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Notes to Accounts of Bajaj Auto Ltd.

Mar 31, 2017

Notes to Investments

1 Investments made by the Company other than those with a maturity of less than one year, are intended to be held for long-term. On an assessment of the expected credit loss due to significant changes in risk profile, no material provisions are required to be made.

2 In absence of an active market and non availability of quotes on recognized stock exchange, investment in fixed maturity plans and fixed term plans though listed on recognized stock exchange are disclosed as unquoted. Other mutual funds, though unlisted, are quoted on recognized stock exchanges at their previous day NAVs which is the quote for the day.

3 Refer note 1C (6) for accounting policy and valuation principles for investments and note 31 for credit risk management related to investments.

Level 4: Level 1 hierarchy includes financial instruments measured using quoted prices in active markets. Quotes would include rates/values/valuation references published periodically by BSE, NSE etc. basis which trades take place in a linked or unlinked active market. This includes traded bonds and mutual funds, as the case may be, that have quoted price/rate/value.

Level 5: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques which maximize the use of observable market data (either directly as prices or indirectly derived from prices) and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 6: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

Valuation Techniques used to determine fair value Valuation Techniques used to determine fair value include

- Open ended mutual funds and certain bonds and debentures at NAV''s/rates declared and/or quoted

- Close ended mutual funds at NAV''s declared by AMFI

- For other bonds and debentures values with references to prevailing yields to maturity matching tenures, quoted on sites of credible organization such as FIMMDA (Fixed Income Money Market and Derivative Association of India)

- Derivative Instruments at values determined by counter parties/Banks using market observable data.

- Commercial papers and certificate of deposits, being short term maturity papers, amortized cost is assumed to be the fair value

The Board provides guiding principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of surplus liquidity. The Company''s risk management is carried out by a treasury department as per the policies approved by the Board of Directors. Accordingly, Company''s treasury identifies, evaluates and hedges financial risks.

A) Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments, financial assets measured at amortized cost and fair value through profit or loss and trade receivables.

Credit Risk Management

For Derivative instruments exposures are extended with multiple banks holding high credit risk ratings.

For other financial assets the Company has an investment policy which allows the Company to invest only with counterparties having credit rating equal to or above AA and P1 . The company reviews the creditworthiness of these counterparties on an ongoing basis. Another source of credit risk at the reporting date is from trade receivables as these are typically unsecured. This credit risk has always been managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to whom credit is extended in the normal course of business. The Company estimates the expected credit loss on the basis of past data and experience. Expected credit losses of financial assets receivable in the next 12 months are estimated on the basis of historical data provided the Company has reasonable and supportable data. On such an assessment the expected losses are nil or negligible, as evidenced in the table below, and hence no further provision than that already made is considered necessary.

Review of outstanding trade receivables and financial assets is carried out by Management at every month end. Company has a practice to provide for doubtful debts on a case to case basis after considering inter-alia customer''s credibility etc. Provision is made in the books generally, for all outstanding trade receivables which are outstanding for more than 180 days from their due date, if they are considered to be doubtful.

B) Liquidity Risk

The Company''s principal sources of liquidity are ''cash and cash equivalents'' and cash flows that are generated from operations. The Company has no outstanding term borrowings. The Company believes that its working capital is sufficient to meet its current requirements. Additionally, the Company has sizeable surplus funds invested in fixed income securities or instruments of similar profile ensuring safety of capital and availability of liquidity if and when required. Hence the Company does not perceive any liquidity risk.

C) Market risk Foreign currency risk

The Company operates, in addition to domestic markets, significantly in international markets through its exports and is therefore exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$. Foreign exchange risk arises from highly probable forecast transactions and recognized assets and liabilities denominated in a currency that is not the Company''s functional currency (INR). The risk is measured through sensitivity analysis. The primary objective for forex hedging against anticipated foreign currency risks will be to hedge the Company''s highly probable foreign currency cash flows arising from such transactions (thus reducing cash flow and profit volatility).

In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts, foreign currency option contracts are entered to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

The Company''s Risk Management Policy permits the use of plain foreign exchange forward contracts and foreign currency option contracts including Foreign Currency - INR Option Cost Reduction Structures to hedge forecasted sales.

The Company also imports certain materials the value of which is not material as compared to value of exports.

Currently, company does not hedge this exposure. Nevertheless, Company may wish to hedge such exposures.

The Company uses a combination of foreign exchange forward contracts and foreign currency option contracts to hedge its exposure in foreign currency risk. The Company designates forward contracts in entirety and intrinsic value of foreign currency option contracts as the hedging instrument. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognized through other comprehensive income in the ''Cash flow hedging reserve'' within equity. The change in time value that relate to the hedged item (aligned time value) is recognized through other comprehensive income in ''Costs of hedging reserve'' within equity. Amount recognized in equity is reclassified to profit or loss when the hedged item (i.e. forecasted export sales) affects Statement of Profit and Loss. The ineffective portion of change in fair value of the hedging instrument and any residual time value (the non-aligned portion), if any, is recognized in the Statement of Profit and Loss immediately.

The intrinsic value of foreign exchange option contracts is determined with reference to the relevant spot market exchange rate. The differential between the contracted strike rate and the spot market exchange rate is defined as the intrinsic value. Time value of the option is the difference between fair value of the option and the intrinsic value.

The fair values (Marked-to-market) of foreign currency derivative contracts outstanding as on 31 March 2017, 31 March 2016 and 1 April 2015 are as follows:

7. Capital management a) Risk management

The Company is cash surplus and has no capital other than Equity. The Company is not exposed to any regulatory imposed capital requirements.

The cash surpluses are currently invested in income generating debt instruments (including through mutual funds) and money market instruments depending on economic conditions in line with the guidelines set out by the Management. Safety of capital is of prime importance to ensure availability of capital for operations. Investment objective is to provide safety and adequate return on the surplus funds.

The Company does not have any borrowings and does not borrow funds unless circumstances require.

8. Segment information

Segment information based on consolidated financial statements is given in note 36 to consolidated financial statements, which are attached to these financial statements.

