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Bajaj Auto

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Directors Report Year End : Mar '16    « Mar 15
The Directors present their Ninth Annual report and Audited Financial
 Statements for the year ended 31 March 2016.
 
 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                               FY2016       FY2015
 
 Two-wheelers                                3,358,252    3,292,084
 
 Three-wheelers   Quadricycle                  535,329      519,117
 
 Total                                       3,893,581    3,811,201
 
 Of which Exports                            1,739,629    1,806,078
 
                                                       (Rs.In Crore) 
 
 Particulars                                    FY2016       FY2015
 
 Total revenue                               23,600.86    22,194.43
 
 Total expenses                              18,215.68    17,769.35
 
 Profit before exceptional items and tax      5,385.18     4,425.08
 
 Exceptional items                                   -       340.29
 
 Profit before tax                            5,385.18     4,084.79
 
 Tax expense                                  1,732.77     1,271.05
 
 Profit for the year                          3,652.41     2,813.74
 
 Transfer to General Reserve                    366.00       282.00
 
 Interim dividend (inclusive of 
 dividend tax)                                1,741.38            -
 
 Proposed dividend (inclusive of 
 dividend tax)                                  174.13     1,734.57
 
 Provision for dividend tax for previous 
 year written back                              (11.35)           -
 
 Balance carried to Balance Sheet             1,382.25       797.17
 
 Earnings per share (Rs.)                        126.2         97.2
 
 Dividend
 
 The Board at its meeting held on 9 March 2016 declared an interim
 dividend at the rate of Rs. 50 per share (500%) for the year ended 31
 March 2016, which was paid to all the eligible shareholders as on 17
 March 2016, being the record date for the purpose of dividend. The
 amount of dividend and the tax thereon to the extent applicable
 aggregated to Rs. 1,741.38 crore.
 
 The directors now recommend for consideration of the shareholders at
 the ensuing annual general meeting, payment of final dividend at the
 rate of Rs. 5 per equity share (50%) for the financial year ended 31
 March 2016. The amount of final dividend and tax thereon to the extent
 applicable aggregate to Rs. 174.13 crore.
 
 For the year ended 31 March 2016, the total dividend including interim
 dividend, therefore, works out to Rs. 55 per share (550%) and the total
 dividend and tax thereon to the extent applicable aggregate to Rs.
 1,915.51 crore.
 
 For the year ended 31 March 2015, dividend paid was Rs. 50 per share
 (500%). The amount of dividend and the tax thereon to the extent
 applicable aggregated to Rs. 1,734.57 crore.
 
 Share capital
 
 The paid up equity share capital as on 31 March 2016 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. The Company plans to increase the installed capacity to around
 6.24 million units per annum by March 2017.
 
 Detailed information on the quadricycle RE 60 and new projects, 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, 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 2015-16 and in the
 previous year was:
 
                                                         (Rs.In Crore) 
 
 Particulars                                         FY2016    FY2015
 
 i.   Capital (including technical know-how)          52.82    139.73
 
 ii.  Recurring                                      277.13    221.68
 
      Total                                          329.95    361.41
 
 iii. Total research and development expenditure 
      as a percentage of sales, net of excise duty    1.48%     1.71%
 
 Conservation of energy
 
 Company continues its efforts to reduce and optimise 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
 
 - Micro mapping of equipments for energy consumption and
 countermeasures thereon.
 
 - Lifecycle cost analysis and countermeasures at centralised coolant
 system.
 
 - Installation of DC brushless motor with direct drive in place of AC
 induction motor at paint shop air supply unit.
 
 - Reduction in emission height of exhaust blowers.
 
 - Use of electrical blower in place of pneumatic vacuum blower at
 de-watering stage in paint shop.
 
 - Installation of energy efficient pumps/motors, equipments, air
 dryers, exhaust blowers axial fans.
 
 - Use of induction/LED/CFLs for street lighting/shop lighting/office.
 
 - Use of auto shut off coolant pumps in machine shop to prevent excess
 pump loads.
 
