BAL-AR-2009-10

Since 1945

Bajaj Auto Limited3rd Annual Report 2009-10

Bajaj Auto Limited3rd Annual Report

2009-10

Pulsar- AM E 2010 Most Ecient Use of Branded Content

Discover DTS-i Kawasaki Ninja 250R C N B COverdrive 2010 Bike of the Year C N B COverdrive 2010 Storyboard Auto Commercial of the Year (Bike)

Kawasaki Ninja 250R ET N O W Zigwheels Award 2009 250cc Bike of the Year

Kawasaki Ninja 250R Business Standard Motoring 2010 Motoring Bike of the Year

Kawasaki Ninja 250R IMOTY 2010 Indian Motorcycle of the Year

PulsarMania Ee Awards 2009 Category: ConsumerDurables

Recent awards for our products

Bajaj Auto Kawasaki Ninja 250R NDTV Prot Car & Bike Awards 2010 Two Wheeler of the Year NDTV Prot Car & Bike Awards 2010 Best Integrated Campai n 2 Wheeler g

Kawasaki Ninja 250R NDTV Prot Car & Bike Awards 2010 Motorcycle of the Year up to 250cc

CONTEN TSManageme Team.............................................................................................................................. nt 3

Chairmans Letter.................................................................................................................................. 4

Manageme Discussionand Analysis ................................................................................................... nt 7

Corporate Governance ......................................................................................................................... .15 Directors Report ................................................................................................................................. .25

General ShareholderInformation .......................................................................................................... .21

Report on Corporate Social Responsibility ............................................................................................ .30

Auditors Report................................................................................................................................... .33 BajajAuto Ltd. and its Subsidia ries, Associ tes and Joint Venturea Consolidated Balance Sheetand Profit & Loss Account....................................................................... .82

Balan Sheetand Profit & Loss Account ............................................................................................... ce .36

Board of DirectorsRahul Bajaj Chairman Madhur Bajaj Vice Chairman Rajiv Bajaj Managing Director Sanjiv Bajaj ExecutiveDirector KantikumarR Podar ShekharBajaj D J Balaji Rao D S Mehta J N Godrej S H Khan Ms Suman Kirloskar Naresh Chandra Nanoo Pamnani Manish Kejriwal P Murari Niraj Bajaj

ManagementRahul Bajaj Chairman Madhur Bajaj Vice Chairman Rajiv Bajaj Managing Director Sanjiv Bajaj ExecutiveDirector Pradeep Shrivastava Chief Operating Officer Abraham Joseph President(Research Development) & S Sridhar President(MotorcycleBusiness) R C Maheshwari President(CommercialVehicleBusiness) RakeshSharma President(International Business) Eric Vas President(New Projects) K Srinivas President(RetailFinance) Kevin Dsa President(Finance) S Ravikumar SeniorVice President(Business Development & Assurance) Amrut Rath Vice President(Human Resources)

AuditorsDalal & Shah CharteredAccountants

Cost AuditorA P Raman Cost Accountant

BankersCentral Bank of India State Bank of India Citibank NA Standard Chartered Bank Bank of America ICICIBank HDFC Bank

Registeredunder the Companies Act, 1956

RegisteredOfficeMumbai-PuneRoad Akurdi, Pune 411 035

Works* Mumbai-PuneRoad Akurdi, Pune 411 035 Bajaj Nagar,Waluj Aurangabad431 136 ChakanIndustrial Area Chakan,Pune 410 501 Plot No.2, Sector10 IIE Pantnagar Udhamsinghnagar Uttarakhand263 531

*

*

* N H Hingorani Vice President(Commercial) C P Tripathi Vice President(C SR )

Company SecretaryJ Sridhar

2 | Bajaj Auto Limited

Management Team

Rahul Bajaj

Madhur Bajaj

RakeshSharma

Sanjiv Bajaj

R C Maheshwari K Srinivas

Rajiv Bajaj

Eric Vas

N H Hingorani

Kevin Dsa S Sridhar C PTripathi

S Ravikumar

Amrut Rath

Abraham Joseph

PradeepShrivastava

Chairma Letter nsDear Shareholder,When I wrote to you last year, we were amidst the worst global economic and financial crisis since the Great Depressionof the 1930s.India, too, was affected. Quite frankly, at the time I wasnt sure when we might come out of the lower growth phase;and when we could expect better fortunes for the Countrysautomotive industry. I have been surprisedat the speed of the turnaround. It looks as if India will achieve somewherebetween 7.2% and 7.5% GDP growth for 2009-10.It is, of course,lower than the 9% plus growth that we were getting accustomedto for three consecutiveyears up to 2007-08. Yet, it is the second highest growth rate among all major countries in the world. Even more impressive,is the significant uptick in demand for two-wheelers,three-wheelers as well as passengervehicles.


We have witnessedexcellent growth in the two-wheeler market, which increasedin volume by 24% in 2009-10. Your Company did better. It sold over 2.5 million motorcycles,and grew by more than 31%. Bajaj Autos superior performancesuggeststhat it has been more than just leveraging market growth. What was it? For the last few years,your Companyhas been working at developing a brand-centredstrategy especiallyof its two key brands,the Discoverand the Pulsar.I believe that 2009-10 saw a near perfect alignment between the power of the brands the front-end and production efficiency, quality, costs and logistics,or the back-end.I agree with the managing director and his team that it is this alignment which has resulted in your Company growing faster than the market and earning the highest profit rate in the industry.

Bajaj Auto Limited | 11

2009-10has been a record year for Bajaj Auto in terms of highest ever sales,exports, profits and margins. Most of the financial details are in the chapter on Management Discussionand Analysis.Even so, here are a few key numbers:l

excellent year:salesw ere up by almost 31% to a high of R s.85billion; EB ITD A had increasedby 47% to R s.13.7 billion; the operating E B ITD A margin was at 17.9%; and PAT had grown by 44% to crossR s.11billion. In that letter, I had exhorted your Company to mobilise India and sell 4 million motorcycles by 2010.W e are clearly getting there. 2009-10saw Bajaj Auto sell over 2.5 million motorcycles.Since Im known for speaking my mind, I am asking the management to make the vision of selling 4 million motorcycles come good by 31 March 2011. I had also asked your Companyto globalise India by rapidly enhancing Bajaj Autos international footprint. It has. Exportshas again done well this year,as it had in the last. 2009-10saw Bajaj Auto export over 725,000motorcyclesand almost 165,000three-wheelers. I expect 2010-11 will see us exporting over 1 million two- and three-wheelers. As India regains its growth momentum in 2010-11and generates something in the neighbourhood of 8.5% GDP growth, I believe that we should see yet another excellent year for B ajajA uto: greater sales,pervasivebrand loyalty and pull, m ore R & Dsuccesses, higher profits andreturn and on both capital employed and shareholderwealth. My thanks to all employees of Bajaj Auto for their unstinting support, especiallyin hard times. And to you for being our support through thick as well as thin. May India prosper. And with it, may Bajaj Auto. With warm regards,

Net salesand other operating income grew by 35% to over R s.119billion.

l

Your Companysoperating EB ITD A grew by 116% to almost R s.2 6billion. Operating earnings before interest, taxes,depreciation andamortisation (E B ITD A ) was 21.7% of net salesand other operating income.

l

Operating profit before tax (P B T )g re w by 170% to almost R s.2 3billion, and was over 19% of net sales and other operating income.

l

P rofit after tax (P A T)grew by 160% to R s.17billion.

I am delighted with the performance.And I would like you to join me and the rest of your Board of Directors to congratulate your Companysmanaging director, Rajiv Bajaj,and his team for delivering such excellent results. What pleasesme is that Bajaj Auto is leveraging its key brands to maximiseprofits. Your Companysperformance has not been about buying market share through various pricing deals.Instead,it is about gaining share through better quality and branding thus having the customer willing to pay higher prices for better value. Your managing director often saysthat while products may generate market share,brands provide pricing power and create higher profits. I am increasinglytending to agree with him. While writing this letter, I went back to the one written in Bajaj Autos annual report of 2005-06.It was also an

Rahul Bajaj Chairman


Management Discussion and AnalysisAs we know, 2008-09was a very difficult year for the world economy.The stock, money and financialmarketscrashed,and with it the real sectors,in what was the worst global depression since the 1930s.Everydeveloped country suffered negative GDP growth. And with it, economic and social pain. Among the major emerging markets,China and India continued to grow but at significantly lower rates.In India, for instance,after three consecutiveyears of growing at over 9%, G D Pgrowth fell to 6.7% in 2008-09.Demand growth reduced sharply acrossall sectors;in many to the negative territory. Discretionarypurchaseswere hit the hardest.It is not surprising, therefore, that automobile and two-wheeler sales tapered off. The good news for China and India was that the two emerging market giants shrugged off the downturn remarkably quickly. After three quarters of declining growth, both nations stemmed the rot, and got back into their stride. To be sure,G DP growth was muted compared to the past. However,for China to achieve 8.7% in 2009 and India to record 7.2% to 7.5% G D Pgrowth in 2009-10 saysa great deal about the capabilities of these two nations in steering through the crisis. In India, growth has been particularly robust in the twowheeler market, which increasedin volume by 24% in 200910. Bajaj Auto Lim ited (BajajAuto, BALor the Company)did very well. It sold over 2.5 million motorcyclesand, in doing so, the Companyearned 21.7% E B ITD Am argin, w hich w as the highest in the industry. Bajaj Autos performancehighlights for 2009-10are given below: It needs to be emphasise that the Company excellen d s t operational and financial performanc is not merely due to e increasin overall growth in motorcycle demand in India. Over the g last few years, Bajaj Auto has been developing a brand-centre strategy. d The front end is guided by the Company strateg of s y differentiation, to continuously specialis its brand positioning in e motorcycles. In the process Bajaj Auto has positioned its , motorcycle brands in the utility, price, value and sports categories. The basic proposition is that while products may generate market share it is brand that provide , s pricing power and create higher profits. The back end - R & D ,quality, production efficiency,logistics and throughput is guided by TPM ,w hich the Company calls The Prime Mover towards excellence. 2009-10saw the coming together of the front end and the back-end.It is this alignment which has resulted in Bajaj Auto growing faster than the market, gaining market share,and earning the highest profit rate in the industry.

MarketsMotorcycles:OverallThere are two tales of motorcyclesin India. The first is well known: the steady growth of motorcycle salesthroughout the country, and its overwhelming dominance in the two-wheeler market. Chart A plots the data. As Chart A shows,from 7.10 million units in 2006-07, motorcycle salesfell to 6.54 million units in 2007-08,and then rose very

Highlights for 2009-10versus2008-09: Bajaj Auto standalonel 2009-10has been a record year for BajajAuto in terms of highest ever sales,exports, profits and margins.

billion. l Net salesand other operating income grew by 35% to R s.119.21l The year saw record salesof 2.85 million units over 2.5 million motorcyclesand 340,937three-wheelers. l Exportsrose by 15% to 891,002units.

stood at R s.25.93 billion a growth of 116% over last year. The operating E B ITD A l The Companysoperating E B ITD A margin was 21.7%of net salesand other operating income for 2009-10. gre billion. l Operating profit before tax (P B T ) w by 170% to R s.22.89 billion. l Profit after tax (P A T)grew by 160% to R s.17.03 billion, versus l Surpluscash and cash equivalentsin the Com panysbalance sheet as on 31 March 2010 stood at R s.32 .6 R s.9.3billion on 31 March 2009.


