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Directors Report of Bajaj Holdings & Investment Ltd.

Mar 31, 2015

Dear Members,

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

Financial results

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

The highlights of the Standalone Financial Results are as under:

(Rs. In Crore)

Particulars FY 2015 FY 2014

Total revenue 1,006.46 839.47

Total expenses 41.96 25.70

Profit before tax 964.50 813.77

Tax expense 79.58 85.14

Profit after tax 884.92 728.63

Profit for the year 867.73 733.35

Transfer to Reserve fund u/s 45-IC (1) of Reserve Bank of India Act, 1934 173.55 146.67

Transfer to General reserve 86.77 73.34

Proposed dividend (inclusive of dividend tax) 434.49 390.47

Balance carried to Balance Sheet 172.92 122.87

Earnings per share (B ) 78.0 65.9

The highlights of the Consolidated Financial Results are as under:

(H In Crore)

Particulars FY 2015 FY 2014

Total revenue 558.83 427.72

Profit before tax 513.19 399.57

Income from associates after tax 1,615.41 1,669.11

Profit for the year 2,029.24 1,987.56

Earnings per share (B ) 182.3 178.6

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs. 32.50 per share (325%) for the year ended 31 March 2015. The amount of dividend and the tax thereon to the extent applicable aggregate to Rs. 434.49 crore.

Dividend paid for the year ended 31 March 2014 was Rs. 30 per share (300%). The amount of dividend and the tax thereon to the extent applicable aggregated to Rs. 390.47 crore.

Share Capital

The paid up equity share capital as on 31 March 2015 was Rs. 111.29 crore. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares nor has it granted any stock options.

Registration as a Systemically Important Non-Deposit taking NBFC

The Company has been registered with the Reserve Bank of India as a Non-Banking Financial Institution (Non-Deposit taking). In terms of provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, the Company is categorised as a ''Systemically Important Non-Deposit taking Non-Banking Financial Company''. The Company has not accepted public deposits during the year under review. The Company has formed Risk Management Committee and Asset Liability Management Committee in terms of the applicable directions/regulations of the Reserve Bank of India in this regard.

Operations

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

De-notification of Special Economic Zone (SEZ) Project

As reported previously, the Company had proposed to set up a sector specific SEZ, at Waluj, Aurangabad, which was notified by the Central Government on 17 April 2007. In response to the application of the Company, the Central Government has de-notified the SEZ Project vide its notification no. F/2/94/2006-SEZ dated 30 July 2014.

Extract of annual return

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

Number of meetings of the Board

There were 6 meetings of the Board held during the year. Detailed information is given in the Corporate Governance Report.

Directors'' responsibility statement

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

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

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

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

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

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

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

Declaration by independent directors

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

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

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

Particulars of loans, guarantees or investments

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

Related party transactions

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

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

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

Material changes and commitments

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

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

The Company primarily being an investment company and not involved in any industrial or manufacturing activities, the Company has no particulars to report regarding conservation of energy and technology absorption as required under section 134 of the Companies Act, 2013 and Rules made thereunder. During the year under review, the Company did not have any foreign exchange earnings, whereas the foreign exchange outgo amounted to B 138,981.

Risk Management Policy

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

Corporate Social Responsibility

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

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

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

Detailed information on the performance and financial position of subsidiary, associates and joint venture of the Company is covered in the Management Discussion and Analysis Report.

As regards Maharashtra Scooters Ltd. (MSL), a company jointly promoted by the Company (erstwhile Bajaj Auto Ltd.) and Western Maharashtra Development Corporation Ltd. (WMDC), WMDC had offered to sell its 27% shareholding in MSL and the Company had confirmed its willingness to purchase these shares. The price at which the shares were to be sold, had been jointly referred to a sole Arbitrator, Justice Arvind V Savant (Retd), with an understanding in writing that the arbitral award would be binding on both.

As reported in the past, the Award of the Arbitrator dated 14 January 2006 valuing the share price of MSL at Rs. 151.63 per share as the rate at which 3,085,712 equity shares of MSL held by WMDC to be sold to the Company, was challenged by WMDC in the Bombay High Court.

