The directors present their Seventh Annual Report and audited Statement
of accounts for the year ended 31 March 2014. Since this Report
pertains to financial year that commenced prior to 1 April 2014, the
contents therein are governed by the relevant
provisions/schedules/rules of the Companies Act, 1956, in compliance
with general circular No. 08/2014 dated 4 April 2014 issued by the
Ministry of Corporate Affairs.
The highlights are as under:
Units in Numbers FY2014 FY2013
Two-wheelers 3,422,403 3,757,105
Three-wheelers 447,674 480,057
Total 3,870,077 4,237,162
Of which Exports 1,583,935 1,547,157
Particulars FY2014 FY2013
Total revenue 20,855.92 20,792.74
Gross profit before finance costs,
depreciation and amortisation 4,812.15 4,433.54
Finance costs 0.49 0.54
Depreciation and amortisation 179.61 166.77
Profit before tax 4,632.05 4,266.23
Tax expense 1,390.10 1,222.66
Profit after tax 3,241.95 3,043.57
Tax credits pertaining to earlier year 1.37 -
Profit for the year 3,243.32 3,043.57
Add: Balance brought forward from
previous year 4,920.26 3,705.14
Profit available for appropriation 8,163.58 6,748.71
Transfer to General reserve 325.00 305.00
Proposed dividend (inclusive of
dividend tax) 1,692.73 1,523.45
Provision of dividend tax for previous
year written back - 4.60
Balance carried to Balance Sheet 6,150.45 4,920.26
Earnings per share (Rs.) 112.1 105.2
The directors recommend for consideration of the shareholders at the
ensuing annual general meeting, payment of a dividend of Rs. 50 per
share, (500 per cent) for the year ended 31 March 2014. The amount of
dividend and the tax thereon aggregate to Rs. 1,692.73 crore.
Dividend paid for the year ended 31 March 2013 was Rs.45 per share (450
per cent). The amount of dividend and the tax thereon aggregated to Rs.
The operations of the Company are elaborated in the annexed Management
Discussion and Analysis Report.
Capacity expansion and new projects
The Company''s current installed capacity is 5.76 million units per
annum. The Company plans to increase the installed capacity to around 6
million units per annum by March 2015.
The 4 Wheeler project is going on as per plan and is being implemented
at Waluj. Commercial production of the four-wheeler RE 60 is slated
for the second half of the current year.
Research and Development and technology absorption
A) Products Pulsar 200 NS
After the successful launch of Pulsar 200 NS in May 2012, this model
has been well received in markets like Colombia. During the year under
review, it was launched in Indonesia under the joint brand of Kawasaki
Bajaj. The bike has been well received. New colour and graphics have
been introduced on the 200 NS to make it even more exciting.
Discover 125 M
The Discover 125 M is the quintessential 125. Built on the compact M
platform, it is a great blend of performance and affordability. This
engine develops class leading performance of 11.5 Ps power and 1.12
Kg-m of torque, for a powerful drive, while maintaining the high fuel
efficiency for which Discover brand is known for. The vehicle has a
four-speed gear box suitably mated to the power characteristics of the
engine. The agile handling chassis and suspension make this an ideal
Discover 100 M
The Discover 100 M is the new entry level Discover. It exemplifies the
core values of high performance blended with great fuel economy. This
product has been designed to complement the styling aspects of the ST
and T series, which have created good appeal for the customers. The
vehicle is powered by a high performance four-valve air cooled 100 cc
DTSi engine, delivering 9.5 Ps and Torque of 0.92 Kg-m, with a
four-speed gear box suitably mated to the power characteristics of the
engine. It has the best in class fuel efficiency. The careful
engineering of the product has resulted in very attractive price to the
KTM Duke 390 with ABS
This joint venture between KTM and Bajaj saw yet another successful
launch in the form of Duke 390. With the trademark Orange frame and
alloy wheels typical to KTM, the bike lives upto the ''Ready to Race''
tag of KTM brand exceptionally well.
