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Directors Reports

Bajaj Auto Ltd (INDUSTRY : Automobile)

  • BSE Code: 532977
  • NSE Symbol: BAJAJ-AUTO
  • ISIN Demat: INE917I01010
  • Book Value ( ₹ ) 830.03
  • Face Value ( ₹ ) 10
  • Market Cap ( ₹ Cr. ) 96,249.26
  • P/E (TTM): 18.42
  • EPS (TTM): 180.53
  • Div Yield (%): 4.21

The directors present their Fourteenth Annual Report and Audited Financial Statements for the year ended 31 March 2021.

Financial Results

The financial results of the Company are elaborated in the report on Management Discussion and Analysis. Given below are the financial highlights.

Sales in numbers FY2021 FY2020
Two-wheelers 3,605,893 3,947,568
Commercial vehicles 367,021 667,644
Total 3,972,914 4,615,212
Of which exports 2,054,247 2,171,105

(Rs. in Crore)

Particulars FY2021 FY2020
Total revenue 29,017.54 31,652.21
Total expenses 23,078.54 25,072.01
Profit before exceptional items and tax 5,939.00 6,580.20
Exceptional items - -
Profit before tax 5,939.00 6,580.20
Tax expense 1,384.41 1,480.22
Profit for the year 4,554.59 5,099.98
Earnings per share (Rs.) 157.5 176.3

Closing balances in reserve/other equity

(Rs. in Crore)

Particulars FY2021 FY2020
General reserve 5,887.60 5,431.60
Retained earnings 18,861.25 14,750.44
Cash flow hedging reserve 148.90 5.63
Costs of hedging reserve (58.06) (121.81)
FVTOCI reserve 88.43 (413.13)
Share based payments reserve 16.91 10.01
Treasury shares (32.14) (26.62)
Total 24,912.89 19,636.12

Note: Detailed movement of above reserves can be seen in ‘Statement of Changes in Equity.

Dividend Distribution Policy

Under the regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, the Company has formulated a dividend distribution policy. The Board at its meeting held on 17 March 2021 has amended the existing dividend distribution policy in a major way.

The policy sets out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders.

As a green initiative, the policy has been uploaded on the Companys website and can be accessed at https://www.bajajauto.com/investors/codes-policies. A copy of the policy will be made available to any shareholder on request by email.

Dividend

The directors recommend for consideration of shareholders at the ensuing annual general meeting, payment of a dividend of H140 per equity share of RS. 10 each (1400%) for the year ended 31 March 2021.

For the year ended 31 March 2020, the dividend paid was RS. 120 per share of RS. 10 each (1200%) and the total dividend and the tax thereon to the extent applicable aggregated to RS. 4,186.16 crore.

As per the amended Income Tax Act, 1961, hereafter there will be no dividend distribution tax payable by the Company. The dividend, if declared, will be taxable in the hands of the shareholders subject to tax deduction at source at the applicable rates. For details, shareholders are requested to refer to the Notice of annual general meeting.

The dividend recommended is in accordance with the principles and criteria as set out in the dividend distribution policy.

Share Capital

The paid-up equity share capital as on 31 March 2021 was RS. 289.37 crore. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights or sweat equity shares.

Operations

Detailed information on the Companys operations is covered in the report on Management Discussion and Analysis.

Capacity Expansion and New Projects

The Companys current installed capacity is 6.33 million units per annum.

Detailed information on capacity expansion and new projects is covered in the report on Management Discussion and Analysis.

Research and Development (R&D) and Technology Absorption

FY2021 was a difficult year due to the impact of Covid-19. However, this did not deter the Companys R&D from achieving the product launches that were planned for the year.

A) Products

During 2020-21, R&D successfully delivered 41 projects across various product segments to meet the domestic and export requirements. Information on the new products is covered in the report on

 

Management Discussion and Analysis.

B) Processes

R&D has been working on improving its operations in a number of areas as listed below:

Manpower: R&D has expanded its team size in areas of design, analysis and validation to facilitate the rapidly expanding aspirations of the Company.