The Company''s Core Management Committee (CMC), examines the group''s performance both from a product and geographical perspective and has identified two reportable operative business segments. The group''s significant source of risk and rewards are derived from Automotive business and Investments, the performance of which is reviewed by the committee on a periodic basis and hence considered as individual operative segments.

The business segments comprise the following:

i. Automotive

ii. Investments

iii. Others

These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.

Funding arrangement and policy

The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested.

The trustees of the plan have outsourced the investment management of the fund to insurance companies. The insurance companies in turn manage these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations.

There is no compulsion on the part of the Company to fully pre fund the liability of the plan. The Company''s philosophy is to fund the benefits based on its own liquidity and tax position as well as level of underfunding of the plan.

The expected contribution payable to the plan next year is H 65 crore.

Projected plan cash flow

The table below shows the expected cash flow profile of the benefits to be paid to the current membership of the plan:

9. Considering the Company has been extended credit period up to 45 days by its vendors and payments being released on a timely basis, there is no liability towards interest on delayed payments under ''The Micro, Small and Medium Enterprises Development Act 2006'' during the year. There is also no amount of outstanding interest in this regard, brought forward from previous years. Information in this regard is on basis of intimation received, on requests made by the Company, with regards to registration of vendors under the said Act.

10. The Company had entered into an arrangement with a consortium of banks on 26 July 2008. Accordingly, first charge was created on all current assets of the Company to the extent of RS, 430 crore. Current assets include stocks of raw materials, semi-finished goods, stores and spares not relating to plant and machinery (consumable stores and spares), book debts not older than 90 days pertaining to Company''s plants located anywhere in India.

During the year, Company has passed the resolution dated 27 July 2016 for dismantling of consortium. Accordingly, discharge letters for clearance are filed with all banks and clearance is awaited as on date.

11. The consolidated financial statements of the Company along with its subsidiaries are attached to these standalone financial statements. The details of the group regarding the nature of relationship and the basis of consolidation can be referred to in note 1 to the said consolidated financial statements.

12. Miscellaneous

a. RS, 1 crore is equal to RS, 10 million.

b. Amounts less than Rs, 50,000 have been shown at actual against respective line items statutorily required to be disclosed.


Mar 31, 2015

Basis of preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of B 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2 Derivative hedging instruments

The Company has adopted the accounting treatment and disclosures in accordance with the principles laid down in Accounting Standards 30 and 32 on foreign currency derivative contracts.

The Company holds foreign currency derivative to hedge its foreign currency exposure. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The Company designates foreign currency derivatives as hedges of foreign currency risk associated with a highly probable forecast transaction (cash flow hedge).

The Company has entered into simple forward contracts and par forward contracts to hedge highly probable forecast export transactions. These instruments meet the Management''s foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. The market value of instruments outstanding at the close of the year is a gain of Rs. 2.92 crore as against a gain of Rs. 1.95 crore in the previous year.

The Company has also entered into range forward contracts to hedge highly probable forecast transactions, where the export realisations of the Company are protected below a minimum pre-determined foreign exchange rate whereas the realisation advantages are available to the Company there from upto a higher pre-determined foreign exchange rate. The Company does not benefit by rupee depreciating beyond the pre-determined foreign exchange rate. These instruments meet the Management''s foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting.

MTM gains/losses in respect of effective hedges is carried to the Hedge reserve and ineffectiveness, if any, including the time value of option contracts is recognised in the results, as per the principles of Accounting Standard 30. The market value of instruments outstanding at the close of the year indicate a gain aggregating to Rs. 53.22 crore as against a gain of Rs. 71.76 crore in the previous year.

The time value of option contracts aggregating a net loss of Rs. 50.22 crore after reversals, (previous year net loss of Rs. 76.81 crore) has been recognised as ''Other expenses''.

Risk Management Policy and other disclosures

The exports of the Company, presently constituting substantial portion of the turnover, are at prices predetermined for each product in each region. These prices are fixed in USD based on an assumed USD/INR rate. (Budgeted rate of realisation).

Exports are then effected at such price and hence it is desirable for the Company to shield itself from adverse movements in forex rates at a future date.

The Company also imports raw materials and components for its motorcycles etc. However, the value of such imports is not material as compared to the value of exports. Nevertheless, the Company may wish to secure its procurement prices in terms of INR to be able to forecast its pricing and profitability. Consequently the Company may wish to hedge such exposures, future and current, to achieve the aforesaid objective.

The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses derivative financial instruments, such as foreign exchange forward and option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables.

The details in respect of the outstanding foreign exchange forward contracts including range forward and par forward contracts are given below. These contracts are due for maturity between one to twelve months. The table below summarises the notional amounts (amounts of contracts booked and outstanding) of foreign currency forward contracts into relevant maturity groupings based on the remaining period as at the 31 March 2015:

For import transactions: Rs.Nil

The fair value of forwards and foreign currency option contracts is determined based on the appropriate valuation techniques as given by the banks.

The cash flows from the hedges are expected to occur over the financial year 2015-16 and will accordingly flow to the Statement of Profit and Loss.

In respect of foreign currency derivative contracts designated as cash flow hedges for par forward contracts, the Company has recorded a net gain of Rs. 2.92 crore and Rs. 1.95 crore, as a component of equity (Hedge reserve) as at 31 March 2015 and 2014 respectively and a net gain of Rs. 8.40 crore and a net loss of Rs. 13.53 crore as part of revenue during the year ended 31 March 2015, and 2014 respectively and Rs. Nil (previous year loss of Rs. 2.60 crore) to the Statement of Profit and Loss on a break in the designation

In respect of foreign currency derivative contracts designated as cash flow hedges for range forward contracts, the Company has recorded a net gain of Rs. 182.32 crore and Rs. 150.65 crore, as a component of equity (Hedge reserve) as at 31 March 2015 and 2014 respectively and a net gain of Rs. 85.10 crore and a net loss of Rs. 114.35 crore as part of revenue during the year ended 31 March 2015 and 2014 respectively and B Nil (previous year gain of Rs. 0.49 crore) to the Statement of Profit and Loss on a break in the designation of the hedge.

