Bajaj Hindusthan

The Directors have pleasure in presenting their Seventy-seventh annual
 report and the audited statement of accounts for the year ended
 September 30, 2008.
 
 Financial results
 
 The summarised results are presented below:
 
                                                2007-08         2006-07
                                            (Rs.million)    (Rs.million)
 
 Sales and other income                       18,028.72       17,436.61
 
 Gross profit before interest, 
 depreciation and extraordinary items          2,185.44        2,484.58
 
 Interest (Net)                                1,394.44          637.34
 
 Depreciation                                  1,872.21        1,468.82
 
 Profit/(loss) before tax                     (1,081.21)         378.42
 
 Provision for taxation 
 (including Fringe Benefit Tax)                   13.80           12.80
 
 Provision for deferred tax                     (618.17)         (90.85)
 
 Profit/(Loss) after tax                        (476.84)         456.47
 
 Disposable surplus after adjustments            164.53          819.64
 
 Transfer to general reserve                          -           50.00
 
 Proposed dividend                                84.84           84.84
 
 Tax on dividend                                  14.42           14.42
 
 Balance carried to balance sheet                 65.27          670.38
 
 Operating results and business
 
 On a stand-alone basis the Company achieved a turnover of Rs. 18,028.72
 million as compared to Rs. 17,436.61 million in the previous year. The
 net loss after tax stood at Rs. 476.84 million compared to the net
 profit of Rs. 456.47 million in the previous year.  On a consolidated
 basis, the turnover is Rs. 21,202.60 million as compared to Rs.
 18,128.62 million in the previous year. The net loss after tax and
 minority interest is Rs. 1,574.22 million compared to a net profit of
 Rs. 20.81 million in the previous year. The loss includes provision
 made towards foreign exchange fluctuation as per Accounting Standard 11
 
 Accounting for the Effects of changes in Foreign Exchange Rates.
 
 During the year Bajaj Hindusthan Limited (BHL) has completed its
 on-going capacity expansion and has strengthened its leadership
 position in the sugar and ethanol sectors by further augmenting its
 sugar capacity by 7,000 Tonnes crushed per day (TCD). The Company now
 has an aggregate crushing capacity of 96,000 TCD.
 
 The Companys co-generation plant at Kinauni, Budhana and Gangnauli
 units commenced operations during the current financial year thereby
 taking the total number of co-generation plants to seven in the Company
 with aggregate generating capacity of 262 M.W.
 
 Dividend
 
 The Board of Directors of the Company recommend for consideration of
 shareholders at the annual general meeting payment of dividend of 60%
 (Re.0.60 per share) on 14,14,07,111 equity shares of the face value of
 Re. 1/- each, for the year ended September 30, 2008. The dividend paid
 during the last year was 60% (Re.0.60 per share) on 14,14,07,111 equity
 shares of the face value of Re. 1/- each.
 
 Subsidiaries
 
 As per the provisions of Section 212 of the Companies Act, 1956, the
 Directors Report, Balance Sheet and Profit and Loss Account of our
 subsidiary companies are required to be attached with the Balance Sheet
 of the Company. However, in terms of approval granted under Section
 212(8) of the Companies Act 1956 by the Ministry of Corporate Affairs,
 Government of India, vide its letter No. 47/ 534/2008-CL-lll dated
 August 26, 2008, the Company has been exempted from complying with the
 provisions contained in sub-section (1) of Section 212 of the Companies
 Act, 1956 in respect of its following subsidiaries, viz.:-
 
 1.  Bajaj Hindusthan Sugar and Industries Limited (formerly known as
 The Pratappur Sugar & Industries Limited)
 
 2.  Bajaj Eco-Tec Products Limited
 
 3.  Bajaj Aviation Private Limited
 
 4.  Bajaj Internacional Participacoes Ltda. (Brazilian subsidiary)
 
 5.  Bajaj Hindusthan (Singapore) Pvt. Ltd. (Singapore subsidiary)
 
 As directed by the Ministry of Corporate Affairs, certain key
 information have been disclosed in an Annexure of the Consolidated
 Accounts forming part of this Annual Report.
 
