Introduction

The directors present their fifth annual report and the audited statements of accounts
for the year ended 31 March 2012.

The highlights are as under:


  

    
Units in Numbers
    
2012
    
2011
  
  

    
Two wheelers
    
3,834,405
    
3,387,070
  
  

    
Three wheelers
    
515,155
    
436,884
  
  

    
Total
    
4,349,560
    
3,823,954
  
  

    
Of which Exports
    
1,579,824
    
1,203,718
  


Financials

(Rs In Crore)


  

    

    
2012
    
2011
  
  

    
Net sales and other income
    
20,137.02
    
16,974.74
  
  

    
Gross profit before exceptional items, interest and depreciation
    
4,328.03
    
3,747.73
  
  

    
Interest
    
22.24
    
1.69
  
  

    
Depreciation
    
145.62
    
122.84
  
  

    
Gross Profit before exceptional items
    
4,160.17
    
3,623.20
  
  

    
Exceptional items
    
(134.00)
    
724.55
  
  

    
Profit before tax
    
4,026.17
    
4,347.75
  
  

    
Tax expense
    
1,022.12
    
1,008.02
  
  

    
Profit for the year
    
3,004.05
    
3,339.73
  
  

    
Add: Balance brought forward from previous year
    
2,515.48
    
854.99
  
  

    
Profit available for Appropriation
    
5,519.53
    
4,194.72
  
  

    
Transfer to General Reserve
    
301.00
    
334.00
  
  

    
Proposed dividend (inclusive of dividend tax)
    
1,513.39
    
1,345.24
  
  

    
Balance carried to Balance Sheet
    
3,705.14
    
2,515.48
  
  

    
Earnings per share (Rs)
    
103.8
    
115.4
  



Dividend

The directors recommend for consideration of the shareholders at the ensuing annual
general meeting, payment of a dividend of Rs 45 per share, (450 per cent) for the year
ended 31 March 2012. The amount of dividend and the tax thereon aggregate to Rs 1,513.39
crore.

Dividend paid for the year ended 31 March 2011 was Rs 40 per share (400 per cent). The
amount of dividend and the tax thereon aggregated to Rs 1,345.24 crore.


Operations

The operations of the Company are elaborated in the annexed Management Discussion and 


Analysis Report.

Capacity expansion and new projects

The company’s current installed capacity is 5.1 million units per annum. The
company plans to increase the installed capacity to 6.36 million units per annum by March
2013.

Commercial launch of the four-wheeler RE 60 show-cased in the Delhi Auto Expo in Jan
2012, is scheduled for second half of 2012-13. RE 60 will be produced from the
Company’s Waluj plant.

The 4 Wheeler plant was earlier being planned in the Company’s site at Chakan MIDC
Phase III. To benefit from the synergies with the 3 Wheeler facilities at Waluj, the 4
Wheeler project is now being implemented at Waluj. The Chakan site will be used for
expansion of the 2 Wheeler capacity.


Research and Development and technology absorption

A) Products

Pulsar 200 NS

A new platform of engine and vehicle was designed to carry forward the legacy of the
Company’s most successful brand Pulsar, into the future. This vehicle is designed to
further enhance and sharpen the street sports image of the Pulsar brand. The vehicle is
powered by a high performance 4 valve liquid cooled engine with triple spark ignition,
delivering 23.5 Ps, with a 6 speed gear box. This provides the vehicle with excellent and
thrilling performance as well as efficiency. The vehicle is equipped with state-of-the-art
features like perimeter frame with high lateral rigidity, low slung central muffler,
nitrox mono shock rear suspension, all adding up to providing excellent handling and
riding pleasure.


KTM 200

This model extends the new platform of engine and vehicle co-designed by Bajaj and KTM
from 125cc into a 200cc. Unlike KTM125, this product is aimed for Indian as well as
European markets. The vehicle is powered by a high performance 4V liquid cooled engine
delivering 25 Ps, with a 6 speed gear box suitably mated to the power characteristics of
the engine. The engine has electronic fuel injection. The vehicle is equipped with
state-of-the-art features like radial calipers for front disc brakes, inverted front
forks, cast aluminum swing arm and radial tyres at both front and back.