C hart A: Industry sale of Two-Wheeler (Domesti + s s c Exports)10 86.54 6.81

Motorcycles:Domestic SalesChart A does not, however, underscorethe second tale of motorcycles.This is the story of the changing preferenceof Indian consumers.It needs some explanation.8.44

in million numburs for the year ending 31 March

6 4 2 0

Over the last five years,the Companysmanagementhas been communicating about the change in consumerpreferencesfor motorcycles.The gist of it has been:l Indian consumers- urban as well as a rural - have become

7.10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010n Motercycles n Other two wheelers

Source: SIAM

better off. They have been enjoyinggreater purchasing power than before; and have begun to demand greater design inputs, better looks,feel, comfort and adventure for the products that they buy. And are willing to pay for these attributes. the consumersare upgrading. Acrossthe l As a consequence, board, a motorcycle is becoming a lifestyle statement.Boring and fuel efficient no longer works; exciting and fuel efficient does rapidly so, in ever increasingstrides.l In addition, there is a growing body of motor-bike userswho

marginally to 6.81 million units in 2008-09.The year under review has been outstanding. Saleshas increasedby 24.1% the best ever growth since 2002-03,and over a much higher base.Indeed, salesin 2009-10was 18.9% higher than even the previous peak during 2006-07.Motorcyclescontinue to account for over 80% of total two-wheeler sales.For the Company, therefore,it is the two-wheeler that matters. How has Bajaj Auto fared? Table 1 gives the data for the last seven years. Table 1: B ajajAutos Salesof Motorcycles(Domestic+ Exports)Ye a re n d e d 1 Marc h 3 Ma rke t * B A (In M illio n Ls grow thN u m b e r s ) Ma rke t BAL grow th (In M illio n ) N um b e rs)

want to purchasepowerful models for the pure thrill of biking. The data prove this very clearly.Considerthe following product segmentation: ComprisingBajaj Autos Platina; l CommuterStandard(S T D ): Hero HondasCD series;and T V S Star. The key brands here are Bajaj Autos l Comm uterDeluxe(D L X ): Discover;Hero HondasSplendor,Passionand Glamour; Honda Motorcycle & ScootersIndias (H M SIs) Shine; a n d T V S Fiero.l

2004 2005 2006 2007 2008 2009 2010

4 .3 1 7 5 .2 1 8 6 .2 0 1 7 .1 0 0 6 .5 4 4 6 .8 0 6 8 .4 4 4

1 4 .9 % 2 0 .9 % 1 8 .8 % 1 4 .5 % -7 .8 % 4 .0 % 2 4 .1 %

1 .0 2 4 1 .4 5 0 1 .9 1 2 2 .3 7 9 2 .1 4 0 1 .9 0 8 2 .5 0 7

1 7 .9 % 4 1 .6 % 3 1 .9 % 2 4 .4 % -1 0 .1 % -1 0 .8 % 3 1 .4 %

Sports:This includes BajajAutos Pulsar;H ero HondasC BZ, Hunk and Karizm a;HM SIsUnicorn and Stunner;T V S s Apache; and Yam ahas R15 and FZ16.

* M a rk ert fe rs d o m e s tic le p lu se x p o rtsf m o to rc y c o f s ll m a n u fa c tu rin rIn d ia e to sa s o le a e s

How do the market sharesof these categories stack in India? up

The C om pany sold over2.5 m illion m otorcycles India and in the rest of the world.It in c re a s ed s a lesb y 3 1 .4 % o r 7 .3 percentage its p o in ts h ig h e r th a n th e m a rk e ta s a w h o le ,i.e .d om e s ticsa le splus exportsof m otorcycle all m anufacturers India. of in Table 2 gives movement in market share for domestic motorcycles.Here, too, Bajaj Autos motorcycle salesin 2009-10 grew faster than the market 39.7% for the Company,versus 25.8% in the aggregate. Table 2: Bajaj Autos Growth in Domestic Market Share for MotorcyclesYe a re n d e d 1 Marc h 3 Ma rke t Ma rke t BAL BA Ls BA Ls (In M illio n grow th (In M illio n grow th m a ke t r n u m b e rs ) n u m b e rs ) s h ae r

Commuter STDThe share of this bottom-of-the-pyramid category has been falling steadily,as Chart B1 shows.

Chart B 1: Segmen share Standar Commute Bikes t , d r60% 50% 40% 30% 20% 10% 0%2005-06 2006-07 2007-08 2008-09 2009-10

54% 47% 43% 38% 31% 24% 19% 24% 41% 43%

2006 2007 2008 2009 2010

5 .8 1 5 6 .5 5 4 5 .8 3 5 7 .3 4 1

1 7 .1 % 1 2 .7 % 1 .2 % 2 5 .8 %

1 .7 4 7 2 .0 7 9

3 1 .7 % 3 0 .0 % 1 9 .0 % 3 1 .7 %

5 .7 6 8 - 1 2 .0 %

1 .6 5 8 - 2 0 .3 % 2 8 .7 % 1 .2 7 6 - 2 3 .0 % 2 1 .9 % 1 .7 8 2 3 9 .7 % 2 4 .3 %

n India, Commutet STD

n BAL, Commuter STD

For India as a whole, the share of Commuter S T D motorcycles has fallen year after year, from 43% of the

market (in terms of

volume) in 2005-06to 19% in 2009-10.So, too, has BajajAutos composition: from 54% of the Companystotal salesin 2005-06 to 24% in 2009-10. It is not just a matter of falling segm ent share.The Com muter STD category compriseslow pricing power, low margin, low profit products.Bajaj Auto believesthat there is more brand premium to be reaped and higher profits generated by being a significant player or leader in the other two categories.

of riding a great bike. The Companybelieves that for India a s a whole, the segment will continue increasing its share of the market;and so too will BajajAuto. In this category, the n ew P ulsa r13 5 L S ha s b e e n ve ry successful in the market. Designed in the Pulsarcharacterof aggression, the bike has been crafted with an eye to detail. Its light sports nature has bought more people into Pulsarfold, who would otherwise have been intimidated by the full size Pulsars. Together with the 1 3 5 L S ,the Pulsarwill also become a one million brand. The strategic shift in favour of the bigger and sportier Discover and Pulsarmodels has not only created a powerful image for the Companysofferings,but also generatedhigher margins.

Commuter DLXUnlike the Commuter S T Dsegment,this category is not only growing every year, but also constitutes the major chunk of Indias motorcycle market. Chart B2 plots the data. From a high base of 48% of the market in 2005-06,the Consum erDLX segment has grown to 64% in 2009-10 or close to two-thirds of the total number of bikes sold. Bajaj Auto, through its Discover DTS-Si,has increasedits presencefrom 25% of the total number of motorcyclessold by the Company in 2005-06to 45% in 2009-10. With the launch of Bajaj Autos DiscoverD T S -S i, Company is the selling an average of 80,000 vehicles per month in this category. Discoveris now a one million plus brand.

Motorcycles:AwardsBajaj Auto has won severalawardsfor its motorcyclesin the course of the year recognition of the Companyscommitment to brands, advertising,technology and product appeal.Theseare given below:AW RDS A MODEL A W R D O D AWA R D A B Y E TN O W - Z ig w h B e lso, f th e Y e a r e ik e E TN O W - Z ig w h T e lsh, n o loogf th e Y e a 4 V a lv e e c y r U T V lo o m b e rg - A u to ik eor,th e Y e a r B BCa f U T V lo o m b e rg - A u to C a r, rs B V ie w e

F o rP ro d u c t P u ls a1r3 5 L S a n dT e c h n o lo g y

C hart B 2: Segmen share Deluxe Commute Bikes t , r80% 60% 40% 20% 0%2005-06 2006-07 2007-08 2008-09 2009-10

52% 48% 25% 32%

57% 35%

62%

64% 45% 30% D IS C O V E R D T S -S i

C h o icBe ik eo f th e Y e a r E TN O W - Z ig w h 1 0 0 c,B ik eo f th e Y e a r e e ls c E TN O W - Z ig w h M eols V a lu e r e s ,t fo M o n eB ik eo f th e Y e a r y N D T P ro fit- C In rd ia& B ik eIn d ia , V a M o to rc y c leth e Y e a ru, p to 1 2 5 of cc In d ia n o to rc y c leT h eY e a r2, 0 0 9 M of E TN O W - Z ig w h 2 5 0 c,B ik eo f th e e e ls c Y e aN D T P ro fit- C In rd ia& B ik eIn d ia , r V a M o to rc y c leth e Y e a ru, p to 2 5 0c c of N D T P ro fit- C In rd ia& B ik e V a In d iaT, w o - W h e e leth e Y e a r of r C N B C - O v e rB r iveo f,th e Y e a r d ik e B u s in eS ta n d a Mdo to rin B ,ik eo f th e Y e a 2 0 1 0 ss r g r G lo b a l o u th a rk e tin go r u m 0 1 0 : Y M F 2 M o s P o p u la rw o -W h e e A m o n g t T le rs

n India, Commutet DLX n BAL, Commuter DLX

SportsThis segmentis showing rapid growth. From 9% market share in 2005-06,it has risen to 17% in 2009-10.According to many, this will be the fastest growing segment in the times to come, given the disproportionate growth of purchasing power in the hands of middle-classurban India, especially age group of 2030 years. With its Pulsarrange,Bajaj Auto has grown faster from 21% of its total volume of motorcyclesin 2005-06to 31% in 200910. Bajaj Auto is the clear market leader in this category.Chart B3 plots the data. This is an exciting segmentin more ways than one. It is about aspiration;power; freedom; enjoyment; and the sheer pleasure

K aw asaki N in ja 5 0R 2

F o rB ra n a n d B a jaA u to d j C o m m u n ic a tio n Y o u th B a jaA u to j

Chart B 3: Segmen share Sport Bikes t , s35% 30% 25% 20% 15% 10% 5 %31%

B r a n E q u ity :n dM o s T r u s t eBdr a n fo r d 2 t d A u toT w o - W h e e le rs D is c o vD T S - S i N D T P r o fit- C In rd ia& B ik eIn d ia , er V a B e s In te g ra te da m p a ig n , o -W h e e le rs t C Tw D is c o vD T S - S i C N B C -v e rd r iv ee, s S to ry b o aCrd m m e r c ia l er O B t o D is c o vD T S - S i A u toIn d iaB e s A d v e r tis in g er , t P u ls a r S ilv eE ff iefo r P u ls aM a n ia d r r A P u ls a r A B B Y :e s film in A u toC a te g ofoyr th e F a s t e Intd ia n B t r s

Exports

24% 21% 21% 14% 9% 10% 12%

27% 17%

P u ls a r M a n ia

AM2005-06 2006-07 2007-08 2008-09n India, Sports

E A w a rd r fo E ff e c tiv es e U o fB ra n d e d

X C D 35 1

C o n te nPt:u ls aMr T V tu n tM a n ia S A B B Y :e s film in A u toC a te g ofoyr th e T w is teSd is t e r s B t r

0%

2009-10n BAL, Sports

BajajAuto continues to be the countrys largest exporter of two and three-wheelers.During 2009-10,the Companysinternational salesachieved an all-time high of 891,002vehicles which was 15% more than the salesrecorded in the previous year.

