The Directors present their Tenth Annual report and Audited Financial Statements for the year ended 31 March 2017.
Financial results
The financial results of the Company are elaborated in the Management Discussion and Analysis Report.
The highlights of the Financial Results are as under:
Sales in Numbers
|
FY2017
|
FY2016
|
|
Two-wheelers
|
3,219,932
|
3,358,252
|
Three-wheelers Quadricycle
|
446,018
|
535,329
|
Total
|
3,665,950
|
3,893,581
|
Of which Exports
|
1,411,333
|
1,739,629
|
Particulars
|
FY2017
|
(RS, In Crore)
FY2016
|
|
Total income
|
24,310.00
|
24,956.79
|
Total expenses
|
18,974.37
|
19,409.47
|
Profit before tax
|
5,335.63
|
5,547.32
|
Tax expense
|
1,508.07
|
1,617.65
|
Profit for the year
|
3,827.56
|
3,929.67
|
Earnings per share (H)
|
132.3
|
135.8
|
Closing balances in reserve/other equity
(RS, In Crore)
Particulars
|
FY2017
|
FY2016
|
|
General reserve
|
4,046.60
|
3,663.60
|
Retained earnings
|
12,562.56
|
9,305.17
|
Cash flow hedging reserve
|
200.27
|
23.86
|
Costs of hedging reserve
|
(64.67)
|
(15.45)
|
Total
|
16,744.76
|
12,977.18
|
Note: Detailed movement of above reserves can be seen in ''''Statement of Changes in Equity''''
Dividend
The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of H 55 per equity share, (550%) for the year ended 31 March 2017.
The amount of dividend and the tax thereon aggregate to RS, 1,915.51 crore.
For the year ended 31 March 2016, the total dividend paid (including interim dividend), was also RS, 55 per share of RS, 10 each (550%) and the total dividend and the tax thereon to the extent applicable also aggregated to RS, 1,915.51 crore.
Share capital
The paid up equity share capital as on 31 March 2017 was RS, 289.37 crore. There was no public issue, rights issue, bonus issue or preferential issue, etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted any stock options.
Operations
Detailed information on the operations of the Company and details on the state of affairs of the Company are covered in the Management Discussion and Analysis Report.
Capacity expansion and new projects
The Company''''s current installed capacity is 6.06 million units per annum.
As regards our Quadricycle - QUTE, the product is ready for launch and the Company awaits requisite approvals for sale in the domestic market.
The Qute was sold in various international markets during the year 2016-17.
Research and Development and technology absorption
A) Products
Many new products have been launched during the year under review. Detailed information on the new products is covered in the Management Discussion and Analysis Report.
B) Process
R&D has been working on improving its operations in a number of areas as listed below:
- Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company.
- Facilities: R&D continued to enhance its design, computing, prototype manufacturing and validation facilities. A number of new test facilities and prototyping facilities were added.
C) Technology
As in the past, new and improved technology has been introduced during the year under review and the detailed information on the same is covered in the Management Discussion and Analysis Report.
D) Outgo
The expenditure on research and development during 2016-17 and in the previous year was:
(RS,In Crore)
Particulars
|
FY2017
|
FY2016
|
|
i. Capital (including technical know-how)
|
35.26
|
52.82
|
ii. Recurring
|
332.38
|
282.34
|
Total
|
367.64
|
335.16
|
iii. Total research and development expenditure as a percentage of sales 1.62% 1.43%
Conservation of energy
The company continues its efforts to reduce and optimize the energy consumption at all its manufacturing facilities, including the corporate office at Pune.
Significant reduction in energy consumption has been achieved by:
A) Electrical energy
- Elimination of compressors for pneumatically operated 132 kv circuit breakers; by modifying circuit breakers to spring mechanism.
- Optimization of centralized coolant system by relocation of production cells.
- Reduction in energy consumption by providing inverter drives with pressure transmitter for hydraulic motors.
- Replacing conventional blower with higher capacity induction motor to achieve optimal design in paint shop-tank cell air supply unit.
- Optimizing compressed air pressure by use of portable small compressors on holidays.
- Reduction in hidden loss by providing on-line loss measurement system for transformer.
- Use of HVLS (High volume and Low Speed) fans for fixed load reduction of air circulators.
B) Water
- Rain water harvesting.
- Re-use of treated water for processes like cooling towers, central coolant systems, de-sludge pool and incinerator, compressor cooling tower and AHU, etc.
- Replacing rusty underground hydrant and raw water pipeline with above ground level pipeline to arrest water leakages.
- Installation of second stage reverse osmosis at paint shop.
C) LPG/propane
- Thermal imaging/audit for ovens in paint shop and countermeasure.
- Weight reduction of job fixtures in heat treatment.
- Burner efficiency improvement through efficient burners.
- Upgrade of furnace insulation to reduce heat losses.
- Providing magnetic resonator in gas train pipeline to increase combustion efficiency.
- Usage of low temperature chemicals for pre-treatment process.
D) Utilization of renewable energy-key initiatives
- Two PV Solar Power Plants, with capacity of 110 KWp and 1100 KWp, are installed at the Company''''s Akurdi Plant. Recurring saving of 1.57 L KWH and 15.5 L KWH respectively is being realized yearly. Benefit of RS, 70 lakh per year.
- Additionally 1228 KWp (roof top) solar power plant installation is in progress at the Company''''s Chakan Plant. Electricity saving to the extent of 17 L KWH per year is expected. Benefit of RS, 19 lakh per year.
- Installation of natural light transparent roof sheets.
Impact of measures taken
As a result of the initiatives taken for conservation of energy and natural resources, the Company has effected an overall reduction in consumption as given in the following table :
Description
|
% Reduction w.r.t. previous year FY2017 FY2016
|
|
|
Electricity consumption
|
1.98 5.96
|
Water consumption
|
18.73 16.99
|
LPG/PNG consumption
|
8.80 15.65
|
Investment/savings
(HIn Crore)
Description
|
FY2017
|
FY2016
|
|
Investment for energy conservation activities
|
3.34
|
3.76
|
Recurring savings achieved through above activities
|
2.18
|
2.52
|
Awards and Accolades
Sr.
No.
|
Details
|
|
1 National Energy Management Award 2016 for ''''Excellent Energy Efficient Unit'''' by CII to Waluj Plant.
|
2
|
National Award for Excellence in Water Management 2016 by CII to Waluj Plant.
|
3
|
BAL Chakan received ''''Certificate of Merit'''' Award in National Energy Conservation Award, by Bureau of Energy Efficiency.
|
4
|
BAL Chakan received ISO 14001 Certification for upgraded standard (2015).
|
International Business
Bajaj Auto continues to be India''''s No. 1 exporter of motorcycles and three-wheelers. It exports to 78 countries in Latin America, Africa, South Asia, Middle East and Asia Pacific regions. During the year under review, exports accounted for 36.9% of the Company''''s net sales. Detailed information on the International Business is given in the Management Discussion and Analysis Report.
Foreign exchange earnings and outgo
The Company continued to be a net foreign exchange earner during the year.
Total foreign exchange earned by the Company during the year under review was RS, 7,336.49 crore, compared to RS, 9,404.68 crore during the previous year.
Total foreign exchange outflow during the year under review was RS, 697.92 crore, as against RS, 774.90 crore during the previous year.
Industrial relations
Industrial relations with staff and workmen across all the plants, viz. Akurdi, Waluj, Chakan and Pantnagar, continued to be cordial.
During the year, a wage settlement has been signed at Pantnagar on 1 August 2016 for a period of three and half years from 1 June 2016 to 30 November 2019, on expiry of the earlier settlement on 31 May 2016.
For the Akurdi and Chakan plants, periodic wage reviews are due with effect from 1 April 2016, as per the terms of the respective wage settlements signed for a period of 9 years, in the year 2010.
In view of the financial difficulties faced by the workmen, an interim wage raise has been given to all Chakan workmen in October 2016, with effect from 1 April 2016.
The existing settlement at Akurdi Plant has been terminated in November 2016. The wage review process will commence on receipt of a fresh charter of demands from the Union.