 Upon written request, the annual accounts of the subsidiary companies
 and the related detailed information will be made available to the
 investors seeking such information, at any point of time, and the same
 will also be kept for inspection at the registered office of the
 Company.
 
 During the year, the Company has incorporated another wholly-owned
 subsidiary, viz. Bajaj Eco-Chem Products Private Limited. The first
 financial year of the said subsidiary will end on March 31, 2009.
 
 Bajaj Hindusthan Sugar and Industries Limited (BHSIL) (formerly known
 as The Pratappur Sugar & Industries Limited)
 
 During the financial year 2007-08, the company commissioned three new
 sugar plants at Kundarkhi, Rudauli & Utraula, all in the state of Uttar
 Pradesh, having an aggregate sugarcane crushing capacity of 34,000 TCD
 (tonnes crushed per day). With the commissioning of these new plants,
 total crushing capacity of BHSIL increased to 40,000 TCD. The Company
 also commissioned three co-generation plants at Kundarkhi, Rudauli and
 Utraula units with an aggregate generating capacity of 80 M.W.
 
 During the year 2007-08, BHSIL achieved a turnover of Rs. 2,986.97
 million as compared to Rs. 674.58 million in the previous year. The net
 loss however increased to Rs.757.48 million against a loss of Rs.
 251.19 million in the previous year. BHSIL crushed 1.99 million tonnes
 of sugarcane (as against 0.55 million tonnes of sugarcane crushed last
 year) and produced 1,94,477 (including Trial Run) tonnes of sugar as
 against 48,200 tonnes last year. The distillery division of BHSIL at
 Rudauli produced 24,229 kilolitres of industrial alcohol as against
 1,916 kilolitres last year.
 
 In December 2007, BHL paid balance 5% of the aggregate value of the
 warrants issued amounting to Rs. 142.50 million and exercised its
 rights attached to all the remaining 29,00,000 equity warrants out of
 38,00,000 equity warrants issued on July 18, 2006 on preferential basis
 and rights attached to all 2,80,00,000 equity warrants issued on
 February 9, 2007. Upon exercise, the Company was allotted an aggregate
 of 5,70,00,000 equity shares of BHSIL of the face value of Re. V- each
 at a price of Rs. 50/- per share, on December 26, 2007. Consequently,
 BHL made an open offer in terms of Regulation 11(1) read with 14(2) of
 Securities and Exchange Board of India (Substantial Acquisition of
 Shares and Takeovers) Regulations, 1997 to acquire upto 2,36,00,000
 fully paid-up equity shares of the face value of Re. 1/- each
 representing 20% of the issued and expanded paid-up capital of BHSIL at
 an offer price of Rs. 52.89 per share, determined in accordance with
 the said regulations. However, only 32,10,454 equity shares
 representing 2.72% of the paid-up capital of BHSIL were received under
 the offer by the Company taking up its post-open offer shareholding to
 9,07,40,724 equity shares representing 76.90% of the paid-up capital of
 BHSIL. In order to comply with the requirement of minimum public
 shareholding at 25% of the paid-up capital in terms of Clause 40A of
 the Listing Agreement, the Company sold 22,40,724 equity shares in the
 secondary market to bring down its holding in BHSIL to 75%.
 
 In September 2008, the Board of Directors of BHSIL considered and
 approved a Scheme of Arrangement, inter alia, comprising merger of
 Phenil Sugars Private Limited, which is presently holding more than 99%
 shares in two companies having one sugar plant each of the capacity of
 6,000 TCD located in the State of Uttar Pradesh and conversion into
 Zero Coupon Secured Optionally Convertible Securities of - (i) loan
 including interest thereon; and (ii) loans including interest thereon
 taken over by it from its future subsidiaries - due to the Company. The
 said scheme is subject to various approvals of the shareholders and
 creditors of the respective companies, the High Courts of judicature at
 Delhi and Bombay, Stock Exchanges and other concerned authorities.
 