 - Use of isolator switches for standby transformers for reduction of
 fixed load.
 
 - Providing portable compressor for jig stripping plant for non-working
 days.
 
 - Installation of breeze air coolers in record room in place of air
 circulators.
 
 - Use of HVLS (High Volume and Low Speed) fans for fixed load reduction
 of air circulators.
 
 B) Water
 
 - Reuse of treated water by using reverse osmosis plants.
 
 - Use of auto close water taps and orificing for controlled consumption
 of water at wash basin.
 
 - Installation of water meters for monitoring and controlling
 consumption of key users.
 
 - Use of ETP/STP water for gardening and toilet flushing.
 
 - Rain water harvesting at all plants.
 
 C) LPG/propane
 
 - Thermal imaging audit to assess the heat losses through paint shop
 ovens and countermeasures on them.
 
 - Extending incinerator heat for backing ovens.
 
 - Removable hook arrangement for multi models for fuel tank jigs.
 
 - Reducing colour change time from 11 min to 5 min/occurrence.
 
 - Optimisation of air velocity in ovens.
 
 - Burner efficiency improvement through magnetic resonators.
 
 - Provision of air curtains at oven exit to reduce heat loss.
 
 - Weight reduction of job fixtures in heat treatment.
 
 - Operation of lower size oven in heat treatment.
 
 - Usage of solar water heaters for canteen.
 
 D) Utilisation of renewable energy - key initiatives
 
 - Use of solar energy through solar concentrator.
 
 - 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:
 
                                   % Reduction w.r.t. previous year 
 
 Description                                      FY2016     FY2015
 
 Electricity consumption                            5.96       3.95
 
 Water consumption                                 16.99       7.37
 
 LPG/PNG consumption                               15.65       9.66
 
 Investment/savings
 
                                                        Rs.In Crore 
 
 Description                                      FY2016     FY2015
 
 Investment for energy conservation activities      3.76       3.24
 
 Annual savings achieved through above 
 activities                                         2.52       3.57
 
 Awards and Accolades
 
 Sr.  Details
 
 1    Excellence in Energy Conservation and Management by MEDA for Waluj
      Plant
 
 2    Green Manufacturing Excellence Award by Frost and Sullivan for 
      Chakan Plant
 
 3    Best Energy Efficient plant Award by TV 100 for Pantnagar Plant
 
 International Business
 
 Bajaj Auto continues to be India''s No.1 exporter of motorcycles and
 three-wheelers. It exports to 74 countries and enjoys the No.1 or No.2
 position in more than 20 of them. During the year under review, exports
 accounted for 43.9 % 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. 9,404.55 crore, compared to Rs. 9,443.51 crore during
 the previous year.
 
 Total foreign exchange outflow during the year under review was Rs.
 774.90 crore as against Rs. 856.08 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 Akurdi and Chakan, periodic wage review is due with effect from 1
 April 2016, as per the terms of the respective wage settlements signed
 for a period of nine years, in the year 2010. Both, Management and
 Union have exchanged their Charter of Demands/Requirements with each
 other.  Negotiations/dialogues to conclude the review process have
 commenced and are going on in a congenial atmosphere at both the
 locations.
 
 The Employers'' Federation of India (EFI) conferred The National Award
 for Excellence in Employee Relations - 2015 on Bajaj Auto Ltd.,
 Motorcycle Division, Waluj, Aurangabad, in recognition of ''Strong
 Commitment to Employee Relations'', at Mumbai, on 9 December 2015.
 
 One workman from Engine Assembly (MCD) Waluj, received National
 ''Vishwakarma Rashtriya Puraskar'' from the Labour and Employment
 Ministry, Government of India, for the year 2013.
 
 The employees of Chakan Plant won first prize five times in TPM Circle
 National Level Competition and once in National Level Champion''s
 Competition organised by Confederation of Indian Industry (CZII).  The
 Chakan Plant also received first prize in the Productivity Case Study
 Contest 2016 organised by Indian Institute of Industrial Engineering
 (IIIE).
 