Facilities: R&D continued to enhance its design, computing, prototype manufacturing and validation facilities. A number of new test facilities and prototyping facilities were added.

C) Technology

As in the past, new and improved technology has been introduced during the year. Such information is covered in the report on Management Discussion and Analysis.

D) Outgo

The expenditure on R&D during 2020-21 and in the previous year was:

(Rs. in Crore)

Particulars FY2021 FY2020
i. Capital (including technical know-how) 21.14 67.02
ii. Recurring 403.33 408.04
Total 424.47 475.06
iii. Total research and development expenditure as a percentage of sales 1.56% 1.63%

Conservation of Energy

Company continues its efforts to reduce and optimize the energy consumption at all its manufacturing facilities, including corporate office at Pune.

Significant reduction in energy consumption has been achieved by various means as shown hereunder:

A) Electrical Energy

• Efficient utilisation of rooftop solar plants: 5MW at Waluj, 1MW at Pantnagar, 3.2MW at Akurdi and 2MW at Chakan.

• Installation of 1,050 energy efficient LED luminaires across all our factories for energy conservation. Estimated savings are some 23,000 units per month.

• Provision of energy efficient motor for de-sludge pump in paint shop at Chakan and energy efficient motors at ETP at Akurdi.

• Installation of energy efficient air compressor, sealing of small air leakages through ultrasonic air leak detector, optimising pneumatic pressure for paint shop equipment for energy conservation.

• Installation of a centralised ARP system for energy conservation of paint shop MCD Waluj.

• Installation of power factor controller RTPFC panels at heavy fluctuating load areas for power quality improvement and overall KVAH reduction by maintaining overall power factor greater than 0.99 across all factory locations.

• Use of HVLS fans and pivot fans for air circulation in shop floors.

• Provision of ION Boiler at the washing machine for heating of the water in place of conventional heaters at Pantnagar.

• Water chiller integration and removal of multiple heating, ventilation and air conditioning (HVAC) systems led to optimum utilisation of energy in water chillers for the R&D process area.

• ASU conventional blowers replaced by DC brushless motors at Pantnagar.

• Optimum control of plant illumination by centrally controlling of plant street lighting through PLC logic remote switching at all plants.

• Installation of VFDs for ARP blowers, ED and topcoat forced coolers at the three-wheeler engine assembly and paint shop.

• Centralised operation of machines resulting in reduced power requirement of auxiliary port equipment.

• Continued use of motion sensors for offices and washroom lights switching.

B) Water

• Rain water storage pond with capacity of 85,000 cubic meter for Waluj plant.

• Use of ETP treated water with rainwater to feed RO plant for paint shop process.

• Continuous reuse of treated water for processes like cooling towers, vehicle washing, test track etc. in addition to toilet flushing and gardening.

• Continued rainwater harvesting across all plants; and efficient use of the sewage treatment plant (STP) water for gardening.

• Reuse of pre-treatment line DM2 overflow water for DM plant at Pantnagar.

• Reuse of dewatering mist spray water in RCDI stage at Pantnagar.

• Use of one touch taps and sensor-based taps for hand wash at various areas across factories.

• Orificing of taps and flush valves at hand wash and toilet to control consumption.

• Rerouting and resizing of the fresh water supply headers above the ground at Waluj plant.

• Use of a second stage RO plant to further treat the high TDS reject of first stage RO and generation of permeate for industrial use in paint shop.

• Water chiller integration and removal of HVAC systems resulting in reduced water consumption.

C) LPG/Propane

• Continued use of magnetic resonance in oven PNG supply.

• Continued use of low temperature chemicals for pre-treatment process at paint shops.

• Use of induction cooking at canteens for vessels up to 40 inch size.

• Use of energy efficient burners in the canteens in all plants.

• Improved thermal efficiency of oven by thermo coating application on the ovens internal surface.

