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Bajaj Auto
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
The directors present their sixth annual report and the audited
 statements of accounts for the year ended 31 March 2013.
 
 The highlights are as under:
 
 Units in Numbers                             2013            2012
 
 Two-wheelers                            3,757,105       3,834,405
 
 Three-wheelers                            480,057         515,155
 
 Total                                   4,237,162       4,349,560
 
 Of which Exports                        1,547,157       1,579,824
 
 Financials
 
                                                      (Rs. In Crore)
 
 Particulars                                       2013         2012
 
 Net sales and other income                   20,792.74    20,137.02 
 
 Cross profit before exceptional item,
 interest and depreciation                     4,430.74     4,328.03
 
 Interest                                          0.54        22.24
 
 Depreciation                                    163.97       145.62
 
 Gross profit before exceptional item          4,266.23     4,160.17 
 
 Exceptional item
 
 - Valuation losses on derivative hedging
 instruments                                          -      (134.00)
 
 Profit before tax                             4,266.23     4,026.17
 
 Tax expense                                   1,222.66     1,022.12
 
 Profit after tax                              3,043.57     3,004.05
 
 Add: Balance brought forward from 
 previous year                                 3,705.14     2,515.48
 
 Profit available for appropriation            6,748.71     5,519.53
 
 Transfer to General reserve                     305.00       301.00
 
 Proposed dividend (inclusive of dividend tax) 1,523.45     1,513.39
 
 Balance carried to Balance Sheet              4,920.26     3,705.14
 
 Earnings per share (Rs.)                         105.2        103.8
 
 Dividend
 
 The directors recommend for consideration of the shareholders at the
 ensuing annual general meeting, payment of a dividend of Rs.45 per
 share, (450 per cent) for the year ended 31 March 2013. The amount of
 dividend and the tax thereon aggregate to Rs. 1,523.45 crore.
 
 Dividend paid for the year ended 31 March 2012 was also Rs. 45 per
 share (450 per cent).
 
 The amount of dividend and the tax thereon aggregated to Rs. 1,513.39
 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 5.4 million units per
 annum. The Company plans to increase the installed capacity to 6.06
 million units per annum by March 2014.
 
 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 second
 half of 2013-14.
 
 Research and Development and technology absorption
 
 A) Products Pulsar 200 NS
 
 Pulsar 200 NS was launched in May 2012. It has gone on to redefine the
 sports motorcycle segment in India. It has set a new benchmark in terms
 of performance, style, technology and affordability. It has brought
 additional set of customers to the Pulsar portfolio. It has won an
 astounding number of 12 awards for product and technology including the
 award for the best product design in all automobiles.
 
 Discover 125 ST
 
 This completely new platform of vehicle was designed to take the legacy
 of the successful Discover brand, into the future. The vehicle has been
 designed to further enhance the sporty commuter image of the Discover
 brand. The vehicle is equipped with a high performance 4 valve air
 cooled engine powered by twin spark ignition, delivering 13 Ps, and a 5
 speed gear box suitably mated to the power characteristics of the
 engine. This provides the commuter the joy of a powerful drive, while
 maintaining high fuel efficiency for which Discover brand is known for.
 The vehicle is also equipped with the state-of-the-art features like
 Nitrox mono shock absorber for riding pleasure, which is a first for a
 commuter 125 cc bike.
 
 Discover 100 T
 
 This product complements Discover 125 ST and extends the all new design
 of Discover 125 ST to smaller engine capacity. It sharply focuses on
 the customers who prefer greater fuel efficiency, but desire all the
 enhancements. The vehicle is powered by a high performance 4 valve air
 cooled 100 cc DTSi engine, delivering 10.2 Ps, with a 5 speed gear box
 suitably mated to the power characteristics of the engine. This is the
 world''s first 100 cc single cylinder 4 valve DTSi engine and delivers
 class leading power and fuel efficiency.
 
 KTM Duke 125 - Duke 200
 
 Model Year 2013 saw Duke 125 and Duke 200 substantially upgraded.
 Vehicle safety is taken to the next level with the introduction of
 Anti-lock braking system (ABS). The vehicle is equipped with twin
 channel ABS offering independent control for both the wheels and
 increases driver safety by not allowing the vehicle to skid even in
 case of panic braking on low friction surfaces.
 
 The Duke 200 won 8 awards this year. Between Pulsar and KTM, the
 Company swept practically all the major awards announced during the
 year under review.
 
 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-typing 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 4 wheelers. The prototyping facilities were also
 upgraded to enable building of the prototypes of these vehicles.
 
 - Technology: This year, R&D launched the Triple Spark technology for
 the Pulsar family.
 
 This technology takes the DTS-I performance to the next higher level.
 It gives best in class fuel efficiency and performance on a sports
 bike. This technology went on to win the Automotive technology of
 the year award competing in the category of not just 2 wheelers, but
 in all categories of automobiles.
 
