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Directors Report of Bajaj Hindusthan Sugar Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their Eighty Third annual report and the audited financial statements for the year ended March 31, 2015.

Financial highlights

The results for the Financial Year under review comprises a period of 12 months and therefore are not comparable with the results of previous period ended March 31, 2014, comprising a period of 18 months.

The summarised financial results of the Company for the year ended March 31, 2015 are presented below:

(Rs. Crore)

Year ended 18 months March 31, 2015 ended March 31 2014

Sales and other income 4,570.12 6,694.06

Profit/(Loss) before depreciation, interest and tax (115.73) (27.77)

Depreciation and amortisation 239.94 531.72

Profit/(Loss) after depreciation but before interest and tax (355.67) (559.49)

Finance costs (Net) 741.55 948.57

Profit/(Loss) before tax (1,097.22) (1,508.06)

Provision for taxation (Net) - 25.06

Profit/(Loss) after tax (1,097.22) (1,533.12)

Disposable surplus after adjustments (1,097.22) (1,532.76)

Transfer to reserve for molasses storage tank 0.28 0.55

Carrying value of fixed assets adjusted 15.16 -

Balance carried to balance sheet (2,645.97) (1,533.31)

On a standalone basis, the Company achieved a turnover (including other income) of Rs. 4,570.12 crore for the year ended March 31, 2015 as compared to Rs. 6,694.06 crore in the previous 18 months period ended March 31, 2014. The loss after tax is Rs. 1,097.22 crore as compared to the loss of Rs. 1,533.12 crore in the previous period. On a consolidated basis, the turnover including other income is Rs. 4,574.05 crore as compared to Rs. 6,668.96 crore in the previous period. The loss after tax and minority interest is Rs. 1,192.45 crore as against loss of Rs. 1,624.68 crore in the previous period.

Dividend

In view of loss incurred during the year under review, your Directors do not recommend any dividend for the current Financial Year. (Previous period Nil)

Operations

The Company continues to be the leading sugar and ethanol manufacturing company in India with its fourteen sugar plants having an aggregate sugarcane crushing capacity of 1,36,000 TCD, six distilleries having aggregate capacity to produce Industrial Alcohol of 800 kilolitres per day and fourteen co-generation plants having a total power generation capacity of 449 MW.

During the year, the operations at all the sugar, distillery and co-generation plants were satisfactory.

Sugar

During the year ended March 31, 2015 the Company crushed 12.107 MMT of sugarcane. The average recovery of sugar from sugarcane was at 9.38% as against 9.20% in the previous period. During the year the Company produced 11,37,815 MT sugar and 6,14,634 MT molasses.

During the year the Company sold 12,39,186 MT of sugar and 33,684 MT of molasses as against 16,30,924 MT of sugar and 53,883 MT of molasses during the previous period.

Distillery

During the year Industrial Alcohol / Ethanol production was 1,25,463 KL as against 2,54,764 KL in the previous period. Alcohol / Ethanol sale during the year was at 1,09,389 KL as against 2,25,678 KL during the previous period.

Power

The operations of power generation were smooth at all the fourteen plants. While most of the power generated by us continued to be used for captive consumption to run our plants, the surplus power was sold to the Uttar Pradesh state grid.

During the year Power generation was at 7,78,057 MW as against to 16,15,638 MW in the previous period.

The Company exported 3,29,277 MW of power during the year as against 7,02,371 MW during the previous period.

Bagasse boards

The Company also owns two Medium Density Fibre (MDF) Board manufacturing plants having capacity of 1,20,000 MT per annum and one Particle Board (PB) manufacturing plant having capacity of 35,000 MT per annum.

The operations at all plants of board division were suspended due to non-availability of adequate quantity of sugarcane bagasse at affordable prices and inadequate demand of the products in the market.

Change in name of the Company

The name of the Company was changed from Bajaj Hindusthan Limited to Bajaj Hindusthan Sugar Limited with effect from January 30, 2015 pursuant to approval received from the Registrar of Companies, Uttar Pradesh and issue of fresh certificate of incorporation upon change of name.

Debt restructuring

The sugar industry has been adversely affected over past few years due to prolonged mismatch between high raw material (cane) procurement cost and finished goods (Sugar) realisations, non settlement of subsidy claims etc. There was considerable financial pressure on the Company and, in particular on its cash flows as a result of which the Company was finding it difficult to service the debt obligations.At the request of the Company, Lenders of the Company comprising of 15 banks formed a Joint Lenders' Forum (JLF) in accordance with the Framework for Revitalising Distressed Assets in the Economy dated January 30,2014 and the Guidelines on Joint Lenders' Forum (JLF) and Corrective Action Plan (CAP) dated February 26, 2014 issued by the Reserve Bank of India (RBI) The JLF approved the corrective action plan and decided to restructure the account independent of the CDR mechanism.A detailed Techno-Economic Viability (TEV) study was conducted and the JLF finalised the Restructuring Scheme which was subject to evaluation by an Independent Evaluation Committee (IEC).

The salient features of the Scheme are as follows:

- Cut-off date (COD) - July 31, 2014.

- Outstanding Term loans to be restructured and to be repaid in 31 structured quarterly instalments after moratorium period of 2 years.