All variants of our RE range of three-wheeler products comprising
small, medium and large platforms and covering gasoline, gaseous and
diesel engines have been put through a complete upgrade. These products
have been updated with much better driver comfort through revised
ergonomics, smart looks, improved engine performance and revised gear
ratios leading to excellent drivability and upto 15% improvement in
DTSi technology has also been employed in the spark ignited engine
versions, while five-speed gear box has been deployed in the diesel
R&D has been working on improving its operations in a number of areas
as listed below.
Manpower: R&D has been expanding its team size in areas of design,
analysis and validation in order to keep up with the rapidly expanding
aspirations of the Company. In the year under review, we have expanded
our manpower by about 6%.
Facilities: R&D continued to enhance its design, computing, prototype
manufacturing and validation facilities. Such enhancement efforts have
enabled R&D to develop durable and refined products. A number of new
test facilities were put in to validate the durability and performance
of the forthcoming two and four wheelers. The prototyping facilities
were also augmented to enable building of the prototypes of these
1) Anti Lock Braking system was introduced on KTM Duke 390. Through
this model, the domestic and export markets got the chance to
experience the confidence and safety of ABS, while applying the brakes
on this high performance bike. Customers and media alike were impressed
by this feature and its performance.
2) Technologies like Fuel Injection, five speed gear box, Multi valves,
DTSi and light weighting have been employed on the RE60 to achieve
excellent fuel economy, while at the same time provide great
drivability and comfort to the driver and passengers. The product meets
among other things the 400 kg weight limit prescribed in the European
regulations for such category.
The expenditure on research and development during 2013-14 and in the
previous year was:
Particulars FY2014 FY2013
i. Capital (including technical
know-how) 87.11 109.19
ii. Recurring 189.68 129.40
Total 276.79 238.59
iii. Total research and development
expenditure as a
percentage of sales, net of excise duty 1.40 % 1.22%
Conservation of energy
Company has always been a forerunner in conservation of energy and
natural resources. Some of the important steps taken during the year
under review are listed below:-
A) Electrical energy
- Installing and running variable speed NIRVAN screw air compressors at
- Use of air pressure boosters for high pressure application in paint
- Installation of energy efficient pumps/motors, equipments, air
dryers, exhaust blowers, axial fans.
- Installation of chillers with scroll compressor in paint shop.
- Use of heat pump for water heating for washing machine.
- Arresting compressed air leakages through audits and countermeasures.
- Installation of soft start valve for machine to prevent air leakages.
- Reduction in frequency of ASU and exhaust blowers of paint shop
during break hours.
- Use of transparent sheet in shops in place of shop lights (total 810
- Separate AHU ducts for both V/A conveyors.
- Use of LED/CFLs for street lighting/shop lightings/office.
- Auto Shut Off - hydraulic, coolant, conveyor motors, fume extractors
in motorcycle shop.
- Elimination of water cooling for compressed air.
- Reuse of treated water for process, installation of RO plant.
Replacement of water cooled dryers of compressor with air cooled
- Replace rusty underground hydrant and raw water pipe line with above
ground level pipe line to arrest water leakage.
- Use of auto closed water taps for controlled consumption of water at
- Usage of bio-cake for urinals and/or waterless urinals.
- Modification of water distribution line by gravity from main storage
tank to different shops at Pantnagar.
- Rain water harvesting.
- Thermal imaging/audit for ovens in paint shop and countermeasure for
heat loss areas identification.
- Installation and commissioning of PNG gas supply at Chakan and
- Optimising start up time of top coat ovens.
- Provision of air curtains at oven exit to reduce heat loss.
- Installation of low temperature chemical in tank cell.
D) Utilisation of renewable energy - key initiatives
- Installation of natural light transparent roof sheets.
- Installation of light pipes.
- Use of solar electrical energy.
