CEATLTD

January 19, 2022 BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers, Exchange Plaza, Dalal Street, Bandra Kurla Complex, Bandra (East), Mumbai 400 001 Mumbai 400 051 Security Code: 500878 Symbol: CEATLTD NCD Symbol: CL23, CL25 CP Listed ISIN: INE482A14AR9, INE482A14AT5, INE482A14AU3, INE482A14AV1, INE482A14AW9, INE482A14AY5 Sub: Results Earnings Call Q3 FY22 – Investors Presentation Dear Sir/Madam, In continuation of our letter dated January 10, 2022 and January 18, 2022, please find enclosed herewith Investors Presentation for the quarter and nine months ended December 31, 2021, for the Results Earnings Call scheduled on Thursday, January 20, 2022, at 9:00 a.m. IST, dial-in details of which are reproduced below for ready reference: Dial-in Details: India (Universal) and Mumbai +91 22 6280 1214 +91 22 7115 8115 Location Dial In Number USA +1 3233868721 UK +44 2034785524 Singapore +65 31575746 Hong Kong +852 30186877 We request you to kindly take the same on record and disseminate appropriately. Thanking you, Yours faithfully, For CEAT Limited Vallari Gupte Company Secretary & Compliance Officer Encl: as above Q3 FY22 – Investor Presentation | 19th January 2022 Disclaimer This presentation may include statements which may constitute forward-looking statements. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, business development, market position, expenditures, and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or willberealized.Theactualresults,performanceorachievements,couldthusdiffermateriallyfromthoseprojectedinanysuchforward-lookingstatements. The information contained in these materials has not been independently verified. None of the Company, its Directors, Promoter or affiliates, nor any of its or their respective employees, advisers or representatives or any other person accepts any responsibility or liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this documentoritscontentsorotherwiseinconnection withthisdocument,andmakesnorepresentationorwarranty,expressorimplied,forthecontentsofthisdocumentincluding itsaccuracy,fairness,completenessorverificationorforanyotherstatementmadeorpurportedtobemadebyanyofthem,oronbehalfofthem,andnothinginthisdocumentor at this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future. The information and opinions contained in this presentation are current,andifnot statedotherwise, asof thedate ofthispresentation.The Companyundertake no obligationtoupdateorrevise anyinformation orthe opinions expressed inthispresentation as a result ofnewinformation,future eventsor otherwise.Anyopinions or informationexpressed in thispresentation are subjectto change without notice. Thispresentationdoesnotconstituteorformpartofanyofferorinvitationorinducementtosellorissue,oranysolicitationofanyoffertopurchaseorsubscribefor,anysecurities of CEAT Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment therefore.Anyperson/partyintendingtoprovidefinance/investintheshares/businessesoftheCompanyshalldosoafterseekingtheirownprofessionaladviceandaftercarrying out their own due diligence procedure to ensure that they are making an informed decision. 