 Bajaj Eco-Tec Products Limited
 
 Bajaj Eco-Tec Products Limited (BEPL) is one of the Wholly Owned
 Subsidiary (WOS) of Bajaj Hindusthan Limited (BHL). The project cost to
 set up plants at three locations in Uttar Pradesh to manufacture
 eco-friendly Particle Boards (PB) and Medium Density Fibre (MDF) Boards
 by using most advanced and modernized technology has escalated from an
 estimated sum of Rs. 2,500 million to Rs. 2,900 million due to purchase
 of some additional equipments not envisaged earlier and due to increase
 in civil construction cost.
 
 During the year, BHL had invested a further sum of Rs. 250 million by
 way of equity subscription.  Accordingly, till date, BHL invested Rs.
 1249.10 million by way of 11,500,000 equity shares of face value of Rs.
 10/- each at a price of Rs. 100/- (comprising Rs.  90/- as premium) and
 1,00,00,000 - 7% Redeemable Cumulative Non-Convertible Preference
 Shares of face value of Rs. 10/- each towards part funding of the
 overall project cost in this subsidiary.
 
 In April 2008, the Company commenced commercial production at all the
 three plants of PB & MDF. The Company has already established
 country-wide marketing & distribution network and its PB & MDF Boards
 are being marketed under the brand - Bajaj Boards. The product will
 go a long way for conservation of forests in the country.
 
 Bajaj Aviation Private Limited
 
 The Board of Directors of Bajaj Hindusthan Holdings Private Limited was
 actively exploring various opportunities to commence suitable business
 activity.  This coincided with the liberalized aviation policy
 announced by the Government of India with analysts predicting the
 aviation sector to grow at approximately 20% per annum. In order to
 take advantage of the opportunities in the aviation sector post
 liberalization, the name of the company was changed to Bajaj Aviation
 Private Limited (BAPL) and the Memorandum and Articles of Association
 of the Company was amended to reflect this new line of business in the
 aviation sector. Further, as a part of a corporate restructuring
 exercise, Bajaj Hindusthan Limited (BHL) sold the entire shareholding
 of Bajaj Aviation Private Limited to Bajaj Eco-Tec Products Limited
 (BEPL) making BAPL a wholly owned subsidiary of BEPL and consequently a
 step-down subsidiary of BHL
 
 During the year, BAPL has acquired one Bell-407 helicopter. This
 helicopter would be primarily used for charter services and similar
 operations where opportunities abound. This experience would enable the
 Company chart out the future course of action in line of
 diversification and expansion plans.
 
 Bajaj Eco-Chem Products Private Limited
 
 Bajaj Eco-Chem Products Private Limited (BECPPL), the wholly owned
 subsidiary of Bajaj Hindusthan Limited (BHL) was formed for the purpose
 of undertaking and carrying the business of manufacture and sale of
 speciality chemicals. As reported in the Directors Report for
 2006-2007, the Company was in the process of acquiring land in the
 state of Gujarat. We have now received the approval from Development
 Commissioner of Dahej SEZ, Gujarat for setting up a project. However,
 the Company is considering deferment of the project, due to the
 depressed financial conditions of markets worldwide.
 
 Bajaj Internacional Participacoes Ltda. (Brazilian subsidiary)
 
 In August 2006, Bajaj Hindusthan Limited (BHL) incorporated a wholly
 owned subsidiary in Brazil to target opportunities in the sugar/alcohol
 sector to leverage our strengths for the domestic and export markets.
 Due to the recent turmoil in Argentina and other Latin American
 countries, the company could not get the desired opportunities. Hence,
 the company is in the process of repatriating the capital invested in
 the said subsidiary.
 
 Bajaj Hindusthan (Singapore) Private Ltd.
 
 Bajaj Hindusthan (Singapore) Pvt. Ltd. was incorporated in May 2007 for
 the purpose of leveraging foreign business opportunities. During the
 year, BHL has advanced SGD 34,858 to meet out its maintenance
 activities & other statutory obligations.
 
 Consolidated financial statement
 
 The Audited Consolidated Financial Statement for the year ended
 September 30, 2008 prepared, pursuant to Clause 41 of the listing
 agreement entered into with stock exchanges and in accordance with the
 Accounting Standards prescribed by The Institute of Chartered
 Accountants of India (ICAI) are attached and forms part of this Annual
 Report.
 