With active participation and involvement of employees, the Company has been able to inculcate TPM culture for excellence and continuous improvement across all plants. The plants have received many Awards during the year from Confederation of Indian Industry (CII), Quality Circle Forum of India (QCFI), Indian Institution of Industrial Engineering (IIIE) and National Convention Quality Circle (NCQC).
Waluj Motorcycle Division (MCD) received Gold Awards in QC Circle competitions organized by QCFI at Nagpur and Aurangabad, apart from Excellence Awards in the competitions held by QCFI at Raipur and Mumbai. It also received an Award in Champion of Champions competition organized by CII at Bangalore and in the 3M Kaizen competition organized by TPM Club and Institute of Quality at New Delhi.
Likewise, Waluj Commercial Vehicle Division (CVD) received Gold Medal/Gold Performance/Excellent/ Best of Best Poka Yoke/Best of Manufacturing Support Awards in the Mini/Annual Convention competitions organized by QCFI at Aurangabad and Nagpur. The CVD also received Excellence Awards in the competition organized by NCQC at Raipur, Chhattisgarh.
Chakan Plant received Gold Awards in the National Productivity Competition organized by IIIE at Nagpur. The plant was declared as First Prize Winner in the TPM Circle Competitions organized by CII at Aurangabad and Chennai.
Pantnagar Plant received Gold Award in the TPM Circle Competition organized by QCFI at Rudrapur. The plant was also declared as a Winner in the TPM Circle competition organized by CII at Chennai.
Ramkrishna Shekhaji Hivale, a workman from Central Heat Treatment (MCD) Waluj, has received the National ''''Vishwakarma Rashtriya Puraskar'''' Award from the Labour and Employment Ministry, Government of India, for the year 2014.
Two workmen from Waluj plant, viz. Ratankumar S Kamble from Final Assly-3Wh. and Vishwanath Savta Jadhav from Final Assly-MCD, have received the Prime Minister''''s ''''Shram Bhushan'''' and ''''Shram Shree'''' Awards respectively for the year 2015.
Subsidiaries and joint ventures
PT. Bajaj Auto Indonesia
Routine business operations of PT. Bajaj Auto Indonesia, a 99.25% subsidiary of Bajaj Auto, have currently stopped.
The Company has an agreement with KTM to establish and distribute the KTM branded bikes in Indonesia, the largest motorcycle market in South-East Asia.
KTM and Bajaj Auto have decided for BAL to manage KTM in the Indonesian market with the jointly developed range of products. Towards this, the joint product range has been introduced in Jakarta through a local distributor. Further plans to build brand network and supply chain are being developed.
During the year under review, a total of 1,598 units of KTM were sold in Indonesia.
It is intended that PT. Bajaj Auto Indonesia will hold the necessary regulatory approvals for the Assembly operations and Product homologation in Indonesia.
Bajaj Auto International Holdings BV, Netherlands (BAIH BV)
Bajaj Auto International Holdings BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd.
Over the years, through this subsidiary, Bajaj Auto has invested a total of € 198.1 million (RS, 1,219 crore), and holds approximately 48% stake in KTM AG of Austria (KTM). Calendar year 2016 has again been a good year for KTM, with highest sales in units and highest turnover in the history of the Company. Detailed information on the developments at the subsidiary and KTM AG is provided in the Management Discussion and Analysis Report.
Signing of anti-corruption initiative of World Economic Forum (WEF)
In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your Company is a signatory to the ''''Commitment to anti-corruption'''' and is supporting the ''''Partnering Against Corruption-Principles for Countering Bribery'''' derived from Transparency International''''s Business Principles. This calls for a commitment to two fundamental actions, viz.a zero-tolerance policy towards bribery and development of a practical and effective implementation programme.
Adoption of Confederation of Indian Industry (CII) Charters
The Company has adopted the CII Code of Conduct for Affirmative Action in the year 2006, effective from 1 December 2006.
In addition, during the year under review, CII had come out with a Model Code of Conduct for its member companies with basic principles of doing business ethically. Your Company, being a member of CII, has adopted the said Model Code of Conduct.
Further, with a view to showcasing industry''''s commitment to fair and ethical practices, CII had also presented two charters on Fair and Responsible Workplace Guidelines viz., Charters on Fair and Responsible Workplace Guidelines for Collaborative Employee Relations and Responsible Workplace Guidelines for Contract Labour to the members of CII. In support of the initiative taken by CII and with a view to striving towards reducing the disparity in treatment between regular and contractual work force, your Company has adopted the above two charters during the year under review.
Extract of annual return
The extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013, in the prescribed form MGT-9 is annexed to this Report.
Number of meetings of the Board
There were seven meetings of the Board held during the year. Detailed information is given in the Corporate Governance Report.
Directors'''' responsibility statement
As required under clause (c) of sub-section (3) of section 134 of the Companies Act, 2013, directors, to the best of their knowledge and belief, state that-
- in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;
- the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the company for that period;
- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the directors had prepared the annual accounts on a going concern basis;
- the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively; and
- the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
Details in respect of frauds reported by auditors under section 143(12)
During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under section 143(12) of the Companies Act, 2013.
Declaration by independent directors
The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in section 149 (6) of the said Act.
Directors'''' Remuneration Policy and criteria for matters under section 178
Information regarding Directors'''' Remuneration Policy and criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 are provided in the Corporate Governance Report.
Particulars of loans, guarantees or investments
Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are detailed in the Financial Statements.
Related party transactions
No Related Party Transactions (RPTs) were entered into by the Company during the financial year, which attracted the provisions of section 188 of the Companies Act, 2013. There being no ''''material'''' related party transactions as defined under regulation 23 of SEBI Listing Regulations, 2015, there are no details to be disclosed in Form AOC-2 in that regard.
During the year 2016-17, pursuant to section 177 of the Companies Act, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all RPTs were placed before the Audit Committee for its approval.
The Policy on RPTs as approved by the Board is uploaded on the Company''''s website www.bajajauto.com
Material changes and commitments
There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.
Risk Management Policy
Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk, which in the opinion of the Board may threaten the existence of the Company, is given in the Corporate Governance Report.
Corporate Social Responsibility (CSR)
Detailed information on the Corporate Social Responsibility Policy developed and implemented by the Company on CSR initiatives taken during the year pursuant to section 135 of the Companies Act, 2013 is given in the annexed Annual Report on CSR activities.
Formal annual evaluation of the performance of the Board, its Committees and Directors
Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is given in the Corporate Governance Report.
Presentation of financial statements
The financial statements of the Company for the year ended 31 March 2017 have been disclosed as per Division ll of Schedule III to the Companies Act, 2013.
Indian Accounting Standards, 2015
The financial statements up to year ended 31 March 2016 were prepared in accordance with the Accounting Standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.
The annexed financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
These financial statements are the first financial statements of the Company under Ind AS.
Detailed information on the impact of the transition from previous GAAP to Ind AS is provided in the annexed financial statements.
Consolidated financial statements
The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, and as prepared in compliance with the Companies Act, 2013, applicable Accounting Standards and SEBI Listing Regulations, 2015 as prescribed by SEBI.
A separate statement containing the salient features of its subsidiaries in the prescribed form AOC-1 is annexed separately.
Statutory disclosures
The summary of the key financials of the Company''''s subsidiaries (Form AOC-1) is included in this Annual Report. A copy of the audited financial statements for each of the subsidiary companies will be made available to the members of the Company seeking such information at any point of time.
The audited financial statements for each of the subsidiary companies will be kept for inspection by any member of the Company at its registered office during business hours. The same are placed on the Company''''s website www.bajajauto.com
Details as required under the provisions of section 197(12) of the Companies Act, 2013, read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this Report.
Details as required under the provisions of section 197(12) of the Companies Act, 2013, read with rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, which form part of the Directors'''' Report, will be made available to any shareholder on request, as per provisions of section 136(1) of the said Act.
A Cash Flow Statement for the year 2016-17 is attached to the Balance Sheet.
Pursuant to the legislation ''''The Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013'''', the Company has a Policy on Prevention of Sexual Harassment at Workplace. There was no case reported during the year under review under the said Policy.