In 2009-10,exports accountedfor R s.32.46 billion (U S $682 million), or 28% of the Companystotal net sales.Table 3 gives the data. It is worth noting that three-wheelerexports now account for almost 50% of total three-wheelersales. Table 3: Product-wiseExportsof BajajAuto (in numbers)Pro d u t c 2 0 0 8 -0 9 2 0 0 9 -1 0 Grow th

decline of three-wheelersalesthat occurred in 2008-09 has become a thing of the past. 2009-10saw a 24% growth in the number of BajajAuto three-wheelerssold - up from 274,529units in 2008-09to 340,937in 2009-10.As always,the Companyremains the leading three-wheelerplayer from India with a market share of over 55%. Table 4 gives the data. 15% 15% 19% 15% P a s s e n gcearr r ie r s In d u s trya le s s B a jaA u tos a le s j B a jaA u tom a rk esth a r e j G o o dcsa r r ie r s In d u s trya le s s B a jaA u tos a le s j B a jaA u tom a rk esth a r e j T o ta 3 -w h e e le r s l In d u s trya le s s B a jaA u tos a le s j B a jaA u tom a rk esth a r e j 4 9 7 ,7 9 3 6 1 3 ,6 5 0 3 4 9 ,7 1 9 4 4 0 ,3 6 8 2 7 4 ,5 2 9 3 4 0 ,9 3 7 1 3 5 ,4 7 3 1 7 6 ,0 5 0 5 5 .1 % 5 5 .6 % 8 2 ,3 8 2 1 0 ,1 9 7 1 2 .4 % 9 1 ,4 8 3 9 ,2 3 0 1 0 .1 % 8 1 ,2 3 0 9 0 ,7 0 6 1 0 ,1 9 7 9 ,2 2 8 4 1 5 ,4 1 1 5 2 2 ,1 6 7 2 6 8 ,4 8 9 3 4 9 ,6 6 2 2 6 4 ,3 3 2 3 3 1 ,7 0 7 1 2 5 ,2 7 6 1 6 6 ,8 2 2 6 3 .6 % 6 3 .5 % Table 4: Three-W heeler Salesand S hareof Bajaj Auto (in numbers)2 0 0 8 -0 9 2 0 0 9 -1 0 o f w h ic h o m e s tic d 2 0 0 8 -0 9 2 0 0 9 -1 0

M o to r c y c le s T o ta tw o -w h e e le rs l T h r e e - w h e e le r s T o ta v e h ic le s l

6 3 1 ,3 8 3 6 3 3 ,4 6 3 1 3 9 ,0 5 6 7 7 2 ,5 1 9

7 2 5 ,0 2 3 7 2 6 ,1 1 5 1 6 4 ,8 8 7 8 9 1 ,0 0 2

The export businessenjoys a healthy geographicalspread,as C hart C shows. The increased presence Africa was primarily due to growth in in Nigeria,Uganda,Angola and Kenya.BajajAuto has initiated a major brand-building effort in Africa for the Boxer,which involves creating exclusivebranded outlets for the customersin terms of salesand after-salesservices.

C h a rt C : Exports Geographica Spread , l 9% 15%

Operations Plants51%n Africa and the Middle East n South Asia,

25%

(excl. India) n Latin America n South East Asia

During the first half of 2009-10,a number of improvement activities were initiated at the shop floor level acrossall plants of the Company.Thanksto these initiatives, Bajaj Auto could produce 32% higher volume of output without any significant investments.Table 5 gives the plant-wise capacitiesfor the last two years. Table 5: Plant-wisecapacities(in numbers)

S alesin South Asia (excluding India) grew by 4% . The slowdown in Sri Lankafor three of the four quarters was more than compensatedby growth in Bangladesh. Due to the fall-out of the financial crisis,South-East Asia had a negative growth of 14%. The Companyssubsidiaryin Indonesia,P T B A I,clocked salesof 11,954units. Although the Com panyssalesto Latin America recoveredin latter half of 2009-10,the year as a whole was worse than before. Adverse economic conditions led to the regions salesdegrowing by 7%. However,given BajajAutos strong brand presencein these markets,it is expected that the Company will increasesales as the Latin American markets improve in 2010-11.

P la n t

2 0 0 8 -0 9

2 0 0 9 -1 0

W a lu j C hakan P a n tn a g a r T o ta l

1 ,8 6 0 ,0 0 0 1 ,2 0 0 ,0 0 0 9 0 0 ,0 0 0 3 ,9 6 0 ,0 0 0

1 ,8 6 0 ,0 0 0 1 ,2 0 0 ,0 0 0 1 ,2 0 0 ,0 0 0 4 ,2 6 0 ,0 0 0

PantnagarBajaj Autos production at its Pantnagarplant, Uttarakhand,has been on the rise. In 2009-10,it produced 577,947vehicles,up by 82% compared to 2008-09.Averageproduction at Pantnagar for January-March 2010 was 60,000per month versus 30,000per month a year earlier.The plant is now geared to produce 80,000units per month in April-June2010, and then ramp up to 120,000vehiclesper month by September-December 2010. Keepingthis in mind, the supply chain activities are also getting geared up. To maximisetax benefits availableat Uttarakhand,the Company

Three-WheelersIn 2008-09, Bajaj Auto had witnesseda 12% drop in domestic sales.2009-10saw a reversal.Like motorcycles,the Companys domestic salesof three-wheelersalso picked up. Thanksto this, as well as growing export dem and (see Table 3 above),the overall

has shifted products like Discoverand Pulsar135 to Pantnagar.

WalujWaluj celebrated its 25th birthday in 2009-10 It also started . production of the Discove and successfull rampe up the r y d output. Waluj is now the export hub of Bajaj Auto. Of the 891,002 units of two- and three-wheelers exported in 2009-10 about 80% was , produced at Waluj. The plant is now ready to meet even higher exports - up to 1 million units of two-wheeler and threes wheelers. Waluj won an aw ard Plan B es In C las Manufacturin : t t s g Leadership Award for Two- Wheelers by the Stars of Industry Group.

valvesallow the engine to breathe well, generating superb performance,while D TS-igives it excellent fuel economy.

ChakanGiven its core competence in high-end products, Chakan produced various upgrade versionsof Pulsar.It is now ready to deliver the new KTM bikes.Chakan was awarded the Super Platinum Award for Manufacturing Excellence by Economic Times-Frost Sullivan. & Table 6 gives the data on which products are manufactured in what plant. Table 6: Activities Acrossthe VariousPlantsP la n t Pro d u ts c

W a lu j C hakan P a n tn a g a r

B o x e P, la tin a , is c o vaenr dth re e -w h e e le rs r D P u ls aA ,v e n g a n dD is c o v e r r er P la tin a , la tin 1 2 5 D is c o vaenr dP u ls a1r3 5 P a ,

Research and Development (R&D)2009-10was an important year.BajajAutos R&D departments were involved with the creation of number of new products, which have helped the Company to acquire more significant market presence.In addition, it has done considerablework in processengineering.

Productsl Pulsar220 F: The Pulsar220 F was re-defined to be the best

performing sports bike in India. It became the fastest Indian bike. Work was done to enhance its power while reducing its fuel consumption. The bike was also made more affordable.l Pulsar180 UG: The bike was loaded with new features

and style along with higher performance.It has,in effect, expanded the greater than 150 cc segment.l Pulsar150 UG: Pulsar150 the backbone of the Pulsar

brand was upgraded with a more powerful engine and new features like clip on handle bars and tank flaps.These features have made the Pulsar150 the best seller in its category.

l Pulsar135 L S :T he P u ls ar1 35 L S w as built to create a light

sports offering in the Pulsarfamily. It was designed to be true to the Pulsarcharacterof aggression,technological predispositionand outstanding style. This bike is powered by a 4V D TS-iengine w hich is the first of its kind. The four

w l DiscoverD TS -si: DiscoverD TS -si as the bike where R&D blended the advantages of the twin plug ignition and swirl motion of the incoming charge in a 100 cc category engine to create Indias most fuel efficient motorcycle. R &D worked upon all aspectsof the engine and vehicle design to maximise the gains in fuel economy along with a crisp throttle response. The successof these products has put BajajAuto in a strong position. R &D is now working on next generation bikes to maintain this momentum.

l 25%

FinancialsTable 7 gives the summarisedprofit and loss statement. Table M illion R s In .

have had zero defect supplie s for 24 straight months (Gold) .l Three vendors

7 Abridged Profit and LossStatement

ProcessesR&D has been working on improving its operations in number of areas,such as:l Manpower:Expandingthe team size in areasof design,

analysisand validation to keep up with the rapidly expanding aspirationsof the Company. EnhancingR &D sdesign,computing and test l Facilities: facilities. A notable addition has been a world classNVH (Noise,Vibration and Harshness) laboratory,which has been commissioned. This will give Bajaj Auto the ability to make even more refined products. R&D has developed the 4V DTS-itechnology l Technology: for outstanding engine performance.Design optimisation has enabled it to be used on the P u ls a r1 3 5 L S ,which competes at a lower price point. The DTS-iis controlled by a new generation C D I(CapacitorDischargeIgnition), which takes continuous load and temperature inputsto compute the optimum timing of each spark plug.

TPMBajaj Auto started its Total Productive Maintenance initiative ten years ago with its manufacturing plants. In March 2007, it achieveda milestone of having all its manufacturing facilities awarded as TPM ExcellenceCategory1 winners by JIPM (JapanInstitute of Plant Maintenance). Last year,TPM and quality initiatives at vendor plants gathered further momentum. Sinceinception of Bajaj Autos Vendor Quality and Vendor TPM awards,the tally of Quality and TPM award winners is as follows: 1. 2. 3. 4. 5. Qualit award Bronze 2009-10 24 winner (cumulatively 108) y : : s , Qualit award Silver 2009-10 30 winners (cumulatively 89) y : : , Qualit award Gold 2009-10 16 winner (cumulatively 44) y : : s , Qualit award Platinum 2009-10 3 winner (cumulatively 3) y : : s , BAL TPM award: 2009-10 11 winner (cumulatively : s ,

have supplied zero defect components for more than 36 straight months (Platinum). On 7 April 2010,Bajaj Auto adopted a wider and more encompassing concept of T P M .It is the acronym for The Prime Mover towards excellence to build and continuously improve its core competencies.With this in mind, Bajaj Auto created a Company-wideTPM Kick-off.This initiative, the first of its kind in India, will align all key businesses and activities of the Company. Bajaj Autos core competenciesrest on its values of innovation, perfection and speed.TPM is expected to build and continuously improve its core competencies, as also its entire supply chain including its suppliers and dealers.

2 O p

SubsidiariesBajajAuto International Holdings B V (B A IHB V )As mentioned earlier, a 100% Netherlands based subsidiaryof

29) In other words:l Over 50% of BALsvendors have achieved a status of

supplying zero defect components to the Companys plants for six straight months at least once during last four years(Bronze).l Almost 40% achievedzero defect suppliesfor 12

straight months (Silver).

Bajaj Auto (Bajaj Auto International Holdings B V) was formed to focus on international ventures, including possible acquisitions. In 2007-08,B A IHB V invested 98.36 million to acquire 24.45% equity stake in KTM Power Sports AG of Austria, Europessecond largest sport motorcycle manufacturer.It is a ViennaStock Exchangelisted company.In the course of 2008-09, BAIHBV increased its ownership of KTM sharesto 31.72%at a cost of 21.26million. During 2009-10, B A IHB V invested further 250,290to increaseits stake to 31.92%.