After hearing both the parties, the Single Judge Bench of Hon''ble Bombay High Court, vide its order dated 15 February 2010, while confirming the ruling of the Arbitrator on his jurisdiction, the relevant date for valuation, the methodology adopted by the Arbitrator on valuation and the price, set aside the Award of the Learned Arbitrator on the ground that the Arbitral Award goes contrary to the provisions of section 111A of the Companies Act, 1956, which relates to free transferability of shares in a public limited company.

The Company challenged the decision of the Hon''ble Bombay High Court by way of filing an Appeal before the Division Bench of the High Court on various grounds. WMDC filed Cross Objections on the issues regarding jurisdiction, date of valuation, methodology and price.

The matter came up for hearing before the Division Bench of the Hon''ble Bombay High Court in February/March 2015. The Bench has pronounced its Order on 8 May 2015, inter alia, stipulating the following:

1. The Company''s Appeal No. 153 of 2010 is allowed and the impugned order of the Single Judge dated 15 February 2010 is set aside in so far as it set aside the Arbitral Award on the ground that clause 7 of the Protocol Agreement was in the nature of a restriction on free transferability of the shares and was therefore contrary to section 111A of the Companies Act, 1956.

2. The Cross Objections filed by the Respondent (WMDC) have no merit and therefore stand dismissed.

3. In the peculiar circumstances of the case and in the interest of justice, the Appellant (BHIL), for the purchase of the 3,085,712 equity shares of MSL, shall pay to the Respondent (WMDC) a sum of Rs. 46.79 crore (calculated at Arbitral Award price of Rs. 151.63 per share) together with simple interest @ 18% per annum from 14 January 2006 (date of Arbitral Award) till payment.

Directors and Key Managerial Personnel

As reported previously, Dr. Gita Piramal was appointed as an additional director in the category of non-executive, independent director of the Company, in the meeting of the Board held on 28 March 2014. Thereafter, at the sixty ninth annual general meeting of the Company held on 17 July 2014, the members of the Company appointed Dr. Gita Piramal as an independent director under the Companies Act, 2013 for a period of 5 years effective from 17 July 2014.

Pursuant to section 149(4) of the Companies Act, 2013, every listed company is required to appoint at least one third of its directors as independent directors. The Board already has one half of its directors in the category of independent directors in terms of clause 49 of the Listing Agreement. The Board therefore, in its meeting held on 28 March 2014 appointed the existing independent directors under clause 49 as ''independent directors'' pursuant to Companies Act, 2013 as well, for a term of 5 years, effective from 1 April 2014 . The members at the annual general meeting held on 17 July 2014, approved the appointment.

Pursuant to section 203 of the Companies Act, 2013, the Company has appointed Anant Marathe as Chief Financial Officer (CFO) of the Company with effect from 1 October 2014 in place of Kevin D''sa. This change became necessary since as required under the said section 203,

Kevin D''sa, who was the CFO of Bajaj Auto Ltd., Bajaj Finserv Ltd. (BFS) and BHIL chose to continue as CFO in Bajaj Auto Ltd. and relinquished his position as CFO of BFS and BHIL with effect from 1 October 2014.

The Company already has Sanjiv Bajaj, Managing Director and Vallari Gupte, Company Secretary as the other Key Managerial Personnel of the Company.

In light of the provisions of the Companies Act, 2013, Rajiv Bajaj retires from the Board by rotation this year and being eligible, offers himself for re-appointment. The information as required to be disclosed under clause 49 of the Listing Agreement in case of re-appointment of the director is provided in the Notice of the ensuing annual general meeting.

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

Significant and material orders passed by the regulators or courts

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

Adequacy of internal financial controls

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

Presentation of financial statements

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

Consolidated financial statements

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

A separate statement containing the salient features of the subsidiaries (including associates and joint venture) in the prescribed form (AOC-1) is annexed separately.

Statutory disclosures

The summary of the key financials of the Company''s subsidiary, associate company and joint venture(Form AOC-1), is included in this Annual Report. A copy of audited financial statements of the said companies will be made available to the members of the Company, seeking such information at any point of time. The audited financial statements of the said companies will be kept for inspection by any member of the Company at its registered office during business hours. The same are placed on the Company''s website www.bhil.in

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

Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding)

Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulations have been made in this Annual Report.

A Cash Flow Statement for the year 2014-15 is attached to the Balance Sheet.

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

Corporate governance

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

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

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

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

Auditors

Statutory auditor

Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules made thereunder, the current auditors of the Company, Dalal & Shah, Chartered Accountants (registration number: 102021W) were appointed by the members at the 69th annual general meeting to hold office until the conclusion of the 72nd annual general meeting, subject to ratification by members at each annual general meeting.