- Outstanding Working capital loans to be converted into Working Capital Term Loan (WCTL) and to be repaid in 31 structured quarterly instalments after moratorium period of 2 years.

- Outstanding Foreign currency loan from IFC, Washington to be funded by the lenders for prepayment and to be repaid in 31 structured quarterly instalments after moratorium period of 2 years.

- Funding for interest on restructured Term Loans and WCTL from August 01, 2014 to July 31, 2016 will be provided by the lenders. 70% of the Funding for interest restructured loans proposed to be converted into equity shares at a price determined by SEBI guidelines and balance 30% shall be repaid in 19 structured quarterly instalments starting from quarter ending September 30, 2016.

- Promoters contribution of Rs. 200 crore to be funded in a phased manner.

- Pledge of entire promoter's holding of the Company in favour of lenders.

- Personal guarantee/corporate guarantee from promoter/promoter group entity.

A Master Restructuring Agreement (MRA) was executed in this regard on December 30, 2014 between the Company and JLF Lenders.

In terms of the Restructuring Scheme, the restructured facilities have been secured on first pari passu charge basis on all current assets and all movable and immovable fixed assets of the Company. The said facilities are further secured by personal/corporate guarantee from promoter/promoter group. Out of the committed amount of Rs. 200 crore, an amount of Rs. 175 crore has been brought by the promoters as unsecured loan. FITL aggregating to Rs.386.10 crore have been converted to equity shares.

The Restructuring gives your Company critical support to tide over the present difficult business environment. The decision of the banks to consider and approve the Restructuring Scheme also reflects the faith these institutions have in the long term business model of the Company.

Changes in capital structure

During the year 17,08,41,266 fully paid-up equity shares of face value Rs. 1/- each at a premium of Rs. 20.77 per equity share were allotted upon conversion of Funded Interest Term Loan (FITL) aggregating to Rs. 3,71,92,14,361 to JLF Lenders pursuant to the Restructuring Scheme under JLF route.

Consequent to the allotment of the equity shares as aforesaid, the paid-up equity share capital of the Company stands increased from Rs. 63,93,99,91 1 divided into 63,93,99,91 1 equity shares of face value Rs. 1/- each to Rs. 81,02,41,177 divided into 81,02,41,177 equity shares of face value Rs. 1/- each, resulting into shareholding of promoters as on March 31, 2015 at 36.40% as compared to 46.13% as on March 31, 2014.

Listing of securities

The Company's equity shares are listed on the BSE Limited and The National Stock Exchange of India Limited. The Annual Listing fees to each of these Stock Exchanges have been paid by the Company.

Employees stock option

The validity of "Employees Stock Option Plan 2006" expired on July 16, 2014. The information required to be disclosed in terms of the provisions of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is enclosed as per "Annexure I" to this report.

Management Discussion and Analysis

Management Discussion and Analysis Report is presented in a separate section forming part of this Annual Report.

Subsidiary and Associate Companies

As on March 31, 2015, the Company had the following Subsidiaries and Associates, all of them are presently unlisted:

Subsidiaries:

1. Bajaj Aviation Private Limited (BAPL) - (Holding 100%).

2. Bajaj Power Generation Private Limited (BPGPL) - (Holding 100%).

3. Bajaj Hindusthan (Singapore) Private Limited (BHSPL) - (Holding 100%).

4. PT. Batu Bumi Persada, Indonesia - (step down subsidiary being 99.00% subsidiary of BHSPL).

5. PT. Jangkar Prima, Indonesia - (step down subsidiary being 99.88% subsidiary of BHSPL).

Associates:

1. Bajaj Ebiz Private Limited - (Holding 49.50%).

2. Lalitpur Power Generation Company Limited (LPGCL) - (Holding 20.97%).

Performance and financial positions of subsidiaries and associates

a) Bajaj Hindusthan (Singapore) Private Limited: BHSPL through its two subsidiaries in Indonesia, continued to hold coal mines in Indonesia which are in process of being developed.

b) Bajaj Aviation Private Limited: BAPL continued to provide Air Transport Services through Air Craft - Falcon LX 2000. In addition to this, the Company also leased out its Helicopter - Bell 407 to another Company providing Air - Transportation Services.

c) Bajaj Power Generation Private Limited: Uttar Pradesh Power Corporation Limited (UPPCL) had granted permission to change the location of the Company's 1980 MW (3 x 660 MW) power project from Bargarh, district Chitrakoot to Mirchwara, district Lalitpur, subject to receipt of approval from Uttar Pradesh Electricity Regulatory Commission.

The Company is in the process of obtaining requisite approvals for shifting its project.

d) Lalitpur Power Generation Company Limited: The project work on 1980 MW (3 x 660 MW) super critical thermal power project at Lalitpur, (Uttar Pradesh) being implemented through LPGCL has progressed satisfactorily. LPGCL has obtained all the major clearances/approvals including Environment Clearance, Pollution Clearance, Stack Height Clearance, Defense Clearance, Boiler License, Factory License, License for storage of petroleum products, Consent to Operate for Unit 1 (660 MW) etc.

