38980105 Bajaj Annual Report 2008
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Transcript of 38980105 Bajaj Annual Report 2008
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Corporate Information
Rahul Bajaj
Chairman
Nanoo Pamnani
Vice Chairman
Madhur Bajaj
Rajiv Bajaj
Sanjiv Bajaj
D S Mehta
Dipak Poddar (Managing Director upto 31st March, 2008)
Ranjan Sanghi
Rajendra Lakhotia
Rajeev Jain
Suhas Patwardhan
Chief Executive Officer
Company Secretary
Annual Report 2007-2008 1
Dalal & Shah
Chartered Accountants
Central Bank of India
State Bank of India
C/o. Bajaj Auto Limited
Mumbai - Pune Road,
Akurdi, Pune - 411 035
Bankers
Registered Office
Board of Directors Auditors
21st Annual General Meeting
on Wednesday, 9th July, 2008 at 11.30 a.m.
at the Registered Office of the company
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2 Annual Report 2007-2008
Directors' Report
1.
2. Financial Results :
The Directors present their Twenty-first Annual
Report and the Audited Statement of Accounts for
the year ended 31st March, 2008.
Income from Operations
Other Income
Total
Provision for Doubtful Debts andBad Debts written off, net
Depreciation
Profit before Taxation
Provision for Taxation[Including Deferred Tax Credit and FBT]
Profit for the year after Taxation
Disposable surplus after earlieryears adjustments
Appropriations :
Transfer to Reserve Fund
Transfer to Debenture Redemption
Reserve
Provision for Proposed Dividend
Provision for Dividend Tax
Balance carried to General Reserve /Balance Sheet
2007-08Rs. million
2006-07Rs. million
4,096.7
930.8
5,027.5
1,091.8
48.5
299.8
98.6
201.2
205.8
41.5
90.0
36.6
6.2
31.5
3,527.6
490.3
4,017.9
808.8
30.3
712.5
240.3
472.2
476.4
96.0
207.5
106.0
18.0
48.9
3. Dividend :The Directors recommend for the consideration of
the Members at the Annual General Meeting,
payment of Dividend of Re.1/- per Share (10 per
cent) for the year ended 31st March, 2008 on the
enhanced capital of Rs.366 million, after the
conversion of balance warrants issued to the
Promoters on preferential basis into equity sharesduring the year. The total Dividend outgo including
tax thereon will be Rs.42.82 million.
Dividend paid for the year ended 31st March, 2007
was Rs.3/- per share (30 per cent) and the total
Dividend outgo including tax thereon was Rs.124.1
million.
The Dividend recommended by the Board for the year
2007-08, apart from decline in profits, is also lower
due to the legal requirements relating to creation of
Debenture Redemption Reserve and rules pertaining
to transfer of profits to reserves.
During the year 2007-08, your company deployed atotal amount of Rs.30,363 million, of which
Rs.27,406 million were under various financing
schemes and Rs.2,957 million in AAA rated
securitized retail asset pools which is a new business
initiative by the company. As against this, during the
previous year 2006-07, the total amount deployed
was Rs.26,313 million, thus recording an increase of
15% over the previous year.
The Assets under Finance, Loan and Securitized Retail
Asset Pool receivables as on 31st March, 2008 were
Rs.33,319 million as compared to Rs.27,610 millionas on 31st March, 2007.
The profit before tax for the year was at Rs.299.8
million, as against Rs.712.5 million in the previous
year and the profit after tax for the year was
Rs.201.2 million as compared to Rs.472.2 million in
the previous year. This has been primarily because of
reduced subvention offers from the two wheeler
manufacturer (Rs.59 million in 2007-08 against
Rs.337 million in 2006-07), increased provision for
doubtful debts and bad debts written off, net
(Rs.1,092 million in 2007-08 against Rs.809 millionin 2006-07) due to the company's increased focus on
semi-urban and rural markets in the last 2-3 years.
4. Working Results :
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Annual Report 2007-2008 3
5. Prospects :
6. New Initiatives :
In the backdrop of strong GDP growth witnessed in
the last few years, the retail finance business is
continuously growing at a rapid pace. This strong
growth is also aided by changes in demographic
profiles, expanding base of potential consumers,
higher disposable incomes and increased product /
brand choices available to the customer. This high
growth level has attracted banks and other multi-
national players into retail finance business, thereby
resulting in increased competition.
However, there are some concerns at the end of the
year with regard to increasing inflationary pressures
and slowdown of economy, which could have an
adverse impact on the demand for two wheelers,
consumer durables and other retail lending
products. It could result in a slow down in retail
finance services and if prolonged, it could adversely
affect the future financial performance of financial
services companies in general.
After a fast paced growth over the last few years, the
retail finance industry in general is currently
witnessing stress in its portfolio quality. This current
trend in provisioning and bad debts is expected to
prevail in the near term.
The company during the year added about 500
permanent employees including some employees at
a senior level in various specialised business /
operational areas, the benefits of which will be
realised in next few quarters.
The company expects to maintain satisfactory
growth during the current year and aims to remain a
leading player in the retail financial services business
in the country through appropriate product strategy,
leveraging on its expertise, enhancing its risk
management capabilities in order to control
delinquencies and launching new business initiatives.
Since the third quarter of the year 2007-08, the
company has launched various new business
initiatives like acquisition of AAA rated securitized
retail asset pools of reputed banks / NBFCs, IPO
financing, insurance distribution to its customers,
cross sell of personal loans to existing customerswith clean repayment history, financing to SMEs /
reputed educational institutions and universities for
personal computers etc. The company is
repositioning itself as a full-service NBFC offering
wide range of products.
The company on 18th January, 2006, had allotted
3,006,540 Warrants to promoters - Bajaj Auto Ltd.,
on preferential basis, each Warrant being convertible
at the option of Bajaj Auto Ltd., within 18 months
from the date of allotment, into one fully paid Equity
Share of Rs.10/- each on payment of an aggregate
price of Rs.410/- per share.
During the year under review, 1,247,940 Equity
Shares were allotted to Bajaj Auto Ltd., on 17th July,
2007, on conversion of the balance Warrants on
receipt of full consideration. With this allotment, the
entire 3,006,540 Warrants allotted to them on
preferential basis, now stand converted into Equity
Shares. Earlier, 1,758,600 Warrants were converted
into equity shares in March, 2007.
After this allotment, the company's Paid-up Equity
Share Capital is now Rs.366 million.
The company under its Rights Issue, had allotted
5,248,365 - 6% Non Convertible Debentures
(NCDs) of the face value of Rs.500/- each
aggregating Rs.2,624.2 million on 9th February,
2007. Of these, the company, as a treasury
operation, repurchased 2,186,380 fully paid NCDs
from the open market, at an average price of
Rs.469.60 per NCD, in terms of the Letter of Offer
dated 1st December, 2006.
Your company received fresh deposits of Rs.1.2
million and with renewals of Rs.6.8 million, the total
deposits mobilised during the year under review,
stood at Rs.8 million. Public Deposits outstanding at
the year-end were Rs.61.1 million and the number of
depositors was 2,539. At the end of the financial
year under review, there were 191 deposits
aggregating Rs.3.00 million which matured but
remained unclaimed as on that date. The company
had written to these depositors and as on date,
deposits aggregating Rs.0.7 million have been
repaid/renewed.
7. Share Capital :
8. Repurchase of Debentures :
9. Fixed Deposits :
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4 Annual Report 2007-2008
10. Credit Rating :
11. RBI Guidelines :
12. Statutory Disclosures :
CRISIL has re-affirmed the highest rating of
FAAA/Stable for the Fixed Deposit programme of
your company. This rating indicates very strong
degree of safety with regard to timely payment of
interest and principal. Your company is one of the
very few Non-Banking Finance Companies (NBFCs)
which enjoys the highest rating.
The company also enjoys the highest rating of P1+
from CRISIL for Rs.7,000 million Commercial Paper
programme.
The Non-Convertible Debentures allotted on Rights
basis to the shareholders have been assigned
AA+/Stable rating by CRISIL and LAA+ rating by
ICRA.
As regards the Bank Loan Ratings for the bank
facilities stipulated by RBI, as a part of BASEL II
guidelines, CRISIL has assigned AA+/Stable rating
for the company's Cash Credit / Working Capital
Demand Loan amounting to Rs.5,850 million and
Long Term Loan facilities amounting to Rs.2,510
million and P1+ rating for the Short Term Loan
facilities amounting to Rs.4,000 million.
Your company continues to fulfill all the norms and
standards laid down by the Reserve Bank of India
(RBI) pertaining to non-performing assets, capital
adequacy, statutory liquidity ratio etc. As against the
RBI norm of 12 per cent, the capital adequacy ratio
of your company is 40.69 per cent.
In line with the RBI guidelines for Asset-Liability
Management (ALM) system for NBFCs, the companyhas in place an Asset-Liability Committee.
As required under the provisions of Section 217(2A)
of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as
amended, particulars of employees are set out in the
Annexure to the Directors' Report. As per the
provisions of Section 219(1)(b)(iv) of the said Act,
these particulars will be made available to any
shareholder on request.