BM-150

The BM-150 moves the highly successful BM-100, the number one bike in Africa, to the
next level. This product brings the power of 150cc to the utility segment of the market.
It has a sturdy frame designed to do duty under demanding usage and terrain conditions and
wide tyres to complement. The BM-150 has been well received in the export markets.


BM-100

The BM-100 complements the BM-150 to bring in features like electric start in order to
enhance the utility of the product. The strong frame and modern engine make it very
robust. The BM-100 and BM-150 together address competitors from the 100 to 150 cc
segments.


B) Process

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


• Manpower: R&D has been expanding its team size in areas of design,
analysis and validation in order to keep up with the rapidly expanding aspirations of the
Company. This year, R&D expanded its manpower strength by about 12%.


• Facilities: R&D continued to enhance its design, computing and
validation facilities. 

The efforts on the establishment of validation facilities have enabled R&D to
develop durable and refined products like the new Pulsar 200 NS.


• Total Productivity Management (TPM): R&D continues to vigorously pursue
the TPM way of thinking and working. This has yielded excellent results in quality
management of design and validation process. The TPM approach has also been effective in
the lead time reduction on the various critical processes in R&D by elimination of
waste.


C) Outgo

The expenditure on research and development during 2011-12 and in the previous year
was:


  

    

    

    
(Rs In Crore)
  
  

    
Particulars
    
2012
    
2011
  
  

    
i. Capital (Including technical know-how)
    
42.22
    
11.65
  
  

    
ii. Recurring
    
113.70
    
112.95
  
  

    
TOTAL
    
155.92
    
124.60
  
  

    
iii. Total research and development expenditure as a percentage of sales, net of
    excise duty
    
0.83%
    
0.78%
  



Conservation of energy

Company has always been a forerunner in conservation of energy and natural resources.
All manufacturing processes and products are designed for minimising the carbon footprints
and are being continuously upgraded to consistently achieve this goal. Company has a
distinction of having all its plants certified for ISO 14000 and 18000. Company not only
follows Standard Operating Procedures for environment protection and conservation of
resources in all its plants, but also propagates these initiatives throughout its vendor
partners under the initiative of ‘Green Supply Chain’.

Given below are some of the key initiatives taken during 2011-12 towards Energy and
Natural resource conservation. Apart from technology adoptions, the energy conservation
drive is guided by the principle of 5Rs (Reuse, Reduce, Recycle, Remove, Recover).

• Electrical energy saving was achieved by replacing reciprocating compressor with
screw air compressors at Waluj; reducing central grid pressure of compressed air from 4.89
Bar to 4.68 Bar at Waluj; installation of Air flow control unit in compressed air line at
Pantnagar; installation of Breeze Air coolers in place of ARP at Waluj; use of LPG heaters
in place of Electrical heaters at CGC furnace in heat treatment; re-using waste energy
from dynamometer to generate electricity, at Pantnagar; use of LED/CFLs for Office/Street
lighting;

• Water saving was achieved by rationalisation of pumping hours of main pump and
regulating pump on-off timing through timers; use of air cooled compressors in place of
water cooled compressors; use of treated water for horticulture and non-critical
processes; l Liquified Petroleum Gas (LPG)/propane saving was achieved by installation of
waste heat recovery system for paint shops at Waluj; implementation of
‘Tactalis’ pre-treatment process; reduction in weight of paint line jigs and
heat treatment fixtures; increasing conveyor speed in paint shop;

• Major initiatives in utilisation of renewable energy were taken by use of solar
water heating system for process shops/canteen, at Waluj and Chakan; installation of
natural air exhaust (turbo ventilators) in shops at Waluj and Chakan; use of wind mill
energy for street lights at Chakan.