 - Total Productive Maintenance (TPM): R&D continues to vigorously
 pursue the TPM way of thinking and working. This has yielded excellent
 results in quality management of design and validation process. The TPM
 approach has also been effective in the lead time reduction on the
 various critical processes in R&D by elimination of waste.
 
 C) Outgo
 
 The expenditure on research and development during 2012-13 and in the
 previous year was:
 
                                                 (Rs. In Crore)
 
 Particulars                                    2013       2012
 
 i.  Capital
 
 (including technical know-how)               109.19      42.22
 
 ii.  Recurring                               129.40     113.70 
 
 Total                                        238.59     155.92
 
 iii. Total research and development 
 expenditure as a percentage of sales,
 net of excise duty                             1.22%      0.83%
 
 Conservation of energy
 
 Company has always been a forerunner in conservation of energy and
 natural resources.
 
 All manufacturing processes and products are designed for minimising
 the carbon footprints and are being continuously upgraded to
 consistently achieve this goal. Company has a distinction of having all
 its plants certified for ISO 14000 and 18000. Company not only follows
 Standard Operating Procedures for environment protection and
 conservation of resources in all its plants, but also propagates these
 initiatives throughout its vendor partners under the initiative of
 ''Green Supply Chain''.
 
 The energy conservation drive is guided by the principle of 5 Rs
 (Reuse, Reduce, Recycle, Remove, Recover). Given below are some of the
 key initiatives taken during 2012-13 towards energy and natural
 resource conservation.
 
 - Electrical energy saving was achieved by replacing reciprocating
 compressor with screw air compressors at Waluj; use of air pressure
 booster for high pressure application, use of energy efficient pumps
 and motors, use of LED/induction lamps for lighting system in plant and
 offices.
 
 - Water saving was achieved by various measures, such as installation
 of RO plant, use of air cooled compressors in place of water cooled
 compressors; use of breeze air coolers instead of ARP, use of treated
 water for horticulture activities.
 
 - Liquified Petroleum Gas (LPG)/propane saving was achieved by
 optimum usage of oven/furnaces at paint shop and HT, by reduction in
 weight of paint line jigs and heat treatment fixtures, by replacing
 pre-treatment chemicals requiring less temperature, at Chakan and by
 increasing conveyor speed in paint shop.
 
 - Initiatives in utilisation of renewable energy were taken during
 the year. Installation of solar power plant 20 Kwp at Waluj and
 installation of light pipes at Waluj and Pantnagar are the key
 initiatives to note.
 
 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                                2013         2012
 
 Electricity consumption                    1.85         7.86
 
 Water consumption                         20.97          Nil
 
 LPG/propane consumption                    7.49        13.44
 
 Investment/savings
 
                                                     (Rs. In Crore) 
 
 Description                                       2013       2012
 
 Investment for energy conservation activities     3.67       2.07
 
 Recurring savings achieved through above 
 activities                                        2.30       2.14
 
 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 1,547,157 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 earning 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. 6,565.34 crore, compared to Rs. 6,625.96 crore during
 the previous year.
 
 Total foreign exchange outflow during the year under review was Rs.
 1,083.16 crore as against Rs. 776.98 crore during the previous year.
 
 The above outflow excludes an investment of Rs. 231.86 crore (previous
 year: Rs. 68.14 crore) made in its 100% subsidiary, Bajaj Auto
 International Holdings BV, Netherlands for increasing its stake in KTM
 AG from 40.87% to 47.96%.
 
 Industrial relations
 
 Industrial relations with staff and workmen across the plants at
 Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.
 
 At Pantnagar, wage settlement dated 7 December 2012 was amicably signed
 in conciliation between the management and representatives of workmen.
 The workmen have formed a trade union on 21 August 2012 under the name
 and style Bajaj Auto Ltd. Employees Sangh, which has a majority
 following.
 
 At Chakan, Vishwa Kalyan Kamgar Sanghatana, the recognised union has
 given notice of termination of the existing settlement dated 21 May
 2010 as per provisions of The Industrial Disputes Act, 1947.
 
 Five workmen of BAL-Waluj and two workmen of BAL-Chakan have received
 Best Worker (Cunwant Kamgar) Welfare Awards for the year 2012 declared
 by the Maharashtra Labour Welfare Board, Mumbai, Government of
 Maharashtra.
 
 Subsidiaries
 
 PT. Bajaj Auto Indonesia (PT BAI)
 
 In line with the general slow-down in the global economy, Indonesia has
 posted a GDP growth rate of 6.3% as against 6.5% recorded in 2011-12.
 
 Two wheeler sales, a true barometer of national economy, had declined
 to 7.1 million units from the levels of 8 million units in the previous
 year, a decline of 11.5%. Restrictions in financing norms imposed by
 the central bank relating to two wheeler financing has contributed
 significantly to the decline in sale of two wheelers in Indonesia.
 
 PT BAI has also witnessed a declining sales volume trend with billing
 of 11,198 units in 2012-13 as against 23,337 units done in 2011-12.
 
