Bajaj Holdings & Investment

The directors present their sixty-third annual report and the audited
 statements of accounts for the year ended 31 March 2008.
 
 Demerger
 
 During the year under review, the Honble High Court of Judicature at
 Bombay approved the scheme of arrangement of demerger of the company
 vide its order dated 18 December 2007.  Accordingly, the manufacturing
 undertaking of the erstwhile Bajaj Auto Ltd. (BAL) has been vested with
 new Bajaj Auto Limited and the strategic business undertaking
 consisting of wind farm business and financial services business has
 been vested with Bajaj Finserv Limited. The appointed date of this
 demerger was closing hours of business on 31 March 2007.
 
 Consequently, the name of the company has changed from Bajaj Auto
 Limited to Bajaj Holdings & Investment Limited and a fresh certificate
 of incorporation in the new name of the company has been issued by the
 Registrar of Companies, Maharashtra, Pune on 5 March 2008.
 
 Pursuant to the demerger, the company now holds strategic investments
 in the group.  The demerger enables the new companies to tap (on an
 arms length basis) into the cash pool of the company to support their
 future growth initiatives, even while enabling the company to
 participate in the growth of the auto business and the financial
 services business. The company will function primarily as an investment
 company and will focus on new business opportunities.
 
 The operations and financial results of the company are elaborated in
 the annexed Management Discussion and Analysis Report.  On account of
 the demerger, the previous years figures of the company are not
 comparable and hence are not given. The highlights are as under :-
 
 Financial results
 
 Operative income                                       3,553
 Gross profit before interest & depreciation            3,495
 Depreciation                                               2
 Profit before taxation                                 3,493
 Provision for taxation                                   423
 Profit after tax                                       3,070
 Disposable surplus                                     3,070
 Proposed dividend                                      2,368
 (inclusive of dividend tax)
 Earnings per share (Rs.)                                30.3
 
 Dividend
 
 The directors recommend for consideration of the shareholders at the
 ensuing annual general meeting, payment of dividend of Rs. 20 per share
 (200 per cent) for the year ended 31 March 2008.  The amount of
 dividend and the tax thereon aggregates to Rs. 2,368 million.
 
 Dividend paid for the year ended 31 March 2007 was Rs.40 per share (400
 per cent). The amount of dividend and the tax thereon aggregated to Rs.
 4,735 million. In view of the demerger, the dividend figures for the
 year 2006-07 and 2007-08 are not comparable.
 
 Conservation of energy, technology absorption and foreign exchange
 earnings & outgo
 
 The company, having become an investment company pursuant to the
 demerger of the company, has nothing to report on Conservation of
 Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
 during the year under review.
 
 Joint ventures / new companies
 
 After the demerger of the company, investments of the company in Bajaj
 Allianz Life Insurance Company Limited (BALICL), Bajaj Allianz General
 Insurance Company Limited (BAGICL) have been transferred to Bajaj
 Finserv Limited and investments in PT Bajaj Auto Indonesia (PTBAI) and
 Bajaj Auto International Holdings BV (BAIHBV) have been transferred to
 new Bajaj Auto Limited.
 
 After the demerger, the following are the companies, which are the
 subsidiary companies /joint venture / associate companies of the
 company:
 
 a.   Bajaj Auto Holdings Ltd.             Subsidiary
 b.   Maharashtra Scooters Ltd.            Joint Venture
 c.   Bajaj Auto Ltd.                      Associate
 d.   Bajaj Finserv Ltd.                   Associate
 
 Maharashtra Scooters Ltd. (MSL) is a company jointly promoted by
 erstwhile BAL and Western Maharashtra Development Corporation Ltd.
 (WMDC). WMDC had offered to sell its 27 per cent shareholding in MSL
 and erstwhile BAL had confirmed its willingness to purchase these
 shares. The price at which the shares were to be sold, had been jointly
 referred to a sole arbitrator, Justice Arvind V Savant (Retd.), with an
 understanding in writing that arbitral award would be final and binding
 on both.
 
 As reported last year, the award of the arbitrator dated 14 January
 2006 valuing the share price of MSL at Rs. 151.63 per share as the rate
 at which 3,085,712 equity shares of MSL held by WMDC are to be sold to
 erstwhile BAL i.e. to the company, has been challenged by WMDC in the
 Bombay High Court.
 
 Directors
 
 Consequent to demerger of the company and vesting of manufacturing
 undertaking with Bajaj Auto Limited and strategic business undertaking
 with Bajaj Finserv Limited, eight directors of the company viz.
 Kantikumar Podar, D S Mehta, J NGodrej, Ms Suman Kirloskar, Naresh
 Chandra, P Murari, Shekhar Bajaj and Niraj Bajaj resigned as directors
 of the company with effect from the 20 February 2008 the effective date
 of scheme of arrangement of demerger.
 
 Further, Rahul Bajaj resigned as executive chairman, Madhur Bajaj
 resigned as executive vice chairman, Rajiv Bajaj resigned as managing
 director and Sanjiv Bajaj resigned as executive director of the company
 with effect from 20 February 2008, the effective date of scheme of
 arrangement of demerger. Rahul Bajaj will continue to act as
 non-executive chairman and Madhur Bajaj, Rajiv Bajaj and Sanjiv Bajaj
 shall continue on the board as non-executive directors.
 
 Madhur Bajaj and Rajiv 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 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 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, associates and joint ventures 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
 
 An application has been made for exemption with regard to attaching of
 the balance sheet, profit and loss account and other documents of its
 subsidiary company, Bajaj Auto Holdings Limited and the approval for
 the same is awaited. The summary of the key financials of the companys
 subsidiary is included in this annual report.
 
 The annual accounts of the subsidiary company and the related detailed
 information will be made available to the members of the company and
 its subsidiary company, seeking such information at any point of time.
 The annual accounts of the subsidiary company 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.
 
 An application has been made for exemption with regard to disclosure of
 investments in the investment schedule in the accounts under section
 211 (4) of the Companies Act, 1956 and the approval for the same is
 awaited.  Any shareholder interested in obtaining the details thereof
 may write to the 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 the 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 : The company, having become
 an investment company pursuant to the demerger of the company, the
 company has nothing to report on Conservation of Energy, Technology
 Absorption, Foreign Exchange Earnings and Outgo during the year under
 review.
 
 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 2007-08 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 Additional Shareholder Information.
 
 All board members and senior management personnel have affirmed
 compliance with the code of conduct for the year 2007-08.  A
 declaration to this effect signed by the Chief Executive Officer
 (Operations) [CEO (O)] of the company is contained in this annual
 report.
 
 The CEO (O) and Chief Financial Officer (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.
 
 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 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 view of demerger of the company, provisions relating to cost audit
 will no longer be applicable to the company from the year under review.
 
                                   On behalf of the board of directors
 
                                             Rahul Bajaj
                                             Chairman 
 22 May 2008