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Directors Report of Bajaj Auto Ltd.

Mar 31, 2017

The Directors present their Tenth Annual report and Audited Financial Statements for the year ended 31 March 2017.

Financial results

The financial results of the Company are elaborated in the Management Discussion and Analysis Report.

The highlights of the Financial Results are as under:

Sales in Numbers

FY2017

FY2016

Two-wheelers

3,219,932

3,358,252

Three-wheelers Quadricycle

446,018

535,329

Total

3,665,950

3,893,581

Of which Exports

1,411,333

1,739,629

Particulars

FY2017

(RS, In Crore)

FY2016

Total income

24,310.00

24,956.79

Total expenses

18,974.37

19,409.47

Profit before tax

5,335.63

5,547.32

Tax expense

1,508.07

1,617.65

Profit for the year

3,827.56

3,929.67

Earnings per share (H)

132.3

135.8

Closing balances in reserve/other equity

(RS, In Crore)

Particulars

FY2017

FY2016

General reserve

4,046.60

3,663.60

Retained earnings

12,562.56

9,305.17

Cash flow hedging reserve

200.27

23.86

Costs of hedging reserve

(64.67)

(15.45)

Total

16,744.76

12,977.18

Note: Detailed movement of above reserves can be seen in ''Statement of Changes in Equity''

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of H 55 per equity share, (550%) for the year ended 31 March 2017.

The amount of dividend and the tax thereon aggregate to RS, 1,915.51 crore.

For the year ended 31 March 2016, the total dividend paid (including interim dividend), was also RS, 55 per share of RS, 10 each (550%) and the total dividend and the tax thereon to the extent applicable also aggregated to RS, 1,915.51 crore.

Share capital

The paid up equity share capital as on 31 March 2017 was RS, 289.37 crore. There was no public issue, rights issue, bonus issue or preferential issue, etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted any stock options.

Operations

Detailed information on the operations of the Company and details on the state of affairs of the Company are covered in the Management Discussion and Analysis Report.

Capacity expansion and new projects

The Company''s current installed capacity is 6.06 million units per annum.

As regards our Quadricycle - QUTE, the product is ready for launch and the Company awaits requisite approvals for sale in the domestic market.

The Qute was sold in various international markets during the year 2016-17.

Research and Development and technology absorption

A) Products

Many new products have been launched during the year under review. Detailed information on the new products is covered in the Management Discussion and Analysis Report.

B) Process

R&D has been working on improving its operations in a number of areas as listed below:

- Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company.

- Facilities: R&D continued to enhance its design, computing, prototype manufacturing and validation facilities. A number of new test facilities and prototyping facilities were added.

C) Technology

As in the past, new and improved technology has been introduced during the year under review and the detailed information on the same is covered in the Management Discussion and Analysis Report.

D) Outgo

The expenditure on research and development during 2016-17 and in the previous year was:

(RS,In Crore)

Particulars

FY2017

FY2016

i. Capital (including technical know-how)

35.26

52.82

ii. Recurring

332.38

282.34

Total

367.64

335.16

iii. Total research and development expenditure as a percentage of sales 1.62% 1.43%

Conservation of energy

The company continues its efforts to reduce and optimize the energy consumption at all its manufacturing facilities, including the corporate office at Pune.

Significant reduction in energy consumption has been achieved by:

A) Electrical energy

- Elimination of compressors for pneumatically operated 132 kv circuit breakers; by modifying circuit breakers to spring mechanism.

- Optimization of centralized coolant system by relocation of production cells.

- Reduction in energy consumption by providing inverter drives with pressure transmitter for hydraulic motors.

- Replacing conventional blower with higher capacity induction motor to achieve optimal design in paint shop-tank cell air supply unit.

- Optimizing compressed air pressure by use of portable small compressors on holidays.

- Reduction in hidden loss by providing on-line loss measurement system for transformer.

- Use of HVLS (High volume and Low Speed) fans for fixed load reduction of air circulators.

B) Water

- Rain water harvesting.

- Re-use of treated water for processes like cooling towers, central coolant systems, de-sludge pool and incinerator, compressor cooling tower and AHU, etc.

- Replacing rusty underground hydrant and raw water pipeline with above ground level pipeline to arrest water leakages.

- Installation of second stage reverse osmosis at paint shop.

C) LPG/propane

- Thermal imaging/audit for ovens in paint shop and countermeasure.

- Weight reduction of job fixtures in heat treatment.

- Burner efficiency improvement through efficient burners.

- Upgrade of furnace insulation to reduce heat losses.

- Providing magnetic resonator in gas train pipeline to increase combustion efficiency.

- Usage of low temperature chemicals for pre-treatment process.

D) Utilization of renewable energy-key initiatives

- Two PV Solar Power Plants, with capacity of 110 KWp and 1100 KWp, are installed at the Company''s Akurdi Plant. Recurring saving of 1.57 L KWH and 15.5 L KWH respectively is being realized yearly. Benefit of RS, 70 lakh per year.

- Additionally 1228 KWp (roof top) solar power plant installation is in progress at the Company''s Chakan Plant. Electricity saving to the extent of 17 L KWH per year is expected. Benefit of RS, 19 lakh per year.

- Installation of natural light transparent roof sheets.

Impact of measures taken

As a result of the initiatives taken for conservation of energy and natural resources, the Company has effected an overall reduction in consumption as given in the following table :

Description

% Reduction w.r.t. previous year FY2017 FY2016

Electricity consumption

1.98 5.96

Water consumption

18.73 16.99

LPG/PNG consumption

8.80 15.65

Investment/savings

(HIn Crore)

Description

FY2017

FY2016

Investment for energy conservation activities

3.34

3.76

Recurring savings achieved through above activities

2.18

2.52

Awards and Accolades

Sr.

No.

Details

1 National Energy Management Award 2016 for ''Excellent Energy Efficient Unit'' by CII to Waluj Plant.

2

National Award for Excellence in Water Management 2016 by CII to Waluj Plant.

3

BAL Chakan received ''Certificate of Merit'' Award in National Energy Conservation Award, by Bureau of Energy Efficiency.

4

BAL Chakan received ISO 14001 Certification for upgraded standard (2015).

International Business

Bajaj Auto continues to be India''s No. 1 exporter of motorcycles and three-wheelers. It exports to 78 countries in Latin America, Africa, South Asia, Middle East and Asia Pacific regions. During the year under review, exports accounted for 36.9% of the Company''s net sales. Detailed information on the International Business is given in the Management Discussion and Analysis Report.

Foreign exchange earnings and outgo

The Company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was RS, 7,336.49 crore, compared to RS, 9,404.68 crore during the previous year.

Total foreign exchange outflow during the year under review was RS, 697.92 crore, as against RS, 774.90 crore during the previous year.

Industrial relations

Industrial relations with staff and workmen across all the plants, viz. Akurdi, Waluj, Chakan and Pantnagar, continued to be cordial.

During the year, a wage settlement has been signed at Pantnagar on 1 August 2016 for a period of three and half years from 1 June 2016 to 30 November 2019, on expiry of the earlier settlement on 31 May 2016.

For the Akurdi and Chakan plants, periodic wage reviews are due with effect from 1 April 2016, as per the terms of the respective wage settlements signed for a period of 9 years, in the year 2010.

In view of the financial difficulties faced by the workmen, an interim wage raise has been given to all Chakan workmen in October 2016, with effect from 1 April 2016.

The existing settlement at Akurdi Plant has been terminated in November 2016. The wage review process will commence on receipt of a fresh charter of demands from the Union.

With active participation and involvement of employees, the Company has been able to inculcate TPM culture for excellence and continuous improvement across all plants. The plants have received many Awards during the year from Confederation of Indian Industry (CII), Quality Circle Forum of India (QCFI), Indian Institution of Industrial Engineering (IIIE) and National Convention Quality Circle (NCQC).

Waluj Motorcycle Division (MCD) received Gold Awards in QC Circle competitions organized by QCFI at Nagpur and Aurangabad, apart from Excellence Awards in the competitions held by QCFI at Raipur and Mumbai. It also received an Award in Champion of Champions competition organized by CII at Bangalore and in the 3M Kaizen competition organized by TPM Club and Institute of Quality at New Delhi.

Likewise, Waluj Commercial Vehicle Division (CVD) received Gold Medal/Gold Performance/Excellent/ Best of Best Poka Yoke/Best of Manufacturing Support Awards in the Mini/Annual Convention competitions organized by QCFI at Aurangabad and Nagpur. The CVD also received Excellence Awards in the competition organized by NCQC at Raipur, Chhattisgarh.

Chakan Plant received Gold Awards in the National Productivity Competition organized by IIIE at Nagpur. The plant was declared as First Prize Winner in the TPM Circle Competitions organized by CII at Aurangabad and Chennai.

Pantnagar Plant received Gold Award in the TPM Circle Competition organized by QCFI at Rudrapur. The plant was also declared as a Winner in the TPM Circle competition organized by CII at Chennai.

Ramkrishna Shekhaji Hivale, a workman from Central Heat Treatment (MCD) Waluj, has received the National ''Vishwakarma Rashtriya Puraskar'' Award from the Labour and Employment Ministry, Government of India, for the year 2014.

Two workmen from Waluj plant, viz. Ratankumar S Kamble from Final Assly-3Wh. and Vishwanath Savta Jadhav from Final Assly-MCD, have received the Prime Minister''s ''Shram Bhushan'' and ''Shram Shree'' Awards respectively for the year 2015.

Subsidiaries and joint ventures

PT. Bajaj Auto Indonesia

Routine business operations of PT. Bajaj Auto Indonesia, a 99.25% subsidiary of Bajaj Auto, have currently stopped.

The Company has an agreement with KTM to establish and distribute the KTM branded bikes in Indonesia, the largest motorcycle market in South-East Asia.

KTM and Bajaj Auto have decided for BAL to manage KTM in the Indonesian market with the jointly developed range of products. Towards this, the joint product range has been introduced in Jakarta through a local distributor. Further plans to build brand network and supply chain are being developed.

During the year under review, a total of 1,598 units of KTM were sold in Indonesia.

It is intended that PT. Bajaj Auto Indonesia will hold the necessary regulatory approvals for the Assembly operations and Product homologation in Indonesia.

Bajaj Auto International Holdings BV, Netherlands (BAIH BV)

Bajaj Auto International Holdings BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd.

Over the years, through this subsidiary, Bajaj Auto has invested a total of € 198.1 million (RS, 1,219 crore), and holds approximately 48% stake in KTM AG of Austria (KTM). Calendar year 2016 has again been a good year for KTM, with highest sales in units and highest turnover in the history of the Company. Detailed information on the developments at the subsidiary and KTM AG is provided in the Management Discussion and Analysis Report.

Signing of anti-corruption initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your Company is a signatory to the ''Commitment to anti-corruption'' and is supporting the ''Partnering Against Corruption-Principles for Countering Bribery'' derived from Transparency International''s Business Principles. This calls for a commitment to two fundamental actions, viz.a zero-tolerance policy towards bribery and development of a practical and effective implementation programme.

Adoption of Confederation of Indian Industry (CII) Charters

The Company has adopted the CII Code of Conduct for Affirmative Action in the year 2006, effective from 1 December 2006.

In addition, during the year under review, CII had come out with a Model Code of Conduct for its member companies with basic principles of doing business ethically. Your Company, being a member of CII, has adopted the said Model Code of Conduct.

Further, with a view to showcasing industry''s commitment to fair and ethical practices, CII had also presented two charters on Fair and Responsible Workplace Guidelines viz., Charters on Fair and Responsible Workplace Guidelines for Collaborative Employee Relations and Responsible Workplace Guidelines for Contract Labour to the members of CII. In support of the initiative taken by CII and with a view to striving towards reducing the disparity in treatment between regular and contractual work force, your Company has adopted the above two charters during the year under review.

Extract of annual return

The extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013, in the prescribed form MGT-9 is annexed to this Report.

Number of meetings of the Board

There were seven meetings of the Board held during the year. Detailed information is given in the Corporate Governance Report.

Directors'' responsibility statement

As required under clause (c) of sub-section (3) of section 134 of the Companies Act, 2013, directors, to the best of their knowledge and belief, state that-

- in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

- the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the company for that period;

- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the directors had prepared the annual accounts on a going concern basis;

- the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively; and

- the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.

Details in respect of frauds reported by auditors under section 143(12)

During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under section 143(12) of the Companies Act, 2013.

Declaration by independent directors

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in section 149 (6) of the said Act.

Directors'' Remuneration Policy and criteria for matters under section 178

Information regarding Directors'' Remuneration Policy and criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 are provided in the Corporate Governance Report.

Particulars of loans, guarantees or investments

Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are detailed in the Financial Statements.

Related party transactions

No Related Party Transactions (RPTs) were entered into by the Company during the financial year, which attracted the provisions of section 188 of the Companies Act, 2013. There being no ''material'' related party transactions as defined under regulation 23 of SEBI Listing Regulations, 2015, there are no details to be disclosed in Form AOC-2 in that regard.

During the year 2016-17, pursuant to section 177 of the Companies Act, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all RPTs were placed before the Audit Committee for its approval.

The Policy on RPTs as approved by the Board is uploaded on the Company''s website www.bajajauto.com

Material changes and commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.

Risk Management Policy

Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk, which in the opinion of the Board may threaten the existence of the Company, is given in the Corporate Governance Report.

Corporate Social Responsibility (CSR)

Detailed information on the Corporate Social Responsibility Policy developed and implemented by the Company on CSR initiatives taken during the year pursuant to section 135 of the Companies Act, 2013 is given in the annexed Annual Report on CSR activities.

Formal annual evaluation of the performance of the Board, its Committees and Directors

Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is given in the Corporate Governance Report.

Presentation of financial statements

The financial statements of the Company for the year ended 31 March 2017 have been disclosed as per Division ll of Schedule III to the Companies Act, 2013.