The company, being a Non-Banking Finance
Company, not having any manufacturing or foreign
exchange activity, the Directors have nothing to
report on "Conservation of Energy, Technology
Absorption, Foreign Exchange earnings and outgo".
In compliance of Section 217(2AA) of the Companies
Act, 1956, your Directors state that :
(i) In the preparation of the annual accounts, the
applicable accounting standards have been
followed along with proper explanation relating
to material departures;
(ii) The Directors have selected such accounting
policies and applied them consistently and made
judgments and estimates that are reasonable
and prudent so as to give a true and fair view of
the state of affairs of the company at the end of
the financial year and of the profit of the
company for that period;
(iii) The Directors have taken proper and sufficient
care for the maintenance of adequate
accounting records in accordance with the
provisions of the Companies Act, 1956 for
safeguarding the assets of the company and for
preventing and detecting fraud and other
irregularities;
(iv) The Directors have prepared the annual accounts
on a going concern basis.
Shri Dipak Poddar, in view of his pre-occupation,
resigned as the Managing Director of the company
with effect from 1st April, 2008. Mr. Poddar has
been the Managing Director of the company since
its inception in 1987 and has been a key force in
bringing the company to the present status of one
of the leading retail finance company in India from a
very small beginning. Although Mr. Poddar has
ceased to be the Managing Director, he continues as
a Director on the Board of the company and hence
his valuable advice would always be available. The
Board places on record its sincere appreciation for
13. Directors' ResponsibilityStatement :
14. Directors :
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Annual Report 2007-2008 5
Pune
21st May, 2008
Rahul Bajaj
Chairman
the valuable contribution made by Shri Dipak Poddar
during his tenure as Managing Director of the
company.
Shri Rahul Bajaj, Shri Sanjiv Bajaj and Shri Madhur
Bajaj, Directors, retire from the Board by rotation this
year and being eligible, offer themselves for re-
appointment.
The information on the particulars of Directors
seeking appointment / re-appointment as required
under Clause 49 of the Listing Agreement with the
Stock Exchanges has been given under the report on
Corporate Governance.
Subject to the approval of the shareholders, the
Board of Directors have appointed Shri Rajeev Jain,
Chief Executive Officer (CEO) of the company as the
Manager under the Companies Act, 1956 for a
period of three years with effect from 1st April,
2008, on the terms of remuneration set out in the
resolution in the Notice for the ensuing AnnualGeneral Meeting. The resolution is recommended for
approval of the shareholders at the Annual General
Meeting.
15. Appointment of Managerunder the Companies Act,1956 :
16. Auditors :
17. Corporate Governance :
You are requested to appoint auditors for the period
from the conclusion of the ensuing Annual General
Meeting till the conclusion of the next Annual
General Meeting and to fix their remuneration.
Your company complies with all the mandatory
requirements pertaining to Corporate Governance, in
terms of Clause 49 of the Listing Agreement with
the Stock Exchanges. A detailed report on Corporate
Governance has been included in this report along
with a certificate from the auditors of the companyregarding compliance of conditions of Corporate
Governance. Further, a separate Management
Discussion and Analysis report is also given in this
report.
On behalf of the Board of Directors
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Management Discussionand Analysis
6 Annual Report 2007-2008
During the last few years, the Indian economy has shown
an impressive growth trend. India has emerged as one ofthe largest and fastest growing economies in the world
during the last decade. Sustained growth in the industry
(except in the last few months) and service sectors have
contributed significantly to the growth of the Indian
economy.
India's banking and financial services sector has emerged as
the vital support system for sustaining our economic
growth. There has been a paradigm shift in the financial
sector primarily due to the financial sector reforms,
evolving macroeconomic environment and several micro-
level factors. In the recent years, a strong GDP growth
accompanied by increased purchasing power of consumers
has resulted in high growth of the retail finance industry.
This high growth also led to intense competition with the
entry of public sector banks, private banks and multi-
national players in retail financing. While this created
greater choice for the consumers, it also resulted in
irrational behaviour by competitors to garner market share
leading to mis-pricing of risks and pressure on margins.
The industry has seen a considerable amount of customer
over-leverage in certain segments, resulting in higher retail
consumer loan losses.
The outlook for 2008-09 is of cautious optimism due to
rise in inflation, slowing down of domestic industrial
growth and recessionary trends in leading economies of
the world. An economic slow down would have a
cascading impact on purchasing power resulting in lower
demand for consumer goods.
In India, Non-Banking Finance Companies (NBFCs) act as a
critical link in the overall financial system by offering a wide
variety of financial services. NBFCs enjoy numerous
advantages vis--vis banks viz., no requirement of branch
licensing, no priority sector lending targets, no CRR and
SLR requirements etc. However, it also has limitations of
restricted borrowing options. In final analysis, weighing the
pros and cons, increasingly, NBFCs are perceived to be anappropriate regulatory vehicle to build lending businesses.
Bajaj Auto Finance Limited (BAFL) is a leading financier of
two wheelers, consumer durables, personal computers and
personal loans. BAFL with an asset base of Rs.38,458
million, is one of India's leading NBFCs focused on retail
financing. The Company has been classified as an Asset
Finance Company by the Reserve Bank of India.
In the last few years, BAFL has built strong market presence
through its unique business model and deep
understanding of its customers. The company continues toserve it customers through its pan-India network of
branches. The year 2007-08 was a tough year for the
industry in general and BAFL in particular. In 2007-08,
owing to changes in external environment, the two-
wheeler industry reduced its subvention offers to finance
companies. BAFL suffered significantly, in its revenue and
income growth due to this changed external scenario.
Coupled with that, there was also a large increase in
provision for doubtful debts and bad debts written off due
to company's increased focus in semi-urban and rural
markets in the last 2-3 years. Given the market
environment in the retail finance industry, the company
expects the current provisioning and bad debts trend to
prevail in the near term.
The company continues to invest in building capabilities to
grow stronger in the medium term. The company is
strengthening its management structure by staffing
domain specialist talent. The company is also strengthening
its operations and risk strategies by restructuring its credit
operations model, enlisting with credit bureau and creating
a dedicated risk analytics unit. These measures are expected
to help BAFL in building current businesses and launching
new product lines across the consumer finance spectrum.
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Annual Report 2007-2008 7
Going forward, BAFL has decided to diversify its product
offerings and grow other retail finance product lines. The
company launched new product lines / extensions in the
current year. It launched IPO financing for high networth
customers, acquisition of AAA rated securitization
transactions, personal loan cross sell programme to its
existing customers and financing for personal computers to
SMEs.
BAFL with its nationwide network of branches, strong
capital adequacy ratio, recent infusion of capital, best in
class strengthening of management team and planned
launch of new product lines will continue to strengthen its
position as a leading retail finance player.
The gross deployments of the company for the year 2007-
08 were Rs.30,363 million as against Rs.26,313 million for
the year 2006-07, a growth of 15 per cent over the last
year.
Analysis of Performance for the year
(a) Business performance :
Deployment 2007-2008 2006-2007 % change
Rs. million
Automobiles
Consumer Durables
Personal Computers
Personal Loans
Securitized retail asset
pools
Total Deployment
14,843.7
6,307.1
4,628.1
1,626.7
2,957.4
30,363.0
15,651.5
5,916.0
4,349.5
396.3
-
26,313.3
(5.2%)
6.6%
6.4%
310.4%
100.0%
15.4%
Deployment
Assets under Finance, Loan and Securitized Retail Asset
Pool receivables as on 31 March 2008 was Rs.33,319
million as against Rs.27,610 million as on 31 March 2007.
(Rs. Million)
(b) Financial performance :
Operational results :
Rs. Million
Rs. Million
Particulars 2007-2008 2006-2007
Income Distribution 2007-2008
Total Income
Interest and Finance Charges
Expenses
Depreciation
Provision for Taxation
Profit for the year
5,027
1,704
2,975
48
99
201
4,018
1,181
2,094
31
240
472
Expenses
Depreciation
Interest andFinance Charges
35000
30000
25000
20000
15000
10000
5000
02003
-2004
20
04
-2005
2005
-2006
2006
-2007
2007
-2008
9772
14063
19545
26313
30363
2975
1704
48
Provisionfor Taxation
Profit forthe year
201
99
Profit after Tax
600
500
400
300
200
100
02003
-2004
2004
-2005
2005
-2006
2006
-2007
2007
-2008
385.
72
556.
88
376.
85
472.
21
201.
22
(Rs. Million)
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8 Annual Report 2007-2008
Income from Operations increased from Rs.3,527.62 million
during 2006-07 to Rs.4,096.65 million during 2007-08, an
increase of 16% per cent over the previous year.
The Board of Directors have recommended a Dividend of
Re.1/- per Share (10 per cent) for the year 2007-08 (last year
: 30 per cent), on the enhanced capital of Rs.366 million
after the allotment of Equity Shares on conversion of balance
Warrants allotted to Promoters into Equity Shares made
during the year. The said Dividend is subject to the approval
of the shareholders.
It is critical to have strong risk management capabilities that
include effective monitoring, reporting, controlling and
mitigation process. BAFL faces risks from factors like
increased competition, economic slowdown, challenge of
retaining manpower, likely decline in asset quality, increase in
operating costs, RBI provisioning policies etc. As an NBFC,
BAFL is also exposed to credit risk, liquidity risk and interest
rate risk.