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

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

Secretarial auditor

Pursuant to the provisions of section 204 of the Companies Act, 2013 and Rules made thereunder the Company has appointed, Shyamprasad D Limaye, (Membership No. 1587) Company Secretaries in Practice to undertake the secretarial audit of the Company. Secretarial Audit Report for the year 2014-15 as issued by him in the prescribed form MR-3 is annexed to this Report.

The said Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer made by the secretarial auditor.

On behalf of the Board of Directors,

Rahul Bajaj Chairman

Pune: 21 May 2015


Mar 31, 2014

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

Operations

The operations and financials of the Company are elaborated in the annexed Management Discussion and Analysis Report. The highlights are as under:

Financial results (Standalone)

(Rs. In Crore)

Particulars FY2014 FY2013

Total revenue 839.47 745.15

Total expenses 25.70 14.70

Profit before tax 813.77 730.45

Tax expense 85.14 67.12

Profit after tax 728.63 663.33

Profit for the year 733.35 663.33

Add: Balance brought forward from previous year 625.40 486.09

Profit available for appropriation 1,358.75 1,149.42

Transfer to Reserve fund u/s 45-IC(1) of Reserve Bank of India Act, 1934 146.67 132.67

Transfer to General reserve 73.34 66.33

Proposed dividend (inclusive of dividend tax) 390.47 325.02

Balance carried to Balance Sheet 748.27 625.40

Earnings per share (Rs.) 65.9 59.6

Financial results (Consolidated)

(Rs. In Crore)

Particulars FY2014 FY2013

Total revenue 427.72 339.46

Profit before tax 399.57 322.02

Income from associates after tax 1,669.11 1,602.69

Profit for the year 1,987.56 1,856.38

Earnings per share (Rs.) 178.6 166.8

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of dividend of Rs. 30 per share (300 per cent) for the year ended 31 March 2014. The amount of dividend and the tax thereon aggregates to Rs. 390.47 crore.

Dividend paid for the year ended 31 March 2013 was Rs. 25 per share (250 per cent) and the amount of dividend and the tax thereon aggregated to Rs. 325.02 crore.

Registration as a Systemically Important Non-Deposit taking NBFC

The Company has been registered with the Reserve Bank of India as a Non-Banking Financial Institution (Non-Deposit taking). In terms of provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, the Company is categorised as a ''Systemically Important Non-Deposit taking Non-Banking Financial Company''. The Company has not accepted public deposits during the year under review. The Company has formed Risk Management Committee and Asset Liability Management Committee in terms of the applicable directions/regulations of the Reserve Bank of India in this regard.

De-notification of Special Economic Zone (SEZ)

As reported in the previous year, the Company had applied on 25 January 2012 to the SEZ section of the Department of Commerce, Ministry of Commerce and Industry of Government of India for de-notification of its SEZ Project located at Waluj, Aurangabad. The said authority vide its letter dated 27 March 2012 conveyed its approval for de-notification of the Company''s SEZ subject to the Development Commissioner, SEEPZ SEZ, Mumbai, furnishing its certificate that the Company has refunded all the tax/duty benefits availed, under the SEZ Act/Rules.

As directed, necessary procedural formalities in this regard are in process.

Subsidiary/joint venture/associates

Following are the companies, which are the subsidiary/joint venture/associate companies of the Company:

% Shareholding of Bajaj Holdings & Name of the company Investment Ltd. as on 31 March 2014 Status

Bajaj Auto Ltd. 31.49% Associate

Bajaj Finserv Ltd. 39.16% Associate

Bajaj Auto Holdings Ltd. 100% Subsidiary

Maharashtra Scooters Ltd. 24% Joint venture

A summary of financial results of the aforesaid subsidiary/associates/joint venture has been covered under the Management Discussion and Analysis Report.

As regards Maharashtra Scooters Ltd. (MSL), a company jointly promoted by the Company (erstwhile Bajaj Auto Ltd.) and Western Maharashtra Development Corporation Ltd. (WMDC), WMDC had offered to sell its 27 per cent shareholding in MSL and the Company had confirmed its willingness to purchase these shares. The price at which the shares were to be sold, had been jointly referred to a sole Arbitrator, Justice Arvind V Savant (Retd), with an understanding in writing that the arbitral award would be binding on both.