Reinforcingits commitment to KTM and signifying the strategic importance of KTM brand and products, Bajaj Auto, through B A IHB V ,invested a further of 20.16 million in April 2010 and increasedits ownership of KTM s sharesto 35.67%. With this, the total investment in KTM stands at 140.03 million. The first product developed under the joint development programme between KTM and BajajAuto was showcasedat the Milan Motorshow in November2009, and was received well. The product will go on sale in 201011.

assem bles semi-knocked down parts. In the second half of 201011, it is expected to assemble complete knocked down parts, which attract lower customsduties in Indonesia. April 2 01 0 sa w PTBAI introducing the Pulsar 135. P T B A Iha s not yet broken even, though losses have reduced. Lossfor 2009-10 w as R s.159 million at the P B Tle ve l, vers u s a loss

S a le s 9 0 ,4 9 7 1 2 1 ,1 8 1 L e s sE: x c isdeu ty 6 ,1 2 7 6 ,0 9 6 N e ts a le s 4 ,2 9 7 8 4 ,3 7 0 1 1 5 ,0 8 5 O t h eor p e ra tin gc o m e in 3 ,7 3 4 4 ,1 2 5 T o ta o p e ra tinin c o m e l g 8 8 ,1 0 4 1 1 9 ,2 1 0 C o sot f m a te r iacls n s u m e d ,to f o ne e x p e n d itu c a s ita lis e d re p 6 4 ,4 9 1 8 0 ,5 4 8 S h a ro f m a te ria lo s t e c 7 3 .2 % 2 1 .7 % 6 7 .6 % to r easn dto o ls S V o lu n ta R e tir e m eSnct h e m e ry 1 ,8 3 3 604 1 ,8 3 3 M a r k m a rk elo s s/ (-) r e v e r s a l to t 671 S h a ro f s t o r e a n dto o ls e s 0 .7 % 0 .6 % a b o u ro s t L c 2 4 ,3 1 1 3 ,5 4 4 3 ,9 9 5 S h a ro f la b o ucr o s t e 2 0 .4 % 4 .0 % 3 .4 % a c t o r yn da d m in is tra tivxe e n s e s F a e p 3 ,1 4 5 In te re s t 210 60 D e p re c ia tio n R e v is eo p e ra tinp ro fit s a s h a r e d g a o f to ta lin c o m e 1 1 .3 % 218 -2 1 8 R e v is eo p e ra tinp ro fit d g 9 ,9 7 2 4 ,6 5 2 S h a ro f s a le a n da fte rs a le e x p e n s e s e s s 4 .9 % 3 .9 % T o ta e x p e n d itu re l 7 6 ,0 8 1 9 3 ,2 8 4 O p e r a tin g fit p ro 1 2 ,0 2 3 2 5 ,9 2 6 O p e r a tin g fit s a s h a r e f to ta l p ro a o o p e ra tinin c o m e g 1 3 .6 % 3 .6 % 2 .9 % a le a n da fte rs a le e x p e n s e s S s s 3 ,4 1 8 S h a ro f fa c to ra n da d m in is tra tiv e e y expenses

P T Bajaj Indonesia(P T BAI)P T B A Iw a s incorporated in 2006-07as a subsidiaryin Indonesia with an issued and subscribedcapital of U S$ 12.5 million (R s.562million). During 2009-10, Bajaj Auto added further capital by U S$ 17 million, thus increasingits total stake to 98.9% in P T BAI. The subsidiary assem bles and m arketsPulsarsin Indonesia. At present,P T BAI

1 ,2 9 8 1 ,3 6 5 N e to p e ra tinp ro fit g 8 ,4 6 4 2 2 ,8 8 6 N o n -o p e r a tin c o m e in g In c o m e 1 ,2 1 9 1 ,2 2 5 E xpenses 102 N o n -o p e r a tin c o m e ,e t in g n

That has changed significantly for the better in 2009-10. The vendor payment cycle has been normalised,and debtors tightened. Operating working capital has now turned negative - to (-) R s.6.95 billion. Moreover,the Companyhas seen a significant increasein its return on operating capital. From 55%pre-tax return on operating capital employed in 2008-09,the ratio has risen to 253% for 2009-10.As Table 8 shows, this has been driven by two factors:l

Consolidationof Accounts and Segment ReportingBajaj Auto has consolidated the financial statements of subsidiariesin accordancewith the relevant accounting standards issued by Institute of Chartered Accountants of India. The summary of the consolidated profit and loss account for 2009-10 and 2008-09is given in Table 9 below. Table 9: Segment Revenueand SegmentResults

1 ,1 1 7 1 ,2 2 5 P ro fit e fo re x a tio n b ta 9 ,5 8 1 2 4 ,1 1 1 P ro v is io nr ta x a tio n fo 3 ,0 1 6 7 ,0 7 5 P ro fit fte rta x a tio n a 6 ,5 6 5 1 7 ,0 3 6

First, a R s.14.42 billion increase in Bajaj Autos operating profits after interest and depreciation, compared to the previous year.

Rs. In M ill io n

Se g m e nR eve n u e t2 0 0 8 -0 9 2 0 0 9 -1 0 Rs. In M illi on

l S econd,a R s.5.90 billion reduction in working capital vis-avis 2008-09.

A u to m o tiv e 8 8 ,1 4 8 1 1 9 ,7 4 2 In v e s tm eannt do th e r s 1 ,2 1 9 1 ,2 2 5 T o ta l 8 9 ,3 6 7 1 2 0 ,9 6 7 L e s sIn te rs e g m ern t e n u e : ev

Table 8: Return on Operating Capital

Operating Working Capitaland ROCEIn the difficult year of 200809, the Companys management consciously took a call to support its vendors by significantly reducing payment cycle. This, and the rise in debtors, showed up in an increase in operating working capital as at 31 March 2009.

As at 3 1 Marc h 2 0 0 9

As at 3 1 Marc h 2 0 1 0

T o ta l 8 9 ,3 6 7 1 2 0 ,9 6 7 Se g m e nRe s u lts t 2 0 0 8 -0 9

F ix e a s s e ts d 1 5 ,4 8 1 1 5 ,2 1 1

C a p it a ld v a n c e s A T e c h n icka lo w -h o w n W o rk incga p ita l T o ta l

2 0 0 9 -1 0 Pro f it /( lo sfro m e a c h e g m e n t s) s 844 793 163 -1 ,0 5 0 1 5 ,4 3 8 -6 ,9 5 2 9 ,0 5 2 2 2 ,8 8 6 253%

O p e r a tin g fita fte rin te re s tn dd e p r e c ia tio n 8 ,4 6 4 p ro a P re -ta re tu r n n o p e ra tincga p itael m p lo y e d 5 5 % x o

CautionaryStatementStatements ManagementDiscussion in and Analysisdescribingthe Com panys objectives, projections, estimates and expectations ay be m forward lookingw ithin the m eaningof applicable laws and regulations. Actualresultsm ight differ materially from thoseexpressed implied. or


Corporate GovernanceBajaj Groupscommitment of good corporate governance practicespredatesS E B and clause 49 of the listing agreements. I Transparency, fairness,disclosureand accountability are the main thrust to the working of the Bajaj Group. Bajaj Auto Limited (BAL or the company or Bajaj Auto) maintains the same tradition and commitment. Given below are the companyscorporate governancepolicies and practices for 2009-10.As will be seen,Bajaj Autos corporate governancepracticesand disclosureshave gonewell beyond complying with the statutory and regulatory requirements in accordancewith the provisions of clause 49 of the listing agreement.

Board proceduresDuring 2009-10,the board of directors met six times: on 21 May 2009, 16 July 2009, 19 September2009,15 October 2009,12 January2010 and 24 March 2010.The gap between any two meetings has been less than four months.

Attendance record of directorsTable 1: Compositionof the board and attendance record of directors for 2009-10 N am of e d ire c to r R a h uBl a ja j M a d h u r a ja j B R a jiv a ja j B S a n jiv a ja j B D S M e h ta S h e k h B ra ja j a D J B a la R a o ji J N G o d re j S H Khan N a r e sCh h a n d r a N a n oP a m n a n i o M a n isK e jriw a l h P M u ra ri N ir a B a ja j j C a te g o ry M e e tin g s a tte n d e d 6 /6 6 /6 5 /6 6 /6 5 /6 5 /6 6 /6 6 /6 0 /6 6 /6 5 /6 6 /6 5 /6 5 /6 4 /6 5 /6 W h e th e r a tte n d e d la s tA G M Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes

Board of directorsIn keeping with the commitment of the management for the principle of integrity and transparency in business operations for good corporate governance, the companys policy is to have an appropriate blend of executive and independent directors to maintain the independence of the board, and to separate the board functions of governance and management.

C h a irm aen ,e c u tiv e x V ic e h a irm aenx,e c u tiv e C M a n a g in gir e c toer x e c u tiv e D , E x e c u t iv e e c toer x e c u tiv e D ir , N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tiv e N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tiv e N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tiv e

K a n tik u mRaP o d a r N o n - e x e c u tivd e p e n d e n t r in e ,

CompositionAs on 31 March 2010,the board of BajajAuto consisted of sixteen directors, of whom four directors were executive.Nine out of the twelve non-executivedirectors were independent. The board, subject to approval of the shareholders, reappointed RahulBajajas the chairm an,M adhur Bajajas vice chairm an and Rajiv Bajajas managing director of the company for a further period of five years from 1 April 2010. The board has no institutional nominee directors. According to clause 49, if the chairman is executive, at least one half of the board should consist of non-executive, independent directors. As Table 1 below shows, this provision is met at Bajaj Auto.

M sS u m aK irlo s k a rN o n - e x e c u tivd e p e n d e n t n in e ,

Information supplied to the boardIn advanc of each meeting the board is presente with the e , d relevant informatio on various matters related to the working of n the company especiall those that require deliberation at the , y highest level. Presentation are also made to the board by the s different functiona heads on variou issue concerning the company l s s from time to time. Director have separat and independent access s e to senior managemen at all times. In addition to items, which t are required to be placed before the board for its noting and / or approval, information is provided on various significant items. In terms of quality and importance, the information supplied by managemen to the board of the company is far ahea of t d the list mandate under clause 49 of the listing agreement. d

Non-executivedirectors compensationThe board of directors at its meeting held on 24 March 2010 partially revised the directors remunerationpolicy with effect from 1 April 2010 and accordingly,non-executivedirectors of the company with effect from 1 April 2010 would be paid, in addition to the sitting fee of Rs.20,000 meeting for every per meeting of the board and its committees,commission at the rate of R s.75,000 (instead of R s.50,000) meeting of the board and its per committee attended by them, subject to the aggregate being within the overall ceiling of one percent of the net profits. The company currently does not have a stock option programme for the non-executivedirectors.

Directorshipsand membershipsof board committeesTable 2 gives the number of directorshipsand committee positions held by the directors of BajajAuto.