 Environmental protection and pollution control
 
 Our concern for environmental safety is superseded only by our
 commitment to augment employee and community safety. The Company
 progressed further on various initiatives to achieve greater heights in
 the field of Environment, Health and Safety (EHS).  Benchmarking the
 EHS Management System to the best EHS practices, we integrated during
 the year, the responsibilities of EHS management amongst all employees.
 In line with the Companys policies, greater emphasis was placed on
 implementing the best practices on EHS management. All manufacturing
 locations remained fully compliant with Environmental Regulations. We
 launched new initiatives targeted at reducing Greenhouse Gases (GHG),
 conservation of natural resources and energy.
 
 Our concerted efforts were to incorporate integrated Environment
 Management Systems and Occupational Health & Safety (ISO 14001 & OHSAS
 18001) in our operational activities at Pratappur, Utraula, Kundarkhi &
 Rudauli. Several other initiatives like Standard Operating Procedures
 (SOPs) followed by Training programmes & programmes for Loss
 Prevention, Resource Conservation, Zero Discharge, Contractor Manual,
 EHS Manual, Transport Emergency Card (TREM), House Keeping, Green Belt
 Development, Clean Development Mechanism (CDM) for Carbon Credits,
 On-site Emergency Plan, Permit System, etc. with a thrust on continual
 improvement are going on unabated.
 
 With no reportable injuries during the year at Distilleries, we are
 committed to enhancing occupational health and safety. We launched a
 number of positive initiatives in this area like work permit system,
 drill and demonstration, on-site emergency plan followed by training to
 all employees including contract workers apart from visual Management.
 
 State-of-the-Art Technology - FLUBEX which is the most energy-efficient
 system is installed in Distilleries to reduce by half the volume of
 spent wash, which is ultimately utilized in Bio-compost to achieve Zero
 Discharge.
 
 Oil skimmers are put at all the sugar mills of the Company to retrieve
 used oil in order to reduce the pollution load at ETP under the Wealth
 from Waste program.
 
 Wet Scrubber and ESP with 65 meter Stake height are installed to
 restrict the emission well below the prescribed norms.
 
 Environmental clearance for the Greenfield Projects has been taken from
 the Ministry of Environment and Forests (MoEF) in order to execute the
 aggressive business growth plan.
 
 We have rigorously followed EHS norms at its manufacturing locations
 resulting in a decline of overall injuries all around. Continuous
 effort is made to maintain air pollutants and noise levels in work
 place environment to the minimum level.
 
 Critical activities that have a potential to cause injury were reviewed
 and the same were commenced only after implementation of appropriate
 controls.
 
 The newly created EHS Departments synergy is focused on specific
 improvement plans with the goal to imbibe an EHS culture, apart from
 improvement in Environmental and Safety performance across the
 organization and to move Beyond Compliance.
 
 We have established a water and air pollution control systems at all
 our sugar mills and distilleries. Our environmental program is
 administered internally by our Project and Engineering Departments and
 includes monitoring, measuring and reporting compliance, establishing a
 safety program and training to our personnel in environmental and
 safety matters.
 
 Conservation of energy, technology absorption and foreign exchange
 earnings and outgo
 
 The relevant data regarding the above is given in the Annexure-I hereto
 and forms part of this report.
 
 Particulars of employees
 
 As required under the provision 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 employees are set
 out in the Annexure-ll and forms part of this report.
 
 Fixed deposits
 
 Fixed deposits accepted from shareholders and public stood at Rs. 0.79
 million as at September 30, 2008 as against Rs.2.42 million in the
 previous year. As on September 30, 2008 there were unclaimed deposits
 from six deposit holders amounting to Rs.  0.79 million.
 
 Directors
 
 Mr. Suresh A. Kotak and Mr. Niraj Bajaj resigned from the Board on
 September 23, 2008 and December 31, 2008 respectively. The Board
 recorded its appreciation for the contribution made by Mr. Suresh A.
 Kotak and Mr. Niraj Bajaj during their tenure of directorship.
 
 Mr. Ml. Apte and Mr. D.S. Mehta, Directors of the Company, will retire
 by rotation and being eligible, offer themselves for re-appointment.
 