Management of Risks
BAFL recognises the importance of risk management on
account of increased competition and market volatility in
financial services business. BAFL has in place suitable
mechanisms to effectively mitigate such risks. All these risks
are continuously analysed and reviewed at various levels of
management through an effective management
information system. BAFL has put in place a stronger risk
management team, an effective credit operations structure,
credit analytics and increased credit bureau usage.
The Asset-Liability Committee set up in terms of the
guidelines issued by the RBI, monitors the asset-liability
mismatches, to ensure that there are no
internal audit process.
The Internal Audit Department reviews and ensures that
the audit observations are acted upon. The Audit
Committee of the Board reviews the Internal Audit reports
and the adequacy and effectiveness of internal controls.
On the regulatory front, the Reserve Bank of India (RBI),
which is the regulatory body for NBFCs, has been
continuously strengthening the supervisory framework for
NBFCs in order to ensure sound and healthy functioning
and avoid excessive risk taking. The degree of supervision is
based on the size, type of activity and acceptance or non-acceptance of deposits. Various prudential norms for
capital adequacy, asset classification, income recognition,
provisioning etc., are applicable to NBFCs.
BAFL continues to fulfill all the norms and standards laid
down by RBI pertaining to non-performing assets, capital
adequacy, statutory liquidity ratio etc. The capital adequacy
ratio of the company is 40.69 per cent, which is above the
RBI norm of 12 per cent.
imbalances or
excessive concentrations on either side of the BalanceSheet.
BAFL has adequate internal control systems to ensure
operational efficiency, protection and conservation of
resources, accuracy and promptness in financial reporting
and compliance of laws and regulations. The internal
control system is supported by the
Internal Control Systems and theirAdequacy
Fulfilment of RBI Norms and
Standards
Net Owned Funds
12000
10000
8000
6000
4000
2000
02003
-2004
2004
-2005
2005
-2006
2006
-2007
2007
-2008
2339.
18
2757.
73
4827.
20
9959.
21
10633.8
6
Select Performance Indicators:
Rs. Million
Particulars 2007-08 2006-07
Earning Per Share (Basic) (Rs.)
Earning Per Share (Diluted) (Rs.)
Book value per share (Rs.)
Dividend
5.68
5.68
290.58
10%
19.76
18.79
281.75
30%
Rs. Million
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Annual Report 2007-2008 9
model. In an increasingly competitive market for human
resources in this industry, the company is putting strong
emphasis on attracting and retaining the right talent. The
company's culture promotes high performance and
professional standards.
Statements in this Management Discussion and Analysis
describing the company's objectives, projections, estimates
and expectations may be a 'forward looking statement'
within the meaning of applicable laws and regulations.
Actual results might differ materially from those either
expressed or implied.
Cautionary Statement :
Human Resources
The relationship with employees continues to be cordial.
The company during the year added about 500 permanent
employees including some employees at a senior level to
head key functional areas, taking the total permanent
employee strength to 1713.
During the year, the company took a number of initiatives
to strengthen human resources such as strengthening the
management structure by bringing domain experts,
realignment of compensation packages in line with the
industry standards with the assistance from external
consultants and streamlining the functional organisation
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Corporate Governance
1. Brief statement on the company's philosophy on code
of governance :
2. Board of Directors :
Composition and category of Directors :
company, proper disclosure of relevant financial and non-financial information and enhancing shareholder value on a
continuing basis.
The Board of consists of 9 Directors, all of whom are non-executive and 4 of them are independent. According to Clause
49, if the Chairman of the Board is a non-executive Director, at least one third of the Board should comprise of
independent directors. This provision is thus met by the Company.
The company strongly believes in fair, efficient and transparent business operations, fairness to all stakeholders in the
Name of Director Executive / Non-executive / No. of other Directorships No. of other BoardIndependent held (in public ltd. companies) Committee positions held
10 Annual Report 2007-2008
Shri Rahul Bajaj
Shri Nanoo Pamnani
Shri Madhur BajajShri Rajiv Bajaj
Shri Sanjiv Bajaj
Shri D.S. Mehta
Shri Dipak Poddar*
Shri Ranjan Sanghi
Shri Rajendra Lakhotia
Chairman, Non-executive
Vice-Chairman, Non-executive, Independent
Non-executiveNon-executive
Non-executive
Non-executive, Independent
Non-executive
Non-executive, Independent
Non-executive, Independent
6
3
114
7
6
8
7
3
As Chairman As Member
--
3 2
-- ---- --
-- 4
1 5
-- 4
-- 4
--
* Shri Dipak Poddar was Managing Director of the Company upto 31st March, 2008 and resigned as Managing
Director w.e.f., 1st April, 2008. Mr. Poddar continues as a Director on the Board of the Company.
Notes :
1. Private limited companies, foreign companies and companies under Section 25 of the Companies Act, 1956 are
excluded for the above purposes.
2. Only audit committee and shareholders' grievance committee are considered for the purpose of committee positions
as per listing agreement.
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Annual Report 2007-2008 11
Attendance of each Director at the Board Meetings and
at the last AGM :
Name of Director No. of BoardMeetings attendedduring 2007-2008
Whetherpresent at thelast AGM ?
Shri Rahul Bajaj
Shri Nanoo Pamnani*
Shri Madhur Bajaj
Shri Rajiv Bajaj
Shri Sanjiv Bajaj
Shri D.S. Mehta
Shri Ranjan Sanghi
Shri Rajendra Lakhotia
Shri Dipak Poddar
Shri Naresh Patni**
3
3
4
3
4
2
3
4
4
1
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N.A.
* Shri Nanoo Pamnani was appointed as a Director
w.e.f., 16th May, 2007.
** Shri Naresh Patni resigned as a Director w.e.f., 16th
May, 2007.
Four Board Meetings were held during the year 2007-08.The dates on which the meetings were held are as follows:
16th May, 2007, 11th July, 2007, 18th October, 2007, and
29th January, 2008.
The gap between any two meetings is less than four
months, thus complying with the Clause 49 requirement.
The Board has laid down a Code of Conduct for all Board
Members and senior management of the company, which
has been posted on the website of the company. All the
Board members and senior management personnel have
affirmed compliance with the Code for the year ended 31
March 2008. A declaration to this effect signed by the CEO
is given elsewhere in this Annual Report.
Shri Rahul Bajaj, Shri Sanjiv Bajaj and Shri Madhur Bajaj,
Directors are retiring by rotation, and are eligible for re-
appointment. Their brief particulars are as follows :
Number of Board meetings held during 2007-08 and
the dates on which held :
Code of Conduct :
Brief Resume of Directors offering for appointment / re-
appointment :
a) Shri Rahul Bajaj, 69, is recognised as one of the most
successful business leaders of India. He heads theBajaj Group of companies which manufacture and
market a range of products and services in India and
abroad including 2 and 3 wheelers, home appliances,
lamps, wind energy, special alloy and stainless steel,
castings, cranes, forgings, infrastructure development,
material handling equipment, travel, general and life
insurance and investment and financial services. He is
the Chairman of the group's flagship, Bajaj Auto Ltd.
Bajaj Auto Ltd., is India's premier 2 and 3-wheeler
company.
He holds an Honours Degree in Economics from Delhi
University, a degree in Law from Bombay University
and an MBA from Harvard Business School.
He is the Chairman of the Board of many companies.
He was elected to the Upper House of Parliament
(Rajya Sabha) in June 2006.
He has received numerous prestigious awards and
recognitions from reputed authorities and bodies,
notable ones being the award of 'Padma Bhushan' in
2001, Alumni Achievement Award by the Harvard
Business School and Life Time Achievement Awards
from Economic Times and Ernst & Young.
He was the President of Confederation of Indian
Industry (CII - 1979-80/1999-2000). He was also
President of Society of Indian Automobile
Manufacturers (SIAM) and Mahratta Chamber of
Commerce, Industry and Agriculture (MCCIA) and
Chairman of the Development Council for
Automobiles and Allied Industries.
He is a member of the Executive Board of Indian
School of Business. He was appointed Chairman
(1986-89) of the Government owned domestic carrier,
Indian Airlines. He is a director on the Board of
Commonwealth Business Council.
The President of India nominated him as the Chairman
of the Board of Governors of the Indian Institute of
Technology, Bombay during 2003-06.
He is a Member and former Chairman of the
International Business Council of the World Economic
Forum, Geneva and a Member of Harvard Business
School's (India) Research Centre & India Advisory
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12 Annual Report 2007-2008
Board and the International Advisory Committee of
NYSE Euronext.
He has been associated with the company as its
Chairman since inception.
He holds Directorships in the following public limited
companies apart from Bajaj Auto Finance Ltd. :
Bajaj Auto Ltd.
Bajaj Allianz General Insurance Co. Ltd.
Bajaj Allianz Life Insurance Co. Ltd.
Bajaj Finserv Ltd.
Bajaj Holdings & Investments Ltd.
Mukand Ltd.
He holds 16,000 Shares in the Company.
38, is B.E. (Mech), first class with
distinction from the University of Pune, M. Sc.
(Manufacturing Systems Engg) with distinction from
the University of Warwick, U K and MBA from Harvard
Business School, U S A.
