfer to Prot & Loss Account Share Forfeiture Rs 1,375/- (Rs 1375/-) Capital Redemption Debenture Redemption As per last Balance Sheet Add: Transfer from Prot & Loss Account Securities Premium As per last Balance Sheet Add: Received during the year Foreign Currency Translation Reserve As per last Balance Sheet Less: Transferred during the year General Reserve As per last Balance Sheet Add: Transfer from Prot & Loss Account 4,006.63 1,000.00 5,006.63 Surplus as shown in the Prot & Loss Account 5,891.91 16,761.87 3,506.63 500.00 4,006.63 3,245.33 13,053.04 0.25 0.25 3.58 3.33 0.25 5,659.71 5,659.71 5,218.80 440.91 5,659.71 62.50 62.50 125.00 62.50 62.50 31.22 31.22 44.40 31.57 0.35 31.22 44.40 3.00 As at March 31, 2009 Rs/Million 3.00

90

ANNUAL REPORT 09-10

SCHEDULE 3 - LOANS
As at March 31, 2010 Rs/Million SECURED Debentures 1,250 - 11.50 % Non Convertible Debentures of Rs 1,000,000/- each Term Loans From International Finance Corporation : - Foreign Currency - Rupee Loan From Banks: - ECB from BNP Paribas, Singapore - ECB I from Standard Chartered Bank, Singapore - ECB II from Standard Chartered Bank, Singapore - Buyers Credit from Standard Chartered Bank - Industrial Development Bank of India - State Bank of India - Dhanalakshmi Bank - Yes Bank From Institutions: - Bharat Earthmovers Ltd. (BEML) - G E Capital Services India Other Loans: - Banks - Cash Credit - Deferred Payment Credit - Sales Tax Loan 144.36 338.29 38.49 521.14 8,759.46 UNSECURED - Commercial Paper - Buyers Credit from Deutsche Bank - Short term Loans - From Banks 1,250.00 20.16 1,300.00 2,570.16 1,000.00 1,331.27 2,331.27 32.76 362.39 57.02 452.17 4,623.88 816.10 6,988.32 500.00 45.00 2,921.71 732.75 934.27 933.30 415.42 1,460.00 500.00 1,000.00 732.75 1,001.00 250.00 89.31 107.17 196.48 178.62 214.34 392.96 1,250.00 1,250.00 As at March 31, 2009 Rs/Million

91

NOTES: SECURED LOANS 1. Loan from International Finance Corporation is secured by : A pari passu rst charge along with other lenders on the Companys land at Perambra in Kerala, at village Limda in Gujarat and at Oragadam and Mathur village in Tamil Nadu, together with the Factory Buildings, Plant & Machinery and Equipments, both present and future. A rst and xed charge on the Companys land and premises situated at Gurgaon, Haryana, together with all existing and future buildings, erections and structures. A pari passu rst charge on all the movable assets except current assets of the Company. A pari passu second charge along with Loan from Standard Chartered Bank on all the current assets of the Company. 2. Loan from BNP Paribas is secured by: A pari passu rst charge along with other lenders by way of mortgage on the Companys land at village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the factory Buildings, Plant and Machinery and equipments, both present and future. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Company, both present and future (except stocks & book debts). 3. Loan from Standard Chartered Bank is secured by: A pari passu rst charge along with other lenders by way of mortgage on the Companys land at village Limda in Gujarat, at Perambra in Kerala and at Village Oragadam and Mathur, Tamil Nadu together with the factory Building, Plant and Machinery and equipments both present and future. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Company, both present and future (except stocks & book debts); and A pari passu second charge along with Loan from International Finance Corporation by way of hypothecation over all the current assets of the Company. 4. Loan from BEML is secured by : A charge to be created by way of hypothecation on the assets at Village Limda in Gujarat acquired out of the proceeds of loan taken from BEML. 5. 1,250 11.50% Secured Redeemable Non-Convertible Debentures of Rs 1 Million each aggregating to Rs 1,250 Million subscribed by Life Insurance Corporation of India is secured by a pari passu rst charge along with other lenders created by way of mortgage on the Companys Land & Premises at Perambra in Kerala & at Village Limda in Gujarat together with the factory buildings, Plant & machinery & Equipments, both present & future. 6. Loan from IDBI Bank is secured by; A pari passu rst charge along with other lenders created by way of mortgage on the Companys land at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the Factory Buildings, Plant and Machinery and equipments both present and future. A pari passu rst charge along with other lenders is to be created by way of mortgage on the Companys land at Village Limda in Gujarat. The charge creation is under process. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Company , both present and future (except stocks & book debts). 7. Loan from Yes Bank: A pari passu rst charge along with other lenders to be created by way of mortgage on the Companys land at Village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu, together with the factory Buildings, Plant and Machinery and equipments both present and future. The Charge creation is under process. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Company, both present and future (except stocks & book debts). 8. Loan from Standard Chartered Bank (Second Loan): A pari passu rst charge along with other lenders to be created by way of mortgage on the Companys land at Village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the factory Buildings, Plant and Machinery and equipments, both present and future. The Charge creation is under process. A pari passu rst charge along with other lenders to be created by way of hypothecation over all the movable assets of the Company, both present and future (except stocks & book debts). The Charge creation is under process. 9. Loan from Dhanalakshmi Bank: A pari passu rst charge along with other lenders to be created by way of mortgage on the Companys land at Village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the factory Buildings, Plant and Machinery and equipments both present and future. The Charge creation is under process. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Company, both present and future (except stocks & book debts). 10. Cash Credits and Guarantees from Banks are secured by Hypothecation of Raw materials, Work-in-Process, Stocks, Stores and Book Debts ranking in priority to the charge created in respect of the IFC Loan and loan from Standard Chartered Bank, and also by a second charge on the Companys land at Perambra in Kerala and at Village Limda in Gujarat, together with the Factory Buildings, Plant & Machinery and Equipments, both present and future. 11. Deferred payment credit is secured by specic assets purchased under the scheme and include Rs 27.51 Million (Rs 24.11 Million) repayable within one year. 12. The Company had availed interest free Sales Tax Loan from the Gujarat State Government amounting to Rs 112.61 Million. This loan is secured by a pari passu charge on the entire xed assets of the Company, both present and future situated at Village Limda in Gujarat. The said loan is repayable in six equal annual installments on the expiry of 14 years from the commencement of commercial production, May 31, 2006. Accordingly, a sum of Rs 18.53 Million (Rs 18.53 Million) was paid during the year and a similar amount is repayable within one year. 13. Secured Loans include Rs 729.11 Million (Rs 576.74 Million) repayable within one year. 14. Maximum amount outstanding on Commercial papers at any time during the year is Rs 2,220 Million (Rs 2,250 Million).

92

ANNUAL REPORT 09-10

SCHEDULE 4 - FIXED ASSETS

Rs/Million GROSS BLOCK Description of Assets Land Leasehold Land Buildings Plant & Machinery Electrical Installation Furniture, Fixtures & Ofce Equipments Vehicles Intangible Assets As at Mar 31, '09 73.87 (b) 153.65 2,650.10 (b) 13,660.31 (b) 465.65 679.15 545.97 151.26 18,379.96 Previous Year 15,697.79 Additions 1,955.92 3,545.85 (c) 308.52 142.62 75.82 10.34 6,039.07 (d) 2,792.94 Deductions 9.57 46.39 172.70 1.43 1.97 45.27 277.33 110.77 As at Mar 31,' 10 73.87 (b) 144.08 4,559.63 (b) 17,033.46 (b) 772.74 819.80 576.52 161.60 24,141.70 18,379.96 DEPRECIATION / AMORTIZATION As at Mar 31,' 09 2.94 438.90 5,523.55 193.93 350.87 316.72 119.69 6,946.60 5,987.83 Additions 1.73 (a) 101.05 994.55 31.80 43.35 40.13 15.21 1,227.82 (e) 980.07 Deductions 0.93 114.49 1.36 1.25 16.94 134.97 21.30 As at Mar 31, '10 4.67 539.02 6,403.61 224.37 392.97 339.91 134.90 8,039.45 6,946.60 NET BLOCK As at Mar 31,' 10 73.87 139.41 4,020.61 (f) 10,629.85 548.37 426.83 236.61 26.70 16,102.25 11,433.36 As at Mar 31,' 09 73.87 150.71 2,211.20 8,136.76 271.72 328.28 229.25 31.57 11,433.36 9,709.96

(a) Represents proportionate lease premium Rs 1.73 Million (Rs 1.74 Million) amortized. (b) Includes amount added on revaluation in 1985-86 and 1986-87 - Rs 227.41 Million (Rs 227.41 Million). (c) Includes Nil (Rs 80.88 Million) for capital expenditure on Research & Development (Note B -9). (d) Includes pre-operative expenses capitalized to the extent of Rs 265.38 Million (Rs 51.97 Million) as per Note B-15 & Borrowing Cost capitalised to the extent of Rs 257.42 Million (Rs 120.75 Million). (e) Includes Additional Depreciation amounting to Rs 3.65 Million (Nil) charged during the year due to revision in useful life of certain class of vehicle. (f) Net Block of Buildings include Rs 3,321.40 Million (Rs 1,554.26 Million) Buildings constructed on Leasehold Land.

93

SCHEDULE 5 - INVESTMENTS
LONG TERM (AT COST): TRADE (FULLY PAID) QUOTED Equity Shares of Rs 10/- each in Companies : 999,515 (999,515) Shares in Raunaq Finance Ltd.* 167,150 (167,150) Shares in Apollo Tubes Ltd.* 16,394 (16,394) Shares in Bharat Gears Ltd. UNQUOTED 24,500 (24,500) Equity Shares of Rs 10/- each in Apollo Radial Tyres Ltd. 24,500 (24,500) Equity Shares of Rs 10/- each in Apollo Automotive Tyres Ltd. 5,568,188 (5,568,188) Equity shares of US$ 1 each in Apollo (Mauritius) Holdings Pvt Ltd. - wholly owned subsidiary 104,163,019 (48,666,679) 9% Non-Cumulative Redeemable Preference Shares of US$ 1 each in Apollo (Mauritius) Holdings Pvt Ltd. - wholly owned subsidiary (55,496,340 Shares Acquired during the year - Cost Rs 2,744.74 Millions) Nil (3,248,652) Equity Shares of CHF 1 each in Apollo Tyres A.G., Switzerland -wholly owned subsidiary (3,248,652 Equity Shares sold to Apollo Tyres (Cyprus) Pvt. Ltd. for Rs 93.09 Millions) Membership Interest in Apollo Tyres Co opeartief U.A., Netherlands Acquired during the year Less: Transferred to Apollo (Mauritius) Holdings Pvt. Ltd. 5,000 (5,000) Equity Shares of Rs 100/- each in Apollo Tyres Employees' Multipurpose Co-operative Society Limited CURRENT: NON TRADE (FULLY PAID) QUOTED 138,469 (132,191) Units of "UTI Balanced Fund - Dividend Plan - Reinvestment" of Unit Trust of India # (Face Value of Rs 10/- each) Less : Provision for diminution / reduction in the value of Investments Cost / Book value of quoted Investments (Net of provision for diminution / reduction in the value of Investments) Market price of quoted Investments # Repurchase price of units As at March 31, 2010 Rs/Million As at March 31, 2009 Rs/Million

0.36 0.36 0.25 0.25 249.01 5,341.80

10.00 0.17 0.36 10.53 0.25 0.25 249.01 2,597.06

125.55

2.42 2.42

0.50 5,591.81

0.50 2,972.62

1.59 5,593.76 5,593.76 0.36 0.87 3.09

1.50 2,984.65 10.17 2,974.48 0.36 0.27 1.89

*The investments in Equity Shares of Raunaq Finance Ltd. and Apollo Tubes Ltd. have been written off against the provision for Diminution in the Value of Investments in the current year

94

ANNUAL REPORT 09-10

SCHEDULE 6 - CURRENT ASSETS, LOANS AND ADVANCES

As at March 31, 2010 Rs/Million

As at March 31, 2009 Rs/Million

CURRENT ASSETS Inventories : @ (Lower of Cost (net of allowances) and estimated Net Realisable Value) Raw Materials Stores and Spares Work-in-Process Finished Goods

2,397.03 334.54 415.19 2,380.52 5,527.28

1,340.74 295.76 289.25 2,244.72 4,170.47

Sundry Debtors - Unsecured Outstanding for a period exceeding six months: Considered Good Considered Doubtful Others - Considered Good* Less: Provision for Doubtful Debts Cash and Bank Balances Cash on hand Cheques on hand Remittances in Transit With Scheduled Banks : Current Accounts Unpaid Dividend Accounts Deposit Accounts** Other Current Assets Interest Accrued on Loans / Deposits

12.85 46.78 1,362.58 1,422.21 46.78 1,375.43 3.28 711.25 319.76

17.94 46.78 854.90 919.62 46.78 872.84 4.86 666.74 321.42

875.93 24.13 653.93 2,588.28 44.18 44.18 0.24

737.65 22.94 1,652.37 3,405.98 5.03 5.03 1.57

*Includes due from Subsidiary Company **Includes Rs 99.52 Million (Rs 168.13 Million) pledged with a bank against which working capital loan has been availed by Apollo Finance Ltd. @Includes stock in transit of Finished Goods

354.64

729.98

95

SCHEDULE 6 - CURRENT ASSETS, LOANS AND ADVANCES (Contd.)

As at March 31, 2010 Rs/Million LOANS AND ADVANCES - UNSECURED (Considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received Considered Good* Considered Doubtful Less: Provision for Doubtful Advances Advance Tax Less: Provision for Taxation Balance with Customs, Port Trust etc. 5,217.02 (5,255.49) (38.47) 0.07 2,629.48 12,164.65 * Includes dues from Subsidiary Companies 30.27 2,667.88 8.00 2,675.88 8.00 2,667.88 3,910.09 (3,837.26) 72.83 0.18 1,954.69 10,409.01 22.28 1,881.68 41.12 1,922.80 41.12 1,881.68 As at March 31, 2009 Rs/Million

96

ANNUAL REPORT 09-10

SCHEDULE 7 - CURRENT LIABILITIES AND PROVISIONS

As at March 31, 2010 Rs/Million CURRENT LIABILITIES Acceptances Sundry Creditors: Dues to Micro Enterprises & Small Enterprises (Note B-6) Others* **Investor Education and Protection Fund shall be credited by the following amounts whenever due:Unpaid Debenture Redemption Amount Unpaid Interest on Debentures Unpaid Matured Deposits Interest on Unpaid Matured Deposits Unpaid Dividend Interest accrued but not due on Loans PROVISIONS Proposed Dividend on Equity Shares Dividend Tax Provision for Wealth Tax Provision for Sales related obligations Provision for Gratuity, Leave Encashment & Superannuation 1,015.36 49.80 5,761.00 As at March 31, 2009 Rs/Million 245.02 43.88 4,198.95

1.21 0.10 24.13 55.00 6,906.60 378.02 62.78 4.00 1,078.08 221.53 1,744.41 8,651.01 13.03

0.85 0.17 1.21 0.10 22.94 88.10 4,601.22 226.81 38.55 2.00 484.91 206.01 958.28 5,559.50 8.22

*Includes due to Subsidiary Company

**- There are no amounts due and outstanding as at Balance Sheet Date to be credited to the Investor Education & Protection Fund. - Other unpaid amounts represent warrants / cheques issued to the Debenture holders / Depositors / Shareholders, as the case may be, which remain unpresented to the bankers as on March 31, 2010.

SCHEDULE 8 - OTHER INCOME

Year Ended March 31, 2010 Rs/Million 0.02 0.09 0.11 1.05 97.97 12.70 111.83

Year Ended March 31, 2009 Rs/Million 0.02 0.02 12.16 69.80 5.00 20.15 5.34 112.47

Income from Investments Dividend from Trade Investments - Bharat Gears Ltd. Dividend from Non-trade Investments - Unit Trust of India

Prot on Sale of Assets (Net) * Unclaimed Credit Balances / Provisions no longer required written back Bad Debts Recovered Interest on Income Tax Refund Miscellaneous Receipts ** *Includes Transfer from Revaluation Reserve to the extent of Nil (Rs 0.35 Million). ** Tax Deducted at Source Rs 0.74 Million (Rs 0.56 Million).