• Lacquer oven auto ON/OFF during lunch and dinner time in paint shops across all plants.

D) Utilisation of Renewable Energy-Key Initiatives

• Usage of renewable solar power generation: 5MW at Waluj, 1MW at Pantnagar, 3.2MW at Akurdi and 2MW at Chakan generating 160 lakh units per year of renewable energy.

• Utilisation of solar water heaters in the canteen of all plants.

• Use of direct sunlight to illuminate shops by installation of skylights across all plants.

Impact of Measures Taken

As a result of the initiatives taken for conservation of energy and natural resources, the Company has brough about an overall reduction in consumption as given in the table below:

% Reduction w.r.t. previous year
Description FY2021* FY2020
Electricity consumption 10.20 1.20
Water consumption 9.60 17.43
LPG/PNG consumption -4.50# 3.97

* Nine months performance.

# Increase is effect of lower volume of Commercial Vehicles production.

Investment/Savings

(Rs. in Crore)

Description FY2021 FY2020
Investment for energy conservation activities 1.69 1.61
Recurring savings achieved through above activities 0.53 0.61

Detailed information on the above is given in the report on Business Responsibility.

Awards and Accolades

• Certified with latest Safety System Certification, ISO 45001:2018, for the Waluj and Pantnagar plants.

• Bureau Veritas Covid-Self Safe Assessment: Certification in Platinum category.

International Business

Despite the lockdown in March 2020, Bajaj Auto exported over 2.05 million vehicles in 2020-21. Exports accounted for RS. 12,687 crore or USD$ 1.65 billion and comprised 46.8% of net sales. The Company continues to remain, by far, Indias No.1 exporter of motorcycles and three-wheelers.

More detailed information is given in the report on Management Discussion and Analysis.

Foreign Exchange Earnings and Outgo

The Company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was RS. 12,181.88 crore, as compared to RS. 11,872.37 crore during the previous year.

Total foreign exchange outflow during the year under review was RS. 753.34 crore, as against RS. 872.88 crore during the previous year.

Industrial Relations

This year, the Company embarked on the process map towards reinventing transformation. This has not only set new benchmarks, but also streamlined its business excellence through productivity and people engagement.

Industrial relations with staff and workmen across all the plants viz. Akurdi, Waluj, Chakan and Pantnagar, continued to be cordial.

Fostering Employee Engagement

Keeping business excellence as the centre, the Company has not only improvised engagement activities, but also tried to instil trust and confidence through innovative engagement frameworks.

Various employee engagement activities like monthly/quarterly Kaizen competitions, online yoga sessions, online learning platforms and certification courses have been organised to inculcate a sense of belonging among employees across all plants.

Employee Health and Wellness

To ensure that the manufacturing processes and supply chain do not get affected during the Covid-19 pandemic, the Company has taken several measures such as provision of medicine to improve immunity, doctors advice, coupled with regular health check-ups and daily screening of employees.

Regular deep-cleaning and sanitisation of shop floor and offices are being conducted. All employees have been equipped with sanitisers and protective masks and are covered by a Covid–19 insurance, which includes pay and benefits, if they are quarantined or diagnosed with the disease.

At its Waluj plant, the Company has set up a Covid care centre and at Chakan, Akurdi and Pantnagar, it has collaborated with various Covid care centres to quarantine affected employees and family members.

Subsidiaries and Joint Ventures

PT. Bajaj Auto Indonesia (PT BAI)

Routine business operations of PT BAI, a 99.25% subsidiary of Bajaj Auto, remain discontinued.

Indonesia is a large two-wheelers market and hence of interest for PT BAI. All the required manufacturing, import and business licences stand renewed.

In the Sports category, PT BAI would continue to study the evolving market and evaluate different possible opportunities.

In view of global pandemic situation all over the world, the Company maintains a cautious approach and monitor the market developments.