 The distribution arrangement announced by Bajaj Auto Ltd. in September
 2012 with Kawasaki Motors to market and distribute Pulsar NS motor
 cycles in Indonesia is expected to give a new fillip to the growth of
 exports to Indonesia, from the second half of financial year 2013-14.
 
 Bajaj Auto International Holdings BV, Netherlands (BAIH BV)
 
 During the year under review, BAIH BV invested further  33.90
 million (approx. Rs. 236 crore) to increase its stake in KTM AG (KTM)
 to 47.96%.
 
 In the calendar year 2012, KTM posted robust growth to 107,142 units
 (up by 32%);
 
  612 million turnover and  25.3 million net profit (up by 22.2%).
 Proportionate net profit of  11.96 million has been accounted in the
 consolidated results of Bajaj Auto Ltd.
 
 KTM returned to dividend list with a dividend declaration of  0.70
 per share for 2012.
 
 BAIH BV is entitled to receive  3.64 million, being its share of
 dividends.
 
 During the year, Bajaj Auto produced 26,805 units of KTM Duke
 Motorcycles. 7,388 Dukes were sold in India through the 70 strong
 pro-biking network in India and 18,546 units were exported to various
 countries, including Europe, Japan, etc.
 
 Various joint development projects are proceeding well. The next
 jointly developed product Duke 390, sporting a high performance engine
 is scheduled to be launched in first half of 2013-14.  Bajaj Auto will
 produce this model in its Chakan plant.
 
 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
 
 During the year 2012-13, Bajaj Auto continued its Affirmative Action
 Plan and Corporate Social Responsibility initiatives in various fields.
 Activities in this area are set out in greater detail in the annexed
 CSR Report.
 
 Directors
 
 J N Godrej, S H Khan, Ms Suman Kirloskar and Naresh Chandra retire from
 the Board by rotation this year and being eligible, offer themselves
 for re-appointment.
 
 Directors'' responsibility statement
 
 As required by sub-section (2AA) of section 217 of the Companies Act,
 1956, directors state:
 
 - that in the preparation of annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures.
 
 - that the directors have selected such accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent, so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for that period.
 
 - that the directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities.
 
 - that the annual accounts have been prepared on a going concern
 basis.
 
 Presentation of financial results
 
 The financial results of the Company for the year ended 31 March 2013
 as in the previous year have been disclosed as per the revised Schedule
 VI to the Companies Act, 1956, pursuant to notification dated 28
 February 2011 issued by the Ministry of Corporate Affairs.
 
 Consolidated financial statements
 
 The directors also present the audited consolidated financial
 statements incorporating the duly audited financial statements of the
 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-l 11
 dated 8 February 2011 has given general exemption with regard to
 attaching of the Balance Sheet, Profit and Loss Account and other
 documents of its subsidiary companies subject to fulfillment of
 conditions mentioned therein. The Company has fulfilled all the
 necessary conditions in this regard.
 
 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(l)(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 2012-13 is attached to the Balance
 Sheet.
 
 Corporate governance
 
 Pursuant to clause 49 of the listing agreement with stock exchanges, a
 separate section titled ''Corporate Governance'' has been included in
 this annual report, along with the reports on Management Discussion and
 Analysis and General Shareholder Information.
 
 All Board members and senior management personnel have affirmed
 compliance with the code of conduct for the year 2012-13. A declaration
 to this effect signed by the 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 decided to mandate inclusion of Business
 Responsibility Reports (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 has presented
 its first BR Report for the financial year 2012-13, 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
 
 Secretarial standards issued by the Institute of Company Secretaries of
 India (ICSI) from time to time are currently recommendatory in nature.
 Your Company is, however, Complying with the same.
 
 Auditors'' report
 
 The observations made in the Auditors'' Report, read together with the
 relevant notes thereon are self-explanatory and hence, do not call for
 any comments under section 217 of the Companies Act, 1956.
 
 Auditors
 
 The members are requested to appoint Messers Dalai & Shah, Chartered
 Accountants, as auditors for the period from the conclusion of the
 ensuing annual general meeting till the conclusion of the next annual
 general meeting and to fix their remuneration.
 
 In conformity with the directives of the Central Government, the
 Company has appointed Mr. A P Raman, cost accountant, ICWA Membership
 No. 837, with address at Golok, Plot No.13, Sector No.28, Pradhikaran,
 Nigdi, Pune - 411 044, as the cost auditor under section 233B of the
 Companies Act, 1956 to conduct the cost audit of Bajaj Auto Ltd. for
 the year 2012-13.
 
 For the year ended 31 March 2012, the due date of filing the cost audit
 report was 30 September 2012, which was subsequently extended upto 28
 February 2013 and the actual date of filing the cost audit report was
 27 February 2013.
 
 On behalf of the Board of Directors,
 
 Rahul Bajaj 
 
 Chairman
 
 16 May 2013
Source : Dion Global Solutions Limited
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