Introduction
The directors present their fourth annual report and the audited
statements of accounts for the year ended 31 March 2011.
The highlights are as under:
Units in Numbers 2011 2010
Two-wheelers 3,387,070 2,511,643
Three wheelers 436,884 340,937
Total 3,823,954 2,852,580
Of which Exports 1,203,718 891,002
Financials
Rs. In Crore
2011 2010
Net sales & other income 16,974.74 12,043.48
Gross profit before
exceptional items,
interest & depreciation 3,750.73 2,715.06
Interest 1.69 5.98
Depreciation 122.84 136.45
Gross Profit before
Exceptional Items 3,626.20 2,572.63
Exceptional items:
Surplus on pre-payment of
sales tax
deferral liability/loan 826.82 —
Provision for diminution in
value of investment
in PT. Bajaj Auto Indonesia (102.27) —
VRS compensation — (183.30)
Valuation losses of
derivative hedging instruments — 21.80
Profit before tax 4,350.75 2,411.13
Provision for tax 1,011.02 707.50
Profit for the year 3,339.73 1,703.63
Add: Balance brought forward
from previous year 854.99 —
Profit available for
Appropriation 4,194.72 1,700.11
Transfer to General Reserve 334.00 170.27
Proposed dividend (inclusive
of dividend tax) 1,345.24 674.85
Balance carried to Balance Sheet 2,515.48 854.99
Earnings per share (Rs.) 115.4 58.8
Bonus Shares
Pursuant to the approval of the members of the company through postal
ballot on 31 August 2010, the company issued and allotted Bonus
share(s) of Rs. 10 each in the ratio of one bonus share for every one
existing equity share held as on 10 September 2010 i.e. the record date
fixed for the purpose. Consequently, the paid-up capital of the company
went up from Rs. 144.68 crore to Rs. 289.37 crore during the year under
review.
Dividend
The directors recommend for consideration of the shareholders at the
ensuing annual general meeting, payment of a dividend of Rs. 40 per
share, (400 per cent) for the year ended 31 March 2011 on the enhanced
capital after the bonus issue made in the ratio of 1:1 during the year
under review . The amount of dividend and the tax thereon aggregate to
Rs. 1,345.24 crore.
Dividend paid for the year ended 31 March 2010 was Rs. 40 per share
(400 per cent). The amount of dividend and the tax thereon aggregated
to Rs. 674.85 crore
Operations
The operations of the company are elaborated in the annexed Management
Discussion and Analysis Report.
Capacity expansion & New Projects
The company plans to maintain the capacity of two and three-wheelers at
the current level of 5,040,000 numbers per annum during the year ending
31 March 2012.
The 4 wheel vehicle development work is under progress and commercial
launch of the first product from this platform is scheduled for 2012.
Research & development and technology absorption
During the year under review, your company continued to invest
substantially in R & D facilities, resulting in the enhancement of its
infrastructure for design, prototyping & testing. R&D continued to work
on improving its operations in a number of areas during the year as
stated below:
- Manpower
- Facilities
- Technology
- Total Productivity Management (TPM)
Important products, which demonstrated the technical prowess of the
company launched during the year under review, were as under:
Avenger 220 DTS-i KTM Duke 125 Discover 150 Discover 125
Your company continues to focus on expanding its design and testing
teams, which has enabled it to make the new generation products.
The developments in this area are set out in greater detail in the
annexed Management Discussion and Analysis Report.
The expenditure on research and development during 2010-11 and in the
previous year was:
Rs. In Crore
2011 2010
i. Capital
(Including technical
know-how) 11.65 31.23
ii. Recurring 112.95 103.53
Total 124.60 134.76
iii.Total research and development
expenditure as a
percentage of sales, net of
excise duty 0.78 % 1.17 %
Conservation of energy
As a part of continuing efforts to conserve various resources,
following steps were taken to conserve energy in plants situated at
various locations:
- Electrical energy saving was achieved by replacing
conventional lamps with Light Emitting Diode (LED) street lights and
LED mid-bay lamps; installation of portable as well as auto load/unload
compressors in various shops, installatio of transparent roof sheets
for optimum utilisation of natural lights; Installation of fan-less
cooling towers for compressor house ;
- Water saving was achieved by usage of recycled water, drip
irrigation/sprinkler system for gardening, revising water change
frequency of paint booth water circulation system; regulating pump
on-off timing through timers and replacement of old underground water
pipes by above- ground pipes to avoid wastage of water due to leakage;
installation of time controlled auto system for water pumping in shops;
Use of treated water for construction at Pantnagar plant;
- Liquified petroleum gas (LPG)/propane saving was achieved by
reduction in number of initial heat up occurrences from two to one for
continuous gas carburising (CGC) furnace; installation of waste heat
recovery system for pre-heating of combustion air in paint shop;
reduction in hot water temperature for pre-treatment process; use of
reflective coating inside furnaces for better heat retention;
- Major initiatives in utilization of renewable energy were taken by
use of solar water heating system for shops, canteens etc; installation
of natural air exhaust (turbo Ventilators) in shops.
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 under :-
Reduction achieved in 2011 (%) 2010 (%)
Electrical energy 14.31 17.45
Water 13.33 26.96
LPG 14.40 12.37
Investment/savings
Investment for energy conservation activities Rs. 0.84 crore
Saving achieved through above activities Rs. 1.12 crore
International Business
Bajaj Auto maintained its stellar growth in exports and continued to be
Indias largest exporter of two and three-wheelers. During 2011, the
company exported 1,203,718 vehicles, achieving a growth of 35 % over
the previous year. In 2011, total exports amounted to Rs. 4,552 crore
(US $ 974.6 Million).