He is the Managing Director of Bajaj Finserv Ltd and
the Executive Director of Bajaj Auto Limited.
He has an extensive on-the-job experience in a variety
of areas in the finance, investment, costing, audit,
legal and IT related functions.
He has been associated with the company as a
Director since 2005.
He holds Directorships in the following public limited
companies apart from Bajaj Auto Finance Ltd. :
Bajaj Auto Ltd.
Bajaj Auto Holdings Ltd.Bajaj Allianz General Insurance Co. Ltd.
Bajaj Allianz Life Insurance Co. Ltd.
Bajaj Finserv Ltd.
Bajaj Holdings & Investments Ltd.
Maharashtra Scooters Ltd.
He does not hold any Shares in the Company.
55, is an alumni of Doon School,
Dehra Dun. After obtaining his B.Com Degree from
Sydenham College, Bombay, in 1973, he did his MBA
at the International Institute of Management
Development (IMD), Lausanne, Switzerland, in 1979.
n
n
n
n
n
n
b) Shri Sanjiv Bajaj,
n
n
n
n
n
n
n
c) Shri Madhur Bajaj,
He is the immediate past President of SIAM (Society of
Indian Automobile Manufacturers), an apex
association of Indian automobile manufacturers.
He is the current National Council Member of the
Confederation of Indian Industry (CII) and the Past
Chairman of its Western Region.
He is the President of Mahratta Chamber of
Commerce, Industries and Agriculture (MCCIA), the
apex Industries Association of Pune.
He is the Vice Chairman of Bajaj Auto Limited. He is
also the Chairman of Maharashtra Scooters Limited.
He has been associated with the Company as a
Director since 1990.
He holds Directorships in the following public limited
companies apart from Bajaj Auto Finance Ltd. :
Bajaj Auto Ltd.
Bajaj Auto Holdings Ltd.
Bajaj Finserv Ltd.
Bajaj Holdings & Investments Ltd.
Bajaj Electricals Ltd.
Catalyst Finance Ltd.Conquest Investments & Finance Ltd.
Econium Investments & Finance Ltd.
Lineage Investments Ltd.
Maharashtra Scooters Ltd.
Sidya Investments Ltd.
He holds 16,000 Shares in the Company.
The terms of reference of the Audit Committee apart
from those specified in the Listing Agreement with the
Stock Exchanges broadly pertain to review of business
practices, review of investment policies, review of
compliances and review of systems and controls etc.
After the resignation of Shri Naresh Patni as a Director
with effect from 16th May, 2007, the Audit
Committee was reconstituted and it consists of three
Non-executive independent Directors viz., Shri Nanoo
Pamnani as Chairman of the Committee and Shri D.S.
Mehta and Shri Ranjan Sanghi as members. In
addition to the Audit Committee members, the
Managing Director, CEO, CFO, Head Internal Audit
function and the Statutory Auditors attended the
n
n
n
n
n
n
n
n
n
n
n
3. Audit Committee :
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Annual Report 2007-2008 13
Name of Director Sitting Fees(Rupees)
Salaries and perquisites(Rupees)
Commission(Rupees)
Total(Rupees)
meetings. The Company Secretary acts as the
Secretary to the Audit Committee.
The Audit Committee met four times during 2007-08,
on 16th May, 2007, 11th July, 2007, 18th October,
2007, and 29th January, 2008. The gap between any
two meetings is less than four months, thus
complying with the Clause 49 requirement.
Shri Nanoo Pamnani and Shri Ranjan Sanghi were
present for three meetings, Shri D.S. Mehta was
present for two meetings. Shri Naresh Patni was
present for one meeting held prior to his resignation
as a Director.
The terms of reference of the Remuneration
Committee in brief pertain to determining the
company's policy on and approve specific
remuneration packages for executive directors after
taking into account financial position of the company,
trend in the industry, appointee's qualification,
experience, past performance, past remuneration,
interest of the company and shareholders etc.
The Remuneration Committee consists of three Non-
executive Independent Directors viz., Shri Nanoo
Pamnani as Chairman of the Committee and Shri
4. Remuneration Committee :
Ranjan Sanghi and Shri Rajendra Lakhotia as
members.
The Remuneration Committee did not meet during
the year, since the remuneration payable to Shri
Dipak Poddar, the then Managing Director was
already approved for his five year term with effect
from 1st April, 2005. Shri Poddar has resigned as
Managing Director w.e.f., 1st April, 2008.
After the resignation of Shri Naresh Patni as a Director
with effect from 16th May, 2007, the Shareholders' /
Investors' Grievance Committee was reconstituted
with Shri Nanoo Pamnani as Chairman of the
Committee and Shri Ranjan Sanghi and Shri D.S.
Mehta as members.
The Secretarial Auditor also attends its meetings.
Name and designation of Compliance Officer : Shri
Suhas Patwardhan, Company Secretary.
19 Shareholder complaints were received during the
year 2007-08 and all of them have been attended to.
Number of pending Share Transfers as on 31st March,
2008 : Nil
5. Shareholders' / Investors'Grievance Committee :
Remuneration of Directors (during 2007-08) :
Shri Rahul Bajaj
Shri Nanoo Pamnani
Shri Madhur Bajaj
Shri Rajiv BajajShri Sanjiv Bajaj
Shri D.S. Mehta
Shri Dipak Poddar
Shri Ranjan Sanghi
Shri Rajendra Lakhotia
Shri Naresh Patni
30,000
60,000
40,000
30,00040,000
40,000
Nil
80,000
40,000
30,000
--
--
--
----
--
2,473,686
--
--
--
2,299,000
--
----
--
1,200,000
--
--
30,000
2,359,000
40,000
30,00040,000
40,000
3,673,686
80,000
40,000
30,000
* Also includes Sitting Fees for attending Committee Meetings.
** The company has not paid any Sitting Fees to Shri Dipak Poddar, Managing Director upto 31st March, 2008, as he was paidsalary/perquisites and commission as specified in Note No.5, Schedule12 forming part of the accounts.
*
*
*
**
*
*
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14 Annual Report 2007-2008
Location Date & Time
6. General Body Meetings :
(i) Location and time, where last three Annual General Meetings held :
18th Annual General Meeting
19th Annual General Meeting
20th Annual General Meeting
Registered Office of the Company atMumbai Pune Road, Akurdi,Pune 411 035
--do
--do
15th July, 2005 3.30 p.m.
14th July, 2006 3.30 p.m.
11th July, 2007 3.30 p.m.
(ii) Special Resolutions passed in the previous three Annual General Meetings : None
(iii) No Special Resolution was passed through Postal Ballot last year.
(iv) No resolutions are proposed to be put through postal ballot at this Annual General Meeting.
7. Subsidiary Companies :
8. Disclosures :
The Company does not have any subsidiary
companies.
nDisclosures on materially significant related party
transactions i.e., transactions of the company of
material nature with its promoters, the directors or
the management, their subsidiaries or relatives etc.,that may have potential conflict with the interests of
the company at large :
None of the transactions with any of the related
parties were in conflict with the interest of the
company. A statement in summary form of
transactions with related parties is placed periodically
before the Audit Committee.
nDetails of non-compliance by the company, penalties,
strictures imposed on the company by Stock
Exchanges or SEBI or any statutory authority, on anymatter related to capital markets, during the last
three years : None
nDisclosure of Accounting Treatment : In the
preparation of financial statements, the company has
followed the treatment as prescribed in the
Accounting Standards.
nRisk Management : The company has a defined Risk
Management framework. The company has laid
down procedures to inform the Board members
about the risk assessment and minimizationprocedures.
nProceeds from public issues, rights issues, preferential
issues etc. : The company has placed before the Audit
Committee a certificate from the statutory auditors
about the utilization of funds raised through the
rights / preferential issues made by the company.
The CEO and the CFO appointed for the purpose of
Clause 49 have given the necessary certificate to the
Board in the prescribed format.
The quarterly, half-yearly and annual financial results
are normally published in Financial Express (all
editions), Indian Express (Pune edition) and Loksatta
(Pune edition).
The half-yearly financial results are sent to the
household of each shareholder.
The financial results, shareholding pattern, code ofconduct etc., are also put on the Company's web-site,
www.bajajfinance.com for the benefit of the public at
large. Official news releases are sent to the stock
exchanges.
As per the Electronic Data Information Filing And
Retrieval (EDIFAR) system introduced by SEBI, various
documents like financial results, shareholding pattern
etc., are filed on SEBI's official web-site,
www.sebi.gov.in.
Management Discussion and Analysis report is givenin a separate section included in this annual report.
9. CEO / CFO Certification :
10.Means of communication :
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11. General Shareholder information :
n21st Annual General Meeting :
nFinancial Calendar (tentative) :
Date : 9th July, 2008Time : 11.30 a.m.
Venue : Regd. Office of the company at
C/o Bajaj Auto Ltd.,Mumbai - Pune Road, Akurdi, Pune - 411 035.
nDates of Book Closure :
nDividend Payment Date :
nListing on Stock Exchanges :
Tuesday, 1st July, 2008 to Wednesday, 9th July, 2008 (both days inclusive)
On or after 14th July, 2008, but within the statutory time limit.
The financial year of the Company is April to March.