Bajaj Auto International Holdings BV, Netherlands (BAIH BV)

BAIH BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd. Over the years, through this subsidiary, Bajaj Auto has invested a total of €198.1 million (RS. 1,219 crore) and holds approximately 48% stake in KTM AG of Austria (KTM), the fastest growing motorcycle brand in the world.

Calendar year 2020 was impacted due to Covid-19, but KTM bounced back strongly in the second half of the year backed by good retail demand in USA, LATAM and Australian markets.

• KTM sold 208,852 motorcycles versus 213,949 in the previous year.

• KTM achieved a turnover of €1.41 billion compared to €1.51 billion in the previous year.

• Profit after tax was at €71.2 million (RS. 638 crore) versus €84.6 million (RS. 670 crore).

• The proportionate profit to Bajaj Auto was €34.1 million (RS. 306 crore) as against €40.6 million (RS. 322 crore) in the previous year, which shows up in the consolidated results.

During the year, Bajaj Auto manufactured 148,183 units of KTM and Husqvarna at its Chakan plant. Of these, 63,187 units were sold through the Pro-biking network and 79,832 were exported.

Bajaj Auto (Thailand) Ltd.

Bajaj Auto (Thailand) Ltd. was incorporated as a wholly owned subsidiary in Thailand with an issued and subscribed share capital of Thai Baht (THB) 45 million (Rs. 11 crore). It has obtained all necessary approvals from local authorities to set up an International Business Centre and an Engineering Design Centre under this subsidiary.

While the start of the activity was delayed by the pandemic, the Engineering Design Centre is now operational and international designers are operating from this new facility in Bangkok. This marks a new beginning for Bajaj R&D expanding its design centre to trend-defining markets round the globe. Full scale operations including International Business Centre is likely to commence in the coming year.

During the year under review, no company became or ceased to be our subsidiary, joint venture or associate company.

Anti-Corruption Initiatives

The Company has established several policies to prevent corruption within Bajaj Auto. These are suitably integrated with the business operations. The Company also has adequate disclosure practices with regard to anti-corruption activities. Some of these practices are given below:

Signing of the Anti-Corruption Initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, the Company is a signatory to the ‘Commitment to Anti-Corruption and is supporting the ‘Partnering Against Corruption-Principles for Countering Bribery derived from Transparency Internationals Business Principles. This calls for a commitment to two fundamental actions, viz. a zero-tolerance policy towards bribery and the development of a practical and effective implementation programme.

Adoption of the Confederation of Indian Industry (CII) Charters

Your Company, being a member of CII, has adopted the following Codes/Charters:

1. CII Code of Conduct for Affirmative Action.

2. Model Code of Conduct for Ethical Business practices.

3. Charters of Fair and Responsible Workplace Guidelines for Collaborative Employee Relations.

4. Charters on Fair and Responsible Workplace Guidelines for Contract Labour.

More details on the subject are given in the Business Responsibility Report hosted on the Companys website on https://www.bajajauto.com/investors/annual-reports

Annual Return

A copy of the annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013 (the ‘Act), in the prescribed form, is hosted on the Companys website and can be accessed at https://www.bajajauto.com/investors/annual-reports.

Number of Meetings of the Board

There were five meetings of the Board held during the year. Detailed information is given in the

 

Corporate Governance Report.

Directors Responsibility Statement

As required under clause (c) of sub-section (3) of section 134 of the Act, directors, to the best of their knowledge and belief, state that:

• in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

• the directors had 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 and loss of the Company for that period;

• the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• the directors have overseen that the annual accounts have been prepared on a going concern basis.

• the directors have laid down internal financial controls to be followed by the Company and that, to the best of their knowledge, examination and analysis, such internal financial controls have been adequate and were operating effectively; and

• the directors had ensured through oversight of the existence of proper systems to ensure compliance with the provisions of all applicable laws and that, to the best of their knowledge, such systems were adequate and were operating effectively.

Details regarding Frauds reported by Auditors under section 143(12)

During the year under review, there were no frauds reported by the auditors to the audit committee or the Board under section 143(12) of the Act.