Table 2: Directorships/ committee positions as on 31 March 2010N a m o f D ire c to r e In lis te d In u n lis tep u b lic d C o m m itte e s it io n s Po c o m p a n ie s lim ite d o m p a n ie A s C h a irm a n A sM e m b e r c s

listing agreement.The present audit committee consists of the following directors :

R a h uBl a ja j M a d h u ra ja j B R a jiv a ja j B S a n jiv a ja j B D S M e h ta S h e k h B ra ja j a D J B a la R a o ji J N G o d re j S H Khan N a r e sCh h a n d r a N a n oP a m n a n i o M a n isK e jriw a l h P M u r a ri

5 4 4 6 5 3 10 6 5 10 4 2 9

3 2 2 5 0 2 5 0 3 3 1 2 0 0 2

0 0 0 0 1 0 1 4 1 5 0 1 4 0 1

0 0 1 5 6 0 2 6 3 5 0 9 4 2 5

K a n tik u mRaP o d a r 3 r

M sS u m aK irlo s k a r 1 n

N ir a B a ja j j 6 6 0 2 N o te sP: r iv a te ite d o m p a n ie sre ig n o m p a n iensdc o m p a n iensd e s e c tio 2 5 lim c fo , c a u r n o f th eC o m p a n ie s t, 1 9 5 6 a r e e x c lu d efo r th e a b o v ep u r p o s e O .n ly a u d it Ac d s c o m m itte e ds h a re h o ld e r s v a n c e m m itte e e c o n s id e re dr th e p u rp o soef an g ie o ar fo c o m m itte e s itio n s p e rlis tin g g r e e m e n t. po a a None of the directors was a member in more than 10 committees, nor a chairman in more than five committees across all companiesin which he / she was a director.

Reviewof legal compliance reportsDuring the year, the board periodically reviewed compliance reports with respect to the various laws applicable to the com pany,as prepared and placed before it by the management.

Code of conductThe board at its meeting on 30 January2008 laid down a code of conduct for all directors and senior managementof the company, which has been posted on the website www.bajajauto.com . All directors and senior managementpersonnelhave affirmed compliance with the code for 2009-10.A declaration to this effect signed by the managing director / chief executiveofficer is given in this annual report.

Audit committeeConstitution and compositionAfter the demerger of erstwhile BAL in 2008,the new Bajaj Auto set up its audit committee in 2008. The company has been reviewing the working of the committee from time to time to bring about greater effectivenessin order to comply with various requirementsunder the CompaniesAct, 1956 and clause 49 of the

1. 2. 3. 4. 5.

Nanoo Pamnani, Chairman S H Khan D J B a la jiRao J N Godrej NareshChandra

During the y e a r, S H Khan resignedfrom the chairmanshipof the audit committee. As recommendedby the remuneration & nomination committee, the board of directors at its meeting held on 24 March 2010 appointed Nanoo Pamnani,who was already a member of the audit committee, as the chairman of the said committee. S H K h a n ,however, continued as the member of the audit committee. All membersof the audit committeeare independent, nonexecutivedirectorsand are financiallyliterateas required by clause49. M oreover,the audit com m itteehas memberswho have accountingor related financial management expertise.

Meetings, attendance and topics discussedDuring 2009-10,the audit committee met four times: 21 May 2009,16 July 2009,15 October 2009 and 12 January2010. The meetings were scheduledwell in advance.In addition to the members of the audit committee, these meetings were attended by the heads of finance and internal audit functions, the statutory auditors and cost auditors of the company,and those executives who were considered necessary providing inputs to the committee. The company secretary for acted as the secretaryto the audit committee. The terms of referenceof the audit committee are extensiveand go beyond what is mandated in clause 49 of the listing agreement and section 292A of the CompaniesAct, 1956. Table 3 : Composition of the audit committee and attendance record of members for 2009-10N a m e f d ir e c to r o C a t e g o ry M e e tin gastte n d e d

N a n o P a m n a n i, a irm a nN o n - e x e c u tivd e p e n d e n t o Ch in e , S H Khan N o n - e x e c u tivd e p e n d e n t in e , D J B a la R a o ji J . N .G o d r e j N a r e sCh h a n d r a N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tivd e p e n d e n t in e , N o n - e x e c u tivd e p e n d e n t in e ,

4 /4 4 /4 4 /4 0 /4 4 /4

SubsidiarycompaniesDuring the year, the audit committee reviewed the financial statements,including the investmentsmade by the two overseas subsidiaries, P T .B a ja jAuto Indonesiaand viz, Bajaj Auto International HoldingsB V ,Netherlands.A statement of all significant transactionsand arrangementsentered into by the subsidiary companieswas regularly placed before the board.

DisclosuresA summary statement of transactionswith related parties was placed periodically before the audit committee during the year. Suitable disclosureshave beenmade in the financial statements,

together with the managementsexplanation in the event of any treatment being different from that prescribed in accounting standards. The board has laid down proceduresto inform it of the companys risk assessment and minimisation procedures.These are periodically reviewed to ensure that managementidentifies and controls risk through a properly defined framework. There were no public issues,right issues,preferential issues etc. during the year.

Bajaj Auto from Bajaj ElectricalsLtd. amounted to R s .0 .1 million. 3. ShekharBajaj is a director of Hind Musafir Agency Limited, an accreditedtravel agency.During the year under review, the total value of servicesavailed of by BajajAuto from Hind Musafir Agency Limited amounted to R s .7 3 .4 million. 4. The register of contracts maintained by the company under section 301 of the CompaniesAct, 1956,contains record of the transactionsentered into with the above companies.The register is signed by all the directors present at the respective board meetings.

Remuneration& Nomination CommitteeBajaj Auto constituted the remuneration committee of the board on 30 January2008.Subsequently, board of directors at its the meeting held on 16 January2009 extended the terms of reference of the said committee to include nomination functions and restyled the said committee as `remuneration and nomination committee . The committee now has the following m em bers : 1. 2. 3. 4. D J B a la jiR a o, Chairman S H Khan NareshChandra RahulBajaj

Criteria of making payments to non-executive directorsNon-executivedirectors of the company play a crucial role in the independent functioning of the board. They bring in an external perspective to decision-making,and provide leadership and strategic guidance while maintaining objective judgment. They also overseecorporate governanceframework of the company. The partially amended criteria of making payments to non-executivedirectors as approved by the board at its meeting held on 24 March 2010 has been put on the companys website www.bajajauto.com

During the year, the committee met on 21 May 2009 to recommendemployeesstock option scheme.It also met on 24 March 2010 and recommendedthe re-appointment of Rahul Bajajas chairm an,M adhur Bajajas vice chairm an and Rajiv Bajaj as managing director of the company for a period of five years commencing from 1 April 2010 to 31 March 2015. At the said meeting, it also recommendedfor the considerationof the board the managerialremuneration payable to the three appointees for the fresh term of five years as also the annual increasepayable to SanjivBajaj,executive director with effect from 1 April 2010. It further approved and recommendedto the board the nomination of Nanoo Pam nanias chairm an of the audit committee in place of S H Khan. The committee also recommendedfor the consideration of the board the reappointment of the directors, who are due for reappointment at the ensuing annual general meeting of the company.

Non-executivedirectorsNon-executivedirectors are paid sitting fees and commissionon net profits as separatelystated in this report.

ExecutivedirectorsRahulBajaj,M adhur Bajajand Rajiv Bajaj,whose term s as managerialpersonnelin the company expired on 31 March 2010, were re-appointed to the same positions for a further period of five years from 1 April 2010,as separatelystated in this report. The remuneration payable to RahulBajaj,M adhur Bajajand Rajiv Bajajfor the fresh term was reviewed and finalised by the remuneration and nomination committee at its meeting held on 24 March 2010 and confirmed by the board on that day. The revised remuneration payable to these executive directors will come into effect from 1 April 2010. On their retirem ent,the executivedirectorsare entitled to superannuation benefitspayablein the form of an annuity from the Life InsuranceCorporationof India and these form a part of the perquisitesallowed to them. No pension is paid by the company. The company has no stock option plans for the directors and hence, it does not form a part of the remuneration package payable to any executiveand / or non-executivedirector. During the year under review, none of the directors was paid any performance-linkedincentive. In 2009-10,the company did not advanceany loans to any of the executive and / or nonexecutive directors.Table 4 gives details of the remuneration paid or payable to directors during 2009-10.

Remunerationof directorsPecuniaryrelationship or transactionsof non-executive directors1. J N Godrej is a director and shareholderof Godrej & Boyce Manufacturing CompanyLimited, which is a vendor to BajajAuto. Purchases goods from this company has been in of the ordinary course of businessand, for the year ended 31 March 2010, amounted to R s .7 .4 million. 2. ShekharBajaj is a director of Bajaj ElectricalsLtd. During the year under review, the total value of servicesavailed by

Table 4: Remunerationpaid / payable to directors during 200910N a m o f d ire c to r R e la tio n s w ip e h ith o th e d ire c to rs r R a h uBl a ja j F a th eor f R a jiv a ja j, B S a n jiv a ja j, th e r-in B fa la w o f M a n isK e jriw a l h B r o th e rf S h e k h B ra ja j o a & N ir a B a ja j j S o no f R a h uBl a ja j, b ro th e rf S a n jiv a ja j, o B b ro th e r-in la w o f M a n isK e jriw a l h S o no f R a h uBl a ja j, b ro th e rf R a jiv a ja j, o B b ro th e r-in la w o f M a n isK e jr iw a l h S ittin g fe e s R s. S a la r& C o m m is s io n T o ta l y p e rq u is ite s R s. R s. R s.

ManagementManagementdiscussionand analysisThis is given as a separatechapter in the annual report.

N il N il

2 5 ,1 2 1 ,0 5 3 6 ,0 0 0 ,0 0601 ,1 2 1 ,0 5 5 5 1 6 ,3 9 5 ,9 5 2 5 ,2 0 0 ,0 0401 ,5 9 5 ,9 5 9 9

Disclosureof material transactions

M a d h uBr a ja j R a jiv a ja j B

N il

Under clause 49, senior managementis required to make periodical disclosuresto the board relating to all material financial and commercial transactions where they had (or were deemed to have had) personal interest that might have been in potential conflict with the interest of the company.This provision was 1 3 ,2 8 8 ,6 1 2 1 ,6 0 0 ,0 0304 ,8 8 8 ,6 1 0 adhered to during the year. 0

S a n jiv a ja j B

Compliancesregarding insider tradingN il 1 0 0 ,0 0 0 1 0 0 ,0 0 0 3 ,0 6 3 ,5 7 7 6 ,3 0 0 ,0 0 09 ,3 6 3 ,5 7 7 2 5 0 ,0 0 0 3 5 0 ,0 0 0 2 5 0 ,0 0 0 3 5 0 ,0 0 0 3 0 0 ,0 0 0 4 2 0 ,0 0 0 6 5 0 ,0 0 0 9 1 0 ,0 0 0

D S M e h ta

K a n tik u mRaP o d a r r S h e k h B ra ja j a D J B a la R a o ji J N G o d re j S H Khan

B r o th e rf M a d h uBr a ja j o & N ir a B a ja j j 1 2 0 ,0 0 0 2 6 0 ,0 0 0 2 6 0 ,0 0 0 1 0 0 ,0 0 0 2 6 0 ,0 0 0 1 8 0 ,0 0 0

Comprehensiveguidelines in accordancewith the S E B I regulations in this regard are in place. A code of conduct and corporate disclosurepractices framed by the company helps in ensuring compliance with the requirements.