LPGCL has signed MoU with Central Coalfields Limited (CCL) on April 11, 2014 for supply of 3.39 million tonnes per annum (MTPA) of domestic Coal for 2 Units of 660 MW each. This MoU has been extended up to March 31, 2016 and under this MoU, Company has already started receiving coal for start-up of Unit 1. LPGCL has also signed two Fuel supply agreement (FSA) for supply of imported coal with PT Kresna group, Indonesia and PT Jangkar Prima, Indonesia for 4 MTPA each. Unit 1 of 660 MW has been synchronised successfully. Construction work of other two units (of 660 MW each) is also in advanced stages of completion.

During the year, cost of the Project was revised to Rs. 17,295 crore (including working capital margin) due to change in existing scope of the project, additional work as mandated by Government which was not envisaged earlier, escalation in IDC and soft cost etc. The Project is being funded by the Consortium of lenders in debt equity ratio of 75:25 i.e. debt of Rs. 12,972 crore, including ECB borrowing for USD 150 Million (i.e. Rs. 929 crore) and Equity of Rs. 4,323 crore. Till date, Lenders have disbursed total term loan amounting to Rs. 10,251.33 crore, consisting of rupee term loan amount to Rs. 9,322.33 crore and ECB loan amounting to US$ 150 million.

e) Bajaj Ebiz Private Limited: Bajaj Ebiz did not carry out any business during the year.

Pursuant to the provisions of Section 129 of the Companies Act, 2013 and Rule 5 of the Companies (Accounts) Rules 2014, statement containing the salient features of the financial statements of its subsidiaries/ associate companies in the manner prescribed under the Companies Act, 2013 is given as Annexure to the Consolidated Financial Statements.

Consolidated financial statements

In compliance with Section 129(3) of the Companies Act, 2013 and Rules made thereunder, Accounting Standards 21, 23 and 27 of Companies (Accounting Standards) Rules,2006 and pursuant to the listing agreement with the stock exchanges, the Consolidated Financial Statements form part of this Annual Report. Consolidated Financial Statements presented by your Company include financial information about its aforesaid subsidiaries and associates.The standalone financial statements of BHSL as well as its aforesaid subsidiaries and its associates will be available on the website of the Company (www.bajajhindusthan.com).

Directors and Key Managerial Personnel

Cessation

Mr. Shishir Bajaj (DIN: 00017612), Chairman & Managing Director and Mr. D.S. Mehta (DIN: 00038366), Independent Director resigned from the Company on October 17, 2014. Mr. Manoj Maheshwari (DIN: 02581704), Director & Group CFO and Dr. Sanjeev Kumar (DIN: 00364416), Executive Director of the Company resigned with effect from March 30, 2015.

The Board placed on record its appreciation for the valuable services rendered by the aforesaid directors.

Retirement by rotation

Mr. Ashok Kumar Gupta (DIN: 02608184), Director of the Company will retire by rotation and being eligible offers himself for re-appointment. Appointment of Mr. Ashok Kumar Gupta is in compliance with the provisions of Section 164(2) of the Companies Act, 2013.

Appointment and re-designation

Mr. Kushagra Bajaj (DIN: 00017575), was re-designated as Chairman & Managing Director of the Company with effect from October 18, 2014.

Mrs. Kiran Anuj was appointed as Additional (woman) Director with effect from March 30, 2015 in accordance with Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In terms of the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mrs. Kiran Anuj would hold office as Additional Director only up to the date of the 83rd Annual General Meeting of the Company. The Company has received notice from a member pursuant to Section 160 of the Companies Act, 2013, proposing the appointment of Mrs. Kiran Anuj as Director of the Company. The Board of Directors recommends the appointment of Mrs. Kiran Anuj as Director of the Company.

Appointment of Independent Directors

The shareholders at the Annual General Meeting held on August 12, 2014 appointed Mr. M.L. Apte (DIN: 00003656), Mr. R.V Ruia (DIN: 00035853) Mr. Alok Krishna Agarwal (DIN: 00127273) and Mr. D.K. Shukla (DIN: 00025409) as Independent Directors as per Section 149 of the Companies Act, 2013 for a term up to March 31, 2019. The Independent Directors have submitted the declaration of Independence pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub section (6) of section 149. The profile of the Independent Directors forms part of the Corporate Governance Report.

Changes in Key Managerial Personnel

Pursuant to the provisions of the Companies Act, 2013 the Company have Chairman & Managing Director, Company Secretary and Chief Financial Officer as Key Managerial Personnel. Details of changes in KMPs during the year are given below:

Name Changes in KMP

Mr. Shishir Bajaj, Chairman & Cessation with effect from Managing Director October 17, 2014

Mr. Kushagra Bajaj, Chairman Elevated as Chairman & & Managing Director Managing Director with effect from October 18, 2014

Mr. Anand Kumar Kanodia, Cessation with effect from Chief Financial Officer October 18, 2014

Mr. Ved Prakash Agrawal, Appointment with effect from Chief Financial Officer October 18, 2014

Board evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Induction and training of Board members

The process followed by the Company for induction and training to Board members has been explained in the Corporate Governance Report.

Directors' responsibility statement

Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

(iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the directors had prepared the annual accounts on a going concern basis;

(v) 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

(vi) 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.