Amount that was removed from appropriate equity account (Hedge reserve account) during the year ended 2015 and 2014 in respect of forecast transaction for which hedge accounting had previously been used, but which is no longer expected to occur is Rs. Nil and and a loss of Rs. 2.11 crore respectively.

Amount that was removed from appropriate equity account (Hedge reserve account) during the period and included in the initial cost or other carrying amount of a non-financial asset or non-financial liability whose acquisition or incurrence was a hedged highly probable forecast transaction is Rs. Nil.

Amount in respect of the ineffectiveness which relates to time value of option contracts recognised in the Statement of Profit and Loss that arises from cash flow hedges is a loss of Rs. 129.10 crore as on 31 March 2015.

In respect of the Company''s foreign currency derivative contracts outstanding as on 31 March 2015, a 10% increase in the exchange rates of the currency, underlying such contracts, as given by the banks would have resulted in an adverse movement by approximately Rs. 466.04 crore in the fair value of outstanding contracts.

In respect of the Company''s foreign currency derivative contracts outstanding as on 31 March 2015, a 10% decrease in the exchange rates of the currency, underlying such contracts, as given by the banks would have resulted in a positive movement by approximately Rs. 666.07 crore in the fair value of outstanding contracts.

Counter-party risk

Counter-party risk encompasses settlement risk on foreign currency derivative contracts. Exposure to these risks is closely monitored and kept within predetermined parameters. The Company does not expect any losses from non-performance by these counter-parties.

The Company''s policy is to transact with creditworthy banks, which are reviewed on an on-going basis. The following table depicts that the majority of the foreign currency derivatives are placed in highly rated banks:

3 Contingent liabilities

(Rs.In Crore)

As at 31 March

Particulars 2015 2014

a Claims against the Company not acknowledged as debts 450.51 446.41

b Guarantees given by the Company to Housing Development Finance Corporation Ltd. - for loans to employees (B 28,529) 0.02

c Excise and Customs demand - matters under dispute and claims for refund of Excise Duty, if any, against Excise Duty Refund received in the earlier year 486.11 392.08

d Income tax matters - Appeal by Company 454.17 98.56

e Value Added Tax (VAT)/Sales Tax matters under dispute 126.30 116.11

f Claims made by temporary workmen

Pending before various judicial/appellate authorities in respect of similar matters adjudicated by the Supreme Court.The matter is contingent on the facts and evidence presented before the courts/ Liability Liability adjudicating authorities and not necessarily likely to be influenced by the Supreme Court''s order unascertained unascertained

4 Previous year figures

Previous year figures have been regrouped wherever necessary to make them comparable with those of the current year.

5 Miscellaneous

a. Rs.1 crore is equal to Rs.10 million.

b. Amounts less than Rs.50,000 have been shown at actual against respective line items statutorily required to be disclosed.


Mar 31, 2014

Basis of preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Consequent to the clarification from the Ministry of Corporate Affairs, vide General Circular 08/2014 dated 4 April 2014, these financial statements have been prepared in accordance with the relevant provisions/Schedules/Rules of the Companies Act, 1956. Accordingly, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

a. Of the above:-

i. 144,683,510 equity shares were allotted as fully paid bonus shares by capitalisation of General reserve by the Company on 13 September 2010.

ii. 101,183,510 equity shares were allotted as fully paid up pursuant to the scheme of arrangement for demerger of erstwhile Bajaj Auto Ltd. (now Bajaj Holdings & Investment Ltd.) by the Company on 3 April 2008.

iii. 1,805,071 equity shares thereof (excluding 1,805,071 equity shares allotted as bonus shares thereon) are deemed to be issued by way of Euro Equity Issue represented by Global Depository Receipts (GDR) evidencing Global Depository Shares outstanding on the record date. Outstanding GDRs at the close of the year were 60,044 (66,196)

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

1 Derivative hedging instruments

The Company has adopted the accounting treatment and disclosures in accordance with the principles laid down in AS 30 and AS 32 on foreign currency derivative contracts.

The Company holds foreign currency derivatives to hedge its foreign currency exposure. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The Company designates foreign currency derivatives as hedges of foreign currency risk associated with a highly probable forecast transaction (cash flow hedge).

The Company has entered into simple forward contracts and par forward contracts to hedge highly probable forecast export transactions. These instruments meet the Management''s foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. The market value of instruments outstanding at the close of the year is a gain of Rs. 1.95 crore as against Rs. Nil in the previous year.

The Company has also entered into range forward contracts to hedge highly probable forecast transactions, where the export realisations of the Company are protected below a minimum pre-determined foreign exchange rate whereas the realisation advantages are available to the Company there from upto a higher pre-determined foreign exchange rate. The Company does not benefit by rupee depreciating beyond the pre-determined foreign exchange rate. These instruments meet the Management''s foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. MTM losses in respect of effective hedges is carried to the Hedge reserve and ineffectiveness, if any, including the time value of option contracts is recognised in the results, as per the principles of AS-30. The market value of instruments outstanding at the close of the year indicate a gain aggregating Rs. 71.76 crore as against a gain in the previous year aggregating Rs. 15.96 crore.

The time value of option contracts from the current year aggregating a net loss of Rs. 76.81 crore after reversals, has been recognised as "Other expense" being recurring in nature, against a net gain of Rs. 131.92 crore in the previous year recognised as "Other income".

Risk management policy and other disclosures

The exports of the Company, presently constituting substantial portion of the turnover, are at prices pre-determined for each product in each region. These prices are fixed in USD based on an assumed USD/ INR rate. (Budgeted rate of realisation). Exports are then effected at such price and hence it is desirable for the Company to shield itself from adverse movements in forex rates at a future date.

