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Bajaj Finance Ltd.

BSE: 500034 | NSE: BAJFINANCE |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE296A01024 | SECTOR: Finance - Leasing & Hire Purchase

BSE Live

Aug 04, 16:00
6360.95 32.60 (0.52%)
Volume
AVERAGE VOLUME
5-Day
55,437
10-Day
55,970
30-Day
64,556
64,672
  • Prev. Close

    6328.35

  • Open Price

    6330.00

  • Bid Price (Qty.)

    6351.00 (1)

  • Offer Price (Qty.)

    6360.95 (61)

NSE Live

Aug 04, 16:01
6359.15 27.25 (0.43%)
Volume
AVERAGE VOLUME
5-Day
1,325,557
10-Day
1,502,130
30-Day
1,325,490
1,632,091
  • Prev. Close

    6331.90

  • Open Price

    6343.00

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    6359.15 (59)

Annual Report

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Director’s Report

1. The Directors present their Twenty-first Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2008. 2. Financial Results 2007-08 2006-07 Rs. million Rs.million Income from Operations 4,096.7 3,527.6 Other Income 930.8 490.3 Total 5,027.5 4,017.9 Provision for Doubtful Debts and 1,091.8 808.8 Bad Debts written off, net Depreciation 48.5 30.3 Profit before Taxation 299.8 712.5 Provision for Taxation 98.6 240.3 [including Deferred Tax Credit and FBT] Profit for the year after Taxation 201.2 472.2 Disposable surplus after earlier 205.8 476.4 years adjustments Appropriations : Transfer to Reserve Fund 41.5 96.0 Transfer to Debenture Redemption 90.0 207.5 Reserve Provision for Proposed Dividend 36.6 106.0 Provision for Dividend Tax 6.2 18.0 Balance carried to General Reserve/ 31.5 48.9 Balance Sheet 3. Dividend : The Directors recommend for the consideration of the Members at the Annual General Meeting, payment of Dividend of Re.1/- per Share (10 per cent) for the year ended 31st March, 2008 on the enhanced capital of Rs.366 million, after the conversion of balance warrants issued to the Promoters on preferential basis into equity shares during the year. The total Dividend outgo including tax thereon will be Rs.42.82 million. Dividend paid for the year ended 31st March, 2007 was Rs.3/- per share (30 per cent) and the total Dividend outgo including tax thereon was Rs.124.1 million. The Dividend recommended by the Board for the year 2007-08, apart from decline in profits, is also lower due to the legal requirements relating to creation of Debenture Redemption Reserve and rules pertaining to transfer of profits to reserves. Working Results During the year 2007-08, your company deployed a total amount of Rs.30,363 million, of which Rs.27,406 million were under various financing schemes and Rs.2,957 million in AAA rated securitized retail asset pools which is a new business initiative by the company. As against this, during the previous year 2006-07, the total amount deployed was Rs.26,313 million, thus recording an increase of 1 5% over the previous year. The Assets under Finance, Loan and Securitized Retail Asset Pool receivables as on 31st March, 2008 were Rs.33,319 million as compared to Rs.27,610 million as on 31st March, 2007. The profit before tax for the year was at Rs.299.8 million, as against Rs.712.5 million in the previous year and the profit after tax for the year was Rs.201.2 million as compared to Rs.472.2 million in the previous year. This has been primarily because of reduced subvention offers from the two wheeler manufacturer (Rs.59 million in 2007-08 against Rs.337 million in 2006-07), increased provision for doubtful debts and bad debts written off, net (Rs. 1,092 million in 2007-08 against Rs.809 million in 2006-07) due to the companys increased focus on semi-urban and rural markets in the last 2-3 years. 5. Prospects : In the backdrop of strong GDP growth witnessed in the last few years, the retail finance business is continuously growing at a rapid pace. This strong growth is also aided by changes in demographic profiles, expanding base of potential consumers, higher disposable incomes and increased product/ brand choices available to the customer. This high growth level has attracted banks and other multi- national players into retail finance business, thereby resulting in increased competition. However, there are some concerns at the end of the year with regard to increasing inflationary pressures and slowdown of economy, which could have an adverse impact on the demand for two wheelers, consumer durables and other retail lending products. It could result in a slow down in retail finance services and if prolonged, it could adversely affect the future financial performance of financial services companies in general. After a fast paced growth over the last few years, the retail finance industry in general is currently witnessing stress in its portfolio quality. This current trend in provisioning and bad debts is expected to prevail in the near term. The company during the year added about 500 permanent employees including some employees at a senior level in various specialised business/ operational areas, the benefits of which will be realised in next few quarters. The company expects to maintain satisfactory growth during the current year and aims to remain a leading player in the retail financial services business in the country through appropriate product strategy, leveraging on its expertise, enhancing its risk management capabilities in order to control delinquencies and launching new business initiatives. 6. New Initiatives : Since the third quarter of the year 2007-08, the company has launched various new business initiatives like acquisition of AAA rated securitized retail asset pools of reputed banks/ NBFCs, IPO financing, insurance distribution to its customers, cross sell of personal loans to existing customers with clean repayment history, financing to SMEs/ reputed educational institutions and universities for personal computers etc. The company is repositioning itself as a full-service NBFC offering wide range of products. 