Auditors and auditors' report

Auditors and their report

As per Section 139(2) of the Companies Act, 2013, an audit firm shall appoint or re-appoint for two terms of five consecutive years. At the last Annual General Meeting held on August 12, 2014, M/s. Chaturvedi & Shah, Chartered Accountants (Firm Registration No.101720W) were appointed for the remaining one year of their first term as Auditors of the Company. First term of M/s. Chaturvedi & Shah, Chartered Accountants, existing Statutory Auditors will end at the conclusion of the ensuing (83rd) Annual General Meeting.

On recommendation of the Audit Committee, the Board of Directors recommends to the shareholders the re-appointment of M/s. Chaturvedi & Shah as Auditors of the Company for a further period of 5 consecutive years up to the conclusion of the 88th Annual General Meeting. The Statutory Auditors have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and they are not disqualified for re-appointment.

The Statutory Audit Report does not contain any qualification, adverse remark or disclaimer made by the Statutory Auditor. The reservations made by the Statutory Auditors under para "Emphasis of Matter" alongwith notes no. 36(I)(a)(iv), 40 and 42 are self explanatory and do not call for any further information and explanation or comments under Section 134(3)(f) of the Companies Act, 2013.

Cost auditors and their report

Pursuant to the directives of the Central Government under the provisions of Section 148 of Companies Act, 2013, M/s. B.J.D. Nanabhoy & Co., Cost Accountants, Mumbai (Firm Registration No. 000011) were appointed as the Cost Auditors of the Company. The cost auditors have submitted the Cost Audit Reports to the Central Government within the time limit of 180 days from the end of the extended financial year of 18 months ended on March 31, 2014 for the following products:

SI. Product Report submitted Financial Date of No. with Central year ended filing Government 1 Sugar Cost Audit Report 31.03.2014 26.09.2014 2 Industrial Alcohol Cost Audit Report 31.03.2014 26.09.2014 3 Electricity Cost Audit Report 31.03.2014 26.09.2014

Secretarial auditors and their report

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Anant B Khamankar & Co., Company Secretaries were appointed as Secretarial Auditor of the Company. The Secretarial Audit Report is annexed as "Annexure II" and forms part of this report. The report does not contain any qualification, reservation or adverse remark or disclaimer.

Public deposits

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Deposits unclaimed at the end of the year was nil.

Particulars of loans, guarantees or investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in "Annexure III" and forms part of this report.

Audit committee

The Company constituted Audit Committee as required under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Composition of Audit committee is given in Corporate Governance Report. There is no such instance during the year under review where the Board had not accepted any recommendation of the Audit Committee.

Related party transactions

The details of transactions entered into with the Related Parties are enclosed in Form no. AOC 2 is annexed herewith as "Annexure IV" and forms part of this report.

Internal financial control

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of fraud and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as "Annexure V" and forms part of this report.

Corporate Social Responsibility

As required under Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility (CSR) Committee. As per recommendation of the CSR Committee, the Board at its meeting held on September 25, 2014 approved the CSR Policy of the Company. Report on CSR Activities/Initiatives is enclosed as "Annexure VI" and forms part of this report.

Policies

Policy for determining material subsidiary

During the year ended March 31, 2015, the Company does not have any material listed/unlisted subsidiary companies as defined in Clause 49 of the Listing Agreement. The Company has framed a policy for determining "material subsidiary" and the same is available on the Company's website at www.bajajhindusthan.com/investorcorner-policie.php

Policy on remuneration and other aspects of directors and KMP

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of director and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The detailed remuneration policy is placed on Company's website at www.bajajhindusthan.com/investorcorner-policies.php

Vigil mechanism/Whistle blower policy

The Company has formulated a Vigil Mechanism/Whistle Blower Policy in accordance with Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing agreement. The details of the Vigil Mechanism/Whistle Blower Policy are provided in the Corporate Governance Report and also posted on the website of the Company at www.bajajhindusthan.com/ investorcorner-policies.php

Risk management policy

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities.

This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various level including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business.

Related party transaction policy

Policy on dealing with Related Party Transactions as approved by the Board is uploaded on the Company's website at www.bajajhindusthan.com/investorcorner- policies.php

Corporate Social Responsibility (CSR) policy

Contents of Corporate Social Responsibility Policy in the Board's report are given in the Report on CSR Activities in "Annexure VI" and on the Company's website at www.bajajhindusthan.com/investorcorner- policies.php

Anti sexual harassment policy

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Committee has been set up to redress the complaints received regarding sexual harassment at workplace. All employees including trainees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed off during the current financial year.

Number of Complaints received: Nil Number of Complaints disposed off:Nil

Significant and material orders passed by the regulators or courts or tribunals

No significant or material order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Particulars of employees and related disclosures

As required under the provision of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 in respect of employees of the Company are set out in "Annexure VII" and forms part of this report.

Transfer of amounts to investor education and protection fund

The amounts of dividend, sum of matured fixed deposits, sum of interest on matured deposits, etc. which has remained unpaid or unclaimed for 7 years have been transferred to the Investor Education and Protection Fund within time stipulated by law on respective due dates in accordance with the provisions of Section 124(5) of the Companies Act, 2013.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The relevant particulars regarding the above is given in "Annexure VIII" and forms part of this report.

Corporate governance

The Company has vigorously striven to follow the best corporate governance practices aimed at building trust among the key stakeholders, shareholders, employees, customers, suppliers (including farmers) and other stakeholders on four key elements of corporate governance - transparency, fairness, disclosure and accountability. As per Clause 49 of the listing agreement, a separate section on Corporate Governance practices followed by the Company, together with a certificate from the Company's Auditors conforming compliance forms part of this Report.

