contents
Board of Directors chairman’s Letter Management Discussion and Analysis corporate Governance shareholder Information Directors’ Report Auditor’s Report Balance sheet and Profit & Loss Account Bajaj Auto Ltd. and its subsidiaries, consolidated Balance sheet and Profit and Loss Account

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Board of Directors
Rahul Bajaj chairman Madhur Bajaj Vice chairman Rajiv Bajaj Managing Director Sanjiv Bajaj executive Director D S Mehta Kantikumar R Podar Shekhar Bajaj D J Balaji Rao J N Godrej S H Khan Ms Suman Kirloskar Naresh Chandra Nanoo Pamnani Manish Kejriwal P Murari Niraj Bajaj

Management
Rahul Bajaj chairman Madhur Bajaj Vice chairman Rajiv Bajaj Managing Director Sanjiv Bajaj executive Director Pradeep Shrivastava President (engineering) Rakesh Sharma ceo (International Business) R C Maheshwari ceo (commercial Vehicles) S Sridhar ceo (two Wheelers) Abraham Joseph Vice President (Research & Development) C P Tripathi Vice President (corporate) Kevin D’sa Vice President (Finance) K Srinivas Vice President (Human Resources) N H Hingorani Vice President (commercial) S Ravikumar Vice President (Business Development)

Auditors
Dalal & Shah chartered Accountants

cost Auditor
A P Raman cost Accountant

Bankers
Central Bank of India State Bank of India Citibank N A Standard Chartered Bank Bank of America ICICI Bank HDFC Bank Registered under the Indian Companies Act, 1956

Registered office
Mumbai-Pune Road Akurdi, Pune 4 035

Works
• • • • Mumbai-Pune Road Akurdi, Pune 4 035 Bajaj nagar, Waluj Aurangabad 43 36 chakan Industrial Area chakan, Pune 40 50 Plot no.2, sector 0 IIe Pantnagar Udhamsinghnagar Uttarakhand 263 53

company secretary
J Sridhar

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chairman’s Letter
Dear shareholder,
Last year, I had correctly observed that January to March 2007 had witnessed the beginnings of slackening domestic demand for two-wheelers “because of the sharp tightening of non-food credit by the Reserve Bank of India and all companies”. But I had wrongly hoped that credit policy which raised interest rates on Moreover, banks and finance companies consumer loans to exceptionally high levels. significantly reduced their exposure to auto loans, and severely curtailed the supply of credit. the twin effects of higher interests and lower credit availability hit the two-wheeler industry double-digit growth, two-wheelers suddenly the industry as a whole witnessed negative

commercial banks and non-banking financing “this slowdown is a temporary aberration.” My argument was the RBI was reacting to inflationary pressures and asset price bubbles; will perforce bounce back to its 30 per cent

very badly. thus, after a decade of spectacular faced a slump. For the first time in over 0 years, growth. From 8.47 million in 2006-07, overall

and as these eased off, “non-food credit growth annual growth rates” allowing your company to regain its high rates of growth of sales, top-line and profits.

two-wheelers sales fell by 4.8% to 8.07 million

in 2007-08. the decline in motorcycle sales was sharper still: by 7.8%, from 7. million vehicles sold in 2006-07 to 6.54 million in 2007-08. Your company has been affected by this

this was not the case. throughout 2007-08,

the RBI maintained a very tight monetary and

downturn. Falling demand coupled with sharply rising cost of critical raw material such as steel,

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especially in the second half of 2007-08, has the key results: •

affected both sales and profits. Given below are

Why do I have this confidence? In part, because of my age which has allowed me to witness the rough and the smooth. I have been at the helm

Bajaj Auto’s motorcycle sales by volume fell by 0% over the previous year, to 2.4 million vehicles in 2007-08.

Despite an impressive growth in exports,

of your company when it was by far the largest two-wheeler manufacturer in India. I have seen Bajaj Auto struggle with rapidly declining sales of scooters, even as it was trying to make its mark in motorcycles. And I have seen us rising from

three-wheeler sales, too, declined by 9.8%

to 290,32 vehicles, notwithstanding strong by 6.8% to Rs.86.63 billion. •

the ashes of 2000-0, and enjoying several years of superb growth. A year’s adversity is nothing in the life cycle of business.

exports. thus, your company’s net sales fell

taxes, depreciation and amortisation) fell

operating eBItDA (earnings before interest,

My confidence, however, is based on more

than just my longevity. Your company has an new offerings slated over the next two years,

by 9.6% to Rs.2.94 billion in 2007-08. this translated to an operating eBItDA margin 5% in the previous year. • of 4.3% of operating income, compared to

excellent suite of products. With its range — and including a four-wheeler cargo vehicle slated for 2009-0, I believe that Bajaj Auto has the ability all segments and, thus, recapture the growth momentum. to consistently offer customer satisfaction across

operating profit before tax (PBt) fell by 6.7% to Rs.0.2 billion in 2007-08.

a company that has been on a consistently profitable growth path since 200-02.

these are not the best results, especially for

I continue to be encouraged by Bajaj

Auto’s export performance. the company

remains India’s largest exporter of two- and

three-wheelers. the total value of exports for — a 20.8% increase over Rs.6.94 billion

Yet, I am not despondent. All industries have

2007-08 was Rs.20.48 billion (Rs.2,048 crore) (Rs.,694 crore) in 2006-07, at a time when the rupee appreciated substantially against the Us dollar. In terms of volumes, too, Bajaj Auto’s international sales achieved an all-time high of 68,34 units of two- and three-wheelers sold during 2007-08, or a growth of 40% over the

their cycles. It is in the nature of businesses to

have feasts as well as famines. We have had a that the downturn of 2007-08 will not be a long term phenomenon. soon enough, we will see an upward movement. Bajaj Auto will be well positioned to make the best of that growth.

great run for the last five years. Moreover, I think

previous year. export of two-wheelers increased

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by 60% to 482,026 units. I expect exports to continue growing in the years to come.

•

Globalising India — by rapidly enhancing among the three largest global player in two-wheelers.

exports and international facilities to become

Having expressed my confidence in your

company’s longer term growth prospects, let me also share a few words of caution. 2008-09 may see continued inflationary pressures which can prompt the RBI to maintain, if not harden, the and credit growth. Moreover, input prices are interest rates and keep a tight lid on monetary expected to remain firm, especially those of steel and aluminium. these can impact two-wheeler sales as well as profitability. I am, of course, hoping that monetary constraints and input

•

Financing India — by ramping up the group’s financial operations.

•

De-Risking India — by expanding the across the land.

group’s life and general insurance business

As far as ‘Mobilising India’ is concerned, your company slipped in 2007-08 with a fall in the number of motorcycles sold in India. thus, more than ever before, we have to ramp up profitable sales to achieve the 4 million target in the next three years. It is a hard task, but one worthy of

prices ease off. But if they don’t, Bajaj Auto will hurting margins. that will require even greater managerial effort.

have to find innovative ways of growing without

to recapitulate: although things have been difficult in 2007-08, I see long term growth prospects for your company, driven by a

your company’s management. Having seen the plant in record time, I believe that Bajaj Auto’s

way the team set up the state-of-the-art Pantnagar managers can rise to the challenge. As they must. ‘Globalising India’ is on target, thanks to your company’s excellent export achievements. exports now account for 23.6% of Bajaj Auto’s

good portfolio of products, growth in domestic demand over the longer horizon and rising exports. equally, we need to be prepared for

the slowdown of 2007-08 to spill-over to some combating this through greater manufacturing productivity and novel marketing strategies.

part of 2008-09; and to figure out new ways of

total net sales. exports will grow, and I am sure that the company will be a significant player in global markets over the next few years.

Let me now touch upon the 200 vision that I wrote of last year. It involved: •

Regarding ‘Financing India’ and ‘De-Risking

India’, the de-merger that occurred in the course of 2007-08, and the consequent formation of Bajaj Finserv Limited, should enable the group reach and portfolio.

Mobilising India — by supplying 4 million motorcycles out of a projected market of 0 million.

to unlock greater value by widening its financial

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I now turn to the de-merger which I touched on 20 February 2008, after approval of the the key features are: •

upon last year, and which became effective shareholders and the High court, Mumbai.

•

finance business, is called Bajaj Holdings of Bajaj Auto and Bajaj Finserv, and most of your company’s surplus cash and

the existing company, without the auto and

and Investment Limited. It retains 30% equity

been de-merged as a separate listed

the auto business with all its assets has

investments to either financially support the newer business opportunities as and when these arise.

auto and / or finance businesses, or to fund

entity. It is now a pure auto company,

and retains the name Bajaj Auto Limited. that company. •

this is my letter to you as the chairman of

I am convinced that this de-merger will unlock greater shareholder value. Just as I believe that Bajaj Auto will overcome the setback profitable growth. of 2007-08, and return to the next phase of

has in its portfolio erstwhile Bajaj Auto’s Bajaj Auto Finance and the wind-power

A new company, Bajaj Finserv Limited, which

holdings of the two insurance companies, undertaking. I expect this company to play a in the growing financial services space.

much greater role in exploiting opportunities

Rahul Bajaj chairman

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Management Discussion and Analysis the decade from 997-98 to 2006-07 was It saw impressive year-on-year growth in spectacular for India’s two-wheeler industry. domestic demand for two-wheelers, driven by the sales of motorcycles. Here are the facts. In terms of volumes, the compounded annual growth rate (cAGR) of two-wheeler sales between 997-98 and 2006-07 was 2%; and for motorcycles, it was a staggering 25.6%. effects of credit tightening in the previous year’s Annual Report. In the Management Discussion and Analysis, we had written, “In the last three months of the year [January-March 2007]… overall market growth slackened considerably — largely due to steadily rising interest rates and constraints on credit growth due to actions taken institutions to control non-food credit.” the trend by the Reserve Bank of India, banks and financial

this phenomenal decade of growth was abruptly, albeit temporarily, halted in 2007-08. From 8.47 million in 2006-07, overall two-wheelers decline in motorcycle sales was sharper: by

Chart A : Industry’s sale of Two-Wheelers
9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000

sale fell by 4.8% to 8.07 million in 2007-08. the 7.8%, from 7. million vehicles sold in 2006-07 to 6.54 million in 2007-08. chart A gives the data.

As chart A shows, the decline, while unfortunate, is not precipitous. the fall was largely brought about by significant hikes in the interest rate on lenders curtailing their exposures. Incidentally, readers will recall that we had identified the

3,000,000 2,000,000 1,000,000 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

retail consumer loans and because of major retail

Source : SIAM Year ended 31 March Motorcycles Other two wheelers

0

of tightening interest rates and putting pressure on certain types of credit growth continued and, with it, motorcycle sales. throughout 2007-08, affecting consumer credit

motorcycles fell marginally from 33.5% in • 2006-07 to 32.7% in 2007-08.

of 7.8%. thus, Bajaj Auto’s market share in

Although interest rates are expected to remain firm, and the credit market relatively tight, in 2008-09, the general consensus within industry is that the drop is a short term phenomenon. With inflation adjusted GDP expected to grow •

taxes, depreciation and amortisation) fell by 9.6%, from Rs.4.3 billion in 2006-07 to Rs.2.94 billion in 2007-08. this translates operating income.

operating eBItDA (earnings before interest,

to an operating eBItDA margin of 4.3% of operating profit before tax (PBt) fell by Rs.0.2 billion in 2007-08.

by at least 8% compound over the next decade, per capita real incomes are set to rise by 6.5% every year. this will increase the demand for

6.7% — from Rs.2.5 billion in 2006-07 to

individual mobility throughout India — especially in the rapidly growing up-country markets and bring with it another period of growth for the

Markets
Motorcycles: Domestic the two-wheeler market is dominated by motorcycles, accounting for over 8% of overall sales. Bajaj Auto, too, focuses on motorcycles A, in 2007-08, the industry’s overall sales of units. Motorcycles sales fell by 7.8% from 7. million units to 6.54 million units. in the two-wheeler segment. As shown in chart two-wheelers declined by 4.8% to 8.07 million

two wheeler industry. to be sure, this growth may not be as spectacular as it was between 2000-0 and 2006-07, when two-wheeler sales grew by 4.5% cAGR. But it will be significant, and

Bajaj Auto Limited (‘Bajaj Auto’ or ‘the company’) is well placed to leverage this growth opportunity. Having said this, it is also a fact that the fall in demand in 2007-08 has adversely affected Bajaj Auto’s performance for the year. performance for 2007-08.

Given below are the highlights of the company’s

With industry as a whole witnessing a fall in

motorcycle sales, so too did Bajaj Auto. table  gives the data. the table also shows that while overall motorcycle sales fell by 7.8% in 2007-08

Highlights for 2007-08: Bajaj Auto stand-alone
• • • net sales (net of excise duty) decreased by 6.8% to Rs.86.63 billion. Rs.20.48 billion. exports increased by 20.8% to Motorcycle sales by volume was 2.4 million year, versus overall market decline in 2007-08—a fall of 0% over the previous

over the previous year, Bajaj Auto’s sales declined motorcycles — which was 0.% less than what it sold in 2006-07. consequently, Bajaj Auto’s further. In 2007-08, the company sold 2.4 million

share in the market fell by 0.8 percentage points, from 33.5% in 2006-07 to 32.7% in 2007-08. the somewhat greater fall of the company’s motorcycle sales vis-à-vis the industry needs explaining.



table : Motorcycle sales — the industry and Bajaj Auto (in numbers) Year ended 3 March 2003 2004 2005 2006 2007 2008 Market (nos.) 3,757,25 4,36,777 5,27,996 6,200,749 7,099,55 6,544,482 Market growth 3.3% 20.9% 4.9% 8.8% 4.5% -7.8% BAL (nos.) ,023,55 ,92,306 868,38 BAL’s growth 32.3% 4.6% 3.9% 7.9% BAL’s market share 23.% 23.7% 27.8% 30.8% 33.5%

,449,70

2,379,499

2,39,779

-0.%

24.4%

32.7%

broadly divided into three segments: .

As mentioned last year, the motorcycle market is

Chart B : The Market Segment for Motorcycles
100% 80% 60% 40% 20% 0% 88% 81% 10% 2% 10% 9% 10% 16% 11% 20% 23% 13%

the high performance segment: this

includes motorcycles in the engine class of

50 cc and above. Bajaj Auto is present here and the new 220 cc) and the Avenger Dts-i. the 25 cc segment: Bajaj Auto is in this category with the upgraded Discover Dts-i 35 and, more significantly, the september 2007. the Platina.

with the Pulsar range (50 cc, 80 cc, 200 cc 2.