The Company also imports raw materials and components for its motorcycles etc. However, the value of such imports is not material as compared to the value of exports. Nevertheless, the Company may wish to secure its procurement prices in terms of INR to be able to forecast its pricing and profitability. Consequently, the Company may wish to hedge such exposures, future and current, to achieve the aforesaid objective.

The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses derivative financial instruments, such as foreign exchange forward and option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables.

The details in respect of the outstanding foreign exchange forward contracts including range forward and par forward contracts are given below. The forward exchange contracts mature between one to twelve months. The table below summarises the notional amounts (amounts of contracts booked and outstanding) of foreign currency forward contracts into relevant maturity groupings based on the remaining period as at the 31 March 2014:

The fair value of forwards and foreign currency option contracts is determined based on the appropriate valuation techniques as given by the banks.

The cash flows from the hedges are expected to occur over the financial year 2014-15 and will accordingly flow to the Statement of Profit and Loss.

In respect of foreign currency derivative contracts designated as cash flow hedges for par forward contracts, the Company has recorded a net gain of Rs. 1.95 crore and net loss of Rs. 16.32 crore, as a component of equity (Hedge reserve) as at 31 March 2014, and 2013, respectively and a net loss of Rs. 13.53 crore and a net loss of Rs. 207.67 crore as part of revenue during the year ended 31 March 2014, and 2013 respectively and a loss of Rs. 2.60 crore (previous year Rs. 69.22 crore) to the Statement of Profit and Loss on a break in the designation of the hedge.

In respect of foreign currency derivative contracts designated as cash flow hedges for range forward contracts, the Company has recorded a net gain of Rs. 150.65 crore and net gain of Rs. 18.04 crore, as a component of equity (Hedge reserve) as at 31 March 2014, and 2013, respectively and a net loss ofRs. 114.35 crore and a net loss of Rs. 394.74 crore as part of revenue during the year ended 31 March 2014, and 2013 respectively and a gain of Rs. 0.49 crore (previous year Rs. Nil) to the Statement of Profit and Loss on a break in the designation of the hedge.

Amount that was removed from appropriate equity account (Hedge reserve account) during the year ended 2014 and 2013 in respect of forecast transaction for which hedge accounting had previously been used, but which is no longer expected to occur is a loss of Rs. 2.11 crore and Rs. 69.22 crore respectively.

Amount that was removed from appropriate equity account (Hedge reserve account) during the period and included in the initial cost or other carrying amount of a non-financial asset or non-financial liability whose acquisition or incurrence was a hedged highly probable forecast transaction is Rs. Nil.

Amount in respect of the ineffectiveness which relates to time value of option contracts recognised in the Statement of Profit and Loss that arises from cash flow hedges is a loss of Rs. 78.89 crore as on 31 March 2014.

In respect of the Company''s foreign currency derivative contracts outstanding as on 31 March 2014, a 10% increase in the exchange rates of the currency underlying such contracts as given by the banks would have resulted in an approximately Rs. 270.87 crore decrease in the fair value of outstanding contracts.

In respect of the Company''s foreign currency derivative contracts outstanding as on 31 March 2014, a 10% decrease in the exchange rates of the currency underlying such contracts as given by the banks would have resulted in an approximately Rs. 402.40 crore increase in the fair value of outstanding contracts.

Counter-party risk

Counter-party risk encompasses settlement risk on foreign currency derivative contracts. Exposure to these risks is closely monitored and kept within pre-determined parameters. The Company does not expect any losses from non-performance by these counter-parties.

The Company''s policy is to transact with credit worthy banks, which are reviewed on an on-going basis. The following table depicts that the majority of the foreign currency derivatives are placed in highly rated banks:

2 Contingent liabilities

(Rs. In Crore)

As at 31 March

Particulars 2014 2013

a. Claims against the Company not acknowledged as debts 446.41 418.88

b. Guarantees given by the Company to banks, on behalf of its subsidiary, PT. Bajaj Auto Indonesia - 27.14

c. Guarantees given by the Company to Housing Development Finance Corporation Ltd. - for loans to employees 0.02 0.04

d. Excise and Customs demand - matters under dispute and claims for refund of Excise Duty, if any, against Excise Duty Refund received in the earlier year 392.08 293.31

e. Income tax matters - Appeal by Company 98.56 54.13

f. Value Added Tax (VAT)/Sales Tax matters under dispute 116.11 377.48

g. Claims made by temporary workmen Pending before various judicial/appellate authorities in respect of similar matters adjudicated by the Supreme Court. The matter is contingent on the facts and evidence presented before the courts/adjudicating authorities and not necessarily likely to be Liability Liability influenced by the Supreme Court''s order unascer -tained unascer -tained

3 Previous year figures

Previous year figures have been regrouped wherever necessary to make them comparable with those of the current year.

4 Miscellaneous

a. Rs. 1 crore is equal to Rs. 10 million.

b. Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed.


Mar 31, 2013

Basis of preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other . criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

1 Derivative hedging instruments

The Company has adopted the accounting treatment and disclosures in accordance with the principles laid down in AS 30 and AS 32 on foreign currency derivative contracts.

The Company holds foreign currency derivative to hedge its foreign currency exposure. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The Company designates foreign currency derivatives as hedges of foreign currency risk associated with a highly probable forecast transaction (cash flow hedge).

The Company has entered into simple forward contracts and par forward contracts to hedge highly probable forecast export transactions. These instruments meet the management''s Foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. The market value of instruments outstanding at the close of the year is Rs. Nil as against a loss in the previous year aggregating Rs. 212.87 crore.

The Company has also entered into range forward contracts to hedge highly probable forecast transactions, where the export realisations of the Company are protected below a minimum pre-determined foreign exchange rate whereas the realisation advantages are available to the Company there from up to a higher pre-determined foreign exchange rate. The Company does not benefit by rupee depreciating beyond the pre-determined foreign exchange rate. These instruments meet the management''s Foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. MTM losses in respect of effective hedges is carried to the Hedge reserve and ineffectiveness, if any, including the time value of option contracts is recognised in the results, as per the principles of AS-30. The market value of instruments outstanding at the close of the year indicate a gain aggregating Rs. 15.96 crore as against a loss in the previous year aggregating Rs. 256.11 crore.