97

SCHEDULE 9 - MANUFACTURING AND OTHER EXPENSES

Year Ended March 31, 2010 Rs/Million MATERIALS Raw Materials Consumed 1 Less: Scrap Recoveries (Net of Excise Duty) 30,579.03 129.36 30,449.67 1,516.83 Year Ended March 31, 2009 Rs/Million 28,042.63 95.99 27,946.64 1,162.04

Purchase of Finished Goods EMPLOYEES Salaries, Wages and Bonus 2 Contribution to Provident and Other Funds Welfare Expenses MANUFACTURING, ADMINISTRATIVE AND SELLING Consumption of stores and spare parts3 Power and Fuel 4 Conversion Charges Repairs and Maintenance - Machinery - Buildings - Others Rent5 Lease Rent - Factory Insurance Rates and Taxes Directors' Sitting Fees Loss on Sale of Assets (Net) Diminution in the value of Investments Travelling, Conveyance and Vehicle Expenses Postage, Telex, Telephone and Stationery Freight & Forwarding Commission to Selling Agents Sales Promotion Expenses Advertisement & Publicity Research and Development Bank Charges Provision for Doubtful Advances Advances Written off Less: Transferred from Provision Legal & Professional Expenses Miscellaneous Expenses6

2,374.33 144.35 376.07

1,654.32 129.31 291.83

343.67 1,634.70 711.41 72.77 27.17 183.17 134.78 250.00 53.22 90.93 0.90 39.29 40.72 454.74 80.63 1,124.41 40.78 1,131.21 410.29 229.27 73.72 8.00 42.69 41.12 1.57 262.09 494.28 42,754.97

271.69 1,492.94 539.05 59.48 27.63 126.89 103.01 250.00 60.26 74.11 0.98 434.04 64.63 879.37 50.04 645.77 267.92 195.75 61.14 38.87 140.10 223.06 37,190.87

Notes: 1. Net of Foreign Exchange Fluctuation Gain of Rs 110.29 Million (Including Loss of Rs 204.76 Million). 2. Includes VRS payments amortized during the year of Rs 1.68 Million (Rs 1.71 Million). 3. Stores & Spares Consumed includes stores issued for repairs Rs 1.70 Million (Nil). 4. Power and Fuel includes Stores Consumed Rs 698.72 Million (Rs 676.45 Million). 5. Net of Rent Received Rs 13.68 Million, TDS Rs 2.19 Million (Rs 13.42 Million, TDS - Rs 3.04 Million). 6. Net of Foreign Exchange Fluctuation Gain of Rs 57.92 Million (Rs 62.75 Million).

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ANNUAL REPORT 09-10

SCHEDULE 10- (INCREASE)/ DECREASE IN WORK IN PROCESS AND FINISHED GOODS

Year Ended March 31, 2010 Rs/Million OPENING STOCK Work in Process Finished Goods 289.25 2,244.72 2,533.97 Less: CLOSING STOCK Work in Process Finished Goods Year Ended March 31, 2009 Rs/Million 240.91 2,667.15 2,908.06

415.19 2,380.52 2,795.71

289.25 2,244.72 2,533.97 374.09

(Increase) / Decrease Excise Duty on Increase / Decrease of Finished Goods (Note B - 7)

(261.74)

34.98 (226.76)

(108.23) 265.86

SCHEDULE 11 - INTEREST
Year Ended March 31, 2010 Rs/Million Fixed Loans * Debentures Others # * 235.05 144.14 360.27 739.46 Year Ended March 31, 2009 Rs/Million 146.10 22.84 499.49 668.43

#Net of Interest Earned Rs 72.19 Million (Rs 58.73 Million) including: Interest Earned on Deposits Rs 64.27 Million (Rs 47.96 Million). Interest Earned on Trade Balances Rs 3.09 Million (Rs 7.02 Million). Interest Earned - Others Rs 4.83 Million (Rs 3.75 Million). Tax Deducted at source on Interest Earned Rs 7.87 Million (Rs 8.67 Million). *Including Foreign Exchange Fluctuation Loss of Rs 9.81Million (Net of Gain of Rs 36.50 Million).

99

SCHEDULE 12 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. 1. SIGNIFICANT ACCOUNTING POLICIES: A. BASIS OF ACCOUNTING The nancial statements are prepared on historical cost convention, with the exception of certain xed assets which were re-valued, based on accrual method of accounting and in accordance with the accounting principles generally accepted in India. They comply with the mandatory accounting standards notied by the Ceantral Government of India and with the relevant provisions of the Companies Act, 1956. B. USE OF ESTIMATES The preparation of nancial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities, including the disclosure of contingent liabilities as of the date of the nancial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the nancial statements are prudent and reasonable. Actual results could vary from these estimates. Any revision to accounting estimates is recognised in the period in which the results are known/materialised. 2. FIXED ASSETS (a) Fixed assets are stated at cost ,as adjusted by revaluation of certain land, buildings, plant and machineries based on the then replacement cost as determined by approved independent valuer in 1986 and 1987, less depreciation. (b) All costs relating to the acquisition and installation of xed assets (net of CENVAT/VAT credits wherever applicable) are capitalised and include nance cost on borrowed funds attributable to acquisition of qualifying xed assets for the period up to the date when the asset is ready for its intended use, and adjustments arising from foreign exchange differences arising on foreign currency borrowings to the extent they are regarded as an adjustment to interest costs.( Also refer accounting policy No. 4 on Borrowing Costs.) Other incidental expenditure attributable to bringing the xed assets to their working condition for intended use are capitalised. (c) Fixed assets taken on nance lease are capitalised and depreciation is provided on such assets, while the interest is charged to the prot and loss account. 3. DEPRECIATION Depreciation on xed assets is provided using straight line method at the rates specied in Schedule XIV of the Companies Act 1956, except for certain vehicles and other equipments for which the depreciation is provided at 30% and 16.67% respectively .Certain plant and machinery are classied as continuous process plants based on technical evaluation by the management and are depreciated at the applicable rates. Additional depreciation consequent to the enhancement in the value of xed assets on the revaluation is adjusted in the xed assets revaluation reserve account. Leasehold land/Improvements thereon are amortised over the primary period of lease. In respect of xed assets whose useful life has been revised, the unamortised depreciable amount is charged over the revised remaining useful life. 4. BORROWING COSTS Borrowing costs are capitalised as a part of the cost of qualifying asset when it is possible that they will result in future economic benets and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred. 5. IMPAIRMENT OF ASSETS The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and its value in use. In assessing value in use, the estimated future cash ows are discounted to their present value at the pre tax weighted average cost of capital. 6. INTANGIBLE ASSETS The expenditure incurred by the Company on acquisition and implementation of software systems/development costs up to the stage when the new product reaches technical feasibility, has been recognised as an intangible asset and is amortised over a period of ve years based on its estimated useful life. 7. INVESTMENTS Long term investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current investments are stated at lower of cost and fair value determined on the basis of each category of investments. 100

ANNUAL REPORT 09-10

8.

INVENTORIES Inventories are valued at the lower of cost and estimated net realisable value (net of allowances). The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of nished goods and work in process, incurred in bringing such inventories to their present location and condition. In case of raw materials ,stores & spares and traded goods, cost (net of CENVAT/VAT credits wherever applicable) is determined on a moving weighted average basis, and, in case of work in process and nished goods, cost is determined on a First In First Out basis

9.

FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recorded at rates of exchange prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the rate of exchange prevailing at the year-end. Exchange differences arising on actual payments/realisations and year-end restatements are dealt with in the prot & loss account. The Company enters into forward exchange contracts and other instruments that are in substance a forward exchange contract to hedge its risks associated with foreign currency uctuations. The premium or discount arising at the inception of a forward exchange contract (other than for a rm commitment or a highly probable forecast) or similar instrument is amortised as expense or income over the life of the contract. Exchange difference on such contracts is recognised in the prot and loss account in the year in which the exchange rates change. Exchange difference arising on a monetary item that, in substance, forms part of the Companys net investment in a non-integral foreign operation has been accumulated in a foreign currency translation reserve in the Companys nancial statements until the disposal of net investment, at which time they would be recognised as income or as expense.

10. REVENUE RECOGNITION Revenue is recognised when the signicant risks and rewards of ownership of goods have been passed to the buyer. Gross sales are inclusive of excise duty and are net of trade discounts/sales returns/VAT. Dividend income on investments is accounted for when the right to receive the payment is established. Interest Income is recognised on time proportion basis. 11. EXPORT INCENTIVES Export Incentives in the form of advance licences/credits earned under duty entitlement pass book scheme are treated as income in the year of export at the estimated realisable value/actual credit earned on exports made during the year and are credited to the raw material consumption account. 12. EMPLOYEE BENEFITS Liability for gratuity to employees determined on the basis of actuarial valuation as on balance sheet date is funded with the Life Insurance Corporation of India and is recognised as an expense in the year incurred. Liability for short term compensated absences is recognised as expense based on the estimated cost of eligible leave to the credit of the employees as at the balance sheet date on undiscounted basis. Liability for long term compensated absences is determined on the basis of actuarial valuation as on the balance sheet date. Contributions to dened contribution schemes such as provident fund, employees pension fund and superannuation fund and cost of other benets are recognised as an expense in the year incurred. Actuarial gains and losses arising from experience adjustments and effects of changes in actuarial assumptions are immediately recognised in the prot & loss account as income or expense. 13. DEFERRED REVENUE EXPENDITURE Payments under voluntary retirement scheme are being charged to prot and loss account over a period of three years or over the period ending March 31, 2010 which ever is earlier. 14. TAXES ON INCOME Current tax is determined on the income for the year chargeable to tax in accordance with the Income Tax Act, 1961. Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantied using the tax rates and laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets are recognised only to the extent there is a reasonable certainty that assets can be realized in future. However, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. 15. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS A provision is recognised when the Company has a present obligation as a result of past events; it is probable that an outow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. 101

Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reect the current best estimates. Contingent liability is disclosed for (i) Possible obligation which will be conrmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the nancial statements since this may result in the recognition of income that may never be realised. B. 1. NOTES ON ACCOUNTS: CONTINGENT LIABILITIES PARTICULARS Sales Tax Income Tax-Disputed Demands under Appeal Claims not acknowledged as debts Employee Related Property Disputes Others Provision of Security (Bank Deposits pledged with a Bank against which working capital loan has been availed by Apollo Finance Ltd.) Guarantee given by Company for the loan taken by a group Company (Apollo Tyres South Africa Pty. Ltd) Guarantees given by bankers on behalf of the Company Custom Duty Excise Duty* Irrevocable Letters of Credit 2009-10 Rs/Million 108.24 21.54 2.60 5.83 99.52 673.50 497.66 23.50 56.34 3,865.72 2008-09 Rs/Million 65.64 247.10 28.22 2.60 16.53 168.13 760.80 588.18 23.50 125.68 1,562.98

* Excludes demand of Rs 532.12 Million (Rs 533.31 Million) raised on one of the Companys units relating to issues which have been decided by the Appellate Authority in Companys favour in appeals pertaining to another unit of the Company. Show-cause notices received from various Government Agencies pending formal demand notices have not been considered as contingent liabilities. In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals. 2. 3. Estimated amount of contracts remaining to be executed on capital account and not provided for as on March 31, 2010 is Rs 8,323.09 Million (Rs 6,314.31 Million). Buy Back of Shares : The Board of Directors of the Company, at its meeting held on March 19, 2009 had approved the Buy Back of equity shares of the Company from open market through stock exchange route up to an amount not exceeding Rs 1,220 Million at a price not exceeding Rs 25 per share. This amount was within 10% of the Companys paid-up equity share capital and free reserves as per last audited accounts. The Company could not buy back any shares because of the run-up in the market price of Companys shares after the commencement of Buy Back. The Company, therefore, closed its Buy Back offer during the year on the due date of closure, i.e., March 18,2010. 4. Acquisition of Vredestein Banden B.V. : The Company acquired 100% Shareholding of Vredestein Banden B.V. (VBBV), a Dutch Tyre manufacturing Company with a production capacity of 5.5 Million Tyres per annum on May 15, 2009 through a special purpose vehicle formed for this purpose. The acquisition was funded through internal accruals and external debt. 5. Status of Chennai Project: The construction of rst phase of the new green eld radial tyre plant at Oragadam near Chennai has been completed as per project schedule. The rst phase of passenger car vehicle segment of the project has commenced operations from March 11, 2010 and the Truck/Bus radial segment has commenced operations from May 11, 2010. The construction of the second phase of the project has also commenced from January 2010 and is going on as per project schedule.

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ANNUAL REPORT 09-10

6.

Based on information available with the Company and relied upon by the auditors, the information as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 (MSMDA) as on March 31 , 2010 is given below: PARTICULARS Principal amount unpaid as at year-end Amount paid after appointed date during the year Amount of interest accrued and unpaid as at year-end 2009-10 Rs/Million 42.93 75.94 6.87 2008-09 Rs/Million 38.85 104.54 5.03

7.

Excise duty relating to sales has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Schedule 10 "(Increase)/Decrease in Work in Process and Finished Goods. Borrowing costs capitalised/transferred to capital work in progress during the year is Rs 257.42 Million (Rs 215.48 Million). This includes Rs 31.57 Million towards Loan processing fees and Rs 15.44 Million towards Bank Charges. Research and development comprises of the following: PARTICULARS (A) Revenue Expenditure Salary, Wages & Other Benets Travelling & Conveyance Others SUB-TOTAL (B) Capital Expenditure TOTAL (A+B) 70.73 9.77 148.77 229.27 Nil 229.27 61.30 8.90 125.55 195.75 80.88 276.63 2009-10 Rs/Million 2008-09 Rs/Million

8. 9.

10. Deferred revenue expenditure: Payment Under Voluntary Retirement Scheme Opening Balance Add: Payment during the year Less: Amortised during the year Closing Balance 11. (A) Computation of prot for managerial remuneration: PARTICULARS Net Prot as per Prot & Loss Account Add: Provision for Tax Remuneration to Managing / Wholetime Directors Commission to Non-Whole Time Directors Sitting Fees to Directors Provision for Doubtful Advances Diminution in the Value of investments Less: Prot on Sale of Assets Interest on income tax refund Net Prot 1% Commission to Non-Wholetime Directors as per section 309(4) of the Companies Act, 1956 Commission paid to Non-Wholetime Directors restricted to (Included under Miscellaneous Expenses) 2009-10 Rs/Million 4,149.88 1,832.07 404.12 10.00 0.90 8.00 40.72 (97.97) 6,347.72 63.48 10.00 103 2008-09 Rs/Million 1,081.18 630.47 134.94 7.00 0.98 38.87 (18.17) 1,875.27 18.75 7.00 2009-10 Rs/Million 1.51 0.17 1.68 2008-09 Rs/Million 2.59 0.63 1.71 1.51

(B) Remuneration to Managing / Whole-time Directors included under Employees Expenses:i) Remuneration to Managing Directors : PARTICULARS Salary Commission Contribution to P.F./Superannuation Funds/Gratuity* Monetary Value of Perquisites TOTAL ii) Remuneration to Whole-time Directors PARTICULARS Salary Commission/Performance Bonus Contribution to P.F./Superannuation Funds/Gratuity* Monetary Value of Perquisites TOTAL TOTAL (i + ii) 12. Statutory Auditors Remuneration included under Miscellaneous Expenses PARTICULARS For Audit For Certication & Other Service Reimbursement of expenses TOTAL 13. (A) Capacities and Production: UNIT PARTICULARS Automobile Tyres Automobile Tubes Automobile Flaps Alloy Wheels-Traded Camel Back/Pre-cured Tread Rubber No. No. No. No. No. 344,256 248,040 INSTALLED CAPACITY* PER ANNUM 2009-10 13,153,934 2008-09 9,896,725 PRODUCTION @ 2009-10 10,528,299 8,177,119 4,523,482 6,167 195,899 2008-09 8,592,050 7,486,464 3,649,053 3,948 133,435 2009-10 Rs/Million 3.50 2.38 0.25 6.13 2008-09 Rs/Million 3.50 2.78 0.52 6.80 2009-10 Rs/Million 5.60 8.10 2.09 8.13 23.92 404.12 2008-09 Rs/Million 5.14 3.17 2.15 9.34 19.80 134.94 2009-10 Rs/Million 43.01 246.50 32.42 58.27 380.20 2008-09 Rs/Million 24.00 56.00 7.99 27.15 115.14

*The gures given above do not include provisions for compensated absences as separate actuarial valuations are not available.