Directors and Key Managerial Personnel-changes
The Board at its meeting held on 16 March 2016 appointed Pradeep Shrivastava, as an additional director and whole-time director with the designation of Executive Director for a period of five years commencing from 1 April 2016. The members at the Ninth annual general meeting have approved the appointment of Pradeep Shrivastava, as a whole-time director with the designation of Executive Director.
During the year under review, Madhur Bajaj, whole-time director and Vice Chairman of the Company informed the Board that due to certain commitments and other pre-occupations, he would be unable to continue as a whole-time director of the Company and that he be relieved of the responsibilities as a whole-time director of the Company with effect from 1 April 2017. He, however, informed that he would be willing to continue as a non-executive director and Vice Chairman of the Company and that his services will continue to be available to the Company on various matters as and when required.
The Board, at its meeting held on 15 March 2017, at the recommendation of the Nomination and Remuneration Committee, approved the change in status of Madhur Bajaj from that of Executive Vice Chairman to Non-Executive Vice Chairman with effect from 1 April 2017. The Board placed on record its appreciation of the long and conscientious service rendered by Madhur Bajaj as an Executive Vice Chairman of the Company.
Kantikumar R Podar, an independent director of the Company, after his long distinguished tenure on the Board of the Company (including erstwhile BAL) since 19 August 1983, due to his health condition, tendered his letter of resignation to take effect from 15 March 2017. The Board placed on record its sincere appreciation of the valuable services rendered by him during his long tenure. In his place, pursuant to section 149 and regulation 17 (1) (b) read with regulation 25 (6) of SEBI Listing Regulations, 2015, Dr. Naushad Forbes was appointed as an additional director in the category of non-executive, independent director of the Company, with effect from 18 May 2017, at the meeting of the Board held on 18 May 2017.
J N Godrej, an independent director of the Company, after his distinguished tenure of nearly two decades on the Board of the Company (including erstwhile Bajaj Auto), tendered his letter of resignation to take effect from 10 April 2017. The Board placed on record its sincere appreciation of the valuable services rendered by him during his long tenure. In his place, pursuant to section 149 and regulation 17 (1) (b) read with regulation 25 (6) of the SEBI Listing Regulations, 2015, Dr. Omkar Goswami was appointed as an additional director in the category of non-executive, independent director of the Company, with effect from 18 May 2017, at the meeting of the Board held on 18 May 2017.
In light of the provisions of the Companies Act, 2013, Madhur Bajaj and Shekhar Bajaj retire from the Board by rotation this year and being eligible, offer themselves for re-appointment. The information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations, 2015 in case of re-appointment of the directors is provided in the Notice of the ensuing annual general meeting.
There was no other change in the directors and KMP during the year under review.
Detailed information on the directors is provided in the Corporate Governance Report.
Significant and material orders passed by the regulators or courts
During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which may impact the going concern status of the Company and its operations in future.
Global Depository Receipts (GDRs)
During the year under review, the Company terminated its GDR programme w.e.f 1 February 2017. Detailed information about the same is given in the annexed General Shareholder Information.
Details of internal financial controls with reference to the financial statements
The Company has documented its internal financial controls considering the essential components of various critical processes, physical and operational. This includes its design, implementation and maintenance, along with periodical internal review of operational effectiveness and sustenance, which are commensurate with the nature of its business and the size and complexity of its operations.
This ensures orderly and efficient conduct of its business, including adherence to the Company''''s policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The internal financial controls with reference to the financial statements were adequate and operating effectively.
Corporate governance
Pursuant to SEBI Listing Regulations, 2015, a separate chapter titled ''''Corporate Governance'''' has been included in this Annual Report, along with the reports on Management Discussion and Analysis and General Shareholder Information.
All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2016-17. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report.
The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17 (8) of the SEBI Listing Regulations, 2015.
Certificate from the Auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report.
Business Responsibility Report
Regulation 34(2) of the SEBI Listing Regulations, 2015, as amended, inter alia, provides that the annual report of the top 500 listed entities based on market capitalization (calculated as on 31 March of every financial year), shall include a Business Responsibility Report.
Since Bajaj Auto Ltd. is one of the top 500 listed entities, the Company, as in the previous years, has presented its BR Report for the financial year 2016-17, which is part of this Annual Report.
As a green initiative, the BR Report has been hosted on the Company''''s website www.bajajauto.com
A physical copy of the BR Report will be made available to any shareholder on request.
Secretarial Standards of ICSI
Pursuant to the approval given on 10 April 2015 by the Central Government to the Secretarial Standards specified by the Institute of Company Secretaries of India, the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) came into effect from 1 July 2015. The Company is in compliance with the same.
Auditors
Statutory Auditor
The current auditors, viz. Dalal & Shah LLP, Chartered Accountants (Firm Registration No. 102021W/W100110) were last re-appointed by the members at their annual general meeting held on 17 July 2014 to hold the office of auditor from the conclusion of the Seventh annual general meeting till the conclusion of this Tenth annual general meeting.
As per the provisions of section 139 of the Companies Act, 2013, no listed company shall appoint an audit firm as auditors for more than two terms of five consecutive years. The Act also provided for an additional transition period of three years from the commencement of the Act i.e. 1 April 2014.
The current auditors had completed a period of seven years at the commencement of the said Act and hence on their completing the additional transition period of three years provided under the Act, the term of the current auditors expires at the conclusion of the ensuing annual general meeting.
The Board of Directors at its meeting held on 18 May 2017, based on the recommendation of the Audit Committee has recommended the appointment of S R B C & Co LLP, Chartered Accountants, (Firm Registration No. 324982E/E300003) as the statutory auditors of the Company for approval by the members.
S R B C & Co LLP, Chartered Accountants have consented to the said appointment and confirmed that their appointment, if made, would be within the limits specified under section 141(3) (g) of the Act and that they are not disqualified to be appointed as statutory auditors in terms of section 143 of the Act.
S R B C & Co LLP, Chartered Accountants will be appointed as the statutory auditors of the Company from the conclusion of the ensuing annual general meeting till the conclusion of the Fifteenth annual general meeting, subject to ratification of their appointment by the members at every intervening annual general meeting on a remuneration, out-of-pocket expenses etc., incurred in connection with the audit as may be decided by the Board in consultation with the auditors from year to year.
The members are therefore requested to appoint S R B C & Co LLP, Chartered Accountants, as statutory auditors of the Company for a term of five years from the conclusion of the ensuing annual general meeting till the conclusion of the Fifteenth annual general meeting, to be scheduled in 2022, subject to ratification at each annual general meeting and to fix their remuneration for the year 2017-18.
The statutory audit report does not contain any qualification, reservation or adverse remark or disclaimer made by statutory auditor.
Secretarial Auditor
Pursuant to the provisions of section 204 of the Companies Act, 2013 and Rules made there under, the Company has re-appointed, Shyamprasad D Limaye, Practising Company Secretary (Membership No.1587) to undertake the secretarial audit of the Company. Secretarial audit report for the year 2016-17 issued by him in the prescribed form MR-3 is annexed to this Report.
The said secretarial audit report does not contain any qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor.
On behalf of the Board of Directors,
Chairman
Pune: 18 May 2017
Dear Members,
The directors present their Eighth Annual Report and audited financial
statements for the year ended 31 March 2015.
Financial results
The financial results of the Company are elaborated in the Management
Discussion and Analysis Report.
The highlights of the Financial Results are as under:
Sales in numbers FY 2015 FY 2014
Motorcycles 3,292,084 3,422,403
Three-wheelers 519,117 447,674
Total 3,811,201 3,870,077
Of which exports 1,806,078 1,583,935
(Rs. In Crore)
Particulars FY 2015 FY 2014
Total revenue 22,194.43 20,855.92
Total expenses 17,769.35 16,223.87
Profit before exceptional items
and tax 4,425.08 4,632.05
Exceptional items 340.29 -
Profit before tax 4,084.79 4,632.05
Tax expense 1,271.05 1,390.10
Profit after tax 2,813.74 3,241.95
Profit for the year 2,813.74 3,243.32
Transfer to General reserve 282.00 325.00
Proposed dividend (inclusive of
dividend tax) 1,734.57 1,692.73
Provision of dividend tax for
previous year written back - (4.60)
Balance carried to Balance Sheet 797.17 1,230.19
Earnings per share (D) 97.2 112.1
Dividend
The directors recommend for consideration of the shareholders at the
ensuing annual general meeting, payment of a dividend of B 50 per
share, (500%) for the year ended 31 March 2015. The amount of dividend
and the tax thereon aggregate to B 1,734.57 crore.