Unaudited results for the quarter ending 30th June, 2008and 21st Annual General Meeting
Unaudited results for the quarter / half year ending30th September, 2008
Unaudited results for the quarter / nine months ending31st December, 2008
Audited results for the year ending March, 2009
Annual Listing Fees as prescribed have been paid to the above Stock Exchanges upto 31st March, 2009.
9th July, 2008
Mid / Second half of October, 2008
Mid / Second half of January, 2009
Mid / Second half of May, 2009
Bombay Stock Exchange Ltd.
Phiroze Jeejeebhoy Towers,
Dalal Street,
Mumbai - 400 001.
(Stock Code for Equity Shares: 500034)
National Stock Exchange of India Ltd.
Exchange Plaza,
Bandra-Kurla Complex,
Bandra (E),
Mumbai - 400 051.
(Stock Code for Equity Shares: BAJAUTOFIN - EQ)
Demat ISIN for NSDL and CDSL :
Equity Shares
Fully Paid Non Convertible Debentures
Warrants
nMarket Price Data of Equity Shares during eachmonth in last financial year :
Month BSE NSE
INE296A01016
INE296A07039
INE296A13011
April, 2007
May, 2007
June, 2007
July, 2007
August, 2007
September, 2007
October, 2007
November, 2007
December, 2007
January, 2008
February, 2008
March, 2008
High (Rs.)
449.95
518.90
408.50
394.00
392.00
378.65
362.00
350.00
454.90
532.90
445.00
430.00
Low (Rs.)
386.10
370.00
355.20
355.00
345.00
350.00
322.00
306.00
319.00
285.25
330.00
300.00
High (Rs.)
440.00
560.00
415.00
390.00
395.00
380.00
369.50
350.00
452.00
548.90
448.00
416.00
Low (Rs.)
402.00
371.00
355.05
355.00
336.20
348.00
320.00
302.80
321.00
281.05
340.00
301.00
nPerformance in comparison to BSE Sensex
Bajaj Auto Finance Limited's Stock Perfomance vs BSE Sensex
31-Mar-2007
30-Apr-2007
31-May-2007
30-Jun-2007
31-Jul-2007
31-Aug-2007
30-Sep-2007
31-Oct-2007
30-Nov-2007
31-Dec-2007
31-Jan-2008
29-Feb-2008
31-Mar-2008
180
160
140
120
100
80
60
40
20
0
BSE BAFL
31st March, 2007=100
n
nShare Transfer System :
Registrar and Transfer Agents :
The company has no external Registrar and ShareTransfer agent. All the work related to share registry interms of both physical and electronic segment isdone in-house at a single point at the Registeredoffice of the company.
Share transfers in physical form are registered and
returned well within the stipulated period of 30 days
from the receipt, if the documents are clear in all
respects.
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16 Annual Report 2007-2008
nDistribution of Shareholding
( as on 31st March, 2008) :
Range of
Holding
No. ofShareholders
% to totalShareholders
No. ofSharesheld
% tototalShares
nShareholding Pattern(as on 31st March, 2008)
CategoryNo. of
Shares held
% to total
Shares
The total number of shares transferred in physical
form during the year 2007-08 was 30,964, compared
to 68,006 in 2006-07.
1 - 100
101 - 500
501 - 1000
1001 - 5000
5001 - 10000
10001 - 50000
50001 - 100000
100001 and above
Total
8849
2854
298
309
55
65
14
25
12469
70.97
22.89
2.39
2.48
0.44
0.52
0.11
0.20
100.00
Promoters & Promoter Group
Resident IndividualsDomestic Companies
Financial
Institutions/Banks/Mutual Funds
Foreign Institutional Investors
Foreign Corporate Bodies
Non Resident Individuals /
Overseas Corporate Bodies
Clearing Members (NSDL+CDSL)
Total...
nDematerialisation of shares and liquidity :
The Equity Shares of your company are traded incompulsory dematerialised form by all the investors.
The company has entered into agreements with both
the depositories viz., National Securities Depository
Ltd (NSDL) and Central Depository Services (India) Ltd
(CDSL), enabling the investors to hold shares of the
company in electronic form through the depository of
their choice.
The Equity Shares of the company are regularly traded
on Bombay Stock Exchange Ltd., and National Stock
Exchange of India Ltd.
670618
636914
238618
718963
414840
1476798
918640
31520685
36596076
1.83
1.74
0.65
1.96
1.13
4.04
2.51
86.14
100.00
nBreak-up of Shares in Physical and Demat segment
(as on 31st March, 2008)
19075276
48107701017253
754036
7669407
3007172
257533
4629
36596076
52.12
13.152.78
2.06
20.96
8.22
0.70
0.01
100.00
No. ofShareholders
% to totalShareholders
No. ofSharesheld
% tototalShares
Segment
Physical
Demat
Total
3854
8615
12469
30.91
69.09
100.00
2075190
34520886
36596076
5.67
94.33
100.00
n
Instruments, conversion date and likely impact onequity :
nAddress for correspondence :
Outstanding GDRs/ADRs/Warrants or any Convertible
The Company on 18th January, 2006, had allotted onpreferential basis, to Bajaj Auto Ltd., 3,006,540
Warrants, each warrant convertible into one fully paid
Equity Share of the face value of Rs.10/- each on
payment of an aggregate price of Rs.410/- per share.
The conversion option was to be exercised within 18
months from the date of allotment. Out of these
Warrants, 1,758,600 Warrants were converted into
Equity Shares on 29th March, 2007 and the balance
1,247,940 were converted on 17th July, 2007. Hence,
there are no outstanding warrants as on 31st March,
2008 out of the said Warrants.
The Company had allotted on 9th February, 2007,5,248,365 detachable Warrants alongwith Non
Convertible Debentures under its Rights Issue in the
year 2006-07. Each Warrant is convertible at the
option of the Warrant holder into one Equity Share of
Rs.10 each during the Warrant Exercise Period
commencing after 12 months from the date of
allotment viz., 9th February, 2008 up to the end of 35
months from the date of allotment viz., 8th January,
2010 on payment of Warrant Exercise Price of
Rs.500/-. The Equity Capital will go up by
Rs.52,483,650/-, if all the Warrantholders exercise the
option for conversion of all the Warrants during the
Warrant Exercise Period.
Secretarial Department
Bajaj Auto Finance Limited,
C/o. Bajaj Auto Ltd.,
Mumbai - Pune Road,
Akurdi, Pune - 411 035.
Phone No. (020) 27472851 (Extn.6912 / 7175)
Fax No. (020) 27484486
E-mail id for Investor Grievances :
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Annual Report 2007-2008 17
Period of Deposit No. of Amount % to Total
(months) Depositors (Rupees) Deposits
36 2348 5,81,35,000 100
Declaration on Code of Conduct
As required by Clause 49(1)(D) of the Listing Agreement with the Stock Exchanges, it is hereby declared that all the Board members
and senior management personnel have affirmed compliance with the Code of Conduct of the Company for the year ended 31st
March, 2008.
Place : Pune
Date : 6th May, 2008
Rajeev Jain
(CEO)
n
1) Report on relatives of Directors :
Shri Rajiv Bajaj and Shri Sanjiv Bajaj, Directors are
sons of Shri Rahul Bajaj, Chairman.
2) Your company, during the year under review, has
not sanctioned any loan to any of the Directors
and there is no outstanding towards loans to
Directors as on date.
3) None of the employees of the company is
related to any of the Directors of the company.
Additional Information : 4) From the date of the Balance Sheet till the date
of this report, there is no significant event which
will have an impact on the performance of the
company during the year 2008-09.
5) Profile of Fixed Deposits as on 31st March, 2008
was as under :
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18 Annual Report 2007-2008
To,
The Members of
Bajaj Auto Finance Limited
Pune
Re :- CERTIFICATE BY THE AUDITORS ON CORPORATE GOVERNANCE
We have reviewed the records concerning the Company's compliance of the conditions of Corporate Governance as
stipulated in Clause 49 of the Listing Agreement entered into, by the Company, with the Stock Exchanges of India,
for the financial year ended 31st March, 2008.
The compliance of the conditions of Corporate Governance is the responsibility of the management. Our review was limited
to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of theCorporate Governance. It is neither an audit nor an expression of the opinion on the financial statements of the Company.
We have conducted our review on the basis of the relevant records and documents maintained by the Company and
furnished to us for examination and the information and explanations given to us by the Company.
Based on such review & to the best of our information & according to the explanations given to us, in our opinion, the
Company has complied with the conditions of the Corporate Governance, as stipulated in of Clause 49 of the Listing
Agreements, of the Stock Exchanges of India.
We further state that such compliance is neither an assurance as to the future viability of the Company, nor to the efficiency
or effectiveness with which the management has conducted the affairs of the Company.
For and on behalf of
Dalal & Shah
Chartered Accountants
Shishir Dalal
Partner
Membership No.: 37310st
Mumbai: 21 May, 2008
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Annual Report 2007-2008 19
Report of theAuditors to the Members
We have audited the attached Balance Sheet of BAJAJ
AUTO FINANCE LIMITED, as at 31st March 2008 and also
the annexed Profit and Loss Account and the Cash Flow
Statement of the company for the year ended on that date.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our Audit.