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Table of Contents Section 1: RPG Group Overview 4-6 Section 2: Business Overview 7-17 Section 3: Financial Performance 18-26 Section 4: ESG Highlights 27-31 Section 1: RPG Group Overview Section 1: RPG Group Overview RPG Group: Powered by Passion, Driven by Ethics UNLEASHTALENT RPG Enterprises was founded in 1979. The group currently operates various businesses in Infrastructure, Technology, Life Sciences, Plantations and Tyre industries . The group has business TOUCHLIVES history dating back to 1820 AD in banking, textiles, jute and tea. The Group grew in size and OUTPERFORM strength with several acquisitions in the 1980s and 1990s. CEAT became a part of the RPG Group in 1982, which is now one of India’s fastest growing conglomerates with 30,000+ employees, AND☺ presence in 100+ countries and annual gross revenues of ~USD 4 Bn EPC major in One of India’s Global Integrated Technology One of India’s infrastructure leading tyre technology pharma company solutions largest plantation segments like manufacturers consulting and IT in formulations company companies T&D, Railways, services and synthetic catering to producing tea, Civil, Oil & Gas company APIs energy and rubber, etc. infrastructure 5 RPG Group: Key Financials FY17-21 Gross Total Income (Rs Cr.) FY17-21 CAGR: EBITDA PAT CAGR: 7.0% EBITDA 10.1% 3,006 PAT 8.9% 26,269 24,682 2,594 23,833 2,423 21,766 2,218 20,052 2,045 1,377 980 1,031 1,099 1,111 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 Market Cap Net Worth ROE ROCE 12,000.00 40.0% Group CEAT KEC ZENSAR 9,786 35.0% 31,331 10,000.00 8,441 7,775 30.0% 8,000.00 6,925 25.0% 6,066 6,000.00 16.2% 14.9% 14.1% 13.2% 14.1% 20.0% 12,313 15.0% 4,000.00 10.0% 13.5% 11,799 2,000.00 12.3% 12.0% 11.0% 10.7% 5.0% 4,911 - 0.0% FY17 FY18 FY19 FY20 FY21 Note: 1) ROCE is calculated by taking EBIT*(1-ETR) divided by Capital Employed 2) ROE is calculated by taking PAT divided by Net-worth 6 3) Market Cap updated till 31stDecember 2021 Section 2: Business Overview Section 1: RPG Group Overview Overview 60+ 100+ India’s leading tyre company for years Presence in countries, with strong brand recall 4,500+ 550+ #No 1 dealers, CEAT special channels player in Sri Lanka in terms of market share 7 Manufacturing facilities - Mumbai, Nasik, Halol, Nagpur, Ambernath, Chennai & Sri Lanka H1 FY22 Revenue Breakup by Product H1 FY22 Revenue Breakup by Market Specialty, 4%(7%) Exports, 19%(14%) Truck and Farm, 11%(7%) Buses, 30% (34%) Passenger Cars / UV, 17%(14%) Replacement, OEM, 23% 58%(65%) (21%) 2/3 wheelers, 29% LCV, 8%(9%) (29%) 1. Standalone revenue breakup 2. Figures in parenthesis denote FY21 standalone revenue break-up (post CSTL merger) 3. Farm exports reclassified from Specialty to Farm in FY22 8 Board of Directors Harsh VardhanGoenka Anant Goenka ArnabBanerjee Pierre E. Cohade Chairman, Non Executive Director Managing Director COO and Whole Time Director Non Executive, Non Independent Director Paras K. Chowdhary Atul C. Choksey HaigreveKhaitan Mahesh S. Gupta Non Executive, Non Independent Director Non Executive, Independent Director Non Executive, Independent Director Non Executive, Independent Director RanjitPandit Vinay Bansal Priya Nair Non Executive, Independent Director Non Executive, Independent Director Non Executive, Independent Director 8 Leadership Team Anant Goenka Kumar Subbiah Arnab Banerjee Milind Apte Managing Director Executive Director, Finance & CFO Chief Operating Officer Senior Vice President, Human Resources Dilip Modak Saurav Mukherjee Peter Becker Senior Vice President, Manufacturing Senior Vice President, Global Sales & Supply Chain Senior Vice President, R&D and Technology 10 Growth Strategy Extensive Distribution Accelerated Growth in