As reported in the past, the award of the Arbitrator dated 14 January 2006 valuing the share price of MSL at Rs. 151.63 per share as the rate at which 3,085,712 equity shares of MSL held by WMDC to be sold to the Company, was challenged by WMDC in the Bombay High Court.

After hearing both the parties, the Hon''ble Bombay High Court, vide its order dated 15 February 2010, while confirming the ruling of the Arbitrator on the relevant date for valuation and on the methodology adopted by the Arbitrator on valuation, set aside the Award of the Learned Arbitrator on the ground that the Arbitral Award goes contrary to the provisions of section 111A of the Companies Act, 1956, which relates to free transferability of shares in a public limited company. The Company has challenged the decision of the Hon''ble Bombay High Court by way of filing an Appeal before the Division Bench of the High Court on various grounds and the same has been admitted. The Appeal is currently under progress.

Corporate Social Responsibility

The Companies Act, 2013 notified section 135 of the Act concerning Corporate Social Responsibility (CSR) along with the Rules there under and revised Schedule VII to the Act on 27 February 2014 to come into effect from 1 April 2014.

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

1. Rahul Bajaj, Chairman

2. Sanjiv Bajaj

3. Nanoo Pamnani

The Committee has formulated its CSR policy for the Company and is in the process of its implementation.

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

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

Directors

During the year under review, Dr. Gita Piramal was appointed as an Additional Director in the category of non-executive, independent director of the Company, in the meeting of the Board held on 28 March 2014, to hold office upto the date of the ensuing Annual General Meeting (AGM) of the Company. Resolution for appointment of Dr. Gita Piramal is put up for the approval of shareholders in the Notice of AGM.

Pursuant to the provisions of the Companies Act, 2013 which have been enacted with effect from 1 April 2014, Dr. Gita Piramal, if appointed at the forthcoming AGM shall be an ''independent director'' under the said Act for a period of 5 years with effect from the date of the AGM.

On appointment of Dr. Gita Piramal, the provisions of section 149(1) of the Companies Act, 2013 of having at least one woman director on the Board of the Company, stand complied.

In light of the provisions of the Companies Act, 2013, Rahul Bajaj has now become a retiring director, thus Rahul Bajaj retires from the Board by rotation this year and being eligible, offers himself for re-appointment. The information as required to be disclosed under clause 49 of the listing agreement in case of re-appointment of director is provided in the Notice of the ensuing AGM.

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

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

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

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

Directors'' responsibility statement

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

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

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

- that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

Presentation of financial results

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

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiary, associates and joint venture and as prepared in compliance with the applicable accounting standards and the provisions of listing agreement as prescribed by SEBI.

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

Statutory disclosures

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

The summary of key financials of the Company''s subsidiary company is included in this Annual Report.

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

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

The Company has no particulars to report regarding technology absorption, conservation of energy as required under section 217(1)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. During the year under review, the Company did not have any foreign exchange earnings, whereas the foreign exchange outgo amounted to H 54,712.

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

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

Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulations have been made in this Annual Report.

A Cash Flow Statement for the year 2013-14 is attached to the Balance Sheet.

Corporate governance

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

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

All Board members and senior management personnel have affirmed compliance with the code of conduct for the year 2013-14. A declaration to this effect signed by the Managing Director of the Company is contained in this Annual Report.

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

Secretarial Standards of ICSI

Companies Act, 2013 has now mandated certain Secretarial Standards specified by the Institute of Company Secretaries of India (ICSI) from time to time. The Company is, however, complying with the Secretarial Standards for many years now.

Auditors'' report

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

Auditors

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

The members are therefore requested to appoint Dalal & Shah, Chartered Accountants as auditors for three years from the conclusion of the ensuing annual general meeting till the conclusion of the 72nd annual general meeting, to be scheduled in 2017 and to fix their remuneration for the year 2014-15.

