Bajaj Holdings & Investment Limited
67th Annual Report 2011-12Bajaj Holdings & Investment Limited
II
ContentsBoard of Directors02Directors’ Report03Management Discussion and Analysis10Corporate Governance14General Shareholder Information24Report on Corporate Social Responsibility30Standalone Financial Statements39Consolidated Financial Statements81
Sanjiv BajajManaging DirectorBoard of DirectorsCEOAuditorsRahul BajajChairmanV S Raghavan(upto 12 Decemer 2011)Dalal and ShahChartered AccountantsCompany SecretaryBankersMandar VelankarCitibank N AHDFC BankSanjiv BajajManaging Director(w.e.f. 1 April 2012 andNon-executive Directorupto 31 March 2012)Madhur BajajD J Balaji RaoS H KhanRajiv BajajRegistered under the IndianCompanies Act, 1913Nanoo PamnaniManish KejriwalNaresh ChandraP Murari2Registered OfficeMumbai-Pune RoadAkurdi, Pune 411 035
Bajaj Holdings & Investment Limited67th Annual Report 2011-12Directors’ ReportIntroductionThe directors present their sixty-seventh annual report and the audited statements ofaccounts for the year ended 31 March 2012.OperationsThe operations and financial figures of the Company are elaborated in the annexedManagement Discussion and Analysis Report. The highlights are as under:-Financial results (Standalone)( In Crore)20122011Total Revenue650.37Finance 571.41567.46997.71—2.38Profit for the year567.461,000.09Add: Balance brought forward from previous year411.05163.71Profit available for appropriation978.511,163.80Transfer to Reserve Fund u/s 45-IC(1) of theReserve Bank of India Act, 1934113.49200.0256.75100.01Proposed dividend (inclusive of dividend tax)322.18452.72Balance carried to Balance Sheet486.09411.05Basic Earnings per share ( )51.093.4Diluted Earnings per share ( )51.091.9Profit before taxTax expenseProfit after taxAdd: Tax credits pertaining to earlier yearsTransfer to General Reserve1,076.45Financial results (Consolidated)The highlights of the Consolidated Financial Results are as under:( In Crore)20122011Total Revenue301.03900.41Profit before tax and exceptional item288.94888.27Profit before tax274.93888.27Income from associates after tax1,480.701,504.23Profit for the year1,679.172,322.76Basic Earnings per share ( )150.9217.0Diluted Earnings per share ( )150.9213.53
Bajaj Holdings & Investment Limited67th Annual Report 2011-12DividendThe directors recommend for consideration of the shareholders at the ensuing annual generalmeeting, payment of dividend of 25 per share (250 per cent) for the year ended31 March 2012. The amount of dividend and the tax thereon aggregates to 322.18 crore.Dividend paid for the year ended 31 March 2011 was 35 per share (350 per cent).The amount of dividend and the tax thereon aggregated to 452.72 crore.De-notification of Special Economic Zone (SEZ)The Board of Approval (BoA), Ministry of Commerce and Industry, had granted its formalapproval to Bajaj Holdings & Investment Limited i.e. erstwhile Bajaj Auto Limited on7 April 2006 for development, operation and maintenance of Engineering SEZ atWaluj, Aurangabad.Your Company had taken numerous steps from time to time over the last few years fordevelopment of SEZ. Given the market conditions and withdrawal of some tax incentives,your Company feels that its SEZ Project is not viable in the changed market scenario.The Company has, therefore, applied on 25 January 2012 to the appropriate authority ofGovernment of India for de-notification of its SEZ Project. The BoA vide its letter dated27 March 2012 has conveyed its in-principle approval for de-notification of the Company’s SEZ.Registration as a Systemically ImportantNon-deposit Taking NBFCThe Company has been registered with the Reserve Bank of India as a Non-Banking FinancialInstitution (non-deposit taking). In terms of provisions of Non-Banking Financial (Non-DepositAccepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007,your Company is categorised as a ‘systemically important non-deposit taking non-bankingfinancial company’ having total assets of 100 crore and above. The Company has notaccepted public deposits during the year under review.Subsidiary/Joint venture/AssociatesFollowing are the companies, which are the subsidiary/joint venture/associate companiesof the Company:% Shareholding of Bajaj Holdings &Investment Limited as on 31 March 2012StatusBajaj Auto Limited31.49%AssociateBajaj Finserv Limited39.15%Associate100%Subsidiary24%Joint VentureName of the CompanyBajaj Auto Holdings LimitedMaharashtra Scooters Limited (MSL)A Summary of financial results of the aforesaid subsidiary/associates/joint-venture has beencovered under the Management Discussion and Analysis report.As regards Maharashtra Scooters Ltd. (MSL), a company jointly promoted by the Company(erstwhile BAL) and Western Maharashtra Development Corporation Ltd. (WMDC), WMDChad offered to sell its 27 per cent shareholding in MSL and the Company had confirmed itswillingness to purchase these shares. The price at which the shares were to be sold, had beenjointly referred to a sole arbitrator, Justice Arvind V Savant (Retd.), with an understanding inwriting that arbitral award would be binding on both.4