International Business Strong Brand Differentiated Products OEM Relationships World Class R&D 11 Extensive Distribution 1 FMCG style distribution, industry leading number of Continuously expanding footprint and enriching touch-points customer experience 4,500+ 600+ 300+ 580+ 400 100 10 Dealers & Channel Partners CEAT Special Channels Distributors Districts (Shoppe / SIS) Approximate number as on 31 Dec and additions in 9M FY22 CEAT Shoppe Shop in Shop (SIS) CEAT Tyre Stop New look illustrations 12 Strong Brand 2 Focused campaigns around umbrella theme of Safer & Smarter Mobility Select digital campaigns for Q3 FY22 “Best Product Launch Campaign” Smarties India 2021 “Best Brand Promotion on OTT & Video Streaming“ Brand Equity Media Strategy Awards 2021 13 Deep OEM Partnerships 3 Honda Royal Enfield Bajaj Yamaha Suzuki Hero Hero Electric Piaggio LML Tork Tunwal Okinawa Scooters Kawasaki Maruti Suzuki TATA Motors Mahindra Renault Hyundai KIA Nissan Force Motors Datsun Skoda Peugeot Volkswagen Morris Garage TATA Motors Ashok Leyland VECV Escorts AMW TAFE Mahindra Daimler Eicher SML Isuzu JBM Group 14 World Class R&D 4 • Consistently churning variants across vehicle platforms and geographies • Focus on upcoming technologies like Electric Vehicle, Smart Tyres and Sustainability • Significant investment on tyre testing infrastructure like Anechoic Chamber, Flat Track Test Machine • 100+ patent filings till date State-of-the-Art R&D R&D Office, Germany Summer and Winter Track Testing Center, Halol 15 Differentiated Products – Platforms & Recent OEM Launches 5 Performance based platforms Stronger OEM relationships, better traction for replacement cycle Skoda Slavia Mahindra Bolero Neo Nissan Magnite Okaya EV Scooter Hero HF Deluxe Suzuki Gixxer Olectra EV Bus Ashok Leyland Ecomet Tata Motors BS VI Select platforms 16 Accelerated Growth In International Business 6 45% Key Export Markets YoY Growth in Export Emerging markets Revenue 100+ 12 Countries Present EU and Americas new focus areas. Business driven by local insights and marketing 680+ 68 SKUs in Off-Highway Tyres Addition / progress in 9M FY22 17 Consolidated: Q3 FY22 Financial Highlights Q3 FY22 v/s Q3 FY21 (YoY) Q3 v/s Q2 FY22 (QoQ) • Net revenue INR 2,413 Crs increased 8.6% • Net revenue INR 2,413 Crs declined 1.6% • Gross margin 34.0 % contracted by 1,156 bps • Gross margin 34.0 % contracted by 292 bps • EBITDA margin 5.9% contracted by 935 bps • EBITDA margin 5.9% contracted by 327 bps • PAT (–ve) INR 20 Crs v/s INR 132 Crs • PAT (–ve) INR 20 Crs v/s INR 42 cr • Debt / equity at 0.7x compared to 0.5x • Debt / equity at 0.7x compared to 0.6x 19 Consolidated: Q3 and 9M FY22 Financials All figures in INR Crs Parameter Q3 FY21 Q2 FY22 Q3 FY22 QoQ YoY 9M FY21 9M FY22 YoY Net Revenue from operations 2,221.3 2,451.8 2,413.3 -2% 9% 5,319.9 6,771.4 27% Raw Material 1,209.6 1,547.0 1,593.2 3% 32% 2,938.0 4,304.5 47% Gross margin 1,011.7 904.8 820.1 -9% -19% 2,381.9 2,467.0 4% Gross margin % 45.5% 36.9% 34.0% (292) bps (1,156) bps 44.8% 36.4% (834) bps Employee Cost 180.6 171.9 172.1 0% -5% 492.8 521.9 6% Other Expenses 503.4 512.6 513.9 0% 2% 1,166.9 1,422.8 22% EBITDA 339.4 225.5 143.0 -37% -58% 750.6 543.4 -28% EBITDA % 15.3% 9.2% 5.9% (327) bps (935) bps 14.1% 8.0% (609) bps Finance Cost 41.9 49.6 54.8 10% 31% 135.6 150.3 11% Depreciation 87.3 120.6 108.6 -10% 24% 249.8 325.6 30% Operating PBT 210.2 55.3 -20.3 NM NM 365.3 67.4 -82% Exceptional expense 12.3 