Indian Accounting Standards, 2015

The financial statements up to year ended 31 March 2016 were prepared in accordance with the Accounting Standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

The annexed financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS.

Detailed information on the impact of the transition from previous GAAP to Ind AS is provided in the annexed financial statements.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, and as prepared in compliance with the Companies Act, 2013, applicable Accounting Standards and SEBI Listing Regulations, 2015 as prescribed by SEBI.

A separate statement containing the salient features of its subsidiaries in the prescribed form AOC-1 is annexed separately.

Statutory disclosures

The summary of the key financials of the Company''s subsidiaries (Form AOC-1) is included in this Annual Report. A copy of the audited financial statements for each of the subsidiary companies will be made available to the members of the Company seeking such information at any point of time.

The audited financial statements for each of the subsidiary companies will be kept for inspection by any member of the Company at its registered office during business hours. The same are placed on the Company''s website www.bajajauto.com

Details as required under the provisions of section 197(12) of the Companies Act, 2013, read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this Report.

Details as required under the provisions of section 197(12) of the Companies Act, 2013, read with rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, which form part of the Directors'' Report, will be made available to any shareholder on request, as per provisions of section 136(1) of the said Act.

A Cash Flow Statement for the year 2016-17 is attached to the Balance Sheet.

Pursuant to the legislation ''The Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013'', the Company has a Policy on Prevention of Sexual Harassment at Workplace. There was no case reported during the year under review under the said Policy.

Directors and Key Managerial Personnel-changes

The Board at its meeting held on 16 March 2016 appointed Pradeep Shrivastava, as an additional director and whole-time director with the designation of Executive Director for a period of five years commencing from 1 April 2016. The members at the Ninth annual general meeting have approved the appointment of Pradeep Shrivastava, as a whole-time director with the designation of Executive Director.

During the year under review, Madhur Bajaj, whole-time director and Vice Chairman of the Company informed the Board that due to certain commitments and other pre-occupations, he would be unable to continue as a whole-time director of the Company and that he be relieved of the responsibilities as a whole-time director of the Company with effect from 1 April 2017. He, however, informed that he would be willing to continue as a non-executive director and Vice Chairman of the Company and that his services will continue to be available to the Company on various matters as and when required.

The Board, at its meeting held on 15 March 2017, at the recommendation of the Nomination and Remuneration Committee, approved the change in status of Madhur Bajaj from that of Executive Vice Chairman to Non-Executive Vice Chairman with effect from 1 April 2017. The Board placed on record its appreciation of the long and conscientious service rendered by Madhur Bajaj as an Executive Vice Chairman of the Company.

Kantikumar R Podar, an independent director of the Company, after his long distinguished tenure on the Board of the Company (including erstwhile BAL) since 19 August 1983, due to his health condition, tendered his letter of resignation to take effect from 15 March 2017. The Board placed on record its sincere appreciation of the valuable services rendered by him during his long tenure. In his place, pursuant to section 149 and regulation 17 (1) (b) read with regulation 25 (6) of SEBI Listing Regulations, 2015, Dr. Naushad Forbes was appointed as an additional director in the category of non-executive, independent director of the Company, with effect from 18 May 2017, at the meeting of the Board held on 18 May 2017.

J N Godrej, an independent director of the Company, after his distinguished tenure of nearly two decades on the Board of the Company (including erstwhile Bajaj Auto), tendered his letter of resignation to take effect from 10 April 2017. The Board placed on record its sincere appreciation of the valuable services rendered by him during his long tenure. In his place, pursuant to section 149 and regulation 17 (1) (b) read with regulation 25 (6) of the SEBI Listing Regulations, 2015, Dr. Omkar Goswami was appointed as an additional director in the category of non-executive, independent director of the Company, with effect from 18 May 2017, at the meeting of the Board held on 18 May 2017.

In light of the provisions of the Companies Act, 2013, Madhur Bajaj and Shekhar Bajaj retire from the Board by rotation this year and being eligible, offer themselves for re-appointment. The information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations, 2015 in case of re-appointment of the directors is provided in the Notice of the ensuing annual general meeting.

There was no other change in the directors and KMP during the year under review.

Detailed information on the directors is provided in the Corporate Governance Report.

Significant and material orders passed by the regulators or courts

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which may impact the going concern status of the Company and its operations in future.

Global Depository Receipts (GDRs)

During the year under review, the Company terminated its GDR programme w.e.f 1 February 2017. Detailed information about the same is given in the annexed General Shareholder Information.

Details of internal financial controls with reference to the financial statements

The Company has documented its internal financial controls considering the essential components of various critical processes, physical and operational. This includes its design, implementation and maintenance, along with periodical internal review of operational effectiveness and sustenance, which are commensurate with the nature of its business and the size and complexity of its operations.

This ensures orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The internal financial controls with reference to the financial statements were adequate and operating effectively.

Corporate governance

Pursuant to SEBI Listing Regulations, 2015, a separate chapter titled ''Corporate Governance'' has been included in this Annual Report, along with the reports on Management Discussion and Analysis and General Shareholder Information.

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2016-17. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report.

The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17 (8) of the SEBI Listing Regulations, 2015.

Certificate from the Auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report.

Business Responsibility Report

Regulation 34(2) of the SEBI Listing Regulations, 2015, as amended, inter alia, provides that the annual report of the top 500 listed entities based on market capitalization (calculated as on 31 March of every financial year), shall include a Business Responsibility Report.

Since Bajaj Auto Ltd. is one of the top 500 listed entities, the Company, as in the previous years, has presented its BR Report for the financial year 2016-17, which is part of this Annual Report.

As a green initiative, the BR Report has been hosted on the Company''s website www.bajajauto.com

A physical copy of the BR Report will be made available to any shareholder on request.

Secretarial Standards of ICSI

Pursuant to the approval given on 10 April 2015 by the Central Government to the Secretarial Standards specified by the Institute of Company Secretaries of India, the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) came into effect from 1 July 2015. The Company is in compliance with the same.

Auditors

Statutory Auditor

The current auditors, viz. Dalal & Shah LLP, Chartered Accountants (Firm Registration No. 102021W/W100110) were last re-appointed by the members at their annual general meeting held on 17 July 2014 to hold the office of auditor from the conclusion of the Seventh annual general meeting till the conclusion of this Tenth annual general meeting.

As per the provisions of section 139 of the Companies Act, 2013, no listed company shall appoint an audit firm as auditors for more than two terms of five consecutive years. The Act also provided for an additional transition period of three years from the commencement of the Act i.e. 1 April 2014.

The current auditors had completed a period of seven years at the commencement of the said Act and hence on their completing the additional transition period of three years provided under the Act, the term of the current auditors expires at the conclusion of the ensuing annual general meeting.

The Board of Directors at its meeting held on 18 May 2017, based on the recommendation of the Audit Committee has recommended the appointment of S R B C & Co LLP, Chartered Accountants, (Firm Registration No. 324982E/E300003) as the statutory auditors of the Company for approval by the members.

S R B C & Co LLP, Chartered Accountants have consented to the said appointment and confirmed that their appointment, if made, would be within the limits specified under section 141(3) (g) of the Act and that they are not disqualified to be appointed as statutory auditors in terms of section 143 of the Act.

S R B C & Co LLP, Chartered Accountants will be appointed as the statutory auditors of the Company from the conclusion of the ensuing annual general meeting till the conclusion of the Fifteenth annual general meeting, subject to ratification of their appointment by the members at every intervening annual general meeting on a remuneration, out-of-pocket expenses etc., incurred in connection with the audit as may be decided by the Board in consultation with the auditors from year to year.

The members are therefore requested to appoint S R B C & Co LLP, Chartered Accountants, as statutory auditors of the Company for a term of five years from the conclusion of the ensuing annual general meeting till the conclusion of the Fifteenth annual general meeting, to be scheduled in 2022, subject to ratification at each annual general meeting and to fix their remuneration for the year 2017-18.

The statutory audit report does not contain any qualification, reservation or adverse remark or disclaimer made by statutory auditor.

Secretarial Auditor

Pursuant to the provisions of section 204 of the Companies Act, 2013 and Rules made there under, the Company has re-appointed, Shyamprasad D Limaye, Practising Company Secretary (Membership No.1587) to undertake the secretarial audit of the Company. Secretarial audit report for the year 2016-17 issued by him in the prescribed form MR-3 is annexed to this Report.

The said secretarial audit report does not contain any qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor.

On behalf of the Board of Directors,

Chairman

Pune: 18 May 2017


Mar 31, 2015

Dear Members,

The directors present their Eighth Annual Report and audited financial statements for the year ended 31 March 2015.

Financial results

The financial results of the Company are elaborated in the Management Discussion and Analysis Report.

The highlights of the Financial Results are as under:

Sales in numbers FY 2015 FY 2014

Motorcycles 3,292,084 3,422,403

Three-wheelers 519,117 447,674

Total 3,811,201 3,870,077

Of which exports 1,806,078 1,583,935

(Rs. In Crore)

Particulars FY 2015 FY 2014

Total revenue 22,194.43 20,855.92

Total expenses 17,769.35 16,223.87

Profit before exceptional items and tax 4,425.08 4,632.05

Exceptional items 340.29 -

Profit before tax 4,084.79 4,632.05

Tax expense 1,271.05 1,390.10

Profit after tax 2,813.74 3,241.95

Profit for the year 2,813.74 3,243.32

Transfer to General reserve 282.00 325.00

Proposed dividend (inclusive of dividend tax) 1,734.57 1,692.73

Provision of dividend tax for previous year written back - (4.60)

Balance carried to Balance Sheet 797.17 1,230.19

Earnings per share (D) 97.2 112.1

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of B 50 per share, (500%) for the year ended 31 March 2015. The amount of dividend and the tax thereon aggregate to B 1,734.57 crore.

Dividend paid for the year ended 31 March 2014 was also B 50 per share (500%). The amount of dividend and the tax thereon aggregated to B 1,692.73 crore.

Share capital

The paid up equity share capital as on 31 March 2015 was B 289.37 crore.

There was no public issue, rights issue, bonus issue or preferential issue etc. during the year.

The Company has not issued shares with differential voting rights, sweat equity shares nor has it granted any stock options.

Operations

Detailed information on the operations of the Company are covered in the Management Discussion and Analysis Report.

Capacity expansion and new projects

The Company''s current installed capacity is 6.06 million units per annum. The Company plans to increase the installed capacity to around 6.12 million units per annum by March 2016.

As regards our quadricycle - RE 60, the product is ready for launch. Detailed information on the same is provided in the Management Discussion and Analysis Report.

Research and Development and technology absorption

A) Products

Many new products have been launched during the year under review. Detailed information on the new products is covered in the Management Discussion and Analysis Report.

B) Process

R&D has been working on improving its operations in a number of areas as listed below:

- Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company.

- Facilities: R&D continued to enhance its design, computing, proto-type manufacturing and validation facilities. Such enhancement efforts have enabled R&D to develop durable and refined products. A number of new test facilities and proto typing facilities were added.

C) Technology

- ABS on Pulsar RS 200 - As the best balance for cost and safety, the vehicle has front wheel ABS that offers safe braking with good vehicle stability. It also controls the rear wheel lift-up behavior, which is associated with emergency front wheel braking. This augments and supplements the race sports nature of the vehicle.

- EVAP systems for KTM offerings for USA and China markets - This system conforms to the evaporative emission norms of US EPA. The evaporative emission from fuel tank is controlled through use of charcoal canisters to absorb the fuel vapours from escaping into the atmosphere, and an electronically controlled purge valves to purge the absorbed vapour back into the intake system of the engine.

D) Outgo

The expenditure on research and development during 2014-15 and in the previous year was:-

(Rs. In Crore)

Particulars FY 2015 FY 2014

i. Capital (including technical know-how) 139.73 87.11

ii. Recurring 221.68 189.68

Total 361.41 276.79

iii. Total research and development expenditure as a % of sales, net of excise duty 1.71 % 1.40 %

Conservation of energy

Company continues its efforts to reduce and optimise the energy consumption at all manufacturing facilities, including corporate office at Pune. Significant reduction in energy consumption has been achieved as set out below:

A) Electrical Energy

- Installing and running variable speed NIRVAN screw air compressors at compressor houses at Waluj.

- Use of air pressure boosters for high pressure application in paint shops/robots at Waluj.

- Installation of chillers with scroll compressor in paint shop at Waluj.

- Arresting compressed air leakages through audits and countermeasures.

- Auto shut off-hydraulic, coolant, conveyor motors, fume extractors in machine shop.

- Installing air handling unit for plant 2 engine assembly in place of air conditioning system at Pantnagar.

- Use of transparent sheet in shops in place of shop lights at Chakan.

- Use of LED/CFLs for street lighting/shop lightings/office.

- Use of day light pipes in paint shop at Chakan and Pantnagar.

- Installation of energy efficient pumps/motors, equipments, air dryers, exhaust blowers, axial fans.

- Installation of breeze air unit in office/dyno room/PT sub assembly area at Chakan.

- Separate AHU ducts for both vehicle assembly conveyors at Pantnagar.

- Dynamometer cooling blower interlock with vehicle testing at Chakan.

B) Water

- Elimination of water cooling for compressed air at Waluj.

- Reuse of treated water for process, installation of RO plant at Waluj and Chakan.

- Replacement of water cooled dryers of compressor with air cooled dryers at Chakan.

- Replace underground hydrant and raw water pipe line with above ground level pipe line at Waluj and Chakan.

- Use of auto closed water taps for controlled consumption of water at wash basin.

- Use of ETP/STP treated water for chemical dosing and cleaning activity, gardening and toilet flushing at Pantnagar.

- Modification of water distribution line by gravity from main storage tank to different shops at Pantnagar.

- Rain water harvesting at Waluj.

C) LPG/PNG

- Thermal imaging/audit for ovens in paint shop and countermeasure at Waluj.

- Use of PNG instead of LPG at Chakan.