ShareholdersAppointment and / or re-appointment of directorsAccording to the statutes,at least two third of the board should consist of directors liable to retire by rotation. Of these, one third are required to retire every year and, if eligible, may seek re-appointment by the shareholders.Accordingly,J N G od re j, S H Khan,SumanKirloskar and NareshChandraretire from the board by rotation this year and being eligible offer themselvesfor reappointment. RahulBajaj,M adhur Bajajand Rajiv Bajajhave been re-appointed a s chairman,vice chairman and managing director respectively for a fresh term of five years commencing from 1 April 2010 to 31 March 2015, subject to approval of the shareholdersat their ensuing annual general meeting. Brief profile of the retiring director and Rahu Bajaj Madhu Bajaj s s l , r and Rajiv Bajaj are given in the notice being issued to the shareholders o the ensuing annual general meeting of the company. f

6 5 0 ,0 0 0 9 1 0 ,0 0 0 2 5 0 ,0 0 0 3 5 0 ,0 0 0 6 5 0 ,0 0 0 9 1 0 ,0 0 0 4 5 0 ,0 0 0 6 3 0 ,0 0 0

S u m aK ir lo s k a r n N a r e sC h a n d r a h N a n oP a m n a n i o

M a n isK e jriw a l S o n -in -laow R a h uBl a ja j, h f b ro th e r-in -la fw o R a jiv a jaa n dS a n jiv a ja j 1 0 0 ,0 0 0 B j B P M u ra ri N ir a B a ja j j 8 0 ,0 0 0

2 5 0 ,0 0 0 3 5 0 ,0 0 0 2 0 0 ,0 0 0 2 8 0 ,0 0 0 2 5 0 ,0 0 0 3 5 0 ,0 0 0

B r o th e rf M a d h uBr a ja j o & S h e k h B ra ja j a 1 0 0 ,0 0 0

N o te s : a la ra n dp e rq u is ite s lu d a ll e le m e no f re m u n e ra tio ns a la r y ,llo w a n ca nsd S y in c e ts i.e . a e b e n e fits .ob o n u s ,e n s ioonr in c e n tivis p a idto a n yo f th e d ire c to rTsh ec o m p a n y sn o t N p e . ha is s u eadn ys t o c o p tio nto a n yo f th e d ire c to rs h ete rmo f e x e c u tiv e c to d o e s o t k s T. d ire rs n e x c e efiv ey e a rs . d

S haresheld by non-executive directorsThe non-executivedirectors as on 31 March 2010, who held shares in the company are: Table 5: Sharesheld by non-executivedirectors N a m o f D ir e c to r e S h e k h B ra ja j a N ir a B a ja j j M a n isK e jr iw a l h D S M e h ta

Communicationto shareholders

Quarterly,half-yearly andannual financial results are published in numerousleading dailies,such as BusinessStandard,Financial Express, The Econom icTim es, Kesari, Hindu BusinessLines N u m b e rf s h a r ehse lda s o n 3 1 M a r c 2 0 1 0 and Times of India. The official press releaseis also issued.The o h company also sends the half-yearlyfinancial results,along with a 3 6 0 ,4 4 0 1 ,1 1 4 , 2 3 8 detailed write-up, to each household of shareholders. 100 8 ,4 9 0

Bajaj Auto has its own website, www.bajajauto.com, which contains all important public domain information, including presentations made to the media, analysts institutional , investors The website also contains information on matters . such as dividend history, answers to Frequently Asked Question (FAQs by the various shareholde categories and s ) r details of the corporate contact persons All financial and . other vital official news release are also communicated to s the concerne stock exchanges besides being placed on the d , companys website. The company also files the following information, statements, reports on the website as specified by S E B I:l Full version of the annual report including the balance

Material disclosureof related party transactionsMaterial transactionsentered into with related parties have been already disclosedin this chapter. None of these have had any potential conflict with the interests of the company.

Details of capital market non-compliance,if anyThere has been no non-complianceby the company of any legal requirements;nor has there been any penalty, stricture imposed on the company by any stock exchange,S E B or any I statutory authority on any matter related to capital markets during the period under review.

sheet, profit and loss account,directors report and auditors report, cash flow statement,half-yearlyfinancial statement and quarterly financial statements.l Corporategovernancereport. l

Shareholders and investors grievancecommitteeThe board of directors of Bajaj Auto constituted its shareholders and investors grievance committee in 2008. This committee has been constituted to specificallylook into the shareholdersand investors complaints on matters relating to transfer of shares, non-receipt of annual report, non-receipt of dividend etc. In addition, the committee also looks into matters that can facilitate better investor servicesand relations. The committee consistedof the following nonexecutive independent directors as on 31 March 2010: 1. 2. 3. 4. D J B a la jiR a o ,Chairman J N Godrej NareshChandra S H Khan

Shareholdingpattern.

Information on general body meetingsAs the company was incorporated on 30 April 2007, the annual general meetings of the company have been held at the registered office of the company on the following dates and times :-. 1st AGM 2nd AGM 10 July 2008 16 July 2009 at 11.30 a.m. at 11.30 a.m.

Details of Special Resolution(s) passedduring the last years Annual General Meeting (AGM)The sharesof the company got listed for the first time on 26 May 2008.No specialresolution was passedat the general meeting held during the year 2008. At the AGM held on 16 July 2009, two special resolutions were passed,viz. (a) pertaining to re-appointment of Sanjiv Bajaj as executive director for a term of five years commencing from 1 April 2009 upto 31 March 2014 and approval of remuneration payable to Sanjiv Bajaj and (b) regarding approval of employee stock option scheme for issue of shares upto a maximum of 2,200,000equity shares.Stock Options,however,have not been granted to any employee so far. So far, the company has not adopted postal ballot for passing any resolution at the general meetings,because there been has no occasionfor doing so.

During the year under review, the committee met on 24 March 2010 to review the status of investorsservices rendered.All members except J N Godrej were present at the meeting. The secretarialauditor as well as company secretary (who is also the compliance officer) were also present. More details have been furnished in the chapter on General ShareholderInformation.

C E O/ C FOcertificationT he C E Oa nd C F Ohave certified to the board with regard to the financial statements and other m atters as required by clause 49 of the listing agreement.The certificate is contained in this annual report.

Report on corporate governanceThis chapter,read together with the information given in the chapters on ManagementDiscussionand Analysisand General ShareholderInformation, constitute the compliance report on corporate governanceduring 2009-10.

Auditors certificate on corporate governanceThe company has obtained the certificate from its statutory auditors regarding compliance with the provisions relating to corporate governancelaid down in clause 49 of the listing agreement.This report is annexed to the directors report, and will be sent to the stock exchangesalong with the annual return to be filed by the company.

2. Remunerationcommittee The company has a remuneration committee. A detailed note on this committee is provided in the annual report. 3. Shareholderrights A half-yearly declaration financial performanceincluding of summary of significant events in the preceding six months, is sent to each household of shareholders. 4. Audit qualifications There are no qualifications in the financial statements of the company for the year 2009-10. 5. Whistle blower policy The company has a whistle blower policy to enable employees to report to the managementtheir concernsabout unethical behaviour,actual or suspectedfraud or violation of companys code of conduct or ethics policy. This mechanism provides safeguardsagainst victimisation of employees,who avail of the mechanism.This also provides for direct accessto the chairman of the audit committee in exceptional cases. Thepolicy has been appropriately communicated to the employeeswithin the organisation.

Complianceof mandatory and nonmandatory requirementsunder clause 49MandatoryThe company has complied with all the mandatory requirements of clause 49 of the listing agreement.

Non-mandatoryThe company has also complied with the nonmandatory requirementsas under : 1. The Board The requirement regarding non-executivechairman is not applicable,since the chairman of the company is executive chairman. None of the nine independent directors of the company have tenures exceeding aperiod of nine years on the board.


General Shareholder InformationAnnual general meetingDate Time Venue : 22 July 2010 : 1 1 .3 0 a.m. : Registeredoffice at Mumbai-Pune Road,Akurdi, Pune 411 035 company on or before the closing hours on Friday,9 July 2010.

Paymentof dividendDividend will be paid by account payee / non-negotiable instruments or through the National Electronic Clearing Service (N E C S ), s notified by the S E B through the stock exchanges. a I In view of the significant advantagesand the convenience,the May June July July October January

FinancialcalendarAudited annual results for year ending 31 March Mailing of annual reports Annual general meeting Unaudited first quarter financial results Unaudited second quarter financial results Unaudited third quarter financial results

DividendThe board of directors of Bajaj Auto has proposed a dividend of R s.40p er equity share (400 per cent) for the financial year 2009-10,subject to approval by the shareholdersat the annual general meeting. Dividend paid in the previous year was R s .2 2 p e r equity share (220 percent).

Dates of book closureThe register of membersand share transferbooks of the company will remain closed from Saturday,10 July 2010 to Thursday, 22 July 2010,both days inclusive.

Date of dividend paymentThe payment of dividend, upon declaration by the shareholders at the forthcoming annual general meeting, will be made on or after 26 July 2010: a) to all those beneficial owners holding sharesin electronic form , as per the ownership data made available to the company by National SecuritiesDepository Limited (NSDL) and the Central Depository Services(India) Limited (C D S L ) as of the end-of-the-dayon Friday, 9 July 2010;and b) to all those shareholders holding sharesin physical form, after giving effect to all the valid share transferslodged with the

company will pay dividend through N E C Sin all major cities to cover maximum number of shareholders, per applicable as guidelines.Shareholders advisedto refer to the notice of the are annual general meeting for details of action required to be taken by them in this regard.For additional details or clarifications, shareholdersare welcome to contact the registered office of the company.

Unclaimed dividendsThe shareholderswho have not encashedtheir dividend warrants for the years 2007-08and 2008-09are requested to claim the amount from Karvy ComputersharePvt. Ltd. / registered office of the company. As per section 205 of the CompaniesAct, 1956,any money transferred by the company to the unpaid dividend account and remaining unclaimed for a period of seven years from the date of such transfershall be transferred to a fund called The Investor Educationand Protection Fund set up by the central government. No claims shall lie against the fund or the company in respect of amount so transferred.

Registrarand share transfer agentThe company appointed Karvy ComputersharePvt. Ltd. as its share transferagent and accordingly,processingof share transfer / dematerialisation/ rematerialisationand allied activities was outsourced to Karvy ComputersharePvt. Ltd., Hyderabadwith effect from 10 July 2008. All physicaltransfers,transmission,transposition,issue of duplicate share certificate/s,issue of demand drafts in lieu of dividend warrants etc as well as requestsfor dematerialisation/ rematerialisationare being processedat Karvy Computershare Pvt. Ltd. The work related to dematerialisation/ rematerialisation is handled by Karvy ComputersharePvt. Ltd. through connectivitieswith National SecuritiesDepository Ltd and Central Depository Services(India) Ltd.

SharetransfersystemSharetransfersreceived by the share transferagent / company would be registered within 15 days from the date of receipt, provided the documents are complete in all respects. Total number of sharestransferred in physical category during 2009-10was 223,120.

Dematerialisationof sharesDuring 2009-10,47,723,435 shareswere dematerialised.