Impact of measures taken

As a result of the initiatives taken for conservation of energy and natural resources,
the 

Company has effected an overall reduction in consumption as under :-


  

    

    
Reduction achieved in %
  
  

    

    
2012
    
2011
  
  

    
Electrical energy
    
7.86 
    
14.31
  
  

    
Water 
    
**
    
13.33
  
  

    
LPG
    
13.44
    
14.40
  


** No saving in water consumption was achieved due to construction work of 4-wheeler
plant.


Investment/savings


  

    

    

    
( Rs In Crore)
  
  

    

    
2012
    
2011
  
  

    
Investment for energy conservation activities
    
2.07
    
0.84
  
  

    
Saving achieved through above activities
    
2.14
    
1.12
  



International Business

Bajaj Auto maintained its stellar growth in exports and continued to be India’s
largest exporter of two and three-wheelers. During the year under review, the Company
exported 1,579,824 vehicles, achieving a growth of 31% over the previous year, while total
exports amounted to Rs 6,604 crore as against Rs 4,552 crore in the previous year.

More details of International Business are set out in the annexed Management Discussion
and Analysis report.


Foreign exchange earning and outgo

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

Total foreign exchange earned by the Company during the year under review was Rs
6,626.30 crore, compared to Rs 4,564.78 crore during the previous year.

Total foreign exchange outflow during the year under review was Rs 1,023.38 crore as
against Rs 844.50 crore during the previous year.

The above outflow includes an investment of Rs 68.14 crore (Previous Year: Rs 210.08
crore) made in its 100% subsidiary, Bajaj Auto International Holdings BV, Netherlands for
increasing its stake in KTM Power Sports AG from 39.26% to 40.87%.


Industrial relations

Industrial Relations with staff and workmen across the plants at Akurdi, Waluj, Chakan
and Pantnagar continued to be cordial.


Subsidiaries

PT. Bajaj Auto Indonesia (PTBAI) is a majority shareholding (98.94%) subsidiary of
Bajaj Auto Limited. The subsidiary assembles and markets Pulsars in Indonesia. PTBAI has
achieved a billing of 23,337 units in 2011-12 as against 21,586 units in 2010-11, an
increase of 8%. Existing models Pulsar 135, Pulsar 180 and Pulsar 220 have contributed to
this steady growth rate.

Sales and service network have been considerably strengthened in 2011-12 across entire
Indonesia with number of showroom/outlets now at 152 compared to 84, in March 2011. 

The year has seen a considerable improvement in availability of finance, as the Company
has tied up financing arrangements with a few more finance companies. Network expansion,
easy availability of finance and scheduled new product launches would be the key drivers
for growth in 2012-13.

More details are given separately in this annual report.


Bajaj Auto International Holdings BV, Netherlands (BAIHBV)

During the year under review, BAIHBV invested further 10.3 million to increase its
stake in KTM Power Sports AG (KTM) to 40.87%.

With further investment of 25.9 million during April 2012, BAIHBV’s shareholding
in KTM currently stands at 47.18%. In its recently held AGM, KTM Power Sports AG has
changed its corporate name to KTM AG.

The co-operation with KTM is progressing well. KTM Duke 125 has become the leader in
its category in Europe. KTM Duke 200 has been launched in India in February 2012 and has
become an instant hit with bike enthusiasts. These products will be taken to further
markets in the current fiscal.

Further, during 2011, KTM has made good progress, improved its market share and has
reported a healthy set of numbers. 


Signing for anti-corruption initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, with a view to strengthening the efforts to
counter bribery and corruption, your company is a signatory to the "Commitment to
anti-corruption" and is supporting the "Partnering Against Corruption -
Principles for Countering Bribery" derived from Transparency International’s
Business Principles. This calls for a commitment to two fundamental actions viz. a
zero-tolerance policy towards bribery and development of practical and effective
implementation program.


Corporate Social Responsibility

During the year 2011-12, Bajaj Auto continued its Affirmative Action Plan and Corporate
Social Responsibility initiatives in various fields. Activities in this area are set out
in greater detail in the annexed CSR Report.