- Provision of air curtains at oven exit to reduce heat loss at Waluj.

- Installation of low temperature chemical in tank cell at Chakan.

- Weight reduction of job fixtures in heat treatment at Waluj and jigs at paint shop Pantnagar.

- Burner efficiency improvement through magnetic resonators at Waluj and Chakan.

- Recovery of heat from waste paint incineration and use it for chemical tank heating at Chakan.

- Use of natural gas started in canteen in place of LPG at Pantnagar.

D) Utilisation of renewable energy - key initiatives

- Installation of transparent roof sheets to maximise use of natural light.

- Installation of light pipes.

- Use of solar electrical energy.

- Use of wind driven ventilators.

Impact of measures taken

As a result of the initiatives taken for conservation of energy and natural resources, the Company has effected an overall reduction in consumption as given in the Table below:

% Reduction w.r.t. previous year

Description FY 2015 FY 2014

Electricity consumption 3.95 1.19

Water consumption 7.37 24.24

LPG/propane consumption 11.70 14.85

Investment/savings

Rs. In Crore

Description FY 2015 FY 2014

Investment for energy conservation activities 3.24 4.36

Recurring savings achieved through above activities 3.57 2.74

Awards and Accolades

- Waluj plant has been recognised with ''Excellent Energy efficient unit award'' for 2014 by CII.

- Waluj plant has won Gold Award (Apex level) in Indian Green Manufacturing Challenge award competition instituted by International Research Institute for Manufacturing, Chennai

International Business

Bajaj Auto continues to be India''s No.1 exporter of motorcycles and three-wheelers. It exports to 62 countries and enjoys the No.1 or No.2 position in 20 of them. During FY2015, exports accounted for 46.2% of the Company''s net sales. Detailed information on the International Business is given in the Management Discussion and Analysis Report.

Foreign exchange earnings and outgo

The Company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was B 9,443.51 crore, compared to B 7,963.86 crore during the previous year.

Total foreign exchange outflow during the year under review was B 856.08 crore as against B 725.21 crore during the previous year.

Industrial relations

Industrial relations with staff and workmen across all the plants viz. Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.

At Chakan, the wage review was due from 1 April 2013 as per the Wage Settlement dated 21 May 2010. Accordingly, a Memorandum of Understanding (MOU) was signed with the recognised union viz. Vishwa Kalyan Kamgar Sanghatana, on 14 August 2014 giving total wage rise of B 10,000 per month in CTC (Cost To Company) per workman in a phased manner for a period of three years from 1 April 2013 to 31 March 2016.

At Waluj, the Wage Settlement was due from 1 August 2014. Accordingly, a fresh settlement was signed with Bajaj Auto Ltd. Employees'' Union on 21 August 2014 for a period of 3.1/2 years from 1 August 2014 to 31 January 2018 giving wage rise of B 9,755 per month in CTC (Cost To Company) per workman. The new settlement is effective from the very next day of expiry of the earlier settlement, which expired on 31 July 2014.

Two workmen from motorcycles division, Waluj received Prime Minister''s ''Shramveer'' and ''Shramshree'' Awards respectively for the year 2013. One workman from spares operations department, Waluj received National ''Vishwakarma Rashtriya Puraskar'' from the Labour and Employment Ministry, Government of India, for the year 2012. Similarly, three workmen from Waluj received ''Gunwant Kamgar'' Awards for the year 2013 from Government of Maharashtra.

Subsidiaries and joint ventures

PT. Bajaj Auto Indonesia

In line with the corporate strategy of aligning with Kawasaki Heavy Industries for business in Indonesia, the routine business operations of PT. Bajaj Auto Indonesia were stopped. This year has seen consolidation of business with Kawasaki and also a complete and smooth closure of company operations in Indonesia.

Bajaj Auto International Holdings BV,

Netherlands (BAIH BV)

Bajaj Auto International Holdings BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd.

Over the years, through this subsidiary, Bajaj Auto has invested a total of € 198.1 million (B 1,219 crore), and holds approximately 48% stake in KTM AG of Austria (KTM), Europe''s second largest sport motorcycle manufacturer. Calendar year 2014 has been a record year for KTM, with highest sales in units and highest turnover in the history of the Company. Detailed information on the developments at the subsidiary and KTM AG is provided in the Management Discussion and Analysis Report.

Signing of anti-corruption initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your Company is a signatory to the ''Commitment to anti-corruption'' and is supporting the ''Partnering Against Corruption - Principles for Countering Bribery'' derived from Transparency International''s Business Principles. This calls for a commitment to two fundamental actions viz. a zero-tolerance policy towards bribery and development of practical and effective implementation programme.

Extract of annual return

The extract of annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013, in the prescribed Form MGT-9 is annexed to this Report.

Number of meetings of the Board

There were 8 meetings of the Board held during the year. Detailed information is given in the Corporate Governance Report.

Directors'' responsibility statement

As required under clause (c) of sub-section (3) of section 134 of Companies Act, 2013, directors, to the best of their knowledge and belief, state that-

- in the preparation of the annual accounts, the applicable Accounting Standards had been followed alongwith proper explanation relating to material departures;

- the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the directors had prepared the annual accounts on a going concern basis;

- the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

- the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Declaration by independent directors

The independent directors have submitted the declaration of independence, as required pursuant to section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section (6).

Directors'' Remuneration Policy and criteria for matters under section 178

Information regarding Directors'' Remuneration Policy and criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 are provided in the Corporate Governance Report.

Particulars of loans, guarantees or investments

Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are detailed in the financial statements.

Related party transactions

There were no related party transactions (RPTs) entered into by the Company during the financial year, which attracted the provisions of section 188 of Companies Act, 2013. There being no ''material'' related party transactions as defined under clause 49 of the Listing Agreement, there are no details to be disclosed in Form AOC-2 in that regard.

During the year 2014-15, pursuant to section 177 of the Companies Act, 2013 and clause 49 of the Listing Agreement, all RPTs were placed before Audit Committee for its prior/omnibus approval.

The policy on RPTs as approved by Board is uploaded on the Company''s website www.bajajauto.com

Material changes and commitments

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

Risk Management Policy

Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk which in the opinion of the Board may threaten the existence of the Company is given in the Corporate Governance Report.

Corporate Social Responsibility

Detailed information report on Corporate Social Responsibility Policy developed and implemented by the Company on CSR initiatives taken during the year pursuant to section 135 of the Companies Act, 2013 is given in the annexed Annual Report on CSR activities.

Formal annual evaluation of the performance of Board, its Committees and Directors

Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is given in the Corporate Governance Report.

Presentation of financial results

The financial results of the Company for the year ended 31 March 2015 have been disclosed as per Schedule III to the Companies Act, 2013.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries and as prepared in compliance with the Accounting Standards and Listing Agreement as prescribed by SEBI.

A separate statement containing the salient features of its subsidiaries in the prescribed form (AOC-1) is annexed separately.

Statutory disclosures

The summary of the key financials of the Company''s subsidiaries (Form AOC-1) is included in this Annual Report. A copy of audited financial statements for each of the subsidiary companies will be made available to the members of the Company, seeking such information at any point of time.

The audited financial statements for each of the subsidiary companies will be kept for inspection by any member of the Company at its registered office during business hours. The same are placed on the Company''s website www.bajajauto.com

As required under the provisions of section 197 (12) of the Companies Act, 2013 read with rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the prescribed particulars are set out in an annexure to the Directors'' Report. As per provisions of section 136 (1) of the said Act, these particulars will be made available to any shareholder on request.

Certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report.

A cash flow statement for the year 2014-15 is attached to the Balance Sheet.

During the year under review, pursuant to the legislation ''Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013'' introduced by the Government of India, which came into effect from 9 December 2013, the Company has framed a Policy on Prevention of Sexual Harassment at Workplace. There was no case reported during the year under review under the said Policy.

Directors and Key Managerial Personnel-changes

Ms. Suman Kirloskar, an independent director of the Company, after her distinguished tenure on the Board since October 2002, tendered her resignation to take effect from close of office hours on 31 March 2015. In her place, pursuant to section 149 (1) and clause 49 of Listing Agreement,

Dr. Gita Piramal was appointed as an additional director in the category of non-executive, independent director of the Company, with effect from 1 April 2015 in the meeting of the Board held on 24 March 2015.

In light of the provisions of the Companies Act, 2013, Shekhar Bajaj as well as Niraj Bajaj retire from the Board by rotation this year and being eligible, offer themselves for re-appointment.

The information as required to be disclosed under clause 49 of the Listing Agreement in case of re-appointment of the directors is provided in the Notice of the ensuing annual general meeting.

There was no change in the Managing Director, CFO and Company Secretary, collectively the key managerial personnel, during the year under review.

Detailed information on the directors is provided in the Corporate Governance Report.

Significant and material orders passed by the regulators or courts

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which may impact the going concern status of the Company and its operations in future.

Adequacy of internal financial controls

Internal financial controls with reference to the financial statements were adequate and operating effectively.

Corporate governance

Pursuant to clause 49 of the Listing Agreement with stock exchanges, a separate section titled ''Corporate Governance'' has been included in this Annual Report, alongwith the reports on Management Discussion and Analysis and General Shareholder Information.

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2014-15. A declaration to this effect signed by the Managing Director/CEO of the Company is contained in this Annual Report.

The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required in clause 49 of the Listing Agreement and the said certificate is contained in this Annual Report.

Certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report.

Business responsibility report

Securities and Exchange Board of India (SEBI), vide its circular dated 13 August 2012, has mandated inclusion of business responsibility reports (BRR) as part of the annual reports for the top 100 listed entities by market capitalisation. Since Bajaj Auto Ltd. is one of the top 100 listed entities, the Company, as in the previous years, has presented its BR Report for the financial year 2014-15, which is part of this Annual Report. As a green initiative, the BR Report has been hosted on the Company''s website www.bajajauto.com

A physical copy of the BR Report will be made available to any shareholder on request.

Auditors

Statutory auditor

Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules made thereunder, the current auditors of the Company, Dalal & Shah, Chartered Accountants (registration number: 102021W) were appointed by the shareholders at the 7th annual general meeting to hold office until the conclusion of the 10th annual general meeting, subject to ratification by shareholders at each annual general meeting.

The members are requested to ratify the appointment of Dalal & Shah, Chartered Accountants, (registration number: 102021W) as statutory auditors of the Company and to fix their remuneration for the year 2015-16.

The statutory audit report does not contain any qualification, reservation or adverse remark or disclaimer made by statutory auditor.

Secretarial auditor

Pursuant to the provisions of section 204 of the Companies Act, 2013 and Rules made thereunder, the Company has appointed, Shyamprasad D Limaye, (Membership No. 1587) Company Secretaries in Practice to undertake the secretarial audit of the Company. Secretarial Audit Report for the year 2014-15 given by Shyamprasad D Limaye in the prescribed form MR-3 is annexed to this Report. The Secretarial Audit Report for the year under review does not contain any qualification, reservation or adverse remark or disclaimer made by the secretarial auditor.

Cost audit/auditor

Pursuant to the provisions of section 148 of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014, the products manufactured/services rendered by the Company were not covered for maintenance of cost records and therefore, the Company discontinued the cost audit and consequently, the Company has not appointed cost auditor for the financial year 2014-15.

On behalf of the Board of Directors,

Rahul Bajaj Chairman

Pune: 21 May 2015


Mar 31, 2014

The directors present their Seventh Annual Report and audited Statement of accounts for the year ended 31 March 2014. Since this Report pertains to financial year that commenced prior to 1 April 2014, the contents therein are governed by the relevant provisions/schedules/rules of the Companies Act, 1956, in compliance with general circular No. 08/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs.

The highlights are as under:

Units in Numbers FY2014 FY2013

Two-wheelers 3,422,403 3,757,105

Three-wheelers 447,674 480,057 Total 3,870,077 4,237,162

Of which Exports 1,583,935 1,547,157

Financials

(Rs.In Crore) Particulars FY2014 FY2013

Total revenue 20,855.92 20,792.74

Gross profit before finance costs, depreciation and amortisation 4,812.15 4,433.54

Finance costs 0.49 0.54

Depreciation and amortisation 179.61 166.77

Profit before tax 4,632.05 4,266.23

Tax expense 1,390.10 1,222.66

Profit after tax 3,241.95 3,043.57

Tax credits pertaining to earlier year 1.37 -

Profit for the year 3,243.32 3,043.57

Add: Balance brought forward from previous year 4,920.26 3,705.14

Profit available for appropriation 8,163.58 6,748.71

Transfer to General reserve 325.00 305.00

Proposed dividend (inclusive of dividend tax) 1,692.73 1,523.45

Provision of dividend tax for previous year written back - 4.60

Balance carried to Balance Sheet 6,150.45 4,920.26

Earnings per share (Rs.) 112.1 105.2

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs. 50 per share, (500 per cent) for the year ended 31 March 2014. The amount of dividend and the tax thereon aggregate to Rs. 1,692.73 crore.

Dividend paid for the year ended 31 March 2013 was Rs.45 per share (450 per cent). The amount of dividend and the tax thereon aggregated to Rs. 1,523.45 crore.

Operations

The operations of the Company are elaborated in the annexed Management Discussion and Analysis Report.

Capacity expansion and new projects

The Company''s current installed capacity is 5.76 million units per annum. The Company plans to increase the installed capacity to around 6 million units per annum by March 2015.

The 4 Wheeler project is going on as per plan and is being implemented at Waluj. Commercial production of the four-wheeler RE 60 is slated for the second half of the current year.

Research and Development and technology absorption

A) Products Pulsar 200 NS

After the successful launch of Pulsar 200 NS in May 2012, this model has been well received in markets like Colombia. During the year under review, it was launched in Indonesia under the joint brand of Kawasaki Bajaj. The bike has been well received. New colour and graphics have been introduced on the 200 NS to make it even more exciting.