Acknowledgements

Industrial relations have been cordial at all the plants of the Company. The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government authorities, bankers, customers and suppliers and business associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company's employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.

For and on behalf of the Board of Directors

Kushagra Bajaj Chairman & Managing Director (DIN: 00017575)

Mumbai, July 08, 2015


Sep 30, 2012

The Directors have pleasure in presenting their Eighty First annual report and the audited statement of accounts for the financial year ended September 30, 2012.

Amalgamation of Bajaj Eco-Tec Products Limited

The Scheme of Amalgamation of wholly-owned subsidiary Bajaj Eco-Tec Products Limited (BEPL) with the Company in terms of the provisions of Sections 391 and 394 of the Companies Act, 1956 ("the scheme") with the Appointed Date as April 01, 2012 was unanimously approved by the Equity Shareholders of the Company, and also by the Secured Creditors and Unsecured Creditors of the Company and BEPL at their respective court convened meetings held on June 16, 2012.

Subsequently, upon sanction of the Scheme vide Orders passed by the Hon''ble High Court of Judicature at Bombay on September 14, 2012 and completion of other formalities in this regard on October 01, 2012 by both the Companies, the Scheme has become effective from October 01, 2012.

Financial Results

The summarised financial results of the Company for the year ended September 30, 2012 are presented below:

2011-2012 2010-2011 (Rs. Crore) (Rs. Crore)

Sales and other income 4,368.78 4,919.15

Profit before depreciation, interest and taxation 563.91 865.80

Depreciation & amortisation 348.82 330.91

Profit after depreciation but before interest and taxation 215.09 534.89

Finance costs (Net) 536.41 515.95

Profit / (Loss) before taxation (321.32) 18.94

Provision for taxation (Net) 0.99 2.63

Provision for deferred tax (87.74) 4.31

Profit / (Loss) after tax (234.57) 12.00

Disposable surplus after adjustments (18.36) 253.81

Transfer to reserve for molasses storage tank 0.37 0.31

Transfer to general reserve - 9.01

Transfer from general reserve 255.58 -

Proposed dividend 6.39 9.14

Corporate dividend tax on proposed dividend 1.04 1.48

Amount pursuant to scheme of amalgamation (229.42) -

Balance carried to balance sheet - 233.87

On a stand-alone basis, the Company achieved a turnover of Rs. 4,368.78 crore as compared to Rs. 4,919.15 crore in the previous year mainly due to lower volume of sugar sales in 2011-12 and sale of raw sugar in 2010-11 inspite of higher production and higher sales realisation as compared to the previous year. The loss after tax stood at Rs. 234.57 crore as compared to the profit of Rs. 12.00 crore in the previous year. On a consolidated basis, the turnover including other income was Rs. 4,451.30 crore compared to Rs. 5,081.90 crore in the previous year. The loss after tax and minority interest is Rs. 320.11 crore as against profit of Rs. 21.45 crore in the previous year.

The financial and operating results for current financial year are not strictly comparable with those of previous financial year 2010-11 to the extent that current financial year includes figures pertaining to the erstwhile subsidiary Bajaj Eco-Tec Products Limited for half year viz. from Appointed Date as April 01, 2012 to September 30, 2012 consequent upon the merger of BEPL with the Company whereas in the previous year these were for the Company only.

Dividend

The Board of Directors of the Company recommend, for consideration of shareholders at the 81st Annual General Meeting, payment of dividend of 10% (Rs. 0.10 per share) on equity shares of the face value of Rs. 1/- each for the year ended September 30, 2012. The dividend paid during the previous year was 40%. Despite absence of profits during the year, the proposed dividend of 10% being the maximum amount payable out of the Reserves as per provisions of "The Companies (Declaration of Dividend out of Reserves) Rules 1975" is recommended to maintain the continuity in payment of dividend of the Company.

Operations

The Company continues to be the number one sugar and ethanol manufacturing company in India with its fourteen sugar plants having an aggregate sugarcane crushing capacity of 1,36,000 TCD, six distilleries having aggregate capacity to produce Industrial Alcohol of 800 kilolitres per day and fourteen co-generation plants having a total power generation capacity of 443 MW, two MDF manufacturing plants having capacity of 1,20,000 MT per annum and one PB manufacturing plant having capacity of 35,000 MT per annum.

Sugar

The operations during the financial year ended September 30, 2012 at all the fourteen sugar plants were satisfactory

During the financial year 2011-12, the Company crushed 12.756 MMT of sugarcane and processed 671.2 MT of raw sugar. The recovery of sugar from sugarcane was at 9.14% as against 9.31% in the previous year.

The Company produced 1 1,65,761 MT sugar from sugarcane and 611 MT sugar from raw sugar and 6,47,585 MT molasses during the financial year 2011-12.

The Company sold 11,38,494 MT of sugar as against 13,74,407 MT during the previous year, registering a decline of 17%. The Company also sold 95,407 MT of molasses as against 96,497 MT in the previous year.

