Bajaj Auto Ltd
Directors Reports
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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