 The employees of Pantnagar Plant won first prize in Breakthrough Kaizen
 category in National Level Kaizen Competition organised by CII.
 Likewise, the Pantnagar Plant also received TV 100 Excellence Award for
 implementing various Kaizens for Energy Saving. The Award was given by
 the Hon''ble Chief Minister of State of Uttarakhand, Mr. Harish Rawat.
 
 Subsidiaries and joint ventures
 
 PT. Bajaj Auto Indonesia
 
 Routine business operations of PT. Bajaj Auto Indonesia have stopped.
 In March 2016, Bajaj Auto and KTM entered into an agreement vide which
 Bajaj Auto will establish the KTM brand in Indonesia, the largest
 motorcycle market in South-East Asia.
 
 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), the
 fastest growing motorcycle brand in the world. Calendar year 2015 has
 again 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 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 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 are
 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 sub-section (6).
 
 Directors'' Remuneration Policy and criteria for matters under section
 178
 
 Information regarding Directors'' Remuneration Policy and criteria for
 determining qualifications, positive attributes, independence of a
 director and other matters provided under sub-section (3) of section
 178 are provided in the Corporate Governance Report.
 
 Particulars of loans, guarantees or investments
 
 Information regarding loans, guarantees and investments covered under
 the provisions of section 186 of the Companies Act, 2013 are detailed
 in the Financial Statements.
 
 Related party transactions
 
 There were no Related Party Transactions (RPTs) entered into by the
 Company during the financial year, which attracted the provisions of
 section 188 of the Companies Act, 2013. There being no ''material''
 related party transactions as defined under regulation 23 of SEBI
 Listing Regulations, 2015, there are no details to be disclosed in Form
 AOC-2 in that regard.
 
 During the year 2015-16, 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 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 statements
 
 The financial statements of the Company for the year ended 31 March
 2016 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 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 financial 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
 
 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, are placed on the
 Company''s website www.bajajauto.com as an annexure to the Directors''
 Report.  A physical copy of the same will be made available to any
 shareholder on request.
 
 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,
 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 2015-16 is attached to the Balance
 Sheet.
 
 Pursuant to the legislation ''Prevention, Prohibition and Redressal of
 Sexual Harassment of Women at Workplace Act, 2013'' introduced by the
 Government of India, which came into effect from 9 December 2013, the
 Company has 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
 
 The Directors regret to report about the sad demise of S H Khan, an
 independent director of the Company, on 12 January 2016. The directors
 record their whole-hearted appreciation of the valuable contribution
 made by him during his long tenure as director in the Company.
 
 Pradeep Shrivastava, COO, has been appointed 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 are
 requested to approve his appointment in the ensuing annual general
 meeting.
 
 In light of the provisions of the Companies Act, 2013, Sanjiv 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 annexed
 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, which includes its design, implementation and maintenance
 along with periodical internal review of operational effectiveness and
 sustenance.
 
 This ensures orderly and efficient conduct of its business, including
 adherence to 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 2015-16. 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 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, inter alia,
 provides that the annual report of the top 100 listed entities based on
 market capitalisation (calculated as on March 31 of every financial
 year), shall include a Business Responsibility Report.
 
 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 2015-16, 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
 
 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 LLP, Chartered Accountants (registration number: 102021W)
 were appointed by the members at the 7th annual general meeting to hold
 office until the conclusion of the 10th annual general meeting, subject
 to ratification by members at each annual general meeting.
 
 The members are requested to ratify the appointment of Dalal & Shah
 LLP, Chartered Accountants (registration number: 102021W/W100110) as
 statutory auditors of the Company and to fix their remuneration for the
 year 2016-17.
 
 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 re-appointed, Shyamprasad D
 Limaye, (Membership No.1587) Company Secretary in Practice to undertake
 the secretarial audit of the Company. Secretarial Audit Report for the
 year 2015-16 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: 25 May 2016
Source : Dion Global Solutions Limited
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