* As certied by Management (Includes capacity under Lease Agreement) @ Includes Production under Lease Arrangement and purchases/conversion of Finished Goods by Conversion Agents as per details given hereunder: PARTICULARS Tyres Tubes Flaps PCTR Alloy Wheels 2009-10 Nos. 283,981 8,177,119 4,523,482 195,899 6,167 2008-09 Nos. 756,021 7,486,464 3,649,053 133,435 3,948

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ANNUAL REPORT 09-10

(B) Turnover and stock of Finished goods PARTICULARS Automobile Tyres Automobile Tubes Automobile Flaps Pre-cured Tread Rubber Alloy Wheels-Traded TOTAL Unit No. Rs/Million No. Rs/Million No. Rs/Million No. Rs/Million No. Rs/Million Rs/Million Opening Stock 2009-10 633,101 1,857.84 969,381 287.33 313,958 57.45 21,796 29.60 5,329 12.50 2,244.72 2008-09 Turnover* 2009-10 2008-09 8,699,334 40,606.34 Closing Stock 2009-10 571,147 1828.61 2008-09 633,101 1,857.84 969,381 287.33 313,958 57.45 21,796 29.60 5,329 12.50 2,244.72

740,385 10,590,253 2,203.63 48,310.54 780,961 345.07 378,051 66.48 37,222 49.08 3,597 2.89 2,667.15 8,126,096 4,648.08 4,523,305 1,037.53 171,166 235.80 7,129 24.43 54,256.38

7,298,044 1,020,404 3,816.19 412.52 3,713,146 840.51 148,861 224.38 2,216 8.90 45,496.32 314,135 61.00 46,529 68.59 4,367 9.80 2,380.52

*Includes quantities relating to claims and own consumption. (C) Raw Materials Consumed PARTICULARS Fabric Rubber Chemicals Carbon Black Others 2009-10 Tonnes 29,971.98 161,008.84 25,802.94 78,388.82 Rs/Million 5,316.18 17,124.96 2,348.81 3,698.15 2,090.93 30,579.03 (D) Break-up of Consumption PARTICULARS Raw Material Imported - Indigenous Stores & Spares - Imported - Indigenous 2009-10 % 38.85 61.15 100.00 5.94 94.06 100.00 (E) C.I.F. Value of Imports PARTICULARS Raw Material Stores & Spares Capital Goods 2009-10 Rs/Million 12,426.54 78.20 3,666.40 2008-09 Rs/Million 10,328.93 107.50 1,086.11 Rs/Million 11,879.18 18,699.85 30,579.03 20.40 323.27 343.67 % 38.59 61.41 100.00 7.99 92.01 100.00 2008-09 Rs/Million 10,820.79 17,221.84 28,042.63 21.73 249.96 271.69 Tonnes 23,131.64 131,090.09 20,795.05 64,344.10 2008-09 Rs/Million 4,450.73 16,225.10 2,041.15 3,447.97 1,877.68 28,042.63

105

(F) Expenditure in Foreign Currency (Remitted) : (Excluding value of imports) PARTICULARS Interest Dividend for the year 2008-09 (2007-08)* Others 14. Earnings in Foreign Exchange: PARTICULARS FOB Value of Exports FOB Value of Sale of Fixed Assets 15. Pre-operative expenses capitalised/included in capital work in progress during the year: PARTICULARS Raw Material Consumed Salaries, Wages and Bonus Contribution to Provident and Other Funds Welfare Expenses Rent Travelling, Conveyance and Vehicle expenses Postage, Telex Telephone and Stationery Power and Fuel Insurance Miscellaneous Expenses Total* 16. Employee Benets The Company has a dened benet gratuity plan. Every employee who has completed ve years or more of service receives gratuity on leaving the Company at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India. The following table summarise the components of net benet expense recognised in the prot and loss account and the funded status and amounts recognised in the balance sheet for the respective plan: Prot and Loss Account: PARTICULARS Net employee benet expenses (recognised in employee cost) Current service cost Interest cost on benet obligation Expected return on plan assets Net actuarial loss recognised in the year Net benet expense 27.67 29.48 (29.39) 24.98 52.74 24.71 23.78 (23.32) 23.28 48.45 2009-10 Rs/Million 2008-09 Rs/Million 2009-10 Rs/Million 33.86 114.98 5.97 26.12 4.10 17.27 1.57 38.21 8.69 19.01 269.78 2008-09 Rs./Million 56.13 11.83 0.14 0.02 3.44 0.41 4.15 4.41 115.18 195.71 2009-10 Rs/Million 3,135.72 2.52 2008-09 Rs/Million 2,483.84 19.43 2009-10 Rs/Million 185.89 14.48 182.24 2008-09 Rs/Million 42.92 29.61 149.49

*Number of non-resident Shareholders 4 (33), Number of Shares held by Non resident Shareholders - 32,186,532 (59,219,500).

*Out of the above Rs 4.40 Million (Rs 143.74 Million) is included in capital work in progress as on March 31, 2010.

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ANNUAL REPORT 09-10

Balance Sheet: PARTICULARS Reconciliation of present value of the obligation and the fair value of plan assets Fair value of plan assets at the end of the year Present value of funded obligation at the end of the year Asset/(Liability) recognised in the balance sheet Changes in the present value of the dened benet obligation are as follows: PARTICULARS Present value of obligations as at the beginning of the year Interest cost Current service cost Benets paid Actuarial loss on obligation Present value of obligations as at the end of the year Changes in the fair value of plan assets are as follows: PARTICULARS Fair value of plan assets at beginning of the year Expected return on plan assets Contributions Benets paid Actuarial gain on plan assets Fair value of plan assets as at the end of the year 2009-10 Rs/Million 311.03 29.39 48.81 (28.50) 1.06 361.79 2008-09 Rs/Million 248.14 23.32 57.99 (20.22) 1.80 311.03 2009-10 Rs/Million 393.04 29.48 27.68 (28.50) 26.04 447.74 2008-09 Rs/Million 339.69 23.78 24.71 (20.22) 25.08 393.04 361.79 447.74 (85.95) 311.03 393.04 (82.01) 2009-10 Rs/Million 2008-09 Rs/Million

The Companys gratuity funds are managed by the Life Insurance Corporation of India and therefore the composition of the fund assets is not presently ascertained. Principal actuarial assumptions PARTICULARS a) Discount rate b) Future salary increase* c) Expected rate of return on plan assets 17. The components of Deferred Tax Liability (Net) are as follows: PARTICULARS Deferred Tax Liability on timing differences arising on: Depreciation Sub Total (A) Deferred Tax Assets on timing differences arising on: Payment under Voluntary Retirement Scheme Others Sub Total (B) Net Deferred Tax Liability (A-B) 2009-10 Rs/Million 2,067.88 2,067.88 0.68 92.69 93.37 1,974.51 2008-09 Rs/Million 1,670.23 1,670.23 0.55 109.01 109.56 1,560.67 107 2009-10 Rate % 7.50 5.00 9.45 2008-09 Rate % 7.00 4.50 9.40

* The estimates of future salary increase take into account ination, seniority, promotion and other relevant factors.

18. Provision for sales related obligations represents estimates for payments to be made in future. Major portion of the these costs is estimated to be paid in the next nancial year and will be paid within a maximum of 3 years from the balance sheet date Rs/Million Opening Balance as at 01.04.2009 484.91 Additional provision made during the year 1,179.24 Incurred against provision during the year 586.07 Closing Balance as at 31.03.2010 1,078.08

19. The following forward exchange contracts entered into by the Company are outstanding as on March 31, 2010: Currency US Dollar Euro Amount USD 3,251,613 (2,811,100) 2,000,000 (NIL) Buy/Sell Buy (Buy) Buy Cross Currency Rupees US Dollar

20. The Companys operations comprise of only one business segment Automobile Tyres, Automobile Tubes and Automobile Flaps in the context of reporting business/geographical segment as required under mandatory accounting standards AS -17 Segment Reporting The geographical segments considered for disclosure are - India and Rest of the world. All the manufacturing facilities are located in India: PARTICULARS 1. Revenue by Geographical market India Rest of the world Total 2. Carrying amount of Segment Assets India Rest of the world- export Debtors Total 3. Additions to Fixed Assets and Intangible Assets India Rest of the world Total 2009-10 Rs/Million 47,333.29 3,144.15 50,477.44 30,416.61 153.48 30,570.09 6,039.07 6,039.07 2008-09 Rs/Million 38,347.71 2,469.17 40,816.88 21965.23 107.72 22,072.95 2,792.94 2,792.94

21. Disclosure of Related Party Transactions in accordance with the mandatory Accounting Standard AS - 18 Related Party Disclosures Name of the Related Parties:
PARTICULARS
Subsidiaries

2009-10
Apollo (Mauritius) Holdings Pvt. Ltd. (AMHPL) Apollo (South Africa) Holdings Pty Ltd. (ASHPL) (Subsidiary through AMHPL) Apollo Tyres South Africa (Pty) Ltd.(ATSA) (Previously Dunlop Tyres International (Pty) Ltd. (DTIPL)) (Subsidiary through ASHPL) Dunlop Africa Marketing (UK) Ltd.(DAMUK) (Subsidiary through ATSA) Dunlop Zimbabwe (Pvt) Ltd. (DZL) (Subsidiary through DAMUK) Radun Investments (Pvt.) Ltd. (Subsidiary through DAMUK) AFS Mining (Pvt.) Ltd. (Subsidiary through DZL) Apollo Tyres (Cyprus) Pvt. Ltd ( ATCPL) (Subsidiary through AMHPL)

2008-09
Apollo (Mauritius) Holdings Pvt. Ltd. (AMHPL) Apollo (South Africa) Holdings Pty Ltd. (ASHPL) (Subsidiary through AMHPL) Apollo Tyres South Africa (Pty) Ltd.(ATSA) (Previously Dunlop Tyres International (Pty) Ltd. (DTIPL)) (Subsidiary through ASHPL) Dunlop Africa Marketing (UK) Ltd.(DAMUK) (Subsidiary through ATSA) Dunlop Zimbabwe (Pvt) Ltd. (DZL) (Subsidiary through DAMUK) Radun Investments (Pvt.) Ltd. (Subsidiary through DAMUK) AFS Mining (Pvt.) Ltd. (Subsidiary through DZL)

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ANNUAL REPORT 09-10

PARTICULARS
Subsidiaries

2009-10
Apollo Tyres AG (AT AG), Switzerland (Subsidiary through ATCPL) Apollo Tyres GmbH, (AT GmbH), Germany (Subsidiary through AT AG) Apollo Tyres Zrt.(AT ZRT), Hungary (Subsidiary through AT AG) Apollo Tyres Pte Ltd ( AT PL), Singapore (Subsidiary through AMHPL) Apollo Tyres (Nigeria) Limited (Subsidiary through AMHPL) Apollo Tyres Co-Operatief UA (Apollo Coop), The Netherlands (Subsidiary through AMHPL) Pollock & Aitken (Pty) Limited (Subsidiary through ATSA) Apollo Vredestein BVAVBV (Previously Vredestein Banden BV), The Netherlands (Subsidiary through Apollo Coop) Subsidiaries of Apollo Vredestein BV: Vredestein GmbH Vredestein Norge A S Vredestein UK Ltd NV Vredestein SA Vredestein GesmbH Vredestein Schweiz AG Vredestein Deck AB Vredestein Italia Srl Vredestein Iberica SA Vredestein Tyres North America Inc Vredestein Kft Vredestein Polska Sp Z o.o Vredestein Bekleding Vredestein Consulting BV Finlo BV Vredestein Marketing BV Vredestein Marketing Agentur BV & Co KG

2008-09
Apollo Tyres AG, (AT AG) Switzerland Apollo Tyres GmbH, (AT GmbH), Germany (Subsidiary through AT AG) Apollo Tyres Zrt.(AT ZRT), Hungary (Subsidiary through AT AG) Apollo Tyres Pte Ltd ( AT PL) Singapore (Subsidiary through AMHPL) Apollo Tyres (Nigeria) Limited (Subsidiary through AMHPL)

Notes: a) Apollo Tyres Co-operatief UA (Apollo Coop) and Apollo Tyres (Cyprus) Pvt. Ltd. (ATCPL) are incorporated during the year. b) As a part of group restructuring exercise, entire share capital of AT AG has been transferred by Apollo Tyres Ltd (Parent Company) to Apollo Tyres (Cyprus) Pvt. Ltd., a subsidiary through AMHPL, on March 9, 2010. c) During the year, the management decided to merge the German subsidiary AT, GmbH with another group entity Vredestein, GmbH which is a subsidiary of Apollo Vredestein BV (AVBV), Netherlands. The upstream merger has been registered by the Court of Registration, Germany on April 8, 2010 with an effective date of October 1, 2009 d) The Company acquired 100% Shareholding of Vredestein Banden BV (VBBV), a Dutch Tyre manufacturing company with a production capacity of 5.5 Million Tyres per annum along with various subsidiaries on May 15, 2009 through a special purpose vehicle, Apollo Cooperatief UA. The acquisition was funded through internal accruals and external debt. e) Pollock & Aitken (Pty) Limited (Subsidiary through ATSA) has been Acquired by Apollo Tyres South Africa as a part of pension surplus.

109

Name of the Related Parties:

PARTICULARS
Associates

2009-10
Apollo International Ltd (AIL) Encorp E Services Ltd UFO Moviez India Ltd Landmark Farms & Housing (P) Ltd Sunlife Tradelinks (P) Ltd Travel Tracks Ltd Classic Auto Tubes Ltd. (CATL) PTL Enterprises Ltd (PTL) National Tyre Services, Zimbabwe Pressurite (Pty) Ltd, South Africa Apollo Finance Ltd Artemis Medicare Services Ltd Artemis Health Sciences Ltd Apollo Automotive Tyres Ltd Apollo Radial Tyres Ltd

2008-09
Apollo International Ltd (AIL) Encorp E Services Ltd UFO Moviez India Ltd Landmark Farms & Housing (P) Ltd Sunlife Tradelinks (P) Ltd Travel Tracks (P) Ltd Classic Auto Tubes Ltd (CATL) PTL Enterprises Ltd (PTL) National Tyre Services, Zimbabwe Pressurite (Pty) Ltd, South Africa Apollo Finance Ltd Artemis Medicare Services Pvt Ltd Artemis Health Sciences Pvt Ltd Apollo Automotive Tyres Ltd Apollo Radial Tyres Ltd Mr O S Kanwar Mr Neeraj Kanwar Mr U S Oberoi Mr Sunam Sarkar Mr Raaja Kanwar

Key Management Personnel

Mr O S Kanwar Mr Neeraj Kanwar Mr U S Oberoi Mr Sunam Sarkar

Relatives of Key Managerial Personnel

Mr Raaja Kanwar

110

ANNUAL REPORT 09-10

Transactions with Related Parties: FY 2009-10 Particulars Subsidiaries Rs/Million Volume of Transactions: Sales to AIL Sales to ATSA Tyres & RM Sales to ATSA-Capital Items Transfer of Investment in Apollo Tyres Cooperatief to AMHPL Sale of investment in Equity shares of ATAG Convetible Loan given to ATAG Convertible Loan refunded by ATAG Investments made in Preference Shares of AMHPL Reimbursement of Expenses received from ATSA - Net Reimbursement of Expenses to AVBV Reimbursement of Expenses to PTL Reimbursement of Expenses to Artemis Medicare Services Lease Rent paid to PTL Service Charges recovered from PTL Managerial Remuneration Conversion Charges to CATL Purchase from ATSA Tyres & RM Travelling Expenses paid to Travel Tracks Rent Received Conference Expenses Paid to Travel Tracks Interest Received - PTL Security Deposit - Received Security Deposit- Paid Rent Paid to Sun life Trade Links Rent Paid to Landmark Farms Share of R & T Expenses cross charged by AT GmbH Total Amount Outstanding Dr./(Cr.) AMHPL AT GmbH Others PTL-Security PTL-Others Landmark Farms & Housing AIL Others 0.34 2.52 2.42 93.09 45.05 (45.05) 2,744.74 (19.54) 8.67 2.33 351.40 10.16 250.00 (3.45) 636.62 103.12 (1.21) 137.18 (3.09) (0.03) 83.10 21.30 24.00 404.12 Associates Rs/Million 982.51 Key Management Personnel Rs/Million Total Rs/Million 982.51 0.34 2.52 2.42 93.09 45.05 (45.05) 2,744.74 (19.54) 8.67 351.40 10.16 250.00 (3.45) 404.12 636.62 2.33 103.12 (1.21) 137.18 (3.09) (0.03) 83.10 21.30 24.00 58.06 5,888.36 524.44

58.06 2,892.63 17.24 17.24

2,591.61 507.20

404.12

250.00 17.20 72.00 120.43 47.57

111

Transactions with Related Parties: FY 2008-09 Particulars Subsidiaries Rs/Million Volume of Transactions: Sales to AIL Sales to ATSA Tyres & RM Sales to ATSA-Capital Items Investments made in Equity Shares of AT AG Investments made in Preference Shares of AMHPL Redemption of Preference Shares of AMHPL Reimbursement of Expenses Received from ATSA Reimbursement of Expenses Received from others Reimbursement of Expenses to ATSA Reimbursement of Expenses to PTL Reimbursement of Expenses to Others Reimbursement of Expenses to Artemis Medicare Services Pvt. Ltd. Lease Rent paid to PTL Service Charges recovered from PTL Managerial Remuneration Purchase - ATSA Tyres & RM Purchase - ATSA Capital Items Travelling Expenses - Travel Tracks Rent Received Conference Expenses Paid to Travel Tracks Interest Received - PTL Rent Paid Sun life Trade links Rent Paid - Landmark Farms Claims Accepted - AIL Share of Research & Technology expenses cross charged by AT GmbH Total Amount Outstanding Dr./(Cr.) AMHPL AT GmbH Others PTL Security PTL- Others Landmark Farms & Housing (P) Ltd. AIL Others 39.67 19.43 122.21 1.24 176.11 (8.25) (1.73) 6.19 2.11 2.01 18.81 377.80 14.06 2.80 (8.22) 19.48 Associates Rs/Million 1,409.49 Key Management Personnel Rs/Million Total Rs/Million 1,409.49 39.67 19.43 122.21 1.24 176.11 (8.25) (1.73) 6.19 295.30 (0.01) 0.46 250.00 (3.22) 134.94 2.11 2.01 112.02 (0.95) 47.40 (3.88) 21.30 13.20 2.38 18.81 2,656.23 250.00 39.67 31.50 191.78 32.43 559.44

295.30 (0.01) 0.46 250.00 (3.22) 112.02 (0.95) 47.40 (3.88) 21.30 13.20 2.38

134.94

2,143.49 545.38

134.94

112

ANNUAL REPORT 09-10

Disclosure required by Clause 32 of the listing agreement regarding the related parties: FY 2009-10 PARTICULARS SUBSIDIARIES Apollo (Mauritius) Holdings Pvt. Ltd. (AMHPL) ASSOCIATES PTL Enterprises Ltd. (PTL) FY 2008-09 PARTICULARS SUBSIDIARIES Apollo (Mauritius) Holdings Pvt. Ltd. (AMHPL) Apollo Tyres AG (AT AG) , Switzerland ASSOCIATES PTL Enterprises Ltd. (PTL) 39.67 2.80 17.20

Rs/Million Outstading as at Maximum amount Investments in March 31, 2010 Outstanding shares of the during the year Company 2.80 24.71 2,744.74 -

Rs/Million Outstading as at Maximum amount Investments in March 31, 2009 Outstanding shares of the during the year Company 131.67 125.93 57.16 1.24 122.21 -

22. Operating Lease The Company has acquired assets under the operating lease agreements that are renewable on a periodic basis at the option of both the lessor and lessee. Rental expenses under those leases were Rs 250 Million (Rs 250 Million). The schedule of future minimum lease payments in respect of non-cancelable operating leases is set out below: PARTICULARS Within one year of the balance sheet date Due in a period between one year and ve years Due after ve years March 31, 2010 March 31, 2009 Rs/Million Rs/Million 250.00 750.00 250.00 1,000.00 -

113

23. Earnings Per Share (EPS) The numerator and denominator used to calculate Basic and Diluted Earnings Per Share: PARTICULARS a) Basic Prot attributable to the equity shareholders used as numerator (Rs Million) - (A) The weighted average number of equity shares outstanding during the year used as denominator -(B) Basic / Diluted earnings per share (Rs) (A) / (B) (Face Value of Re 1 each) b) Diluted Prot attributable to the equity shareholders used as numerator (Rs Million) - (A) The weighted average number of equity shares outstanding during the year used as denominator -(B) Basic / Diluted earnings per share (Rs) (A) / (B) (Face Value of Re 1 each) 2009-10 2008-09

4,149.88 504,024,770 8.23

1,081.18 503,299,126 2.15

4,149.88 504,024,770 8.23

1,081.18 503,338,920 2.15

24. The mark to market losses of Rs 3.89 Million (Nil) relating to undesignated / ineffective forward contracts / derivatives has been recognised in the Prot and Loss Account. 25. Previous Years gures have been regrouped or rearranged wherever considered necessary to conform to the classications for the current year. Figures in brackets relate to previous year.