Impact of measures taken
As a result of the initiatives taken for conservation of energy and
natural resources, the Company has effected an overall reduction in
consumption as given in the Table below:
% Reduction w.r.to previous year
Description FY2014 FY2013
Electricity consumption 1.19 1.85
Water consumption 24.24 20.97
LPG/propane consumption 14.85 7.49
Description FY2014 FY2013
Investment for energy conservation
activities 4.36 3.67
Recurring savings achieved through above
activities 2.74 2.30
This chapter may be read with the Business Responsibility Report (BRR),
which is part of the Annual Report.
Bajaj Auto continues to outperform competition in terms of two and
three-wheeler exports in spite of the grim world economic scenario. We
have maintained our leadership position in exports and have dominated
the Indian two and three-wheeler export scenario. Bajaj has exported a
total of 1,583,935 two and three-wheelers, highlighting the stellar
lead the Company has established against competition.
More details of International Business are set out in the annexed
Management Discussion and Analysis Report.
Foreign exchange earnings and outgo
The Company continued to be a net foreign exchange earner during the
Total foreign exchange earned by the Company during the year under
review was Rs. 7,963.86 crore, compared to Rs. 6,565.34 crore during the
Total foreign exchange outflow during the year under review was Rs.725.21
crore as against Rs. 1,083.16 crore during the previous year.
The above outflow excludes an investment of Rs. 67.75 crore (previous
year: Rs. Nil) made in its subsidiary, PT. Bajaj Auto Indonesia (PT BAI)
for increasing its stake from 98.94%.to 99.25%.
Industrial relations with staff and workmen at the plants at Akurdi,
Waluj and Pantnagar continued to be cordial. This includes the
relations with staff at the plant at Chakan.
At Chakan, the workmen represented by the recognised union Vishwa
Kalyan Kamgar Sanghatana, went on strike from 25 June 2013 to 13 August
2013 for the reason that Management refused to accede to their demand
of allotment of 500 shares to each workman at a discounted rate of Rs. 1
per share. The union withdrew the strike unconditionally on realising
Management''s firm decision and workers resumed work with effect from 14
At Chakan, wage review was due effective from 1 April 2013. Management
offered Rs. 10,000 per month in a phased manner, depending upon the year
of service etc., for three years. However, this issue is under
At Akurdi, as per the provisions of the wage settlement dated 20 August
2010, wage review was due and accordingly Memorandum of Understanding
(MOU) was signed on 10 February 2014 giving wage rise of Rs. 10,000 per
month per workman in a phased manner.
At Waluj, Bajaj Auto Ltd. Employees'' Union, representing majority of
the workmen, has submitted a Charter of Demands for the forthcoming
wage settlement, which is due from 1 August 2014.
PT. Bajaj Auto Indonesia (PT BAI)
The Company has a Memorandum of Understanding with Kawasaki Heavy
Industries (KHI) for jointly distributing its products in many of the
ASEAN countries. This was a result of a successful strategy followed by
the Company in launching its products in Philippines. Enthused by the
commendable success of this strategy, the Company has extended this
strategy in Indonesia as well. Consequently, the operations at PT BAI
have been scaled down significantly.
During the year under review, the Company through KHI sold 13,570 nos.
of Pulsars during the seven-month period commencing from August 2013.
Bajaj Auto International Holdings BV, Netherlands (BAIH BV)
Bajaj Auto International Holdings BV is a 100% Netherlands based
subsidiary of Bajaj Auto Ltd. Through this subsidiary, Bajaj Auto,
over the years, has invested a total of 198.1 million and holds about
48% stake in KTM AG of Austria (KTM), Europe''s second largest sport
Calendar year 2013 has been a record year for KTM, with highest sales
in units and highest turnover in the history of the Company. KTM sold
123,859 motorcycles, a growth of 15.6% and achieved a turnover of
716.4 million, a growth of 17.1%. Profit after tax was at 36.5
million, a growth of 44.3%.
Proportionate profit of 17.5 million has been accounted in the
consolidated results of Bajaj Auto Ltd.
During the year, Bajaj Auto manufactured 36,047 units of KTM Duke in
its Chakan plant. 11,050 units were sold through the pro-biking
network in India and 24,016 units were exported to various countries
across the globe.