Distribution of sharesas on 31 March 2010 is given in Table 1. Table 1: Sharesheld in physical and electronic modeP o s itioans o n 3 1M a rc 2 0 1 0 h N o .o f % to to ta l s h a re s s h a re h o ld in g P h y s ic a l D e m a t: NSDL CDSL S u bT o ta l T o ta l 1 1 ,1 5 4 ,5 3 0 1 3 1 ,4 2 6 ,7 4 4 2 ,1 0 2 ,2 3 6 1 3 3 ,5 2 8 ,9 8 0 7 .7 1 9 0 .8 4 1 .4 5 9 2 .2 9 P o s itioans o n 3 1M a rc 2 0 0 9 h N o .o f % to to ta l s h a re s sh a re h o ld in g 5 8 ,8 7 7 ,9 6 5 8 3 ,4 2 1 ,8 7 0 2 ,3 8 3 ,6 7 5 8 5 ,8 0 5 ,5 4 5 4 0 .6 9 5 7 .6 6 1 .6 5 5 9 .3 1 1 0 0 .0 0 N e tc h a n g e d u r in g 0 0 9 - 1 0 2 N o .o f % to to ta l sh a re s s h a re h o ld in g 4 7 ,7 2 3 ,4 3 5 4 8 ,0 0 4 ,8 7 4 -2 8 1 ,4 3 9 3 2 .9 8 3 3 .1 8 - 0 .1 9

Table 2: Monthly highs and lows of BajajAuto Limited shares during 2009-10(R s .)vis-a-visB S ESensexM o n th A p r0 9 M a y0 9 J u n0 9 J u l0 9 A u g0 9 S e p0 9 O c t0 9 N o v0 9 D e c0 9 J a n1 0 F e b1 0 M a r 0 1 B S E ig h H 6 8 7 .9 5 1 ,0 5 7 .0 0 1 ,1 5 5 .0 0 1 ,2 6 2 .0 0 B S E ow L 5 9 1 .0 0 6 3 9 .0 0 9 2 2 .5 0 9 3 5 .2 5 N S E ig h H 6 8 9 .8 0 1 ,0 6 0 .0 0 1 ,1 5 9 .0 0 1 ,2 8 5 .0 0 1 ,3 5 8 .0 0 1 ,5 3 4 .0 0 1 ,6 6 5 .0 0 1 ,6 2 1 .8 5 1 ,7 9 9 .5 0 1 ,8 3 6 .5 5 1 ,8 7 4 .0 0 2 ,0 5 4 .9 5 N S E o w C lo s inBgS E e n s e x L S 5 3 5 .0 0 6 2 4 .4 0 9 2 0 .0 0 9 0 6 .5 5 1 ,0 4 0 .1 0 1 ,1 6 2 .2 0 1 ,3 6 6 .1 0 1 ,3 9 5 .0 0 1 ,5 7 7 .0 0 1 ,6 4 0 .0 0 1 ,6 2 6 .9 0 1 ,7 9 6 .1 0 1 1 ,4 0 3 .2 5 1 4 ,6 2 5 .2 5 1 4 ,4 9 3 .8 4 1 5 ,6 7 0 .3 1 1 5 ,6 6 6 .6 4 1 7 ,1 2 6 .8 4 1 5 ,8 9 6 .2 8 1 6 ,9 2 6 .2 2 1 7 ,4 6 4 .8 1 1 6 ,3 5 7 .9 6 1 6 ,4 2 9 .5 5 1 7 ,5 2 7 .7 7

1 ,3 5 6 .0 0 1 ,0 4 5 .0 0 1 ,5 3 5 .0 0 1 ,1 6 1 .8 5 1 ,6 6 5 .0 0 1 ,3 6 8 .0 0 1 ,6 1 6 .0 0 1 ,3 9 1 .2 5 1 ,8 0 0 .0 0 1 ,4 8 0 .0 0 1 ,8 3 6 .4 0 1 ,6 4 1 .1 5 1 ,8 7 0 .0 0 1 ,6 2 0 .0 0 2 ,0 5 5 .0 0 1 ,8 0 0 .0 0

1 4 4 ,6 8 3 ,5 1 0 1 0 0 .0 0 1 4 4 ,6 8 3 ,5 1 0

Global depository receipts(GDRs)Bajaj Auto issued and allotted Global Depository Receipts (GDRs)on 3 April 2008 to the shareholdersof B H IL(formerly BAL) pursuant to the schemeof demerger sanctioned by the Honble High Court of Judicatureat Bombay vide its order dated 18 December 2007 and the underlying sharesagainst each GDR were issued in the name of the overseasdepository, i.e. Deutsche Bank Trust CompanyAmericas(DBTCA). The company has entered into deposit agreement with D BTC Aon 21 August 2008. The company is in the processof getting the said G D R slisted on the Professional SecuritiesMarket of the London Stock Exchange.

Stock Exchangeof India Ltd (N S E ) :

Stock code1. B S E Mumbai , 2. National Stock Exchange 3. IS INfor Depositories(N SD Land C D SL) 4. Bloomberg 5. Reuters 532977 BAJAJ-AUTO INE917I01010 BJAUT.IN BAJA.BO

Listing on stock exchangesThe sharesof the company are currently listed on the following stock exchanges:N am e 1 . B o m b a yt o c E x c h a n L td ., S k ge M u m b aB S E ) (i 2 . N a tio n S lt o c E x c h a n g e a k o f In d iaL t d .( N S E ) A d d re ss 1 s tF lo o rP, h ir o zJee e je e b hTooyw e r s D a laS tre e M u m b a i0 00 0 1 l t, 4 E x c h a nP la z a , a n d ra -K u rlam p le x , ge B Co B a n d r(a )M u m b a i0 00 5 1 E 4

During 2009-10,the listing fees payable to these stock exchanges have been paid in full.

Market price dataTable 2 gives the monthly highs and lows of Bajaj Autos shareson the BombayStock ExchangeLtd (B S E and National )


Distribution of shareholdingsTable 3 gives details about the pattern of shareholdingsamong various categoriesas on 31 March 2010 and 31 March 2009, while Table 3A gives the data according to size classesas on 31 March 2010 and 31 March 2009. Table 3: Distribution of shareholdingsacrosscategoriesC a t e g o r ie s P ro m o te rs1 GDRs

3 1 M a rc 2 0 1 0 h N o .o f % to to ta l c a p ita l s h a re s 7 1 ,7 8 6 ,8 8 6 1 2 7 ,9 0 2 2 5 ,7 7 4 ,5 3 4 4 ,6 3 7 ,2 2 0 4 ,7 3 2 ,6 5 5 4 5 ,0 1 2 5 9 8 ,9 9 9 2 0 ,6 9 7 ,9 3 1 4 9 .6 2 1 1 .2 5 0 .0 9 1 7 .8 1 3 .2 1 3 .2 7 0 .0 3 0 .4 1 1 4 .3 1

3 1 M a rc 2 0 0 9 h N o .o f % to to ta s h a r e s l c a p ita l 7 1 ,7 8 6 ,0 3 6 1 6 ,3 2 7 ,4 7 8 1 8 1 ,7 7 5 1 9 ,9 8 0 ,9 1 9 8 ,3 1 6 ,1 2 2 4 ,9 2 6 ,5 4 7 1 1 0 ,3 9 7 6 5 0 ,0 5 6 2 2 ,4 0 4 ,1 8 0 4 9 .6 1 1 1 .2 8 0 .1 3 1 3 .8 1 5 .7 5 3 .4 1 0 .0 8 0 .4 5 1 5 .4 8 1 0 0 .0 0

F r ie n dasn da s s o c ia o f s ro m o te r1s6 ,2 8 2 ,3 7 1 te p F o r e igIn s titu tio nIn lv e s to rs n a P u b lic in a n c In ls titu tio n s F ia M u tu aFl u n d s N a tio n a lis&e o th e b a n k s d r N R I& O C B s s O th e rs T o ta l1

1 4 4 ,6 8 3 ,5 1 0 1 0 0 .0 0 1 4 4 ,6 8 3 ,5 1 0

U n d eth e d e p o saitg r e e m e tht, d e p o s itoery e r c isth s v o tin g ig h ts n th e s h a r e s r ne x ee r o u n d e r ly in ge G D Rass d ir e c tebdy th e p r o m o teor fsth e c o m p a n y . th Table 3A: Distribution of shareholding according to size classas on 31 March 2010N oo f s h a r e s 1 T O500 5 0 1T O 1 0 0 0 1 0 0 1 O2 0 0 0 T 2 0 0 1 O3 0 0 0 T 3 0 0 1 O4 0 0 0 T 4 0 0 1 O5 0 0 0 T 5 0 0 1 O1 0 0 0 0 T 10001 N D B O V E A A T o ta l N oo f s h re h o ld e rs a Num ber % 5 8 ,4 6 9 1 ,4 7 6 1 ,0 1 6 503 246 186 424 662 6 2 ,9 8 2 9 2 .8 4 2 .3 4 1 .6 1 0 .8 0 0 .3 9 0 .3 0 0 .6 7 1 .0 5 S h a r ehse ld e a c h la s s in c Num ber % 2 ,7 3 7 ,9 0 3 1 ,0 8 2 ,8 0 5 1 ,4 6 5 ,8 3 2 1 ,2 6 4 ,5 4 9 8 5 9 ,0 2 4 8 5 3 ,1 3 9 2 ,9 5 1 ,6 1 9 1 3 3 ,4 6 8 ,6 3 9 1 .8 9 0 .7 5 1 .0 1 0 .8 7 0 .5 9 0 .5 9 2 .0 4 9 2 .2 6 1 0 0 .0 0

1 0 0 .0 0 1 4 4 ,6 8 3 ,5 1 0


Shareholders and investorsgrievancesThe board of directors of Bajaj Auto currently has a shareholders / investors grievance committee consisting of four nonexecutive independent directors to specificallylook into the shareholders / investors complaints on various matters.Routine queries / complaints received from shareholdersare promptly attended to and replied. Queries/ complaints received during the period under review related to non-receipt of dividend by warrantsas well a s through electronic clearing service,non-receipt of annual report, non-receipt of transferred sharesand change of address and / or bank particulars.There were no pending issuesto be addressedor resolved.During the year, letters were receivedfrom S E B / RO C/Stock Exchanges Investorsconcerning 7 complaints I / filed by the shareholderson various matters.In respect of each of these complaints, replies were sent to S E B / R O C/ Stock I Exchanges Investorsin the prescribed format, and no / action remained to be taken at the Companysend.

3. M IDC,Plot No A1, MahalungeVillage,Chakan 410 501 Dist. Pune (Maharashtra) 4. P lo t N o.2 ,S ec tor1 0, IIE Pantnagar,Udhamsinghnagar, Uttarakhand

Addressfor correspondenceInvestorsand shareholderscan correspondwith the share transfer agent or at registered office of the Company at the following address: Karvy Computershare Pvt. Ltd. Plot No.17 to 24, Vittalrao Nagar, Near Image Hospital, Madhapur, H Y D E R A B AD 081 500

Contact personsMr M S Madhusudhan/ Mr Mohd.Mohsinuddin Tel No. (040) 44655152; Fax No: (040) 44655024 e-mail: [email protected] website: www.karvy.com Bajaj Auto Limited BajajAuto Limited Complex Mumbai-PuneRoad Akurdi, Pune 411 035. Tel: (020)27472851(Extn 6063),27406063 Fax:(020)27407380 e-mail: [email protected] Website:www.bajajauto.com

NominationIndividual shareholdersholding sharessingly or jointly in physical form can nominate a person in whose name the shares shall be transferablein the caseof death of the registered shareholder(s). The prescribed nomination form will be sent by the company upon such request. Nomination facility for shares held in electronic form is also availablewith depository participant as per the bye-lawsand businessrules applicable to N SD Land C D SL.