Declaration by independent directors

The independent directors have submitted their declaration of independence, as required under section 149(7) of the Act stating that they meet the criteria of independence as provided in section 149(6) of the Act, as amended and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations, 2015), as amended. The independent directors have also confirmed compliance with the provisions of the rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended, relating to inclusion of their name in the databank of independent directors.

The Board took on record the declaration and confirmation submitted by the independent directors regarding their meeting the prescribed criteria of independence, after undertaking due assessment of the veracity of the same as required under Regulation 25 of the Listing Regulations, 2015.

Directors remuneration policy and criteria for matters under section 178

The Board, at its meeting held on 13 March 2019, revised the commission from RS. 150,000 to RS. 250,000 payable per meeting to all non-executive (including independent) directors for meetings of Board and committees thereof attended by them from 1 April 2019 onwards as members.

The salient features and changes to the policy on directors appointment and remuneration form a part of the Corporate Governance Report. The policy is on the Companys website https://www.bajajauto.com/investors/codes-policies

Particulars of Loans, Guarantees or Investments

Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Act, are detailed in the financial statements.

Related Party Transactions

No related party transactions (RPTs) were entered into by the Company during the financial year, which could have attracted the provisions of section 188 of the Act. There being no ‘material RPTs as defined under regulation 23 of Listing Regulations, 2015, there are no details to be disclosed in Form AOC-2 in that regard.

During the year 2020-21, pursuant to section 177 of the Act and regulation 23 of Listing Regulations, 2015, all RPTs were placed before the audit committee for its approval. All RPTs during the year were conducted at arms length and were in the ordinary course of business.

Pursuant to regulation 23 of Listing Regulations, 2015, the Board, at its meeting held on 13 March 2019, revised the policy on materiality of RPTs and on dealing with RPTs inter alia by including clear threshold limits.

The revised policy on materiality of RPTs as approved by the Board is on the Companys website https://www.bajajauto.com/investors/codes-policies

Material Changes and Commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.

Risk Management Policy

Information on the development and implementation of a risk management policy for the Company, including identification of elements of risk which, in the opinion of the Board may threaten the existence of the Company, is given in the Corporate Governance Report.

Corporate Social Responsibility (CSR)

Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been amended substantially with effect from 22 January 2021.

In terms of the provisions of the Act read with amended Companies (Corporate Social Responsibility Policy) Rules, 2014, the Annual Report on CSR activities in the format prescribed under Annexure II of the said Rules is annexed to this Report.

In line with the said amendments, the Board, at its meeting held on 29 April 2021, amended the existing policy. The policy including the composition of the CSR committee is uploaded on the Companys website www.bajajauto.com

The Chief Financial Officer has certified that the funds disbursed have been utilised for the purpose and in the manner approved by the Board for FY2021.

Formal Annual Evaluation of the Performance of the Board, its Committees, Chairperson and Individual Directors

Information on the manner in which a formal annual evaluation has been made by the Board of its own performance and that of its Committees, Chairperson and Individual Directors is given in the Corporate Governance Report.

Presentation of Financial Statements

The financial statements of the Company for the year ended 31 March 2021 have been disclosed as per Division Il of Schedule III to the Act.

Indian Accounting Standards, 2015

The annexed financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Act, Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

Consolidated Financial Statements

The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, as prepared in compliance with the Act, applicable accounting standards and Listing Regulations, 2015.

Internal Audit

At the beginning of each financial year, an audit plan is rolled out with approval by the Companys audit committee. The plan is aimed at evaluation of the efficacy and adequacy of internal control systems and compliance thereof, robustness of internal processes, policies and accounting procedures and compliance with laws and regulations. Based on the reports of internal audit, process owners undertake corrective action in their respective areas. Significant audit observations and corrective actions are periodically presented to the audit committee of the Board.

Statutory Disclosures

The summary of the key financials of the Companys subsidiaries (Form AOC-1) is included in this Annual Report. A copy of the audited financial statements for each of the subsidiary companies will be made available by email to members of the Company, seeking such information.

