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Services > Company Profile > Director's Reports
Bajaj Auto Ltd Automobiles - Scooters And 3 - Wheelers
BSE Code
532977
ISIN Demat
INE917I01010
Book Value
660.1946905
NSE Symbol
BAJAJ-AUTO
Div & Yield %
2.15
Market Cap (Rs Cr.)
80674.08
P/E
18.94
EPS
147.2
Face Value
10

The Directors present their Eleventh Annual report and Audited Financial Statements for the year ended 31 March 2018.

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 FY2018 FY2017
Motorcycles 3,369,334 3,219,932
Commercial vehicles 637,457 446,018
Total 4,006,791 3,665,950
Of which Exports 1,662,577 1,411,333
(Rs. In Crore )
Particulars FY2018 FY2017
Total revenue 26,910.51 24,310.00
Total expenses 21,095.94 18,974.37
Profit before exceptional items and tax 5,814.57 5,335.63
Exceptional items 32.00
Profit before tax 5,782.57 5,335.63
Tax expense 1,714.47 1,508.07
Profit for the year 4,068.10 3,827.56
Earnings per share (H) 140.6 132.3

Closing balances in reserve/other equity

(Rs. In Crore )
Particulars FY2018 FY2017
General reserve 4,453.60 4,046.60
Retained earnings 14,321.65 12,562.56
Cash flow hedging reserve 79.72 200.27
Costs of hedging reserve (40.48) (64.67)
Total 18,814.49 16,744.76

D) Outgo

The expenditure on research and development during 2017-18 and in the previous year was:

Conservation of energy

Company continues its efforts to reduce and optimise the energy consumption at all its manufacturing facilities, including corporate office at Pune.

Significant reduction in energy consumption has been achieved by:

A) Electrical energy

• Use of energy efficient LED lighting for street lights, shops and offices.

• Provision of energy efficient pumps for ETP/STP pumps, water supply and fire systems.

• Replacing conventional AHU units with energy efficient AHU units.

• Optimising compressed air pressure by use of portable small compressors on holidays.

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

• Use of Mid Frequency DC Welding Machine in place of AC Welding Machine for Seam Welding Process.

• Use of active filters for harmonic suppression to reduce energy loss.

• Reduction in energy consumption by providing inverter drives with pressure transmitter for hydraulic and coolant systems.

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

• Optimisation of processes and operational control.

B) Water

• Installation of second stage RO (Reverse Osmosis) at paint shop.

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

• Rain water harvesting with Ground Recharge.

• Replacement of underground hydrant and water pipeline with above ground level pipeline to arrest water leakages.

• Use of one touch water taps in canteen and wash rooms.

C) LPG/propane

• Weight reduction of hangers in paint shop to reduce heat losses.

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

• Burner efficiency improvement through efficient burners.

• Recovering heat from the process and using for other process.

• Upgradation of furnace insulation to reduce heat losses.

• Providing teflon coated grills, which are easily washable by high-pressure water jet.

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

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

D) Utilisation of renewable energy-key initiatives

• Use of solar energy through Roof Top Solar Power System. Akurdi Total Capacity – 1220 KWp Chakan Total Capacity – 2000 KWp

• 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 table below:

Awards and Accolades

Sr. No. Details
1 BAL Waluj Plant clinched National Energy Management Trophy 2017 for 'Excellent Energy Efficient Unit' by Confederation of Indian Industry.
2 BAL Chakan and Pantnagar plants received ISO 14001 Certification for upgraded standard ISO 14001:2015 from ISO 14001:2008.

International Business

Bajaj Auto's 14% growth in motorcycles and 39% in commercial vehicles means that it remains by far, India's No.1 exporter of two and three wheelers. It exports to over 70 countries, including Latin America, Africa, South Asia, Middle East, Asia Pacific and Europe. During the year under review, exports accounted for 39.3% of the Company's net sales as against 36.9% in FY2017. 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 H 9,281.46 crore, as compared to H 7,336.49 crore during the previous year.

Total foreign exchange outflow during the year under review was H 673.41 crore, as against H 697.92 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, wage settlement has been signed at Waluj Plant on 23 February 2018 for a period of three and half years from 1 February 2018 to 31 July 2021, on expiry of earlier settlement on 31 January 2018.

Similarly, the wage review process for the period from 1 April 2016 to 31 March 2019 has also been completed for Akurdi and Chakan plants by signing MoUs with the Union on 23 February 2018.