74%

69%

64%

XcD 25 Dts-si, which was launched in 3. the 00 cc segment: Here, Bajaj Auto offers

2003-04

2004-05

2005-06 100cc

2006-07 125cc

2007-08 150cc+

Without doubt, the market is moving towards the 25 cc and above segment, with an increasing mass migrating to the 25 cc variants. In fact,

period. the chart also shows the sharply falling the market in 2003-04 to 64% in 2007-08.

share of the 00 cc entry segment, from 88% of

Bajaj Auto has catalysed this trend, and it forms product development and R&D strategy. chart B shows the trend—where the 25 cc market

the core of the company’s integrated marketing,

Where does Bajaj Auto operate among these segments? can this explain the marginally greater fall in motorcycle sales of the company versus the market? What does Bajaj Auto’s market segmentation strategy mean for future segment and move up the chain.

has grown from 2% of total motorcycle sales in

2003-04 to 23% in 2007-08, and the 50 cc plus

market has grown from 0% to 3% over the same

sales and profits? Let us begin with the 00 cc

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the 00 cc segment
Although this is the largest segment in the motorcycle market, as chart B shows it has

50 cc motorcycle while matching the fuel efficiency and price of a 00cc product.

XcD 25 Dts-si has been well received by first six months of launch.

been steadily falling in percentage terms since 2003-04. It is also a sector characterised by intense competition from all players, which is promotions.

consumers, and has sold 93,466 bikes in the

accompanied by aggressive pricing initiatives and

During the early part of 2007-08, the Discover 25 Dts-i was upgraded to a 35 cc variant. Bajaj Auto’s domestic sales in the segment 548,083 in 2007-08. Bajaj Auto is the clear market leader in this segment. this and the XcD 25 Dts-si helped increase by 43% — from 384,482 units in 2006-07 to

All profitable business depends on differentiated marketing. the “ 00cc segment ” in the mind of the customers is of a reliable, economical commuter and belongs to someone else. no there; market share - yes, but at heavy cost. Hence Bajaj Auto is focused on moving customers to the “ 25cc+ segment ”, representing high tech, high quality, fun to ride bikes. this is its strength since it is the leader 4 well established brands – Pulsar, Avenger, Discover and XcD. here with close to 50% market share owing to

competitor has been able to establish volumes

the 50 cc + segment this segment consists of more powerful motorcycles in range of 50cc and above,

and is for those who want performance and

power. this segment has Bajaj Auto’s flagship exciting segment in volumes and mind-space

brand, the Pulsar. the company dominates this with the Pulsar range and the Avenger Dts-i. segment is close to 50%.

the company’s domestic market share in this

the “ 25cc+ segment ” is already 36% of the motorcycle market and growing. Bajaj Auto will accelerate this trend of moving customers with In this way, Bajaj Auto will gain not just market

In June 2007, Bajaj Auto launched its Pulsar 220 Dts-Fi (Digital twin spark Fuel Injected), which has created a new technological benchmark for from Bajaj Auto with the powerful combination bikes in performance category. It is the first bike of twin spark plugs and fuel-injection technology and is the ultimate machine for the performance motorcycle enthusiast. the biggest feature of the Pulsar 220 Dts-Fi is the fuel injection,

4 new 25cc+ category motorcycles in 2008-09. share but will do so profitably. over time, 00cc bikes should cease to be of major significance, as have geared scooters. For that horizon we must align our ship without distraction.

the 25 cc segment
Bajaj Auto competes in this category with the Dts-si (Digital twin spark-swirl Induction), which was launched in september 2007. the product offers features of a upgraded Discover Dts-i 35 and the XcD 25

which gives the bike a linear power curve, crisp feel and instant throttle response. Besides, the 220 cc engine that produces 20 BHP and .95 kg metre (kgm) of torque. motorcycle boasts low noise, and a low vibration

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the Pulsar 220 Dts-Fi has won several

accolades, with the latest being the Indian

compared to the previous year. export demand, however, continued to be stable. Bajaj Auto continued to drive exports to de-risk itself from of its three-wheeler sales came from exports — up from 44% last year. table 2 gives the

Motorcycle of the Year Award 2008, which had jury members from all the major automobile magazines of the country.

fluctuations in domestic demand. thus, over 47%

Although competition in this segment has

intensified, Bajaj Auto remains ahead in visibility, product quality and technology in this highly confident of growing this market. demanding segment. As a company, we are fairly

three-wheeler data for domestic as well as exports. In a backdrop of de-growth, the domestic

passenger three-wheeler segment (for three

and six seaters) saw a significant shift towards alternate fuel powered vehicles like cnG and LPG . the company had anticipated these shifts, and plans to launch two variants of its passenger in the second half of 2008–09. carrier, Mega Max, in the cnG and LPG versions

In this highly demanding performance

segment, Bajaj Auto intends to further up the powerful models. As a part of this strategy, in november 2007, the company took a 4.5% equity stake in KtM Power sports

play by introducing even more advanced and

AG of Austria, europe’s second largest sport equity stake was progressively increased to

motorcycle manufacture. By March 2008, the 24.45%. KtM will provide the know-how for the four-stroke engines from 25 cc to 250 cc.

Domestic and exports (in numbers)

table 2: three-wheeler sales of Bajaj Auto, 2006-07 Passenger Sales Industry sales Bajaj Auto sales Goods Carriers Industry sales 373,868 2007-08 368,94

joint development of highly efficient water-cooled It will be a two-way co-operation, where KtM, in co-operation with Bajaj Auto, will extend its product portfolio to a 25 cc line.

Bajaj Auto Market share

279,34

74.7%

263,598

7.5%

Bajaj Auto sales

59,47

We now come to why Bajaj Auto’s decline in

Bajaj Auto Market share Total Three-Wheelers Industry sales Bajaj Auto sales

42,487 26.7%

28,348

26,74 20.8%

motorcycle sales by volume in 2007-08 was greater than that of the industry as a whole. simply put, competitive, low margin 00 cc category was 25 cc segment and above. the drop in the company’s sales in the extremely significantly greater than its gain in sales in the

533,285

Bajaj Auto Market share

32,828

497,262

60.3%

290,32

58.4%

Bajaj Auto also introduced ‘Gasoline Direct Injection’ auto rickshaws in a few markets, which is delivering 33% better fuel efficiency

three-wheelers: Domestic and exports
Bajaj Auto continues to be the leading three-wheeler player in India. Domestic demand for three-wheelers in 2007–08 was 9% lower

and has cut down exhaust emissions by 50%. this model will be introduced in all markets in Q2 2008–09. the company believes that this

environment-friendly, fuel efficient offering will

reinforce Bajaj Auto’s dominance in this segment.

4

the domestic three-wheeler goods segment

also saw a substantial drop in demand — down by 20% in volume terms in 2007-08 over the interest rates as well as a shift towards the a volume growth of 9% during the year. previous year. this was primarily driven by higher sub-one-tonne four-wheeler vehicles, which saw

table 3: Bajaj Auto’s exports (in numbers)
Product Motorcycles total two-wheelers three–wheelers total Vehicles 2006-07 300,656 30,766 40,645 442,4 2007-08 48,549 482,026 36,35 68,34 Growth 60% 60% - 3% 40%

to strengthen Bajaj Auto’s position in domestic to launch a new four-wheeler cargo offering in 2009-0, which should lower operating costs

the international business enjoys a healthy,

cargo segment further, the company is planning

de-risked spread across all the major regions. south Asia contributes to 32% of total sales; south-east Asia (mainly Indonesia and

of customers compared to the existing models in the market. It is expected that the launch of this vehicle will lift the company’s sales in the cargo segment.

Philippines) another 3%; Africa and the Middle east comprises 30%; and south America constitutes 25%. While the business in south Asia grew by 5%, sales in south east Asia by 93%; and in south America by 24%. increased by 43%; in Africa and the Middle east

exports the company continues to be India’s largest exporter of two- and three-wheelers, and exports remain a success story. the total value of exports for 2007-08 was Rs.20.48 billion (Rs.2,048 crore) — a 20.8% increase over

Almost all the major brands contributed to the growth. In the 00cc category, Boxer / ct00 (which is exclusively for exports) and Platina grew by 54% & 57 % respectively over the previous doubled its volume with 93 % growth over last the Re 2-stroke declined; but this was almost completely offset by growth of Re 4-stroke. several initiatives were consolidated. year. In the 25 cc + segment, Discover nearly year, and Pulsar grew by 23%. In three-wheelers,

Rs.6.94 billion (Rs.,694 crore) in 2006-07.

a time when the rupee appreciated against the Us dollar.

note that the 20.8% growth is in rupee terms, at

In terms of volumes, too, Bajaj Auto’s

international sales achieved an all-time high of 68,34 units of two- and three-wheelers sold during 2007-08, which was a growth of 40% increased by 60% to 482,026 units, though

the Indonesian operation launched towards the

end of 2006-07 was expanded. the entry strategy has focused on the high performance segments, have now been launched. these products, along with advertising and public relations, and both the Pulsar 80 cc and the Pulsar 200 cc

over the previous year. export of two-wheelers three wheelers saw a marginal decline of 3% to 36,35 units. table 3 summarises the product wise exports.

are steadily building the Bajaj Auto brand in

Indonesia. An exclusive network has been put in place and this gives the company reach into the

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key markets of Jakarta, Java, sumatra, Bali and strengthened with local recruitments in both the technical and commercial areas.

sulawesi. the organisational capability has been

operations the Pantnagar Plant on 9 April 2007, Bajaj Auto inaugurated its green-field plant at Pantnagar, Uttarakhand.

the nigerian business has recorded rapid

growth, with Boxer easily being the most visible two-wheeler brand in the capital city of Lagos. three-wheelers, too, have done impressively in nigeria. Meaningful penetration has been sudan, ethiopia and Uganda.

Built on the unique concept of having the mother plant and its vendors in the same premises, the Pantnagar plant completed producing 00,000 December 2007, it began producing the XcD

achieved in several African countries like Angola,

units of the Platina in less than six months; from 25 cc as well.

In colombia, the Discover was established as the second pillar of the company’s business which, leadership position. along with the Pulsar, gives Bajaj Auto a powerful

As planned, localisation of components up to 75% to 80 % has been achieved with the 6 and the XcD. vendors located in the cluster, for both the Platina

In sri Lanka, the business faced a difficult

market environment and did not grow. even so, it managed to increase market share. Additionally, a successful changeover to Re 4-stroke was made. Bangladesh showed growth of

In it’s first year of operations, the plant produced over 275,000 vehicles. this achievement of high volumes in its inaugural year reflects the

meticulous care taken during the project planning and execution stage to eliminate all the problems that are generally faced during plant start up and production ramp up.

both two-and three-wheelers, and Bajaj Auto

consolidated its no. position in the country. In in the 00 cc motorcycle segment.

Philippines, too, the company enjoys leadership

the chakan Plant
Bajaj Auto treats the chakan plant, as a ‘manufacturing laboratory for mass production’. Various new concepts for mass production deployed in other plants according to their applicability. are first tried and tested at chakan, and then

the challenge is the exchange rate. Profitability came under pressure due to the appreciating rupee and this will continue to be an important

dimension to manage in the future. Besides the exchange rate, rising input costs will also pose in many existing markets. Managing growth a challenge to the company’s competitiveness with profitability, stabilisation of the Indonesian operations and building a sustainable growth momentum will be the key challenges for the business in the coming year.

Having achieved successful operations of robotic initiative of supplying components from various

machining cells in the past, the plant took another machining cells to the engine assembly through

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7

automatic guided vehicles (AGVs). the use of AGV was also started in the vehicle assembly shop in the later part of year.

Research and Development (R&D)
During 2007-08, Bajaj Auto’s R&D was primarily involved with the work on the next wave of products to be launched in 2008-09. two important technological prowess were also launched products which demonstrated the company’s

thanks to various innovative engineering

initiatives in the cylinder block machining cells,

the capacity has been more than doubled — thus avoiding huge investment that would have been significant cost reductions have been achieved the mono-coat system. necessary to meet incremental demand. similarly, in the paint shop by successful implementation of

three-wheeler Direct Injected auto rickshaw.

during the year — the XcD 25 Dts-si and the

XcD 25 Dts-si the XcD 25 Dts-si has been touched upon earlier. the platform is strategically important, as it uses technological differentiation to increase large 25 cc segment. the penetration of Bajaj Auto’s motorcycles in the

In 2007-08, chakan completed the cumulative production of over 2 million Pulsars. It also achieved the highest ever production volume of more that a 00,000 vehicles in a single month.

the Akurdi Plant
Akurdi was shut down as a vehicle assembly plant from 3 september 2007. the main reason for doing so was the higher cost of

the XcD 25 Dts-si is the result of the

cumulative experience of many years of engine and vehicle development in Bajaj Auto. Dts-si the company’s patented Dts-i technology to represents the latest advancements in modifying further enhance the combustion by incorporating a swirl motion in the combustion chamber. the microcontroller-based ecU, which gives both revolutions per minute and temperature. the combustion is controlled by using an advanced ignition and fuel controls based on inputs of load, engine cuts down weight and friction to match

manufacturing, which placed this location in a to the other facilities of the company. Bajaj R&D centre that focuses on the growing

significantly disadvantageous position compared Auto plans to convert Akurdi to: (i) a significant development needs, (ii) a prototype plant for its

new products and offerings, and (iii) a world class development / training centre for its employees, vendors and dealers.

numbers of a typical 00cc engine. the XcD 25 Dts-si has been engineered to cut down weight, speedometer, LeD tail lamps and tank spoilers. while having on board advanced features like LcD

Akurdi will, of course, continue to remain the corporate headquarters of Bajaj Auto.

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three-Wheeler: Gasoline Direct Injected
Bajaj Auto’s R&D team has been working on the Direct Injection of gasoline for the past three

namely sales, service, engineering, R&D, vendors and dealers.

initiatives to all its non-manufacturing functions,

Right from concept planning, various tPM

years. the work has resulted in a new two-stroke with gas fuelled three-wheelers in terms of of a diesel model.

initiatives played key roles in setting up the

engine for the three-wheeler, which is comparable emissions, while simultaneously giving the power

company’s new green-field plant at Pantnagar. were implemented from the very first day at

the best kaizens and learning from other plants Pantnagar. this resulted in rapid ramp-up of operating cost per vehicle at the plant.

production with near zero defects, and the lowest

the direct injection technology ensures that there is no loss of hydrocarbons due to short circuiting, unlike a conventional two-stroke engine. this means that the engine has all the advantages of the two-stroke such as excellent low end torque characteristics, smooth power delivery and consumption and emissions.