ONKAR S. KANWAR Chairman & Managing Director SUNAM SARKAR Chief Financial Ofcer & Whole Time Director

NEERAJ KANWAR Vice Chairman & Managing Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary

Gurgaon May 28, 2010

A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

114

ANNUAL REPORT 09-10

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

(AS PER SCHEDULE VI, PART (iv) OF THE COMPANIES ACT, 1956) 1. REGISTRATION DETAILS Registration No. State Code Balance Sheet Date II CAPITAL RAISED DURING THE YEAR (Amount in Rs Thousands) Public Issue Rights Issue Private Placement III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands) Total Liabilities* Total Assets Paid-up Capital Reserves & Surplus Secured Loans Unsecured Loans *Including Deferred Tax Liability (Net) APPLICATION OF FUNDS Net Fixed Assets Investments Net Current Assets Misc. Expenditure Accumulated Losses IV PERFORMANCE OF THE COMPANY (Amount in Rs. Thousands) Turnover including Other Incomes Total Expenditure Prot Before Tax Prot After Tax Earnings Per Share Basic (Rs.) Earnings Per Share Diluted (Rs.) Dividend rate (%) V GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY ITEM CODE NO. (ITC CODE) TYRES FLAPS Passenger/Jeep Bus/Lorries Off the Road Tractor 40111000 40112000 40119901 40119902 40129004

2,449 9 31.03.2010

NIL NIL NIL

30,570,090 30,570,090 504,090 16,761,870 8,759,460 2,570,160 1,974,510 21,462,690 5,593,760 3,513,640 NIL NIL

50,477,440 44,495,490 5,981,950 4,149,880 8.23 8.23 75%

TUBES 40131001 40131002 40139003 40139004

Signatures to Schedules 1 to 12 which form integral part of Accounts.

ONKAR S. KANWAR Chairman & Managing Director SUNAM SARKAR Chief Financial Ofcer & Whole Time Director NEERAJ KANWAR Vice Chairman & Managing Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

Gurgaon May 28, 2010

115

STATEMENT PURSUANT TO SECTION 212(3) OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
APOLLO (MAURITIUS) HOLDINGS PVT. LTD. (AMHPL) APOLLO TYRES COOPERATIEF, U.A. NETHERLANDS (AT COOP) APOLLO APOLLO TYRES VREDESEIN (CYPRUS) B.V. PVT. LTD. NETHER(AT CPL) LANDS (AVBV) * APOLLO TYRES AG, SWITZERLAND (AT AG) APOLLO APOLLO TYRES PTE TYRES GmbH, LTD., GERMANY SINGAPORE (AT GmbH) ** (AT PL) APOLLO TYRES ZRT, HUNGARY (AT ZRT) APOLLO TYRES (NIGERIA) LTD., NIGERIA (AT NGR) 43,000 100 ORDINARY ORDINARY SHARES OF SHARES OF EURO 1 EACH EURO 1 EACH FULLY PAID FULLY PAID (SUBSIDIARY (SUBSIDIARY THROUGH THROUGH AT AMHPL) COOP) 3,248,652 45,000 EQUITY EQUITY SHARES OF SHARES OF US$ 1 EACH CHF 1 EACH FULLY PAID FULLY PAID (SUBSIDIARY (SUBSIDIARY THROUGH THROUGH AT AMHPL) CPL) APOLLO (SOUTH AFRICA) HOLDINGS (PTY) LTD. (ASHPL) APOLLO DUNLOP TYRES SOUTH AFRICA AFRICA (PTY) MARKETING LTD. (UNITED (ATSAPL) KINGDOM) ***** LTD. (DAMUK)

NAME OF THE SUBSIDIARY

Gurgaon May 28, 2010

314 5,568,188 2,487,818 103 ORDINARY MEMBERSHIP ORDINARY ORDINARY ORDINARY SHARES OF INTEREST SHARES OF SHARES OF SHARES OF GBP 1 EACH FULLY PAID US$ 1/- FULLY ZAR 1 EACH ZAR 0,0001 FULLY PAID (SUBSIDIARY FULLY PAID EACH FULLY (SUBSIDIARY THROUGH PAID & 104,163,019 (SUBSIDIARY PAID THROUGH AMHPL) THROUGH 9% NON(SUBSIDIARY DTIPL) AMHPL) CUMULATIVE THROUGH REDEEMABLE ASHPL) PREFERENCE SHARES OF US$ 1/FULLY PAID 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 31st March, 2010 31st March, 2010 31st March, 2010 31st March, 2010 31st March, 2010 100.00% 31st March, 2010 31st March, 2010 31st March, 2010 100.00% 100.00% 31st March, 2010 100.00% 31st March, 2010 16 EQUITY SHARE 10 MILLION SHARES OF CAPITAL OF ORDINARY EURO 25,000 256,976 tHUF SHARES OF EACH FULLY FULLY PAID NGN 1 EACH PAID (SUBSIDIARY (SUBSIDIARY (SUBSIDIARY THROUGH AT THROUGH THROUGH AT AG) AMHPL) AG) 100.00% 31st March, 2010 100.00% 31st March, 2010 Rs. 417.86 Millions (Rs. 0.29 Millions) (Rs. 257.76 Millions) Rs. 69.32 Millions **** Rs. 68.67 Millions **** (Rs. 0.29 Millions) Rs. 1704.38 Millions (Rs. 0.21 Millions) Rs. 160.10 Millions (Rs. 24.17 Millions) Rs. 2631.32 Millions (Rs. 133.89 Millions) Rs. 958.07 Millions Rs. 109.72 Millions Rs. 1673.25 Millions (Rs. 0.65 Millions) Rs. 1704.38 Millions (Rs. 0.21 Millions) (Rs. 48.17 Millions) (Rs. 5.84 Millions) (Rs. 54.01 Millions) (Rs. 0.51 Millions) (Rs. 1.00 Millions) (Rs. 1.51 Millions) (Rs. 10.38 Millions) (Rs. 10.65 Millions) (Rs. 10.65 Millions) Rs. 3.48 Millions (Rs. 0.97 Millions) Rs. 2.51 Millions (Rs. 11.68 Millions) (Rs. 2.52 Millions) (Rs. 14.20 Millions) -

116

NUMBER OF SHARES HELD IN THE SUBSIDIARY COMPANY

PERCENTAGE OF HOLDING IN THE SUBSIDIARY COMPANY

FINANCIAL YEAR ENDED

ONKAR S. KANWAR Chairman & Managing Director

SUNAM SARKAR Chief Financial Ofcer & Whole Time Director

PROFITS/(LOSSES) OF THE SUBSIDIARY COMPANY FOR ITS FINANCIAL YEAR SO FAR AS IT CONCERNS THE MEMBERS OF APOLLO TYRES LTD. WHICH HAVE NOT BEEN DEALT WITH IN THE ACCOUNTS OF APOLLO TYRES LTD. FOR THE YEAR ENDED 31ST MARCH, 2010 ***

FOR THE YEAR

FOR THE PREVIOUS FINANCIAL YEAR

TOTAL ACCUMULATED UPTO THE YEAR

NEERAJ KANWAR Vice Chairman & Managing Director

P. N. WAHAL Head (Sectt. & Legal) & Company Secretary

THE NET AGGREGATE OF PROFITS / (LOSSES) OF THE SUBSIDIARY CO. WHICH HAVE BEEN DEALT WITHIN THE ACCOUNTS OF APOLLO TYRES LTD. FOR THE YEAR ENDED 31ST MARCH, 2010

FOR THE YEAR

FOR THE PREVIOUS FINANCIAL YEAR

A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

TOTAL ACCUMULATED UPTO THE YEAR

Note :Exchange rates conversion on average rates during the year * Including various subsidiaries under Apollo Vredestein B.V. ** Merged during the year with another group entity Vredestein GmbH w.e.f. 01.10.2009 *** The information in respect of subsidiaries in Zimbabwe through DAMUK, which operate under severe political and economic uncertainty that signicantly diminishes control or which operates under severe long term restrictions which signicantly impair its ability to transfer funds to parent has not been disclosed **** Includes GBP 261,000 Special Reserve Account ***** Includes Pollock& Aitken, subsidiary under ATSAPL.

ANNUAL REPORT 09-10

AUDITORS REPORT
TO THE BOARD OF DIRECTORS OF APOLLO TYRES LTD. 1. We have audited the attached Consolidated Balance Sheet of APOLLO TYRES LTD.(the Company), its subsidiaries and associates (the Company, its subsidiaries and associates constitute the Group) as at March 31, 2010, the Consolidated Prot and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. The Consolidated Financial Statements include investments in associates accounted on the equity method in accordance with Accounting Standard 23 (Accounting for Investments in Associates in Consolidated Financial Statements) as notied under the Companies (Accounting Standards) Rules, 2006. These nancial statements are the responsibility of the Companys Management and have been prepared on the basis of the separate nancial statements and other nancial information regarding components. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the nancial statements. An audit also includes assessing the accounting principles used and the signicant estimates made by the Management, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the nancial statements of certain subsidiaries whose nancial statements reect total assets of Rs. 15,524.42 Million as at March 31, 2010, total revenues of Rs 30,841.81 Million and net cash inows amounting to Rs 466.24 Million for the year ended on that date as considered in the Consolidated Financial Statements. These nancial statements have been audited by other auditors whose reports have been furnished to us and our opinion in so far as it relates to the amounts included in respect of these subsidiaries is based solely on the reports of the other auditors. The results of the subsidiaries/associate based in Zimbabwe have not been consolidated in accordance with paragraph 11 of the Accounting Standard 21 (Consolidated Financial Statements) as notied under the Companies (Accounting Standards) Rules, 2006. We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard 21 (Consolidated Financial Statements) and Accounting Standard 23 (Accounting for Investment in Associates in Consolidated Financial Statements) as notied under the Companies (Accounting Standards) Rules, 2006. Based on our audit and on consideration of the separate audit reports on individual nancial statements of the Company, subsidiaries and associates and to the best of our information and according to the explanations given to us, in our opinion, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2010; (ii) in the case of the Consolidated Prot and Loss Account, of the prot of the Group for the year ended on that date and (iii) in the case of the Consolidated Cash Flow Statement, of the cash ows of the Group for the year ended on that date. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.008072S) sd/Place: Gurgaon Date : May 28, 2010 GEETHA SURYANARAYANAN Partner (Membership No.29519)

2.

3.

4.

5.

117

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010

Schedule As at March 31, 2010 Rs/Million As at March 31, 2009 Rs/Million

SOURCES OF FUNDS : Shareholders' Funds : Share Capital Reserves and Surplus Loans : Secured Unsecured

1 2 3

504.09 19,174.15 19,678.24 14,464.85 2,606.71 17,071.56 2,514.40 39,264.20

504.09 12,992.26 13,496.35 6,368.42 2,538.83 8,907.25 1,941.54 24,345.14

Deferred Tax Liability (Net) (Note - B 14) TOTAL APPLICATION OF FUNDS : Fixed Assets Gross Block Less : Accumulated Depreciation Net Block Capital Work in Progress (Including Capital Advances) Goodwill on Consolidation Investments Current Assets, Loans and Advances : Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Deferred Revenue Expenditure (Note - B 10) TOTAL

4 55,627.95 31,202.74 24,425.21 5,360.44 29,785.65 1,175.16 58.52 9,928.72 7,869.00 3,489.82 44.18 2,372.23 23,703.95 7 13,122.16 2,336.92 15,459.08 8,244.87 39,264.20 5,860.44 1,141.00 7,001.44 7,228.20 1.51 24,345.14 22,840.48 8,821.75 14,018.73 2,814.09 16,832.82 235.08 47.53 6,302.15 2,247.35 3,620.91 5.33 2,053.90 14,229.64

5 6

SIGNIFICANT ACCOUNTING POLICIES AND 12 NOTES ON ACCOUNTS The Schedules referred to above form an intergral part of the Consolidated Balance Sheet
In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants GEETHA SURYANARAYANAN Partner Gurgaon May 28, 2010 SUNAM SARKAR Chief Financial Ofcer & Whole Time Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary ONKAR S. KANWAR Chairman & Managing Director NEERAJ KANWAR Vice Chairman & Managing Director A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

118

ANNUAL REPORT 09-10

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
Schedule INCOME Gross Sales Less: Excise Duty Other Income EXPENDITURE Manufacturing and Other Expenses Decrease/(Increase) in Work in Process and Finished Goods Interest PROFIT BEFORE DEPRECIATION & TAX Depreciation PROFIT BEFORE TAX (Note B-21) Provision for Tax - Current - Deferred - Fringe Benet Tax Prot After Tax Before Exceptional Items Add: Exceptional Items (Pension Fund Surplus) PROFIT AFTER TAX (Note B-21) Less: Share of Loss in Associates NET PROFIT ADD: PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR DEDUCT- APPROPRIATIONS: General Reserve Debenture Redemption Reserve Proposed Dividend Dividend Tax SURPLUS CARRIED TO SCHEDULE 2 BASIC AND DILUTED EARNINGS PER SHARE (FACE VALUE OF Re. 1/- each) ( Rs.) Before Exceptional Items After Exceptional Items 2,183.60 423.01 Year Ended March 31, 2010 Rs/Million 85,098.20 3,890.77 8 9 10 11 81,207.43 213.74 81,421.17 67,277.99 2,180.63 1,153.80 70,612.42 10,808.75 2,542.33 8,266.42 2,606.61 5,659.81 873.73 6,533.54 0.02 6,533.52 4,080.01 10,613.53 1,000.00 62.50 378.02 62.78 1,503.30 9,110.23 546.22 153.62 42.50 54,632.60 4,791.91 Year Ended March 31, 2009 Rs/Million 49,840.69 230.05 50,070.74 45,792.92 (113.71) 972.53 46,651.74 3,419.00 1,285.13 2,133.87 742.34 1,391.53 1,391.53 0.06 1,391.47 3,516.40 4,907.87 500.00 62.50 226.81 38.55 827.86 4,080.01

11.23 12.96

2.76 2.76

SIGNIFICANT ACCOUNTING POLICIES AND 12 NOTES ON ACCOUNTS The Schedules referred to above form an intergral part of the Consolidated Prot and Loss Account
In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants GEETHA SURYANARAYANAN Partner Gurgaon May 28, 2010 SUNAM SARKAR Chief Financial Ofcer & Whole Time Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary ONKAR S. KANWAR Chairman & Managing Director NEERAJ KANWAR Vice Chairman & Managing Director A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

119

CONSOLIDATED CASH - FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
Year Ended March 31, 2010 Rs/Million 9,140.13 Year Ended March 31, 2009 Rs/Million 2,133.87

A. CASH FLOW FROM OPERATING ACTIVITIES (i) Net Prot Before Tax Add: Depreciation (Prot) / Loss on Sale of Assets (Net) Income from Investments Impairment of Fixed Assets Diminution in value of Investments Provision for Doubtful Debts/Advances Deferred Revenue Expenditure Amortized Interest Provisions Written Back Unrealised Forex Fluctuation Loss / (Gain) Forex Fluctuation Gain on Sale of Investment Provision for Pension Liability Post Retirement Medical Obligation Bad Debts / Advances Written Off (ii) Operating Prot Before Working Capital Changes Adjustments for (Increase)/ Decrease in Trade & Other Receivable (Increase) / Decrease in Inventories (Increase)/Decrease in Trade Payables Cash Generated from Operations Direct Taxes Paid (Net of Refund) (iv) Net Cash From Operating Activities (10,444.05) 130.92 (2,441.14) 577.62 0.11 35.02 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (Including Interest Capitalized) Proceeds from Sale of Fixed Assets Purchase of Investments Long Term Fixed Term Deposits Placed With Banks Proceeds from Sale of Investments Dividends Received Interest Received Net Cash Used in Investing Activities C. CASH FLOW FROM FINANCING ACTIVITIES Loan from Holding Company Proceeds from issue of Share Capital including Share Premium Long Term Borrowings Received / Issue of Debentures Repayment of Long Term Borrowings Unpaid Debentures Redeemed during the Year Bank Overdraft / Short Term Borrowings Payment of Dividends Interest Paid (Net of Interest Capitalized) Net Cash used in Financing Activities Forex Fluctuation Difference arising out of Consolidation Net Increase/(Decrease) in Cash & Cash Equivalents Cash & Cash Equivalents as at Beginning of the year Cash & Cash Equivalents of subsidiary as at the date of acquisition Less : Bank Deposits With Tenure Exceeding Three Months Adjusted Cash & Cash Equivalents as at Beginning of the year Cash & Cash Equivalents as at the end of the year Less : Bank Deposits With Tenure Exceeding Three Months Adjusted Cash & Cash Equivalents as at the end of the year 5,237.92 (4,852.08) (0.85) 350.49 (264.37) (1,272.44) 2,542.32 39.17 5.23 10.69 8.00 1.51 1,157.14 (42.17) (54.70) (8.26) 48.65 6.13 42.29

