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Bajaj Auto Directors Report, Bajaj Auto Reports by Directors
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Bajaj Auto
BSE: 532977|NSE: BAJAJ-AUTO|ISIN: INE917I01010|SECTOR: Auto - 2 & 3 Wheelers
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Download Annual Report PDF Format 2015 | 2014 | 2013 | 2012 | 2011
Directors Report Year End : Mar '15    Mar 14
Dear Members,
 
 The directors present their Eighth Annual Report and audited financial
 statements for the year ended 31 March 2015.
 
 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                  FY 2015      FY 2014
 
 Motorcycles                      3,292,084     3,422,403
 
 Three-wheelers                     519,117       447,674
 
 Total                            3,811,201     3,870,077
 
 Of which exports                 1,806,078     1,583,935
 
                                            (Rs. In Crore)
 
 Particulars                       FY 2015       FY 2014
 
 Total revenue                    22,194.43     20,855.92
 
 Total expenses                   17,769.35     16,223.87
 
 Profit before exceptional items 
 and tax                           4,425.08      4,632.05
 
 Exceptional items                   340.29          -
 
 Profit before tax                 4,084.79      4,632.05
 
 Tax expense                       1,271.05      1,390.10
 
 Profit after tax                  2,813.74      3,241.95
 
 Profit for the year               2,813.74      3,243.32
 
 Transfer to General reserve         282.00        325.00
 
 Proposed dividend (inclusive of 
 dividend tax)                     1,734.57      1,692.73
 
 Provision of dividend tax for 
 previous year written back            -            (4.60)
 
 Balance carried to Balance Sheet    797.17      1,230.19
 
 Earnings per share (D)                97.2         112.1
 
 Dividend
 
 The directors recommend for consideration of the shareholders at the
 ensuing annual general meeting, payment of a dividend of B 50 per
 share, (500%) for the year ended 31 March 2015. The amount of dividend
 and the tax thereon aggregate to B 1,734.57 crore.
 
 Dividend paid for the year ended 31 March 2014 was also B 50 per share
 (500%). The amount of dividend and the tax thereon aggregated to B
 1,692.73 crore.
 
 Share capital
 
 The paid up equity share capital as on 31 March 2015 was B 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 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
 6.12 million units per annum by March 2016.
 
 As regards our quadricycle - RE 60, the product is ready for launch.
 Detailed information on the same 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,
 proto-type manufacturing and validation facilities. Such enhancement
 efforts have enabled R&D to develop durable and refined products. A
 number of new test facilities and proto typing facilities were added.
 
 C) Technology
 
 - ABS on Pulsar RS 200 - As the best balance for cost and safety, the
 vehicle has front wheel ABS that offers safe braking with good vehicle
 stability. It also controls the rear wheel lift-up behavior, which is
 associated with emergency front wheel braking. This augments and
 supplements the race sports nature of the vehicle.
 
 - EVAP systems for KTM offerings for USA and China markets - This
 system conforms to the evaporative emission norms of US EPA. The
 evaporative emission from fuel tank is controlled through use of
 charcoal canisters to absorb the fuel vapours from escaping into the
 atmosphere, and an electronically controlled purge valves to purge the
 absorbed vapour back into the intake system of the engine.
 
 D) Outgo
 
 The expenditure on research and development during 2014-15 and in the
 previous year was:-
 
                                              (Rs. In Crore)
 
 Particulars                                   FY 2015    FY 2014
 
 i. Capital (including technical know-how)      139.73     87.11
 
 ii. Recurring                                  221.68    189.68
 
 Total                                          361.41    276.79
 
 iii. Total research and development expenditure 
 as a % of sales, net of excise duty            1.71 %    1.40 %
 
 Conservation of energy
 
 Company continues its efforts to reduce and optimise the 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
 
 - Installing and running variable speed NIRVAN screw air compressors
 at compressor houses at Waluj.
 
 - Use of air pressure boosters for high pressure application in paint
 shops/robots at Waluj.
 
 - Installation of chillers with scroll compressor in paint shop at
 Waluj.
 
 - Arresting compressed air leakages through audits and
 countermeasures.
 
 - Auto shut off-hydraulic, coolant, conveyor motors, fume extractors
 in machine shop.
 
 - Installing air handling unit for plant 2 engine assembly in place
 of air conditioning system at Pantnagar.
 
 - Use of transparent sheet in shops in place of shop lights at
 Chakan.
 
 - Use of LED/CFLs for street lighting/shop lightings/office.
 
 - Use of day light pipes in paint shop at Chakan and Pantnagar.
 
 - Installation of energy efficient pumps/motors, equipments, air
 dryers, exhaust blowers, axial fans.
 