Bajaj Auto initiated tPM in all its 6 vendor plants situated in the Pantnagar vendor cluster. the excellence on its own; and that the vendors and their suppliers needed to be improved simultaneously. the event created history basic thought was that the plant cannot achieve

lightness without the negatives such as poor fuel

— where the mother company with all its vendors doing a concurrent tPM Kick-off. conducting and possibly in the world. tPM on such a scale is definitely a first in India,

In addition, the R&D continues to build its infrastructure in all the areas of design, prototyping and validation. these are long term investments, and are aimed to give flexibility, design and development. speed and insight spanning the entire gamut of

During 2007-08, other Bajaj Auto plants

at chakan and Waluj (three-wheeler and

other Initiatives total Productive Maintenance (tPM)
Bajaj Auto started its tPM initiative eight years ago with its manufacturing plants. In March all its manufacturing facilities awarded by 2007, it achieved a distinct milestone of having JIPM (Japan Institute of Plant Maintenance) as winners of the ‘tPM excellence category–’. thereafter, the company extended tPM

motorcycles), which had received the tPM

excellence Award in 2006-07, started gearing up for next level of tPM award, namely the ‘special Award for tPM Achievements’. All the three

plants — chakan, Waluj and Pantnagar — will be in a position to apply for this award in 2008-09.

Last year, tPM at vendor plants received further momentum. 64 vendors received the ‘Bajaj Quality Award’, compared to 32 in 2006-07. the of award, the ‘Bajaj tPM Award’.

year also saw five vendors getting the next level

20

subsidiaries
Bajaj Auto International Holdings BV (BAIH BV)
A 00% netherlands based subsidiary of Bajaj Auto (Bajaj Auto International Holdings BV) was formed to focus on international ventures, including possible acquisitions. to its issued

develops and manufactures competition off-road and street motorcycles.

the core company, KtM-sportmotorcycle AG,

With more than ,930 employees, the KtM Group earned revenue of € 566.1 million (Rs.32 billion) in 2006-07. over 23 sales subsidiaries distribute KtM products to ,400 dealerships worldwide.

and subscribed capital of €200,000 was added total investment in BAIH BV to €98.4 million. invested €58.62 million (Rs.3.45 billion or

further capital of €98.2 million, taking Bajaj Auto’s As its first activity, in november 2007, BAIH BV Rs.345 crore) to acquire a 4.5% equity stake in KtM Power sports AG of Austria, europe’s second largest sport motorcycle manufacturer.

KtM is a Vienna stock exchange listed company with market capitalisation of euro 390 million (InR 22 billion).

Pt Bajaj Indonesia (PtBAI)
PtBAI was incorporated in 2006-07 as a subsidiary in Indonesia with an issued

the equity stake was progressively increased to (Rs.5.68 billion or Rs.568 crore).

24.45% with a total investment of €98.36 million

and subscribed capital of Us$ 2.5 million (Rs.562 million). Bajaj Auto holds 97.5% by the local partner. shares in PtBAI, with the balance being held

KtM is a leading global manufacturer of power sports vehicles. With products in Motocross, supermoto, enduro segments and on-road bike products like the super Duke, KtM is a strong have won several World championship titles brand in europe and the UsA. KtM motorcycles and the Paris-Dakar rally on seven occasions.

Indonesia. During 2007-08, variants of the Pulsar were launched, and an exclusive dealer network has been put in place which gives the company reach into the key markets of Jakarta, Java, sumatra, Bali and sulawesi.

PtBAI assembles and markets Pulsars in

2

summarised Financials
Given below are Bajaj Auto’s summarised financials. Given that this is the first annual report of the comparable. company after its scheme of Arrangement (i.e. de-merger), the previous year’s figures are no longer table 4: Abridged Profit and Loss statement Rs. In Million sales Operations 2007-08 96,900

net sales

Less: excise duty

0,267 86,633 90,462 65,973 72.9% 747

other operating income

cost of materials consumed, net of expenditures capitalised share of material cost stores and tools Labour cost

Total operating income

3,829

share of stores and tools share of labour cost

3,46 3,03 4,359 77,526 4.8% 3.4% 3.8%

0.8%

share of factory and administrative expenses sales and after sales expenses Total expenditure operating profit share of sales and after sales expenses

Factory and administrative expenses

operating profit as a share of total operating income Revised operating profit Voluntary Retirement scheme

2,936 4.3% ,024

Interest

Revised operating profit as a share of total income

11,912 13.2% ,740 52

Net operating profit Income

Depreciation

Non-operating income

10,120

expenses

,226 1,226 -

Profit after taxation

Provision for taxation

Profit before taxation

Non-operating income, net

11,346 7,558 3,788

22

operating working capital table 5 gives the details of operating working capital. though negligible, Bajaj Auto enjoys negative working capital. this is even after VAt and excise duty, amounting to

consolidation of accounts and segment reporting
Bajaj Auto has consolidated the financial statements of subsidiaries, in accordance with

monies being locked up on account of refunds of Rs. ,70 million. Rs. In Million

the relevant accounting standards issued by the Institute of chartered Accountants of India. the business segment wise is tabulated in table 7. summary of consolidated profit and loss account

table 5: operating Working capital As at 3st March 2008 3,496 2,753 56 4,438 ,248 9,445 948 ,032 ,425 -177

table 7: segment Revenue and segment Results segment Revenue Automotive Total Total Investment and others 2007-08 90,43 91,640 91,640 2007-08 0,000 11,227 11,175 ,227 52 ,227 —

Current assets Inventories sundry debtors cash and bank balances other current assets sub-total Less: Current liabilities sundry creditors Advance against orders other current liabilities sub-total Working capital

(Rs. million)

Less: Intersegment revenue

segment Results Profit/(loss) from each segment before interest and tax Automotive Total Investment and others Less: Interest

Return on operating capital employed
As table 6 shows, the company’s return on 2007-08. operating working capital stands at 74 per cent in table 6: Return on operating capital employed Rs. In Million As at 3st March 2008 2,928 83 05 -77

Profit before tax

cautionary statement statements in Management Discussion and Analysis describing the company’s objectives,

Fixed assets capital Advances technical know-how Working capital operating profit before interest and taxation Total

projections, estimates and expectation may be

‘forward looking’ within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

13,687

Pre-tax return on operating capital employed

0,72 74%

23

corporate Governance the commitment of Bajaj Group to the highest predates seBI and clause 49 of the listing standards of good corporate governance practices agreements. transparency, fairness, disclosure Rahul Bajaj, Rajiv Bajaj and sanjiv Bajaj are the first directors of the company. Madhur Bajaj was appointed as an additional director on 0 May 2007. twelve more directors, viz. D s Mehta, Kantikumar R Podar, shekhar Ms suman Kirloskar, naresh chandra, and accountability are central to the working of the Group. Bajaj Auto Limited (‘BAL’ or ‘the company’ or ‘Bajaj Auto’), the newly incorporated company maintains the same tradition and commitment. Given below are the company’s corporate governance policies and practices for 2007-08 (refers to the period 30 April 2007 to 3 March 2008, since the company was incorporated on 30 April 2007 only and the term with reference to BAL). Bajaj, D J Balaji Rao, J n Godrej, s H Khan, nanoo Pamnani, Manish Kejriwal, P Murari and with effect from 30 January 2008.

niraj Bajaj were inducted as additional directors

consequent upon the approval of scheme of arrangement of demerger of erstwhile Bajaj Auto Ltd. by the High court of Judicature at Bombay vide its order dated 8 December 2007, managerial personnel of the erstwhile and accordingly • Bajaj Auto Ltd. were transferred to the company

‘2007-08’ will have the same meaning hereinafter

Board of directors
Bajaj Auto was incorporated on 30 April 2007 as Bajaj Holdings & Investment Ltd. After the demerger of erstwhile Bajaj Auto Ltd.

chairman for the period commencing from 20 February 2008 and ending on 3 March 200

Rahul Bajaj was appointed as executive

manufacturing undertaking was vested with was changed to Bajaj Auto Ltd. vide fresh certificate of Incorporation issued by the 5 March 2008.

the company and the name of the company

•

Registrar of companies, Maharashtra, Pune on

vice chairman for the period commencing 3 March 200 from 20 February 2008 and ending on

Madhur Bajaj was appointed as executive

24

•

director for the period commencing from 20 February 2008 and ending on 3 March 200; and

Rajiv Bajaj was appointed as managing

proposing all the thirteen directors as candidates for the office of directors.

•

director for the period commencing from 20 February 2008 and ending on 3 March 2009.

sanjiv Bajaj was appointed as executive

non-executive directors’ compensation
Until 20 February 2008, the effective date of scheme of arrangement of demerger, the

non-executive directors of the company were not paid any sitting fee or commission. the board of revised the directors’ remuneration policy with directors at its meeting held on 30 January 2008 effect from 20 February 2008 and accordingly, non-executive directors of the company would now be paid sitting fee of Rs.20,000 per meeting for every meeting of the board and its committee and commission at the rate of Rs.50,000 per

composition
As on 3 March 2008, the board of Bajaj Auto consisted of sixteen directors, of whom four directors were executive. nine out of the twelve non-executive directors were independent. the board has no institutional nominee directors. According to clause 49 as in force as on

meeting of the board and its committee attended by them, within the overall ceiling of one percent of the net profits.

3 March 2008, if the chairman is executive,

at least one half of the board should consist of

non-executive, independent directors. As table  below shows, this provision is met at Bajaj Auto. According to the statutes, first directors of the company viz. Rahul Bajaj, Rajiv Bajaj and sanjiv Bajaj shall retire at the first annual general meeting and being eligible have offered their candidature for re-appointment. the term of

the company currently does not have a stock option programme.

Board procedures
During 2007-08, the board of directors met nine 5 May 2007, 7 May 2007, 2 July 2007, 30 January 2008 and 28 March 2008. less than four months. 20 July 2007, 9 october 2007, times: on 2 May 2007, 0 May 2007,

thirteen additional directors expires on the date

of the first annual general meeting. the company amount from the member(s) of the company

has received a notice along with requisite deposit

the gap between any two meetings has been

25

Attendance record of directors table : composition of the board and attendance record of directors for 2007-08 name of director Rahul Bajaj 


category chairman, executive

Meetings attended 8/8 7/9

Whether attended last AGM

D s Mehta 3

sanjiv Bajaj 

Rajiv Bajaj

Madhur Bajaj

 2

executive Director, executive non-executive, independent non-executive, independent non-executive non-executive independent

Managing Director, executive

Vice chairman, executive

9/9 /2

9/9

shekhar Bajaj J n Godrej
3

Kantikumar R Podar 3
3

/2

not applicable since the company will have its first Annual General 0 July 2008.

D J Balaji Rao 3 s H Khan 3

Ms suman Kirloskar nanoo Pamnani 3 P Murari 3 naresh chandra 3

3

Manish Kejriwal 3 niraj Bajaj 3
 2 3

non-executive, independent non-executive

non-executive, independent

non-executive, independent

non-executive, independent

non-executive, independent

2/2

2/2 /2 2/2

2/2

Meeting only on

2/2 /2

2/2

non-executive, independent non-executive

/2

/2

took up executive positions from 20 February 2008 Appointed with effect from 0 May 2007 Appointed with effect from 30 January 2008 management at all times. In addition to items for its noting and / or approval, information is

Information supplied to the board
In advance of each meeting, the board is various matters related to the working of presented with all relevant information on the company, especially those that require

which are required to be placed before the board provided on various significant items. In terms of quality and importance, the information supplied by management to the board of the company is far ahead of the list mandated under clause 49 of the listing agreement.

deliberation at the highest level. Directors have separate and independent access to senior

26

27

outside directorships and memberships of board committees table 2 gives the number of outside directorships and committee positions held by the directors of Bajaj Auto. table 2: outside directorships / committee positions as on 3 March 2008 name of Director In listed companies In unlisted public limited companies 3 4 2 3 4 3 2 5 5 3 3 7 2 4 2 2 5 3 6 4  As chairman/ member of Board committees of companies 0 4 0 4 8 0  8 2 4 0 9

Rahul Bajaj Rajiv Bajaj

Madhur Bajaj sanjiv Bajaj D s Mehta Kantikumar R Podar shekhar Bajaj J n Godrej s H Khan D J Balaji Rao

naresh chandra nanoo Pamnani Manish Kejriwal P Murari niraj Bajaj

Ms suman Kirloskar

0 7 2 0 6 6

2

  5 6

7 0 5 2

notes: Private limited companies, foreign companies and companies under section 25 of the companies committee are considered for the purpose of committee positions as per listing agreement. none of the directors was a member in more Act, 956 are excluded for the above purposes. only audit committee and shareholders’ grievance

than 0 committees, nor a chairman in more than five committees across all companies in which he / she was a director.

adopted the legal compliance reporting system for the company and the same will be duly adhered to.

Review of legal compliance reports
Provision regarding the above as stipulated under clause 49 is not applicable for the period under review, as the company which got incorporated

code of conduct
Provision regarding the above as stipulated under review, as the company which got under clause 49 is not applicable for the period incorporated on 30 April 2007 had not got listed at its meeting on 30 January 2008 laid down

on 30 April 2007 had not got listed on or before 30 January 2008, the board has approved and

3 March 2008. However, at its meeting held on

on or before 3 March 2008. However, the board a code of conduct for all directors and senior

28

management of the company, which has been posted on the web-site www.bajajauto.com. All directors and senior management personnel have affirmed compliance with the code for

secretary to the audit committee.

committee. the company secretary acted as the

2007-08. A declaration to this effect signed by the managing director / ceo is given in this annual report.

the terms of reference of the audit committee

are extensive and go beyond what is mandated 292A of the companies Act, 956.

in clause 49 of the listing agreement and section

Audit committee constitution and composition
With a view to comply with various requirements under the companies Act, 956 and clause 49 of

subsidiary companies
Provision regarding the above as stipulated under clause 49 is not applicable for the period under review, as the company which got incorporated 3 March 2008. the two overseas companies, viz., Pt. Bajaj Auto Indonesia and Bajaj Auto the subsidiaries of the company pursuant to the scheme of demerger and the provisions with regard to the same would hereafter be adhered to.

the listing agreement, the company has set up its audit committee in the board of directors meeting held on 30 January 2008. the present audit . 2. 3. 4. 5. s H Khan, chairman committee consists of the following directors: D J Balaji Rao J n Godrej naresh chandra nanoo Pamnani

on 30 April 2007 had not got listed on or before

International Holdings BV, netherlands became

Disclosures
A summary statement of transactions with related parties was placed before the audit suitable disclosures have been made in

All members of the audit committee are

independent, non-executive directors and are ‘financially literate’ as required by clause 49. Moreover, s H Khan, D J Balaji Rao, J n Godrej financial management expertise’.

committee meeting held on 30 January 2008. the financial statements, together with the

and nanoo Pamnani have ‘accounting or related

management’s explanation in the event of any accounting standards.