 Mr. Shishir Bajaj has been on the Board of the Company since February
 01, 1986 and was appointed Managing Director of the Company with effect
 from July 01, 1988. He has been the Managjng Director of the Company
 since then. He has also been the Chairman of the Company since 1999.
 The term of office of Mr. Shishir Bajaj as the Managing Director of the
 Company expired on June 30, 2008. The Board of Directors, at its
 meeting held on April 23, 2008, re-appointed Mr. Shishir Bajaj as the
 Managing Director for another term of five (5) years w.e.f. July 01,
 2008 at a remuneration approved by the Remuneration Committee, subject
 to the approval of shareholders and other authorities. Requisite
 approval in this regard is being sought at the forthcoming Annual
 General Meeting of the Company.
 
 Life Insurance Corporation of India withdrew the nomination of Mr. D.
 K. Shukla, Nominee Director on November 11, 2008. The Board of
 Directors wishes to place on record its appreciation for the
 contribution made by Mr. D. K. Shukla during his tenure of
 directorship.
 
 Mr. D. K. Shukla was re-inducted as Addditional Director on the Board
 of the Company on December 21, 2008. He holds office up to the next
 Annual General Meeting of the Company. The Company has received notice
 from one of the shareholders for appointment of Mr. D. K. Shukla as
 Director of the Company liable to retire by rotation. Requisite
 approval in this regard is being sought at the forthcoming Annual
 General Meeting of the Company.
 
 All the appointments of the Directors of the Company are in compliance
 with the provisions of Section 274(1 )(g) of the Companies Act, 1956.
 
 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 the SEBI (Substantial
 Acquisition of Shares and Takeovers) Regulations, 1997.
 
 Directors responsibility statement
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, as amended, with respect to the directors responsibility
 statement, it is hereby confirmed:
 
 (i) that in preparation of accounts for the financial year ended
 September 30, 2008, the applicable accounting standards have been
 followed along with proper explanation relating to the material
 departures;
 
 (ii) that the directors of the Company have selected such accounting
 policies and applied them consistently and made judgements and
 estimates that are reasonable and prudent so as to give a true and fair
 view of the state of affairs of the Company as at September 30, 2008
 and of the loss of the Company for the year ended September 30, 2008;
 
 (iii) that the directors of the Company 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; and
 
 (iv) that the directors of the Company have prepared the accounts of
 the Company for the financial year ended September 30, 2008 on a going
 concern basis.
 
 Corporate governance
 
 The Company has continued its quest to follow the best corporate
 governance practices towards building trust among shareholders,
 employees, customers, suppliers (including farmers) and diverse
 stakeholders on four key elements of corporate governance -
 transparency, fairness, disclosure and accountability.
 
 Management discussion and analysis
 
 Management Discussion and Analysis Report is presented in a separate
 section forming part of this Annual Report.
 
 Auditors
 
 M/s. Dalai & Shah, auditors of the Company, will retire at the ensuing
 Annual General Meeting of the Company and are eligible for
 re-appointment.  Shareholders are requested to re-appoint the auditors
 and fix their remuneration.
 
 The Company has received Government orders for conduct of the audit of
 cost accounts for both of its products - sugar and industrial alcohol -
 maintained by the Company, M/s. B.J.D. Nanabhoy & Co.  Cost
 Accountants, Mumbai have been appointed as cost auditors to conduct the
 said audits. Necessary government approval in this regard has been
 obtained.
 
 The programme for physical verification of assets, commensurate with
 the size of the Company and the nature of its business, as referred to
 by the Auditors in their Report (refer para (i) of the Annexure to
 their report) is expected to be set up at the earliest.
 
 Industrial relations
 
 Industrial relations have been cordial at all the plants of the
 Company.
 
 The Directors express their appreciation of the sincere co-operation
 and assistance of Central and State Government authorities, bankers,
 customers and suppliers and business associates. Your Directors also
 wish to place on record their deep sense of appreciation for the
 committed services by your Companys employees. Your Directors
 acknowledge with gratitude the encouragement and support extended by
 our valued shareholders.
 
                                           For and on behalf of the 
                                                 Board of Directors
 
                                                      SHISHIR BAJAJ
                                       Chairman & Managing Director
 Mumbai,
 January 29, 2009