Plant locationsBajaj Auto has plants located at the following places: 1. Mumbai-PuneRoad,Akurdi, Pune 411 035 (Maharashtra) 2. Bajaj Nagar,Waluj,Aurangabad431 136 (Maharashtra)


Directors ReportIntroductionThe directors present their third annual report and the audited statements of accounts for the year ended 31 March 2010. The highlights are as under:U n its T w o - w h e e le rs T h r e w h e e le r s e T o ta l O f w h ic h x p o rts E 2 0 0 9 -1 0 (N o s ) 2 ,5 1 1 ,6 4 3 3 4 0 ,9 3 7 2 ,8 5 2 ,5 8 0 8 9 1 ,0 0 2 2 0 0 8 -0 9 (N o s ) 1 ,9 1 9 ,6 2 5 2 7 4 ,5 2 9 2 ,1 9 4 ,1 5 4 7 7 2 ,5 1 9

annum to 4,980,000numbers per annum by 31 March 2011.

FinancialsRs. In Millio n 2 0 0 9 -1 0 N e ts a le & o th e in c o m e s r E x c e p tio ite m s nal V R S o m p e n s a tio n c V a lu a tio ns s eosf d e riv a tiv e d g inin s tr u m e n ts lo he g In te re s t D e p re c ia tio n P ro fit e fo re x a tio n b ta P r o v is io nr ta x a tio n fo P ro fit fte rta x a D is p o s a s u rp lu s b le P r o p o s d iv id e n(in c lu s iv e d iv id e nta x ) ed d of d T r a n s fe r G e n e rR le s e rv e to a B a la n c e r r ie in P ro fit L o s A c c o u n t a d & s E a r n in g s rs h a r e s .) pe (R 1 ,8 3 3 (2 1 8 ) 60 1 ,3 6 5 2 4 ,1 1 1 7 ,0 7 5 1 7 ,0 3 6 1 7 ,0 0 1 6 ,7 4 8 1 ,7 0 3 8 ,5 5 0 1 1 7 .7 1 ,8 3 3 218 210 1 ,2 9 8 9581 3 ,0 1 6 6 ,5 6 5 6 ,5 4 5 3 ,7 2 4 2 ,8 2 1 4 5 .2 1 2 0 ,4 3 5 G r o spsro fitb e fo re x c e p tio n a lm sin te re s t d e p re c ia tio n 2 7 ,1 5 1 e ite , & 2 0 0 8 -0 9 8 9 ,3 2 3 1 3 ,1 4 0

DividendThe directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of a dividend of Rs.40 per share, (400 per cent) for the year ended 31 March 2010. The amount of dividend and the tax thereon aggregates to Rs. 6,748.5million. Dividend paid for the year ended 31 March 2009 was Rs.22 per share (220 per cent). The amount of dividend and the tax thereon aggregated to Rs. 3 ,7 2 4 million.

OperationsThe operations of the company are elaborated in the annexed Manageme Discussionand Analysis Report. nt

Capacityexpansion& New ProjectsThe company plans to increase its capacity of two and three wheelersfrom the current 4,260,000numbers per Bajaj Auto Limited | 25

The 4 wheel vehicle development work is under progress and commercial launch of the first product from this platform is scheduledfor 2012. The techno-economic feasibility of the 4-wheeler Project and related agreements between partners, Bajaj, Renault & Nissan will be concluded at a suitable stage of this platform development.

Research development and & technology absorptionDuring the year under review, your company continued to invest substantially in R & D facilities, resulting in the enhancement of its infrastructure for design, prototyping & testing. The year 2009-10was a satisfying year, with R&D being involved in the creation of a number of new products and helping your company to gain m arket share. Many important products, which demonstrated the technical prowess of the company, were launched during the year under review. These were Pulsar 220 F, Pu ls a r 1 80 U G ,Pu lsa r 15 0 U G ,Pu ls a r 1 35 LS and Discover DTSsi. Your company continue to focus on expandin its design and s g testing teams, which has enable it to make the new generatio d n products. The developme in this area are set out in greater detail in nts the annexed Manageme Discussionand Analysis Report. nt The expenditu on research and development during 2009re 10 and in the previous year was:Rs. In Millio n

2 0 0 9 -1 0 i. C a p itain c lu d in g c h n ick n o w -h o w ) (l te al ii. R e c u r rin g T o ta l iii. T o tarle s e a r c h dd e v e lo p m e x p e n d itu re an nt a s a p e r c e n tao fe a le s ,e to f e x c isdeu ty gs n 3 1 2 .3 1 ,0 3 5 .3 1 ,3 4 7 .6 1 .1 7

2 0 0 8 -0 9 3 1 0 .8 8 3 7 .9 1 ,1 4 8 .7 1 .3 6

Conservationof energyAs a part of continuing efforts to conserve various resources, following steps were taken to conse energy : rvel Electrical energy saving was achieved by introduction of light

emitting diode (LED) street lights and LED mid-bay lamps; use of compact fluorescent lamps for office lighting; efficient usage of compressor and installation of transpa rent roof sheetsfor optimum utilisation of natural lights;l Water saving was achieved by usage of recycled water, drip

irrigation / sprinkler system for gardening, revising water change frequency of paint booth water circulation system; regulating pump on-off timing through timers and replacement of old underground water pipes aboveground pipes to avoid wastage of water due to leakage;


l Liquified petroleum gas (LP G )saving was achieved by

reduction in number of initial heat up occurrences from two to one for continuous gas carburising (CGC) furnace; installation of waste heat recovery system for preheating of combustion air in paint shop; reduction in hot water temperature for pre-treatment process and single shift running for production upto 60K at Pantnagar.

Pulsarupgrades were introduced in Indonesia.So far, there are more than 38,000satisfied customers, owning Bajaj motorcycles in Indonesia. Product portfolio will be expanded under Pulsar brand with Pulsa r 1 3 5 L S in the first quarter of 2010-11.Indonesia,being a light weight high acceleration step-through market (bebek), Pulsa r 1 3 5 L S will be positioned competitively to upgrade from bebek for the thrill seeking youngsters. During the year under review, salesand service showrooms were expanded to cover 23 provinces, across 7 major islands. (98.94%)subsidia of BajajAuto Limited. The ry subsidiary assem blesand m arkets Pulsarsin Indonesia.During the year, the

Impact of measurestakenAs a result of the initiatives taken for conservation of energy and natural resources, the company has effected an overall reduction in consumption as under :R e d u c tio c h ie v e d an in 2 0 0 9 - 1(% ) 2 0 0 8 - 0(% ) 0 9 E le c tr iceanl e r g y W a te r LPG 17 27 12 23 11 44

Investment / savingsInvestment for energy conservation activities Rs.8 .1 million Saving achieved through above activities Rs.1 5.1million

Foreign exchangeearning & outgoThe 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.32,690million, compared to Rs. 26,819million during the previous year. Total foreign exchange outflow during the year under review was Rs. 4,616 million as agains Rs. 7,286 million during the previous t year. The above outflow includes an investment of Rs.1 6 million (PreviousYear Rs. 1 ,3 7 8 million) made in its 100% subsidia ry, Bajaj Auto International Holdings BV. Netherlands for increasing its stake in KTM Power Sports AG from 31.72%to 31.92%.It further includes an investment of Rs.81 1million (PreviousYear Nil) made in its subsidia P T B ajajAuto Indonesia. ry,

Industrial relationsIndustrial relations with staff and workmen across the plant at Akurdi, Waluj, Chakan and Pantnagar remained cordial. The year 2010, being a Silver Jubilee year for the Waluj factory, various events like cultural activities of employees and their family members, sports competitions, tree plantation, blood donation etc. were conducted. One workman of the Waluj plant received the `KamgarBhusha Award and six workmen received the n `Gunwant Kamgar Award, declared by the Government of Maharashtra for the year 2009.

SubsidiariesPT. B a jajAuto Indonesia(P T B A I),is a majority shareholding

In an effort to bring down the customs duties, the subsidia has ry localisedsome of the assemblyoperations. It would continue to pursue the localisation of sub- assembliesfurther in 2010-11. With the addition of Pu ls a r 1 35 LS to the model line up and with increased local sub-assemblyoperations, the subsidia would be in a position to ry reduce its lossesin 2010-11. Bajaj Auto International Holdings BV, Netherlands (BAIH During BV) the year under review, B A IH invested further Euro BV 250,290to increase its stake in KT M P Sto 31.92%. The first product developed under the joint development program between KTM and BAL was showcased in Milan Motorshow in November 2009 and was received well. The product will go on sale in 2010-11. Reinforcing its commitment to KTM and signifying the strategic importance of KTM brand & products, Bajaj invested a further Euro 20 Million in April 2010 in KTM through B A IH taking its stake in KTM to BV 35.67%.

Corporatesocial responsibilityDuring the year 2009-10, Bajaj Auto continued its Affirmative Action Plan & Corporate Social Responsibility initiatives in various fields. Activities in this area are set out in greater detail in the C S RReport.

DirectorsJ N Godrej, S H Khan, SumanKirloskar and Naresh Chand retire from the ra board by rotation this year and being eligible, offer themsel es for rev appointment. Rahul Bajaj, Madhur Bajajand Rajiv Bajajhave been re-appointed as Chai m an, Vice Chai m an and Managing Director for a further term of five r r years commencing from 1 April 2010 and ending 31 March 2015.

Directors responsibilitystatementAs required by sub-section (2AA) of section 217 of the CompaniesAct, 1956,directors state:l that in the preparation of annual accounts, the applicable accounting

standards have been followed along with proper explanation relating to material departures.l that the directors have selected such accounting policies and applied

them consistently and made judgments and estimates

that are reasonableand 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.l that the directors have taken proper and sufficient care for

Certificate from auditors of the company regarding compliance of conditions of corporate governance is annexed to this report as Annexure 1.

the maintenance of adequate accounting records in accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assetsof the company and for preventing and detecting fraud and other irregularities.l that the annual accounts have been prepared on a

going concern basis.

Consolidatedfinancial statementsThe directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidia ries, v iz . PT. B a jajAuto Indonesia and Bajaj Auto International Holdings BV, Netherlands and as prepared in compliance with the accounting standards and listing agreement as prescribed by S E B I. Information in aggregate for each subsidia company is ry disclosed separately in the consolidated balance sheet.

Statutory disclosuresThe compa has received an exemption from the central ny government under section 212 (8) of the Companie Act, 1956 s with regard to attaching of the balance sheet, profit and loss account and other documents of its subsidia companies, viz. PT ry Bajaj Auto Indonesi and Bajaj Auto International Holdings BV, a Netherlands for the year 2009-10 The summa of the key financial of . ry s the companys subsidia is include in this annual report. ries d The annual accounts of the subsidiary companies and the related detailed information will be made available to the members of the company and its subsidia companies, seeking such ry information at any point of time. The annual accounts of the subsidiary companieswill be kept for inspection by any member of the company at its registered office and also at the registered office of the concerned subsidia company. ry As required under the provisions of sub-section (2A) of section 217 of the CompaniesAct, 1956 read with the Companies (Particularsof Em pl yees) Rules1975 as amended, particulars of o the employees are set out in an 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. Particularsregarding technology absorption, conservation of energy and foreign exchange earning and outgo required under section 217(1)(e)of the CompaniesAct, 1956 and Companies (Disclosu of Particularsin the report of board of directors) re R ule s, 1988 have been given in preceding paragraphs. Directors Responsibility Statement as required by section 217(2A of the CompaniesAct, 1956 appearsin A) a preceding paragraph.

A cash flow statement

BAL-AR-2009-10

Documents

Transcript of BAL-AR-2009-10