Meetings, attendance and topics discussed
During 2007-08, the audit committee met once on 30 January 2008. this meeting was

treatment being different from that prescribed in

At its meeting of 30 January 2008, the board laid down procedures to inform it of the company’s risk assessment and minimisation procedures. that management identifies and controls risk through a properly defined framework.

attended by all members of the committee except J n Godrej. In addition to the members of the audit committee, this meeting was attended by the statutory auditors and cost auditors of the company, and those executives who were

these would be periodically reviewed to ensure

the heads of finance and internal audit functions,

Pursuant to scheme of arrangement of demerger sanctioned by the Hon’ble High court of Judicature at Bombay, 0,83,50 equity

considered necessary for providing inputs to the

29

shares of Rs.0 each of the company, have

been issued and allotted to the shareholders of :, on 3 April, 2008.

demerged company (erstwhile BAL) in the ratio of

which is a vendor to Bajaj Auto. Purchases of goods from this company have been in year ended 3 March 2008, amounted to Rs. 29.8 million. 2. the ordinary course of business and, for the

Boyce Manufacturing company Limited,

except as above, there were no public issues, right issues, preferential issues etc. during the year.

Remuneration committee
At the meeting of the board of directors held on 30 January 2008, remuneration committee independent directors as its members : . 2. 3. shri D J Balaji Rao, chairman shri s H Khan shri naresh chandra

company with effect from 30 January 2008,

shekhar Bajaj who became a director of the

is a director of Hind Musafir Agency Limited, under review, the total value of services

an accredited travel agency. During the year availed of by Bajaj Auto from Hind Musafir

was constituted with the following non-executive 3.

Agency Limited amounted to Rs. 44.4 million. the Register of contracts maintained by

the company under section 30 of the

companies Act, 956, contains record of companies. the register is signed by all board meetings.

the remuneration committee met on

the transactions entered into with the above the directors present during the respective

30 January 2008 to fix the remuneration payable Rahul Bajaj, Madhur Bajaj, Rajiv Bajaj and to managerial personnel of the company viz.

sanjiv Bajaj. At this meeting, the remuneration, which had been finalised by erstwhile BAL for the period from  April 2005 has been continued

criteria of making payments to non-executive directors the criteria of making payments to non-executive directors as approved by the board at its meeting held on 30 January 2008 have been put on the company’s web-site www.bajajauto.com

unchanged in the new Bajaj Auto consequent upon the demerger.

the remuneration committee met again on 28 March 2008 to revise the remuneration for their remaining tenure. payable to the aforesaid managerial personnel

non-executive Directors non-executive directors are paid sitting fees this report. after 20 February 2008 as separately stated in

Remuneration of directors
Pecuniary relationship or transactions of non-executive directors
. J n Godrej who became a director of the company with effect from 30 January 2008, is a director and shareholder of Godrej &

executive Directors consequent upon the demerger of erstwhile Bajaj Auto Limited, managerial personnel of the said company resigned from their executive positions from that company with effect from

30

3

20 February, 2008 and joined the company

in same capacities with effect from the same as executive chairman, Madhur Bajaj was was appointed as managing director and of the company.

on their retirement, all the executive directors

date. Accordingly, Rahul Bajaj was appointed appointed as executive vice chairman, Rajiv Bajaj sanjiv Bajaj was appointed as executive director on their appointments, the remuneration

are entitled to superannuation benefits payable

in the form of an annuity from the Life Insurance corporation of India — and these form a part of the perquisites allowed to them. no pension is paid by the company. the company has no stock option plans and

hence it does not form a part of the remuneration package payable to any executive and / or nonexecutive director. During the year under review,

payable to the aforesaid managerial personnel was kept unchanged by the board and the same was approved by the shareholders at

none of the directors was paid any performanceadvance any loans to any of the executive and / or non-executive directors. table 3 gives details of the remuneration paid or payable to directors during 2007-08.

their extra ordinary general meeting held on the remuneration payable to managerial personnel with effect from  April 2008.

linked incentive. In 2007-08, the company did not

7 March 2008. the board of directors revised

table 3: Remuneration paid / payable to Directors during 2007-08 name of director Relationship with other directors sitting fees Rs. salary & perquisites Rs. commission Rs. total Rs.

Rahul Bajaj  Madhur Bajaj


Rajiv Bajaj 

Brother of shekhar Bajaj & niraj Bajaj son of Rahul Bajaj, brother of sanjiv Bajaj, brother-in-law of Manish Kejriwal son of Rahul Bajaj, brother of Rajiv Bajaj, brother-in-law of Manish Kejriwal

Father of Rajiv Bajaj and sanjiv Bajaj, father-in-law of Manish Kejriwal

— —

—

0,04,973 6,733,8

6,462,749

5,300,000 3,500,000

2,600,000

25,34,973 20,233,8 4,825,94

38,062,749

sanjiv Bajaj  D s Mehta

shekhar Bajaj J n Godrej

Kantikumar R Podar D J Balaji Rao

—

—

Brother of Madhur Bajaj & niraj Bajaj —

20,000

20,000 20,000 40,000

—

4,925,94 537,600 —

9,900,000 250,000 50,000

707,600 270,000 320,000 590,000

— —

s H Khan

suman Kirloskar nanoo Pamnani Manish Kejriwal

—

—

20,000 40,000

naresh chandra

—

—

20,000

—

—

50,000

550,000

300,000

niraj Bajaj


P Murari

son-in-law of Rahul Bajaj, brother-in-law of Rajiv Bajaj and sanjiv Bajaj Brother of Madhur Bajaj & shekhar Bajaj —

—

40,000

—

550,000

70,000

20,000 20,000

—

300,000

590,000

—

500,000

320,000

400,000

540,000

420,000

20,000

— — —

50,000

250,000

70,000

270,000

—

200,000

200,000

took up executive positions from 20 February 2008

32

note to table 3: salary and perquisites include all elements of remuneration i.e. salary, allowances and benefits. no bonus, pension or incentive is

practices framed by the company helps in

ensuring compliance with the requirements.

paid to any of the directors. the company has not issued any stock options to any of the directors. five years. the term of executive directors does not exceed

shareholders
Appointment and / or re-appointment of directors
Rahul Bajaj, Rajiv Bajaj and sanjiv Bajaj are the first directors of the company. Madhur Bajaj was appointed as an additional director on 0 May 2007. twelve more directors, viz. D s Mehta, Kantikumar R Podar, shekhar

shares held by non-executive Directors the non-executive directors as on 3 March 2008, who held shares in the company are: name of director

number of shares held as on 3 April 2008 ,264,238 794,440 00

Bajaj, D J Balaji Rao, J n Godrej, s H Khan, Pamnani, Manish Kejriwal, P Murari and with effect from 30 January 2008.

Ms suman Kirloskar, naresh chandra, nanoo niraj Bajaj were inducted as additional directors

shekhar Bajaj niraj Bajaj Manish Kejriwal D s Mehta

8,490

According to the statutes, first directors of the company viz. Rahul Bajaj, Rajiv Bajaj and sanjiv Bajaj shall retire at the first annual general meeting and being eligible have offered their candidature for re-appointment. the term of

Management

Management discussion and analysis this is given as a separate chapter in the annual report.

thirteen additional directors is expiring on the date of first annual general meeting. the company amount from the member of the company for the office of directors. has received a notice along with requisite deposit proposing all the thirteen directors as candidates

Disclosure of material transactions
Under clause 49, senior management is required to make periodical disclosures to the board relating to all material financial and commercial transactions where they had (or were deemed to have had) personal interest that might have

communication to shareholders
As the company was not listed on Bse and nse until 3 March 2008, it was not required to publish

been in potential conflict with the interest of the the year.

company. this provision was adhered to during

its financial statements for the period under review. However, the shareholders of the company were communicated the information on demerger process through leading newspapers such as and through other communications from time to time. the company has its own web-site,

Warning against insider trading comprehensive guidelines in accordance with A code of conduct and corporate disclosure the seBI regulations in this regard are in place.

times of India and sakal on 7 september 2007

www.bajajauto.com which contains all important

33

public domain information, including presentations made to the media, analysts and institutional on matters concerning the shareholders and details of the corporate contact persons. investors. the web-site also contains information

shareholders’ and investors’ grievance committee the board of directors of Bajaj Auto constituted its shareholders’ and investors’ grievance committee in its meeting held on 30 January 2008. this look into the shareholders’ and investors’ committee has been constituted to specifically complaints on matters relating to transfer of of dividend etc. In addition, the committee investor services and relations.

Information on general body meetings
As the company was incorporated on 30 April 2007, the first annual general meeting of the company is scheduled to be held the company. on 0 July 2008 at the registered office of

shares, non-receipt of annual report, non-receipt also looks into matters that can facilitate better the committee consisted of the following 3 March 2008: . 2. 3. 4.

so far, the company has not adopted postal

non-executive independent directors as on D J Balaji Rao, chairman J n Godrej naresh chandra s H Khan

ballot for passing any resolution at the general for doing so.

meetings, because there has been no occasion

Material disclosure of related party transactions
Material transactions entered into with related parties have been already disclosed in this conflict with the interests of the company. chapter. none of these have had any potential

During the year under review, the company

had not held any shareholders’ and investors’

grievance committee meeting, as the company a wholly owned subsidiary of Bajaj Holdings &

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

was not listed up to 3 March 2008 and was only Investment Limited until that date. the committee would meet normally once in a year to review the status of the investors’ services rendered. All physical transfers of shares as well as

requests for dematerialisation / rematerialisation shall be processed in weekly cycles. Bajaj Auto has not appointed any registrar or share transfer

34

agent and the work regarding dematerialisation / rematerialisation is handled in-house through connectivities with the national securities Depository Limited and central Depository

Report on corporate governance this chapter, read together with the information and Analysis and Additional shareholder corporate governance during 2007-08. given in the chapters on Management Discussion Information, constitute the compliance report on

services (India) Limited. the company being an unlisted company until 3 March 2008, no under review. query / complaint was received during the year

More details have been furnished in the chapter on Additional shareholder Information.

Auditors’ certificate on corporate governance the company has obtained the certificate from its statutory auditors regarding compliance with the provisions relating to corporate governance laid down in clause 49 of the listing agreement. this be sent to the stock exchanges along with the annual return to be filed by the company.

ceo / cFo certification the ceo and cFo have certified to the board matters as required by clause 49 of the listing agreement. the certificate is contained in this annual report. with regard to the financial statements and other

report is annexed to the directors’ report, and will

35

Additional shareholder Information
Annual general meeting
Date time : 0 July 2008 : .30 a.m. Bajaj Auto Limited complex, Mumbai-Pune Road, Akurdi, Pune 4 035 (200 per cent) for the financial year 2007-08, subject to approval by the shareholders at the annual general meeting. As the company was incorporated on 30 April, 2007, there was no dividend paid in the previous year. Venue : Registered office at

Dates of book closure the register of members and share transfer books of the company will remain closed from both days inclusive.

Financial calendar
Audited annual results for year ending 3 March Mailing of annual reports Unaudited first quarter Annual general meeting June July May

tuesday,  July 2008 to thursday, 0 July 2008,

Date of dividend payment the payment of dividend, upon declaration by the shareholders at the forthcoming annual general meeting, will be made on or after 4 July 2008 : a) to all those beneficial owners holding shares made available to the company by national securities Depository Limited (nsDL) and the central Depository services (India) Monday, 30 June 2008; and

financial results financial results

Unaudited second quarter Unaudited third quarter financial results

July october January

in electronic form, as per the ownership data

Dividend the board of directors of Bajaj Auto has proposed a dividend of Rs.20 per equity share

Limited (cDsL) as of the end-of-the-day on

36

b)

to all those shareholders holding shares in physical form, after giving effect to all the valid share transfers lodged with the Monday, 30 June 2008.

Registrar and share transfer agent the company has no external registrar or share transfer agent. All work relating to share certificates, dematerialisation and physical transfer, transmission, splitting of rematerialisation processing, payment of office of the company.

company on or before the closing hours on

Payment of dividend
Dividend will be paid by account payee / non-negotiable instruments or through the electronic clearing service (ecs), as notified by the significant advantages and the convenience, the

dividend, etc. is done in-house at the registered

seBI through the stock exchanges. In view of the

company will pay dividend through ecs in all major cities to cover maximum number of shareholders, as per applicable guidelines. shareholders are

share transfer system share transfers received by the company would be registered within 5 days from the date of receipt, provided the documents are complete in from the year 2008-09 as the equity shares of the company are getting listed shortly.

advised to refer to the notice of the annual general meeting for details of action required to be taken by them in this regard. For additional details or the registered office of the company.

all respects. the process will become applicable

clarifications, shareholders are welcome to contact

Dematerialisation of shares
During 2007-08, no shares were dematerialized. Distribution of shares as on 3 March 2008 in table . and 3 April 2008 (date of allotment) is given

Unclaimed dividends incorporated on 30 April 2007. not applicable since the company was

table : shares held in physical and electronic mode 3 March 2008 Position as on Position as on no. of 3 April 2008 % to total

no. of Physical Demat: nsDL cDsL Total

shares

% to total

43,500,000 — — 43,500,000 —

shareholding

100.00 — — 100.00 —

shares

59,759,914

shareholding

41.31

83,33,322 84,923,596 ,60,274

57.58 58.69 .

sub total

144,683,510

100.00

37

Allotment of shares
In terms of scheme of arrangement of demerger approved by the Hon’ble High court of Judicature at Bombay vide its order dated 0,83,50 equity shares of Rs.0 each to 8 December 2007, BAL allotted on 3 April 2008 every shareholder of Bajaj Holdings & Investment Limited (BHIL) in the proportion of  equity share of Rs.0 as fully paid up for every  equity share of Rs.0 each held in BHIL on 25 March 2008, the record date fixed by BHIL.

Listing on stock exchanges
As on 3 March 2008 the shares of BAL were not listed on any stock exchanges. However, the following stock exchanges : name . Bombay stock exchange Ltd, Mumbai

company is shortly getting its shares listed on the Address st Floor, Phiroze Dalal street,

Jeejeebhoy towers Mumbai 400 00 Bandra-Kurla

(Bse)

Global depository receipts (GDRs)
BAL issued and allotted Global Depository Receipts (GDRs) on 3 April 2008 to the shareholders of BHIL (formerly BAL) pursuant to the scheme of demerger sanctioned by the vide its order dated 8 December 2007 and Hon’ble High court of Judicature at Bombay

2. national stock exchange of India Ltd. (nse)

exchange Plaza complex, Bandra (e)

Mumbai 400 05

the company will take necessary steps with

London stock exchange for the listing of GDRs issued and allotted to the shareholders of BHIL (formerly BAL) pursuant to the scheme of

the underlying shares against each GDR were

Demerger sanctioned by the Hon’ble High court of Judicature at Bombay vide its order dated 8 December 2007.

issued in the name of the overseas depository-the Bankers trust company (whose name changed 5 April 2002). to Deutsche Bank trust company Americas from

Market price data nIL, since the company was an unlisted company during the year under review.