Directors

D S Mehta, Kantikumar R Podar, Shekhar Bajaj and D J Balaji Rao retire from the Board
by rotation this year and being eligible, offer themselves for re-appointment.

Sanjiv Bajaj, in view of his appointment as Managing Director in Bajaj Holdings &
Investment Ltd., has resigned as Executive director of the Company with effect from 1
April 2012. He will however continue on the Board as a non-executive director. The Board
places on record its sincere appreciation of the valuable services rendered by Sanjiv
Bajaj during his tenure as Executive Director of the Company.


Directors’ responsibility statement

As required by Sub-section (2AA) of Section 217 of the Companies Act, 1956, directors
state:

• that in the preparation of annual accounts, the applicable accounting standards
have been followed alongwith proper explanation relating to material departures

• that 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

• that 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

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


Presentation of financial results

Pursuant to Notification dated 28 February 2011 issued by the Ministry of Corporate
Affairs, the format for disclosure of financial statement prescribed under Schedule VI to
the Companies Act, 1956 has been substantially revised. The financial results of the
Company for the year ended 31 March 2012 have, therefore, been disclosed as per the
revised Schedule VI. Previous year’s figures have also been restated to conform with
the current year’s presentation.


Consolidated financial statements

The directors also present the audited consolidated financial statements incorporating
the duly audited financial statements of the subsidiaries, viz. PT. Bajaj Auto Indonesia
and Bajaj Auto International Holdings BV, Netherlands and as prepared in compliance with
the accounting standards and listing agreement as prescribed by SEBI.

Information in aggregate for each subsidiary company is disclosed separately in the
consolidated balance sheet.


Statutory disclosures

Ministry of Corporate Affairs (MCA) vide Circular No. 51/12/2007-CL-III dated 8
February 2011 has given general exemption with regard to attaching of the balance sheet,
profit and loss account and other documents of its subsidiary companies subject to
fulfillment of conditions mentioned therein. The company has fulfilled all the necessary
conditions in this regard. The summary of the key financials of the Company’s
subsidiaries is included in this annual report.

The annual accounts of the subsidiary companies and the related detailed information
will be made available to the members of the Company and its subsidiary companies, seeking
such information at any point of time. The annual accounts of the subsidiary companies
will be kept for inspection by any member of the Company at its registered office and also
at the registered office of the concerned subsidiary company.

As required under the provisions of Sub-section (2A) of Section 217 of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended,
particulars of 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.

Particulars regarding technology absorption, conservation of energy and foreign
exchange earnings and outgo required under Section 217(1)(e) of the Companies Act, 1956
and Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988
have been given in preceding paragraphs.

Directors’ Responsibility Statement as required by Section 217(2AA) of the
Companies Act, 1956 appears in a preceding paragraph.

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

A cash flow statement for the year 2011-12 is attached to the balance sheet.


Corporate governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section
titled ‘Corporate Governance’ has been included in this annual report, alongwith
the reports on Management Discussion and Analysis and General Shareholder Information.

All Board members and senior management personnel have affirmed compliance with the
code of conduct for the year 2011-12. A declaration to this effect signed by the Chief
Executive Officer (CEO) of the Company is contained in this annual report.

The CEO and Chief Financial Officer (CFO) have certified to the Board with regard to
the financial statements and other matters as specified in clause 49 of the listing
agreement and the said certificate is contained in this annual report.


Secretarial standards of ICSI

Secretarial standards issued by the Institute of Company Secretaries of India (ICSI)
from time to time are currently recommendatory in nature. Your company is, however,
complying with the same.


Group

Pursuant to an intimation from the promoters, the names of the promoters and entities
comprising "Group" as defined under the erstwhile Monopolies and Restrictive
Trade Practices ("MRTP") Act, 1969 are disclosed in the annual report in terms
of Regulation 3(1)(e) of the erstwhile SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997.