Dividend paid for the year ended 31 March 2014 was also B 50 per share
(500%). The amount of dividend and the tax thereon aggregated to B
1,692.73 crore.
Share capital
The paid up equity share capital as on 31 March 2015 was B 289.37
crore.
There was no public issue, rights issue, bonus issue or preferential
issue etc. during the year.
The Company has not issued shares with differential voting rights,
sweat equity shares nor has it granted any stock options.
Operations
Detailed information on the operations of the Company are covered in
the Management Discussion and Analysis Report.
Capacity expansion and new projects
The Company''s current installed capacity is 6.06 million units per
annum. The Company plans to increase the installed capacity to around
6.12 million units per annum by March 2016.
As regards our quadricycle - RE 60, the product is ready for launch.
Detailed information on the same is provided in the Management
Discussion and Analysis Report.
Research and Development and technology absorption
A) Products
Many new products have been launched during the year under review.
Detailed information on the new products is covered in the Management
Discussion and Analysis Report.
B) Process
R&D has been working on improving its operations in a number of areas
as listed below:
- Manpower: R&D has been expanding its team size in areas of design,
analysis and validation in order to keep up with the rapidly expanding
aspirations of the Company.
- Facilities: R&D continued to enhance its design, computing,
proto-type manufacturing and validation facilities. Such enhancement
efforts have enabled R&D to develop durable and refined products. A
number of new test facilities and proto typing facilities were added.
C) Technology
- ABS on Pulsar RS 200 - As the best balance for cost and safety, the
vehicle has front wheel ABS that offers safe braking with good vehicle
stability. It also controls the rear wheel lift-up behavior, which is
associated with emergency front wheel braking. This augments and
supplements the race sports nature of the vehicle.
- EVAP systems for KTM offerings for USA and China markets - This
system conforms to the evaporative emission norms of US EPA. The
evaporative emission from fuel tank is controlled through use of
charcoal canisters to absorb the fuel vapours from escaping into the
atmosphere, and an electronically controlled purge valves to purge the
absorbed vapour back into the intake system of the engine.
D) Outgo
The expenditure on research and development during 2014-15 and in the
previous year was:-
(Rs. In Crore)
Particulars FY 2015 FY 2014
i. Capital (including technical know-how) 139.73 87.11
ii. Recurring 221.68 189.68
Total 361.41 276.79
iii. Total research and development expenditure
as a % of sales, net of excise duty 1.71 % 1.40 %
Conservation of energy
Company continues its efforts to reduce and optimise the energy
consumption at all manufacturing facilities, including corporate office
at Pune. Significant reduction in energy consumption has been achieved
as set out below:
A) Electrical Energy
- Installing and running variable speed NIRVAN screw air compressors
at compressor houses at Waluj.
- Use of air pressure boosters for high pressure application in paint
shops/robots at Waluj.
- Installation of chillers with scroll compressor in paint shop at
Waluj.
- Arresting compressed air leakages through audits and
countermeasures.
- Auto shut off-hydraulic, coolant, conveyor motors, fume extractors
in machine shop.
- Installing air handling unit for plant 2 engine assembly in place
of air conditioning system at Pantnagar.
- Use of transparent sheet in shops in place of shop lights at
Chakan.
- Use of LED/CFLs for street lighting/shop lightings/office.
- Use of day light pipes in paint shop at Chakan and Pantnagar.
- Installation of energy efficient pumps/motors, equipments, air
dryers, exhaust blowers, axial fans.
- Installation of breeze air unit in office/dyno room/PT sub assembly
area at Chakan.
- Separate AHU ducts for both vehicle assembly conveyors at
Pantnagar.
- Dynamometer cooling blower interlock with vehicle testing at
Chakan.
B) Water
- Elimination of water cooling for compressed air at Waluj.
- Reuse of treated water for process, installation of RO plant at
Waluj and Chakan.
- Replacement of water cooled dryers of compressor with air cooled
dryers at Chakan.
- Replace underground hydrant and raw water pipe line with above
ground level pipe line at Waluj and Chakan.
- Use of auto closed water taps for controlled consumption of water
at wash basin.
- Use of ETP/STP treated water for chemical dosing and cleaning
activity, gardening and toilet flushing at Pantnagar.
- Modification of water distribution line by gravity from main
storage tank to different shops at Pantnagar.
- Rain water harvesting at Waluj.
C) LPG/PNG
- Thermal imaging/audit for ovens in paint shop and countermeasure at
Waluj.
- Use of PNG instead of LPG at Chakan.
- Provision of air curtains at oven exit to reduce heat loss at
Waluj.
- Installation of low temperature chemical in tank cell at Chakan.
- Weight reduction of job fixtures in heat treatment at Waluj and
jigs at paint shop Pantnagar.
- Burner efficiency improvement through magnetic resonators at Waluj
and Chakan.
- Recovery of heat from waste paint incineration and use it for
chemical tank heating at Chakan.
- Use of natural gas started in canteen in place of LPG at Pantnagar.
D) Utilisation of renewable energy - key initiatives
- Installation of transparent roof sheets to maximise use of natural
light.
- Installation of light pipes.
- Use of solar electrical energy.
- Use of wind driven ventilators.
Impact of measures taken
As a result of the initiatives taken for conservation of energy and
natural resources, the Company has effected an overall reduction in
consumption as given in the Table below:
% Reduction w.r.t. previous year
Description FY 2015 FY 2014
Electricity consumption 3.95 1.19
Water consumption 7.37 24.24
LPG/propane consumption 11.70 14.85
Investment/savings
Rs. In Crore
Description FY 2015 FY 2014
Investment for energy conservation
activities 3.24 4.36
Recurring savings achieved through
above activities 3.57 2.74
Awards and Accolades
- Waluj plant has been recognised with ''Excellent Energy efficient
unit award'' for 2014 by CII.
- Waluj plant has won Gold Award (Apex level) in Indian Green
Manufacturing Challenge award competition instituted by International
Research Institute for Manufacturing, Chennai
International Business
Bajaj Auto continues to be India''s No.1 exporter of motorcycles and
three-wheelers. It exports to 62 countries and enjoys the No.1 or No.2
position in 20 of them. During FY2015, exports accounted for 46.2% of
the Company''s net sales. Detailed information on the International
Business is given in the Management Discussion and Analysis Report.
Foreign exchange earnings and outgo
The Company continued to be a net foreign exchange earner during the
year.
Total foreign exchange earned by the Company during the year under
review was B 9,443.51 crore, compared to B 7,963.86 crore during the
previous year.
Total foreign exchange outflow during the year under review was B
856.08 crore as against B 725.21 crore during the previous year.
Industrial relations
Industrial relations with staff and workmen across all the plants viz.
Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.
At Chakan, the wage review was due from 1 April 2013 as per the Wage
Settlement dated 21 May 2010. Accordingly, a Memorandum of
Understanding (MOU) was signed with the recognised union viz. Vishwa
Kalyan Kamgar Sanghatana, on 14 August 2014 giving total wage rise of B
10,000 per month in CTC (Cost To Company) per workman in a phased
manner for a period of three years from 1 April 2013 to 31 March 2016.
At Waluj, the Wage Settlement was due from 1 August 2014. Accordingly,
a fresh settlement was signed with Bajaj Auto Ltd. Employees'' Union on
21 August 2014 for a period of 3.1/2 years from 1 August 2014 to 31
January 2018 giving wage rise of B 9,755 per month in CTC (Cost To
Company) per workman. The new settlement is effective from the very
next day of expiry of the earlier settlement, which expired on 31 July
2014.