Distillery

During the year, Industrial Alcohol / Ethanol production was higher at 1,45,156 KL as compared to 89,059 KL in the previous year. Alcohol / Ethanol sale during the year was higher at 1,48,835 KL as against 1,24,366 KL during the previous year, reporting an increase of 20%.

Power

The operations of power generation were smooth at all of our fourteen sugar plants. While most of the power generated by us continued to be used captively to run our plants, the surplus power was sold to the Uttar Pradesh State grid.

Power generation was substantially higher at 8,21,215 MW as compared to 5,56,578 MW in the previous year recording a growth of 48%. This was achieved primarily out of higher quantum of bagasse available from the crushing of sugarcane and optimum utilisation of co-gen capacities resulting from efficient planning. The Company exported 3,46,180 MW of power during the year as against 1,75,842 MW during the previous year, an increase of 97%.

Bagasse Boards

During the period from April 01, 2012 (Appointed Date of Amalgamation) to September 30, 2012, the Company manufactured 4,905 MT of Particle Board (PB) and 10,118 MT of Medium Density Fibre Board (MDF) at its two plants at Kinauni and Palia Kalan, respectively. Operations at the Kundarkhi plant remained suspended due to non-availability of adequate quantity of sugarcane bagasse in and around that area.

The Company sold 5,513 MT of PB and 14,415 MT of MDF during the period.

Change in Capital Structure

Rights Issue

An aggregate of 41,10,42,800 equity shares were allotted to the eligible shareholders on October 31, 2011 against the valid applications for the Rights Issue of equity shares in the ratio of two equity shares at a price of Rs. 36 per share for every one equity share held announced by the Company in the last year. Consequent to allotment of the aforesaid shares, the paid-up equity share capital of the Company increased from Rs. 22,83,57,111 to 63,93,99,911.

Out of the aggregate proceeds of Rs. 1,479.75 crore from this Rights Issue, as on September 30, 2012, the Company has utilised Rs. 1,374.98 crore towards the repayment of loan, Rs. 40.88 crore towards general corporate purposes and Rs. 37.87 crore towards issue expenses aggregating to Rs. 1,453.73 crore. The balance Rs. 26.02 crore has been utilised for temporary reduction of working capital loan which would be redrawn, when necessary as stated in the letter of offer.

Listing of Securities

The Company''s equity shares are listed on the BSE Limited and The National Stock Exchange of India Limited. The Annual Listing fees to each of these Stock Exchanges have been paid by the Company. The Global Depository Receipts (GDRs) are listed on the Luxembourg Stock Exchange and London Stock Exchange.

Employees Stock Option

The information required to be disclosed in terms of the provisions of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is enclosed as per Annexure II to this report.

Management Discussion and Analysis

Management Discussion and Analysis Report is presented in a separate section forming part of this Annual Report.

Subsidiaries

As on September 30, 2012, the Company had the following Subsidiaries, all of them are presently unlisted:

1. Bajaj Aviation Private Limited

2. Lalitpur Power Generation Company Limited

3. Bajaj Power Generation Private Limited

4. Bajaj Hindusthan (Singapore) Pte. Ltd.

In terms of General Circular No. 2/2011 dated February 08, 2011 issued by the Government of India, Ministry of Corporate Affairs granting general exemption under Section 212 of the Companies Act, 1956, and consent of the Board of Directors vide their resolution passed at the Board Meeting, the Company has not attached with its Balance Sheet as at September 30, 2012, copies of the balance sheet, statement of profit and loss and reports of the Board of Directors and Auditors of the Company''s subsidiaries and has disclosed the requisite information in the Consolidated Balance Sheet as at September 30, 2012.

Pursuant to the General Circular No. 2/2011 dated February 08, 2011 the Company hereby undertakes that:

I. Annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company and subsidiary companies seeking such information at any point of time.

II. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholder in the registered office of the Company and of the subsidiary companies concerned.

III. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

Subsidiaries'' Operations

Bajaj Eco-Tec Products Limited (Amalgamated with BHL)

During the year ended March 31, 2012, Bajaj Eco-Tec Products Limited (BEPL) recorded a turnover of Rs. 122.25 crore as compared Rs. 160.37 crore in the previous year. The Net Loss after Tax was Rs. 55.36 crore as against Rs. 49.53 crore recorded during the previous year. The reduction in turnover was primarily on account of lower availability of main raw material - sugarcane bagasse - in and around the areas near all the three factories of BEPL. Scarce availability of raw material, higher raw material prices, high finance cost, general inflationary conditions and lower realisation continued to put margins under pressure.

In order to improve the Medium Density Fibre Board and Particle Board operations by minimising the impact of tax outgoings on the prices of these bagasse boards and to improve the efficiencies by reducing cost of supervision and management, the Board of Directors of both BEPL and BHL approved a Scheme of Amalgamation of BEPL with BHL. The Orders sanctioning the Scheme was passed by the Hon''ble High Court of Bombay on September 14, 2012. Upon accomplishment of the applicable formalities under the law, the Scheme has come into effect from October 01, 2012 and BEPL stood dissolved without winding up. The appointed date fixed for the Scheme was April 01, 2012.

Bajaj Aviation Private Limited

Bajaj Aviation Private Limited (BAPL), was a wholly-owned subsidiary of Bajaj Eco-Tec Products Limited (BEPL) and accordingly after amalgamation of BEPL with BHL, BAPL became a wholly-owned subsidiary of BHL. During the year ended September 30, 2012, BAPL generated an income of Rs. 0.96 crore and posted net loss of Rs. 1.54 crore.