GDRs are expected to get listed on the London stock exchange in due course of time.

stock code
. Bombay stock exchange Ltd. 532977 2. national stock exchange of India Ltd. 3. Reuters 5. IsIn 4. Bloomberg BAJAJ-AUto BAJA.Bo

Distribution of shareholdings table 2 gives details about the pattern of shareholdings among various categories as on

3 March 2008 and 3 April 2008, while table 3A and 3B gives the data according to size classes as on 3 March 2008 and 3 April 2008.

BJAUt.In

Ine97I000

38

39

table 2: Distribution of shareholdings across categories categories 3 March 2008 No. of shares % to total capital No. of shares 3 April 2008 % to total capital

Promoters Friends and associates of promoters GDRs Foreign Institutional Investors Public Financial Institutions Mutual Funds nationalised & other banks nRIs & ocBs others Total

43,500,000 — — — — — — — — 43,500,000

00.00 — — — — — — — — 100.00

144,683,510

72,747,805 6,454,36 ,805,07 20,266,586 8,707,469 ,23,75 25,704 63,745 22,73,89

100.00

50.28 .37 .25 4.0 6.02 0.78 0.7 0.42 5.70

table 3A: Distribution of shareholding according to size class as on 3 March 2008 no of shares  to 00 0 to 200 20 to 500 50 to 000 00 to 5000 500 to 0000 000 to 00000 0000 AnD ABoVe Total no of shareholders Number 6 — — — — —  — 7 % 85.7 — — — — — 4.29 — 100.00 shares held in each class Number 600 — — — — — 43,499,400 — 43,500,000 % — — — — — — 00.00 — 100.00

table 3B: Distribution of shareholding according to size class as on 3 April 2008 no of shares  to 00 0 to 200 20 to 500 50 to 000 00 to 5000 500 to 0000 000 to 00000 0000 AnD ABoVe Total no of shareholders Number 64,084 3,779 3,87 ,5 ,993 436 4,70 44 75,604 % 84.76 5.00 4.22 2.00 2.64 0.58 0.62 0.9 100.00 shares held in each class Number ,278,620 587,93 ,067,092 ,05,792 4,508,642 3,034,320 4,474,822 8,627,029 144,683,510 % 0.88 0.4 0.74 0.76 3.2 2.0 0.00 8.99 100.00

40

shareholders’ and investors’ grievances
During the year under review, the board of directors of BAL constituted a shareholders’ / investors’ grievance committee consisting to specifically look into the shareholders’/ of three non-executive independent directors investors’ complaints on various matters. since the company was an unlisted company upto being any pending issues to be addressed or resolved. 3 March 2008, there was no question of there

Plant locations
Bajaj Auto has plants located at the following places: . 2. 3. 4.

Mumbai-Pune Road, Akurdi, Pune 4 035 (Maharashtra) (Maharashtra) Bajaj nagar, Waluj, Aurangabad 43 36 MIDc, Plot no A, Mahalunge Village, Plot no.2, sector 0, IIe Pantnagar, Udhamsinghnagar, (Uttarakhand)

chakan 40 50 Dist. Pune (Maharashtra)

nomination
Individual shareholders holding shares singly or jointly in physical form can nominate a person in whose name the shares shall be

Address for correspondence
Investors and shareholders can correspond following address: with the registered office of the company at the Bajaj Auto Limited

transferable in the case of death of the registered shareholder(s). the prescribed nomination form will be sent by the company upon such request. nomination facility for shares held in electronic

Bajaj Auto Limited complex tel

Mumbai-Pune Road, Akurdi, Pune 4 035. Fax : (020) 27407380

form is also available with depository participant to nsDL and cDsL.

: (020) 2747285(extn 6063), 27406063 : investors@bajajauto.co.in

as per the bye-laws and business rules applicable

e-mail

Web-site : www.bajajauto.com

4

Directors’ Report
Introduction
the company was incorporated on 30 April 2007 as a wholly owned subsidiary of erstwhile Bajaj Auto Limited and received the certificate of commencement of Business on 7 May 2007. of the erstwhile Bajaj Auto Ltd. and will focus on auto business. consequently, the name of the company has changed from Bajaj Holdings a fresh certificate of incorporation in the new & Investment Limited to Bajaj Auto Limited and name of the company has been issued by the 5 March 2008. the directors present their first annual report and the audited statements of accounts for the year ended 3 March 2008. Registrar of companies, Maharashtra, Pune on

Demerger
During the year under review, the Hon’ble High court of Judicature at Bombay approved the scheme of arrangement of demerger of the dated 8 December 2007. Accordingly, the erstwhile Bajaj Auto Ltd. (BAL) vide its order manufacturing undertaking of the erstwhile

operations & Financials the operations and financial results of the company are elaborated in the annexed the highlights are as under:sales Motorcycles other two-wheelers Total Two wheelers three wheelers of the above, exports were two wheelers three wheelers Total Exports 482,026 36,35 618,341 30,766 40,645 442,411

Management Discussion and Analysis Report.

2007-08 (nos) 2,39,779 2,36 2,161,095 290,32

2006-07* (nos) 2,379,499 20,497 2,399,996 32,828 2,721,824

BAL has been vested with the company and

the strategic business undertaking consisting of wind farm business and financial services business of the erstwhile BAL has been vested

with Bajaj Finserv Limited. the appointed date of this demerger was closing hours of business on 3 March 2007.

Total Two & Three wheelers 2,451,407

Pursuant to the demerger, the company has

been vested with the manufacturing undertaking

* Figures pertain to the erstwhile Bajaj Auto Ltd.

42

since the company was incorporated only

on 30 April 2007, and this year being the first of the company.

financial year, there are no previous year’s figures
2007-08 Rs. Million net sales & other income Gross profit before VRs compensation, interest & depreciation VRs compensation Interest Depreciation Profit before taxation Provision for taxation Profit after tax Disposable surplus Proposed dividend (inclusive of dividend tax) Earnings per share (Rs.) 9,688 4,62 ,023 52 ,740 11,347 3,788 7,559 7,558 3,385 54.2

units of its production in less than six months,

starting with Platina and completing 00,000

the plant also commenced production of XcDand supply chain has been enhanced upto 720,000 per annum.

25 from December 2007. capacity of the plant

In its first year of operations, the plant produced over 275,000 vehicles of both Platina and XcD-25 and has planned a production of

600,000 vehicles in 2008-09. the achievement of such volumes in the very first year reflects the project planning and execution stage to during plant start up. capability building of the meticulous care that has been taken during preclude the problems that are generally faced the manufacturing team, ability to carry out

continuous improvements, ability to bring out new models, tPM way of thinking and the culture of the main strengths of this plant. ‘pursuit of excellence’ at all levels of the plant are

Dividend the directors recommend for consideration of meeting, payment of a dividend of Rs.20/the shareholders at the ensuing annual general per share (200 per cent) for the year ended tax thereon aggregates to Rs.3,385 million.

‘Lite’ cargo vehicle code named “PV500” is progressing satisfactorily. this model is

Chakan 4-wheeler plant, development of

3 March 2008. the amount of dividend and the

scheduled for launch in 2009. company is also in a joint feasibility study with Renault and nissan of the feasibility study, further details will be crystalised. for its ‘Lite’ passenger car project. on conclusion

Dividend paid by the erstwhile BAL for the year ended 3 March 2007 was Rs.40 per share (400 per cent). the amount of dividend and the tax thereon aggregated to Rs.4,735 million. on account of the demerger, which has taken place for the two years are not comparable.

company has taken possession of a green-field Industrial Area for its future projects.

site admeasuring 246.8 acres in chakan MIDc

during the year under review, the dividend figures

new Plants / Projects
Pantnagar plant, built on the unique concept of mother plant and its vendors in the same premises, was inaugurated on 9 April 2007.

Research & development and technology absorption the developments in this area are set out in greater detail in the annexed Management Discussion and Analysis Report.

43

company continued to invest substantially in as for advanced design and analysis.

R&D facilities for testing and prototyping, as well

by eliminating high power consuming

machines / equipments, optimisation of

central air conditioning plant, providing for

R&D was primarily involved with the work on the next wave of products to be launched in the year 2008-09. two important products

automatic switch off for pump house motors, and use of cFL lamps in installation of natural draft air exhaust ventilators. •

illumination systems, transparent roof sheets

which demonstrated the technical prowess of the company were launched during this year. these were the XcD 25 cc Dts-si and the three-wheeler Direct Injected auto rickshaw. company continues to build its research and

Water saving was achieved by installation and reducing the water line size, drip of PLc controlled auto system, re-routing

irrigation system for gardening, usage of treated water for bin washing and paint shop process, rain water harvesting and replacement. •

development infrastructure in all the areas of long term investments and are aimed to give interest in creating the product.

design, prototyping and validation. these are flexibility, speed and insight into every field of

increase in frequency of de-sludge pit water

LPG saving was achieved by optimisation furnaces, revamping of canteen bio-gas

the expenditure on research and development during 2007-08 and in the previous year was:
2007-08
Rs. In Million

of loading pattern in cGc and seal quench

plant, temperature control of burners in paint and heat treatment shops and stopping use of vaporisers in heat treatment shop.

2006-07 *

Rs. In Million

i. capital (including technical know-how) ii. Recurring iii. total research and development expenditure as a percentage of sales, net of excise duty

48.4 706.0 ,87.4 .37

473.4 676.9 ,50.3 .24

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 of electrical energy and water by 23% and 6% respectively, as compared to 20% and 26% respectively in the previous year.

* Figures pertain to the erstwhile Bajaj Auto Ltd.

conservation of energy
As a part of continuing efforts to conserve conserve energy : • various resources, following steps were taken to electrical energy saving was achieved

Investment / savings
Investment for energy conservation activities saving achieved through Rs.0.45 million

by installation of energy efficient motors, modifying the production processes

above activities

Rs.20.0 million

44

Foreign exchange earning & outgo the company continued to be a net foreign exchange earner during the year.

Relations with staff and workmen across the remained cordial.

plants at Akurdi, Waluj, chakan and Pantnagar

Government of Maharashtra declared

total foreign exchange earned by the Rs. 20,778 million, compared to

5 Gunwant Kamgars for the year 2007. out of from Akurdi and 0 from Waluj Plant.

company during the year under review was Rs.7,298 million during the previous year.

these, Bajaj Auto received 4 awards; 4 workers

two employees from Waluj Plant have received awards this year.

total foreign exchange outflow during the year under review was Rs 3,569 million, as against Rs. 5,647 million during the previous year.

the prestigious shram Bhushan and shram Veer

Industrial relations
Bharatiya Kamgar sena, the recognised union at Waluj, Aurangabad, was de-recognised by thereafter signed the wage settlement on Industrial court on 24 April 2007. Management 23 July 2007 with Bajaj Auto Limited employees Union, the union having the majority following, in conciliation and accordingly, the benefits of employees at Waluj.

subsidiaries
PT. Bajaj Auto Indonesia (PTBAI), was incorporated as a subsidiary company in

Indonesia with an issued, subscribed & paid up capital of Us$ 2.5 million (Rs.562 million) in 2006-07. Bajaj Auto holds 97.5% shares in this company, with balance being held by a

local partner. semi-knocked down components are currently sent from India for assembly of motorcycles in Indonesia.

the settlement have been given to all daily rated

During the year under review, sales and service

subsequently, with a view to downsizing the was floated for the permanent daily rated under the scheme.

network reach has been expanded substantially and sulawesi islands. total showroom strength of Indonesia.

workforce at Waluj, Voluntary Retirement scheme workmen. 72 workmen availed of the benefit

covering the major cities of Jawa, sumatara, Bali stands at around 50 numbers, covering 30 cities

the management discontinued its vehicle

PtBAI assembles and markets Bajaj Pulsar in Indonesia, establishing Bajaj as a high quality tech-savvy brand. the company plans to expand its presence, product range and reach towards becoming a strong player in 2-wheeler majors.

assembly facilities at its Akurdi plant with effect from 3 september 2007 due to the higher cost workmen became surplus. negotiations are of manufacturing; as a result of which over 2000 on with the newly recognised union viz Vishwa

this market currently dominated by Japanese

Kalyan Kamgar sanghatana to find a fair solution.

45

Bajaj Auto International Holdings BV,

Netherlands (BAIHBV), was incorporated as a with an issued, subscribed & Paid up capital of euros 200,000 during the year under review.

corporate social responsibility code of conduct for affirmative action the company continues to place emphasis on inclusive growth and has put in place certain processes for delivering the intended social has adopted a voluntary code of conduct

wholly owned subsidiary company in netherlands

Further capital of euro 98.2 million was invested in this company during the year, by way of premium, taking the total investment to euro 98.4 million

(Rs.5,692 million). It is proposed to make strategic shares and / or loans and to undertake related activities through this company.

outcome in measurable terms. the company for affirmative action, which is effective from

investments in overseas ventures, by way of equity

 December 2006 and has placed the same on its competitiveness is interlinked with the well

its website. the company believes strongly that being of all sections of Indian society and that

other highlights of the year 2007-08 are as under :

equal opportunity for all sections of the society is a component of its growth and competitiveness. the company will constantly endeavour to ensure that no discrimination of any type is shown to the socially disadvantaged sections of the society in the work place. 6% of the fresh employees added during the year belonged to the weaker sections (sc / st) of the society under the 6% for the period prior to the drive.

BAIHBV invested euro 98.4 million

(Rs.568 million) to acquire 24.45% of

outstanding equity capital of KtM Power sports AG, Austria – the second largest european Motorcycle Manufacturer.

KtM is a strong high-end motorcycle brand, well known in developed country markets of europe, Us and Japan. synergies in technology, product development, market reach, combined with non-overlapping brand positions between Bajaj and KtM, make for a win-win long term cooperation between the two companies. Joint product development programs are

affirmative action drive, and was well above the

centre for AIDs patients
Under the Government of India, Ministry of Health and Family Welfare, national Aids control organisation (nAco) at the initiative of cII has come forward for Public Private Partnership (PPP) in order to provide better health care to

progressing satisfactorily. select Metros in India will see launch of KtM bikes in the current fiscal year.

Aids patients. the company has signed an MoU center (ARt centre) with the co-operation of Yeswantrao chavan Municipal Hospital,

with nAco to set up an Anti Retroviral treatment

Rajiv Bajaj, managing director of the company joined the supervisory Board of KtM Power sports AG on 30 november 2007.