Discover 125 M

The Discover 125 M is the quintessential 125. Built on the compact M platform, it is a great blend of performance and affordability. This engine develops class leading performance of 11.5 Ps power and 1.12 Kg-m of torque, for a powerful drive, while maintaining the high fuel efficiency for which Discover brand is known for. The vehicle has a four-speed gear box suitably mated to the power characteristics of the engine. The agile handling chassis and suspension make this an ideal city bike.

Discover 100 M

The Discover 100 M is the new entry level Discover. It exemplifies the core values of high performance blended with great fuel economy. This product has been designed to complement the styling aspects of the ST and T series, which have created good appeal for the customers. The vehicle is powered by a high performance four-valve air cooled 100 cc DTSi engine, delivering 9.5 Ps and Torque of 0.92 Kg-m, with a four-speed gear box suitably mated to the power characteristics of the engine. It has the best in class fuel efficiency. The careful engineering of the product has resulted in very attractive price to the customer.

KTM Duke 390 with ABS

This joint venture between KTM and Bajaj saw yet another successful launch in the form of Duke 390. With the trademark Orange frame and alloy wheels typical to KTM, the bike lives upto the ''Ready to Race'' tag of KTM brand exceptionally well.

RE

All variants of our RE range of three-wheeler products comprising small, medium and large platforms and covering gasoline, gaseous and diesel engines have been put through a complete upgrade. These products have been updated with much better driver comfort through revised ergonomics, smart looks, improved engine performance and revised gear ratios leading to excellent drivability and upto 15% improvement in fuel economy.

DTSi technology has also been employed in the spark ignited engine versions, while five-speed gear box has been deployed in the diesel engine versions.

B) Process

R&D has been working on improving its operations in a number of areas as listed below.

Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company. In the year under review, we have expanded our manpower by about 6%.

Facilities: R&D continued to enhance its design, computing, prototype manufacturing and validation facilities. Such enhancement efforts have enabled R&D to develop durable and refined products. A number of new test facilities were put in to validate the durability and performance of the forthcoming two and four wheelers. The prototyping facilities were also augmented to enable building of the prototypes of these vehicles.

C) Technology

1) Anti Lock Braking system was introduced on KTM Duke 390. Through this model, the domestic and export markets got the chance to experience the confidence and safety of ABS, while applying the brakes on this high performance bike. Customers and media alike were impressed by this feature and its performance.

2) Technologies like Fuel Injection, five speed gear box, Multi valves, DTSi and light weighting have been employed on the RE60 to achieve excellent fuel economy, while at the same time provide great drivability and comfort to the driver and passengers. The product meets among other things the 400 kg weight limit prescribed in the European regulations for such category.

D) Outgo

The expenditure on research and development during 2013-14 and in the previous year was:

(Rs.In Crore) Particulars FY2014 FY2013

i. Capital (including technical know-how) 87.11 109.19

ii. Recurring 189.68 129.40

Total 276.79 238.59

iii. Total research and development expenditure as a percentage of sales, net of excise duty 1.40 % 1.22%

Conservation of energy

Company has always been a forerunner in conservation of energy and natural resources. Some of the important steps taken during the year under review are listed below:-

A) Electrical energy

- Installing and running variable speed NIRVAN screw air compressors at compressor houses.

- Use of air pressure boosters for high pressure application in paint shops/robots.

- Installation of energy efficient pumps/motors, equipments, air dryers, exhaust blowers, axial fans.

- Installation of chillers with scroll compressor in paint shop.

- Use of heat pump for water heating for washing machine.

- Arresting compressed air leakages through audits and countermeasures.

- Installation of soft start valve for machine to prevent air leakages.

- Reduction in frequency of ASU and exhaust blowers of paint shop during break hours.

- Use of transparent sheet in shops in place of shop lights (total 810 nos.).

- Separate AHU ducts for both V/A conveyors.

- Use of LED/CFLs for street lighting/shop lightings/office.

- Auto Shut Off - hydraulic, coolant, conveyor motors, fume extractors in motorcycle shop.

B) Water

- Elimination of water cooling for compressed air.

- Reuse of treated water for process, installation of RO plant. Replacement of water cooled dryers of compressor with air cooled dryers.

- Replace rusty underground hydrant and raw water pipe line with above ground level pipe line to arrest water leakage.

- Use of auto closed water taps for controlled consumption of water at wash basin.

- Usage of bio-cake for urinals and/or waterless urinals.

- Modification of water distribution line by gravity from main storage tank to different shops at Pantnagar.

- Rain water harvesting.

C) LPG/Propane

- Thermal imaging/audit for ovens in paint shop and countermeasure for heat loss areas identification.

- Installation and commissioning of PNG gas supply at Chakan and Pantnagar.

- Optimising start up time of top coat ovens.

- Provision of air curtains at oven exit to reduce heat loss.

- Installation of low temperature chemical in tank cell.

D) Utilisation of renewable energy - key initiatives

- Installation of natural light transparent roof sheets.

- Installation of light pipes.

- Use of solar electrical energy.

Impact of measures taken

As a result of the initiatives taken for conservation of energy and natural resources, the Company has effected an overall reduction in consumption as given in the Table below:

% Reduction w.r.to previous year

Description FY2014 FY2013

Electricity consumption 1.19 1.85

Water consumption 24.24 20.97

LPG/propane consumption 14.85 7.49

Investment/savings

Rs.In Crore

Description FY2014 FY2013

Investment for energy conservation activities 4.36 3.67

Recurring savings achieved through above activities 2.74 2.30

This chapter may be read with the Business Responsibility Report (BRR), which is part of the Annual Report.

International business

Bajaj Auto continues to outperform competition in terms of two and three-wheeler exports in spite of the grim world economic scenario. We have maintained our leadership position in exports and have dominated the Indian two and three-wheeler export scenario. Bajaj has exported a total of 1,583,935 two and three-wheelers, highlighting the stellar lead the Company has established against competition.

More details of International Business are set out in the annexed Management Discussion and Analysis Report.

Foreign exchange earnings and outgo

The Company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was Rs. 7,963.86 crore, compared to Rs. 6,565.34 crore during the previous year.

Total foreign exchange outflow during the year under review was Rs.725.21 crore as against Rs. 1,083.16 crore during the previous year.

The above outflow excludes an investment of Rs. 67.75 crore (previous year: Rs. Nil) made in its subsidiary, PT. Bajaj Auto Indonesia (PT BAI) for increasing its stake from 98.94%.to 99.25%.

Industrial relations

Industrial relations with staff and workmen at the plants at Akurdi, Waluj and Pantnagar continued to be cordial. This includes the relations with staff at the plant at Chakan.

At Chakan, the workmen represented by the recognised union Vishwa Kalyan Kamgar Sanghatana, went on strike from 25 June 2013 to 13 August 2013 for the reason that Management refused to accede to their demand of allotment of 500 shares to each workman at a discounted rate of Rs. 1 per share. The union withdrew the strike unconditionally on realising Management''s firm decision and workers resumed work with effect from 14 August 2013.

At Chakan, wage review was due effective from 1 April 2013. Management offered Rs. 10,000 per month in a phased manner, depending upon the year of service etc., for three years. However, this issue is under litigation.

At Akurdi, as per the provisions of the wage settlement dated 20 August 2010, wage review was due and accordingly Memorandum of Understanding (MOU) was signed on 10 February 2014 giving wage rise of Rs. 10,000 per month per workman in a phased manner.

At Waluj, Bajaj Auto Ltd. Employees'' Union, representing majority of the workmen, has submitted a Charter of Demands for the forthcoming wage settlement, which is due from 1 August 2014.

Subsidiaries

PT. Bajaj Auto Indonesia (PT BAI)

The Company has a Memorandum of Understanding with Kawasaki Heavy Industries (KHI) for jointly distributing its products in many of the ASEAN countries. This was a result of a successful strategy followed by the Company in launching its products in Philippines. Enthused by the commendable success of this strategy, the Company has extended this strategy in Indonesia as well. Consequently, the operations at PT BAI have been scaled down significantly.

During the year under review, the Company through KHI sold 13,570 nos. of Pulsars during the seven-month period commencing from August 2013.

Bajaj Auto International Holdings BV, Netherlands (BAIH BV)

Bajaj Auto International Holdings BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd. Through this subsidiary, Bajaj Auto, over the years, has invested a total of €198.1 million and holds about 48% stake in KTM AG of Austria (KTM), Europe''s second largest sport motorcycle manufacturer.

Calendar year 2013 has been a record year for KTM, with highest sales in units and highest turnover in the history of the Company. KTM sold 123,859 motorcycles, a growth of 15.6% and achieved a turnover of €716.4 million, a growth of 17.1%. Profit after tax was at €36.5 million, a growth of 44.3%.

Proportionate profit of €17.5 million has been accounted in the consolidated results of Bajaj Auto Ltd.

During the year, Bajaj Auto manufactured 36,047 units of KTM Duke in its Chakan plant. 11,050 units were sold through the pro-biking network in India and 24,016 units were exported to various countries across the globe.

In the annual general meeting held on 24 April 2014, for the year 2013, KTM AG has declared a dividend of €1.00 per share (for the year 2012, dividend declared was €0.70 per share). BAIH BV is entitled to receive €5.2 million, being its share of dividend.

KTM is listed in the Second Regulated Market of the Vienna Stock Exchange and its market capitalisation as on 31 March 2014 was €818 million.

Signing of anti-corruption Initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your Company is a signatory to the "Commitment to anti-corruption" and is supporting the "Partnering Against Corruption - Principles for Countering Bribery" derived from Transparency International''s Business Principles. This calls for a commitment to two fundamental actions viz. a zero-tolerance policy towards bribery and development of practical and effective implementation program.

Corporate Social Responsibility

The Companies Act, 2013 notified section 135 of the Act concerning Corporate Social Responsibility alongwith the Rules thereunder and revised Schedule VII to the Act on 27 February 2014 to come into effect from 1 April 2014.

The Company being covered under the provisions of the said section, has taken necessary initial steps in this regard. A Committee of the directors, titled ''Corporate Social Responsibility Committee'', has been formed by the Board in its meeting held on 28 March 2014, consisting of the following Directors -

1. Rahul Bajaj, Chairman

2. Rajiv Bajaj

3. Nanoo Pamnani

The Committee has in place a CSR policy.

The said section being enacted with effect from 1 April 2014, necessary details as prescribed under the said section shall be presented to the members in the Annual Report for the year 2014-15.

Even when the said provisions were not mandated by the Ministry of Corporate Affairs, the Bajaj Group continued its Corporate Social Responsibility (CSR) initiatives in various fields, during the year 2013-14. Activities in this area are set out in detail in the annexed CSR Report.

Directors

In view of the provisions of the Companies Act, 2013, Madhur Bajaj and Sanjiv Bajaj have now become retiring directors. Thus they retire from the Board by rotation this year and being eligible, offer themselves for re-appointment. The information as required to be disclosed under clause 49 of the listing agreement in case of re-appointment of directors is provided in the Notice of the ensuing annual general meeting.

Pursuant to section 149(4) of the Companies Act, 2013, every listed company is required to appoint at least one third of its directors as independent directors. The Board already has one half of its directors in the category of independent directors in terms of the provisions of clause 49 of the listing agreement. The Board therefore, in its meeting held on 28 March 2014 appointed the existing independent directors under clause 49 as ''independent directors'' pursuant to Companies Act, 2013, subject to approval of shareholders.

As required under the said Act and the Rules made there under, the same is now put up for approval of members at the ensuing annual general meeting. Necessary details have been annexed to the Notice of the meeting in terms of section 102(1) of the Companies Act, 2013.

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6).

With the appointment of independent directors, the conditions specified in the Act and the Rules made there under as also under new clause 49 of the listing agreement stand complied.

Directors'' responsibility statement

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, directors state:

- that in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

- that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

- that the directors have taken proper and sufficient care 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.

- that the annual accounts have been prepared on a going concern basis.

Presentation of financial results

The financial results of the Company for the year ended 31 March 2014 as in the previous year have been disclosed as per the revised Schedule VI to the Companies Act, 1956, pursuant to notification dated 28 February 2011 and General Circular No. 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto International Holdings BV, Netherlands as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.

Information in aggregate for each subsidiary company is disclosed separately in the consolidated Balance Sheet.

Statutory disclosures

Ministry of Corporate Affairs (MCA) vide circular No. 51/12/2007-CL-III dated 8 February 2011 has given general exemption with regard to attaching of the Balance Sheet, Profit and Loss Account and other documents of its subsidiary companies subject to fulfilment of conditions mentioned therein. The Company has fulfilled all the necessary conditions in this regard. Hence, the Company is not attaching the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies. The summary of the key financials of the Company''s subsidiaries is included in this Annual Report.

The annual accounts of the subsidiary companies and the related detailed information will be made available to the members of the Company and its subsidiary companies, seeking such information at any point of time. The annual accounts of the subsidiary companies will be kept for inspection by any member of the Company at its registered office and also at the registered office of the concerned subsidiary company.

As required under the provisions of sub-section (2A) of section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, particulars of the employees are set out in an annexure to the Directors'' Report. As per provisions of section 219 (1) (b) (iv) of the said Act, these particulars will be made available to any shareholder on request.

Particulars regarding technology absorption, conservation of energy and foreign exchange earnings and outgo required under section 217(1)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 have been given in preceding paragraphs.

Directors'' responsibility statement as required by section 217(2AA) of the Companies Act, 1956 appears in a preceding paragraph.

Certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report as Annexure 1.

A cash flow statement for the year 2013-14 is attached to the Balance Sheet.

During the year under review, pursuant to the new legislation "Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013" introduced by the Government of India, which came into effect from 9 December 2013, the Company has framed a Policy on Prevention of Sexual Harassment at Workplace. There were no cases reported during the year under review under the said Policy.

Corporate governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section titled ''Corporate Governance'' has been included in this Annual Report, along with the reports on Management Discussion and Analysis and General Shareholder Information.