Bajaj Holdings & Investment Limited67th Annual Report 2011-12As reported in the past, the award of the arbitrator dated 14 January 2006 valuing the shareprice of MSL at 151.63 per share as the rate at which 3,085,712 equity shares of MSL heldby WMDC are to be sold to the Company, was challenged by WMDC in the Bombay High Court.After hearing both the parties, the Hon’ble Bombay High Court, vide its order dated15 February 2010, while confirming the ruling of the Arbitrator on the relevant date forvaluation and on the methodology adopted by the Arbitrator on valuation, set aside theAward of the Learned Arbitrator on the ground that the Arbitral Award goes contrary to theprovisions of Section 111A of the Companies Act, 1956, which relates to free transferability ofshares in a public limited company. The Company has challenged the decision of the Hon’bleBombay High Court by way of filing an Appeal before the Division Bench of the High Court onvarious grounds and the same has been admitted. The Appeal is currently under progress.Sad demise of Shri V S Raghavan, CEOShri V S Raghavan, CEO of the Company, who was suffering from a major ailment, passedaway on 12 December 2011 at Pune.Shri Raghavan was also the ‘manager’ of the Company in terms of provisions of the CompaniesAct, 1956 since 20 February 2008. He was associated with the Bajaj Group since 1984.The Board hereby notes and takes on record the contribution made by Shri V S Raghavanduring his association with the Group in various capacities.DirectorsDuring the year under review, the Board, at its meeting held on 27 March 2012, has,subject to approval by the shareholders, appointed Sanjiv Bajaj as Managing Director of theCompany for a period of 5 years with effect from 1 April 2012 to 31 March 2017 and alsofixed his remuneration, based on the recommendation made by the Remunerationand Nomination Committee.D J Balaji Rao and Naresh Chandra retire from the Board by rotation this year and beingeligible, offer themselves for re-appointment.Corporate Social ResponsibilityDuring the year 2011-12, Bajaj Group continued its Corporate Social Responsibility (CSR)initiatives in various fields. Activities in this area are set out in detail in the annexed CSR Report.Directors’ responsibility statementAs required by sub-section (2AA) of Section 217 of the Companies Act, 1956, directors state:lthat in the preparation of annual accounts, the applicable accounting standards havebeen followed alongwith proper explanation relating to material departures.lthat the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent, so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand of the profit of the Company for that period.lthat the directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.lthat the annual accounts have been prepared on a going concern basis.5
Bajaj Holdings & Investment Limited67th Annual Report 2011-12Presentation of financial resultsPursuant to Notification dated 28 February 2011 issued by the Ministry of CorporateAffairs, the format for disclosure of financial statement prescribed under Schedule VI to theCompanies Act, 1956 has been substantially revised. The financial results of the Company forthe year ended 31 March 2012 have, therefore, been disclosed as per the revisedSchedule VI. Previous year’s figures have also been restated to conform with the currentyear’s presentation.Consolidated financial statementsThe directors also present the audited consolidated financial statements incorporating the dulyaudited financial statements of the subsidiary, associates and joint venture and as prepared incompliance with the accounting standards and listing agreement as prescribed by SEBI.Information in aggregate for the subsidiary company is disclosed separately in theconsolidated balance sheet.Statutory disclosuresMinistry of Corporate Affairs (MCA) vide Circular No. 51/12/2007-CL-III dated 8 February 2011has given general exemption with regard to attaching of the balance sheet, statement of profitand loss and other documents of its subsidiary companies subject to fulfillment of conditionsmentioned therein. The Company has fulfilled all the necessary conditions in this regard henceis not attaching the balance sheet, statement of profit and loss and other documents of thesubsidiary company. The summary of key financials of the Company’s subsidiary company isincluded in this annual report.The annual accounts of the subsidiary company and the related detailed information will bemade available to the members of the Company and its subsidiary company, seeking suchinformation at any point of time. The annual accounts