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

Chakan Plant received the Gold Award in Safety Improvements and Safety Skit Competition and Bronze Award in Safety Poster Competition organised by QCFI – Pune Chapter. Chakan Team also won the Certificate of Merit for its efforts in energy conservation in automobile in the National Energy Conservation Award competition organised by the Ministry of Power, Government of India.

The teams from Chakan Plant also received first and second prizes for Kaizen for improving productivity in Crank Case cell by 'MUDA' elimination and Kaizen for colour change loss time reduction at the ninth and tenth CII TPM Competitions organised at Delhi and Chennai respectively.

Pantnagar Plant received Gold, Silver and Excellence Awards in the TPM Circle Competition organised by QCFI at Rudrapur and Mysore. The Plant team also got first prize for Office TPM pillar presentation competition organised by CII at Chennai.

One workman from Engine Assembly (Commercial Vehicle) Waluj has received 'Kamgar Bhushan Puraskar' and two workmen from Final Assembly (Commercial Vehicle) have been awarded 'Gunwant Kamgar Puraskar' from Maharashtra Kamgar Kalyan Mandal, Mumbai.

Six workmen from Waluj Plant have received Prime Minister's ‘Shram Bhushan','Shram Vir' and ‘Shram Shree' Awards at the hands of Vice President of India in New Delhi on 26 February 2018 for the years 2012, 2013 and 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.

During the year under review, in order to bring the capital of PT. Bajaj Auto Indonesia in line with its true net worth, PT. Bajaj Auto Indonesia with concurrence of Bajaj Auto Ltd. undertook the reduction of its share capital by writing down the par value of share from USD 100 per equity share to USD 3 per equity share.

Consequently, the total paid-up share capital of PT. Bajaj Auto Indonesia got reduced from $ 41,500,000 to $1,245,000, without actual repatriation of funds from Indonesia.

Necessary approvals from the regulators in Indonesia and from Reserve Bank of India have been received.

The plan for PT. Bajaj Auto Indonesia is to spearhead the development of KTM and Bajaj partnership and bring the jointly developed products into Indonesia. To take this further, all the required manufacturing, import and business licences have been renewed. Further, studies on the product acceptability have been conducted, which look favourable.

In addition, CKD configurations have been created and the process of seeking clearances for these configurations has started. The Company plans to kick off the business operations for PT. Bajaj Auto Indonesia in the current year with the CKD production 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

(H 1,219 crore), and holds approximately 48% stake in KTM AG of Austria (KTM). Calendar year 2017 has again been a record year for KTM, with highest sales in units and again 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.

During the year, dividend received from BAIH BV amounted to H 135 crore.

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

Your Company, being a member of CII, has adopted the following Codes/Charters:

1. CII Code of Conduct for Affirmative Action;

2. Model Code of Conduct for Ethical Business practices;

3. Charters of Fair and Responsible Workplace Guidelines for Collaborative Employee Relations; and

4. Charters on Fair and Responsible Workplace Guidelines for Contract Labour.

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 eight 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 2017-18, 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, Chairperson and Individual 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, Chairperson 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 2018 have been disclosed as per Division ll of Schedule III to the Companies Act, 2013.

Indian Accounting Standards, 2015

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, as amended from time to time and other relevant provisions of the Act.

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.

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 2017-18 is attached to the Balance Sheet.

Pursuant to the legislation ‘The Sexual Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013', the Company has a Policy on Prevention of Sexual Harassment at Workplace. During the year under review, one complaint was received from one of the employees, which was investigated and redressed by the Internal Complaints Committee formed under the aforesaid Act and closed.

There was no other case reported during the year under review under the said Policy.

Directors and Key Managerial Personnel-changes

As informed last year, Kantikumar R Podar and J N Godrej, independent directors, resigned from the Board w.e.f. 15 March 2017 and 10 April 2017 respectively. In their place, the Board at its meeting held on 18 May 2017 appointed Dr. Naushad Forbes and Dr. Omkar Goswami as additional directors in the category of non-executive, independent directors for a period of five years commencing from 18 May 2017. The members at the Tenth annual general meeting held on 20 July 2017 have approved the appointment of Dr. Naushad Forbes and Dr. Omkar Goswami, as independent directors.