0.5 6.5 NM -47% 34.1 7.0 -79% Non-Operating income 4.1 2.8 3.2 15% -22% 10.6 8.1 -24% PBT 202.0 57.6 -23.7 NM NM 341.8 68.5 -80% PAT 132.3 42.3 -20.2 NM NM 279.3 45.2 -84% Notes Figures are as per IND AS Company’s investment in Sri Lanka JV is accounted using Equity method under IND AS which was earlier consolidated using proportionate consolidation method Gross margin includes impact of non-material cost movement of inventory (FG + SFG) EBITDA includes profit from Sri Lanka JV 20 EBITDA does not include Non-operating income Consolidated: Financial Trends All figures in INR Crs Revenue EBITDA and Margin 7,610 1,019 6,985 6,779 6,771 741 751 663 5,320 543 9.5% 10.9% 13.4% 14.1% 8.0% FY19 FY20 FY21 9M FY21 9M FY22 FY19 FY20 FY21 9M FY21 9M FY22 PAT and Margin Debt and Leverage Ratios 432 2,260 1,929 279 1,556 1,498 251 1,418 230 2.3x 2.6x 1.4x 1.6x 2.8x Debt/EBITDA 45 0.5x 0.7x 0.4x 0.5x 0.7x Debt/Equity 3.6% 3.4% 5.7% 5.2% 0.6% FY19 FY20 FY21 9M FY21 9M FY22 FY19 FY20 FY21 9M FY21 9M FY22 Note All figures are per IND AS Company’s investment in Sri Lanka JV is accounted using Equity method 21 EBITDA includes profit from Sri Lanka JV; EBITDA does not include Non-operating income Standalone: Q3 and 9M FY22 Financials All figures in INR Crs Parameter Q3 FY21 Q2 FY22 Q3 FY22 QoQ YoY 9M FY21 9M FY22 YoY Net Revenue from operations 2,212.5 2,432.3 2,406.1 -1% 9% 5,293.8 6,736.2 27% Raw Material 1,206.5 1,535.9 1,591.9 4% 32% 2,925.4 4,291.6 47% Gross margin 1,006.0 896.5 814.3 -9% -19% 2,368.4 2,444.6 3% Gross margin % 45.5% 36.9% 33.8% (302) bps (1,163) bps 44.7% 36.3% (845) bps Employee Cost 178.5 170.0 170.1 0% -5% 486.6 515.3 6% Other Expenses 501.7 510.2 512.0 0% 2% 1,163.4 1,413.6 22% EBITDA 325.8 216.3 132.2 -39% -59% 718.5 515.8 -28% EBITDA % 14.7% 8.9% 5.5% (340) bps (923) bps 13.6% 7.7% (592) bps Finance Cost 41.2 48.7 54.1 11% 31% 133.8 148.0 11% Depreciation 87.3 120.6 108.6 -10% 24% 249.7 325.6 30% Operating PBT 197.4 47.0 -30.4 NM NM 334.9 42.1 -87% Exceptional expense 12.3 0.5 6.5 NM -47% 34.1 7.0 -79% Non-Operating income 10.0 2.6 18.9 623% 89% 28.7 23.6 -18% PBT 195.1 49.1 -18.0 NM NM 329.5 58.7 -82% PAT 127.6 36.0 -14.9 NM NM 271.8 41.0 -85% Notes Financials are as per IND AS Gross margin includes impact of non-material cost movement of inventory (FG + SFG) EBITDA does not include Non-operating income 22 Sustainability Goals Manufacturing ✓ Plant electricity through rooftop / captive solar plants ✓ Using briquette as fuel Materials Transportation ✓ Greener raw materials; Reduce Carbon Footprint by 50% ✓ Network optimization recycled crumb rubber by 2030 ✓ Alternate Mode of Transport ✓ ESG compliant vendors Product Use End of Life ✓ Light weight tyres ✓ High recycling and recovery ✓ Low rolling resistance rates ✓ Increased retreadability 24 Select Environment & Society Initiatives Nasik, Bhandup and Halol, Nasik, 5-10% reduction in 26% plant power Nagpur, Chennai Nagpur plant certified Nagpur, Chennai rolling resistance through solar roof platinum and Halol for energy and Ambernath ZLD top for select SKUs (YoY) plant gold certified management system plants Green Building Internship for Gender diversity Functional English women wanting Training in hirings at 32% for school children Installation of to return to programmes for for 9M FY22, and teacher fever clinics, corporate world functional skills transgender empowerment oxygen tanks, & specially abled recruitment programmes concentrators 25