 - Installation of breeze air unit in office/dyno room/PT sub assembly
 area at Chakan.
 
 - Separate AHU ducts for both vehicle assembly conveyors at
 Pantnagar.
 
 - Dynamometer cooling blower interlock with vehicle testing at
 Chakan.
 
 B) Water
 
 - Elimination of water cooling for compressed air at Waluj.
 
 - Reuse of treated water for process, installation of RO plant at
 Waluj and Chakan.
 
 - Replacement of water cooled dryers of compressor with air cooled
 dryers at Chakan.
 
 - Replace underground hydrant and raw water pipe line with above
 ground level pipe line at Waluj and Chakan.
 
 - Use of auto closed water taps for controlled consumption of water
 at wash basin.
 
 - Use of ETP/STP treated water for chemical dosing and cleaning
 activity, gardening and toilet flushing at Pantnagar.
 
 - Modification of water distribution line by gravity from main
 storage tank to different shops at Pantnagar.
 
 - Rain water harvesting at Waluj.
 
 C) LPG/PNG
 
 - Thermal imaging/audit for ovens in paint shop and countermeasure at
 Waluj.
 
 - Use of PNG instead of LPG at Chakan.
 
 - Provision of air curtains at oven exit to reduce heat loss at
 Waluj.
 
 - Installation of low temperature chemical in tank cell at Chakan.
 
 - Weight reduction of job fixtures in heat treatment at Waluj and
 jigs at paint shop Pantnagar.
 
 - Burner efficiency improvement through magnetic resonators at Waluj
 and Chakan.
 
 - Recovery of heat from waste paint incineration and use it for
 chemical tank heating at Chakan.
 
 - Use of natural gas started in canteen in place of LPG at Pantnagar.
 
 D) Utilisation of renewable energy - key initiatives
 
 - Installation of transparent roof sheets to maximise use of natural
 light.
 
 - Installation of light pipes.
 
 - Use of solar electrical energy.
 
 - Use of wind driven ventilators.
 
 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                  FY 2015       FY 2014
 
 Electricity consumption        3.95          1.19
 
 Water consumption              7.37         24.24
 
 LPG/propane consumption       11.70         14.85
 
 Investment/savings
 
                                         Rs. In Crore
 
 Description                             FY 2015     FY 2014
 
 Investment for energy conservation 
 activities                                3.24        4.36
 
 Recurring savings achieved through 
 above activities                          3.57        2.74
 
 Awards and Accolades
 
 - Waluj plant has been recognised with ''Excellent Energy efficient
 unit award'' for 2014 by CII.
 
 - Waluj plant has won Gold Award (Apex level) in Indian Green
 Manufacturing Challenge award competition instituted by International
 Research Institute for Manufacturing, Chennai
 
 International Business
 
 Bajaj Auto continues to be India''s No.1 exporter of motorcycles and
 three-wheelers. It exports to 62 countries and enjoys the No.1 or No.2
 position in 20 of them. During FY2015, exports accounted for 46.2% 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 B 9,443.51 crore, compared to B 7,963.86 crore during the
 previous year.
 
 Total foreign exchange outflow during the year under review was B
 856.08 crore as against B 725.21 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 Chakan, the wage review was due from 1 April 2013 as per the Wage
 Settlement dated 21 May 2010. Accordingly, a Memorandum of
 Understanding (MOU) was signed with the recognised union viz. Vishwa
 Kalyan Kamgar Sanghatana, on 14 August 2014 giving total wage rise of B
 10,000 per month in CTC (Cost To Company) per workman in a phased
 manner for a period of three years from 1 April 2013 to 31 March 2016.
 
 At Waluj, the Wage Settlement was due from 1 August 2014. Accordingly,
 a fresh settlement was signed with Bajaj Auto Ltd. Employees'' Union on
 21 August 2014 for a period of 3.1/2 years from 1 August 2014 to 31
 January 2018 giving wage rise of B 9,755 per month in CTC (Cost To
 Company) per workman. The new settlement is effective from the very
 next day of expiry of the earlier settlement, which expired on 31 July
 2014.
 
 Two workmen from motorcycles division, Waluj received Prime Minister''s
 ''Shramveer'' and ''Shramshree'' Awards respectively for the year 2013. One
 workman from spares operations department, Waluj received National
 ''Vishwakarma Rashtriya Puraskar'' from the Labour and Employment
 Ministry, Government of India, for the year 2012. Similarly, three
 workmen from Waluj received ''Gunwant Kamgar'' Awards for the year 2013
 from Government of Maharashtra.
 