Pimpri, for the benefit of the affected people

in the surrounding areas. this will be the first

46

such centre in Pimpri chinchwad Municipal

corporation area. the company will fully equip paramedical staff at a capital expenditure of

watershed development, sanitation, health empowerment etc.

this centre and provide necessary medical and around ßRs.35 lakhs and an annual outgo of

care, dairy development, education, women

Rs.5 lakhs. this initiative will bring solace to

the 3,000 affected poor families in PcMc area, besides containing the spread of this dreaded disease and helping humanity.

Groups (sHG) and organised training programmes for sHGs. out of 28 Gram Panchayats in JBGVs area, 4 have lady sarpanch, one of whom has been felicitated as the Best Lady tribal sarpanch

JBGVs continued supporting 04 self Help

other major initiatives
2 sc-st students were offered the course fee of Rs.35,000 per head to train them for IIt Joint

by Zilla Parishad, Pune.

Five of the villages, where JBGVs had worked award. JBGVs has withdrawn from these villages as they attained 80% development as per its guidance when necessary. laid down indicators. It continues to give them in the past, received “Nirmal Gram Abhiyan”

entrance examination – Jee and financial aid will be extended to cover their full course duration of 4 years on their securing admission to IIt. For employees who opted for voluntary

retirement, the company took a number of steps to develop and implement a new initiative, viz. Guidance and Future Planning Program. the

samaj seva Kendra (ssK) as part of JBGVs provides facilities for social development of the residents of Akurdi, nigdi and adjoining

Program was a resounding success, which was

townships, with the aim of improving their quality of life, through skill development training, hobby centre, nursery education, health care, sports, music, dance, cultural programmes etc.

reflected in the company receiving the “Best HR Initiative of the year” award from Auto Monitor declared on 7 March 2008.

Rural and community development activities and empowerment of women the company continued its rural development activities in Pune and Aurangabad districts of Maharashtra through Jankidevi Bajaj Gram Vikas sanstha (JBGVs). JBGVs aims at integrated development of 44 selected villages, to be carried out by the villagers under their own leadership and through unified efforts forged by local

the Rotary club of enshede netherlands and JBGVs donated one cow each to 64 poor earning Rs.2200 per family per month, to supplement their family income.

the Rotary club of Poona north together through farmers. these 64 families are now additionally

Directors the board of directors appointed Madhur Bajaj, D J Balaji Rao, J n Godrej, s H Khan, D s Mehta, Kantikumar R Podar, shekhar Bajaj, Ms suman Kirloskar, naresh chandra,

organisations with JBGVs acting as a catalyst. During the year, JBGVs conducted a number of development programmes including

nanoo Pamnani, Manish Kejriwal, P Murari and

under review. All these directors hold office till the

niraj Bajaj as additional directors during the period

date of ensuing annual general meeting and are to

47

be appointed directors in that meeting. With this,

the total number of directors has become sixteen. During the period under review, Rahul Bajaj •

company and for preventing and detecting fraud and other irregularities.

was appointed as executive chairman, Madhur

Bajaj was appointed as executive vice chairman, Rajiv Bajaj was appointed as managing director and sanjiv Bajaj was appointed as executive effective date of the scheme of arrangement of demerger. director with effect from 20 February 2008, the

prepared on a going concern basis.

that the annual accounts have been

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 and as prepared in compliance with the prescribed by seBI.

Rahul Bajaj, Rajiv Bajaj and sanjiv Bajaj, first

directors of the company retire from the board at the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

Bajaj Auto International Holdings BV, netherlands accounting standards and listing agreement as

Directors’ responsibility statement
As required by sub-section (2AA) of section 27 of the companies Act, 956, directors state : •

Information in aggregate for each subsidiary company is disclosed in one page of the consolidated balance sheet.

the applicable accounting standards have relating to material departures.

that in the preparation of annual accounts,

statutory disclosures the company has received an exemption from the central government under section 22 (8) of

been followed along with proper explanation

the companies Act, 956 with regard to attaching of the balance sheet, profit and loss account and other documents of its subsidiary companies, viz. Pt Bajaj Auto Indonesia and Bajaj Auto

•

accounting policies and applied them

that the directors have selected such

consistently and made judgements and so as to give a true and fair view of the

estimates that are reasonable and prudent, state of affairs of the company at the end company for that period. •

International Holdings BV, netherlands for the

year 2007-08. the summary of the key financials of the company’s subsidiaries is included in this annual report.

of the financial year and of the profit of the

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

sufficient care for the maintenance of

that the directors have taken proper and

adequate accounting records in accordance with the provisions of the companies Act, 956 for safeguarding the assets of the

by any member of the company at its registered

48

office and also at the registered office of the concerned subsidiary company.

contained in this annual report.

chief executive officer (ceo) of the company is

As required under the provisions of sub-section read with the companies (Particulars of

(2A) of section 27 of the companies Act, 956 employees) Rules 975 as amended, particulars of the employees are set out in the Annexure to the Directors Report. As per provisions of section 29 ()(b)(iv) of the said Act, these particulars will be made available to any shareholder on request.

the ceo and chief Financial officer (cFo) have certified to the board with regard to the financial statements and other matters as specified in certificate is contained in this annual report. clause 49 of the listing agreement and the said

Auditors’ report the observations made in the Auditors’ Report, read together with the relevant notes thereon are selfunder section 27 of the companies Act, 956. explanatory and hence, do not call for any comments

Particulars regarding technology absorption, earning and outgo required under section

conservation of energy and foreign exchange 27()(e) of the companies Act, 956 and

Auditors the members are requested to note that Messrs Dalal & shah, chartered Accountants, are the first auditors of the company and hold office until the conclusion of first annual general meeting.

companies (Disclosure of Particulars in the report of board of directors) Rules, 988 have been given in preceding paragraphs.

Directors’ Responsibility statement as required appears in a preceding paragraph.

by section 27(2AA) of the companies Act, 956

the members are requested to appoint auditors annual general meeting till the conclusion of remuneration.

for the period from the conclusion of the ensuing the next annual general meeting and to fix their

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

corporate governance
Pursuant to clause 49 of the listing agreement ‘corporate Governance’ has been included in this annual report, along with the reports on Management Discussion and Analysis and Additional shareholder Information. with stock exchanges, a separate section titled

Your company has applied for government

order to conduct the audit of cost accounts,

maintained by the company for the year ended Pune has been appointed as cost auditor to conduct the said audit, and the government approval in this regard is awaited.

3 March 2008. Mr. A P Raman, cost accountant,

on behalf of the board of directors

All board members and senior management personnel have affirmed compliance with A declaration to this effect signed by the the code of conduct for the year 2007-08. Rahul Bajaj chairman

22 May 2008

49

Annexure  certificate by the Auditors on corporate Governance to the members of

Bajaj Auto Limited
We have reviewed the records concerning the company’s compliance of the conditions of corporate exchanges of India for the financial year ended on March 3, 2008. Governance as stipulated in clause 49 of the Listing Agreement entered into by the company with the stock

the compliance of conditions of corporate governance is the responsibility of the management. our review of the conditions of the corporate Governance. It is neither an audit nor an expression of an opinion on the

was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance 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 a review, and to the best of our information and according to the explanations given to Governance as stipulated in clause 49 of the Listing Agreement of the stock exchanges of India.

us, in our opinion, the company has complied, to the extent applicable, with the conditions of corporate

We further state that such compliance is neither an assurance as to the future viability of the company nor to the efficiency with which the management has conducted the affairs of the company. For and on behalf of Dalal & Shah chartered Accountants

Anish Amin Partner

Membership no. 4045 Mumbai: 22 May 2008

50

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 3 March 2008 compliance with the code of conduct of the company laid down for them. Rajiv Bajaj Managing Director Mumbai : 22 May 2008

Annexure 3 certificate by chief executive officer (ceo) and chief Financial officer (cFo)
We, Rajiv Bajaj, Managing Director and Kevin D’sa, Vice President (Finance) of Bajaj Auto Limited, certify : . that we have reviewed the financial statements for the year ended 3 March 2008 and that to the best of our knowledge and belief; • • 2. 3. these statements do not contain any materially untrue statement nor omit any material fact nor contain statements that might be misleading, and 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.

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; 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. that we have informed the auditors and the audit committee of: i. ii. iii. significant changes in internal control during the year; significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and 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. Kevin D’sa Vice President (Finance)

4.

Rajiv Bajaj Managing Director Mumbai : 22 May 2008

5

Report of the Auditors to the Members
We have audited the attached Balance sheet of BAJAJ AUto LIMIteD, as at 3st March 2008 and also the annexed Profit and Loss Account 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. () 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 and disclosures 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, 956, we annexe hereto a statement on the matters specified in paragraphs 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 and Profit and Loss Account dealt with by the report are in MUMBAI: 22 May 2008. agreement with the Books of Account of the company; (d) In our opinion, the Balance sheet and the Profit and Loss Account dealt with by this report comply with the Accounting standards referred to in section 2 (3c) of the companies Act, 956, to the extent applicable. (e) on the basis of the written representations received from the Directors as at 3st March, 2008, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 3st. March, 2008 from being appointed as a director in terms of clause (g) of sub-section () of section 274 of the companies Act, 956. (f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial statements, read together with the notes thereon, give the information required by the companies Act, 956, 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 3st March, 2008,

(ii) In the case of the Profit and Loss Account, of the Profit for the year ended on that date. For and on behalf of DALAL & SHAH chartered Accountants

Anish Amin Partner Membership no: 4045

52

Annexure to the Auditors’ Report
Statement referred to in Paragraph 2 of the Auditors’ Report of even date to the Members of BAJAJ AUTO LIMITED on the Accounts 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, in terms of information and explanations given to us on our enquiries and in consideration of the scheme of arrangement detailed in note no. in schedule “4” to the financial statements, we state that: i) (a) the company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) As explained to us, considering the nature of the Fixed Assets and to ensure minimum disruptions in production schedules, the fixed assets have been physically verified by the management at reasonable intervals during the year in accordance with the verification policy adopted by the erstwhile Bajaj Auto Ltd prior to the demerger, whereby all the assets are verified, in a phased manner, once in a block of three years. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material and the same have been properly dealt with in the Books of Account. (c) As per the information and explanations given to us on our enquiries the disposal of assets during the year were not substantial and would not have an impact on the operations of the company. ii) (a) the inventories have been physically verified by the management at reasonable intervals during the year and partially at the close of the year; (b) the procedures of physical verification of inventories followed by the management as explained to us are, in our opinion, reasonable and adequate in relation to the size of the company and the nature of its business; (c) According to the records produced to us for our verification, which in our opinion were adequately maintained, the discrepancies noticed on physical verification of inventories referred to above, as compared to book records, though not material, have been properly dealt with in the books of account; iii) (a) As per the information and explanations given to us and the records produced to us for our verification, the company has not granted loans, secured or unsecured, to any company, Firms or other parties covered in the register maintained under section 30 of the companies Act, 956. (b) the company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 30 of the companies Act, 956.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to the purchase of inventory and fixed assets

53

Annexure to the Auditors’ Report and for the sale of goods and services, if any. As per the information given to us, no major weaknesses in the internal controls have been identified by the management or the internal audit department of the company during the year. During the course of our audit, nothing had come to our notice that may suggest a major weakness in the internal control systems of the company; v) (a) on the basis of the audit procedures performed by us and according to the information and explanations given to us and on our enquiries on this behalf and the records produced to us for our verification, the particulars of contracts and arrangements required to be entered into the register in pursuance of section 30 of the companies Act, 956 have been so entered. (b) the transactions effected in pursuance of such contracts and arrangements, as the case may be, 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 explanations given to us, made at prices which are reasonable having regard to prevailing market prices as available with the company for such transactions or prices at which transactions, if any, for similar goods have been made with other parties at the relevant time; vi) In our opinion, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A of the companies Act,956, other relevant provisions of the said Act including the companies (Acceptance of Deposits) Rules, 975, where applicable, with regard to the deposits accepted by it from the public. since the company has not defaulted in repayments of deposits, compliance of section 58AA or obtaining any order from the company Law Board, national company Law tribunal or Reserve Bank of India or any other court or tribunal, does not arise; vii) on the basis of the internal audit reports 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; viii) We have broadly reviewed the Books of Account maintained by the company pursuant to the rules made by the central Government for the maintenance of cost Records under section 209()(d) of the companies Act,956, and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate; ix) (a) According to the records of the company, the company has been regular in depositing undisputed statutory dues including Provident Fund, Investor education and Protection Fund, employees state Insurance, Income tax, sales tax, Wealth tax, service tax, customs Duty, excise duty, cess and other statutory dues with the appropriate authorities; (b) According to the records of the company and the information and explanations given to us & upon our enquiries in this regards, disputed dues in respect of sales tax, Income-tax, Wealth-tax, service tax, customs Duty,

54

Annexure to the Auditors’ Report excise Duty and cess unpaid as at the last day of the financial year, are as follows
FoRUM BeFoRe WHoM PenDInG statutes commissioner tribunal Appeals
Rs. In million

xiii) the terms and conditions at which guarantees have been given by the company for loans taken from financial institutions and/or banks by others, are, in our opinion, not prejudicial to the interest of the company; xiv) the company has raised working capital funds, which are used for the purpose as and when needed. Internal generations have been mainly deployed in investments and partially ploughed back into the business. xv) As per the information and explanations given to us and on our enquiries on this behalf there were no frauds on or by the company which have been noticed or reported during the year, In view of the nature of business 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 prerequisite to the reporting requirement of clauses (iii) (b), (c), (d), (f) and (g), (x), (xvi), (xviii), (xix) and (xx) the said clauses are, at present, not applicable. For and on behalf of DALAL & SHAH chartered Accountants Anish Amin Partner Membership no: 4045

High court 63.00 — — — 38.45 2.53 —

supreme court — — — — — .25 6.9

total

Rs. In million Rs. In million Rs. In million Rs. In million

sales tax Income tax Wealth tax service tax customs Duty excise octroi

335.33 — — 0.94 — 7.52 6.95

0.75 — — — 2.40 30.83 —

399.07 — — 0.94 40.85 42.3 23.4

x)

the company has not defaulted in repayment of dues to banks. the company has not borrowed any sums from Financial Institutions nor through debentures;

xi) the company has, not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other investments; xii) the company, in our opinion, has maintained proper records and contracts with respect to its investments wherein timely entries of transactions are made. Investments at the close of the year are in the process of being transferred in the name of the company as detailed in note no. 2 to schedule “4” to the financial statements.

MUMBAI: 22 May 2008.

55

Balance sheet as at 3 March, 2008 schedule I. Sources of Funds . shareholders’ Funds a) share capital b) Reserves & surplus 2. Loan Funds a) secured Loans b) Unsecured Loans 3. Deferred tax Adjustments [see note 7] a) Deferred tax Liabilities b) Deferred tax Assets Total Rs. In Million Rs. In Million

 2 3 4

,446.8 4,429. 69.5 3,273.9

5,875.9

3,343.4

,49.4 (,309.6)

II. Application of Funds . Fixed Assets a) Gross Block b) Less: Depreciation and write downs

29,329.