3,756.00 12,896.13

1,285.06 8.75 (0.02) 0.08 38.87 1.08 1,097.78 (70.33) (32.61) -

2,328.66 4,462.53

(2,287.37) 1,141.53 3,138.22

1,992.38 14,888.51 (1,763.85) 13,124.66

696.06 927.42 (1,156.10)

467.38 4,929.91 (680.08) 4,249.83

(iii)

(5,018.80) 106.75 (179.42) (522.99) 202.56 191.09 (12,141.52) (608.46) 410.84 3,483.75 (697.86) (0.89) (511.75) (289.65) (1,114.70) (801.33) 44.38 226.19 3,620.91 220.34 679.74 3,161.51 3,489.82 102.12 3,387.70 671.28 550.53 250.83 2,847.09 156.75 2,690.34 3,620.91 679.74 2,941.17 (5,220.81)

In terms of our report attached For DELOITTE HASKINS & SELLS Chartered Accountants GEETHA SURYANARAYANAN Partner Gurgaon May 28, 2010

ONKAR S. KANWAR Chairman & Managing Director SUNAM SARKAR Chief Financial Ofcer & Whole Time Director

NEERAJ KANWAR Vice Chairman & Managing Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary

A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

120

ANNUAL REPORT 09-10

SCHEDULES TO CONSOLIDATED ACCOUNTS

ANNEXED TO THE ACCOUNTS SCHEDULE 1 - SHARE CAPITAL
As at March 31, 2010 Rs/Million As at March 31, 2009 Rs/Million

AUTHORISED 730,000,000 Nos. (730,000,000 Nos.) Equity Shares of Re 1/- each 200,000 Nos. (200,000 Nos.) Cumulative Redeemable Preference Shares of Rs 100/- each 730.00 20.00 750.00 730.00 20.00 750.00

ISSUED, SUBSCRIBED, CALLED AND PAID UP 504,024,770 Nos. (504,024,770 Nos.) Equity Shares of Re 1/- each Add: Forfeited Shares 504.02 0.07 504.09 504.02 0.07 504.09

121

SCHEDULE 2 - RESERVES & SURPLUS

As at March 31, 2010 Rs/Million Capital Subsidy Fixed Assets Revaluation Reserve As per last Balance Sheet Less: Transfer to Prot & Loss Account Share Forfeiture (Rs. 1375/-) Capital Redemption Reserve Debenture Redemption Reserve As per last Balance Sheet Add: Transfer from Prot & Loss Account 62.50 62.50 125.00 Securities Premium As per last Balance Sheet Add: Received during the year 5,659.71 5,659.71 Foreign Currency Translation Reserve As per last Balance Sheet Movement during the year (890.01) 100.76 (789.25) Cash Flow Hedge Reserve General Reserve As per last Balance Sheet Add: Transfer from Prot & Loss Account Surplus as shown in the Prot & Loss Account 4,001.43 1,000.00 5,001.43 9,110.23 19,174.15 3,501.43 500.00 4,001.43 4,080.01 12,992.26 (11.59) (1,045.64) 155.63 (890.01) 5,218.80 440.91 5,659.71 62.50 62.50 31.22 31.22 44.40 31.57 0.35 31.22 44.40 3.00 As at March 31, 2009 Rs/Million 3.00

122

ANNUAL REPORT 09-10

SCHEDULE 3 - LOANS
As at March 31, 2010 Rs/Million SECURED Debentures 1,250 - 11.50 % Non Convertible Debentures of Rs 10,00,000/- each Term Loans From International Finance Corporation - Foreign Currency - Rupee Loan From Banks : - ECB from BNP Paribas, Singapore - ECB I from Standard Chartered Bank, Singapore - ECB II from Standard Chartered Bank, Singapore - Buyers Credit from Standard Chartered Bank - Industrial Development Bank of India - Dhanalakshmi Bank - Yes Bank - State Bank of India - ICICI Bank, South Africa - State Bank of India, South Africa -ING , Netherlands - ABN AMRO , Netherlands - Other From Institutions : - Bharat Earthmovers Ltd. (BEML) - G E Capital Services India Other Loans : - Banks - Cash Credit - Banks - Overdraft - Deferred Payment Credit - Sales Tax Loan - Other loan , Netherlands 1,250.00 1,250.00 As at March 31, 2009 Rs/Million

89.31 107.17

196.48 732.75 934.27 933.30 415.42 1,460.00 500.00 1,000.00 565.54 851.75 1,831.44 1,831.44 73.07 816.10 144.36 550.09 338.29 38.49 2.06 13,214.85 14,464.85

178.62 214.34

392.96 732.75 1,001.00 250.00 784.67 306.81 500.00 45.00 32.76 653.06 362.39 57.02 5,118.42 6,368.42 1,000.00 1,331.27 207.56 2,538.83

UNSECURED - Commercial Paper - Buyers Credit from Deutsche Bank - Short term Loans - From Banks - From Others

1,250.00 20.16 1,300.00 36.55 2,606.71

123

NOTES:
1.

SECURED LOANS

Loan from International Finance Corporation is secured by : A pari passu rst charge along with other lenders on the Parent Companys land at Perambra in Kerala, at village Limda in Gujarat and at Oragadam and Mathur village in Tamil Nadu, together with the Factory Buildings, Plant & Machinery and Equipments, both present and future. A rst and xed charge on the Parent Companys Land and premises situated at Gurgaon, Haryana State together with all existing and future buildings, erections and structures. A pari passu rst charge on all the movable assets except current assets of the Parent Company. A pari passu second charge along with Loan from Standard Chartered Bank on all the current assets of the Parent Company. Loan from BNP Paribas is secured by: A pari passu rst charge along with other lenders by way of mortgage on the Parent Companys land at village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the factory Buildings, Plant and Machinery and equipments, both present and future. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Parent Company, both present and future (except stocks & book debts). Loan from Standard Chartered Bank is secured by: A pari passu rst charge along with other lenders by way of mortgage on the Parent Companys land at village Limda in Gujarat, at Perambra in Kerala and at Village Oragadam and Mathur, Tamil Nadu together with the factory Building, Plant and Machinery and equipments both present and future. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Parent Company, both present and future (except stocks & book debts); and A pari passu second charge along with Loan from International Finance Corporation by way of hypothecation over all the current assets of the Parent Company. Loan from BEML is secured by : A charge to be created by way of hypothecation on the assets at Village Limda in Gujarat acquired out of the proceeds of loan taken from BEML. 1,250 11.50% Secured Redeemable Non-Convertible Debentures of Rs 1 Million each aggregating to Rs 1,250 Million subscribed by Life Insurance Corporation of India is secured by a pari passu rst charge along with other lenders created by way of mortgage on the Parent Companys Land & Premises at Perambra in Kerala & at Village Limda in Gujarat together with the factory buildings, Plant & machinery & Equipments, both present & future. Loan from IDBI Bank is secured by: A pari passu rst charge along with other lenders created by way of mortgage on the Parent Companys land at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the Factory Buildings, Plant and Machinery and equipments both present and future. A pari passu rst charge along with other lenders is to be created by way of mortgage on the parent companys land at Village Limda in Gujarat. The charge creation is under process. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Parent Company , both present and future (except stocks & book debts). Loan from Yes Bank: A pari passu rst charge along with other lenders to be created by way of mortgage on the Parent Companys land at Village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu, together with the factory Buildings, Plant and Machinery and equipments both present and future. The Charge creation is under process. A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Parent Company, both present and future (except stocks & book debts).

2.

3.

4.

5.

6.

7.

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ANNUAL REPORT 09-10

8.

Loan from Standard Chartered Bank (Second Loan): A pari passu rst charge along with other lenders to be created by way of mortgage on the Parent Companys land at Village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the factory Buildings, Plant and Machinery and equipments, both present and future. The Charge creation is under process. A pari passu rst charge along with other lenders to be created by way of hypothecation over all the movable assets of the Parent Company, both present and future (except stocks & book debts). The Charge creation is under process.

9.

Loan from Dhanalakshmi Bank: A pari passu rst charge along with other lenders to be created by way of mortgage on the Parent Companys land at Village Limda in Gujarat, at Perambra in Kerala and at Oragadam and Mathur Village in Tamil Nadu together with the factory Buildings, Plant and Machinery and equipments both present and future. The Charge creation is under process A pari passu rst charge along with other lenders by way of hypothecation over all the movable assets of the Parent Company, both present and future (except stocks & book debts).

10. Cash Credits and Guarantees from Banks are secured by Hypothecation of Raw materials, Work-in-Process, Stocks, Stores and Book Debts ranking in priority to the charge created in respect of the IFC Loan and loan from Standard Chartered Bank, and also by a second charge on the Parent Companys land at Perambra in Kerala and at Village Limda in Gujarat, together with the Factory Buildings, Plant & Machinery and Equipments, both present and future. 11. Deferred payment credit is secured by specic assets purchased under the scheme and include Rs 27.51 Million (Rs 24.11 Million) repayable within one year. 12. The Company had availed interest free Sales Tax Loan from the Gujarat State Government amounting to Rs 112.61 Million. This loan is secured by a pari passu charge on the entire xed assets of the Company, both present and future situated at Village Limda in Gujarat. The said loan is repayable in six equal annual installments on the expiry of 14 years from the commencement of commercial production, May 31, 2006. Accordingly, a sum of Rs 18.53 Million (Rs 18.53 Million) was paid during the year and a similar amount is repayable within one year. 13. Secured Loans include Rs 5221.90 Million (Rs 956.36 Million) repayable within one year. 14. Maximum amount outstanding on Commercial papers at any time during the year is Rs 2,220 Million (Rs 2,250 Million). 15. One of the subsidiary Company has entered into an inter-creditor Agreement with the security SPV namely Micawber 362 Pty Ltd, wherein security has been given to the lenders by the Security SPV. The subsidiary Company, in turn, has issued counter indemnity and cession in security to the Security SPV for all amounts which may become payable to the lenders for present and future obligations. The lenders who rank as pari passu creditors of the security SPV are Standard Bank, State Bank of India and ICICI Bank Ltd The security held by the Security SPV is as follows: - a covering mortgage bond over freehold property - a collateral mortgage bond over free hold property - a general notarial bond over all movable property and effects, including debtors, rights, plant equipment and furniture and ttings. - a special notarial bond over certain specied assets - a deed of suretyship of Dunlop Marketing (UK) Limited - a cession in security of the Parent Companyrights, title and interest in and to a trade mark license agreement with BTR Industries Ltd dated April 30, 1998, as amended and a trade mark assignment agreement with Dunlop International Ltd. - a deed of suretyship by Dunlop Africa Marketing (U.K.) Limited - a letter of support by Apollo Tyres Limited (India) on behalf of Apollo Tyres South Africa (Pty) Limited. 16. One of the subsidiary Company has entered into a credit facility agreement with ABN/AMRO and ING Bank. The Company provided securities for this debt in the form of mortgages and pledges of shares, rights, bank accounts, movable assets, insurances, intellectual property rights and licences.

125

SCHEDULE 4 - FIXED ASSETS

GROSS BLOCK Description of Assets As at March 31, 2009 171.17 (b) 153.65 3,001.94 (b) 17,187.41 (b) Electrical Installation Furniture Fixtures & Ofce Equipments Vehicles Intangible Assets Assets under Hire Purchase acquired after 01.04.2001: -Vehicles 465.74 855.85 562.61 442.11 Additions Deductions Exchange rate
Adjustment (f)

Rs/Million
DEPRECIATION / AMORTIZATION As at March 31,
2010

NET BLOCK As at March 31,

2010

For the Period 4.18 1.73 (a) 181.15 2,042.09 31.81 52.47 (d) 43.00 185.90

To date

As at March 31,
2009

Land Leasehold Land Buildings Plant & Machinery

1,205.77 4,607.21 28,359.81 (c) 308.43 187.45 26.11 1,068.67

9.57 46.39 538.01 1.43 4.82 48.63 0.72

110.07 208.08 1,966.36 (18.71) (7.50) 68.11

1,266.87 (b) 144.08 7,354.68 (b) 43,042.85 (b) 772.74 1,057.19 547.59 1,441.95

68.47 4.67 2,100.03 27,233.57 224.37 580.39 366.68 624.56

1,198.40 139.41 5,254.65 (h) 15,809.28 548.37 476.80 180.91 817.39

171.17 150.71 2,473.06 10,124.37 271.81 360.53 230.42 236.66

22,840.48

35,763.45 (e) 3,149.33

649.57 229.12

2,326.41 (364.83)

55,627.95 22,840.48

2,542.33 (g) 1,285.13

31,202.74 8,821.75

24,425.21 14,018.73

14,018.73 12,051.36

Previous Year

19,555.44

(a) Represents proportionate lease premium Rs 1.73 Million (Rs 1.74 Million) written off. (b) Includes amount added on revaluation in 1985-86 and 1986-87 - Rs 227.41 Million (Rs 227.41 Million). (c) Includes NIL (Rs 80.88 Million) for capital expenditure on Research & Development (Note B -9). (d) Includes Rs NIL (Rs 0.08 Million) on account of impairment of some xed assets located at the subsidiary at Hungary. (e) Includes pre-operative expenses capitalized to the extent of Rs 265.38 Million (Rs 51.97 Million) as per Note B-11 & Borrowing cost capitalized to the extent of Rs 257.42 Million (Rs 120.75 Million). Includes Rs 27,859.12 Million (NIL) as a result of acquisition of VBBV. (f) Represents exchange rate adjustment arising on consolidation of foreign subsidiaries due to difference in opening and closing conversion rates. (g) Includes Additional Depreciation amounting to Rs 3.65 Million (Nil) charged during the year due to revision in useful life of certain class of vehicles. (h) Net Block of Buildings include Rs 3,321.40 Million (Rs 1,554.26 Million) Buildings constructed on Leasehold Land.

126

ANNUAL REPORT 09-10

SCHEDULE 5 - INVESTMENTS

As at March 31, 2010 Rs/Million

As at March 31, 2009 Rs/Million

LONG TERM (AT COST) : TRADE (FULLY PAID) QUOTED Equity Shares of Rs 10/- each in Companies : 999,515 (999,515) Shares in Raunaq Finance Ltd.* 167,150 (167,150) Shares in Apollo Tubes Ltd.* 16,394 (16,394) Shares in Bharat Gears Ltd. 86,867,731 (86,867,731) Ordinary Shares in National Tyre Service, Zimbabwe UNQUOTED 5,000 (5,000) Shares of Rs 100/- each in Apollo Tyres Employees' Multipurpose Co-operative Society Limited 500,000 (500,000) Ordinary Shares in RADUN Investment (Private) Ltd, Zimbabwe 24,500 (24,500) Equity Shares of Rs 10/- each in Apollo Radial Tyres Ltd. 24,500 (24,500) Equity Shares of Rs 10/- each in Apollo Automotive Tyres Ltd. 822 (Nil) Units of Panardius LLC, USA CURRENT: NON TRADE (FULLY PAID) QUOTED 138,469 (132,191) Units of "UTI Balanced Fund Dividend Plan - Reinvestment" of Unit Trust of India # (Face Value of Rs 10/- each) 58.52 Less : Provision for Diminution / Reduction in the Value of Investments Cost / Book value of Quoted Investments (Net of Provision for Diminution / Reduction in the Value of Investments) Market Price of Quoted Investments # Repurchase Price of Units 57.70 1.59 1.50 0.50 0.50 0.36 10.00 0.17 0.36

33.40 33.76

35.81 46.34

8.42

9.02

0.16 0.16 13.93 23.17

0.17 0.17 9.86

58.52

10.17 47.53

33.76 47.60 3.09

36.17 66.90 1.89

*The investments in Equity Shares of Raunaq Finance Ltd. and Apollo Tubes Ltd. have been written off against the provision for Diminution in the Value of Investments in the current year

127

SCHEDULE 6 - CURRENT ASSETS, LOANS AND ADVANCES

As at March 31, 2010 Rs/Million

As at March 31, 2009 Rs/Million

CURRENT ASSETS Inventories : @ (Lower of Cost (net of allowances) and estimated Net Realisable Value) Raw Materials Stores and Spares Work-in-Process Finished Goods Sundry Debtors - Unsecured Considered Good Considered Doubtful Less: Provision for Doubtful Debts 3,115.87 715.36 805.46 5,292.03 9,928.72 7,869.00 663.17 8,532.17 663.17 7,869.00 Cash and Bank Balances Cash on hand Cheques on hand Remittances in Transit With Banks : Current Accounts Unpaid Dividend Accounts Deposit Accounts* Other Current Assets Interest Accrued on Loans/ Deposits 1,834.17 383.42 525.04 3,559.52 6,302.15 2,247.35 64.50 2,311.85 64.50 2,247.35

3.51 711.25 319.76

6.87 666.74 321.42

1,777.24 24.13 653.93 3,489.82 44.18 44.18

869.38 22.94 1,733.56 3,620.91 5.33 5.33

*Includes Rs 99.52 Million (Rs 168.13 Million) pledged with a bank against which working capital loan has been availed by Apollo Finance Ltd. @Includes stock in transit 354.64 729.98

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ANNUAL REPORT 09-10

SCHEDULE 6 - CURRENT ASSETS, LOANS AND ADVANCES (Contd.)