Two workmen from motorcycles division, Waluj received Prime Minister''s
''Shramveer'' and ''Shramshree'' Awards respectively for the year 2013. One
workman from spares operations department, Waluj received National
''Vishwakarma Rashtriya Puraskar'' from the Labour and Employment
Ministry, Government of India, for the year 2012. Similarly, three
workmen from Waluj received ''Gunwant Kamgar'' Awards for the year 2013
from Government of Maharashtra.
Subsidiaries and joint ventures
PT. Bajaj Auto Indonesia
In line with the corporate strategy of aligning with Kawasaki Heavy
Industries for business in Indonesia, the routine business operations
of PT. Bajaj Auto Indonesia were stopped. This year has seen
consolidation of business with Kawasaki and also a complete and smooth
closure of company operations in Indonesia.
Bajaj Auto International Holdings BV,
Netherlands (BAIH BV)
Bajaj Auto International Holdings BV is a 100% Netherlands based
subsidiary of Bajaj Auto Ltd.
Over the years, through this subsidiary, Bajaj Auto has invested a
total of ? 198.1 million (B 1,219 crore), and holds approximately 48%
stake in KTM AG of Austria (KTM), Europe''s second largest sport
motorcycle manufacturer. Calendar year 2014 has been a record year for
KTM, with highest sales in units and highest turnover in the history of
the Company. Detailed information on the developments at the subsidiary
and KTM AG is provided in the Management Discussion and Analysis
Report.
Signing of anti-corruption initiative of World Economic Forum (WEF)
In support of the initiative taken by WEF, with a view to strengthening
the efforts to counter bribery and corruption, your Company is a
signatory to the ''Commitment to anti-corruption'' and is supporting the
''Partnering Against Corruption - Principles for Countering Bribery''
derived from Transparency International''s Business Principles. This
calls for a commitment to two fundamental actions viz. a zero-tolerance
policy towards bribery and development of practical and effective
implementation programme.
Extract of annual return
The extract of annual return as provided under sub-section (3) of
section 92 of the Companies Act, 2013, in the prescribed Form MGT-9 is
annexed to this Report.
Number of meetings of the Board
There were 8 meetings of the Board held during the year. Detailed
information is given in the Corporate Governance Report.
Directors'' responsibility statement
As required under clause (c) of sub-section (3) of section 134 of
Companies Act, 2013, directors, to the best of their knowledge and
belief, state that-
- in the preparation of the annual accounts, the applicable
Accounting Standards had been followed alongwith proper explanation
relating to material departures;
- the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit and
loss of the Company for that period;
- the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of Companies Act, 2013 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities;
- the directors had prepared the annual accounts on a going concern
basis;
- the directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively; and
- the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Declaration by independent directors
The independent directors have submitted the declaration of
independence, as required pursuant to section 149 (7) of the Companies
Act, 2013 stating that they meet the criteria of independence as
provided in sub-section (6).
Directors'' Remuneration Policy and criteria for matters under section
178
Information regarding Directors'' Remuneration Policy and criteria for
determining qualifications, positive attributes, independence of a
director and other matters provided under sub-section (3) of section
178 are provided in the Corporate Governance Report.
Particulars of loans, guarantees or investments
Information regarding loans, guarantees and investments covered under
the provisions of section 186 of the Companies Act, 2013 are detailed
in the financial statements.
Related party transactions
There were no related party transactions (RPTs) entered into by the
Company during the financial year, which attracted the provisions of
section 188 of Companies Act, 2013. There being no ''material'' related
party transactions as defined under clause 49 of the Listing Agreement,
there are no details to be disclosed in Form AOC-2 in that regard.
During the year 2014-15, pursuant to section 177 of the Companies Act,
2013 and clause 49 of the Listing Agreement, all RPTs were placed
before Audit Committee for its prior/omnibus approval.
The policy on RPTs as approved by Board is uploaded on the Company''s
website www.bajajauto.com
Material changes and commitments
There have been no material changes and commitments, affecting the
financial position of the Company, which have occurred between the end
of the financial year of the Company and the date of this Report.
Risk Management Policy
Information on the development and implementation of a Risk Management
Policy for the Company including identification therein of elements of
risk which in the opinion of the Board may threaten the existence of
the Company is given in the Corporate Governance Report.
Corporate Social Responsibility
Detailed information report on Corporate Social Responsibility Policy
developed and implemented by the Company on CSR initiatives taken
during the year pursuant to section 135 of the Companies Act, 2013 is
given in the annexed Annual Report on CSR activities.
Formal annual evaluation of the performance of Board, its Committees
and Directors
Information on the manner in which formal annual evaluation has been
made by the Board of its own performance and that of its Committees and
individual directors is given in the Corporate Governance Report.
Presentation of financial results
The financial results of the Company for the year ended 31 March 2015
have been disclosed as per Schedule III to the Companies Act, 2013.
Consolidated financial statements
The directors also present the audited consolidated financial
statements incorporating the duly audited financial statements of the
subsidiaries and as prepared in compliance with the Accounting
Standards and Listing Agreement as prescribed by SEBI.
A separate statement containing the salient features of its
subsidiaries in the prescribed form (AOC-1) is annexed separately.
Statutory disclosures
The summary of the key financials of the Company''s subsidiaries (Form
AOC-1) is included in this Annual Report. A copy of audited financial
statements for each of the subsidiary companies will be made available
to the members of the Company, seeking such information at any point of
time.
The audited financial statements for each of the subsidiary companies
will be kept for inspection by any member of the Company at its
registered office during business hours. The same are placed on the
Company''s website www.bajajauto.com
As required under the provisions of section 197 (12) of the Companies
Act, 2013 read with rule 5 of Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, the prescribed particulars are
set out in an annexure to the Directors'' Report. As per provisions of
section 136 (1) of the said Act, these particulars will be made
available to any shareholder on request.
Certificate from auditors of the Company regarding compliance of
conditions of corporate governance is annexed to this Report.
A cash flow statement for the year 2014-15 is attached to the Balance
Sheet.
During the year under review, pursuant to the legislation ''Prevention,
Prohibition and Redressal of Sexual Harassment of Women at Workplace
Act, 2013'' introduced by the Government of India, which came into
effect from 9 December 2013, the Company has framed a Policy on
Prevention of Sexual Harassment at Workplace. There was no case
reported during the year under review under the said Policy.
Directors and Key Managerial Personnel-changes
Ms. Suman Kirloskar, an independent director of the Company, after her
distinguished tenure on the Board since October 2002, tendered her
resignation to take effect from close of office hours on 31 March 2015.
In her place, pursuant to section 149 (1) and clause 49 of Listing
Agreement,
Dr. Gita Piramal was appointed as an additional director in the
category of non-executive, independent director of the Company, with
effect from 1 April 2015 in the meeting of the Board held on 24 March
2015.
In light of the provisions of the Companies Act, 2013, Shekhar Bajaj as
well as Niraj Bajaj retire from the Board by rotation this year and
being eligible, offer themselves for re-appointment.
The information as required to be disclosed under clause 49 of the
Listing Agreement in case of re-appointment of the directors is
provided in the Notice of the ensuing annual general meeting.
There was no change in the Managing Director, CFO and Company
Secretary, collectively the key managerial personnel, during the year
under review.
Detailed information on the directors is provided in the Corporate
Governance Report.
Significant and material orders passed by the regulators or courts
During the year under review, there were no significant and material
orders passed by the regulators or courts or tribunals, which may
impact the going concern status of the Company and its operations in
future.
Adequacy of internal financial controls
Internal financial controls with reference to the financial statements
were adequate and operating effectively.
Corporate governance
Pursuant to clause 49 of the Listing Agreement with stock exchanges, a
separate section titled ''Corporate Governance'' has been included in
this Annual Report, alongwith the reports on Management Discussion and
Analysis and General Shareholder Information.
All Board members and Senior Management personnel have affirmed
compliance with the Code of Conduct for the year 2014-15. A declaration
to this effect signed by the Managing Director/CEO of the Company is
contained in this Annual Report.