09.8

c) net Block d) capital Work in progress,expenditure to date

5

29,84.5 7,260.7

2,580.8 347.4

2,928.2 05.3 8,57.4

2. technical Know-how 3. Investments 4. current Assets, Loans and Advances a) Inventories b) sundry Debtors c) cash and Bank Balances d) other current Assets e) Loans and Advances Less: current Liabilities and Provisions a) Liabilities b) Provisions net current Assets

6 7 8

6,497. 9

3,496. 2,753. 560.7 799.5 8,887.7

0,432.5 8,340.4 8,772.9 (2,275.8) 29,329.

Total notes forming part of the Financial statements As per our attached report of even date For and on behalf of Dalal and shah chartered Accountants Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008 4 Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj chairman Vice chairman Managing Director executive Director

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

}

Directors

56

Profit and Loss Account for the financial year ended 3 March, 2008 schedule Income sales Less: excise Duty net sales other Income 0 Rs. In Million 96,899.5 0,266.6 Rs. In Million

86,632.9 5,055.5

Expenditure Materials other expenses Interest Depreciation and write downs Less: expenses, included in above items, capitalised compensation Paid Under Voluntary Retirement scheme Profit for the period before taxation taxation current tax [including Rs. 7.5 million for Wealth tax] Deferred tax [see note 7] Fringe Benefit tax Profit for the period Prior Period expenses transfer to General Reserve Proposed Dividend corporate Dividend tax thereon

9,688.4

 2 3

66,203.7 ,553.0 5.6 ,739.6 79,547.9 79,37.5 230.4

,023.6 80,34. ,347.3 3,927.5 (73.2) 33.5

3,787.8 7,559.5 .7 7,557.8 4,72.3 2,893.7 49.8

Balance carried to Balance sheet

notes forming part of the Financial statements Basic and diluted Earnings Per Share (Rs.) nominal value per share (Rs.) net Profit (Rs. In Million)

4

—

54.2 0.0 7,557.8 39.5

Weighted average number of shares (In Million) As per our attached report of even date For and on behalf of Dalal and shah chartered Accountants Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008 Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj chairman Vice chairman Managing Director executive Director

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

}

Directors

57

schedules no -4

annexed to and forming part of the Balance sheet as at and the Profit and Loss Account for the financial year ended 3st March, 2008 As at 3st March, 2008 Rs. In Million

schedule  - share capital

Authorised 50,000,000 equity shares of Rs. 0 each

Issued,Subscribed and Paid up *44,683,50 equity shares of Rs. 0 each Notes

,500.0 ,446.8

Total

,446.8

*of the above:-

. 43,500,000 equity shares of Rs. 0 each were issued, subscribed and allotted to erstwhile Bajaj Auto Ltd. and its nominees, now known as Bajaj Holdings & Investment Ltd. 2. 0,83,50 equity shares of Rs. 0 each are deemed to be issued, subscribed and fully paid up in terms of the scheme of arrangement, detailed in note no.  in schedule 4 to the Financial statements, becoming operative from 20th February 2008 (effective Date), since allotted on 3rd April 2008. ,805,07 equity shares thereof are deemed to be issued by way of euro equity Issue represented by Global Depository Receipts (GDR) evidencing Global Depository shares outstanding on the record date i.e. 25th March 2008 , in terms of scheme of arrangement.

schedule 2 - Reserves and surplus
Rs. In Million General Reserve As computed in terms of the scheme of arrangement, detailed in note no.  Less:Diminution in the value of Fixed Income securities, net of deferred tax, see note no. 3 ,60.4 903.6 0,256.8 4,72.3

As at 3st March, 2008 Rs. In Million

set aside this financial year Total

4,429. 4,429.

schedule 3 - secured Loans

As at 3st March, 2008 Rs. In Million

From Banks, against hypothecation of stores, Raw Materials Finished Goods, stock in Process and Book Debts cash credit

Total

69.5

69.5

58

schedule 4 - Unsecured Loans
Rs. In Million sales tax deferral Liability / Loan, an incentive under Package scheme of Incentives 983,988,993 and 998 - Interest free 3,480.6

As at 3st March, 2008 Rs. In Million

Less: deferral attached to the Wind Farm Business, assigned to and availed by the company, passed on to Bajaj Finserv Ltd. under an arrangement. see note no. 5 Fixed Deposits, unclaimed Total

207.2

3,273.4 3,273.9 0.5

schedule 5 - Fixed Assets
Gross Block (a) Particulars As at st April, 2007 (f) Rs. In Million Land Freehold Land Leasehold Buildings (b) & (d) Waterpumps, Reservoirs and Mains Plant & Machinery Dies & Jigs electric Installations Factory equipments Furniture & Fixtures electric Fittings Vehicles & Aircraft Wind energy Generators Leased Assets :Plant & Machinery Dies & Moulds total 99.7 564.3 3,42.8 7.0 6,777.2 3,457.2 6.6 ,638.5 357. 26.4 509.4 — — — 72.5 27,697.7 Additions Rs. In Million 22. — ,302.9 56.6 609.4 244.0 86.3 35.0 90.3 34.2 279. — — — — 3,265.9 Deductions and Adjustments Rs. In Million — 6.5 6.3 — 655.5 28.0 6.8 50. 35.6 22.3 5.5 — — — 4.5 ,22. As at 3st As at March, 2008 st April, 2007 (f) Rs. In Million 3.8 557.8 4,709.4 27.6 6,73. 3,573.2 636. ,839.4 4.8 38.3 737.0 — — — 68.0 29,84.5 Rs. In Million — — 857.3 35.4 ,75.2 2,409. 266. 766. 74.7 72.5 35.0 — — — 72.5 6,503.9 Depreciation Deductions and Adjustments Rs. In Million — — 5.3 — 59.0 09.6 56.3 35.2 30.0 20.9 30.0 — — — 4.5 982.8 For the Year (c) & (e) Rs. In Million — — 04.4 5.4 ,076.9 309.0 25. 54.8 2.8 4.8 37.4 — — — — ,739.6 As at 3st March, 2008 Rs. In Million — — 956.4 40.8 2,20. 2,608.5 234.9 785.7 66.5 56.4 42.4 — — — 68.0 7,260.7 net Block As at 3st March, 2008 Rs. In Million 3.8 557.8 3,753.0 86.8 4,530.0 964.7 40.2 ,053.7 245.3 8.9 594.6 — — — — 2,580.8

(a) At cost, except leasehold land which is at cost,less amounts written off. (b) Includes Premises on ownership basis in co-operative society Rs. 58.4 million and cost of shares therein Rs. ,750/(c) Refer Para 3(A) & (B) of Statement on Significant Accounting Policies annexed to the Accounts. (d) Includes premises purchased during the year, pending registration amounting to Rs.83.7 million. (e) Depreciation for the year includes assets written down to the realiasable value by Rs. 8.7 million being marked for disposal. (f) see note no. 

59

schedule 6 - technical Know- How

As at 3st March, 2008 Rs. In Million

(i) Acquired transferred and vested with the company under the scheme of arrangement, see note no.  Less: Written off during the year (ii) Developed by the company transferred and vested with the company under the scheme of arrangement, see note no.  Add: expenses incurred on development completed during the year (incurred during the year Rs. 9.2 million)

2.2 2.2 —

.7 25.6 37.3

Less: Written off / amortised upto date of transfer Written off / amortised during the period

8.4 0.2 8.6 8.7 86.6

Development in Progress

Total

05.3

60

schedule 7 - Investments, at cost (Unless otherwise stated)
Rs. In Million Long Term Investments : In Government and Trust Securities : Quoted : - 5.69% Government of India stock 208 of face value of Rs.,300,000,000 - 7.40% Government of India stock 2035 of face value of Rs.550,000,000 - 7.50% Government of India stock 2034 of face value of Rs.50,000,000 - 7.95% Government of India stock 2025 of face value of Rs.50,000,000 - 8.33% Government of India stock 2036 of face value of Rs.50,450,000 - 0.7% Government of India stock 206 of face value of Rs.,550,000,000 - .83% Government of India stock 204 of face value of Rs.303,500,000 Less: Amortisation of Premium / Discount on acquisition Unquoted : 6 Years national saving certificates of the face value of Rs.,500 In Fully Paid Preference Shares : Unquoted : ,30,000 2.50% Redeemable cumulative Preference shares of Rs.0 each in Durovalves India Private Limited. ,9.7 553.7 49.3 48.3 54.3 2,229.7 450. 4,677. 43.

As at 3st March, 2008 Rs. In Million

4,534.0 —

.3

carried over

4,545.3

6

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Rs. In Million Brought over In Fully Paid Equity Shares : In Subsidiary Company : Unquoted : 2,000 shares of euro 00 each in Bajaj Auto International Holdings BV Amsterdam, netherlands 2,875 shares of Us $ 00 each in Pt. Bajaj Auto Indonesia In Fully Paid Equity Shares : Other : Unquoted : 565,000 shares of Rs.0 each in Durovalves India Private Limited In Debentures: Fully Paid: Other : Quoted: 200 5.85%Redeemable non convertible Debentures of Rs.,000,000 each of Housing Development Finance corporation Limited 50 7.5% Redeemable non convertible Debentures of Rs.,000,000 each of Housing Development Finance corporation Limited 00 7.75% Unsecured, Redeemable, subordinated Bonds in the nature of Debentures of Rs.,000,000 each of HDFc Bank Limited - series 5 / 2005 00 0.25% Unsecured, Redeemable, subordinated Bonds in the nature of Debentures of Rs.,000,000 each of HDFc Bank Limited 25 0.35% Unsecured, Redeemable, subordinated Bonds in the nature of Debentures of Rs.,000,000 each of HDFc Bank Limited 2,000 6.70% secured non convertible Debentures of Rs.00,000 each of Reliance energy Limited - series 3 (ncD-3) 5,692.2 566.8 —

As at 3st March, 2008 Rs. In Million 4,545.3

6,259.0

5.7

97.5

50.0

00.0

00.0

25.0 200.4

carried over carried over

772.9 0,80.0

62

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Rs. In Million In Debentures : (Contd.) Fully Paid : (Contd.) Other : (Contd.) Quoted : (Contd.) Brought over

As at 3st March, 2008 Rs. In Million 0,80.0

Brought over

772.9

250 .49% secured Redeemable non convertible Debentures (PPD-V) of Rs.,000,000 each of Reliance Utilities & Power Limited 0 0.20% Fixed Rate, Redeemable, transferable, secured, non convertible Debentures of Rs.0,000,000 each of the tata Power company Limited 00 6.50% Unsecured non convertible Redeemable Debentures of Rs.,000,000 each of Axis Bank Limited - series VIII Less: Amortisation of Premium / Discount on acquisition In Bonds: Fully Paid: Other : Quoted: 50 7.50% Unsecured Redeemable non convertible subordinated Bonds of Rs.,000,000 each of Bank of India - series VIII 00 5.85% secured taxable, non convertible Redeemable Bonds with stRPP series -II of Rs.,000,000 each of Gail (India) Limited. 00 8.25% Unsecured Redeemable subordinated Bonds in the nature of Debentures of Rs.,000,000 each of HDFc Bank Limited - series 6 / 2005 5 3.05% subordinated Debentures of Rs.0,000,000 each of the Hongkong and shanghai Banking corporation Limited 00 6.80% Gujarat Punarnirman special taxfree Bonds series IV B of Rs.,000,000 each of Housing & Urban Development corporation Limited (202) 00 7.90% Bonds Rs.,000,000 each of Housing & Urban Development corporation Limited 200 9.25% Gujarat Punarnirman special taxfree Bonds series I of Rs.500,000 each of Housing & Urban Development corporation Limited 200 7.80% Unsecured Redeemable subordinated Bonds in the nature of Debentures of Rs.,000,000 each of IcIcI Bank Ltd. carried over carried over

278.9

5.3 00.0 ,267. 24.4

,242.7

50.0

92.5

00.0 94.5

00.0 07.5

00.0 200.0 944.5 2,052.7

63

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Rs. In Million In Bonds : (Contd.) Fully Paid : (Contd.) Other : (Contd.) Quoted : (Contd.) Brought over

As at 3st March, 2008 Rs. In Million 2,052.7

Brought over

944.5 54.2 4.7

30,000 7% omni Bonds of Rs. 5000 each of Industrial Development Bank of India Limited ,000 8% omni Bonds of Rs.00,000 each of Industrial Development Bank of India Limited 350 7.5% secured non convertible Redeemable Bonds in the nature of Debentures (series-VI) of Rs.,000,000 each of Indian oil corporation Limited 200 7.40% secured non convertible Redeemable Bonds in the nature of Debentures (series-VII) of Rs.,000,000 each of Indian oil corporation Limited 50 7.63% taxable secured Redeemable non convertible Bonds of Rs.,000,000 each of Indian Railway Finance corporation Limited - 202- series 43JJ 50 7.63% taxable secured Redeemable non convertible Bonds of Rs.,000,000 each of Indian Railway Finance corporation Limited - 203 - series 43KK 50 7.63% taxable secured Redeemable non convertible Railway Bonds of Rs.,000,000 each of Indian Railway Finance corporation Limited - 204 - series 43LL 50 9% tax Free secured Redeemable non convertible Bonds of Rs.,000,000 each of Indian Railway Finance corporation Limited - series 7 (205) 00 8.75% taxable secured Redeemable non convertible Bonds of Rs.,000,000 each of Indian Railway Finance corporation Limited 50 8.75% Unsecured Redeemable subordinated Bonds in the nature of Promissory notes of Rs.,000,000 each of InG Vysya Bank Limited

354.3

200.0

65.4

55.3

55.4

50.0

00.