As at March 31, 2010 Rs/Million LOANS AND ADVANCES - UNSECURED (Considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received Considered Good Considered Doubtful Less: Provision for Doubtful Advances Advance Tax Less: Provision for Taxation Balance with Customs, Port Trust etc. 5,219.03 (5,902.42) (683.39) 0.07 2,372.23 23,703.95 3,055.55 8.00 3,063.55 8.00 3,055.55 3,910.10 (3,841.22) 68.88 3.26 2,053.90 14,229.64 1,981.76 41.12 2,022.88 41.12 1,981.76 As at March 31, 2009 Rs/Million

129

SCHEDULE 7 - CURRENT LIABILITIES AND PROVISIONS

As at March 31, 2010 Rs/Million CURRENT LIABILITIES Acceptances Sundry Creditors: Dues to Micro Enterprises & Small Enterprises (Note B-6) Others *Investor Education and Protection Fund shall be credited by the following amounts whenever due:Unpaid Debenture Redemption Amount Unpaid Interest on Debentures Unpaid Matured Deposits Interest on Unpaid Matured Deposits **Unpaid Dividend Derivative Financial Liabilities Interest accrued but not due PROVISIONS Proposed Dividend on Equity Shares Dividend Tax Post Retirement Medical Benets Provision for wealth Tax Provision for Sales related obligations Provision for Gratuity, Leave Encashment & Superannuation 1,015.36 49.80 11,925.91 As at March 31, 2009 Rs/Million 245.02 43.88 5,425.85

1.21 0.10 26.70 34.15 68.93 13,122.16 378.02 62.78 149.36 4.00 1,078.08 664.68 2,336.92 15,459.08

0.85 0.17 1.21 0.10 25.38 10.09 107.89 5,860.44 226.81 38.55 126.48 2.00 484.91 262.25 1,141.00 7,001.44

*- There are no amounts due and outstanding as at Balance Sheet Date to be credited to the Investor Education & Protection Fund. - Other unpaid amounts represent warrants / cheques issued to the Debentureholders / Depositors / Shareholders, as the case may be, which remain unpresented to the bankers as on March 31, 2010. ** Includes Rs 2.57 Milllion (Rs 2.44 Million) payable by one of the subsidiaries.

SCHEDULE 8 - OTHER INCOME

Year Ended March 31, 2010 Rs/Million 0.02 6.05 6.07 1.05 97.97 108.65 213.74

Year Ended March 31, 2009 Rs/Million 0.02 0.02 100.22 20.15 5.00 104.66 230.05

Income from Investments Dividend from Trade Investments - Bharat Gears Ltd. Dividend from Non-trade Investments-From Mutual Funds Dividend from Trade Investments Unclaimed Credit Balances/Provisions no longer required written back Interest on Income Tax Refund Bad Debts Recovered Miscellaneous Receipts*
*Tax Deducted at Source Rs 0.74 Million (Rs 0.56 Million)

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ANNUAL REPORT 09-10

SCHEDULE 9 - MANUFACTURING & OTHER EXPENSES

Year Ended March 31, 2010 Rs/Million MATERIALS 1 Raw Materials Consumed Less: Scrap Recoveries (Net of Excise Duty) Purchase of Finished Goods EMPLOYEES 2 Salaries, Wages and Bonus Contribution to Provident and Other Funds Welfare expenses MANUFACTURING, ADMINISTRATIVE AND SELLING Consumption of stores and spare parts 3 Power and Fuel 4 Conversion Charges Repairs and Maintenance - Machinery - Buildings - Others Rent 5 Lease Rent / Service Charges Insurance Rates and Taxes Directors' Sitting Fees 6 Loss on Sale of Assets (Net) Travelling, Conveyance and Vehicle Expenses Postage, Telex, Telephone and Stationery Freight & Forwarding Commission to Selling Agents Sales Promotion Expenses Advertisement & Publicity Research and Development Bank Charges Provision for Doubtful Debts / Advances Bad Debts/Advances Written off Less: Transferred from Provision Legal & Professional Expenses Miscellaneous Expenses 7 39,480.81 141.03 39,339.78 4,287.46 10,005.56 401.77 477.40 541.43 2,385.27 711.41 467.56 32.86 251.03 136.58 577.56 223.94 118.02 1.37 46.87 621.21 156.68 2,311.70 41.55 1,131.21 1,189.56 331.50 102.68 8.00 117.92 49.69 68.23 401.29 908.51 67,277.99 18.18 18.18 Year Ended March 31, 2009 Rs/Million 32,392.06 106.67 32,285.39 1,831.34 3,593.77 222.29 334.22 340.62 1,717.22 539.05 285.36 33.39 162.90 103.90 313.30 101.89 91.79 1.40 8.75 545.40 92.89 1,236.80 51.29 645.77 486.91 214.40 74.64 38.87 200.85 238.52 45,792.92

1. 2. 3. 4. 5. 6. 7.

Net of Foreign Exchange Fluctuation Gain of Rs 110.29 Million (Including Loss of Rs 204.76 Million). Includes VRS payments amortised during the year of Rs 1.68 Million (Rs 1.71 Million). Stores & Spares Consumed includes stores issued for repairs Rs 1.70 Million (Nil). Power and fuel includes Stores Consumed Rs 698.72 Million (Rs 676.45 Million). Net of Rent Receipts of Rs 13.68 Million, TDS Rs 2.19 Million (Rs 13.42 Million, TDS Rs 3.04 Million). Net of Transfer from Revaluation Reserve to the extent of Nil (Rs 0.35 Million). Net of Foreign Exchange Fluctuation Gain of Rs 116.58 Million (Including Loss of Rs 127.49 Million).

131

SCHEDULE 10 - (INCREASE)/DECREASE IN WORK IN PROCESS AND FINISHED GOODS

Year Ended March 31, 2010 Rs/Million Decrease/(Increase) in Finished Goods Excise Duty on Decrease/ (Increase) of Finished Goods (Note - B 7) 2,145.65 Year Ended March 31, 2009 Rs/Million (5.48)

34.98 2,180.63

(108.23) (113.71)

SCHEDULE 11 - INTEREST
Year Ended March 31, 2010 Rs/Million Fixed Loans* Debentures Bank Overdraft Others # 589.53 144.14 73.02 347.11 1,153.80 #Net of Interest Earned Rs 86.77 Million (Rs 70.67 Million). Interest Earned on Deposits Rs 78.81 Million (Rs 59.90 Million). Interest Earned on Trade Balances Rs 3.13 Million (Rs 7.02 Million). Interest Earned - Others Rs 4.83 Million (Rs 3.75 Million). Tax Deducted at source Rs 7.87 Million (Rs 8.67 Million). *Including Foreign Exchange Fluctuation loss of Rs 9.81 Million (Net of Gain of Rs 36.50 Million). Year Ended March 31, 2009 Rs/Million 302.35 22.84 161.79 485.55 972.53

132

ANNUAL REPORT 09-10

SCHEDULE 12 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. 1. SIGNIFICANT ACCOUNTING POLICIES: A. BASIS OF ACCOUNTING The nancial statements are prepared on historical cost convention with the exception of certain xed assets which were revalued based on accrual method of accounting and applicable accounting standards. B. USE OF ESTIMATES The preparation of nancial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the nancial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the nancial statements are prudent and reasonable. Actual results could vary from these estimates. Any revision to accounting estimates is recognised in the period in which the results are known/materialised. 2. BASIS OF CONSOLIDATION The consolidated nancial statements comprise the nancial statements of Apollo Tyres Ltd (the Company) and the following companies of Apollo Tyres Group. a. Subsidiaries Name of the Company Apollo (Mauritius) Holdings Pvt Ltd (AMHPL) Apollo (South Africa) Holdings (Pty) Ltd (ASHPL) Apollo Tyres Co-operatief UA (Apollo Coop) Apollo Tyres (Cyprus) Pvt. Ltd. (ATCPL) Apollo Tyres Pte Ltd (ATPL) Apollo Tyres (Nigeria) Limited Apollo Tyres South Africa (Pty) Ltd (ATSA) Dunlop Africa Marketing (United Kingdom) Ltd. (DAMUK) Pollock & Aitken (Pty) Ltd. Apollo Tyres AG (AT AG) Apollo Tyres GmbH (AT GmbH) Apollo Tyres Zrt (ATZRT) Apollo Vredestein BV (AVBV) Subsidiary Subsidiary through AMHPL Subsidiary through AMHPL Subsidiary through AMHPL Subsidiary through AMHPL Subsidiary through AMHPL Subsidiary through ASHPL Subsidiary through ATSA Subsidiary through ATSA Subsidiary through ATCPL Subsidiary through ATAG Subsidiary through ATAG Subsidiary through Apollo Coop Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Cyprus Singapore Nigeria South Africa United Kingdom South Africa Switzerland Germany Hungary Netherlands 100% 100% 100% 100% 100% 100% 100% NA 100% 100% NA 100% 100% 100% 100% NA 100% 100% 100% NA Note 4 Note 5 Note 2 Note 1 Relationship Country of Proportion Proportion Remarks Incorporation of Ownership of Ownership 31.03.2010 31.03.2009 Mauritius South Africa Netherlands 100% 100% 100% 100% 100% NA Note 1

Vredestein GmbH (VGmbH) Vredestein Norge AS Vredestein UK Ltd

Germany Norway United Kingdom

100% 100% 100%

NA NA NA

Note 4 Note 4 Note 4

133

Name of the Company N.V. Vredestein S.A. Vredestein GesmbH Vredestein Schweiz AG Vredestein Deck AB Vredestein Italia Srl Vredestein Iberica SA Vredestein Tyres North America Inc. Vredestein Kft Vredestein Polska Sp Z o.o Vredestein Bekleding Vredestein consulting BV Finlo BV Vredestein Marketing BV Vredestein Marketing Agentur BV & Co. KG Note 1 - Incorporated during the year.

Relationship

Country of Proportion Proportion Remarks Incorporation of Ownership of Ownership 31.03.2010 31.03.2009 Belgium Austria Switzerland Sweden Italy Spain USA Hungary Poland Netherlands Netherlands Netherlands Netherlands Germany 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% NA NA NA NA NA NA NA NA NA NA NA NA NA NA Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4

Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through AVBV Subsidiary through VGmbH

Note 2 - As a part of group restructuring exercise, entire share capital of AT AG has been transferred by Apollo Tyres Ltd (Parent Company) to Apollo Tyres (Cyprus) Pvt. Ltd., a subsidiary through AMHPL, on March 31, 2010. Note 3 - During the year, the management decided to merge the German subsidiary AT, GmbH with another group entity Vredestein, GmbH which is a subsidiary of Apollo Vredestein BV (AVBV), Netherlands. The upstream merger has been registered by the Court of Registration, Germany on April 7, 2010 with an effective date of October 1, 2009. Note 4 - The Company acquired 100% Shareholding of Vredestein Banden BV (VBBV), a Dutch Tyre manufacturing Company with a production capacity of 5.5 Million Tyres per annum along with various subsidiaries on May 15, 2009 through a special purpose vehicle, Apollo Cooperatief U.A. The acquisition was funded through internal accruals and external debt. Accordingly, results of the acquired Vredestein group has been consolidated from the effective date May 15, 2009. Note 5 - Acquired by Apollo Tyres South Africa as a part of pension surplus.

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ANNUAL REPORT 09-10

b. Associates Name of the Company Relationship Country of Incorporation Zimbabwe India India Proportion of Ownership 31.03.2010 46.90% 49.00% 49.00% Proportion of Ownership 31.03.2009 46.90% 49.00% 49.00%

National Tyre Services Ltd, Zimbabwe Apollo Automotive Tyres Ltd. Apollo Radial Tyres Ltd.

Associate of DAMUK Associate Associate

The consolidated nancial statements have been prepared in accordance with the principles and procedures for the preparation and presentation of the consolidated nancial statements as laid down in accounting standard (AS 21) Consolidated Financial Statements. Investment in associates is accounted for in the consolidated nancial statements under the Equity Method as laid down in accounting standard (AS 23). Consolidated nancial statements are prepared using uniform accounting policies. The excess of cost to the Parent Company of its investments in subsidiaries over its share of equity in the subsidiary at the date on which investment was made is recognised in the nancial statements as goodwill. The Parent Companys portion of equity in the subsidiary is determined on the basis of the book value of assets and liabilities as per the nancial statements of the subsidiary on the date of investment. In respect of the foreign operations, the audited nancial statements for the year ended March 31, 2010 were converted into Indian currency as per accounting standard (AS 11) The effect of changes in Foreign Exchange Rates. c. Foreign subsidiaries, which operate under severe political and economic uncertainty that signicantly diminishes control or which operates under severe long term restrictions which signicantly impair its ability to transfer funds to parent are not consolidated. In view of the current political situation in Zimbabwe and the long term restriction on nancial repatriation the accounts of Zimbabwe based entities have not been consolidated under accounting standard (AS 21) Consolidated Financial Statements and has been considered as detailed below: Subsidiaries Radun Investment (Private) Ltd (RADUN), Zimbabwe Dunlop Zimbabwe (Private) Ltd ASF Mining (Pvt) Ltd Zimbabwe Associates National Tyre Services Ltd, Zimbabwe (NTS) Investment is accounted for on equity basis to the extent of actual receipt of share of prot, if any, in form of dividend. Treatment in consolidated nancials Not consolidated. Cost of investment included under investment. The cost of investment has been impaired. The cost of investment has been impaired.

The cost of investment of Pressurite (Pty) Ltd South Africa has been fully impaired and hence not consolidated. 3. FIXED ASSETS (a) Fixed assets are stated at cost, as adjusted by revaluation of certain land, buildings, plant and machineries based on the then replacement cost as determined by approved independent valuer in 1986 and 1987 less depreciation. (b) All costs relating to the acquisition and installation of xed assets (net of Cenvat /VAT credits wherever applicable) are capitalised and include nance cost on borrowed funds attributable to acquisition of qualifying xed assets for the period upto the date of commencement of production, and adjustments arising from foreign exchange differences arising on foreign currency borrowings to the extent they are regarded as an adjustment to interest costs. (Also refer accounting policy No. 5 on Borrowing Costs.) Other incidental expenditure attributable to bringing the assets to their working condition for its intended use are capitalised. (c) Fixed assets taken on nancial lease are capitalised and depreciation is provided on such assets, while the interest is charged to the prot and loss account.

135

4.

DEPRECIATION Depreciation on xed assets is provided using straight line method at the rates specied in Schedule XIV of the Companies Act 1956, except for certain vehicles and other equipments for which the depreciation is provided at 30% and 16.67% respectively Certain plant and machinery are classied as continuous process plants based on technical evaluation by the management and are depreciated at the applicable rates. Additional depreciation consequent to the enhancement in the value of xed assets on the revaluation is adjusted in the xed assets revaluation reserve account. Leasehold land/improvements thereon are amortised over the primary period of lease. In respect of assets whose useful life has been revised, the unamortised depreciable amount is charged over the revised remaining useful life. In case of a subsidiary company incorporated outside India, depreciation is provided for on a straight line basis at such rates as will write off the cost of the various assets over the period of their expected useful lives. The rates of depreciation considered for the major assets are as under:`` Assets Class Building Plant & Equipments Moulds Material Handling Equipments Computer Hardware Computer Software Motor Vehicles Furniture & Fixtures and Ofce Equipments Rates of Depreciation 3.33% - 5% 9% - 12.5% 20% - 25% 15% - 33.33% 20% - 33.33% 20% - 33.33% 20% - 33.33% 10% - 20%

5.

BORROWING COSTS Borrowing costs are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benets and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

6.

IMPAIRMENT OF ASSETS The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and its value in use. In assessing value in use, the estimated future cash ows are discounted to their present value at the pre tax weighted average cost of capital.

7.

INTANGIBLE ASSETS The expenditure incurred by the Company on acquisition and implementation of software system/development costs upto the stage when the new product reaches technical feasibility has been recognised as an Intangible asset and is amortised over a period of ve years based on its estimated useful life. Trademarks are measured at cost and amortised over the estimated useful life not exceeding period of ten years.

8.

INVESTMENTS Long term investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current investments are stated at lower of cost and fair value determined on the basis of each category of investments.

9.

INVENTORIES Inventories are valued at the lower of cost and estimated net realisable value (net of allowances). The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of nished goods and work in process, incurred in bringing such inventories to their present location and condition. For Indian companies, in case of raw materials, stores and spares and traded goods cost (net of CENVAT/VAT credits wherever applicable) is determined on a moving weighted average basis and in case of nished goods, cost is determined on a First in First Out basis, whereas in case of subsidiary companies incorporated outside India, the cost is determined on the basis of First-in First-Out and consumable stores are stated at actual cost by reference to latest purchases.