The Managing Director and CFO have certified to the Board with regard
to the financial statements and other matters as required in clause 49
of the Listing Agreement and the said certificate is contained in this
Annual Report.
Certificate from auditors of the Company regarding compliance of
conditions of corporate governance is annexed to this Report.
Business responsibility report
Securities and Exchange Board of India (SEBI), vide its circular dated
13 August 2012, has mandated inclusion of business responsibility
reports (BRR) as part of the annual reports for the top 100 listed
entities by market capitalisation. Since Bajaj Auto Ltd. is one of the
top 100 listed entities, the Company, as in the previous years, has
presented its BR Report for the financial year 2014-15, which is part
of this Annual Report. As a green initiative, the BR Report has been
hosted on the Company''s website www.bajajauto.com
A physical copy of the BR Report will be made available to any
shareholder on request.
Auditors
Statutory auditor
Pursuant to the provisions of section 139 of the Companies Act, 2013
and the Rules made thereunder, the current auditors of the Company,
Dalal & Shah, Chartered Accountants (registration number: 102021W) were
appointed by the shareholders at the 7th annual general meeting to hold
office until the conclusion of the 10th annual general meeting, subject
to ratification by shareholders at each annual general meeting.
The members are requested to ratify the appointment of Dalal & Shah,
Chartered Accountants, (registration number: 102021W) as statutory
auditors of the Company and to fix their remuneration for the year
2015-16.
The statutory audit report does not contain any qualification,
reservation or adverse remark or disclaimer made by statutory auditor.
Secretarial auditor
Pursuant to the provisions of section 204 of the Companies Act, 2013
and Rules made thereunder, the Company has appointed, Shyamprasad D
Limaye, (Membership No. 1587) Company Secretaries in Practice to
undertake the secretarial audit of the Company. Secretarial Audit
Report for the year 2014-15 given by Shyamprasad D Limaye in the
prescribed form MR-3 is annexed to this Report. The Secretarial Audit
Report for the year under review does not contain any qualification,
reservation or adverse remark or disclaimer made by the secretarial
auditor.
Cost audit/auditor
Pursuant to the provisions of section 148 of the Companies Act, 2013
and Companies (Cost Records and Audit) Rules, 2014, the products
manufactured/services rendered by the Company were not covered for
maintenance of cost records and therefore, the Company discontinued the
cost audit and consequently, the Company has not appointed cost auditor
for the financial year 2014-15.
On behalf of the Board of Directors,
Rahul Bajaj
Chairman
Pune: 21 May 2015
The directors present their Seventh Annual Report and audited Statement
of accounts for the year ended 31 March 2014. Since this Report
pertains to financial year that commenced prior to 1 April 2014, the
contents therein are governed by the relevant
provisions/schedules/rules of the Companies Act, 1956, in compliance
with general circular No. 08/2014 dated 4 April 2014 issued by the
Ministry of Corporate Affairs.
The highlights are as under:
Units in Numbers FY2014 FY2013
Two-wheelers 3,422,403 3,757,105
Three-wheelers 447,674 480,057
Total 3,870,077 4,237,162
Of which Exports 1,583,935 1,547,157
Financials
(Rs.In Crore)
Particulars FY2014 FY2013
Total revenue 20,855.92 20,792.74
Gross profit before finance costs,
depreciation and amortisation 4,812.15 4,433.54
Finance costs 0.49 0.54
Depreciation and amortisation 179.61 166.77
Profit before tax 4,632.05 4,266.23
Tax expense 1,390.10 1,222.66
Profit after tax 3,241.95 3,043.57
Tax credits pertaining to earlier year 1.37 -
Profit for the year 3,243.32 3,043.57
Add: Balance brought forward from
previous year 4,920.26 3,705.14
Profit available for appropriation 8,163.58 6,748.71
Transfer to General reserve 325.00 305.00
Proposed dividend (inclusive of
dividend tax) 1,692.73 1,523.45
Provision of dividend tax for previous
year written back - 4.60
Balance carried to Balance Sheet 6,150.45 4,920.26
Earnings per share (Rs.) 112.1 105.2
Dividend
The directors recommend for consideration of the shareholders at the
ensuing annual general meeting, payment of a dividend of Rs. 50 per
share, (500 per cent) for the year ended 31 March 2014. The amount of
dividend and the tax thereon aggregate to Rs. 1,692.73 crore.
Dividend paid for the year ended 31 March 2013 was Rs.45 per share (450
per cent). The amount of dividend and the tax thereon aggregated to Rs.
1,523.45 crore.
Operations
The operations of the Company are elaborated in the annexed Management
Discussion and Analysis Report.
Capacity expansion and new projects
The Company''s current installed capacity is 5.76 million units per
annum. The Company plans to increase the installed capacity to around 6
million units per annum by March 2015.
The 4 Wheeler project is going on as per plan and is being implemented
at Waluj. Commercial production of the four-wheeler RE 60 is slated
for the second half of the current year.
Research and Development and technology absorption
A) Products Pulsar 200 NS
After the successful launch of Pulsar 200 NS in May 2012, this model
has been well received in markets like Colombia. During the year under
review, it was launched in Indonesia under the joint brand of Kawasaki
Bajaj. The bike has been well received. New colour and graphics have
been introduced on the 200 NS to make it even more exciting.
Discover 125 M
The Discover 125 M is the quintessential 125. Built on the compact M
platform, it is a great blend of performance and affordability. This
engine develops class leading performance of 11.5 Ps power and 1.12
Kg-m of torque, for a powerful drive, while maintaining the high fuel
efficiency for which Discover brand is known for. The vehicle has a
four-speed gear box suitably mated to the power characteristics of the
engine. The agile handling chassis and suspension make this an ideal
city bike.
Discover 100 M
The Discover 100 M is the new entry level Discover. It exemplifies the
core values of high performance blended with great fuel economy. This
product has been designed to complement the styling aspects of the ST
and T series, which have created good appeal for the customers. The
vehicle is powered by a high performance four-valve air cooled 100 cc
DTSi engine, delivering 9.5 Ps and Torque of 0.92 Kg-m, with a
four-speed gear box suitably mated to the power characteristics of the
engine. It has the best in class fuel efficiency. The careful
engineering of the product has resulted in very attractive price to the
customer.
KTM Duke 390 with ABS
This joint venture between KTM and Bajaj saw yet another successful
launch in the form of Duke 390. With the trademark Orange frame and
alloy wheels typical to KTM, the bike lives upto the ''Ready to Race''
tag of KTM brand exceptionally well.
RE
All variants of our RE range of three-wheeler products comprising
small, medium and large platforms and covering gasoline, gaseous and
diesel engines have been put through a complete upgrade. These products
have been updated with much better driver comfort through revised
ergonomics, smart looks, improved engine performance and revised gear
ratios leading to excellent drivability and upto 15% improvement in
fuel economy.
DTSi technology has also been employed in the spark ignited engine
versions, while five-speed gear box has been deployed in the diesel
engine versions.
B) Process
R&D has been working on improving its operations in a number of areas
as listed below.
Manpower: R&D has been expanding its team size in areas of design,
analysis and validation in order to keep up with the rapidly expanding
aspirations of the Company. In the year under review, we have expanded
our manpower by about 6%.
Facilities: R&D continued to enhance its design, computing, prototype
manufacturing and validation facilities. Such enhancement efforts have
enabled R&D to develop durable and refined products. A number of new
test facilities were put in to validate the durability and performance
of the forthcoming two and four wheelers. The prototyping facilities
were also augmented to enable building of the prototypes of these
vehicles.
C) Technology
1) Anti Lock Braking system was introduced on KTM Duke 390. Through
this model, the domestic and export markets got the chance to
experience the confidence and safety of ABS, while applying the brakes
on this high performance bike. Customers and media alike were impressed
by this feature and its performance.
2) Technologies like Fuel Injection, five speed gear box, Multi valves,
DTSi and light weighting have been employed on the RE60 to achieve
excellent fuel economy, while at the same time provide great
drivability and comfort to the driver and passengers. The product meets
among other things the 400 kg weight limit prescribed in the European
regulations for such category.