of the subsidiary company will bekept for inspection by any member of the Company at its registered office and also at theregistered office of the concerned subsidiary company.As required under the provisions of sub-section (2A) of Section 217 of theCompanies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975as amended, particulars of the employees are set out in an Annexure to the DirectorsReport. As per provisions of Section 219(1)(b)(iv) of the said Act, these particulars will bemade available to any shareholder on request.The Company has no particulars to report regarding technology absorption, conservationof energy and foreign exchange earnings and outgo as required under Section 217(1)(e) ofthe Companies Act, 1956 and Companies (Disclosure of Particulars in the report of Board ofDirectors) Rules, 1988.Directors’ Responsibility Statement as required by Section 217(2AA) of theCompanies Act, 1956 appears in a preceding paragraph.Certificate from auditors of the Company regarding compliance of conditions of corporategovernance is annexed to this report.Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulationshave been made in this annual report.A Cash Flow Statement for the year 2011-12 is attached to the balance sheet.Corporate GovernancePursuant to clause 49 of the listing agreement with stock exchanges, a separate section titled‘Corporate Governance’ has been included in this annual report, alongwith the reports onManagement Discussion and Analysis and General Shareholder Information.6
Bajaj Holdings & Investment Limited67th Annual Report 2011-12All Board members and senior management personnel have affirmed compliance withthe code of conduct for the year 2011-12. A declaration to this effect signed by theChief 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 thefinancial statements and other matters as required in clause 49 of the listing agreement andthe said certificate is contained in this annual report.Secretarial standards of ICSISecretarial standards issued by the Institute of Company Secretaries of India (ICSI) fromtime to time are currently recommendatory in nature. Your Company is, however, complyingwith the same.GroupPursuant to an intimation from the promoters, the names of the promoters and entitiescomprising “Group” as defined under the erstwhile Monopolies and Restrictive Trade Practices(“MRTP”) Act, 1969 are disclosed in the annual report in terms of Regulation 3(1)(e) of theerstwhile SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.Auditors’ reportThe observations made in the Auditors’ Report, read together with the relevant notes thereonare self-explanatory and hence, do not call for any comments under Section 217 of theCompanies Act, 1956.AuditorsThe members are requested to appoint M/s Dalal and Shah, Chartered Accountants as auditorsfor the period from the conclusion of the ensuing annual general meeting till the conclusion ofthe next annual general meeting and to fix their remuneration.On behalf of the Board of DirectorsRahul BajajChairman17 May 20127
Bajaj Holdings & Investment Limited67th Annual Report 2011-12Annexure 1Auditors’ certificate regarding compliance of conditionsof Corporate GovernanceTo the Members ofBajaj Holdings & Investment LimitedWe have examined the compliance of conditions of Corporate Governance byBajaj Holdings & Investment Limited, for the year ended 31 March 2012, as stipulated inClause 49 of the Listing Agreements of the said Company with stock exchanges in India.The compliance of conditions of Corporate Governance is the responsibility of the Company’smanagement. Our examination was carried out in accordance with the Guidance Note onCertification of Corporate Governance (as stipulated in Clause 49 of the Listing Agreement),issued by the Institute of Chartered Accountants of India and was limited to proceduresand implementation thereof, adopted by the Company for ensuring the compliance of theconditions of Corporate Governance. It is neither an audit nor an expression of opinion on thefinancial statements of the Company.In our opinion and to the best of our information and according to the explanations given tous, we certify that the Company has complied with the conditions of Corporate Governance asstipulated in the above mentioned Listing Agreement.We state that such compliance is neither an assurance as to the future viability of theCompany nor the efficiency or effectiveness with which the management has conducted theaffairs of the Company.For Dalal and ShahFirm Registration Number: 102021WChartered AccountantsAnish P AminPartnerMembership Number: 40451Pune: 17 May 20128