1. We conducted our audit in accordance with auditing
standards generally accepted in India. Those
Standards require that we plan and perform the audit
to obtain reasonable assurance about whether the
financial statements are free of material
misstatements. An Audit includes examining, on a test
basis, evidence supporting the amounts anddisclosures in financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
2. As required by the Companies (Auditor's Report)
Order, 2003 (CARO, 2003), issued by the Central
Government of India in terms of Section 227(4A) of
the Companies Act, 1956, we annex hereto a
Statement on the matters specified in paragraph 4 of
the said Order;
3. Further to our comments in Annexure referred to in
paragraph 2 above, we report that:
(a) We have obtained all the information and
explanations, which to the best of our knowledge and
belief were necessary for the purposes of our audit;
(b) In our opinion, proper Books of Account as required
by Law have been kept by the Company so far as
appears from our examination of the Books of the
Company;
(c) The Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by the report
are in agreement with the Books of Account of theCompany;
(d) In our opinion, the Balance Sheet, the Profit andLoss Account and the Cash Flow Statement dealt
with by this report comply with the Accounting
Standards referred to in Section 211 (3C) of the
Companies Act,1956, to the extent applicable;
(e) On the basis of the written representations received
from the Directors as on 31st March, 2008, and
taken on record by the Board of Directors, we report
that none of the Directors is disqualified as on 31st
March, 2008 from being appointed as a director in
terms of clause (g) of sub-section (1) of section 274
of the Companies Act,1956;
(f) In our opinion, and to the best of our information
and according to the explanations given to us, the
said Financial Statements read with note No. 13relating to change in manner of computing
depreciation on additions to assets other than
leasing assets resulting into lower charge of
depreciation by Rs 1.87 crores and profit for the
year being higher by an equivalent amount and
read together with other notes thereon, give the
information required by the Companies Act,1956,
in the manner so required and present a true and
fair view in conformity with the accounting
principles generally accepted in India:
(i) In the case of the Balance Sheet, of the
state of the affairs of the Company as at
31st March,2008;
(ii) In the case of the Profit and Loss Account, ofthe Profit for the year ended on that date, and
(iii) In the case of the Cash Flow Statement, of the
Cash Flows for the year ended on that date.
For and on behalf of
DALAL & SHAH
Chartered Accountants
SHISHIR DALAL
Partnerst
Mumbai: 21 May, 2008 Membership No. 37310
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20 Annual Report 2007-2008
Annexure to the Auditor's Report
Statement referred to in Paragraph 2 of the Auditor's
Report of even date to the Members of BAJAJ AUTO
FINANCE LIMITED on the Financial Statements for the
year ended 31st March, 2008.
On the basis of the records produced to us for our
verification / perusal, such checks as we considered
appropriate, and in terms of information and explanations
given to us on our enquiries, we state that:
(i) (a) The Company has maintained proper records
showing full particulars including quantitativedetails and situation of fixed assets;
(b) As explained to us, considering the nature of the
Fixed Assets, the same have been physically
verified by the management, at reasonable
intervals, during the year as per the verification
plan adopted by the Company, which is
reasonable having regard to the size of the
company and nature of its assets, except in case
of Leased Assets, where the confirmations have
been received from the lessees. According to
the information and explanations given to us andthe records produced to us for our verification,
discrepancies noticed on physical verification were
not, in our opinion, material however the same
have been properly dealt with in the Books of
Account;
(c) As per the information and explanation given to
us on our enquiries the disposal of assets during
the year were not substantial so as to have an
impact on the operations of the company, or
affect its going concern;
(ii) (a) As per the information and explanation given to
us and the records produced to us for our
verification, the company has not granted loans,
secured or unsecured, to companies, firms and
other parties covered in the register maintained
under Section 301 of the Companies Act, 1956;
(b) As per the information and explanation given to
us and the records produced to us for our
verification, the Company had taken unsecured
loan of Rs. 67.33 Crores from an Associate
Company, covered in the register maintainedunder section 301 of the Companies Act, 1956
and the balance outstanding at the close of the
year is Rs. 40.50 Crores. The Company has not
taken any loans, secured or unsecured, from
Firms or other parties covered under section 301
of the Companies Act, 1956.
(c) In our opinion the rate of interest and other terms
and conditions on which loan has been taken from
a Company listed in the register maintained under
Section 301 are not prima facie, prejudicial to the
interest of the company;
(d) The Company is regular in repaying the principal
amount as stipulated and has been regular in thepayment of Interest;
(iii) In our opinion and according to the information and
explanation given to us, there are adequate internal
control procedures commensurate with the size of
the Company and the nature of its business with
regard to the purchase of fixed assets and also for
sale of services. During the course of our audit,
nothing had come to our notice that may suggest a
major weakness in internal control systems of the
company;
(iv) (a) On the basis of the audit procedures applied by
us, and according to the information and
explanations given to us on our enquiries on this
behalf and the records produced to us for our
verification, transactions required to be entered
into the register in pursuance of section 301 of
the Companies Act, 1956 have been so entered;
(b) The transactions so entered, aggregating in
excess of Rs. 500,000/- in respect of each party
during the year, have been, in our opinion, as
per the information and explanation given to us,made at prices, which are reasonable, having
regard to the prevailing market prices available
with the Company for such transactions or
prices at which transactions for similar goods or
services have been made with other parties at
the relevant time;
(v) In our opinion and according to the information and
explanations given to us, the Company has complied
with the directives issued by the Reserve Bank of India
and provisions of Section 58A and 58AA of the
Companies Act, 1956, other relevantprovisions of the said Act including the Companies
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(Acceptance of Deposits) Rules, 1975, with regard
to the deposits accepted from the public. No order
has been passed on the Company by the Company
Law Board or National Company Law Tribunal or
Reserve Bank of India or any Court or any other
Tribunal in this regard;
(vi) On the basis of internal audit report broadly reviewed
by us, we are of the opinion that, the Company has
an adequate internal audit system commensurate
with the size and nature of its business;
vii) (a) According to the records of the Company,
the Company has been generally regular indepositing undisputed statutory dues including
Provident Fund, Investor Education and
Protection Fund, Employees State insurance,
Income Tax, Sales Tax, Wealth Tax, Service Tax,
Cess and other Statutory dues with the
appropriate authorities;
(b) On the basis of our examination of the
documents and records of the Company and the
information and explanations given to us upon
our inquiries in this regard, there are no disputed
dues in respect of Sales Tax, Income tax, Wealthtax, Service tax and Cess unpaid as at the last day
of the financial year.
(viii) The Company has not defaulted in repayment of
dues to banks or debenture holders during the
year. The Company has not borrowed any sums
from Financial Institutions;
(ix) The Company has, in our opinion, maintained proper
records and contracts with respect to its investments
where timely entries of transactions are made in the
former. All Investments held by the company at theclose of the year are held in its own name;
(x) As per the information and explanations given to us
on our enquiries, and records of the company
examined by us, the Company has not given any
guarantee for loans taken from financial institutions
and / or banks by others;
(xi) As per the information and explanations given to us,
term loans obtained by the company, in our opinion,
have been applied for the purpose for which they
were obtained;
(xii) According to the information and explanations given
to us and on an overall examination of the Balance
Sheet of the Company, we report that no funds raised
on short-term basis have been used for long term
investments;
(xiii)According to the information and explanations
given to us, the company has made preferential
allotment of shares to a company covered in the
register maintained under section 301 of the
Companies Act, 1956. In our opinion, the price at
which the shares are issued is not prejudicial to the
interest of the company;
(xiv)The company has created securities and registered
charges in respect of debentures issued, in past year
as well as in current year. The details of security are
disclosed in Schedule 3 to the financial statements;
(xv) The management of the company has disclosed the
end use of money raised by way of rights issue of
equity shares & non-convertible debentures as
detailed in Note. No. 12 in schedule No.12 to the
financial statements, during the year, which have
been verified by us;
xvi) As per the information and explanation given to us
on our enquiries in this behalf there were no frauds
on or by the company noticed or reported by the
company during the year;
In view of the nature of activities carried on by the
Company clause no (xiii) of CARO, 2003 is not applicable to
the company. Further in view of the absence of conditions
pre-requisite to the reporting requirement of clauses (ii),
(iii) (b), (c), (d), (viii), (x) and (xii) the said clauses are, at
present, not applicable.