D) Outgo
The expenditure on research and development during 2013-14 and in the
previous year was:
(Rs.In Crore)
Particulars FY2014 FY2013
i. Capital (including technical
know-how) 87.11 109.19
ii. Recurring 189.68 129.40
Total 276.79 238.59
iii. Total research and development
expenditure as a
percentage of sales, net of excise duty 1.40 % 1.22%
Conservation of energy
Company has always been a forerunner in conservation of energy and
natural resources. Some of the important steps taken during the year
under review are listed below:-
A) Electrical energy
- Installing and running variable speed NIRVAN screw air compressors at
compressor houses.
- Use of air pressure boosters for high pressure application in paint
shops/robots.
- Installation of energy efficient pumps/motors, equipments, air
dryers, exhaust blowers, axial fans.
- Installation of chillers with scroll compressor in paint shop.
- Use of heat pump for water heating for washing machine.
- Arresting compressed air leakages through audits and countermeasures.
- Installation of soft start valve for machine to prevent air leakages.
- Reduction in frequency of ASU and exhaust blowers of paint shop
during break hours.
- Use of transparent sheet in shops in place of shop lights (total 810
nos.).
- Separate AHU ducts for both V/A conveyors.
- Use of LED/CFLs for street lighting/shop lightings/office.
- Auto Shut Off - hydraulic, coolant, conveyor motors, fume extractors
in motorcycle shop.
B) Water
- Elimination of water cooling for compressed air.
- Reuse of treated water for process, installation of RO plant.
Replacement of water cooled dryers of compressor with air cooled
dryers.
- Replace rusty underground hydrant and raw water pipe line with above
ground level pipe line to arrest water leakage.
- Use of auto closed water taps for controlled consumption of water at
wash basin.
- Usage of bio-cake for urinals and/or waterless urinals.
- Modification of water distribution line by gravity from main storage
tank to different shops at Pantnagar.
- Rain water harvesting.
C) LPG/Propane
- Thermal imaging/audit for ovens in paint shop and countermeasure for
heat loss areas identification.
- Installation and commissioning of PNG gas supply at Chakan and
Pantnagar.
- Optimising start up time of top coat ovens.
- Provision of air curtains at oven exit to reduce heat loss.
- Installation of low temperature chemical in tank cell.
D) Utilisation of renewable energy - key initiatives
- Installation of natural light transparent roof sheets.
- Installation of light pipes.
- Use of solar electrical energy.
Impact of measures taken
As a result of the initiatives taken for conservation of energy and
natural resources, the Company has effected an overall reduction in
consumption as given in the Table below:
% Reduction w.r.to previous year
Description FY2014 FY2013
Electricity consumption 1.19 1.85
Water consumption 24.24 20.97
LPG/propane consumption 14.85 7.49
Investment/savings
Rs.In Crore
Description FY2014 FY2013
Investment for energy conservation
activities 4.36 3.67
Recurring savings achieved through above
activities 2.74 2.30
This chapter may be read with the Business Responsibility Report (BRR),
which is part of the Annual Report.
International business
Bajaj Auto continues to outperform competition in terms of two and
three-wheeler exports in spite of the grim world economic scenario. We
have maintained our leadership position in exports and have dominated
the Indian two and three-wheeler export scenario. Bajaj has exported a
total of 1,583,935 two and three-wheelers, highlighting the stellar
lead the Company has established against competition.
More details of International Business are set out in the annexed
Management Discussion and Analysis Report.
Foreign exchange earnings and outgo
The Company continued to be a net foreign exchange earner during the
year.
Total foreign exchange earned by the Company during the year under
review was Rs. 7,963.86 crore, compared to Rs. 6,565.34 crore during the
previous year.
Total foreign exchange outflow during the year under review was Rs.725.21
crore as against Rs. 1,083.16 crore during the previous year.
The above outflow excludes an investment of Rs. 67.75 crore (previous
year: Rs. Nil) made in its subsidiary, PT. Bajaj Auto Indonesia (PT BAI)
for increasing its stake from 98.94%.to 99.25%.
Industrial relations
Industrial relations with staff and workmen at the plants at Akurdi,
Waluj and Pantnagar continued to be cordial. This includes the
relations with staff at the plant at Chakan.
At Chakan, the workmen represented by the recognised union Vishwa
Kalyan Kamgar Sanghatana, went on strike from 25 June 2013 to 13 August
2013 for the reason that Management refused to accede to their demand
of allotment of 500 shares to each workman at a discounted rate of Rs. 1
per share. The union withdrew the strike unconditionally on realising
Management''s firm decision and workers resumed work with effect from 14
August 2013.
At Chakan, wage review was due effective from 1 April 2013. Management
offered Rs. 10,000 per month in a phased manner, depending upon the year
of service etc., for three years. However, this issue is under
litigation.
At Akurdi, as per the provisions of the wage settlement dated 20 August
2010, wage review was due and accordingly Memorandum of Understanding
(MOU) was signed on 10 February 2014 giving wage rise of Rs. 10,000 per
month per workman in a phased manner.
At Waluj, Bajaj Auto Ltd. Employees'' Union, representing majority of
the workmen, has submitted a Charter of Demands for the forthcoming
wage settlement, which is due from 1 August 2014.
Subsidiaries
PT. Bajaj Auto Indonesia (PT BAI)
The Company has a Memorandum of Understanding with Kawasaki Heavy
Industries (KHI) for jointly distributing its products in many of the
ASEAN countries. This was a result of a successful strategy followed by
the Company in launching its products in Philippines. Enthused by the
commendable success of this strategy, the Company has extended this
strategy in Indonesia as well. Consequently, the operations at PT BAI
have been scaled down significantly.
During the year under review, the Company through KHI sold 13,570 nos.
of Pulsars during the seven-month period commencing from August 2013.
Bajaj Auto International Holdings BV, Netherlands (BAIH BV)
Bajaj Auto International Holdings BV is a 100% Netherlands based
subsidiary of Bajaj Auto Ltd. Through this subsidiary, Bajaj Auto,
over the years, has invested a total of ?198.1 million and holds about
48% stake in KTM AG of Austria (KTM), Europe''s second largest sport
motorcycle manufacturer.
Calendar year 2013 has been a record year for KTM, with highest sales
in units and highest turnover in the history of the Company. KTM sold
123,859 motorcycles, a growth of 15.6% and achieved a turnover of
?716.4 million, a growth of 17.1%. Profit after tax was at ?36.5
million, a growth of 44.3%.
Proportionate profit of ?17.5 million has been accounted in the
consolidated results of Bajaj Auto Ltd.
During the year, Bajaj Auto manufactured 36,047 units of KTM Duke in
its Chakan plant. 11,050 units were sold through the pro-biking
network in India and 24,016 units were exported to various countries
across the globe.
In the annual general meeting held on 24 April 2014, for the year 2013,
KTM AG has declared a dividend of ?1.00 per share (for the year 2012,
dividend declared was ?0.70 per share). BAIH BV is entitled to receive
?5.2 million, being its share of dividend.
KTM is listed in the Second Regulated Market of the Vienna Stock
Exchange and its market capitalisation as on 31 March 2014 was ?818
million.
Signing of anti-corruption Initiative of World Economic Forum (WEF)
In support of the initiative taken by WEF, with a view to strengthening
the efforts to counter bribery and corruption, your Company is a
signatory to the "Commitment to anti-corruption" and is supporting the
"Partnering Against Corruption - Principles for Countering Bribery"
derived from Transparency International''s Business Principles. This
calls for a commitment to two fundamental actions viz. a zero-tolerance
policy towards bribery and development of practical and effective
implementation program.
Corporate Social Responsibility
The Companies Act, 2013 notified section 135 of the Act concerning
Corporate Social Responsibility alongwith the Rules thereunder and
revised Schedule VII to the Act on 27 February 2014 to come into effect
from 1 April 2014.