Bajaj Holdings & Investment Limited67th Annual Report 2011-12Annexure 2Declaration by Chief Executive Officer (CEO)I, Sanjiv Bajaj, Managing Director of Bajaj Holdings & Investment Limited hereby declare thatall the Board members and senior managerial personnel have affirmed for the year ended31 March 2012 compliance with the code of conduct of the Company laid down for them.Sanjiv BajajManaging DirectorPune: 17 May 2012Annexure 3Certificate by Chief Executive Officer (CEO) andChief Financial Officer (CFO)We, Sanjiv Bajaj, Managing Director and Kevin D’sa, CFO of Bajaj Holdings & InvestmentLimited, certify:1. That we have reviewed the financial statements for the year ended 31 March 2012 andthat to the best of our knowledge and belief;lthese statements do not contain any materially untrue statement nor omit anymaterial fact nor contain statements that might be misleading, andlthese statements present a true and fair view of the Company’s affairs and are incompliance with the existing accounting standards, applicable laws and regulations2. That there are, to the best of our knowledge and belief, no transactions entered into by theCompany during the year, which are fraudulent, illegal or violative of the Company’s codeof conduct;3. That we accept responsibility for establishing and maintaining internal controls, we haveevaluated the effectiveness of the internal control systems of the Company and we havedisclosed to the auditors and the audit committee, deficiencies in the design or operationof internal controls, if any, of which we are aware and the steps that we have taken orpropose to take to rectify the identified deficiencies; and4. That we have informed the auditors and the audit committee oflsignificant changes in internal control during the year;lsignificant changes in accounting policies during the year and that the same havebeen disclosed in the notes to the financial statements; andlinstances of significant fraud of which we have become aware and the involvementtherein, if any, of the management or an employee having a significant role in theCompany’s internal control systemSanjiv BajajManaging DirectorPune: 17 May 2012Kevin D’saChief Financial Officer9
Bajaj Holdings & Investment Limited67th Annual Report 2011-12ManagementDiscussion and AnalysisBajaj Holdings & Investment Limited (‘BHIL’ or ‘the Company’), after the demerger of erstwhileBajaj Auto Limited in 2007-08, is essentially an investment company. The Company holds31.49% in Bajaj Auto Limited and 39.15% in Bajaj Finserv Limited, the results of which areconsolidated with BHIL.FY 2012 has been a mixed year for the Company as its performance on standalone basis wasaffected by the depressed equity markets during the year. Performance of its associates hashowever generally been impressive in terms of revenue and profit.lStandalone Income - 650.37 crore v/s 1,076.45 crorelStandalone Profit for the year - 567.46 crore v/s 1,000.09 crorelConsolidated Profit for the year - 1,679.17 crore v/s 2,322.76 croreStandalone Results of Bajaj Holdings& Investment LimitedThe performance of the Company is directly related to the performance of its investments.Income of the Company consists of interest on securities, dividend income and profit on saleof investments. During the year, total income was 650.37 crore as against 1,076.45 croreduring the previous year.Dividend income was 411.30 crore as against 225.01 crore during the previous year,mainly on account of increase in dividend by Bajaj Auto Limited.During the year, profit on sale of investments for the year under review dropped from 706.52 crore to 85.72 crore. Due to slowdown in market and depressed equity marketconditions, opportunities for booking profits on investments were limited during the yearunder review.Standalone results of Bajaj Holdings & Investment Ltd. are given in Table 1:Table 1: Financial performance of Bajaj Holdings & Investment Limited( In 85.72706.52Profit on sale of investmentsOthersTotal IncomeOther expensesProfit before taxTax expenseAdd: Tax credits pertaining to earlier yearsProfit for the 69.1275.3571.41—2.38567.461,000.09
Bajaj Holdings & Investment Limited67th Annual Report 2011-12The Company’s assets broadly consist of equity investments and investments in liquid andsecured instruments. The position of investments and its corresponding market values aregiven in Table 2.Table 2: Position of investments held by the Company( In Crore)2012Cost2011Market ValueCostMarket ValueBajaj Auto Limited286.2215,297.06286.2213,332.99Bajaj Finserv Limited375.603,464.10346.132,934.86Other group companies236.24545.75223.91592.60Other equities (including application money)1,516.782,140.561,211.572,350.80Subtotal – Equity shares2,414.8421,447.472,067.8319,211.25Mutual funds – equi
Bajaj Holdings & Investment Limited 67th Annual Report 2011-12 . Profit before tax and exceptional item 288.94 888.27 . During the year under review, the Board, at its meeting held on 27 March 2012, has, subject to approval by the shareholders, appointed Sanjiv Bajaj as Managing Director of the .
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