SEBI vide its circular No. CIR/CFD/POLICY CELL/2/2014 dated 17 April 2014 has notified the revised clause 49 of the listing agreement to be applicable with effect from 1 October 2014. This Report therefore stands complied against the previous clause 49 of the listing agreement.

All board members and senior management personnel have affirmed compliance with the code of conduct for the year 2013-14. A declaration to this effect signed by the Chief Executive Officer (CEO) of the Company is contained in this Annual Report.

The CEO and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as specified in clause 49 of the listing agreement and the said certificate is contained in this Annual Report.

Business Responsibility Report

Securities and Exchange Board of India (SEBI), vide its circular dated 13 August 2012, has mandated inclusion of Business Responsibility Report (BRR) as part of the annual reports for listed entities. To begin with, SEBI has made it mandatory for top 100 listed entities based on market capitalisation at BSE and NSE as on 31 March 2012 to include BR Reports as part of their annual reports from the financial year ending on or after 31 December 2012. Since Bajaj Auto Ltd. is one of the top 100 listed entities, the Company, as in the previous year, has presented its BR Report for the financial year 2013-14, which is part of this Annual Report. As a green initiative, the BR Report has been hosted on the Company website www.bajajauto.com A physical copy of the BR Report will be made available to any shareholder on request.

Secretarial Standards of ICSI

During the year under review, Secretarial Standards specified by the Institute of Company Secretaries of India (ICSI) from time to time were recommendatory in nature. Your Company, however, complied with the same.

Auditors'' report

The observations made in the Auditors'' Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under section 217 of the Companies Act, 1956.

Auditors

Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules made there under, the current auditors of the Company, Dalal & Shah, Chartered Accountants are eligible to hold the office for a period of three years, upto 2017.

The members are requested to appoint Dalal & Shah, Chartered Accountants, as auditors for three years from the conclusion of the ensuing annual general meeting till the conclusion of the 10th annual general meeting in 2017 and to fix their remuneration for the year 2014-15.

Cost Auditors

A P Raman was appointed as Cost Auditor to conduct audit of cost accounts maintained by the Company for the financial year 2013-14. The full particulars of the Cost Auditor and cost audit conducted by him for the financial year 2012-13 are furnished below:- ICWA Membership No. 837

Registration No. of Firm 110141

Address Golok, Plot No.13, Sector No.28

Pradhikaran, Nigdi, Pune - 411 044

Details of Cost Audit Report for the financial year 2012-13:

(a) Due date of filing 30 September 2013

(b) Actual date of filing 27 September 2013

On behalf of the Board of Directors,

Rahul Bajaj

Chairman

15 May 2014


Mar 31, 2013

The directors present their sixth annual report and the audited statements of accounts for the year ended 31 March 2013.

The highlights are as under:

Units in Numbers 2013 2012

Two-wheelers 3,757,105 3,834,405

Three-wheelers 480,057 515,155

Total 4,237,162 4,349,560

Of which Exports 1,547,157 1,579,824

Financials

(Rs. In Crore)

Particulars 2013 2012

Net sales and other income 20,792.74 20,137.02

Cross profit before exceptional item, interest and depreciation 4,430.74 4,328.03

Interest 0.54 22.24

Depreciation 163.97 145.62

Gross profit before exceptional item 4,266.23 4,160.17

Exceptional item

- Valuation losses on derivative hedging instruments - (134.00)

Profit before tax 4,266.23 4,026.17

Tax expense 1,222.66 1,022.12

Profit after tax 3,043.57 3,004.05

Add: Balance brought forward from previous year 3,705.14 2,515.48

Profit available for appropriation 6,748.71 5,519.53

Transfer to General reserve 305.00 301.00

Proposed dividend (inclusive of dividend tax) 1,523.45 1,513.39

Balance carried to Balance Sheet 4,920.26 3,705.14

Earnings per share (Rs.) 105.2 103.8

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs.45 per share, (450 per cent) for the year ended 31 March 2013. The amount of dividend and the tax thereon aggregate to Rs. 1,523.45 crore.

Dividend paid for the year ended 31 March 2012 was also Rs. 45 per share (450 per cent).

The amount of dividend and the tax thereon aggregated to Rs. 1,513.39 crore.

Operations

The operations of the Company are elaborated in the annexed Management Discussion and Analysis Report.

Capacity expansion and new projects

The Company''s current installed capacity is 5.4 million units per annum. The Company plans to increase the installed capacity to 6.06 million units per annum by March 2014.

The 4 Wheeler project is going on as per plan and is being implemented at Waluj.

Commercial production of the four-wheeler RE 60 is slated for second half of 2013-14.

Research and Development and technology absorption

A) Products Pulsar 200 NS

Pulsar 200 NS was launched in May 2012. It has gone on to redefine the sports motorcycle segment in India. It has set a new benchmark in terms of performance, style, technology and affordability. It has brought additional set of customers to the Pulsar portfolio. It has won an astounding number of 12 awards for product and technology including the award for the best product design in all automobiles.

Discover 125 ST

This completely new platform of vehicle was designed to take the legacy of the successful Discover brand, into the future. The vehicle has been designed to further enhance the sporty commuter image of the Discover brand. The vehicle is equipped with a high performance 4 valve air cooled engine powered by twin spark ignition, delivering 13 Ps, and a 5 speed gear box suitably mated to the power characteristics of the engine. This provides the commuter the joy of a powerful drive, while maintaining high fuel efficiency for which Discover brand is known for. The vehicle is also equipped with the state-of-the-art features like Nitrox mono shock absorber for riding pleasure, which is a first for a commuter 125 cc bike.

Discover 100 T

This product complements Discover 125 ST and extends the all new design of Discover 125 ST to smaller engine capacity. It sharply focuses on the customers who prefer greater fuel efficiency, but desire all the enhancements. The vehicle is powered by a high performance 4 valve air cooled 100 cc DTSi engine, delivering 10.2 Ps, with a 5 speed gear box suitably mated to the power characteristics of the engine. This is the world''s first 100 cc single cylinder 4 valve DTSi engine and delivers class leading power and fuel efficiency.

KTM Duke 125 - Duke 200

Model Year 2013 saw Duke 125 and Duke 200 substantially upgraded. Vehicle safety is taken to the next level with the introduction of "Anti-lock braking system (ABS)". The vehicle is equipped with twin channel ABS offering independent control for both the wheels and increases driver safety by not allowing the vehicle to skid even in case of panic braking on low friction surfaces.

The Duke 200 won 8 awards this year. Between Pulsar and KTM, the Company swept practically all the major awards announced during the year under review.

B) Process

R&D has been working on improving its operations in a number of areas as listed below.

- Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company.

- Facilities: R&D continued to enhance its design, computing, proto-typing and validation facilities. Such enhancement efforts have enabled R&D to develop durable and refined products. A number of new test facilities were put in to validate the durability and performance of the forthcoming 4 wheelers. The prototyping facilities were also upgraded to enable building of the prototypes of these vehicles.

- Technology: This year, R&D launched the Triple Spark technology for the Pulsar family.

This technology takes the DTS-I performance to the next higher level. It gives best in class fuel efficiency and performance on a sports bike. This technology went on to win the "Automotive technology of the year" award competing in the category of not just 2 wheelers, but in all categories of automobiles.

- Total Productive Maintenance (TPM): R&D continues to vigorously pursue the TPM way of thinking and working. This has yielded excellent results in quality management of design and validation process. The TPM approach has also been effective in the lead time reduction on the various critical processes in R&D by elimination of waste.

C) Outgo

The expenditure on research and development during 2012-13 and in the previous year was:

(Rs. In Crore)

Particulars 2013 2012

i. Capital

(including technical know-how) 109.19 42.22

ii. Recurring 129.40 113.70

Total 238.59 155.92

iii. Total research and development expenditure as a percentage of sales, net of excise duty 1.22% 0.83%

Conservation of energy

Company has always been a forerunner in conservation of energy and natural resources.

All manufacturing processes and products are designed for minimising the carbon footprints and are being continuously upgraded to consistently achieve this goal. Company has a distinction of having all its plants certified for ISO 14000 and 18000. Company not only follows Standard Operating Procedures for environment protection and conservation of resources in all its plants, but also propagates these initiatives throughout its vendor partners under the initiative of ''Green Supply Chain''.

The energy conservation drive is guided by the principle of 5 Rs (Reuse, Reduce, Recycle, Remove, Recover). Given below are some of the key initiatives taken during 2012-13 towards energy and natural resource conservation.

- Electrical energy saving was achieved by replacing reciprocating compressor with screw air compressors at Waluj; use of air pressure booster for high pressure application, use of energy efficient pumps and motors, use of LED/induction lamps for lighting system in plant and offices.

- Water saving was achieved by various measures, such as installation of RO plant, use of air cooled compressors in place of water cooled compressors; use of breeze air coolers instead of ARP, use of treated water for horticulture activities.

- Liquified Petroleum Gas (LPG)/propane saving was achieved by optimum usage of oven/furnaces at paint shop and HT, by reduction in weight of paint line jigs and heat treatment fixtures, by replacing pre-treatment chemicals requiring less temperature, at Chakan and by increasing conveyor speed in paint shop.

- Initiatives in utilisation of renewable energy were taken during the year. Installation of solar power plant 20 Kwp at Waluj and installation of light pipes at Waluj and Pantnagar are the key initiatives to note.

Impact of measures taken

As a result of the initiatives taken for conservation of energy and natural resources, the Company has effected an overall reduction in consumption as given in the table below :

% Reduction w.r.to previous year Description 2013 2012

Electricity consumption 1.85 7.86

Water consumption 20.97 Nil

LPG/propane consumption 7.49 13.44

Investment/savings

(Rs. In Crore)

Description 2013 2012

Investment for energy conservation activities 3.67 2.07

Recurring savings achieved through above activities 2.30 2.14

This chapter may be read with the Business Responsibility Report (BRR), which is part of the annual report.

International business

Bajaj Auto continues to outperform competition in terms of two and three wheeler exports, in spite of the grim world economic scenario. We have maintained our leadership position in exports and have dominated the Indian two and three wheeler export scenario.

Bajaj has exported a total of 1,547,157 two and three wheelers, highlighting the stellar lead the Company has established against competition.

More details of International Business are set out in the annexed Management Discussion and Analysis Report.

Foreign exchange earning and outgo

The Company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was Rs. 6,565.34 crore, compared to Rs. 6,625.96 crore during the previous year.

Total foreign exchange outflow during the year under review was Rs. 1,083.16 crore as against Rs. 776.98 crore during the previous year.

The above outflow excludes an investment of Rs. 231.86 crore (previous year: Rs. 68.14 crore) made in its 100% subsidiary, Bajaj Auto International Holdings BV, Netherlands for increasing its stake in KTM AG from 40.87% to 47.96%.

Industrial relations

Industrial relations with staff and workmen across the plants at Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.

At Pantnagar, wage settlement dated 7 December 2012 was amicably signed in conciliation between the management and representatives of workmen. The workmen have formed a trade union on 21 August 2012 under the name and style "Bajaj Auto Ltd. Employees Sangh", which has a majority following.

At Chakan, Vishwa Kalyan Kamgar Sanghatana, the recognised union has given notice of termination of the existing settlement dated 21 May 2010 as per provisions of The Industrial Disputes Act, 1947.

Five workmen of BAL-Waluj and two workmen of BAL-Chakan have received Best Worker (Cunwant Kamgar) Welfare Awards for the year 2012 declared by the Maharashtra Labour Welfare Board, Mumbai, Government of Maharashtra.

Subsidiaries

PT. Bajaj Auto Indonesia (PT BAI)

In line with the general slow-down in the global economy, Indonesia has posted a GDP growth rate of 6.3% as against 6.5% recorded in 2011-12.

Two wheeler sales, a true barometer of national economy, had declined to 7.1 million units from the levels of 8 million units in the previous year, a decline of 11.5%. Restrictions in financing norms imposed by the central bank relating to two wheeler financing has contributed significantly to the decline in sale of two wheelers in Indonesia.

PT BAI has also witnessed a declining sales volume trend with billing of 11,198 units in 2012-13 as against 23,337 units done in 2011-12.

The distribution arrangement announced by Bajaj Auto Ltd. in September 2012 with Kawasaki Motors to market and distribute Pulsar NS motor cycles in Indonesia is expected to give a new fillip to the growth of exports to Indonesia, from the second half of financial year 2013-14.

Bajaj Auto International Holdings BV, Netherlands (BAIH BV)

During the year under review, BAIH BV invested further € 33.90 million (approx. Rs. 236 crore) to increase its stake in KTM AG (KTM) to 47.96%.

In the calendar year 2012, KTM posted robust growth to 107,142 units (up by 32%);

€ 612 million turnover and € 25.3 million net profit (up by 22.2%). Proportionate net profit of € 11.96 million has been accounted in the consolidated results of Bajaj Auto Ltd.

KTM returned to dividend list with a dividend declaration of € 0.70 per share for 2012.

BAIH BV is entitled to receive € 3.64 million, being its share of dividends.

During the year, Bajaj Auto produced 26,805 units of KTM Duke Motorcycles. 7,388 Dukes were sold in India through the 70 strong pro-biking network in India and 18,546 units were exported to various countries, including Europe, Japan, etc.

Various joint development projects are proceeding well. The next jointly developed product Duke 390, sporting a high performance engine is scheduled to be launched in first half of 2013-14. Bajaj Auto will produce this model in its Chakan plant.

Signing of anti-corruption initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your Company is a signatory to the "Commitment to anti-corruption" and is supporting the "Partnering Against Corruption - Principles for Countering Bribery" derived from Transparency International''s Business Principles. This calls for a commitment to two fundamental actions viz. a zero-tolerance policy towards bribery and development of practical and effective implementation program.

Corporate Social Responsibility

During the year 2012-13, Bajaj Auto continued its Affirmative Action Plan and Corporate Social Responsibility initiatives in various fields. Activities in this area are set out in greater detail in the annexed CSR Report.