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ANNUAL REPORT 09-10

Since it is not practically possible to use uniform accounting policy for raw material and stores and spares, the valuation of the inventory of such subsidiaries has been considered for the purpose of consolidation. The proportion of such inventory is 14% (26%) of the consolidated value of inventory. 10. FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recorded at rates of exchange prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the rate of exchange prevailing at the year-end. Exchange differences arising on actual payments/realisations and year-end restatements are dealt with in the prot & loss account. The Company enters into forward exchange contracts and other instruments that are in substance a forward exchange contract to hedge its risks associated with foreign currency uctuations. The premium or discount arising at the inception of a forward exchange contract (other than for a rm commitment or a highly probable forecast) or similar instrument is amortised as expense or income over the life of the contract. Exchange difference on such contracts is recognised in the prot and loss account in the year in which the exchange rates change. Forward exchange contracts are the main hedging instruments used to hedge foreign currency risk management. Currency options are used only as a cost effective alternative to forward exchange contracts. The nancial statements of consolidated foreign subsidiaries are translated into Indian Rupees, which is the functional currency of the Company, as follows: Assets and liabilities at rates of exchange ruling at year end. Income and expense items at the average rate for the year. Exchange rate differences arising on the translation of consolidated foreign subsidiaries are classied as equity and transferred to the foreign currency translation reserve. HEDGE ACCOUNTING If a fair value hedge meets the conditions for hedge accounting, any gain or loss on the hedged item attributable to the hedged risk is included in the carrying amount of the hedged item and recognised in prot or loss. If a cash ow hedge meets the conditions for hedge accounting the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective and over-effective portions are recognised in prot or loss. A hedge of the foreign currency risk of a rm commitment is designated and accounted for as a cash ow hedge. If an effective hedge of a forecast transaction subsequently results in the recognition of a nancial asset or nancial liability, the associated gains or losses recognised in equity are transferred to income in the same period in which the asset or liability affects prot or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-nancial asset or non-nancial liability, the associated gains or losses recognised in equity are included in the initial measurement of the acquisition cost or other carrying amount of the asset or liability. If a hedge of a net investment in a foreign entity meets the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective portion is recognised in prot or loss. On disposal of a foreign entity, the gain or loss recognised in equity is transferred to prot or loss. Hedge accounting is discontinued on a prospective basis when the hedge no longer meets the hedge accounting criteria (including when it becomes ineffective), when the hedge instrument is sold, terminated or exercised, when for cash ow hedges the forecast transaction is no longer expected to occur or when the hedge designation is revoked. Any cumulative gain or loss on the hedging instrument for a forecast transaction is retained in equity until the transaction occurs, unless the transaction is no longer expected to occur, in which case it is transferred to prot or loss for the period. 11. REVENUE RECOGNITION Revenue is recognised when the signicant risks and rewards of ownership of goods have been passed to the buyer. Gross sales are inclusive of excise duty and are net of trade discounts/sales returns/VAT. Sales of the consolidated entity include sales to external customers and non-consolidated subsidiaries. Dividend income from investments is accounted for when the right to receive the payment is established. Interest Income is recognised on time proportion basis. 12. EXPORT INCENTIVES Export Incentives in the form of advance licences/credits earned under duty entitlement pass book scheme are treated as income in the year of export at the estimated realisable value/actual credit earned on exports made during the year and are credited to the raw material consumption account. 137

13. EMPLOYEE BENEFITS Liability for gratuity to employees determined on the basis of actuarial valuation as on balance sheet date is funded with the Life Insurance Corporation of India and is recognised as an expense in the year incurred. Liability for short term compensated absences is recognised as expense based on the estimated cost of eligible leave to the credit of the employees as at the balance sheet date on undiscounted basis. Liability for long term compensated absences is determined on the basis of actuarial valuation as on the balance sheet date. Contributions to dened contribution schemes such as provident fund, employees pension fund and superannuation fund and cost of other benets are recognised as an expense in the year incurred. Actuarial gains and losses arising from experience adjustments and effects of changes in actuarial assumptions are immediately recognised in the prot & loss account as income or expense. The employers liability for post employment medical benets, in respect of past service, is provided for and adjusted in response to actuarial assessments when necessary. 14. DEFFERED REVENUE EXPENDITURE Payments under voluntary retirement scheme are being charged to prot and loss account over a period of three years or over the period ending March 31, 2010 which ever is earlier. 15. TAXES ON INCOME Current tax is determined in accordance with the applicable income tax laws of the country in which the respective entities in the group are incorporated. Deferred tax is recognised for all timing differences, subject to the consideration of prudence in respect of deferred tax assets. 16. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date These are reviewed at each balance sheet date and adjusted to reect the current best estimates. Contingent liability is disclosed for (i) Possible obligation which will be conrmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the nancial statements since this may result in the recognition of income that may never be realised. B. 1. NOTES ON ACCOUNTS: CONTINGENT LIABILITIES PARTICULARS Sales Tax Income Tax-Disputed Demands under Appeal Claims not acknowledged as debts Employee Related Property Disputes Others Provision of Security (Bank Deposits pledged with a Bank against which working capital loan has been availed by Apollo Finance Ltd.) Guarantee given by Parent Company for the loan taken by a group Company (Apollo Tyres South Africa Pty. Ltd) Guarantees given by bankers on behalf of the Parent Company Custom Duty Excise Duty* Irrevocable letters of credit 2009-10 Rs/Million 108.24 0.00 21.54 2.60 5.83 99.52 673.50 497.66 23.50 56.34 3,984.58 2008-09 Rs/Million 65.64 247.10 28.22 2.60 16.53 168.13 760.80 590.88 23.50 125.68 1586.06

* Excludes demands of Rs 532.12 Million (Rs 533.31 Million) raised on one of the Companys units relating to the issues which have been decided by the Appellate Authority in Companys favour in appeals pertaining to another unit of the Company. Show cause notices received from various Government Agencies pending formal demand notices, have not been considered as contingent liabilities. In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals. 138

ANNUAL REPORT 09-10

2.

Estimated amount of contracts remaining to be executed on capital account and not provided for as on March 31, 2010 is Rs 10,027.35 Million (Rs 6,774.31 Million) 3. Buy Back of Shares: The Board of Directors of the Company, at its meeting held on March 19, 2009 had approved the Buy Back of equity shares of the Company from open market through stock exchange route up to an amount not exceeding Rs 1,220 Million at a price not exceeding Rs 25 per share. This amount was within 10% of the Companys paid-up equity share capital and free reserves as per last audited accounts. The Company could not buy back any shares because of the run-up in the market price of Companys shares after the commencement of Buy Back. The Company, therefore, closed its Buy Back offer during the year on the due date of closure, i.e., March 18,2010. 4. Status of Chennai Project: The construction of rst phase of the new green eld radial tyre plant at Oragadam near Chennai has been completed as per project schedule. The rst phase of passenger car vehicle segment of the project has already commenced operations from March 11, 2010 and the Truck / Bus radial segment of the project has commenced operations from May 11, 2010. The construction of the second phase of the project has also commenced from January 2010 and is going on as per project schedule. 5(a) Voluntary Dissolution of Apollo Tyres Zrt, Hungary During the year, the management decided to dissolve the Hungarian subsidiary AT Zrt. Closing report of the AT Zrt based on the audited nancial statements as on January 31, 2010 was submitted with the court of registration on March 8, 2010. As per the Hungarian procedure, dissolution shall be registered by the court by the earliest of 90 days from March 8, 2010 (date of publication of closing report) or on the receipt of the electronic notication / clearance form the tax authorities. Further, the court of registration has approved the Capital reduction of AT Zrt vide order dated 4th January 2010 and Apollo Tyres AG (Parent Company) has already received 346,715,000 HUF (about Rs 84 Million) as capital reduction out of the registered capital and free reserves as on the date of the order. Registered Capital of the Company (Original) of AT Zrt was 256,976 ordinary shares of the nominal value of HUF 1000 each and the Registered Capital (after capital reduction) is at 5,000 ordinary shares of the nominal value of HUF 1000 each (b) Name strike-off Apollo Tyres Pte. Ltd., Singapore During the year, the management decided to wind-up Apollo Tyres Pte. Ltd, Singapore and application for striking-off of the name was led with Accounting and Corporate Regulatory Authority (ACRA), Singapore. The name will be struck-off the register at the expiry of three months from March 4, 2010 when a public notice would be published in the Government Gazette to this effect. 6. Based on information available with the Company and relied upon by the auditors, the information as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 (MSMDA) as on March 31, 2010 is given below: PARTICULARS Principal amount unpaid as at year-end Amount paid after appointed date during the year Amount of interest accrued and unpaid as at year-end 7. 2009-10 Rs/Million 42.93 75.94 6.87 2008-09 Rs/Million 38.85 104.54 5.03

8. 9.

Excise duty relating to sales of the Company has been disclosed as a reduction from turnover. Excise duty related to difference between the closing stock and opening stock has been disclosed in Schedule 10 "(Increase)/Decrease in Work in Process and Finished Goods. Borrowing costs capitalised/transferred to capital work in progress during the year is Rs 257.42 Million (Rs 215.48 Million). This includes Rs 31.57 Million towards Loan processing fees and Rs 15.44 Million towards Bank Charges Research and development comprise of the following: PARTICULARS (A) Revenue Expenditure Salary, Wages & Other Benets Travelling & Conveyance Others SUB-TOTAL (B) Capital Expenditure TOTAL (A+B) 2009-10 Rs/Million 70.73 9.77 148.77 229.27 Nil 229.27 2008-09 Rs/Million 61.30 8.90 144.20 214.40 80.88 295.28 139

10. Deferred revenue expenditure: Payment Under Voluntary Retirement Scheme Opening Balance Add : Payment during the year Less : Amortised during the year Closing Balance 2009-10 Rs/Million 1.51 0.17 1.68 2008-09 Rs/Million 2.59 0.63 1.71 1.51

11. Pre-operative expenses capitalised/included in capital work in progress during the year PARTICULARS Raw Material Consumed Salaries, Wages and Bonus Contribution to Provident and Other Funds Welfare Expenses Rent Travelling, Conveyance and Vehicle expenses Postage, Telex Telephone and Stationery Power Expenses Insurance Expenses Miscellaneous Expenses TOTAL* 2009-10 Rs/Million 33.86 114.98 5.97 26.12 4.10 17.27 1.57 38.21 8.69 19.01 269.78 2008-09 Rs/Million 56.13 11.83 0.14 0.02 3.44 0.41 4.15 4.41 115.18 195.71

*Including, Rs 4.40 Million (Rs 143.74 Million) lying in capital work in progress as on March 31, 2010. 12. Statutory Auditors Remuneration (including other auditors) included under Miscellaneous Expenses PARTICULARS For Audit For Certication & Other Service Reimbursement of expenses TOTAL 13. Employee Benets A. Indian Operations The Company has a dened benet gratuity plan. Every employee who has completed ve years or more of service receives gratuity on leaving the Company at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India. The following table summarise the components of net benet expense recognised in the prot and loss account and the funded status and amounts recognised in the balance sheet for the respective plan: Prot and Loss Account: Net employee benet expenses (recognised in employee cost) Current service cost Interest cost on benet obligation Expected return on plan assets Net actuarial loss recognised in the year Net benet expense 2009-10 Rs/Million 27.67 29.48 (29.39) 24.98 52.74 2008-09 Rs/Million 24.71 23.78 (23.32) 23.28 48.45 2009-10 Rs/Million 27.52 4.05 0.25 31.82 2008-09 Rs/Million 17.07 4.78 0.52 22.37

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ANNUAL REPORT 09-10

Balance Sheet PARTICULARS Reconciliation of present value of the obligation and the fair value of plan assets Fair value of plan assets at the end of the year Present value of funded obligation at the end of the year Asset/(Liability) recognized in the balance sheet Changes in the present value of the dened benet obligation are as follows: PARTICULARS Present value of obligations as at the beginning of the year Interest cost Current service cost Benets paid Actuarial loss on obligation Present value of obligations as at the end of the year Changes in the fair value of plan assets are as follows: PARTICULARS Fair value of plan assets at beginning of the year Expected return on plan assets Contributions Benets paid Actuarial gain on plan assets Fair value of plan assets as at the end of the year 2009-10 Rs/Million 311.03 29.39 48.81 (28.50) 1.06 361.79 2008-09 Rs/Million 248.14 23.32 57.99 (20.22) 1.80 311.03 2009-10 Rs/Million 393.04 29.48 27.68 (28.50) 26.04 447.74 2008-09 Rs/Million 339.69 23.78 24.71 (20.22) 25.08 393.04 2009-10 Rs/Million 2008-09 Rs/Million

361.79 447.74 (85.95)

311.03 393.04 (82.01)

The Companys gratuity funds are managed by the Life Insurance Corporation of India and therefore the composition of the fund assets in not presently ascertained. Principal actuarial assumptions PARTICULARS a) Discount rate b) Future salary increase* c) Expected rate of return on plan assets B. South African Operations Apollo Tyres South Africa (Pty) Ltd. Employees are members of an umbrella fund of one of three active retirement benet funds which are dened contribution provident funds. These are governed by the Pensions Funds Act, 1956. The assets of these funds are independent of the Company. The Retirement On-Line Provident Fund is an umbrella fund which is managed and controlled by an external board of trustees. Members of the Dunlop Staff Provident Fund were transferred to this fund with effect from September 1, 2007. The Dunlop Tyres Operatives Provident Fund is valued in three year intervals. The fund's last formal actuarial valuation was independently performed as at December 2006. The fund is judged to be in a sound nancial position. The New Tyre Manufacturing Industry Provident Fund was established in 2005 and the majority of weekly paid employees are members of this fund. Interim valuations are performed by an actuary, the most recent being June 2006. The fund is judged to be in a sound nancial position. The Dunlop Staff Provident Fund is currently under liquidation. It has no active members and last statutory valuation was as at December 31, 2006. 141 2009-10 Rs/Million 7.50 5.00 9.45 2008-09 Rs/Million 7.00 4.50 9.40

*The estimates of future salary increase take into account ination, seniority, promotion and other relevant factors.

The Dunlop Staff Provident Fund is in liquidation and 92.5% of employer surplus was received by the Group on February 10, 2010. The realisation of the balance of the employer surplus amount (7.5%) is still conditional upon several activities/approval. The amount will be paid to the Group on the nalisation of the liquidation. The contribution holiday in the current period amounted to Rs Nil (Rs 101.31 Million). This is derived from the surplus status of the Dunlop Staff Provident Fund. Certain management are members of an umbrella fund which is managed and controlled by an external board of trustees. There is a single dened benet fund, the Dunlop Africa Pension Fund. It has no active members and the last statutory valuation was as at March 31, 2005. The surplus apportionment schemes for the Dunlop Africa Pension Fund and the Dunlop Staff Provident Fund, in terms of section 15B of the Act, have been approved by the Financial Services Board (FSB). After all of the surplus claims in these funds have been paid there will be a balance in the employer surplus account in the Dunlop Staff Provident Fund. Realisation of the surplus amount is still conditional upon several activities/approvals, accordingly the surplus has not been recognised on the balance sheet. Foreign consolidated subsidiaries of Apollo Tyres South Africa (Pty) Ltd. Employees are members of two dened contribution pension funds which are governed by the UK Pensions Act of 1995. The funds are managed by appointed Investment managers and are reviewed as statutorily required. Both funds are in a sound nancial position. Post-employment medical obligation Apollo Tyres South Africa (Pty) Ltd. Prior to 1998, it was the Company's policy to provide post-employment medical benets for its employees, by the way of subsidies. These subsidies have been funded by means of pensions purchased from insurers. Each year additional amounts are paid in line with the increases in medical aid subscriptions. The Company's liability in respect of the post-employment medical obligation has been actuarially valued at Rs 149.36 Million (Rs 126.47 Million) at March 31, 2010 by Fifth Quadrant Actuaries and Consultants. The actuarial valuation performed has been based on the following assumptions: a) a health care cost ination rate of 6.30% p.a. (6.25% p.a) b) a discount rate of 8.60% p.a. (8.50% p.a) PARTICULARS Opening Balance Interest cost recognised in income statement in current period Health care cost ination Actuarial loss(gain) recognised in income statement in current period Miscellaneous (including basis and data changes) Closing balance Sensitivity of healthcare cost For every 1% strengthening/weakness of investment returns, relative to medical aid ination, the liability is calculated to increase/reduce by Rs 11.61 Million (Rs 10.25 Million) from the reported level of Rs 149.36 Million (Rs 126.47 Million). Similarly for every 1% increase/decrease in medical aid ination, relative to investment returns, the liability is calculated to increase/decrease by Rs 17.72 Million (Rs 15.36 Million) Foreign consolidated subsidiaries of Apollo Tyres South Africa (Pty) Ltd. Foreign consolidated operations do not provide post-retirement medical benets for employees, hence no employer obligation exists. C. European Operations Valuations of the obligations under the pension plans are carried out by independent actuaries. At March 31, 2010 employees of Apollo Vredestein BV and Vredestein GmbH participated in dened benet pension plans. The benets of the dened benet pension plans in Holland and Germany are based primarily on years of service and employees compensation. The funding policy for the plans is consistent with local requirements in the countries of establishment. Awarded pension rights for the dened benet pension plan of Apollo Vredestein B.V. are nanced. by means of annual premiums paid to the pension fund. The dened benet pension plan of Apollo Vredestein BV is wholly funded. The plan includes conditional indexation. It has been assumed that current and future pension payments for deferred pensioners will increase at an average rate of 0.75% per annum and for active participants at an average rate of 1.25% per annum. 142 2009-10 Rs/Million 126.47 11.65 7.36 6.13 (2.25) 149.36 2008-09 Rs/Million 116.16 6.36 11.65 (0.53) (7.17) 126.47