The time value of option contracts from the current year aggregating a net gain of Rs. 131.92 crore after reversals, has been recognised as "other income" being recurring in nature, against a loss in the previous year recognised for the first time aggregating Rs. 134 crore as an exceptional item.

Risk management policy and other disclosures

The exports of the Company, presently constituting substantial portion of the turnover, are at prices predetermined for each product in each region. These prices are fixed in USD based on an assumed USD/INR rate. (Budgeted rate of realisation).

Exports are then effected at such price and hence it is desirable for the Company to shield itself from adverse movements in forex rates at a future date.

The Company also imports raw materials and components for its Motorcycles etc. However, the value of such imports is not material as compared to the value of exports. Nevertheless, the Company may wish to secure its procurement prices in terms of INR to be able to forecast its pricing and profitability. Consequently the Company may wish to hedge such exposures, future and current, to achieve the aforesaid objective.

The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses derivative financial instruments, such as foreign exchange forward and option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables.

The details in respect of the outstanding foreign exchange forward contracts including range forward and par forward contracts are given below. The forward exchange contracts mature between one to twelve months. The table below summarises the notional amounts (amounts of contracts booked and outstanding) of foreign currency forward contracts into relevant maturity groupings based on the remaining period as at the 31 March 2013:

Amount that was removed from appropriate equity account (Hedge reserve account) during the year ended 2013 and 2012 in respect of forecast transaction for which hedge accounting had previously been used, but which is no longer expected to occur is Rs. 69.22 crore and t Nil respectively.

Amount that was removed from appropriate equity account (Hedge reserve account) during the period and included in the initial cost or other carrying amount of a non-financial asset or non-financial liability whose acquisition or incurrence was a hedged highly probable forecast transaction is Rs. Nil.

Amount in respect of the ineffectiveness which relates to time value of option contracts recognised in the Statement of Profit and Loss that arises from cash flow hedges is Rs. 2.08 crore as on 31 March 2013.

In respect of the Company''s foreign currency derivative contracts outstanding as on 31 March 2013, a 10% increase in the exchange rates of the currency underlying such contracts as given by the banks would have resulted in an approximately Rs. 185.07 crore decrease in the fair value of outstanding contracts.

In respect of the Company''s foreign currency derivative contracts outstanding as on 31 March 2013, a 10% decrease in the exchange rates of the currency underlying such contracts as given by the banks would have resulted in an approximately Rs. 320.86 crore increase in the fair value of outstanding contracts.

Counter-party Risk

Counter-party risk encompasses settlement risk on foreign currency derivative contracts. Exposure to these risks is closely monitored and kept within predetermined parameters. The Company does not expect any losses from non-performance by these counter-parties.

The Company''s policy is to transact with credit worthy banks, which are reviewed on an on-going basis. The following table depicts that the majority of the foreign currency derivatives are placed in highly rated banks:

2 Earnings Per Share (EPS)

Earnings per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. The numbers used in calculating basic and diluted earnings are stated below:

3 Employee benefits

Liability for employee benefits has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the accounting standard 15 (Revised) the details of which are as hereunder.

4 Lease

Future minimum lease rental in respect of assets given on operating lease in the form of office premises after 1 April 2001 Minimum future lease payments as on 31 March 2013:

5 Previous year figures

Previous year figures have been reclassified to conform to this year''s classification.

6 Miscellaneous

Rs. 1 crore is equal to Rs. 10 million.

Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed.


Mar 31, 2012

1 Derivative hedging instruments

The company has adopted the accounting treatment and disclosures in accordance with the principles laid down in AS 30 and AS 32 on foreign currency derivative contracts.

The company holds foreign currency derivative to hedge its foreign currency exposure. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The company designates foreign currency derivatives as hedges of foreign currency risk associated with a highly probable forecast transaction (cash flow hedge).

The company has entered into simple forward contracts and par forward contracts to hedge highly probable forecast export transactions. These instruments meet the management's Foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. The market value of instruments outstanding at the close of the year indicate a loss aggregating Rs. 212.87 crore as against a gain in the previous year aggregating Rs. 20.77 crore.

The company has also entered into range forward contracts to hedge highly probable forecast transactions, where the export realisations of the company are protected below a minimum pre-determined foreign exchange rate whereas the realisation advantages are available to the company there from up to a higher pre-determined foreign exchange rate. The company does not benefit by rupee depreciating beyond the pre-determined foreign exchange rate. These instruments meet the management's Foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting. MTM losses in respect of effective hedges is carried to the Hedge Reserve and ineffectiveness, if any, including the time value of option contracts is recognised in the results, as per the principles of AS-30. The market value of instruments outstanding at the close of the year indicate a loss aggregating Rs. 256.11 crore as against a gain in the previous year aggregating Rs. 116.46 crore, which was not recognised in the previous year as a matter of prudence.

Risk management policy and other disclosures

The exports of the company, presently constituting substantial portion of the turn over, are at prices predetermined for each product in each region. These prices are fixed in USD based on an assumed USD/INR rate. (Budgeted rate of realisation). Exports are then effected at such price and hence it is desirable for the company to shield itself from adverse movements in forex rates at a future date.

The company also imports raw materials and components for its Motorcycles etc. However the value of such imports is not material as compared to the value of exports. Nevertheless, the company may wish to secure its procurement prices in terms of INR to be able to forecast its pricing and profitability. Consequently the company may wish to hedge such exposures, future and current, to achieve the aforesaid objective.

The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the company uses derivative financial instruments, such as foreign exchange forward and option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables.