Directors

J N Godrej, S H Khan, Ms Suman Kirloskar and Naresh Chandra retire from the Board by rotation this year and being eligible, offer themselves for re-appointment.

Directors'' responsibility statement

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, directors state:

- that in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

- that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

- that the directors have taken proper and sufficient care 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.

- that the annual accounts have been prepared on a going concern basis.

Presentation of financial results

The financial results of the Company for the year ended 31 March 2013 as in the previous year have been disclosed as per the revised Schedule VI to the Companies Act, 1956, pursuant to notification dated 28 February 2011 issued by the Ministry of Corporate Affairs.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto International Holdings BV, Netherlands as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.

Information in aggregate for each subsidiary company is disclosed separately in the consolidated Balance Sheet.

Statutory disclosures

Ministry of Corporate Affairs (MCA) vide circular No.51/12/2007-CL-l 11 dated 8 February 2011 has given general exemption with regard to attaching of the Balance Sheet, Profit and Loss Account and other documents of its subsidiary companies subject to fulfillment of conditions mentioned therein. The Company has fulfilled all the necessary conditions in this regard.

Hence, the Company is not attaching the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies. The summary of the key financials of the Company''s subsidiaries is included in this annual report.

The annual accounts of the subsidiary companies and the related detailed information will be made available to the members of the Company and its subsidiary companies, seeking such information at any point of time. The annual accounts of the subsidiary companies will be kept for inspection by any member of the Company at its registered office and also at the registered office of the concerned subsidiary company.

As required under the provisions of sub-section (2A) of section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, particulars of the employees are set out in an annexure to the directors'' report.

As per provisions of section 219 (1) (b) (iv) of the said Act, these particulars will be made available to any shareholder on request.

Particulars regarding technology absorption, conservation of energy and foreign exchange earnings and outgo required under section 217(l)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 have been given in preceding paragraphs.

Directors'' responsibility statement as required by section 217(2AA) of the Companies Act, 1956 appears in a preceding paragraph.

Certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this report as Annexure 1.

A cash flow statement for the year 2012-13 is attached to the Balance Sheet.

Corporate governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section titled ''Corporate Governance'' has been included in this annual report, along with the reports on Management Discussion and Analysis and General Shareholder Information.

All Board members and senior management personnel have affirmed compliance with the code of conduct for the year 2012-13. A declaration to this effect signed by the Chief Executive Officer (CEO) of the Company is contained in this annual report.

The CEO and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as specified in clause 49 of the listing agreement and the said certificate is contained in this annual report.

Business Responsibility Report

Securities and Exchange Board of India (SEBI), vide its circular dated 13 August 2012, has decided to mandate inclusion of Business Responsibility Reports (BRR) as part of the annual reports for listed entities. To begin with, SEBI has made it mandatory for top 100 listed entities based on market capitalisation at BSE and NSE as on 31 March 2012 to include BR Reports as part of their annual reports from the financial year ending on or after 31 December 2012. Since Bajaj Auto Ltd. is one of the top 100 listed entities, the Company has presented its first BR Report for the financial year 2012-13, which is part of this annual report. As a green initiative, the BR Report has been hosted on the Company website www.bajajauto.com A physical copy of the BR Report will be made available to any shareholder on request.

Secretarial standards of ICSI

Secretarial standards issued by the Institute of Company Secretaries of India (ICSI) from time to time are currently recommendatory in nature. Your Company is, however, Complying with the same.

Auditors'' report

The observations made in the Auditors'' Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under section 217 of the Companies Act, 1956.

Auditors

The members are requested to appoint Messers Dalai & Shah, Chartered Accountants, as auditors for the period from the conclusion of the ensuing annual general meeting till the conclusion of the next annual general meeting and to fix their remuneration.

In conformity with the directives of the Central Government, the Company has appointed Mr. A P Raman, cost accountant, ICWA Membership No. 837, with address at Golok, Plot No.13, Sector No.28, Pradhikaran, Nigdi, Pune - 411 044, as the cost auditor under section 233B of the Companies Act, 1956 to conduct the cost audit of Bajaj Auto Ltd. for the year 2012-13.

For the year ended 31 March 2012, the due date of filing the cost audit report was 30 September 2012, which was subsequently extended upto 28 February 2013 and the actual date of filing the cost audit report was 27 February 2013.

On behalf of the Board of Directors,

Rahul Bajaj

Chairman

16 May 2013


Mar 31, 2012

Dear Members,

Introduction

The directors present their fifth annual report and the audited statements of accounts for the year ended 31 March 2012.

The highlights are as under:

Units in Numbers 2012 2011

Two wheelers 3,834,405 3,387,070

Three wheelers 515,155 436,884

Total 4,349,560 3,823,954

Of Which Exports 1,579,824 1,203,718

Financials

(Rs. In Crore)

2012 2011

Net sales and other income 20,137.02 16,974.74

Gross profit before exceptional items, interest and depreciation 4,328.03 3,747.73

Interest 22.24 1.69

Depreciation 145.62 122.84

Gross Profit before exceptional items 4,160.17 3,623.20

Exceptional items (134.00) 724.55

Profit before tax 4,026.17 4,347.75

Tax expense 1,022.12 1,008.02

Profit for the year 3,004.05 3,339.73

Add: Balance brought forward from previous year 2,515.48 854.99

Profit available for Appropriation 5,519.53 4,194.72

Transfer to General Reserve 301.00 334.00

Proposed dividend (inclusive of dividend tax) 1,513.39 1,345.24

Balance carried to Balance Sheet 3,705.14 2,515.48

Earnings per share (Rs.) 103.8 115.4

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs. 45 per share, (450 per cent) for the year ended 31 March 2012. The amount of dividend and the tax thereon aggregate to Rs. 1,513.39 crore.

Dividend paid for the year ended 31 March 2011 wasRs. 40 per share (400 per cent). The amount of dividend and the tax thereon aggregated to Rs. 1,345.24 crore.

Operations

The operations of the Company are elaborated in the annexed Management Discussion and Analysis Report.

Capacity expansion and new projects

The company's current installed capacity is 5.1 million units per annum. The company plans to increase the installed capacity to 6.36 million units per annum by March 2013.

Commercial launch of the four-wheeler RE 60 show-cased in the Delhi Auto Expo in Jan 2012, is scheduled for second half of 2012-13. RE 60 will be produced from the Company's Waluj plant.

The 4 Wheeler plant was earlier being planned in the Company's site at Chakan MIDC Phase III. To benefit from the synergies with the 3 Wheeler facilities at Waluj, the 4 Wheeler project is now being implemented at Waluj. The Chakan site will be used for expansion of the 2 Wheeler capacity.

Research and Development and technology absorption

A) Products Pulsar 200 NS

A new platform of engine and vehicle was designed to carry forward the legacy of the Company's most successful brand - Pulsar, into the future. This vehicle is designed to further enhance and sharpen the street sports image of the Pulsar brand. The vehicle is powered by a high performance 4 valve liquid cooled engine with triple spark ignition, delivering 23.5 Ps, with a 6 speed gear box. This provides the vehicle with excellent and thrilling performance as well as efficiency. The vehicle is equipped with state-of-the-art features like perimeter frame with high lateral rigidity, low slung central muffler, nitrox mono shock rear suspension, all adding up to providing excellent handling and riding pleasure.

KTM 200

This model extends the new platform of engine and vehicle co-designed by Bajaj and KTM from 125cc into a 200cc. Unlike KTM125, this product is aimed for Indian as well as European markets. The vehicle is powered by a high performance 4V liquid cooled engine delivering 25 Ps, with a 6 speed gear box suitably mated to the power characteristics of the engine. The engine has electronic fuel injection. The vehicle is equipped with state-of-the-art features like radial calipers for front disc brakes, inverted front forks, cast aluminum swing arm and radial tyres at both front and back.

BM-150

The BM-150 moves the highly successful BM-100, the number one bike in Africa, to the next level. This product brings the power of 150cc to the utility segment of the market. It has a sturdy frame designed to do duty under demanding usage and terrain conditions and wide tyres to complement. The BM-150 has been well received in the export markets.

BM-100

The BM-100 complements the BM-150 to bring in features like electric start in order to enhance the utility of the product. The strong frame and modern engine make it very robust. The BM-100 and BM-150 together address competitors from the 100 to 150 cc segments.

B) Process

R&D has been working on improving its operations in a number of areas as listed below:

- Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company. This year, R&D expanded its manpower strength by about 12%.

- Facilities: R&D continued to enhance its design, computing and validation facilities. The efforts on the establishment of validation facilities have enabled R&D to develop durable and refined products like the new Pulsar 200 NS.

- Total Productivity Management (TPM): R&D continues to vigorously pursue the TPM way of thinking and working. This has yielded excellent results in quality management of design and validation process. The TPM approach has also been effective in the lead time reduction on the various critical processes in R&D by elimination of waste.

C) Outgo

The expenditure on research and development during 2011-12 and in the previous year was:

(Rs. In Crore)

Particulars 2012 2011

i. Capital (Including technical know-how) 42.22 11.65

ii. Recurring 113.70 112.95

TOTAL 155.92 124.60

iii. Total research and development expenditure as a percentage of sales, net of excise duty 0.83% 0.78%

Conservation of energy

Company has always been a forerunner in conservation of energy and natural resources. All manufacturing processes and products are designed for minimising the carbon footprints and are being continuously upgraded to consistently achieve this goal. Company has a distinction of having all its plants certified for ISO 14000 and 18000. Company not only follows Standard Operating Procedures for environment protection and conservation of resources in all its plants, but also propagates these initiatives throughout its vendor partners under the initiative of 'Green Supply Chain'.

Given below are some of the key initiatives taken during 2011-12 towards Energy and Natural resource conservation. Apart from technology adoptions, the energy conservation drive is guided by the principle of 5Rs (Reuse, Reduce, Recycle, Remove, Recover).

- Electrical energy saving was achieved by replacing reciprocating compressor with screw air compressors at Waluj; reducing central grid pressure of compressed air from 4.89 Bar to 4.68 Bar at Waluj; installation of Air flow control unit in compressed air line at Pantnagar; installation of Breeze Air coolers in place of ARP at Waluj; use of LPG heaters in place of Electrical heaters at CGC furnace in heat treatment; re-using waste energy from dynamometer to generate electricity, at Pantnagar; use of LED/CFLs for Office/Street lighting;

- Water saving was achieved by rationalisation of pumping hours of main pump and regulating pump on-off timing through timers; use of air cooled compressors in place of water cooled compressors; use of treated water for horticulture and non-critical processes;

- Liquified Petroleum Gas (LPG)/propane saving was achieved by installation of waste heat recovery system for paint shops at Waluj; implementation of 'Tactalis' pre-treatment process; reduction in weight of paint line jigs and heat treatment fixtures; increasing conveyor speed in paint shop;

- Major initiatives in utilisation of renewable energy were taken by use of solar water heating system for process shops/canteen, at Waluj and Chakan; installation of natural air exhaust (turbo ventilators) in shops at Waluj and Chakan; use of wind mill energy for street lights at Chakan.

International Business

Bajaj Auto maintained its stellar growth in exports and continued to be India's largest exporter of two and three-wheelers. During the year under review, the Company exported 1,579,824 vehicles, achieving a growth of 31% over the previous year, while total exports amounted to Rs. 6,604 crore as against Rs. 4,552 crore in the previous year.

More details of International Business are set out in the annexed Management Discussion and Analysis report.

Foreign exchange earning and outgo

The company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was Rs. 6,626.30 crore, compared to Rs. 4,564.78 crore during the previous year.

Total foreign exchange outflow during the year under review was Rs. 1,023.38 crore as against Rs. 844.50 crore during the previous year.

The above outflow includes an investment of Rs. 68.14 crore (Previous Year: Rs. 210.08 crore) made in its 100% subsidiary, Bajaj Auto International Holdings BV, Netherlands for increasing its stake in KTM Power Sports AC from 39.26% to 40.87%.

Industrial relations

Industrial Relations with staff and workmen across the plants at Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.

Subsidiaries

PT. Bajaj Auto Indonesia (PTBAI) is a majority shareholding (98.94%) subsidiary of Bajaj Auto Limited. The subsidiary assembles and markets Pulsars in Indonesia. PTBAI has achieved a billing of 23,337 units in 2011-12 as against 21,586 units in 2010-11, an increase of 8%. Existing models Pulsar 135, Pulsar 180 and Pulsar 220 have contributed to this steady growth rate.

Sales and service network have been considerably strengthened in 2011-12 across entire Indonesia with number of showroom/outlets now at 152 compared to 84, in March 2011. The year has seen a considerable improvement in availability of finance, as the Company has tied up financing arrangements with a few more finance companies. Network expansion, easy availability of finance and scheduled new product launches would be the key drivers for growth in 2012-13.

More details are given separately in this annual report.

Bajaj Auto International Holdings BV, Netherlands (BAIHBV)

During the year under review, BAIHBV invested further € 10.3 million to increase its stake in KTM Power Sports AG (KTM) to 40.87%.

With further investment of € 25.9 million during April 2012, BAIHBV's shareholding in KTM currently stands at 47.18%. In its recently held AGM, KTM Power Sports AG has changed its corporate name to KTM AG.

The co-operation with KTM is progressing well. KTM Duke 125 has become the leader in its category in Europe. KTM Duke 200 has been launched in India in February 2012 and has become an instant hit with bike enthusiasts. These products will be taken to further markets in the current fiscal.

Further, during 2011, KTM has made good progress, improved its market share and has reported a healthy set of numbers.

Signing for anti-corruption initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your company is a signatory to the "Commitment to anti-corruption" and is supporting the "Partnering Against Corruption - Principles for Countering Bribery" derived from Transparency International's Business Principles. This calls for a commitment to two fundamental actions viz. a zero-tolerance policy towards bribery and development of practical and effective implementation program.