More details of International Business are set out in the annexed
Management Discussion & Analysis report.
Foreign exchange earning & 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. 4,564.78 crore, compared to Rs. 3,268.95 crore during
the previous year.
Total foreign exchange outflow during the year under review was Rs.
844.50 crore as against Rs. 461.61 crore during the previous year.
The above outflow includes an investment of Rs. 210.08 crore (Previous
Year; Rs. 1.60 crore) made in its 100% subsidiary, Bajaj Auto
International Holdings BV. Netherlands for increasing its stake in KTM
Power Sports AG from 31.92 % to 39.26 %.
Industrial relations
Industrial Relations with staff and workmen across the plants at
Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.
The wage settlements dated 21 May 2010 and 20 August 2010 were signed
in conciliation between the management and Vishwa Kalyan Kamgar
Sanghtana for BAL Chakan and BAL Akurdi respectively. Also the wage
settlement dated 1 March 2011 was signed in conciliation between the
management and Bajaj Auto Ltd. Employees Union for BAL Waluj.
Three workmen of BAL Waluj, Aurangabad received the Prime Minister
Shram Award at the hands of Prime Minister of India, on 15 September
2010.
Subsidiaries
PT. Bajaj Auto Indonesia (PT BAI) is a majority shareholding (98.94%)
subsidiary of Bajaj Auto Limited. The subsidiary assembles and markets
Pulsars in Indonesia.
The past year had recorded a significant growth in volumes compared to
last year. The growth was led by the Light Sports Pulsar 135.
Indonesia, being a light weight high acceleration step-through market
(bebek), Pulsar 135 LS is positioned competitively to upgrade from
bebek for the thrill seeking youngsters. The product is well received
by the customers and continued to do well. So far, there are more than
50,000 satisfied customers, owning Bajaj motorcycles in Indonesia.
Product portfolio will be expanded under Pulsar brand with Pulsar 220
in the first quarter of 2011-12.
During the year under review, sales and service showrooms were expanded
to cover 3 additional provinces. The company plans to increase the
number of sales & service show rooms from 84 Nos. to 130 Nos. in the
current year.
In an effort to bring down the customs duty liability, the subsidiary
has localised some of the assembly operations. It would continue to
pursue the localisation of sub- assemblies further in 2011-12. Custom
duty rates for SKD and CKD operations have been reduced by 5% from
December 2010 by Govt. of Indonesia
With the addition of Pulsar 135 & Pulsar 220 to the model lineup and
with increased local sub-assembly operations, the subsidiary would be
in a position to reduce its losses in 2011-12.
Notwithstanding what is stated above, considering the continuing losses
and longer gestation period, the company has assessed the carrying
value of investments made in PT. Bajaj Auto Indonesia and determined an
amount of Rs. 102.27 crore at present as a diminution in the value of
investment and has accordingly made a provision of the said amount.
Bajaj Auto International Holdings BV, Netherlands (BAIHBV)
During the year under review, BAIHBV invested further € 32 million to
increase its stake in KTM Power Sports AG (KTM PS) to 39.26%.
The first product KTM Duke 125cc went into production on 7 March 2011.
This product stands testimony to Bajaj Autos design, development and
production engineering skills.
KTM Duke 125cc has been extensively tested by European Auto Magazine
and has had rave reviews. The product has been launched in Europe in
April 2011.
KTM 200 from this platform is under development.
Signing for 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 has now
become a signatory to the “Commitment to anti-corruption” and has also
decided to support the “Partnering Against Corruption – Principles for
Countering Bribery” derived from Transparency Internationals 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.
Approval of Shareholders for Payment of commission
Directors seek your approval by way of a special resolution for payment
of commission to non-executive directors of a sum not exceeding 1% of
the net profits of the Company for a further five years term from 1
April 2011 to 31 March 2016, subject to applicable provisions of the
Companies Act, 1956. Earlier such approval has expired on 31 March
2011.
Corporate social responsibility
During the year 2010-11, Bajaj Auto continued its Affirmative Action
Plan & Corporate Social Responsibility initiatives in various fields.
Activities in this area are set out in greater detail in the annexed
CSR Report.
Directors
Nanoo Pamnani, Manish Kejriwal, P Murari and Niraj Bajaj 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.
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 and 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-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 fulfillment of
conditions mentioned therein. Prior to the issue of this Circular, the
company had applied for exemption under Section 212(8) of the Companies
Act, 1956. In response, the company received a communication from MCA
mentioning about the applicability of this general exemption and that
further no exemption would be necessary. The company has fulfilled all
the
necessary conditions in this regard. The summary of the key financials
of the companys 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 earning 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
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 2010-11 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 2010-11. 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.
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.
Group
Pursuant to an intimation from the Promoters, the names of the
Promoters and entities comprising “Group” as defined under the
Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969 are
disclosed in the Annual Report for the purpose of Regulation 3(1)(e) of
the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997.
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 Dalal & 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.
Mr A P Raman, cost accountant, Pune has been appointed as cost auditor
to conduct the said audit for the year 2011-12, and the government
approval in this regard has been received.
On behalf of the board of directors
Rahul Bajaj
Chairman
18 May 2011
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