1. The company had announced a Voluntary Retirement Scheme (VRS) on July 19, 2008 for the workmen of its Akurdi plant. The scheme was open till July 25, 2008. In response to the VRS, 2331 workmen opted for the same. Upto previous year, expenditure incurred on voluntary early separation was entirely expensed to Profit and Loss Account in the year of retirement. The company has this year decided to recognise such expenditure aggregating to Rs. 36660 lakhs over a period of two years in line with the option of the special transitional provision introduced in the Accounting Standard - 15 Employee Benefits allowing such expenditure to be deferred for recognition over the payback period but not extending beyond April 01, 2010. Accordingly, the company has recognised a charge for the year of Rs. 18330 Lakhs and the balance Rs. 1833 lakhs will be recognized as an expense in the subsequent year.

2. In order to recognize the impact of fluctuation in foreign currency rates arising out of Instruments acquired to hedge highly probable forecast transaction, in appropriate accounting periods, the company has from this year decided to apply the principles of recognition set out in the Accounting Standard 30 - Financial Instruments-Recognition and Measurement (AS-30) as suggested by the Institute of Chartered Accountant of India. Accordingly, the unrealised loss (net) consequent to foreign currency fluctuations, in respect of effective hedging instruments, represented by simple forward covers, to hedge future exports, were carried as a Hedging Reserve, during the year, and to be ultimately set off in the profit and loss account when the underlying transaction arises, as against the past practice of recognizing the losses, in respect of such derivatives, in the profit and loss account at the end of each period determined with reference to the foreign exchange rates at the close of the period. However, the amount outstanding in the hedge reserve at the close of the year is Rs. Nil.

The company has also, during the year, entered into range forward contracts to hedge highly probable forecast transactions, where the expo realizations of the company are protected below a minimum pre-determined foreign exchange rate whereas the realization advantages are available to the company there from up to a higher pre-determined foreign exchange rate. Though these instruments meet the management’s Foreign exchange risk management objectives, they do not meet the test of effectiveness as per the principles of hedge accounting. Hence valuation losses aggregating Rs 2180 lakhs, have been recognised in the profit and loss account.

3. Directors recommend a dividend of Rs 22 per share (220%) subject to approval of shareholders.

4. Pursuant to the scheme of demerger, shares were allotted to the shareholders of erstwhile Bajaj Auto Ltd on April 03, 2008.

5. Figures for previous year / period have been regrouped wherever necessary.

6. The above results have been reviewed by the Audit Committee and approved by the Board of Directors in the meeting held on May 21, 2009.

Rahul Bajaj
Chairman