In the annual general meeting held on 24 April 2014, for the year 2013,
KTM AG has declared a dividend of 1.00 per share (for the year 2012,
dividend declared was 0.70 per share). BAIH BV is entitled to receive
5.2 million, being its share of dividend.
KTM is listed in the Second Regulated Market of the Vienna Stock
Exchange and its market capitalisation as on 31 March 2014 was 818
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
Corporate Social Responsibility
The Companies Act, 2013 notified section 135 of the Act concerning
Corporate Social Responsibility alongwith the Rules thereunder and
revised Schedule VII to the Act on 27 February 2014 to come into effect
from 1 April 2014.
The Company being covered under the provisions of the said section, has
taken necessary initial steps in this regard. A Committee of the
directors, titled ''Corporate Social Responsibility Committee'', has been
formed by the Board in its meeting held on 28 March 2014, consisting of
the following Directors -
1. Rahul Bajaj, Chairman
2. Rajiv Bajaj
3. Nanoo Pamnani
The Committee has in place a CSR policy.
The said section being enacted with effect from 1 April 2014, necessary
details as prescribed under the said section shall be presented to the
members in the Annual Report for the year 2014-15.
Even when the said provisions were not mandated by the Ministry of
Corporate Affairs, the Bajaj Group continued its Corporate Social
Responsibility (CSR) initiatives in various fields, during the year
2013-14. Activities in this area are set out in detail in the annexed
In view of the provisions of the Companies Act, 2013, Madhur Bajaj and
Sanjiv Bajaj have now become retiring directors. Thus they retire from
the Board by rotation this year and being eligible, offer themselves
for re-appointment. The information as required to be disclosed under
clause 49 of the listing agreement in case of re-appointment of
directors is provided in the Notice of the ensuing annual general
Pursuant to section 149(4) of the Companies Act, 2013, every listed
company is required to appoint at least one third of its directors as
independent directors. The Board already has one half of its directors
in the category of independent directors in terms of the provisions of
clause 49 of the listing agreement. The Board therefore, in its meeting
held on 28 March 2014 appointed the existing independent directors
under clause 49 as ''independent directors'' pursuant to Companies Act,
2013, subject to approval of shareholders.
As required under the said Act and the Rules made there under, the same
is now put up for approval of members at the ensuing annual general
meeting. Necessary details have been annexed to the Notice of the
meeting in terms of section 102(1) of the Companies Act, 2013.
The independent directors have submitted the declaration of
independence, as required pursuant to section 149(7) of the Companies
Act, 2013 stating that they meet the criteria of independence as
provided in sub-section(6).
With the appointment of independent directors, the conditions specified
in the Act and the Rules made there under as also under new clause 49 of
the listing agreement stand complied.
Directors'' responsibility statement
As required by sub-section (2AA) of section 217 of the Companies Act,
1956, directors state:
- that in the preparation of annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
- 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
- that the annual accounts have been prepared on a going concern basis.
Presentation of financial results
The financial results of the Company for the year ended 31 March 2014
as in the previous year have been disclosed as per the revised Schedule
VI to the Companies Act, 1956, pursuant to notification dated 28
February 2011 and General Circular No. 8/2014 dated 4 April 2014 issued
by the Ministry of Corporate Affairs.
Consolidated financial statements
The directors also present the audited consolidated financial
statements incorporating the duly audited financial statements of the
subsidiaries, viz. PT. Bajaj Auto Indonesia and Bajaj Auto
International Holdings BV, Netherlands as prepared in compliance with
the accounting standards and listing agreement as prescribed by SEBI.
Information in aggregate for each subsidiary company is disclosed
separately in the consolidated Balance Sheet.