Corporate Social Responsibility

During the year 2011-12, Bajaj Auto continued its Affirmative Action Plan and Corporate Social Responsibility initiatives in various fields. Activities in this area are set out in greater detail in the annexed CSR Report.

Directors

D S Mehta, Kantikumar R Podar, Shekhar Bajaj and D J Balaji Rao retire from the Board by rotation this year and being eligible, offer themselves for re-appointment.

Sanjiv Bajaj, in view of his appointment as Managing Director in Bajaj Holdings & Investment Ltd., has resigned as Executive director of the Company with effect from 1 April 2012. He will however continue on the Board as a non-executive director. The Board places on record its sincere appreciation of the valuable services rendered by Sanjiv Bajaj during his tenure as Executive Director of the Company.

Directors' responsibility statement

As required by Sub-section (2AA) of Section 217 of the Companies Act, 1956, directors state:

- that in the preparation of annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures

- that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period

- that the directors have taken proper and sufficient care 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

- that the annual accounts have been prepared on a going concern basis

Presentation of financial results

Pursuant to Notification dated 28 February 2011 issued by the Ministry of Corporate Affairs, the format for disclosure of financial statement prescribed under Schedule VI to the Companies Act, 1956 has been substantially revised. The financial results of the Company for the year ended 31 March 2012 have, therefore, been disclosed as per the revised Schedule VI. Previous year's figures have also been restated to conform with the current year's presentation.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto International Holdings BV, Netherlands and as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.

Information in aggregate for each subsidiary company is disclosed separately in the consolidated balance sheet.

Statutory disclosures

Ministry of Corporate Affairs (MCA) vide Circular No. 51/12/2007-CL-lll dated 8 February 2011 has given general exemption with regard to attaching of the balance sheet, profit and loss account and other documents of its subsidiary companies subject to fulfillment of conditions mentioned therein. The company has fulfilled all the necessary conditions in this regard. The summary of the key financials of the Company's subsidiaries is included in this annual report.

The annual accounts of the subsidiary companies and the related detailed information will be made available to the members of the Company and its subsidiary companies, seeking such information at any point of time. The annual accounts of the subsidiary companies will be kept for inspection by any member of the Company at its registered office and also at the registered office of the concerned subsidiary company.

As required under the provisions of Sub-section (2A) of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended, particulars of the employees are set out in an Annexure to the directors report. As per provisions of Section 219 (l)(b)(iv) of the said Act, these particulars will be made available to any shareholder on request.

Particulars regarding technology absorption, conservation of energy and foreign exchange earnings and outgo required under Section 217(l)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 have been given in preceding paragraphs.

Directors' Responsibility Statement as required by Section 217(2AA) of the Companies Act, 1956 appears in a preceding paragraph.

Certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this report as Annexure 1.

A cash flow statement for the year 2011-12 is attached to the balance sheet.

Corporate governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section titled 'Corporate Governance' has been included in this annual report, alongwith the reports on Management Discussion and Analysis and General Shareholder Information.

All Board members and senior management personnel have affirmed compliance with the code of conduct for the year 2011-12. A declaration to this effect signed by the Chief Executive Officer (CEO) of the Company is contained in this annual report.

The CEO and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as specified in clause 49 of the listing agreement and the said certificate is contained in this annual report.

Secretarial standards of ICSI

Secretarial standards issued by the Institute of Company Secretaries of India (ICSI) from time to time are currently recommendatory in nature. Your company is, however, complying with the same.

Group

Pursuant to an intimation from the promoters, the names of the promoters and entities comprising "Group" as defined under the erstwhile Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969 are disclosed in the annual report in terms of Regulation 3(l)(e) of the erstwhile SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Auditors' report

The observations made in the Auditors' Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under Section 217 of the Companies Act, 1956.

Auditors

The members are requested to appoint Messers Dalai and Shah, Chartered Accountants, as auditors for the period from the conclusion of the ensuing annual general meeting till the conclusion of the next annual general meeting and to fix their remuneration.

In conformity with the directives of the Central Government, the Company has appointed A P Raman, cost accountant, ICWA Membership No. 837, with address at Golok, Plot No.13, Sector No.28, Pradhikaran, Nigdi, Pune - 411 044, as the cost auditor under Section 233B of the Companies Act, 1956 to conduct the cost audit of Bajaj Auto Ltd. for the year 2012-13. For the year ended 31 March 2011, the due date of filing the cost audit report was 30 September 2011, and the actual date of filing the cost audit report was 8 August 2011.

On behalf of the Board of Directors,

Rahul Bajaj Chairman 17 May 2012


Mar 31, 2011

Introduction

The directors present their fourth annual report and the audited statements of accounts for the year ended 31 March 2011.

The highlights are as under:

Units in Numbers 2011 2010

Two-wheelers 3,387,070 2,511,643 Three wheelers 436,884 340,937

Total 3,823,954 2,852,580

Of which Exports 1,203,718 891,002

Financials

Rs. In Crore

2011 2010

Net sales & other income 16,974.74 12,043.48

Gross profit before exceptional items, interest & depreciation 3,750.73 2,715.06

Interest 1.69 5.98

Depreciation 122.84 136.45

Gross Profit before Exceptional Items 3,626.20 2,572.63

Exceptional items:

Surplus on pre-payment of sales tax deferral liability/loan 826.82 —

Provision for diminution in value of investment in PT. Bajaj Auto Indonesia (102.27) —

VRS compensation — (183.30)

Valuation losses of derivative hedging instruments — 21.80

Profit before tax 4,350.75 2,411.13

Provision for tax 1,011.02 707.50

Profit for the year 3,339.73 1,703.63

Add: Balance brought forward from previous year 854.99 —

Profit available for Appropriation 4,194.72 1,700.11 Transfer to General Reserve 334.00 170.27

Proposed dividend (inclusive of dividend tax) 1,345.24 674.85

Balance carried to Balance Sheet 2,515.48 854.99

Earnings per share (Rs.) 115.4 58.8

Bonus Shares

Pursuant to the approval of the members of the company through postal ballot on 31 August 2010, the company issued and allotted Bonus share(s) of Rs. 10 each in the ratio of one bonus share for every one existing equity share held as on 10 September 2010 i.e. the record date fixed for the purpose. Consequently, the paid-up capital of the company went up from Rs. 144.68 crore to Rs. 289.37 crore during the year under review.

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs. 40 per share, (400 per cent) for the year ended 31 March 2011 on the enhanced capital after the bonus issue made in the ratio of 1:1 during the year under review . The amount of dividend and the tax thereon aggregate to Rs. 1,345.24 crore.

Dividend paid for the year ended 31 March 2010 was Rs. 40 per share (400 per cent). The amount of dividend and the tax thereon aggregated to Rs. 674.85 crore

Operations

The operations of the company are elaborated in the annexed Management Discussion and Analysis Report.

Capacity expansion & New Projects

The company plans to maintain the capacity of two and three-wheelers at the current level of 5,040,000 numbers per annum during the year ending 31 March 2012.

The 4 wheel vehicle development work is under progress and commercial launch of the first product from this platform is scheduled for 2012.

Research & development and technology absorption

During the year under review, your company continued to invest substantially in R & D facilities, resulting in the enhancement of its infrastructure for design, prototyping & testing. R&D continued to work on improving its operations in a number of areas during the year as stated below:

- Manpower

- Facilities

- Technology

- Total Productivity Management (TPM)

Important products, which demonstrated the technical prowess of the company launched during the year under review, were as under:

Avenger 220 DTS-i KTM Duke 125 Discover 150 Discover 125

Your company continues to focus on expanding its design and testing teams, which has enabled it to make the new generation products.

The developments in this area are set out in greater detail in the annexed Management Discussion and Analysis Report.

The expenditure on research and development during 2010-11 and in the previous year was:

Rs. In Crore

2011 2010

i. Capital (Including technical know-how) 11.65 31.23

ii. Recurring 112.95 103.53

Total 124.60 134.76

iii.Total research and development expenditure as a percentage of sales, net of excise duty 0.78 % 1.17 %

Conservation of energy

As a part of continuing efforts to conserve various resources, following steps were taken to conserve energy in plants situated at various locations:

- Electrical energy saving was achieved by replacing

conventional lamps with Light Emitting Diode (LED) street lights and LED mid-bay lamps; installation of portable as well as auto load/unload compressors in various shops, installatio of transparent roof sheets for optimum utilisation of natural lights; Installation of fan-less cooling towers for compressor house ;

- Water saving was achieved by usage of recycled water, drip irrigation/sprinkler system for gardening, revising water change frequency of paint booth water circulation system; regulating pump on-off timing through timers and replacement of old underground water pipes by above- ground pipes to avoid wastage of water due to leakage; installation of time controlled auto system for water pumping in shops; Use of treated water for construction at Pantnagar plant;

- Liquified petroleum gas (LPG)/propane saving was achieved by reduction in number of initial heat up occurrences from two to one for continuous gas carburising (CGC) furnace; installation of waste heat recovery system for pre-heating of combustion air in paint shop; reduction in hot water temperature for pre-treatment process; use of reflective coating inside furnaces for better heat retention;

- Major initiatives in utilization of renewable energy were taken by use of solar water heating system for shops, canteens etc; installation of natural air exhaust (turbo Ventilators) in shops.

Impact of measures taken

As a result of the initiatives taken for conservation of energy and natural resources, the company has effected an overall reduction in consumption as under :-

Reduction achieved in 2011 (%) 2010 (%)

Electrical energy 14.31 17.45

Water 13.33 26.96

LPG 14.40 12.37

Investment/savings

Investment for energy conservation activities Rs. 0.84 crore

Saving achieved through above activities Rs. 1.12 crore

International Business

Bajaj Auto maintained its stellar growth in exports and continued to be Indias largest exporter of two and three-wheelers. During 2011, the company exported 1,203,718 vehicles, achieving a growth of 35 % over the previous year. In 2011, total exports amounted to Rs. 4,552 crore (US $ 974.6 Million).

More details of International Business are set out in the annexed Management Discussion & Analysis report.

Foreign exchange earning & outgo

The company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the company during the year under review was Rs. 4,564.78 crore, compared to Rs. 3,268.95 crore during the previous year.

Total foreign exchange outflow during the year under review was Rs. 844.50 crore as against Rs. 461.61 crore during the previous year.

The above outflow includes an investment of Rs. 210.08 crore (Previous Year; Rs. 1.60 crore) made in its 100% subsidiary, Bajaj Auto International Holdings BV. Netherlands for increasing its stake in KTM Power Sports AG from 31.92 % to 39.26 %.

Industrial relations

Industrial Relations with staff and workmen across the plants at Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.

The wage settlements dated 21 May 2010 and 20 August 2010 were signed in conciliation between the management and Vishwa Kalyan Kamgar Sanghtana for BAL Chakan and BAL Akurdi respectively. Also the wage settlement dated 1 March 2011 was signed in conciliation between the management and Bajaj Auto Ltd. Employees Union for BAL Waluj.

Three workmen of BAL Waluj, Aurangabad received the Prime Minister Shram Award at the hands of Prime Minister of India, on 15 September 2010.

Subsidiaries

PT. Bajaj Auto Indonesia (PT BAI) is a majority shareholding (98.94%) subsidiary of Bajaj Auto Limited. The subsidiary assembles and markets Pulsars in Indonesia.

The past year had recorded a significant growth in volumes compared to last year. The growth was led by the Light Sports Pulsar 135. Indonesia, being a light weight high acceleration step-through market (bebek), Pulsar 135 LS is positioned competitively to upgrade from bebek for the thrill seeking youngsters. The product is well received by the customers and continued to do well. So far, there are more than 50,000 satisfied customers, owning Bajaj motorcycles in Indonesia.

Product portfolio will be expanded under Pulsar brand with Pulsar 220 in the first quarter of 2011-12.

During the year under review, sales and service showrooms were expanded to cover 3 additional provinces. The company plans to increase the number of sales & service show rooms from 84 Nos. to 130 Nos. in the current year.

In an effort to bring down the customs duty liability, the subsidiary has localised some of the assembly operations. It would continue to pursue the localisation of sub- assemblies further in 2011-12. Custom duty rates for SKD and CKD operations have been reduced by 5% from December 2010 by Govt. of Indonesia

With the addition of Pulsar 135 & Pulsar 220 to the model lineup and with increased local sub-assembly operations, the subsidiary would be in a position to reduce its losses in 2011-12.

Notwithstanding what is stated above, considering the continuing losses and longer gestation period, the company has assessed the carrying value of investments made in PT. Bajaj Auto Indonesia and determined an amount of Rs. 102.27 crore at present as a diminution in the value of investment and has accordingly made a provision of the said amount.

Bajaj Auto International Holdings BV, Netherlands (BAIHBV)

During the year under review, BAIHBV invested further € 32 million to increase its stake in KTM Power Sports AG (KTM PS) to 39.26%.

The first product KTM Duke 125cc went into production on 7 March 2011. This product stands testimony to Bajaj Autos design, development and production engineering skills.

KTM Duke 125cc has been extensively tested by European Auto Magazine and has had rave reviews. The product has been launched in Europe in April 2011.

KTM 200 from this platform is under development.

Signing for Anti-corruption Initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF with a view to strengthening the efforts to counter bribery and corruption, your company has now become a signatory to the “Commitment to anti-corruption” and has also decided to support the “Partnering Against Corruption – Principles for Countering Bribery” derived from Transparency Internationals Business Principles. This calls for a commitment to two fundamental actions viz. a zero-tolerance policy towards bribery and development of practical and effective implementation program.

Approval of Shareholders for Payment of commission

Directors seek your approval by way of a special resolution for payment of commission to non-executive directors of a sum not exceeding 1% of the net profits of the Company for a further five years term from 1 April 2011 to 31 March 2016, subject to applicable provisions of the Companies Act, 1956. Earlier such approval has expired on 31 March 2011.