For and on behalf of
DALAL & SHAH
Chartered Accountants
SHISHIR DALAL
Partnerst
Mumbai: 21 May, 2008 Membership No. 37310
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Balance Sheetas at 31st March, 2008
As at 31stMarch, 2007
Schedule Rupees Rupees Rupees
1. Shareholders' Funds:
(a) Capital 1 365,965,760 353,486,360
(b) Reserves and Surplus 2 10,267,891,447 9,605,721,384
10,633,857,207 9,959,207,744
2. Preferential warrant application money - 51,165,540
3. Loan Funds:
(a) Secured Loans 3 9,416,077,206 9,742,245,385
(b) Unsecured Loans 4 7,218,990,791 6,440,631,301
16,635,067,997 16,182,876,686
Total 27,268,925,204 26,193,249,970
1. Fixed Assets :
(a) Gross Block 468,925,310 334,967,599
(b) Less: Depreciation 331,321,729 284,705,329
(c) Net Block 5 137,603,581 50,262,270
2. Investments 6 3,268,798,752 326,669,642
3. Deferred Tax Asset, net (See Note No.6) 274,042,357 163,140,709
4. Current Assets, Loans and Advances: 7
(a) Assets under Finance 28,346,251,246 27,013,956,426
(b) Lease Debtors - 713
(c) Cash and Bank Balances 2,101,088,986 5,377,500,693
(d) Other Current Assets 143,234,613 167,948,661
(e) Loans and Advances 4,186,628,599 2,321,197,769
34,777,203,444 34,880,604,262
Less: Current Liabilities and Provisions: 8
(a) Liabilities 9,817,589,718 7,823,434,644
(b) Provisions 1,371,133,212 1,403,992,269
11,188,722,930 9,227,426,913
Net Current Assets 23,588,480,514 25,653,177,349
Total 27,268,925,204 26,193,249,970
Notes forming part of the Financial Statements 12
I. SOURCES OF FUNDS:
II. APPLICATION OF FUNDS:
As per our attached report of even date
For and on behalf of DALAL & SHAHChartered Accountants
Shishir DalalPartner
Mumbai: 21st May, 2008
Suhas PatwardhanCompany Secretary
Directors
Rahul BajajChairman
Nanoo PamnaniMadhur BajajD.S. MehtaRanjan SanghiRajendra Lakhotia
Rajiv Bajaj
}Pune: 21st May, 2008
Sanjiv BajajDirector
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Profit and Loss Account for the year ended 31st March, 2008
PreviousYear
Schedule Rupees Rupees Rupees
Assets under Finance:
Financing Charges 2,512,647,549 1,847,273,734Service and Administration charges 1,375,006,788 1,502,312,143
3,887,654,337 3,349,585,877
Leasing Business:
Lease Rentals 6,258,015 38,138,984Lease Equalisation - (87,270)
6,258,015 38,051,714Interest on loans 202,734,338 139,979,574
Other Income 9 930,853,167 490,336,7975,027,499,857 4,017,953,962
Expenses 10 2,975,356,449 2,094,104,797Interest and Finance Charges 11 1,703,799,779 1,180,941,431Depreciation (See Note Nos. 1(B)and 13) 48,528,299 30,374,335
4,727,684,527 3,305,420,563
Profit before Taxation 299,815,330 712,533,399TaxationCurrent tax (including Rs.150,000/-for Wealth tax, Previous year Rs. 100,000 /-) 202,000,000 387,500,000Add: Fringe Benefit Tax 7,500,000 4,500,000Less: Deferred tax credit 110,901,648 151,677,213
98,598,352 240,322,787
Profit for the year after Taxation 201,216,978 472,210,612
Prior Period Adjustments relating to earlier
years:expense/(income) Taxation (4,592,664) (4,206,297)
Profit for the year after Taxation andPrior Period Adjustments 205,809,642 476,416,909
Transferred to Reserve Fund in terms of Section 45IC(1)of the Reserve Bank of India Act, 1934 41,500,000 96,000,000
Transfer to Debenture Redemption Reserve 90,000,000 207,500,000
Transferred to General Reserve - 48,850,254
Proposed Dividend 36,596,076 106,044,408
Provision for Dividend Tax on Dividend 6,219,503 18,022,247
Balance carried to Balance Sheet 31,494,063 -
Notes forming part of the Financial Statements. 12
Earnings per share: (See Note No.15)(Face value Rs.10/-)Net Profit after tax and prior period adjustments 205,809,642 476,416,909
Basic EPS 5.68 19.76
Diluted EPS 5.68 18.79
INCOME FROM:
EXPENDITURE:
As per our attached report of even date
For and on behalf of DALAL & SHAHChartered Accountants
Shishir DalalPartner
Mumbai: 21st May, 2008
Suhas PatwardhanCompany Secretary
Directors
Rahul BajajChairman
Nanoo PamnaniMadhur BajajD.S. MehtaRanjan SanghiRajendra Lakhotia
Rajiv Bajaj
}Pune: 21st May, 2008
Sanjiv BajajDirector
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Cash flow statementfor the financial year 2007 - 2008
2007-2008 2006-2007
Rupees Rupees Rupees
A) Profit before taxation 299,815,330 712,533,399
B) Adjustments:
Add:
i) Depreciation 48,528,299 30,374,335
ii) Lease equalisation - 87,270
iii) Provision for lease debtors, receivablesand doubtful overdue installments from
Assets under Finance, net 328,894,159 217,253,407
iv) Interest and finance charges 1,703,799,779 1,180,941,431
2,081,222,237 1,428,656,443
2,381,037,567 2,141,189,842
Less:
i) Investment income included in above
Dividend 21,926 37,081
Interest on bonds 575,000 575,000
Interest on government and trust securities 13,246,761 13,337,761
Interest on fixed deposits 218,993,068 59,090,854
Income from units of mutual funds 7,325,977 6,327,823
Interest on investment in securitized assets 68,846,437 -
Profit on sale of investments, net 58,891,956 3,901,789
367,901,125 83,270,308
ii) Surplus on sale of assets 328,809 128,679
iii) Provision for diminution in value of investments
written back, net 12,714,152 12,636,290
Total 380,944,086 96,035,277
CASH FROM OPERATIONS 2,000,093,481 2,045,154,565
Carried over 2,000,093,481 2,045,154,565
I) CASH FROM OPERATIONS:
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Cash flow statementfor the financial year 2007 - 2008 (Contd.)
2007-2008 2006-2007
Brought over 2,000,093,481 2,045,154,565
C) (Increase) / Decrease in Current Assets:
i) Assets under Finance (1,628,013,517) (8,635,724,362)
ii) Lease Debtors 71,001 (713)
iii) Net investment in lease 106,561,575 418,692,186
iv) Other Current Assets and
Loans and Advances (1,871,489,052) (191,533,648)
Total (3,392,869,993) (8,408,566,537)
Increase/ (Decrease) in Current Liabilities:
i) Liabilities 1,904,100,349 2,079,958,493
ii) Gain on debenture repurchase 74,532,598 -
Total 1,978,632,947 2,079,958,493
(1,414,237,046) (6,328,608,044)
Less: Direct taxes paid 269,179,011 431,444,754
Tax adjustments relating to earlier years (4,592,664) (4,206,297)
NET CASH FROM OPERATIONS 321,270,088 (4,710,691,936)
i) (Increase)/ Decrease in Investment, net (2,929,414,958) (45,000,000)
ii) Capital Expenditure (including leased assets) (136,286,463) (48,892,697)
iii) Sale Proceeds of Assets/Adjustments to gross block 745,662 545,853
Total (3,064,955,759) (93,346,844)
iv) Investment Income:
Dividends 21,926 37,081
Interest on Debentures & Bonds 575,000 575,000
Interest on Government Securities 13,246,761 13,337,761
Interest on fixed deposits 218,993,068 59,090,854
Income from units of mutual funds 7,325,977 6,327,823
Interest on investment in securitized assets 68,846,437 -
Profit/(Loss) on Sale of Investment, net 58,891,956 3,901,789
Total 367,901,125 83,270,308
NET CASH FROM INVESTING ACTIVITIES (2,697,054,634) (10,076,536)
Carried over (2,375,784,546) (4,720,768,472)
II) INVESTMENT ACTIVITIES:
Rupees Rupees Rupees
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Cash flow statement for the financial year 2007 - 2008 (Contd.)