The audited financial statements for each of the subsidiary companies will be available for inspection upto the date of annual general meeting by any member of the Company on the Companys website www.bajajauto.com

Details as required under the provisions of section 197(12) of the Act, read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, inter alia, ratio of remuneration of directors and KMP to median remuneration of employees and percentage increase in the median remuneration are annexed to this Report.

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as required under the provisions of section 197(12) of the Act, read with rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, which form part of the Directors Report, will be made available to any shareholder on request, as per provisions of section 136(1) of the said Act.

The directors responsibility statement as required by section 134(5) of the Act, appears in a preceding paragraph.

A cash flow statement for 2020-21 is attached to the balance sheet.

The provisions of section 148 of the Act, are not applicable to the Company. Accordingly, there is no requirement of maintenance of cost records as specified under sub-section (1) of section 148 of the Act.

Pursuant to the legislation ‘The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has a policy on Prevention of Sexual Harassment at Workplace. During the year under review, one complaint was received from one of the employees, which was investigated and redressed by the internal complaints committee formed under the aforesaid Act and closed. The actions recommended by the Committee have been implemented.

There was no other case reported during the year under review under the said policy.

Directors and Key Managerial Personnel-Changes

I. Changes in Directorate

(a) Rahul Bajaj, after successfully leading Bajaj Auto Ltd. (including erstwhile BAL) for five decades, stepped down as Executive Chairman and was appointed as Non-executive Chairman with effect from 1 April 2020. Given his age, Rahul Bajaj has decided to step down as Non-executive Chairman with effect from close of business hours on 30 April 2021.

Rahul Bajaj has made a huge contribution to the success of the Company and the Group over the last five decades. Considering his tremendous experience, it is in the interest of the Company to continue to benefit from his experience, knowledge and wisdom from time to time in an advisory role and as a mentor.

In light of the above, the Board at its meeting held on 29 April 2021, on the recommendation of nomination and remuneration committee and with approval by the audit committee unanimously conferred upon Rahul Bajaj, the title of Chairman Emeritus of the Company for a term of five years with effect from 1 May 2021.

As Chairman Emeritus, Rahul Bajaj will, inter alia, mentor, guide and provide perspective to the Board and management including in relation to the broad strategic aspects of the business, corporate governance-related matters and support in establishing and enabling relations with external fora like industry chambers and institutions etc.

(b) Consequent upon the resignation of Rahul Bajaj, Chairman of the Company, the Board at its meeting held on 29 April 2021 has unanimously appointed Niraj Bajaj, non-executive director of the Company as Chairman of the Company with effect from 1 May 2021.

II. Retirement by Rotation

Independent directors hold office for a fixed term not exceeding five years from the date of their appointment and are not liable to retire by rotation.

The Act, mandates that at least two–third of the total number of directors (excluding independent directors) shall be liable to retire by rotation. Accordingly, Niraj Bajaj (DIN 00028261) and Sanjiv Bajaj (DIN 00014615), directors, being the longest in the office among the directors liable to retire by rotation, retire from the Board this year and, being eligible, have offered themselves for re–appointment.

Brief details of Niraj Bajaj and Sanjiv Bajaj are given in the notice of annual general meeting.

III. Re-appointment of Whole-time Director

Pradeep Shrivastava was appointed as the Whole-time Director of the Company for a period of five years from 1 April 2016 up to 31 March 2021. The Board, on recommendation of the nomination and remuneration committee and after evaluating his performance and the valuable contribution made by him in the progress of the Company, has approved his re-appointment for another term of five years commencing from 1 April 2021, subject to approval of the shareholders.

Accordingly, resolution seeking his re-appointment for a further term of five years and brief details of Pradeep Shrivastava are given in the notice of annual general meeting.

There was no other change in the directors and key managerial personnel during the year under review since the last report.

Detailed information on the directors is provided in the Corporate Governance Report.