Bajaj Energy Private Limited (ceased to be subsidiary w.e.f. March 19, 2012)

Bajaj Energy Private Limited (BEnPL) was implementing projects for thermal power having generation capacity of 450 MW and projects at all five locations in the State of Uttar Pradesh were successfully commissioned during March and April, 2012.

As on March 31, 2012, BEnPL has earned revenue of Rs. 20.14 crore from sale of power and Rs. 0.01 crore from Interest on Fixed Deposits for the year ended March 31, 2012. Total expenses incurred during the year was at Rs. 32.58 crore. The loss after tax was at Rs. 12.43 crore for the year ended on that date. Earning per share was Rs. (7.78). BEnPL sells power generated from its projects to Uttar Pradesh Power Corporation Limited in terms of Power Purchase Agreement at a provisional price of Rs. 4/- per unit which is subject to upward revision on finalisation of tariff.

BENPL had allotted 1,96,05,882 equity shares of the face value of Rs. 10/- each on March 19, 2012. Consequent to said allotment, BEnPL ceased to be a subsidiary of Bajaj Hindusthan.

Lalitpur Power Generation Company Limited

The Company was awarded 1,980 MW (3x660 MW) mega thermal power project at Lalitpur, Uttar Pradesh which is being implemented through Lalitpur Power Generation Company Limited (LPGCL), SPV created for this purpose.

The estimated cost of project is Rs. 12,000 crore.

LPGCL has entered into a facility agreement dated August 24, 2011 with Consortium of lenders for term loan financing of Rs. 8,886 crore.

LPGCL has acquired 1288.76 acres land till date out of the total estimated land requirement of 1320 acres. LPGCL has also obtained all clearances including major ones from Irrigation Department, Ministry of Environment and Forest (MoEF) and Uttar Pradesh Pollution Control Board (UPPCB) etc. The Boiler Turbine Generators (BTG) and Balance of Plant (BoP) orders through International Competitive Bidding route have also been placed.

LPGCL''s application for domestic coal duly recommended by Central Electricity Authority and Ministry of Power is submitted to Ministry of Coal and shall be taken up in the next Standing Linkage Committee meeting. The Company has also made arrangements for procuring imported coal from Indonesia to meet 100% fuel requirements of the project until domestic coal is awarded to the project.

Till date, LPGCL had issued and allotted 92,48,700 equity shares of Rs. 10/- each to the Company and to other promoter group companies.

Bajaj Power Generation Private Limited

Bajaj Power Generation Private Limited (BPGPL), a wholly owned subsidiary of the Company is mandated with implementation of 1,980 MW (3x660 MW) thermal power project at Bargarh, district Chitrakoot, Uttar Pradesh at an estimated cost of around Rs. 12,000 crore. BPGPL had initiated steps to acquire land in Bargarh and nearby villages and has also applied for various licenses, approvals and clearances, including application for coal linkages, required for setting up its project. BPGPL has received permission from Joint Secretary,

Uttar Pradesh Government and clearance from Central Water Commission, Irrigation Planning (North) Dte., Government of India for withdrawal of water from Yamuna river for its power plant and permission from Central Ground Water Authority, Ministry of Water Resources, Government of India to withdraw ground water to facilitate construction activities at the plant site. The Irrigation Department has also accorded in-principle consent for making water available to the project from Yamuna river subject to construction of barrage on the river. BPGPL can avail water from Yamuna only on receipt of approval from the concerned legal entities of Government of India for construction of barrage across the river.

Citing delay in implementation of its project as a result of this development, application had been made to Uttar Pradesh Power Corporation Limited (UPPCL) for shifting the project site from Bargarh, district Chitrakoot to Mirchwara, district Lalitpur. UPPCL has granted permission to the Company to change the project location from Bargarh to Lalitpur subject to receipt of approval from Uttar Pradesh Electricity Regulatory Commission.

BPGPL is exploring options to develop logistical and infrastructural support for its upcoming power project.

Bajaj Internacional Participates Limitada (Subsidiary in Brazil) (ceased to be subsidiary w.e.f. January 26, 2012)

Since no operation in this Wholly Owned Subsidiary (WOS) was started, the Company had initiated steps of winding up of its operations in 2011 and the resolution for termination of Bajaj Internacional Participates Limitada (BIPL) was duly registered at the Board of Trade, Brazil on January 26, 2012 and accordingly BIPL ceased to be subsidiary of the Company with effect from January 26, 2012.

Bajaj Hindusthan (Singapore) Private Limited

Bajaj Hindusthan (Singapore) Pte. Ltd. (BHSPL), a Wholly Owned Subsidiary of the Company in Singapore engaged in trading in commodities and also exploring opportunities for coal mine acquisition in Indonesia. The Company achieved a turnover including other income of US$ 12.79 million and posted a net loss after taxation of US$ 0.13 million for the year ended March 31, 2012. Company is exploring a possibility for acquisition of coal mines in Indonesia.

Consolidated Financial Statements

In compliance with Accounting Standards 21, 23 and 27 of Companies (Accounting Standards) Rules, 2006 and pursuant to the Listing Agreement with the Stock Exchanges, the Consolidated Financial Statements form part of this Annual Report.