The Company being covered under the provisions of the said section, has
taken necessary initial steps in this regard. A Committee of the
directors, titled ''Corporate Social Responsibility Committee'', has been
formed by the Board in its meeting held on 28 March 2014, consisting of
the following Directors -
1. Rahul Bajaj, Chairman
2. Rajiv Bajaj
3. Nanoo Pamnani
The Committee has in place a CSR policy.
The said section being enacted with effect from 1 April 2014, necessary
details as prescribed under the said section shall be presented to the
members in the Annual Report for the year 2014-15.
Even when the said provisions were not mandated by the Ministry of
Corporate Affairs, the Bajaj Group continued its Corporate Social
Responsibility (CSR) initiatives in various fields, during the year
2013-14. Activities in this area are set out in detail in the annexed
CSR Report.
Directors
In view of the provisions of the Companies Act, 2013, Madhur Bajaj and
Sanjiv Bajaj have now become retiring directors. Thus they retire from
the Board by rotation this year and being eligible, offer themselves
for re-appointment. The information as required to be disclosed under
clause 49 of the listing agreement in case of re-appointment of
directors is provided in the Notice of the ensuing annual general
meeting.
Pursuant to section 149(4) of the Companies Act, 2013, every listed
company is required to appoint at least one third of its directors as
independent directors. The Board already has one half of its directors
in the category of independent directors in terms of the provisions of
clause 49 of the listing agreement. The Board therefore, in its meeting
held on 28 March 2014 appointed the existing independent directors
under clause 49 as ''independent directors'' pursuant to Companies Act,
2013, subject to approval of shareholders.
As required under the said Act and the Rules made there under, the same
is now put up for approval of members at the ensuing annual general
meeting. Necessary details have been annexed to the Notice of the
meeting in terms of section 102(1) of the Companies Act, 2013.
The independent directors have submitted the declaration of
independence, as required pursuant to section 149(7) of the Companies
Act, 2013 stating that they meet the criteria of independence as
provided in sub-section(6).
With the appointment of independent directors, the conditions specified
in the Act and the Rules made there under as also under new clause 49 of
the listing agreement stand complied.
Directors'' responsibility statement
As required by sub-section (2AA) of section 217 of the Companies Act,
1956, directors state:
- that in the preparation of annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures.
- that the directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit of
the Company for that period.
- that the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
- that the annual accounts have been prepared on a going concern basis.
Presentation of financial results
The financial results of the Company for the year ended 31 March 2014
as in the previous year have been disclosed as per the revised Schedule
VI to the Companies Act, 1956, pursuant to notification dated 28
February 2011 and General Circular No. 8/2014 dated 4 April 2014 issued
by the Ministry of Corporate Affairs.
Consolidated financial statements
The directors also present the audited consolidated financial
statements incorporating the duly audited financial statements of the
subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto
International Holdings BV, Netherlands as prepared in compliance with
the accounting standards and listing agreement as prescribed by SEBI.
Information in aggregate for each subsidiary company is disclosed
separately in the consolidated Balance Sheet.
Statutory disclosures
Ministry of Corporate Affairs (MCA) vide circular No. 51/12/2007-CL-III
dated 8 February 2011 has given general exemption with regard to
attaching of the Balance Sheet, Profit and Loss Account and other
documents of its subsidiary companies subject to fulfilment of
conditions mentioned therein. The Company has fulfilled all the
necessary conditions in this regard. Hence, the Company is not
attaching the Balance Sheet, Statement of Profit and Loss and other
documents of the subsidiary companies. The summary of the key
financials of the Company''s subsidiaries is included in this Annual
Report.
The annual accounts of the subsidiary companies and the related
detailed information will be made available to the members of the
Company and its subsidiary companies, seeking such information at any
point of time. The annual accounts of the subsidiary companies will be
kept for inspection by any member of the Company at its registered
office and also at the registered office of the concerned subsidiary
company.
As required under the provisions of sub-section (2A) of section 217 of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended, particulars of the employees are set
out in an annexure to the Directors'' Report. As per provisions of
section 219 (1) (b) (iv) of the said Act, these particulars will be
made available to any shareholder on request.
Particulars regarding technology absorption, conservation of energy and
foreign exchange earnings and outgo required under section 217(1)(e) of
the Companies Act, 1956 and Companies (Disclosure of Particulars in the
report of Board of Directors) Rules, 1988 have been given in preceding
paragraphs.
Directors'' responsibility statement as required by section 217(2AA) of
the Companies Act, 1956 appears in a preceding paragraph.
Certificate from auditors of the Company regarding compliance of
conditions of corporate governance is annexed to this Report as
Annexure 1.
A cash flow statement for the year 2013-14 is attached to the Balance
Sheet.
During the year under review, pursuant to the new legislation
"Prevention, Prohibition and Redressal of Sexual Harassment of Women at
Workplace Act, 2013" introduced by the Government of India, which came
into effect from 9 December 2013, the Company has framed a Policy on
Prevention of Sexual Harassment at Workplace. There were no cases
reported during the year under review under the said Policy.
Corporate governance
Pursuant to clause 49 of the listing agreement with stock exchanges, a
separate section titled ''Corporate Governance'' has been included in
this Annual Report, along with the reports on Management Discussion and
Analysis and General Shareholder Information.
SEBI vide its circular No. CIR/CFD/POLICY CELL/2/2014 dated 17 April
2014 has notified the revised clause 49 of the listing agreement to be
applicable with effect from 1 October 2014. This Report therefore
stands complied against the previous clause 49 of the listing
agreement.
All board members and senior management personnel have affirmed
compliance with the code of conduct for the year 2013-14. A declaration
to this effect signed by the Chief Executive Officer (CEO) of the
Company is contained in this Annual Report.
The CEO and Chief Financial Officer (CFO) have certified to the Board
with regard to the financial statements and other matters as specified
in clause 49 of the listing agreement and the said certificate is
contained in this Annual Report.
Business Responsibility Report
Securities and Exchange Board of India (SEBI), vide its circular dated
13 August 2012, has mandated inclusion of Business Responsibility
Report (BRR) as part of the annual reports for listed entities. To
begin with, SEBI has made it mandatory for top 100 listed entities
based on market capitalisation at BSE and NSE as on 31 March 2012 to
include BR Reports as part of their annual reports from the financial
year ending on or after 31 December 2012. Since Bajaj Auto Ltd. is one
of the top 100 listed entities, the Company, as in the previous year,
has presented its BR Report for the financial year 2013-14, which is
part of this Annual Report. As a green initiative, the BR Report has
been hosted on the Company website www.bajajauto.com A physical copy of
the BR Report will be made available to any shareholder on request.
Secretarial Standards of ICSI
During the year under review, Secretarial Standards specified by the
Institute of Company Secretaries of India (ICSI) from time to time were
recommendatory in nature. Your Company, however, complied with the
same.
Auditors'' report
The observations made in the Auditors'' Report, read together with the
relevant notes thereon are self-explanatory and hence, do not call for
any comments under section 217 of the Companies Act, 1956.
Auditors
Pursuant to the provisions of section 139 of the Companies Act, 2013
and the Rules made there under, the current auditors of the Company,
Dalal & Shah, Chartered Accountants are eligible to hold the office for
a period of three years, upto 2017.
The members are requested to appoint Dalal & Shah, Chartered
Accountants, as auditors for three years from the conclusion of the
ensuing annual general meeting till the conclusion of the 10th annual
general meeting in 2017 and to fix their remuneration for the year
2014-15.
Cost Auditors
A P Raman was appointed as Cost Auditor to conduct audit of cost
accounts maintained by the Company for the financial year 2013-14. The
full particulars of the Cost Auditor and cost audit conducted by him
for the financial year 2012-13 are furnished below:-
ICWA Membership No. 837
Registration No. of Firm 110141
Address Golok, Plot No.13, Sector No.28
Pradhikaran, Nigdi, Pune - 411 044
Details of Cost Audit Report for
the financial year 2012-13:
(a) Due date of filing 30 September 2013
(b) Actual date of filing 27 September 2013
On behalf of the Board of Directors,
Rahul Bajaj
Chairman
15 May 2014