Corporate social responsibility

During the year 2010-11, Bajaj Auto continued its Affirmative Action Plan & Corporate Social Responsibility initiatives in various fields. Activities in this area are set out in greater detail in the annexed CSR Report.

Directors

Nanoo Pamnani, Manish Kejriwal, P Murari and Niraj Bajaj retire from the board by rotation this year and being eligible, offer themselves for re-appointment.

Directors responsibility statement

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, directors state:

- that in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

- that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period.

- that the directors have taken proper and sufficient care 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.

- that the annual accounts have been prepared on a going concern basis.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto International Holdings BV. Netherlands and as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.

Information in aggregate for each subsidiary company is disclosed separately in the consolidated balance sheet.

Statutory disclosures

Ministry of Corporate Affairs (MCA) vide Circular No. 51/12/2007- CL-III dated 8 February 2011 has given general exemption with regard to attaching of the balance sheet, profit and loss account and other documents of its subsidiary companies subject to fulfillment of conditions mentioned therein. Prior to the issue of this Circular, the company had applied for exemption under Section 212(8) of the Companies Act, 1956. In response, the company received a communication from MCA mentioning about the applicability of this general exemption and that further no exemption would be necessary. The company has fulfilled all the

necessary conditions in this regard. The summary of the key financials of the companys subsidiaries is included in this annual report.

The annual accounts of the subsidiary companies and the related detailed information will be made available to the members of the company and its subsidiary companies, seeking such information at any point of time. The annual accounts of the subsidiary companies will be kept for inspection by any member of the company at its registered office and also at the registered office of the concerned subsidiary company.

As required under the provisions of sub-section (2A) of section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended, particulars of the employees are set out in an Annexure to the directors report. As per provisions of section 219 (1) (b) (iv) of the said Act, these particulars will be made available to any shareholder on request.

Particulars regarding technology absorption, conservation of energy and foreign exchange earning and outgo required under section 217(1)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of board of directors) Rules, 1988 have been given in preceding paragraphs.

Directors Responsibility Statement as required by section 217(2AA) of the Companies Act, 1956 appears in a preceding paragraph.

Certificate from auditors of the company regarding compliance of conditions of corporate governance is annexed to this report as Annexure 1.

A cash flow statement for the year 2010-11 is attached to the balance sheet.

Corporate governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section titled Corporate Governance has been included in this annual report, along with the reports on Management Discussion and Analysis and General Shareholder Information.

All board members and senior management personnel have affirmed compliance with the code of conduct for the year 2010-11. A declaration to this effect signed by the Chief Executive Officer (CEO) of the company is contained in this annual report.

The CEO and Chief Financial Officer (CFO) have certified to the board with regard to the financial statements and other matters as specified in clause 49 of the listing agreement and the said certificate is contained in this annual report.

Secretarial standards of ICSI

Secretarial standards issued by the Institute of Company Secretaries of India (ICSI) from time to time are currently recommendatory in nature. Your company is, however, complying with the same.

Group

Pursuant to an intimation from the Promoters, the names of the Promoters and entities comprising “Group” as defined under the Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969 are disclosed in the Annual Report for the purpose of Regulation 3(1)(e) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Auditors report

The observations made in the Auditors Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under section 217 of the Companies Act, 1956.

Auditors

The members are requested to appoint Messers Dalal & Shah, Chartered Accountants, as auditors for the period from the conclusion of the ensuing annual general meeting till the conclusion of the next annual general meeting and to fix their remuneration.

Mr A P Raman, cost accountant, Pune has been appointed as cost auditor to conduct the said audit for the year 2011-12, and the government approval in this regard has been received.

On behalf of the board of directors

Rahul Bajaj Chairman

18 May 2011


Mar 31, 2010

The directors present their third annual report and the audited statements of accounts for the year ended 31 March 2010.

The highlights are as under:-

Units 2009-10 2008-09
Two Wheelers 2,511,643 1,919,625

Three Wheelers 340,937 274,529

Total 2,852,580 2,194,154

Of which Exports 891,002 772,519



Financials

Rs. In Million

2009-10 2008-09

Net sales & other income 120,435 89,323

Gross profit before exceptional items, interest & depreciation 27,151 13,140

Exceptional items

VRS compensation 1,833 1,833 Valuation losses of derivative hedging instruments 218 218

Interest 60 210

Depreciation 1,365 1,298

Profit before taxation 24,111 9581

Provision for taxation 7,075 3,016

Profit after tax 17,036 6,565

Disposable surplus 17,001 6,545

Proposed dividend (inclusive of dividend tax> 6,748 3,724

Transfer to General Reserve 1,703 2,821

Balance carried in Profit & Loss Account 8,550 --

Earnings per share (Rs.) 117.7 45.2

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs.40 per share, (400 per cent) for the year ended 31 March 2010. The amount of dividend and the tax thereon aggregates to Rs. 6,748.5 million.

Dividend paid for the year ended 31 March 2009 was Rs.22 per share (220 per cent). The amount of dividend and the tax thereon aggregated to Rs. 3,724 million.

Operations

The operations of the company are elaborated in the annexed Management Discussion and Analysis Report.

Capacity expansion & New Projects

The company plans to increase its capacity of two and three wheelers from the current 4,260,000 numbers per annum to 4,980,000 numbers per annum by 31 March 2011.

The 4 wheel vehicle development work is under progress and commercial launch of the first product from this platform is scheduled for 2012.

The techno-economic feasibility of the 4-wheeler Project and related agreements between partners, Bajaj, Renault & Nissan will be concluded at a suitable stage of this platform development.

Research & development and technology absorption

During the year under review, your company continued to invest substantially in R & D facilities, resulting in the enhancement of its infrastructure for design, prototyping & testing.

The year 2009-10 was a satisfying year, with R&D being involved in the creation of a number of new products and helping your company to gain market share. Many important products, which demonstrated the technical prowess of the company, were launched during the year under review. These were Pulsar 220 F, Pulsar 180 UG, Pulsar 150 UG, Pulsar 135 LS and Discover DTS-si.

Your company continues to focus on expanding its design and testing teams, which has enabled it to make the new generation products.

The developments in this area are set out in greater detail in the annexed Management Discussion and Analysis Report.

The expenditure on research and development during 2009-10 and in the previous year was:

Rs. In Million

2009-10 2008-09

i. Capital (including technical know-how) 312.3 310.8

ii. Recurring 1,035.3 837.9

Total 1,347.6 1,148.7

iii. Total resarch and development expenditure as a percentage of sales, net of excise duty 1.17 1.36

Conservation of energy

As a part of continuing efforts to conserve various resources, following steps were taken to conserve energy:

Electrical energy saving was achieved by introduction of light emitting diode (LED) street lights and LED mid-bay lamps; use of compact fluorescent lamps for office lighting; efficient usage of compressor and installation of transparent roof sheets for optimum utilisation of natural lights;

# Water saving was achieved by usage of recycled water, drip irrigation / sprinkler system for gardening, revising water change frequency of paint booth water circulation system; regulating pump on-off timing through timers and replacement of old underground water pipes above-ground pipes to avoid wastage of water due to leakage;

• Liquified petroleum gas (LPG) saving was achieved by reduction in number of initial heat up occurrences from two to one for continuous gas carburising (CGC) furnace; installation of waste heat recovery system for pre-heating of combustion air in paint shop; reduction in hot water temperature for pre-treatment process and single shift running for production upto 60K at Pantnagar.

Impact of measures taken

Asa result of the initiatives taken for conservation of energy and natural resources, the company has effected an overall reduction in consumption as under:-

Reduction achieved in 2009-10 (%) 2008-09 (%)

Electrical energy 17 23

Water 27 11

LPG 12 44

Investment / savings

Investment for energy conservation activities Rs.8.1 million

Saving achieved through above activities Rs.15.1 million

Foreign exchange earning & outgo

The company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the company during the year under review was Rs.32,690 million, compared to Rs. 26,819 million during the previous year.

Total foreign exchange outflow during the year under review was Rs. 4,616 million as against Rs. 7,286 million during the previous year.

The above outflow includes an investment of Rs.16 million (Previous Year Rs. 1,378 million) made in its 100% subsidiary, Bajaj Auto International Holdings BV. Netherlands for increasing its stake in KTM Power Sports AG from 31.72% to 31.92%. It further includes an investment of Rs.811 million (Previous Year Nil) made in its subsidiary, PT Bajaj Auto Indonesia.

Industrial relations

Industrial relations with staff and workmen across the plant at Akurdi, Waluj, Chakan and Pantnagar remained cordial.

The year 2010, being a Silver Jubilee year for the Waluj factory, various events like cultural activities of employees and their family members, sports competitions, tree plantation, blood donation etc. were conducted.

One workman of the Waluj plant received the Kamgar Bhushan Award and six workmen received the Gunwant KamgarAward, declared by the Government of Maharashtra for the year 2009.

Subsidiaries

PT. Bajaj Auto Indonesia (PT BAI), is a majority shareholding (98.94%) subsidiary of Bajaj Auto Limited. The subsidiary assembles and markets Pulsars in Indonesia. During the year, the

Pulsar upgrades were introduced in Indonesia. So far, there are more than 38,000 satisfied customers, owning Bajaj motorcycles in Indonesia.

Product portfolio will be expanded under Pulsar brand with Pulsar 135 LS in the first quarter of 2010-11. Indonesia, being a light weight high acceleration step-through market (bebek), Pulsar 135 LS will be positioned competitively to upgrade from bebek for the thrill seeking youngsters.

During the year under review, sales and service showrooms were expanded to cover 23 provinces, across 7 major islands.

In an effort to bring down the customs duties, the subsidiary has localised some of the assembly operations. It would continue to pursue the localisation of sub- assemblies further in 2010-11.

With the addition of Pulsar 135 LS to the model line up and with increased local sub-assembly operations, the subsidiary would be in a position to reduce its losses in 2010-11.

Bajaj Auto International Holdings BV, Netherlands (BAIHBV) During the year under review, BAIHBV invested further Euro 250,290 to increase its stake in KTMPS to 31.92%.

The first product developed under the joint development program between KTM and BAL was showcased in Milan Motorshow in November 2009 and was received well. The product will goon sale in 2010-11.

Reinforcing its commitment to KTM and signifying the strategic importance of KTM brand & products, Bajaj invested a further Euro 20 Million in April 2010 in KTM through BAIHBV taking its stake in KTM to 35.67%.

Corporate social responsibility

During the year 2009-10, Bajaj Auto continued its Affirmative Action Plan & Corporate Social Responsibility initiatives in various fields. Activities in this area are set out in greater detail in the CSR Report.

Directors

J N Godrej, S H Khan, Suman Kirloskar and Naresh Chandra retire from the board by rotation this year and being eligible, offer themselves for re-appointment.

Rahul Bajaj, Madhur Bajaj and Rajiv Bajaj have been re-appointed as Chairman, Vice Chairman and Managing Director for a further term of five years commencing from 1 April 2010 and ending 31 March 2015.

Directors responsibility statement

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, directors state:

« that in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

# that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period.

® that the directors have taken proper and sufficient care 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.

• that the annual accounts have been prepared on a going concern basis.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto International Holdings BV, Netherlands and as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.

Information in aggregate for each subsidiary company is disclosed separately in the consolidated balance sheet.

Statutory disclosures

The company has received an exemption from the central government under section 212 (8) of the Companies Act, 1956 with regard to attaching of the balance sheet, profit and loss account and other documents of its subsidiary companies, viz. PT Bajaj Auto Indonesia and Bajaj Auto International Holdings BV, Netherlands for the year 2009-10. The summary of the key financials of the companys subsidiaries is included in this annual report.

The annual accounts of the subsidiary companies and the related detailed information will be made available to the members of the company and its subsidiary companies, seeking such information at any point of time. The annual accounts of the subsidiary companies will be kept for inspection by any member of the company at its registered office and also at the registered office of the concerned subsidiary company.

As required under the provisions of sub-section (2A) of section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended, particulars of the employees are set out in an Annexure to the directors report. As per provisions of section 219(1 )(b)(iv) of the said Act, these particulars will be made available to any shareholder on request.

Particulars regarding technology absorption, conservation of energy and foreign exchange earning and outgo required under section 217(1)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of board of directors) Rules, 1988 have been given in preceding paragraphs.

Directors Responsibility Statement as required by section 217(2AA) of the Companies Act, 1956 appears in a preceding paragraph.

Certificate from auditors of the company regarding compliance of conditions of corporate governance is annexed to this report as Annexure 1.

A cash flow statement for the year 2009-10 is attached to the balance sheet.

Corporate governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section titled Corporate Governance has been included in this annual report, along with the reports on Management Discussion and Analysis and General Shareholder Information.

All board members and senior management personnel have affirmed compliance with the code of conduct for the year 2009-10. A declaration to this effect signed by the Chief Executive Officer (CEO) of the company is contained in this annual report.

The CEO and Chief Financial Officer (CFO) have certified to the board with regard to the financial statements and other matters as specified in clause 49 of the listing agreement and the said certificate is contained in this annual report.

Secretarial standards of ICSI

Secretarial standards issued by the Institute of Company Secretaries of India (ICSI) from time to time are currently recommendatory in nature. Your company is, however, complying with the same.

Group

Pursuant to an intimation from the Promoters, the names of the Promoters and entities comprising "Group" as defined under the Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969 are disclosed in the Annual Report for the purpose of Regulation 3(1 )(e) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Auditors report

The observations made in the Auditors Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under section 217 of the Companies Act, 1956.

Auditors

The members are requested to appoint Messers Dalai & Shah, Chartered Accountants, as auditors for the period from the conclusion of the ensuing annual general meeting till the conclusion of the next annual general meeting and to fix their remuneration.

Mr A P Raman, cost accountant, Pune has been appointed as cost auditor to conduct the said audit for the year 2010-11, and the government approval in this regard has been received.

On behalf of the board of directors

Rahul Bajaj 12 May 2010 Chairman

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