On behalf of the Board of Directors,

Rahul Bajaj

Chairman

15 May 2014


Mar 31, 2013

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

Operations

The operations and financial figures of the Company are elaborated in the annexed Management Discussion and Analysis Report. The highlights are as under:-

Financial results (Standalone)

(Rs. In Crore)

2013 2012

Total revenue 745.15 650.37

Total expenses 14.70 7.56

Profit before tax 730.45 642.81

Tax expense 67.12 75.35

Profit after tax 663.33 567.46

Add: Balance brought forward from previous year 486.09 411.05

Profit available for appropriation 1,149.42 978.51

Transfer to Reserve fund u/s 45-IC(1) of Reserve Bank of India Act, 1934 132.67 113.49

Transfer to General reserve 66.33 56.75

Proposed dividend (inclusive of dividend tax) 325.02 322.18

Balance carried to Balance Sheet 625.40 486.09

Earnings per share (Rs.) 59.6 51.0

Financial results (Consolidated)

The highlights of the Consolidated Financial Results are as under:

(Rs. In Crore)

2013 2012

Total revenue 339.46 301.03

Profit before exceptional item and tax 322.02 288.94

Profit before tax 322.02 274.93

Income from associate after tax 1,602.69 1,480.70

Profit for the year 1,856.38 1,679.17

Earnings per share (Rs.) 166.8 150.9

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of dividend of Rs. 25 per share (250 per cent) for the year ended 31 March 2013. The amount of dividend and the tax thereon aggregates to Rs. 325.02 crore.

Dividend paid for the year ended 31 March 2012 was also Rs. 25 per share (250 per cent) and the amount of dividend and the tax thereon aggregated to Rs. 322.18 crore.

Registration as a Systemically Important Non-Deposit taking NBFC

The Company has been registered with the Reserve Bank of India as a Non-Banking Financial Institution (Non-Deposit taking). In terms of provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, the Company is categorised as a ''Systemically Important Non-Deposit taking Non-Banking Financial Company''. The Company has not accepted public deposits during the year under review. The Company has formed Risk Management Committee and Asset Liability Management Committee in terms of the applicable directions/regulations of the Reserve Bank of India in this regard.

De-notification of Special Economic Zone (SEZ)

As reported in the previous year, the Company had applied on 25 January 2012 to the SEZ section of the Department of Commerce, Ministry of Commerce and Industry of Government of India for de-notification of its SEZ Project located at Waluj, Aurangabad. The said authority vide its letter dated 27 March 2012 conveyed its approval for de-notification of the Company''s SEZ subject to the Development Commissioner, SEEPZ SEZ, Mumbai, furnishing its certificate that the Company has refunded all the tax/duty benefits availed, under the SEZ Act/Rules.

As directed, necessary procedural formalities in this regard are in process.

Subsidiary/joint venture/associates

Following are the companies, which are the subsidiary/joint venture/associate companies of the Company:

% Shareholding of Bajaj Holdings & Investment Ltd. as on Name of the Company 31 March 2013 Status

Bajaj Auto Ltd. 31.49% Associate

Bajaj Finserv Ltd. 39.16% Associate

Bajaj Auto Holdings Ltd. 100% Subsidiary

Maharashtra Scooters Ltd. (MSL) 24% Joint venture

A Summary of financial results of the aforesaid subsidiary/associates/joint venture has been covered under the Management Discussion and Analysis report.

As regards Maharashtra Scooters Ltd. (MSL), a company jointly promoted by the Company (erstwhile Bajaj Auto Ltd.) and Western Maharashtra Development Corporation Ltd. (WMDC), WMDC had offered to sell its 27 per cent shareholding in MSL and the Company had confirmed its willingness to purchase these shares. The price at which the shares were to be sold, had been jointly referred to a sole Arbitrator, Justice Arvind V Savant (Retd), with an understanding in writing that the arbitral award would be binding on both.

As reported in the past, the award of the Arbitrator dated 14 January 2006 valuing the share price of MSL at Rs. 151.63 per share as the rate at which 3,085,712 equity shares of MSL held by WMDC to be sold to the Company, was challenged by WMDC in the Bombay High Court. After hearing both the parties, the Hon''ble Bombay High Court, vide its order dated 15 February 2010, while confirming the ruling of the Arbitrator on the relevant date for valuation and on the methodology adopted by the Arbitrator on valuation, set aside the Award of the Learned Arbitrator on the ground that the Arbitral Award goes contrary to the provisions of section 111A of the Companies Act, 1956, which relates to free transferability of shares in a public limited company. The Company has challenged the decision of the Hon''ble Bombay High Court by way of filing an Appeal before the Division Bench of the High Court on various grounds and the same has been admitted. The Appeal is currently under progress.