ANNUAL REPORT 09-10

The mortality level was assessed in accordance with the Dutch Mortality table GBM/V 2000-2050 (mortality forecast) with a 1-year setback for the Dutch pension scheme and the German Mortality table 2005 G Heubeck with a 1-year setback for the German pension scheme. Prot and Loss Account: PARTICULARS Net employee benet expenses (recognised in employee cost) Current service cost Interest cost on benet obligation Expected return on plan assets Net actuarial loss recognised in the year Administration Cost Net benet expense Balance Sheet: PARTICULARS Reconciliation of present value of the obligation and the fair value of plan assets Fair value of plan assets at the end of the year Present value of funded obligation at the end of the year Asset/(Liability) recognised in the balance sheet Changes in the present value of the dened benet obligation are as follows: PARTICULARS Present value of obligations as at the beginning of the year Interest cost Current service cost Contribution by employees Benets paid Actuarial loss on obligation Present value of obligations as at the end of the year Changes in the fair value of plan assets are as follows: PARTICULARS Fair value of plan assets at beginning of the year Expected return on plan assets Contributions Benets paid Administration Cost Actuarial gain on plan assets Fair value of plan assets as at the end of the year 2009-10 Rs/Million 5,089.03 317.97 800.27 (30.66) (53.02) 866.85 6,990.44 2009-10 Rs/Million 6,706.35 468.48 159.05 305.19 (45.62) 909.57 8,503.02 2009-10 Rs/Million 6,990.44 8,503.01 (1,512.57) 2009-10 Rs/Million 159.05 468.48 (317.97) 42.72 53.02 405.30

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14. The components of Deferred Tax Liability (Net) are as follows: PARTICULARS Deferred Tax Liability on timing differences arising on: Depreciation Others Sub Total (A) Deferred Tax Assets on timing differences arising on: Payment under Voluntary Retirement Scheme Others Sub Total (B) Net Deferred Tax Liability (A-B) 2009-10 Rs/Million 2,953.55 7.43 2.960.98 0.68 445.90 446.58 2,514.40 2008-09 Rs/Million 2,149.43 8.75 2,158.18 0.55 216.09 216.64 1,941.54

15. Provision for sales related obligations of the Company represents estimates for payments to be made in future. Major portion of these costs is estimated to be paid in the next nancial year and will be paid within a maximum of 3 years from the balance sheet date
Rs/Million

Opening Balance as at 01.04.2009 484.91

Additional provision made during the year 1,179.24

Incurred against provision during the year 586.07

Closing Balance as at 31.03.2010 1,078.08

16. The following Forward Exchange Contracts entered are outstanding as on March 31, 2010: Currency United States Dollar Euro Swiss Franc Norwegian krone Swedish krona United States Dollar Great British Pound Sterling Polish zoty United States Dollar Euro Great British Pound Sterling Japanese Yen 17. Segmental Reporting a. Geographical Segments The Company has considered geographic segments as the primary segments for disclosure. The Geographic Segments are India , South Africa , Europe on the basis of Organisation Structure and Operating Locations. Indian segment includes manufacturing and sales operations through India, South Africa and Europe segments includes manufacturing and sales operations through South Africa and Europe along with its subsidiaries located in South Africa and Europe respectively b. Business Segments The Company has considered business segment as the secondary segment for disclosure. The Company's operations comprise of only one segment - Tyres, Tubes & Flaps and therefore, there are no other business segments to be reported as required under accounting standard (AS-17) - Segment Reporting. c. Segmental assets includes all operating assets used by respective segment and consists principally of operating cash, debtors, inventories and xed assets net of allowances and provisions. Segmental liabilities include all operating liabilities and consist primarily of creditors and accrued liabilities. Segment assets and liabilities do not include income tax assets and liabilities US $ EURO CHF NOK SEK US $ GBP PLN US $ EURO GBP JPY Amount 3,251,613.00 2,000,000.00 5,880,733.12 13,089,825.72 28,880,563.14 7,400,686.60 4,682,513.64 1,547,761.24 7,842,781.00 3,290,095.76 22,973.70 504,000.00 Buy/Sell Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Sell Buy Cross Currency Rupees US $ Euro Euro Euro Euro Euro Euro Zar Zar Zar Zar

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ANNUAL REPORT 09-10

d. Information about primary segment (Geographical ) is as under :

Particulars 1. REVENUE Total Sales Inter segment Sales External Sales 2. RESULT Segment result Interest expense Interest and Dividend Income Income Taxes Net prot 3. OTHER INFORMATION Segment assets Segment liabilities Capital Expenditure Depreciation 33,629.87 24,566.03 18,070.41 8,585.42 1,227.82 12,503.83 4,662.95 980.07 7,186.29 4,846.07 783.52 370.48 6,589.09 3,373.75 346.54 304.86 13,590.74 9,526.68 1,077.28 940.92 316.39 2,601.88 4.46 3.10 187.95 1,970.65 9.86 0.20 54,723.29 35,045.04 10,450.68 2,542.33 6,762.13 (811.65) 72.19 (1,832.07) 4,190.60 2,382.06 (727.16) 58.73 (630.47) 1,083.16 1,649.02 (181.89) 9.83 (370.29) 1,106.67 736.39 (318.04) 6.70 (108.34) 316.71 2,240.70 (242.17) 0.01 (404.01) 1,594.53 (357.90) (0.12) (0.24) (358.26) (12.05) 7.24 (3.53) (8.34) 10,293.95 (1,235.83) 82.03 (2606.61) 6,533.54 India 2009-10 0.24 2008-09 39.65 South Africa 2009-10 10,971.64 31.05 10,940.59 2008-09 9,175.93 9,175.93 Europe 2009-10 19,901.47 19,901.47 2008-09 Other Corp 2009-10 2008-09 2009-10 81,238.72 31.29 81,207.43

Rs/Million
Total 2008-09 49,880.34 39.65 49,840.69 3,106.40 (1,045.20) 72.67 (742.34) 1,391.53

50,365.61 40,704.41 50,365.37 40,664.76

31,343.07 17,848.23 5,019.35 1,285.13

18. Disclosure of related party transaction in accordance with accounting standard (AS 18) Related Party Disclosures (excluding subsidiaries and associates considered for consolidation) Name of the Related Parties: PARTICULARS Associates 2009-10 Apollo International Ltd. (AIL) Encorp E Services Ltd. Landmark Farms & Housing (P) Ltd. UFO Moviez India Ltd. Sunlife Tradelinks (P) Ltd. Travel Tracks Ltd. Classic Auto Tubes Ltd. ( CATL) PTL Enterprises Ltd. (PTL) National Tyre Services, Zimbabwe Pressurite (Pty) Ltd, South Africa Apollo Finance Ltd. Artemis Medicare Services Ltd. Artemis Health Sciences Ltd. Apollo Automotive Tyres Ltd. Apollo Radial Tyres Ltd. Key Management Personnel Mr O S Kanwar Mr Neeraj Kanwar Mr U S Oberoi Mr Sunam Sarkar Relatives of Key Managerial Personnel Mr Raaja Kanwar 2008-09 Apollo International Ltd. (AIL) Encorp E Services Ltd. Landmark Farms & Housing (P) Ltd. UFO Moviez India Ltd. Sunlife Tradelinks (P) Ltd. Travel Tracks (P) Ltd. Classic Auto Tubes Ltd. ( CATL) PTL Enterprises Ltd. (PTL) National Tyre Services, Zimbabwe Pressurite (Pty) Ltd, South Africa Apollo Finance Ltd. Artemis Medicare Services Pvt. Ltd. Artemis Health Sciences Pvt. Ltd. Apollo Automotive Tyres Ltd. Apollo Radial Tyres Ltd. Mr O S Kanwar Mr Neeraj Kanwar Mr U S Oberoi Mr Sunam Sarkar Mr Raaja Kanwar

145

Transactions with Related Parties - 2009-10 Associates Particulars Volume of Transactions: Sales to AIL Reimbursement of Expenses to PTL Reimbursement of Expenses to Artemis Medicare Services Ltd. Lease Rent paid to PTL Service Charges recovered from PTL Conversion Charges Paid to CATL Managerial Remuneration Travelling Expenses - Travel Tracks Rent Received Conference Expenses Paid - Travel Tracks Interest Received PTL Security Deposit -Paid Security Deposit Received Rent Paid Sun life Trade links Rent Paid Landmark Farm Total Amount Outstanding Dr./(Cr.) PTL- Security PTL- Others Landmark Farms & Housing (P) Ltd. AIL Others 982.51 351.40 10.16 250.00 (3.45) 636.62 103.12 (1.21) 137.18 (3.09) (0.03) 83.10 21.30 24.00 2,591.61 507.20 250.00 17.20 72.00 120.43 47.57 404.12 404.12 982.51 351.40 10.16 250.00 (3.45) 636.62 404.12 103.12 (1.21) 137.18 (3.09) (0.03) 83.10 21.30 24.00 2995.73 507.20 Rs/Million Key Management Personnel Rs/Million Total Rs/Million

146

ANNUAL REPORT 09-10

Transactions with Related Parties - 2008-09 Associates Particulars Volume of Transactions: Sales to AIL Reimbursement of Expenses to PTL Reimbursement of Expenses to Others Reimbursement of Expenses to Artemis Medicare Services Pvt. Ltd. Lease Rent paid to PTL Service Charges recovered from PTL Managerial Remuneration Travelling Expenses - Travel Tracks Rent Received Conference Expenses Paid to Travel Tracks Interest Received - PTL Rent Paid Sun life Trade links Rent Paid Landmark Farm Claims Accepted - AIL Total Amount Outstanding Dr./(Cr.) PTL Landmark Farms & Housing (P) Ltd. AIL Others 19. Operating Lease A. Indian Operations The Company has acquired assets under the operating lease agreements that are renewable on a periodic basis at the option of both the lessor and lessee. Rental expenses under those leases were Rs 250 Million (Rs 250 Million) The schedule of future minimum lease payments in respect of non-cancelable operating leases is set out below : PARTICULARS Within one year of the balance sheet date Due in a period between one year and ve years Due after ve years B. South African Operations Apollo Tyres South Africa (Pty) Ltd. The lease escalation liability relates to rental and lease contracts with xed escalation clause. Rental payables under the contracts are charged to prot and loss account on a straight-line basis over the term of relevant lease. LEASE ESCALATION Long term Short term (due within a year) Total lease escalation 2009-10 Rs/Million 78.25 0.46 78.71 2008-09 Rs/Million 69.48 (2.98) 66.50 2009-10 Rs/Million 250.00 750.00 2008-09 Rs/Million 250.00 1,000.00 1,409.49 295.30 (0.01) 0.46 250.00 (3.22) 112.02 (0.95) 47.40 (3.88) 21.30 13.20 2.38 2143.49 545.38 289.67 31.50 191.78 32.43 134.94 134.94 1,409.49 295.30 (0.01) 0.46 250.00 (3.22) 134.94 112.02 (0.95) 47.40 (3.88) 21.30 13.20 2.38 2278.43 545.38 Rs/Million Key Management Personnel Rs/Million Total Rs/Million

147

C. Netherlands Operations The schedule of future minimum lease payments in respect of non-cancellable operating leases is set out below: PARTICULARS Within one year of the balance sheet date Due in a period between one year and ve years Due after ve years 20. Earnings Per Share (EPS) The numerator and denominator used to calculate Basic and Diluted Earnings Per Share: PARTICULARS a) Basic & Diluted (Before Exceptional Items) Prot attributable to the equity shareholders used as numerator (Rs Million) - (A) The weighted average number of equity shares outstanding during the year used as denominator -(B) Basic / Diluted earnings per share (Rs) (A) / (B) (Face Value of Re 1 each) b) Basic & Diluted (After Exceptional Items) Prot attributable to the equity shareholders used as numerator (Rs Million) - (A) The weighted average number of equity shares outstanding during the year used as denominator-(B) Basic/Diluted earnings per share (Rs)(A)/(B) (Face Value of Re 1 each) 21. DISCONTINUED OPERATIONS During the year ended March 31, 2009, the Group discontinued the trading activities of Dunlop Africa Marketing (UK) Limited ("DAMUK"). DAMUK's principal business activity is now only an investment Company currently holding investments in subsidiaries and associates in Zimbabwe. (LOSS) / PROFIT FROM DISCONTINUED OPERATIONS PARTICULARS Revenue Other gains Expenditure Prot before taxation Taxation: Current Tax Deffered Tax Total Tax Charge (Loss)/prot for the year from discontinued operations 2009-10 Rs/Million 2008-09 Rs/Million 20.58 1.58 42.49 (20.33) 4.78 (0.31) 4.47 (15.86) 12.96 2.76 6,533.52 504,024,770 1,391.47 503,338,920 5,659.79 504,024,770 11.23 1,391.47 503,299,126 2.76 2009-10 2008-09 2009-10 Rs/Million 387.19 30.88 29.29 2008-09* Rs/Million 7.26 33.29 42.39

*includes lease payments by Apollo Tyres GmbH, Germany merged during the year with Vredestein GmbH.

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ANNUAL REPORT 09-10

CASH FLOW FROM DISCONTINUED OPERATIONS PARTICULARS Net cash ow from operating activities Net cash ow from investing activities Net cash ow from nancing activities Unrealised forex (loss) / gain Net cash ow from discontinued operations 2009-10 Rs/Million 2008-09 Rs/Million (50.80) 0.37 (2.85) (6.19) (59.47)

22. The mark to market losses of Rs 3.89 Million (Nil) relating to undesignated / ineffective forward contracts / derivatives have been recognised in the Prot and Loss Account. 23. Pursuant to the acquisition of Vredestein Banden B.V.(VBBV), a Dutch Tyre manufacturing Company on May 15, 2009, the prior period gures are not comparable. 24. Previous years gures have been regrouped or rearranged wherever considered necessary to conform to the classications for the current year. Figures in brackets relate to previous year.

ONKAR S. KANWAR Chairman & Managing Director SUNAM SARKAR Chief Financial Ofcer & Whole Time Director

NEERAJ KANWAR Vice Chairman & Managing Director P. N. WAHAL Head (Sectt. & Legal) & Company Secretary

Gurgaon May 28, 2010

A. K. PURWAR K. JACOB THOMAS M.R.B. PUNJA NIMESH N. KAMPANI ROBERT STEINMETZ S. NARAYAN T. BALAKRISHNAN U. S. OBEROI Directors

149

150

Information partaining to Subsidiary Companies u/s 212 (8) of the Companies Act, 1956
APOLLO (MAURITIUS) HOLDINGS PVT LTD (AMHPL) 5,239.08 160.10 5,453.60 5,453.60 2,511.14 7,350.61 44.43 2.45 18,772.24 104.58 2,511.14 7,350.61 44.43 2.45 18,772.24 104.58 145.94 145.94 (24.17) 2,806.43 44.02 (0.29) 6,768.79 (0.21) (54.01) 627.17 252.33 2.43 2.90 0.01 145.94 (AT CPL) (AT AG) (AT PL) 1.51 (1.51) APOLLO SOUTH AFRICA HOLDINGS (PTY) LTD (ASHPL)
APOLLO DUNLOP APOLLO APOLLO TYRES SOUTH AFRICA TYRES VREDESEIN AFRICA (PTY) MARKETING COOPERATIEF B.V. NETHERLTD. (UNITED U.A. NETHERLANDS (ATSAPL) KINGDOM) LTD LANDS *** (DAMUK)* (AT COOP) (AVBV)**

Rs/Million
APOLLO TYRES (CYPRUS) PVT LTD APOLLO TYRES AG SWITZERLAND APOLLO TYRES PTE LTD SINGAPORE APOLLO TYRES GmbH GERMANY APOLLO TYRES KFT, HUNGARY

Contents

(AT GmbH) 26.99 (10.48) 43.86 43.86

(AT KFT) 1.23 2.00 3.23 3.23

APOLLO TYRES (NIGERIA) LTD NIGERIA (AT NGR) 0.80 (18.46) 0.80 0.80

Share Capital

Reserves / (Accumulated Loss)

Total Assets

Total Liabilities

Detail of Investments (other than investment in subsidiary companies) 739.31 425.02 (0.09) 424.94 130.84 1,522.19 (0.75) (0.29) 1,704.39 0.04 672.21 (404.03) 130.87 2,194.40 (0.75) (0.29) 2,108.42 275.89 12,790.86 19,951.99 (0.21) (0.21) 34.34 0.02 -

0.96 (47.78) (47.78) -

(0.47) (0.47) -

35.93 0.45 0.45 -

4.72 3.59 0.14 3.45 -

(14.87) 0.01 (14.88) -

Turnover (including other income)

Prot / (Loss) Before Taxation

Income Tax Expense / (Income)

Prot / (Loss) after taxation

Proposed dividend

Exchange rates conversion on average rates during the year

* The information in respect of 3 subsidiaries in Zimbabwe through DAMUK, which operate under severe political and economic uncertainty that signicantly diminishes control or which operate under severe long term restrictions which signicantly impair their ability to transfer funds to the Parent Company has not been disclosed.

** Includes 18 subsidiaries under AVBV.

*** Includes Pollock& Aitken, subsidiary under ATSAPL.