Investment Risks:

Balkrishna Industries is export oriented company, with 80% of revenues generated from
different geographies. Trade wars between the countries can affect the margins of company.
BKT industries Ltd 60% of product mix is related to agricultural segment which is cyclical in
nature and depends on the monsoon. Supply chain disruptions will severely disrupt the
operations of the company.
The changes in the tax rates (upside) will affect the cash flows of the company.
If India’s major tyre manufacturers (MRF and CEAT) focuses on OHT segment for more
penetration into global market, will pose a risk to BKT industries.
BKT tyres are preferred globally because of their quality and 10-15% discounted prices than
global players. If the global players started a price aggressive strategy to compete with BKT
industries, this will result in loss of global market share of BKT in OHT segment of tyres.
Raw materials natural rubber and crude derivatives prices are actively traded on exchanges
and increase in prices due to volatility and market factors will increase the costs of the
company and margins are affected.
As BKT is export oriented where as raw materials are being imported by the company, any
changes in regulations of the export-import policies between the countries will severely
impact the operation life cycle of the company.

Fluctuation in Raw Material prices:

The Company’s major raw material is Natural Rubber, which is an agricultural commodity and actively traded on the commodities
exchanges. The demand supply situation of Natural Rubber has been favourable to the users which has kept its prices under check. Though
we see volatility in its pricing, we do not foresee any major increase in its prices in the near to medium term unless due to unforeseen
circumstances. The prices of other raw materials which are crude derivatives have been declining on account of drop in crude prices. Since
crude is a very volatile commodity, the prices of crude linked raw materials are likely to fluctuate due to any fluctuation in crude prices.

Currency Fluctuation:
The Company revenues are mainly generated through exports. Further, since most of the raw materials and capital equipment are imported,
the Company is exposed to foreign currency risk. However, it enjoys natural hedge as most of its revenues are in foreign currency.
COVID-19 issue has created imbalance in the economies of various countries including India and therefore we are exposed to wider risk
due to currency fluctuation.

Commodity price risk or foreign exchange risk

Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and
prices (such as interest rates, foreign currency exchange rates ) or in the price of market risk-sensitive instruments as a result of such
adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign
currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to
foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company’s exposure to market risk is a
function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Currency risk
The company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchase, other
expenses and borrowings are denominated and the functional currency of the company. The functional currency of the company
is Indian Rupees (`). The currencies in which these transactions are primarily denominated are EURO and USD.

At any point in time, the Company generally hedges its estimated foreign currency exposure in respect of forecast sales over the
following 10 to 12 months. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of
less than one year from the reporting date. Such contracts are generally designated as cash flow hedges.

The Company, as per its risk management policy, uses foreign exchange forward contract and cross currency forward contracts primarily
to hedge foreign exchange. The Company does not use derivative financial instruments for trading or speculative purposes.