Significant and Material Orders passed by the Regulators or Courts

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which may impact the going concern status of the Company and its operations in future.

Covid-19 Impact

The second wave in Covid-19 now exceed 3 lakh cases per day across India. A complete lockdown, like the last time, is not yet enforced. While fear, economic uncertainty and disruptions continue to impact the already fragile business environment and our operations, the full impact of this cannot be assessed at this point of time. However, this does not affect the going concern status of the Company.

Details of Internal Financial Controls with reference to the Financial Statements

The Company has documented its internal financial controls considering the essential components of various critical processes, both physical and operational. This includes its design, implementation and maintenance, along with periodic internal review of operational effectiveness and sustenance and whether these are commensurate with the nature of its business and the size and complexity of its operations.

This ensures orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Internal financial controls with reference to the financial statements were adequate and operating effectively.

Corporate Governance

Pursuant to Listing Regulations, 2015, a separate chapter titled ‘Corporate Governance has been included in this Annual Report, along with the reports on Management Discussion and Analysis and

 

General Shareholder Information.

All Board members and senior management personnel have affirmed compliance with the Code of Conduct for 2020-21. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report.

The Managing Director (CEO) and Chief Financial Officer have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the Listing Regulations, 2015.

Certificate from the auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report.

Employee Stock Option Scheme

The Company grants share-based benefits to eligible employees with a view to attracting and retaining talent, to encourage employees to align individual performance with the Company objectives and to promote their increased participation in the growth of the Company.

During the year under review, there has been no change in the Bajaj Auto Employee Stock Option Scheme 2019 (BAL-ESOS 2019) of the Company. BAL-ESOS 2019 is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 and this has been certified by the statutory auditors of the Company.

In line with regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, a statement giving complete details, as at 31 March 2021, is available on the website of the Company https://www.bajajauto.com/investors/annual-reports

Details of options vested, exercised and cancelled are provided in the notes to the standalone financial statements.

Business Responsibility Report

Pursuant to the provisions of the Listing Regulations, 2015, a Business Responsibility Report (‘BRR) has been hosted on the website and can be accessed at https://www.bajajauto.com/investors/annual-reports.

The BRR highlights the initiatives, actions and processes of the Company in conducting its business in line with its environmental, social and governance obligations.

A copy of the BRR will be made available by email to any shareholder on request.

Secretarial Standards of ICSI

The Company has complied with the requirements prescribed under the Secretarial Standards on Meetings of the Board of Directors (SS–1) and General Meetings (SS–2) read with the MCA Circulars granting exemptions in view of the Covid-19 pandemic.

Statutory Auditor

Pursuant to provisions of Section 139 of the Act, the members at the annual general meeting of the Company held on 20 July 2017 appointed S R B C & CO LLP (Firm Registration No. 324982E/E300003) as statutory auditors of the Company from the conclusion of 10th annual general meeting till the conclusion of 15th annual general meeting, covering one term of five consecutive years. The statutory auditors have confirmed that they are not disqualified from continuing as auditors of the Company.

The statutory audit report for the year 2020-21 does not contain any qualification, reservation or adverse remark or disclaimer made by statutory auditor.

Secretarial Auditor

Pursuant to the provisions of section 204 of the Act and Rules made thereunder, the Company has re-appointed, Shyamprasad D Limaye, Practising Company Secretary (Membership No.1587, CP No. 572) to undertake the secretarial audit of the Company. Secretarial audit report for the year 2020-21 issued by him in the prescribed form MR-3 is annexed to this Report.

The secretarial audit report does not contain any qualification, reservation or adverse remark or disclaimer made by the secretarial auditor.

In addition to the above and pursuant to SEBI Circular dated 8 February 2019, a report on secretarial compliance by Shyamprasad D Limaye for the financial year ended 31 March 2021 has been submitted with the stock exchanges. There are no observations, reservations or qualifications in that report.

On behalf of the Board of Directors,
Rahul Bajaj
Chairman
Pune: 29 April 2021