Corporate Governance-Bajaj Auto Limited

7/29/2019 Corporate Governance-Bajaj Auto Limited

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Corporate Governance

Bajaj Auto Limited.


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Introduction to Bajaj groups andCompany

Bajaj Auto

Ltd. Bajaj

Holdings &InvestmentLtd.

Bajaj Finserv

Bajaj Sevashram Pvt. Ltd.Jamnalal Sons Pvt. Ltd.

Rahul Securities Pvt LtdShekhar Holdings Pvt Ltd

Madhur Securities Pvt LtdNiraj Holdings Pvt LtdShishir Holdings Pvt LtdKamalnayan Investments & TradingPvt LtdSanraj Nayan Investments Pvt. Ltd.Hercules Hoists Ltd.

Hind Musafir Agency Pvt. Ltd.Bajaj International Pvt. Ltd.Bachhraj Factories Pvt. Ltd.Baroda Industries Pvt. Ltd.

Jeevan Ltd.Bachhraj & Co Pvt Ltd

The Hindustan Housing Co. Ltd.

Hospet Steels Ltd

Bajaj Auto is the flagship of the Bajaj group of companies.The group comprises of 34 companies and was founded inthe year 1926.The companies in the group are:


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Introduction to Company

The Bajaj Group is amongst the top 10 businesshouses in India.

Its footprint stretches over a wide range of

industries, spanning automobiles (two-wheelersand three-wheelers), home appliances, lighting,iron and steel, insurance, travel and finance.

The group's flagship company, Bajaj Auto, isranked as the world's fourth largest two- andthree- wheeler manufacturer and the Bajaj brandis well-known across several countries in Latin

America, Africa, Middle East, South and South


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Company History

Founded in 1926, at the height of India's

movement for independence from theBritish, the group has an illustrious history.

The integrity, dedication, resourcefulness

and determination to succeed which arecharacteristic of the group today, are oftentraced back to its birth during those days ofrelentless devotion to a common cause.

Jamnalal Bajaj, founder of the group, was aclose confidant and disciple of MahatmaGandhi. In fact, Gandhiji had adopted him ashis son. This close relationship and his deepinvolvement in the independence

movement did not leave Jamnalal Bajaj withmuch time to spend on his newly launched


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Evolution

His son, KamalnayanBajaj, then 27, tookover the reigns of

business in 1942. Hetoo was close toGandhiji and it wasonly afterIndependence in 1947,that he was able togive his full attention

to the business.


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Rajiv Bajaj MD & CEO, Bajaj AutoLtd.

Rajiv Bajaj, 42, is the eldest son ofIndias leading industrialist RahulBajaj.

When he joined his family business

in the late 90s, Bajaj, Indiasundisputed two wheeler maker ofseveral leaders was slowly losingground to motorcycles made byinternational joint venturecompanies.

Rajiv fought back making his ownmotorcycles and today, BajajsPulsar is a sought after bike by theIndian youth.

An engineer at heart, Rajiv dislikesthe management discipline and


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Major Stakeholders


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Major Stakeholder


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Shares held by non-executivedirectors


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Board Members


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As on 31 March 2012, the Board ofBajaj Auto consisted of sixteendirectors, of whom four directorswere executive.

Nine out of twelve non-executivedirectors were independent.

The Board has no institutionalnominee directors.


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Board Procedures

During 2011-12, the Board of Directors met sixtimes: on 18 May 2011, 14 July 2011, 16September 2011, 20 October 2011, 19 January2012 and 27 March 2012.

The gap between any two meetings has been lessthan four months.

The Board meeting held on 27 March 2012 wasdone with Video Conferencing facility in terms ofthe circulars issued by Ministry of Corporate

Affairs.


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Remuneration and NominationCommittee

Bajaj Auto constituted the remuneration committee of the Boardon 30 January 2008.Subsequently, the Board of Directors at itsmeeting held on 16 January 2009 extended the terms of referenceof the said committee to include nomination functions andrestyled the said committee as Remuneration and NominationCommittee.

The committee has the following members:

1. D J Balaji Rao, Chairman Independent

2. S H Khan Independent

3. Naresh Chandra Independent

4. Rahul Bajaj Non-Executive.

During the year, the committee met twice on 16 September 2011and 27 March 2012. S H Khan attended the meeting of 27 March


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Corporate Governance

Bajaj Groups commitment to goodcorporate governance practicespredates SEBI and clause 49 of the

listing agreements. Transparency,fairness, disclosure andaccountability are the main thrust tothe working of the Bajaj Group.

Bajaj Auto Limited (BAL or The

Company or Bajaj Auto) maintains


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Analysis: Measuring Goodwill

Based on environmental and social impactperformance, Bajaj Auto Limited has receivedan overall Scientific Rating of4.1, which is 18%lower than the average for all Company Ratings.


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ENVIRONMENTAL PERFORMANCE

Transparency 1.6

EnvironmentalManagement 4

Governance 4

Policies 4Reporting 4

Supply Chain 4

Resource Use 5.5

General ResourceManagement 6

Materials 4

Water 6

Energy 6

Environmental Impacts4

Biodiversity 4

Emissions 4

General Emissions

4

Greenhouse Gases4

Criteria and Hazardous AirPollutants 4

Water Pollution4

Waste 4

SOCIAL PERFORMANCE

Transparency 2

Management 4.6

Governance 4.6

Policies 6

Reporting 4

Supply Chain 4

Workers 5.3General 5

Occupational Health andSafety 5

Diversity and EqualOpportunity 7

Human Rights 4.2

General Human Rights 5

Freedom of Assoc. &

Collect. Bargaining 4

Child Labor 4

Forced and CompulsoryLabor 4

Indigenous Rights 4

Community 4.8

Public Policy 4

Stakeholder Engagement 4

Community Relationships 6.5Consumers 4.3

Customer Health andSafety 5

Product and ServiceLabeling 4

MarketingCommunications 4


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Analysis: CRISIL Rating


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CRISIL RATING FOR BAL

CRISILs ratings on the debt instruments of Bajaj

Auto Ltd (Bajaj Auto) continue to reflect BajajAutos established position in Indias motorcycleand passenger carrier three-wheeler segments,and robust financial risk profile marked by a

strong capital structure and ample liquidity.

These rating strengths are partially offset by BajajAutos moderate presence in the executive

segment of the motorcycles market.

The company is likely to maintain its near debt-

free status over the medium term, given that itsavera e ca ital ex enditure (ca ex) re uirements


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Bajaj Autos substantial portfolio ofliquid investments and cash

surpluses (over Rs.55 billion as onMarch 31, 2012) provides steadytreasury income, besides enhancing

its financial flexibility. CRISIL believesthat Bajaj Autos robust financial riskprofile helps the company towithstand any competitivechallenges in terms of pricingflexibility, the necessary expenditurefor product launches and upgrades,

or any sluggishness in revenue


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Ninad V Deogharkar.

PG-11-068

Corporate Governance-Bajaj Auto Limited

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