Corporate Social Responsibility

During the year 2012-13, Bajaj group continued its Corporate Social Responsibility (CSR) initiatives in various fields. Activities in this area are set out in detail in the annexed CSR Report.

Directors

During the year under review, Sanjiv Bajaj was appointed as the Managing Director of the Company for a period of 5 years with effect from 1 April 2012 to 31 March 2017.

Nanoo Pamnani and P Murari retire from the Board by rotation this year and being eligible, offer themselves for re-appointment. The information as required to be disclosed under clause 49 of the listing agreement in case of re-appointment of directors is provided in the notice of the ensuing annual general meeting.

Directors'' responsibility statement

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

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

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

- that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

Presentation of financial results

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

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiary, associates and joint venture and as prepared in compliance with the applicable accounting standards and the provisions of listing agreement as prescribed by SEBI.

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

Statutory disclosures

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

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

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

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

The Company has no particulars to report regarding technology absorption, conservation of energy as required under section 217(1)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988. During the year under review, the Company did not have any foreign exchange earnings, whereas the foreign exchange outgo amounted to Rs. 38,500.

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

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

Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulations have been made in this annual report.

A Cash Flow Statement for the year 2012-13 is attached to the Balance Sheet.

Corporate governance

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

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

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

Secretarial standards of ICSI

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

Auditors'' report

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

Auditors

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

On behalf of the Board of Directors,

Rahul Bajaj

Chairman

16 May 2013


Mar 31, 2012

Dear Members,

Introduction

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

Operations

The operations and financial figures of the Company are elaborated in the annexed Management Discussion and Analysis Report. The highlights are as under:-

Financial results (Standalone)

(Rs. In Crore)

2012 2011

Total Revenue 650.37 1,076.45

Finance Costs 0.01 -

Depreciation 0.24 0.24

Profit before tax 642.81 1,069.12

Tax expense 75.35 71.41

Profit after tax 567.46 997.71

Add: Tax credits pertaining to earlier years - 2.38

Profit for the year 567.46 1,000.09

Add: Balance brought forward from previous year 411.05 163.71

Profit available for appropriation 978.51 1,163.80

Transfer to Reserve Fund u/s 45-IC(l) of the Reserve Bank of India Act, 1934 113.49 200.02

Transfer to General Reserve 56.75 100.01

Proposed dividend (inclusive of dividend tax) 322.18 452.72

Balance carried to Balance Sheet 486.09 411.05

Basic Earnings per share (Rs.) 51.0 93.4

Diluted Earnings per share (Rs.) 51.0 91.9

Financial results (Consolidated)

The highlights of the Consolidated Financial Results are as under:

(Rs. In Crore)

2012 2011

Total Revenue 301.03 900.41

Profit before tax and exceptional item 288.94 888.27

Profit before tax 274.93 888.27

Income from associates after tax 1,480.70 1,504.23

Profit for the year 1,679.17 2,322.76

Basic Earnings per share (Rs.) 150.9 217.0

Diluted Earnings per share (Rs.) 150.9 213.5

Dividend

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of dividend of Rs. 25 per share (250 per cent) for the year ended 31 March 2012. The amount of dividend and the tax thereon aggregates to Rs. 322.18 crore.

Dividend paid for the year ended 31 March 2011 wasRs. 35 per share (350 per cent). The amount of dividend and the tax thereon aggregated to Rs. 452.72 crore.

De-notification of Special Economic Zone (SEZ)

The Board of Approval (BoA), Ministry of Commerce and Industry, had granted its formal approval to Bajaj Holdings & Investment Limited i.e. erstwhile Bajaj Auto Limited on 7 April 2006 for development, operation and maintenance of Engineering SEZ at Waluj, Aurangabad.

Your Company had taken numerous steps from time to time over the last few years for development of SEZ. Given the market conditions and withdrawal of some tax incentives, your Company feels that its SEZ Project is not viable in the changed market scenario.

The Company has, therefore, applied on 25 January 2012 to the appropriate authority of Government of India for de-notification of its SEZ Project. The BoA vide its letter dated 27 March 2012 has conveyed its in-principle approval for de-notification of the Company's SEZ.