2007-2008 2006-2007
Rupees Rupees Rupees
Brought over (2,375,784,546) (4,720,768,472)
i) Increase/ (Decrease) in secured loans (1,423,691,407) 1,484,112,195
(excluding interest accrued and due)
ii) Repurchase of debentures 1,093,190,000 -
iii) Increase/ (Decrease) in unsecured loans 782,202,641 4,502,381,253
(excluding interest accrued and due)
iv) Interest and finance charges (1,688,608,644) (1,156,602,892)
v) Dividend paid (106,187,364) (83,745,814)
vi) Tax on dividend paid (18,022,247) (11,777,331)
vii) Other adjustments
a) Addition to share capital 12,479,400 143,546,760
b) Addition to share premium 499,176,000 4,636,109,685
c) Preferential warrant application money (51,165,540) (72,102,600)
Total (900,627,161) 9,441,921,256
NET CASH FROM FINANCING ACTIVITIES (900,627,161) 9,441,921,256
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,276,411,707) 4,721,152,784
Cash and cash equivalents as at 01.04.2007
(Opening Balance) 5,377,500,693 656,347,909
Cash and cash equivalents as at 31.03.2008
(Closing Balance) 2,101,088,986 5,377,500,693
III) FINANCING ACTIVITIES:
As per our attached report of even date
For and on behalf of DALAL & SHAH
Chartered Accountants
Shishir DalalPartner
Mumbai: 21st May, 2008
Suhas PatwardhanCompany Secretary
Directors
Rahul Bajaj
Chairman
Nanoo PamnaniMadhur BajajD.S. MehtaRanjan SanghiRajendra LakhotiaRajiv Bajaj
}Pune: 21st May, 2008
Sanjiv Bajaj
Director
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Schedules 1 to 12 annexed to and forming part of the Financial Statements for the year
ended 31st March, 2008
Rupees Rupees
Share Capital:
Authorised:
50,000,000 Equity shares of Rs. 10 each 500,000,000 500,000,000
Issued:
36,597,076 (35,349,136) Equity shares of Rs. 10 each 365,970,760 353,491,360
Subscribed & Paid up:
36,596,076 (35,348,136) Equity shares of Rs 10 each
fully called up and paid up 365,960,760 353,481,360
1,000 (1,000) Add : Forfeited Equity Shares
(amount paid up) 5,000 5,000
Total 365,965,760 353,486,360
Schedule 1:
Rupees Rupees Rupees
Reserves and Surplus
Share Premium Account:(Security Premium Account)
As per last Account 7,044,242,611 2,408,132,926
Add: Received during the year (See Note No.12) 499,176,000 4,671,203,940
Less: Share issue expenses - 35,094,255
7,543,418,611 7,044,242,611Reserve Fund in terms of Section 45IC(1)of the Reserve Bank of India Act, 1934As per last Account 618,000,000 522,000,000
Set aside this year 41,500,000 96,000,000
659,500,000 618,000,000
Debenture Redemption Reserve:(See Note No. 14)As per last account 207,500,000 -
Set aside this year 90,000,000 207,500,000
297,500,000 207,500,000General Reserve:As per last account 1,735,978,773 1,687,128,519
Set aside this year - 48,850,254
1,735,978,773 1,735,978,773
Surplus as per annexed Account 31,494,063 -
Total 10,267,891,447 9,605,721,384
Schedule 2 :
Note: Subscribed and paid up capital includes 3,006,540 equity shares of Rs. 10/- each at a premium of Rs. 400/- per shareallotted to promoters, of which 1,247,940 equity shares of Rs. 10 each at a premium of Rs. 400/- per share are on account ofconversion of warrants during the year.
As at 31stMarch, 2007
As at 31stMarch, 2007
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Rupees Rupees Rupees
Secured Loans
From Banks, against hypothecation of assets under finance,book debts and other receivables :Term loan 2,510,000,000 2,510,000,000Cash Credit (including Working Capital Demand LoanRs. 4,295,000,000/- previous year Rs. 3,145,000,000 /-) 4,340,649,141 3,589,412,8731,000 Secured Redeemable Non Convertible Debentures ofthe face value of Rs. 1,000,000/- each secured byhypothecation of Assets under finance, book debts, otherreceivables and immovable property, since redeemed on10th May, 2008 1,000,000,000 1,000,000,0005,248,365 (5,248,365) Secured Redeemable Non ConvertibleDebentures of the face value of Rs. 500/- each secured by
hypothecation of book debts and mortgage of immovableproperty of the company. Redeemable on 8th February, 2010.(See Note No.12) 2,624,182,500 2,624,182,500Less : 2,186,380 (-) debentures repurchased butnot cancelled - to be reissued (See Note No.12) 1,093,190,000 -
1,530,992,500 2,624,182,500Less :Calls in arrears 6,872,050 18,324,375
1,524,120,450 2,605,858,125Interest accrued and due on bank loans 41,307,615 36,974,387
Total 9,416,077,206 9,742,245,385
Schedule 3 :
As at 31stMarch, 2007
Rupees Rupees
Unsecured LoansFixed Deposits 61,124,000 83,315,000Add: Interest accrued and due 2,866,791 3,473,150
63,990,791 86,788,150Loan from a company 405,000,000 -Short term loan from bank 2,650,000,000 3,800,000,000Interest accrued and due on above bank loans - 3,843,151Short term borrowing by issue of" Commercial Papers" 3,250,000,000 2,550,000,000Term loan - others 850,000,000 -
Total 7,218,990,791 6,440,631,301
Rupees
Schedule 4 :
As at 31stMarch, 2007
Note:(Maximum balance outstanding during the period Rs. 5,850,000,000 /- Previous year Rs. 4,000,000,000 /-)Negotiable Commercial Papers aggregating Rs. 8,000,000,000/- issued by way of Promissory Note
As at Additions Deductions As at As at Deductions For the As at As at As at31st March, and 31st March, 31st March, and year 31st March, 31st March, 31st March,
2007 adjustments 2008 2007 adjustments (b) 2008 2008 2007
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
Assets relating to leasing business:Plant and Machinery 176,440,231 - - 176,440,231 176,440,231 - - 176,440,231 - -
Other assets:Building ( a ) 1,323,207 - - 1,323,207 527,463 - 39,787 567,250 755,957 795,744
Computers 95,579,230 64,711,866 881,049 159,410,047 69,150,690 870,631 23,615,103 91,895,162 67,514,885 26,428,540
Furniture and Fixturesand Equipments 53,755,362 47,102,966 567,703 100,290,625 34,962,534 492,410 21,715,052 56,185,176 44,105,449 18,792,828
Vehicles 7,869,569 8,466,539 880,000 15,456,108 3,624,411 548,858 2,074,521 5,150,074 10,306,034 4,245,158
Intangible assets:Specialised software ( c ) - 16,005,092 - 16,005,092 - - 1,083,836 1,083,836 14,921,256 -
As at 31st March, 2008 Total 334,967,599 136,286,463 2,328,752 468,925,310 284,705,329 1,911,899 48,528,299 331,321,729 137,603,581 50,262,270
As at 31st March, 2007 Total 288,091,838 48,892,697 2,016,936 334,967,599 255,930,756 1,599,762 30,374,335 284,705,329 50,262,270
Particulars Gross Block at cost Depreciation Net Block
Schedule 5 : Fixed Assets
(a) Includes cost of shares in co-operative society Rs. 250/-(b) See Note Nos. 1 B and 13(c) See Note No. 1 B II
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As at 31stMarch, 2007
Rupees Rupees Rupees
Investments, at cost:(unless otherwise stated)
Long Term:In Government and Trust Securities:
Quoted:* 13% Maharashtra State Development Loan
2007,of the face value of Rs.1,000,000 - 1,000,000
547,085 6.6% Tax Free ARS Bonds of theface value of Rs. 100 each, received onconversion of UTI MIP 1999 includinginterest accrued thereon 54,708,500 54,708,500
12.32% Government of India Stock, 2011of the face value of Rs 10,000,000/- 11,202,533 11,202,533
@ 12.25% Government of India Stock, 2010of the face value of Rs 20,000,000/- 27,480,000 27,480,000
@ 11.83% Government of India Stock, 2014of the face value of Rs 50,000,000/- 63,677,500 63,677,500
157,068,533 158,068,533
157,068,533 158,068,533
In fully paid equity shares:Other than trade:Quoted:
90 Shares of TCFC Finance Limited - -
@ 38,700 Shares of Rs.10 each in Akai Impex Limited 2,322,000 2,322,000
- (75) Shares of Rs.10 each in Bajaj Auto Limited - 34,772
75 (-) Shares of Rs.10 each in Bajaj Holdings andInvestments Limited 19,646 -(Formerly Bajaj Auto Limited)
@ 16,880 Shares of Rs.10 each in Dai IchiKarkaria Limited 1,688,000 1,688,000
50 Shares of Rs.10 each in Fortis FinancialServices Limited 1,435 1,435
25 Shares of Rs.10 each in ICICI Bank Ltd 1,320 1,320
@ 52 Shares of Rs.10 each inMidwest Leasing Limited 450 450
@ 50 Shares of Rs.10 each in Mazda Industriesand Leasing Limited 500 500
@ 50 Shares of Rs.10 each in MCC Finance Limited 1,665 1,665
@ 50 Shares of Rs.10 each inNagarjuna Finance Limited 713 713
Carried over 4,035,729 4,050,855
Carried over 157,068,533 158,068,533
Schedule 6 :
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As at 31stMarch, 2007
Rupees Rupees Rupees
Investments, at cost:(contd.) Brought over 157,068,533 158,068,533(unless otherwise stated)
In fully paid equity shares:(contd.)Other than trade:(contd.)Quoted:(contd.) Brought over 4,035,729 4,050,855
@ 100 Shares of Rs.10 each in P L Finance andInvestment Limited 1,500 1,500
@ 310 (3100) Shares of Rs.10 each inSouthern Fuels Limited 31,000 31,000(decrease in number of shares due tocapital reduction) 4,068,229 4,083,355
161,136,762 162,151,888
In fully paid equity shares:Other than trade:Unquoted:
75 (-) Shares of Rs.10 each inBajaj Auto Limited (New) 7,685 -
75 (-) Shares of Rs.5 each in Bajaj Finserv Limited 7,441 -
15,126In Bonds:
Quoted:* 11.50% Bonds of Industrial Development
Bank of India 2010 (55th Series) ofthe face value of Rs. 5,000,000/- 4,750,000 4,750,000
165,901,888 166,901,888In Mutual Funds:
Quoted:@ State Bank of India Magnum Equity Fund
of the face value of Rs. 12,655,646/- - 37,702,177
@ State Bank of India Magnum Sector FundUmbrella IT fund of the face value ofRs.18,314,942/- - 52,434,400
Carried over - 90,136,577
Carried over 165,901,888 166,901,888
Schedule 6 :
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As at 31stMarch, 2007
Rupees