 Subsidiaries and joint ventures
 
 PT. Bajaj Auto Indonesia
 
 In line with the corporate strategy of aligning with Kawasaki Heavy
 Industries for business in Indonesia, the routine business operations
 of PT. Bajaj Auto Indonesia were stopped. This year has seen
 consolidation of business with Kawasaki and also a complete and smooth
 closure of company operations 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 (B 1,219 crore), and holds approximately 48%
 stake in KTM AG of Austria (KTM), Europe''s second largest sport
 motorcycle manufacturer. Calendar year 2014 has 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 8 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
 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 alongwith 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 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 were
 adequate and operating effectively.
 
 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 Companies Act, 2013. There being no ''material'' related
 party transactions as defined under clause 49 of the Listing Agreement,
 there are no details to be disclosed in Form AOC-2 in that regard.
 
 During the year 2014-15, pursuant to section 177 of the Companies Act,
 2013 and clause 49 of the Listing Agreement, all RPTs were placed
 before Audit Committee for its prior/omnibus approval.
 
 The policy on RPTs as approved by 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 of the Company 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
 
 Detailed information report 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 results
 
 The financial results of the Company for the year ended 31 March 2015
 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 Accounting
 Standards and Listing Agreement 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 financials 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
 
 As required under the provisions of section 197 (12) of the Companies
 Act, 2013 read with rule 5 of Companies (Appointment and Remuneration
 of Managerial Personnel) Rules, 2014, the prescribed particulars are
 set out in an annexure to the Directors'' Report. As per provisions of
 section 136 (1) of the said Act, these particulars will be made
 available to any shareholder on request.
 
 Certificate from auditors of the Company regarding compliance of
 conditions of corporate governance is annexed to this Report.
 
 A cash flow statement for the year 2014-15 is attached to the Balance
 Sheet.
 
 During the year under review, 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
 
 Ms. Suman Kirloskar, an independent director of the Company, after her
 distinguished tenure on the Board since October 2002, tendered her
 resignation to take effect from close of office hours on 31 March 2015.
 In her place, pursuant to section 149 (1) and clause 49 of Listing
 Agreement,
 
 Dr. Gita Piramal was appointed as an additional director in the
 category of non-executive, independent director of the Company, with
 effect from 1 April 2015 in the meeting of the Board held on 24 March
 2015.
 
 In light of the provisions of the Companies Act, 2013, Shekhar Bajaj as
 well as Niraj Bajaj 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 the directors is
 provided in the Notice of the ensuing annual general meeting.
 
 There was no change in the Managing Director, CFO and Company
 Secretary, collectively the key managerial personnel, 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.
 
 Adequacy of internal financial controls
 
 Internal financial controls with reference to the financial statements
 were adequate and operating effectively.
 
 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, alongwith 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 2014-15. 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 in clause 49
 of the Listing Agreement and the said certificate is contained in this
 Annual Report.
 
 Certificate from auditors of the Company regarding compliance of
 conditions of corporate governance is annexed to this Report.
 
 Business responsibility report
 
 Securities and Exchange Board of India (SEBI), vide its circular dated
 13 August 2012, has mandated inclusion of business responsibility
 reports (BRR) as part of the annual reports for the top 100 listed
 entities by market capitalisation. 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 2014-15, 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.
 
 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, Chartered Accountants (registration number: 102021W) were
 appointed by the shareholders at the 7th annual general meeting to hold
 office until the conclusion of the 10th annual general meeting, subject
 to ratification by shareholders at each annual general meeting.
 
 The members are requested to ratify the appointment of Dalal & Shah,
 Chartered Accountants, (registration number: 102021W) as statutory
 auditors of the Company and to fix their remuneration for the year
 2015-16.
 
 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 appointed, Shyamprasad D
 Limaye, (Membership No. 1587) Company Secretaries in Practice to
 undertake the secretarial audit of the Company. Secretarial Audit
 Report for the year 2014-15 given by Shyamprasad D Limaye in the
 prescribed form MR-3 is annexed to this Report.  The Secretarial Audit
 Report for the year under review does not contain any qualification,
 reservation or adverse remark or disclaimer made by the secretarial
 auditor.
 
 Cost audit/auditor
 
 Pursuant to the provisions of section 148 of the Companies Act, 2013
 and Companies (Cost Records and Audit) Rules, 2014, the products
 manufactured/services rendered by the Company were not covered for
 maintenance of cost records and therefore, the Company discontinued the
 cost audit and consequently, the Company has not appointed cost auditor
 for the financial year 2014-15.
 
 On behalf of the Board of Directors,
 
 
 Rahul Bajaj
 Chairman
 
 Pune: 21 May 2015
Source : Dion Global Solutions Limited
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