2 Contingent liabilities

(Rs. In Crore)

As at As at 31 March 2012 31 March 2011

a) Claims against the Company not acknowledged as debts 418.74 422.49

b) Guarantees given by the Company to banks, on behalf of its subsidiary, PT Bajaj Auto Indonesia 25.44 23.19

c) Guarantees given by the Company to Housing Development Finance Corporation Ltd. for loans to employees 0.12 0.22

d) Excise and Customs demand - matters under dispute and Claims for refund of Excise Duty, if any, against Excise Duty Refund received in the earlier year 181.78 122.70

e) Income tax matters - Appeal by company 9.58 -

f) Sales Tax matters under dispute 357.85 328.41

g) Claims made by temporary workmen

Pending before various judicial/appellate authorities in respect of similar matters adjudicated by the Supreme Court in the past.The matter is contingent on the facts and evidence presented before the courts/adjudicating authorities and not necessarily Liability Liability likely to be influenced by the Supreme Courts order unascertained unascertained

3 Segment information

Segment information is based on the consolidated financial statements.

4 Previous year figures

The financial statements for the year ended 31 March 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been re-classified to conform to this year's classification. The adoption of Revised Schedule VI for previou: year figures does not impact recognition and measurement principles followed for preparation of financial statements.

5 Miscellaneous

Rs. 1 crore is equal to Rs. 10 million.

Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed.


Mar 31, 2011

(Rs. In Crore) 2011 2010

1 (a) Contingent liabilities not provided for in respect of :

(i) Claims against the Company not acknowledged as debts 422.49 411.28

(ii) Guarantees given by the Company to banks, on behalf of its subsidiary, PT Bajaj Auto Indonesia 23.19 23.35

(iii) Guarantees given by the Company to Housing Development Finance Corporation Ltd. - for loans to Employees 0.22 0.45

(iv) Excise and Customs demand - matters under dispute and Claims for refund of Excise Duty, if any, against Excise Duty Refund received in the earlier year 122.70 68.12

(v) Sales Tax matters under dispute 328.41 276.45

(vi) Claims made by temporary workmen

Pending before various judicial/appellate authorities in respect of similar matters adjudicated by the Supreme Court in the past. The matter is contingent on the facts and evidence presented before the courts/adjudicating authorities and not necessarily likely Liability Liability to be influenced by the Supreme Courts order unascertained unascertained

(b) The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantifed exports. The future obligation aggregates to USD 559 million (Previous Year USD Nil).

Minimum export obligation to be fulfilled by the company under the said scheme by 31 March 2011 has been fulfilled. Non-fulfillment of the balance of such future obligation in the manner required, if any, entails options/rights to the Government to confiscate capital goods imported under the said licences and other penalties under the above- referred scheme.

6. Managerial Remuneration:

(a) Mr. Sanjiv Bajaj, an Executive Director of the company is also the Managing Director of Bajaj Finserv Limited.

His remuneration as an Executive Director from this company and as a Managing Director from Bajaj Finserv Limited, both together, are subject to the higher of the maximum admissable limits of any one of the two companies.

8. Details of Licensed & Installed Capacity, Production, Stocks and Turnover Class of Goods

(a) Licensed Capacity is stated as per the Original Licence held by the erstwhile Bajaj Auto Ltd. (pre-demerger). However, the Companys products are exempt from Licensing requirements under New Industrial Policy in terms of notifcation no. s.o. 477 (E) dated 25 July1991.

(b) As certifed by the COO and being a technical matter, accepted by the Auditors as correct.

9. Sales tax deferral incentive/loan, to the extent eligible under Rule 84 of the Maharashtra Value Added Tax Rules, 2005, has been prepaid during the year at a discounted value of Rs. 368.14 crore thereby resulting in a surplus of Rs. 826.82 crore. The said sum has been refected as an exceptional item in the Profit & Loss Account and considered as a capital receipt.

10. Derivative financial instruments:

The Company has adopted the accounting treatment and disclosures in accordance with the principles laid down in AS 30 and AS 32 on foreign currency derivative contracts.

The Company holds foreign currency derivative to hedge its foreign currency exposure. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The Company designates certain foreign currency derivatives as hedges of foreign currency risk associated with a highly probable forecast transaction (cash flow hedge).

The company has entered into simple forward contracts and par forward contracts to hedge highly probable forecast export transactions. These instruments meet the managements Foreign exchange risk management objectives and also qualify for hedge accounting as per the principles of hedge accounting.

The company has also entered into range forward contracts to hedge highly probable forecast transactions, where the export realisations of the company are protected below a minimum pre-determined foreign exchange rate whereas the realisation advantages are available to the company there from up to a higher pre-determined foreign exchange rate. The company does not benefit by rupee depreciating beyond the pre-determined foreign exchange rate. Though these instruments meet the managements Foreign exchange risk management objectives, they do not qualify for hedge accounting as the same do not satisfy test of effectiveness. The market value of instruments outstanding at the close of the year indicate a gain aggregating Rs. 116.46 crore (previous year aggregating Rs. 76.08 crore), which as a matter of prudence has not been recognised.

Cash flow hedges

Changes in the fair value of a derivative hedging instrument that qualify for hedge accounting as per the principles of hedge accounting and designated as a cash flow hedge are recognised as Hedging Reserve and presented within Reserves and Surplus, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value if resulted in loss are recognised in profit and loss account. However, changes in fair value in respect of ineffective hedges resulting in gains are not recognised on the basis of prudence. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in Hedging Reserve, remains there until the forecast transaction occurs.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time is recognised in profit and loss account. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in Hedging Reserve is immediately transferred to profit and loss account.

Risk management policy and other disclosures

The Exports of BAL, presently constituting substantial portion of the turnover, are at prices predetermined for each product in each region. These prices are fixed in USD based on an assumed USD/INR rate. (Budgeted rate of realisation). Exports are then effected at such price and hence it is desirable for the company to shield itself from adverse movements in forex rates at a future date.

The Company also imports raw materials and components for its Motorcycles etc. However, the value of such imports is not material as compared to the value of exports. Nevertheless, the company may wish to secure its procurement prices in terms of INR to be able to forecast its pricing and profitability. Consequently the company may wish to hedge such exposures, future and current, to achieve the aforesaid objective.

The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses derivative financial instruments, such as foreign exchange forward and option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables.

The fair value of forwards and foreign currency option contracts is determined based on the appropriate valuation techniques as given by the banks.