Ministry of Corporate Affairs (MCA) vide circular No. 51/12/2007-CL-III
dated 8 February 2011 has given general exemption with regard to
attaching of the Balance Sheet, Profit and Loss Account and other
documents of its subsidiary companies subject to fulfilment of
conditions mentioned therein. The Company has fulfilled all the
necessary conditions in this regard. Hence, the Company is not
attaching the Balance Sheet, Statement of Profit and Loss and other
documents of the subsidiary companies. The summary of the key
financials of the Company''s subsidiaries is included in this Annual
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
As required under the provisions of sub-section (2A) of section 217 of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended, particulars of the employees are set
out in an annexure to the Directors'' Report. As per provisions of
section 219 (1) (b) (iv) of the said Act, these particulars will be
made available to any shareholder on request.
Particulars regarding technology absorption, conservation of energy and
foreign exchange earnings and outgo required under section 217(1)(e) of
the Companies Act, 1956 and Companies (Disclosure of Particulars in the
report of Board of Directors) Rules, 1988 have been given in preceding
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
A cash flow statement for the year 2013-14 is attached to the Balance
During the year under review, pursuant to the new legislation
Prevention, Prohibition and Redressal of Sexual Harassment of Women at
Workplace Act, 2013 introduced by the Government of India, which came
into effect from 9 December 2013, the Company has framed a Policy on
Prevention of Sexual Harassment at Workplace. There were no cases
reported during the year under review under the said Policy.
Pursuant to clause 49 of the listing agreement with stock exchanges, a
separate section titled ''Corporate Governance'' has been included in
this Annual Report, along with the reports on Management Discussion and
Analysis and General Shareholder Information.
SEBI vide its circular No. CIR/CFD/POLICY CELL/2/2014 dated 17 April
2014 has notified the revised clause 49 of the listing agreement to be
applicable with effect from 1 October 2014. This Report therefore
stands complied against the previous clause 49 of the listing
All board members and senior management personnel have affirmed
compliance with the code of conduct for the year 2013-14. A declaration
to this effect signed by the Chief Executive Officer (CEO) of the
Company is contained in this Annual Report.
The CEO and Chief Financial Officer (CFO) have certified to the Board
with regard to the financial statements and other matters as specified
in clause 49 of the listing agreement and the said certificate is
contained in this Annual Report.
Business Responsibility Report
Securities and Exchange Board of India (SEBI), vide its circular dated
13 August 2012, has mandated inclusion of Business Responsibility
Report (BRR) as part of the annual reports for listed entities. To
begin with, SEBI has made it mandatory for top 100 listed entities
based on market capitalisation at BSE and NSE as on 31 March 2012 to
include BR Reports as part of their annual reports from the financial
year ending on or after 31 December 2012. Since Bajaj Auto Ltd. is one
of the top 100 listed entities, the Company, as in the previous year,
has presented its BR Report for the financial year 2013-14, which is
part of this Annual Report. As a green initiative, the BR Report has
been hosted on the Company website www.bajajauto.com A physical copy of
the BR Report will be made available to any shareholder on request.
Secretarial Standards of ICSI
During the year under review, Secretarial Standards specified by the
Institute of Company Secretaries of India (ICSI) from time to time were
recommendatory in nature. Your Company, however, complied with the
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.
Pursuant to the provisions of section 139 of the Companies Act, 2013
and the Rules made there under, the current auditors of the Company,
Dalal & Shah, Chartered Accountants are eligible to hold the office for
a period of three years, upto 2017.
The members are requested to appoint Dalal & Shah, Chartered
Accountants, as auditors for three years from the conclusion of the
ensuing annual general meeting till the conclusion of the 10th annual
general meeting in 2017 and to fix their remuneration for the year
A P Raman was appointed as Cost Auditor to conduct audit of cost
accounts maintained by the Company for the financial year 2013-14. The
full particulars of the Cost Auditor and cost audit conducted by him
for the financial year 2012-13 are furnished below:-
ICWA Membership No. 837
Registration No. of Firm 110141
Address Golok, Plot No.13, Sector No.28
Pradhikaran, Nigdi, Pune - 411 044
Details of Cost Audit Report for
the financial year 2012-13:
(a) Due date of filing 30 September 2013
(b) Actual date of filing 27 September 2013
On behalf of the Board of Directors,
15 May 2014