The directors regret to inform about the sad demise of Naresh Chandra, an independent director of the Company on 9 July 2017. The directors record their very 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, Anami Roy was appointed as an additional director in the category of non-executive, independent director of the Company, with effect from 14 September 2017, at the meeting of the Board held on 14 September 2017. The members are requested to approve his appointment in the ensuing annual general meeting.

In light of the provisions of the Companies Act, 2013, Niraj Bajaj and Manish Kejriwal 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.

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 2017-18. 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 capitalisation (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 2017-18, 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 said standards were further amended w.e.f. 1 October 2017. The Company is in compliance with the same.

Auditors

Statutory Auditor

Pursuant to the provisions of section 139 of the Companies Act, 2013, the members at the Annual General Meeting of the Company held on 20 July 2017 appointed S R B C & CO LLP

(Firm Registration No. 324982E/E300003) as statutory auditors of the Company from the conclusion of Tenth Annual General Meeting till the conclusion of Fifteenth Annual General Meeting, covering one term of five consecutive years, subject to ratification by the members at each intervening Annual General Meeting.

In view of the amendment to the said section 139 through the Companies (Amendment) Act, 2017 notified on 7 May 2018, ratification of auditors' appointment is no longer required. However, as required under section 142 of the Companies Act, 2013, a proposal is put up for approval of members for authorising the Board of Directors of the Company to fix Auditors' remuneration for the year 2018-19 and thereafter. The members are requested to approve the same.

The statutory audit report for the year 2017-18 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 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 2017-18 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: 18 May 2018

Annexure to Directors' Report

Remuneration Details under Rule 5 (1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 (as amended) for the year ended 31 March 2018

Sr. No. Name of Director/KMP Ratio of Remuneration of director to Median Remuneration of employees % increase in the financial year
(A) Whole-time directors/Managerial Personnel
Rahul Bajaj, Chairman 167.36 1.35
Rajiv Bajaj, Managing Director 409.30 10.67
Pradeep Shrivastava, Executive Director 60.87 (4.11)
Whole-time Directors in aggregate 6.53
(B) Non-executive directors1
Madhur Bajaj2 1.73 (98.58)
Sanjiv Bajaj 1.73 14.29
D S Mehta 1.30 (14.29)
Shekhar Bajaj 1.52 75.00
D J Balaji Rao 3.25 15.38
Naresh Chandra3 0.65 (78.57)
Nanoo Pamnani4 5.27 (3.95)
Manish Kejriwal 1.52 75.00
P Murari 0.65 (40.00)
Niraj Bajaj 1.73 33.33
Dr. Gita Piramal 3.25 66.67
Dr. Naushad Forbes5 1.95
Dr. Omkar Goswami6 1.73
Anami Roy7 1.30
(C) Key Managerial Personnel
Rajiv Bajaj, Managing Director 10.67
Kevin D'sa, CFO (4.66)
Dr. J Sridhar, Company Secretary (6.90)
(D) Remuneration of Median Employee (other than whole-time directors) 41.22
(E) Permanent employees as on 31 March 20188: 8,013

1. (a) Remuneration payable to Non-executive directors is based on the number of meetings of the Board and its Committees attended by them as members during the year. (b) Remuneration to directors does not include sitting fees paid to them for attending board/committee meetings.

2. Madhur Bajaj ceased to be executive Vice Chairman w.e.f. 1 April 2017. He continues as Vice Chairman, but in non-executive capacity. His remuneration for 2017-18 is thus not comparable with that for 2016-17.

3. Naresh Chandra, an independent director on the Board, passed away on 9 July 2017. Figures in his case are therefore not comparable.

4. As approved by the Board, Nanoo Pamnani is being paid an additional commission of H 20 lakh, for certain additional services rendered by him during the year, at the request of the Management.

5. Dr. Naushad Forbes was appointed w.e.f. 18 May 2017. Figures in his case are therefore not comparable.

6. Dr. Omkar Goswami was appointed w.e.f. 18 May 2017. Figures in his case are therefore not comparable.

7. Anami Roy was appointed w.e.f. 14 September 2017. Figures in his case are therefore not comparable.

8. The term 'Permanent Employees' does not include trainees, probationers and contract employees.

Notes on Disclosures under Rule 5

1. In 2017-18, the remuneration of median employee other than whole-time Directors increased by 41.22% over the previous year.

2. Increase in the remuneration of the Managerial Personnel, which in the aggregate was 6.53% during the year under review, was given, keeping in view the trends of remuneration in industry.

3. The remuneration paid as above was as per the Remuneration Policy of the Company.

   

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