The cash flows from the hedges are expected to occur over the financial year 2011-12 and will accordingly flow to the profit and loss account.

In respect of foreign currency derivative contracts designated as cash flow hedges, the Company has recorded a net gain of Rs. 20.77 crore and net gain of Rs. 33.39 crore, as a component of equity (Hegde Reserve) as at March 31, 2011, and 2010, respectively and a net gain of Rs. 32.02 crore and a net gain of Rs. Nil as part of revenue during the year ended March 31, 2011, and 2010 respectively.

There is no forecast transaction for which hedge accounting had previously been used, but which is no longer expected to occur.

Amount that was removed from appropriate equity account (Hedging Reserve Account) during the period and included in the initial cost or other carrying amount of a non-financial asset or non-financial liability whose acquisition or incurrence was a hedged highly probable forecast transaction is Rs. Nil.

Amount in respect of the ineffectiveness recognised in the statement of profit and loss that arises from cash flow hedges are Rs. Nil.

In respect of the Companys foreign currency par forward contracts outstanding as on March 31,2011, a 10% increase/decrease in the exchange rates of the currency underlying such contracts as given by the banks would have resulted in an approximately Rs. 106.77 crore increase/decrease in the Companys hedging reserve.

Counter-Party Risk

Counter-party risk encompasses settlement risk on foreign currency derivative contracts. Exposure to these risks is closely monitored and kept within predetermined parameters. The Company does not expect any losses from non-performance by these counter-parties.

The Companys policy is to transact with credit worthy banks, which are reviewed on an on-going basis. The following table depicts that the majority of the foreign currency derivatives are placed in highly rated banks:

Investment grade of Outstanding Foreign Exchange Forward

Highest Safety represents a credit rating equivalent of AAA, High Safety represents a credit rating equivalent of AA+, AA and Adequate Safety represents a credit rating of A.

11. Investments:

a. Investments made by the Company other than those with a maturity of less than one year and those intended to be held for less than one year, being of long-term nature, diminution in the value of quoted investments are not considered to be of a permanent nature. On an assessment of non-performing investments (quoted and unquoted) as per guidelines adopted by the management, no provision has been determined during the year ended 31 March 2011.

b. PT. Bajaj Auto Indonesia (PT. BAI), a subsidiary of the company, in which the company holds 98.94%, has registered substantial accumulated losses. The company through PT. BAI made a foray into the Indonesian market, which is very competitive but promising. Considering the challenges in setting up an appropriate dealer and service network, creation of brand awareness, appropriate tie ups with finance agencies, understanding customer behavior and preferences, in addition to setting up an assembly plant, the gestation period is expected to be long but eventually profitable. However, considering the continuing losses and longer gestation period, the company has assessed the carrying value of investments made in PT. BAI 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.

15. Deposits include a sum of Rs. 9.2 crore (Previous year Rs. 9.2 crore) against use of premises on a Leave and License basis, placed with Directors and their relatives, jointly and severally.

16. Future minimum lease rental in respect of assets

(i) given on operating lease in the form of office premises after April 1, 2001 Minimum future lease payments as on March 31, 2011:

(a) Receivable within one year - Rs. 2.63 crore (Rs. 0.49 crore)

(b) Receivable between one year and five years - Rs. 9.90 crore (Rs. 1.31 crore)

(c) Receivable after five years -Rs. 0.14 crore (Rs. 0.16 crore)

(ii) taken on operating lease in the form of office premises after April 1, 2001 Minimum future lease payments as on March 31, 2011:

(a) Payable within one year- Rs. 7.25 crore (Rs. 6.83 crore)

(b) Payable between one year and five years- Rs. 17.43 crore (Rs. 17.31 crore)

(c) Payable after five years - Rs. 17.74 crore (Rs. 19.51 crore)

17. The company has allotted bonus shares on 13 September 2010 in the ratio of one equity share for every equity share of Rs. 10 each held in the company on the record date. The Basic and Diluted Earnings Per Share (EPS) has been calculated for the current year and previous year after taking into account the bonus issue as required by AS-20 “Earnings Per Share”.

18. Segment Information based on the Consolidated Financial Statements attached to the Independent Financial Statements has been disclosed in the Statement annexed to this Schedule.

19. Disclosure of transactions with Related Parties, as required by Accounting Standard 18 Related Party Disclosures has been set out in a separate statement annexed to this Schedule. Related parties as defined under clause 3 of the Accounting Standard have been identified based on representations made by key managerial personnel and information available with the Company.

20. Considering the company has been extended credit period upto 45 days by its vendors and payments being released on a timely basis, there is no liability towards interest on delayed payments under “The Micro, Small and Medium Enterprises Development Act 2006” during the year. There is also no amount of outstanding interest in this regard, brought forward from previous years.

The above information is on basis of intimation received, on requests made by the company, with regards to vendors registration under the said Act.

21. Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed.

22. Previous year figures have been regrouped, wherever necessary, to make them comparable with those of the current year.


Mar 31, 2010

As at 31 March 2009

Rs. In Million Rs. In Million

1 (A) Contingent liabilities not provided for in respect of: (i) Sales Bills Discounted -- --

(ii) Claims against the Company not acnowledged as debts 4,112.8 4,166.5

(iii) Guarantees given by the Company to banks, on behalf of its subsidiary, PTBajaj Auto Indonesia 233.5 263.7

(iv) Guarantees given by the Company to Housing Development Finance Corporation Limited-for loans to Employees 4.5 6.6

(v) Excise and Customs demand - matters under dispute and Claims for refund of Excise Duty, if any, against Excise Duty Refund received in the earlier year 681.2 775.8

(vi) Sales Tax matters under dispute 2,764.5 2,602.0

(vii) Claims made by temporary workmen Pending before various courts in respect of similar matters adjudicated by the Supreme Court in the past.The matter is contingent on the facts and evidence presented before the courts / adjudicating authorities and not necessarily Liability Liability likely to be influenced Liability Liability by the Supreme Courts order unascertained unascertained

(B) The Company has imported Capital Goods under the Export Promotion Capital Goods Scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports, which have been entirely fulfilled by the close of the year. However , formal discharge from obligation by discharge of license by the appropriate authorities is in progress.