Registration as a Systemically Important Non-deposit Taking NBFC

The Company has been registered with the Reserve Bank of India as a Non-Banking Financial Institution (non-deposit taking). In terms of provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, your Company is categorised as a 'systemically important non-deposit taking non-banking financial company' having total assets ofRs. 100 crore and above. The Company has not accepted public deposits during the year under review.

Subsidiary/Joint venture/Associates

Following are the companies, which are the subsidiary/joint venture/associate companies of the Company:

% Shareholding of Bajaj Holdings & Name of the Company Investment Limited as on 31 March 2012 Status

Bajaj Auto Limited 31.49% Associate

Bajaj Finserv Limited 39.15% Associate

Bajaj Auto Holdings Limited 100% Subsidiary

Maharashtra Scooters Limited (MSL) 24% Joint Venture

A Summary of financial results of the aforesaid subsidiary/associates/joint-venture has been covered under the Management Discussion and Analysis report.

As regards Maharashtra Scooters Ltd. (MSL), a company jointly promoted by the Company (erstwhile BAL) and Western Maharashtra Development Corporation Ltd. (WMDC), WMDC had offered to sell its 27 per cent shareholding in MSL and the Company had confirmed its willingness to purchase these shares. The price at which the shares were to be sold, had been jointly referred to a sole arbitrator, Justice Arvind V Savant (Retd.), with an understanding in writing that arbitral award would be binding on both.

As reported in the past, the award of the arbitrator dated 14 January 2006 valuing the share price of MSL at Rs. 151.63 per share as the rate at which 3,085,712 equity shares of MSL held by WMDC are to be sold to the Company, was challenged by WMDC in the Bombay High Court.

After hearing both the parties, the Hon'ble Bombay High Court, vide its order dated 15 February 2010, while confirming the ruling of the Arbitrator on the relevant date for valuation and on the methodology adopted by the Arbitrator on valuation, set aside the Award of the Learned Arbitrator on the ground that the Arbitral Award goes contrary to the provisions of Section 111A of the Companies Act, 1956, which relates to free transferability of shares in a public limited company. The Company has challenged the decision of the Hon'ble Bombay High Court by way of filing an Appeal before the Division Bench of the High Court on various grounds and the same has been admitted. The Appeal is currently under progress.

Sad demise of Shri V S Raghavan, CEO

Shri V S Raghavan, CEO of the Company, who was suffering from a major ailment, passed away on 12 December 2011 at Pune.

Shri Raghavan was also the 'manager' of the Company in terms of provisions of the Companies Act, 1956 since 20 February 2008. He was associated with the Bajaj Group since 1984.

The Board hereby notes and takes on record the contribution made by Shri V S Raghavan during his association with the Group in various capacities.

Directors

During the year under review, the Board, at its meeting held on 27 March 2012, has, subject to approval by the shareholders, appointed Sanjiv Bajaj as Managing Director of the Company for a period of 5 years with effect from 1 April 2012 to 31 March 2017 and also fixed his remuneration, based on the recommendation made by the Remuneration and Nomination Committee.

D J Balaji Rao and Naresh Chandra retire from the Board by rotation this year and being eligible, offer themselves for re-appointment.

Corporate Social Responsibility

During the year 2011-12, Bajaj Group continued its Corporate Social Responsibility (CSR) initiatives in various fields. Activities in this area are set out in detail in the annexed CSR Report.

Directors' responsibility statement

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

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

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

- that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

Presentation of financial results

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

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiary, associates and joint venture and as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.

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

Statutory disclosures

Ministry of Corporate Affairs (MCA) vide Circular No. 51/ 12/2007-CL-111 dated 8 February 2011 has given general exemption with regard to attaching of the balance sheet, statement of profit and loss and other documents of its subsidiary companies subject to fulfillment of conditions mentioned therein. The Company has fulfilled all the necessary conditions in this regard hence is not attaching the balance sheet, statement of profit and loss and other documents of the subsidiary company. The summary of key financials of the Company's subsidiary company is included in this annual report.

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

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

The Company has no particulars to report regarding technology absorption, conservation of energy and foreign exchange earnings and outgo as required under Section 217(l)(e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988.

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

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

Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulations have been made in this annual report.

A Cash Flow Statement for the year 2011-12 is attached to the balance sheet.

Corporate Governance

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

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

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

Secretarial standards of ICSI

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

Group

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

Auditors' report

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

Auditors

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

On behalf of the Board of Directors

Rahul Bajaj Chairman 17 May 2012

 
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