Auditors’ report

The observations made in the Auditors’ Report, read together with the relevant
notes thereon are self-explanatory and hence, do not call for any comments under Section
217 of the Companies Act, 1956.


Auditors

The members are requested to appoint Messers Dalal and Shah, Chartered Accountants, as
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.

In conformity with the directives of the Central Government, the Company has appointed
A P Raman, cost accountant, ICWA Membership No. 837, with address at Golok, Plot No.13,
Sector No.28, Pradhikaran, Nigdi, Pune 411 044, as the cost auditor under Section 233B of
the Companies Act, 1956 to conduct the cost audit of Bajaj Auto Ltd. for the year 2012-13.
For the year ended 31 March 2011, the due date of filing the cost audit report was 30
September 2011, and the actual date of filing the cost audit report was 8 August 2011.

On behalf of the Board of Directors,


Rahul Bajaj 

Chairman 17 May 2012


Annexure 1

Auditors’ certificate regarding compliance of conditions of Corporate Governance

To the members of 

Bajaj Auto Limited

We have examined the compliance of conditions of Corporate Governance by Bajaj Auto
Limited , for the year ended 31 March 2012, as stipulated in Clause 49 of the Listing
Agreement(s) of the said Company with stock exchange(s) in India.

The compliance of conditions of Corporate Governance is the responsibility of the
Company’s management. Our examination was carried out in accordance with the Guidance
Note on Certification of Corporate Governance (as stipulated in Clause 49 of the Listing
Agreement), issued by the Institute of Chartered Accountants of India and was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance
of the conditions of Corporate Governance. It is neither an audit nor an expression of
opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations
given to us we certify that the Company has complied with the conditions of Corporate
Governance as stipulated in the above mentioned Listing Agreement(s).

We state that such compliance is neither an assurance as to the future viability of the
Company nor the efficiency or effectiveness with which the management has conducted the
affairs of the Company.


For Dalal and Shah

Firm Registration Number: 102021W

Chartered Accountants

Anish P Amin Partner 

Membership No : 40451 Pune: 17 May 2012


Annexure 2

Declaration by Chief Executive Officer (CEO) 

I, Rajiv Bajaj, Managing Director of Bajaj Auto Limited hereby declare that all the
Board members and senior managerial personnel have affirmed for the year ended 31 March
2012 compliance with the code of conduct of the Company laid down for them.


Rajiv Bajaj

Managing Director

Pune: 17 May 2012


Annexure 3

Certificate by Chief Executive Officer (CEO) and Chief Financial Officer (CFO) 

We, Rajiv Bajaj, Managing Director and Kevin D’sa, President (Finance) of Bajaj
Auto Limited, certify: 

1. That we have reviewed the financial statements for the year ended 31 March 2012 and
that to the best of our knowledge and belief; 

l these statements do not contain any materially untrue statement nor omit any material
fact nor contain statements that might be misleading, and 

l these statements present a true and fair view of the Company’s affairs and are
in compliance with the existing accounting standards, applicable laws and regulations.

2. That there are, to the best of our knowledge and belief, no transactions entered
into by the Company during the year, which are fraudulent, illegal or violative of the
Company’s code of conduct;

3. That we accept responsibility for establishing and maintaining internal controls, we
have evaluated the effectiveness of the internal control systems of the Company and we
have disclosed to the auditors and the audit committee, deficiencies in the design or
operation of internal controls, if any, of which we are aware and the steps that we have
taken or propose to take to rectify the identified deficiencies; and

4. That we have informed the auditors and the audit committee of

i. significant changes in internal control during the year;

ii. significant changes in accounting policies during the year and that the same have
been disclosed in the notes to the financial statements; and 

iii. instances of significant fraud of which we have become aware and the involvement
therein, if any, of the management or an employee having a significant role in the
Company’s internal control system.


  

    
Rajiv Bajaj 
    
Kevin D’sa
  
  

    
Managing Director
    
President (Finance)
  
  

    
Pune: 17 May 2012