(C) The Sales tax benefit availed by the company by virtue of assignment of incentives attached to the wind farm business, has been passed-on to the Bajaj Finserv Limited. The obligation to repay could devolve on the companny if not settled by Bajaj Finserv Limited.Total amount passed on to date aggregates Rs.3,107.6 million (Previous year Rs.3,107.6 million).

(e) Foreign exchange derivatives and exposures outstanding at close of the year:

(disclosed in equivalent US Dollars for sake of brevity, uniformity and comparability)

2 Details of raw materials consumption, goods traded in and Machinery Spares Consumption

3) a) Voluntary Retirement:

During the previous year, company decided to recognise the expenditure incurred on voluntary retirement of employees of its Akurdi plant, aggregating to Rs.3666 million over a period of two years in line with the option of the special transitional provision introduced in the Accounting Standard -15 "Employee Benefits" allowing such expenditure to be deferred forrecognition over the payback period but not extending beyond 1 April 2010. A charge of Rs.1833 million has already been recognised during 2008-09. Accordingly, the company has recognised the balance charge for the year amounting to Rs.1833 million.

b) Instruments acquired to hedge highly probable forecast transaction:

In order to recognise the impact of fluctuation in foreign currency rates arising out of instruments acquired to hedge highly probable forecast transactions, in appropriate accounting periods, the company has decided to apply the principles of recognition set out in the Accounting Standard 30 - Financial Instruments-Recognition and Measurement (AS-30) as suggested by the Institute of Chartered Accountants of India.

Accordingly, the unrealised loss/gain (net) consequent to foreign currency fluctuations, in respect of effective hedging instruments, represented by simple forward covers, to hedge future exports, are carried as a Hedging Reserve, during the year, and to be ultimately set off in the profit and loss account when the underlying transaction arises, as against the past practice of recognising the losses, in respect of such derivatives, in the profit and loss account at the end of each period determined with reference to the foreign exchange rates at the close of the period. The amount outstanding in the hedge reserve at the close of the year is Rs.333.9 million.

The company has also entered into range forward contracts to hedge highly probable forecast transactions, where the export realisations of the company are protected below a minimum pre-determined foreign exchange rate whereas the realisation advantages are available to the company there from up to a higher pre-determined foreign exchange rate.The company does not benefit by rupee depreciating beyond the pre-determined foreign exchange rate. Though these instruments meet the managements Foreign exchange risk management objectives, they do not meet the test of effectiveness as per the principles of hedge accounting. The market value of instruments outstanding at the close of the year indicate a gain aggregating Rs.760.8 million, which as a matter of prudence has not been recognised, as against a loss provided for in the previous year aggregating Rs.218 million which has now been written back.

4) Transfer of some of the titles to the assets vested with the company consequent to the Scheme of arrangement (de-merger) could not, where necessary, be transferred, as at 31st March 2010 pending adjudication of stamp duty. Hence the same were held intrust for the company by Bajaj Holdings and Investment Limited.

5) Investments:

a. Investments made by the Company other than those with a maturity of less than one year and those intended to be held for less than one year, being of long-term nature, diminution in the value of quoted Investments are not considered to be of a permanent nature. On an assessment of non-performing investments (quoted and unquoted) as per guidelines adopted by the management, no provision has been determined during the year ended 31 March 2010.

b. PT. Bajaj Auto Indonesia (PT. BAI), a subsidiary of the company, in which the company holds 98.94%, has registered substantial accumulated losses. The company through PT. BAI made a foray into the Indonesian market, which is very competitive but promising. Considering the challenges in setting up an appropriate dealer and service network, creation of brand awareness, appropriate tie ups with finance agencies, understanding customer behavior and preferences, in addition to setting up an assembly plant, the gestation period is expected to be long but eventually profitable. Hence diminution in the value of the investments made in PT. BAI are not considered to be of a permanent nature and hence no provisions are required to be made in this regard, as per the policy followed by the company, at this point of time.

6) Deposits include a sum of Rs.92 million (Previous year Rs.80 million) against use of premises on a Leave License basis, placed with Directors and their relatives, jointly and severally.

7) Future minimum lease rental in respect of assets

(i) given on operating lease in the form of office premises after April 1,2001 Minimum future lease payments as on March 31,2010:

(a) Receivable within one year-Rs.4.9 million (Rs.0.1 million)

(b) Receivable between one year and five years - Rs.13.1 million (Rs.Nil)

(c) Receivable after five years- Rs. 1.6 million (Rs.Nil)

(ii) taken on operating lease in the form of office premises after April 1,2001 Minimum future lease payments as on March 31,2010:

(a) Payable within one year- Rs. 68.3 million (Rs.58.6 million)

(b) Payable between one year and five years- Rs.173.1 million (Rs.123.3 million)

(c) Payable after five years-Rs. 195.1 million (Rs.189.4 million)

8) Segment Information based on the Consolidated Financial Statements attached to the Independent Financial Statements has been disclosed in the Statement annexed to this Schedule.

9) Disclosure of transactions with Related Parties, as required by Accounting Standard 18Related Party Disclosureshas been set out in a separate statement annexed to this Schedule. Related parties as defined under clause 3 of the Accounting Standard have been identified based on representations made by key managerial personnel and information available with the Company.

10) Considering the company has been extended credit period of 45 days by its vendors and payments being released on a timely basis, there is no liability towards interest on delayed payments under"The Micro, Small and Medium Enterprises Development Act 2006" during the year. There is also no amount of outstanding interest in this regard, brought forward from previous years. The above information is on basis of intimation received, on requests made by the company, with regards to vendors registration under the said Act.

11) Amounts less than Rs.50,000 have been shown at actual against respective line items statutorily required to be disclosed.

12) Previous year figures have been regrouped, wherever necessary, to make them comparable with those of the current year.

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