As directed by the Central Government and pursuant to the Accounting Standard - 21 (AS - 21) prescribed under the Companies (Accounting Standards) Rules, 2006, Consolidated Financial Statements presented by your Company include financial information about its aforesaid subsidiaries. The financial statements of BHL as well as its aforesaid subsidiaries will be available on the website of the Company (www.bajajhindusthan.com).

Directors

Mr. Manoj Maheshwari joined the Company in September 2007 as Chief Finance Officer (CFO) of the Company. He was inducted on the Board on whole time basis and designated as Director & Group CFO for a period of five years with effect from October 01, 2012. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Company,

Mr. Manoj Maheshwari would hold office as Additional Director (appointed with effect from October 01, 2012 at the Board Meeting held on August 14, 2012) only up to the date of the 81st Annual General Meeting of the Company. The Company has received notice from a member pursuant to Section 257 of the Companies Act, 1956, proposing the appointment of Mr. Manoj Maheshwari as Director of the Company. The Board of Directors recommends the appointment of Mr. Manoj Maheshwari as Director of the Company

Mr. Ashok Kumar Gupta joined the Company in May 1982. During his long tenure with BHL, he had gained experience in different departments and immediately prior to his induction on the Board, he was Senior President (Group Operations), Sugar & Distillery Divisions. He was inducted on the Board on whole time basis and designated as Director (Group Operations) for a period of five years with effect from October 01, 2012. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Company,

Mr. Ashok Kumar Gupta would hold office as Additional Director (appointed with effect from October 01, 2012 at the Board Meeting held on August 14, 2012) only up to the date of the 81st Annual General Meeting of the Company. The Company has received notice from a member pursuant to Section 257 of the Companies Act, 1956, proposing the appointment of Mr. Ashok Kumar Gupta as Director of the Company. The Board of Directors recommends the appointment of Mr. Ashok Kumar Gupta as Director of the Company.

Dr. Sanjeev Kumar (DIN 00364416) and Mr. Alok Krishna Agarwal (DIN 00127273), Directors of the Company, will retire by rotation and being eligible, offer themselves for re-appointment. All the appointments of the Directors of the Company are in compliance with the provisions of Section 274 (1)(g) of the Companies Act, 1956.

Directors'' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, as amended, with respect to the directors'' responsibility statement, it is hereby confirmed:

(i) that in preparation of accounts for the financial year ended September 30, 2012, the applicable accounting standards have been followed along with proper explanation relating to the material departures;

(ii) that the directors of the Company have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at September 30, 2012 and of the loss of the Company for the year ended September 30, 2012;

(iii) that the directors of the Company 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; and

(iv) that the directors of the Company have prepared the accounts of the Company for the financial year ended September 30, 2012 on a going concern basis.

Auditors and Auditors'' Report

M/s. Chaturvedi & Shah, Chartered Accountants, existing Statutory Auditors will retire at the conclusion of the ensuing (81st) Annual General Meeting and seek re-appointment as Statutory Auditors of the Company at the ensuing Annual General Meeting.

The Company has received certificate from M/s. Chaturvedi & Shah to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

The Board of Directors recommends to the shareholders the appointment of M/s. Chaturvedi & Shah as Auditors of the Company

The observations and comments given in the report of the Auditors read together with notes to accounts are self explanatory and hence do not call for any further information and explanation under Section 217(3) of the Companies Act, 1956.

International Accountants

M/s. B S R & Company, Chartered Accountants, appointed as International Accountants of the Company have submitted the report on the Company''s Consolidated Financial Statement to the Board of Directors for the year under review and the same forms a part of this report for the information of members.

Cost Auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, M/s. B.J.D. Nanabhoy & Co., Cost Accountants, Mumbai (Firm Regn. No. 000011) were appointed as the Cost Auditors of the Company. The cost auditors have submitted the Cost Audit Reports to the Central Government within the time limit of 180 days from the close of the financial year for the following products:

Sl. Product Financial Date of No. year ended filing

1 Sugar 30.09.2011 21.03.2012

2 Industrial Alcohol 30.09.2011 21.03.2012

Particulars of employees

As required under the provision of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, particulars of employees are set out in Annexure-III and forms part of this report.

However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Transfer of amounts to Investor Education and Protection Fund

The amounts of dividend, sum of matured fixed deposits, sum of interest on matured deposit, etc. which has remained unpaid or unclaimed for 7 years have been transferred to the Investor Education and Protection Fund within the time stipulated by law on respective due dates in accordance with the provisions of Section 205C of the Companies Act, 1956.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The relevant particulars regarding the above is given in Annexure-I hereto and forms part of this report.

Corporate Governance

The Company has vigorously striven to follow the best corporate governance practices aimed at building trust among the key stakeholders, shareholders, employees, customers, suppliers (including farmers) and other stakeholders on four key elements of corporate governance -- transparency, fairness, disclosure and accountability.

Acknowledgements

Industrial relations have been cordial at all the plants of the Company.

The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government authorities, bankers, customers and suppliers and business associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company''s employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.

For and on behalf of the Board of Directors

SHISHIR BAJAJ

Chairman & Managing Director

Mumbai,

November 26, 2012

 
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