7. Share Capital : The company on 18th January, 2006, had allotted 3,006,540 Warrants to promoters - Bajaj Auto Ltd., on preferential basis, each Warrant being convertible at the option of Bajaj Auto Ltd., within 18 months from the date of allotment, into one fully paid Equity Share of Rs.10/- each on payment of an aggregate price of Rs.410/- per share. During the year under review, 1,247,940 Equity Shares were allotted to Bajaj Auto Ltd., on 17th July, 2007, on conversion of the balance Warrants on receipt of full consideration. With this allotment, the entire,3,006,540 Warrants allotted to them on preferential basis, now stand converted into Equity Shares. Earlier, 1,758,600 Warrants were converted into equity shares in March, 2007. After this allotment, the companys Paid-up Equity Share Capital is now Rs.366 million. 8. Repurchase of Debentures The company under its Rights Issue, had allotted 5,248,365 - 6% Non Convertible Debentures (NCDs) of the face value of Rs.500/- each aggregating Rs.2,624.2 million on 9th February, 2007. Of these, the company, as a treasury operation, repurchased 2,186,380 fully paid NCDs from the open market, at an average price of Rs.469.60 per NCD, in terms of the Letter of Offer dated 1st December, 2006. 9. Fixed Deposits : Your company received fresh deposits of Rs. 1.2 million and with renewals of Rs.6.8 million, the total deposits mobilised during the year under review, stood at Rs.8 million. Public Deposits outstanding at the year-end were Rs.61.1 million and the number of depositors was 2,539. At the end of the financial year under review, there were 191 deposits aggregating Rs.3.00 million which matured but remained unclaimed as on that date. The company had written to these depositors and as on date, deposits aggregating Rs.0.7 million have been repaid/renewed. 10. Credit Rating : CRISIL has re-affirmed the highest rating of FAAA/Stable for the Fixed Deposit programme of your company. This rating indicates very strong degree of safety with regard to timely payment of interest and principal. Your company is one of the very few Non-Banking Finance Companies (NBFCs) which enjoys the highest rating. The company also enjoys the highest rating of P1 + from CRISIL for Rs.7,000 million Commercial Paper programme. The Non-Convertible Debentures allotted on Rights basis to the shareholders have been assigned AA+/Stable rating by CRISIL and LAA+ rating by ICRA. As regards the Bank Loan Ratings for the bank facilities stipulated by RBI, as a part of BASEL II guidelines, CRISIL has assigned AA+/Stable rating for the companys Cash Credit/ Working Capital Demand Loan amounting to Rs.5,850 million and Long Term Loan facilities amounting to Rs.2,510 million and P1 + rating for the Short Term Loan facilities amounting to Rs.4,000 million. 11. RBI Guidelines : Your company continues to fulfill all the norms and standards laid down by the Reserve Bank of India (RBI) pertaining to non-performing assets, capital adequacy, statutory liquidity ratio etc. As against the RBI norm of 12 per cent, the capital adequacy ratio of your company is 40.69 per cent. In line with the RBI guidelines for Asset-Liability Management (ALM) system for NBFCs, the company has in place an Asset-Liability Committee. 12. Statutory Disclosures : As required under the provisions of Section 217(2A) 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 to the Directors Report. As per the provisions of Section 219(1 )(b)(iv) of the said Act, these particulars will be made available to any shareholder on request. The company, being a Non-Banking Finance Company, not having any manufacturing or foreign exchange activity, the Directors have nothing to report on Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo. 13. Directors Responsibility Statement : In compliance of Section 217(2AA) of the Companies Act, 1956, your Directors state that: (i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) 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; (iii) 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; (iv) The Directors have prepared the annual accounts on a going concern basis. 14. Directors : Shri Dipak Poddar, in view of his pre-occupation, resigned as the Managing Director of the company with effect from 1st April, 2008. Mr. Poddar has been the Managing Director of the company since its inception in 1987 and has been a key force in bringing the company to the present status of one of the leading retail finance company in India from a very small beginning. Although Mr. Poddar has ceased to be the Managing Director, he continues as a Director on the Board of the company and hence his valuable advice would always be available. The Board places on record its sincere appreciation for the valuable contribution made by Shri Dipak Poddar during his tenure as Managing Director of the company. Shri Rahul Bajaj, Shri Sanjiv Bajaj and Shri Madhur Bajaj, Directors, retire from the Board by rotation this year and being eligible, offer themselves for re- appointment. The information on the particulars of Directors seeking appointment / re-appointment as required under Clause 49 of the Listing Agreement with the Stock Exchanges has been given under the report on Corporate Governance. 1 5. Appointment of Manager under the Companies Act, 1956 : Subject to the approval of the shareholders, the Board of Directors have appointed Shri Rajeev Jain, Chief Executive Officer (CEO) of the company as the Manager under the Companies Act, 1956 for a period of three years with effect from 1 st April, 2008, on the terms of remuneration set out in the resolution in the Notice for the ensuing Annual General Meeting. The resolution is recommended for approval of the shareholders at the Annual General Meeting. 16. Auditors : You 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. 17. Corporate Governance : Your company complies with all the mandatory requirements pertaining to Corporate Governance, in terms of Clause 49 of the Listing Agreement with the Stock Exchanges. A detailed report on Corporate Governance has been included in this report along with a certificate from the auditors of the company regarding compliance of conditions of Corporate Governance. Further, a separate Management Discussion and Analysis report is also given in this report. On behalf of the Board of. Directors Pune Rahul Bajaj 21st May, 2008 Chairman

Director’s Report