50.0

carried over carried over

2,243.9

2,052.7

64

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Rs. In Million In Bonds : (Contd.) Fully Paid : (Contd.) Other : (Contd.) Quoted : (Contd.) Brought over

As at 3st March, 2008 Rs. In Million 2,052.7

Brought over

2,243.9

500 6.40% secured taxable non convertible (central Government Guaranteed) Bonds of Rs.500,000 each of ItI Limited series J - option I 2,000 6.35% Redeemable non convertible taxable Bonds in the nature of Debentures of Rs.00,000 each of national textile corporation Limited - series III 00 9.50% capital Gain Bonds of Rs.,000,000 each of national Bank for Agriculture and Rural Development 200 9% tax Free secured Redeemable Bonds of nuclear Power corporation of India Limited of face value of Rs.00,000 each series XIV (205) 250 7% Unsecured Redeemable non cumulative taxable Bonds in the nature of Debentures of Rs.,000,000 each of Power Finance corporation Limited - series XXII 200 9.22% Unsecured, Redeemable, non-convertible, non-cumulative, taxable Bonds in the nature of Debentures of Rs.,000,000 each of Power Finance corporation Limited 40 8.63% secured Redeemable non convertible Bonds in the nature of Debentures of Rs.,250,000 each of Power Grid corporation of India Limited - series 3G-202 40 8.63% secured Redeemable non convertible Bonds in the nature of Debentures of Rs.,250,000 each of Power Grid corporation of India Limited - series 3H-203 80 8.73% secured, non convertible, non-cumulative, Redeemable, taxable Bonds XXI-Issue 2006-07 of Rs.,250,000 each of Power Grid corporation of India Limited 80 0.0% secured, non convertible, non-cumulative, Redeemable, taxable Bonds Issue 2006-07 of Rs.,250,000 each of Power Grid corporation of India Limited 40 0.0% secured, non convertible, non-cumulative, Redeemable, taxable Bonds Issue 2006-07 of Rs.,250,000 each of Power Grid corporation of India Limited carried over

250.0

200.0 0.2

20.0

250.5

20.2

55.8

55.9

0.5

00.4

50.2 3,630.6

carried over

2,052.7

65

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Rs. In Million In Bonds : (Contd.) Fully Paid : (Contd.) Other : (Contd.) Quoted : (Contd.) 200 7.45% subordinated non convertible Bonds of Rs.,000,000 each of state Bank of India 200 8.96% subordinated non convertible Bonds of Rs.,000,000 each of state Bank of India 300 0.20% subordinated non convertible Bonds of Rs.,000,000 each of state Bank of India 00 9.90% subordinated non convertible Bonds of Rs.,000,000 each of state Bank of Patiala 200 7.45% Unsecured Redeemable non convertible subordinated Bonds of Rs.,000,000 each of Union Bank of India - series VIII 7,950,00 6.75% tax Free UtI Us 64 Bonds Guaranteed by Government of India of Rs.00 each 7,89,70 6.60% tax Free UtI ARs Bonds Guaranteed by Government of India of Rs.00 each Brought over

As at 3st March, 2008 Rs. In Million 2,052.7

Brought over

3,630.6 200.0 20.4 300.0 06.4

200.0 94. 735. 6,287.6

Less: Amortisation of Premium / Discount on acquisition

9.4 6,268.2

In Mutual Fund Units: Quoted: 25,000,000.000 Units of Rs.0 each of ABn Amro Fixed term Plan - series 8 : Yearly Plan c 7,599,728.876 Units of Rs.0 each of DWs Insta cash Plus Fund - super IP-Growth 77,734.687 Units of Rs.,000 each of standard chartered Mutual Fund under standard chartered Liquidity Manager Plus - Growth option

250.0 750.0

90.0 ,090.0

carried over

9,40.9

66

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Rs. In Million Brought over Current Investments : In Certificate of Deposit : Quoted: 500 certificate of Deposit of Rs.00,000 each of corporation Bank - 20.05.2008 48.8

As at 3st March, 2008 Rs. In Million 9,40.9

Add: Amortisation of Premium / Discount on acquisition

0.6 49.4 9,460.3

Less: Provision for diminution in value of Investments

888.9 8,57.4

Book Value as at 3 March 2008 Rs. In Million Unquoted Quoted 2,295.4 6,276.0 8,57.4

Market Value as at 3 March 2008 Rs. In Million *2,565.7

67

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
Notes to Investment Schedule : 1 The following investments were purchased and sold during the year (a) Mutual Funds : name of the company Quantity Purchase cost sale Proceeds

nos

Rs. In Million 5,2.5 360.0 ,000.2 250.0 850.0

Rs. In Million 5,88.6 360.

standard chartered Mutual Fund under Liquidity Manager Fund Plus - Growth Manager Fund - Growth standard chartered Mutual Fund under Liquidity DWs Insta cash Plus Fund sIP Growth

03,267,32 32,443,539

DWs Money Plus Fund

82,37,553,925 92,525,548 6,303,880

Birla cash Plus Institutional Premium Growth Liquid Birla sunlife Liquid Plus Institutional Growth InG Liquid super Institutional Growth InG Liquid Plus Fund Institutional Growth Plan Growth

chola Liquid Institutional Plus cumulative

chola Mutual Fund Freedom Income stP Growth

64,242,046 39,359,203 3,032,46 4,505,867 6,458,282

6,092,694

750.0

,006.0 250.0

850.2

75.6

2,000.0 2,000.4 50.0 50.0 750.0

2,000.4 2,003.3 50.0 50.6 750.2

Principal cash Management Liquid Institutional Premium Principal Floating Rate Fund FMP Institutional Growth

Reliance Liquid Fund Growth

Reliance Liquid Fund

Reliance Liquid Plus Fund Institutional Growth Growth

2,96,559,000

46,792,309 43,990

60,929,653

sundaram BnP Paribas Liquid Plus super Institutional sundaram BnP Paribas Money Fund super Institutional UtI Liquid cash Plan Institutional - Growth option UtI Fixed Income Interval Fund Quarterly Plan HDFc FMP 90 D Wholesale Plan Growth (b) Certificate of Deposits : name of the company HDFc cash Management Fund saving Plan Growth Growth

50.0

50.0

480.0

750.2

50.6

50.0

480.

754.8

24,22,255 5,39,097 3,463,993 30,96,399 8,280,24 07,287

250. 250.0

250.9 250.

34.6 302.0

34.6

30.9

43.8 308.7

34.6

302.0

Quantity ,000

nos

Purchase cost 9.6 346.7 99.7

Rs. In Million 99.8

sale Proceeds

Rs. In Million 00.0 00.0 93.7

Axis Bank Ltd. - 3.8.2008 Indian Bank - 0.7.2007

HDFc Bank Ltd. - 9.7.2007

,000 3,500 ,000

IcIcI Bank Ltd. - 3.7.2007

standard chartered Bank - 2..2007 state Bank of Hyderabad - 3.3.2008 Union Bank of India - 30.4.2008

,000

350.0 97.7

state Bank of Bikaner & Jaipur - 30..2007

,000

95.

,000

95.7

,000

96.4

97.6

94.4

97. 96.8

68

schedule 7 - Investments, at cost (Unless otherwise stated) (contd.)
2 The following Government Securities have been purchased and sold during the year, through SGL Account with Citibank N.A., Mumbai : Particulars Purchase cost Rs. In Million 46. sale Proceeds

Rs. In Million 46.9

5.48% Government of India Loan, 2009 7.37% Government of India Loan, 204 7.55% Government of India Loan, 200 7.99% Government of India Loan, 207 8.33% Government of India Loan, 2036

0.5

49.6 52.0

02.3

50.0 52.2

53.9

52.5

3 National Savings Certificates of the face value of Rs. 11,500 deposited with Government Department. 4* Quoted Investments for which quotations are not available have been included in market value at the face value / paid up value, whichever is lower, except in case of Debentures, Bonds and Government Securities, where the Net Present Value at current Yield to Maturity have been considered. 5 See Note ‘13’ in Schedule ‘14’ to the Accounts.

69

schedule 8 - current Assets, Loans and Advances
Rs. In Million (a) Inventories stores, at cost * tools, at cost * stock-in-trade, at cost or market value whichever is lower : Raw Materials and components Work-in-progress (including factory made components Rs. 03.6 million) Finished Goods: Vehicles Auto spare parts, etc. As valued and certified by Management Goods in transit, at cost to date (b) Sundry Debtors, Unsecured outstanding for a period exceeding six months : Good Doubtful Less: Provision Rs. In Million 56.2 78.9 924.4 79.4 ,694.8 504.7 3,438.4 57.7

As at 3st March, 2008 Rs. In Million

3,496.

4.0 22.7 22.7 —

others, Good (c) Cash and Bank Balances cash on hand (including cheques on hand Rs. nil) Bank Balances : With scheduled Banks: In current account In margin deposits In fixed deposits Interest accrued on fixed deposits With other Banks : In current account [see note 8] carried over

4.0 2,749. 2,753.

0.6

546. 0.0 3.2 0. 559.4 0.7 560.7 6,809.9

70

schedule 8 - current Assets, Loans and Advances (contd.)
Rs. In Million (d) Other Current Assets, good (Unless otherwise stated) Brought over Rs. In Million

As at 3st March, 2008 Rs. In Million 6,809.9

Dividend and Interest receivable on Investments Interest receivable on Loans, Deposits etc. export Incentives Receivable

77.3 799.5 405.0 283.8

20.2

8.0

(e) Loans and Advances, unsecured, good (Unless otherwise stated) Loan to suppliers to be received: Loan to Bajaj Auto Finance Limited Advances Recoverable in cash or in kind or for value Due from subsidiaries Doubtful —

@ others, Good

,367.2 42.5

Less: Provision

42.5 —

Advances for capital assets VAt refund receivable sundry Deposits Balances with customs and central excise Departments tax paid in Advance

,367.2 ,30.7 830.8

440.3 263.0 8,887.7

3,986.9

Total * except obsolete and slow moving inventory at estimated realisable value @ Includes amount due from an officer of the company Rs. 67,500 Maximum balance outstanding during the year Rs. 82,500

6,497.

7

schedule 9 - current Liabilities and Provisions
Rs. In Million (a) Liabilities sundry creditors:

As at 3st March, 2008 Rs. In Million

Dues to Micro and small enterprises

other than dues to Micro and small enterprises Advances against orders

9,430.8 9,444.6 948.4 39.5 0,432.5 270.0

3.8

Deposit from Dealers and others (b) Provisions

Investor education Protection Fund (Rs. 20,260)

—

Provision for employee Benefits [see note 6 ] Provision for taxation Proposed Dividend

Provision for Warranty claims

3,96.0

723.9

Provision for corporate Dividend tax on Proposed Dividend

2,893.7 49.8 8,340.4

Total

8,772.9

72

schedule 0 - other Income
Rs. In Million Royalty Rs. In Million 3.7 486. 53.8 244.9 ,278. 6.4 ,26.7 .8 5.5 33.3

Interest[Gross-tax Deducted Rs. 24.2 million] on Government securities on Loans other on Debentures and Bonds

Less: Amortisation of premium / discount on acquisition of fixed income securities

Rent

Insurance claims export Incentives

surplus on sale of Assets

Miscellaneous Receipts

,240.5 7.6

,653.4

Profit on sale of Investments,net * Bad Debts Recovered

surplus on redemption of securities *

205.6 2.9 3.5

Provisions for Doubtful Debts and Advances written back Less: Write backs on account of amounts written off during the year,as per contra

sundry credit balances appropriated

0.5 0.

.3

Provisions no longer required Total * Including on current Investments Rs. 3.6 million

583.6

0.4

5,055.5

73

schedule  - Materials
Rs. In Million (a) Raw materials and components consumed (b) Finished Goods purchases Auto spare-Parts two Wheelers 3,384.6 — Rs. In Million 63,455.9

engineering Products, for export (c) Excise duty on increase / (decrease) in stocks of finished goods, at Plant (d) (Increase) / Decrease in Stocks stocks at close Work in progress(including factory made components Rs.03.6 million - opening Rs. 89.6 million) Finished Goods Auto spare Parts

3.2

3,397.8 28.5

,694.8 2,378.9

79.4 504.7

Less: stocks at commencement, transferred under the scheme of arrangement, detailed in note no.  Work in progress(including factory made components Rs. 89.6 million) Finished Goods Auto spare Parts 95.8 38.4 (678.5) Total 66,203.7

,23.2 ,700.4

74

schedule 2 - other expenses
Rs. In Million stores and tools consumed Power,fuel and water Repairs Buildings and Roads Machinery other employees’ emoluments salaries,wages,bonus etc. contribution to Provident and other funds and schemes Welfare expenses Rent Rates and taxes Insurance Auditors’ Remuneration Directors’ fees and travelling expenses Managing Directors’ remuneration salary commission Wholetime Directors’ remuneration salary commission commission to non executive Directors Miscellaneous expenses sales tax / VAt expenses Packing,forwarding etc. Advertisement Vehicle service charges and other expenses commission and Discount Incentives & sales Promotion Royalty Donations Bad debts and other irrecoverable debit balances written off Less: Provisions made in earlier years in respect of amounts written off during the year, adjusted as per contra Loss on assets sold,demolished,discarded and scrapped Provision for Doubtful Debts and Advances Amount written off against technical Know-how Amount written off against leasehold land Preliminary expenses written off Rs. In Million 746.7 692.0 20. 489.0 25.8 2,726.9 394.4 294.9

724.9

3,46.2 56.7 .2 6.0 7.9 0.4

4.5 3.5 6. 46.8

8.0

0.5 0.

62.9 3.8 ,329.8 368.6 ,474.6 ,27.5 758.8 08.7 293.6 35.8 52.5

Total

0.4 63.3 8.5 2.4 6.6 .2 ,553.0

schedule 3 - Interest
Interest: on Fixed Loans (Rs. ,24) others Rs. In Million — 5.6

Total

5.6

75

schedule 4 - Notes forming part of financial statements
 the company was incorporated on 30th April 2007 with the object of carrying out investment activity under the name Bajaj Holdings & Investment Ltd. Under a scheme of arrangement under section 39 to 394 of the companies Act, 956 between the company and erstwhile Bajaj Auto Ltd., the “Manufacturing Undertaking” of erstwhile Bajaj Auto Ltd. vested with the company retrospectively from st April 2007 (the Appointed date)” the Manufacturing Undertaking comprises of the business of manufacturing of and dealing in two, three and four-wheeled vehicles and spare parts and accessories thereof and comprises of all the assets(whether moveable or immoveable, tangible or intangible, real or personal, corporeal or incorporeal, present, future or contingent) and liabilities, which relate thereto or are necessary therefore, including items specifically set out in detail in the scheme of arrangement. the said scheme became effective from 20th February 2008 (“effective Date”) upon which, i) the business of the “Manufacturing Undertaking” together with all related assets, liabilities and employees, including items specifically listed in the scheme were deemed to have been vested and transferred with the company with retrospective effect from st April 2007 ii) the business of the Manufacturing Undertaking was deemed to have been carried out by erstwhile Bajaj Auto Ltd., in trust for the company upto the effective date. iii) the name of the company changed to Bajaj Auto Ltd. iv) the said transfer and vesting of the business and its assets were deemed to be on a going concern basis. v) the accounting treatment and recognition of the above was to be as specified in Part V of the scheme. Accordingly these financial statements incorporate the results of the activities carried out by the erstwhile Bajaj Auto Ltd. in trust for the company from st April 2007 to 20th February, 2008. the details of the Assets and Liabilities relating to the Manufacturing undertaking transferred and vested with the company with effect from st April 2007, the appointed date are as follows: Assets Fixed Assets Gross Block Accumulated Depreciation net Block capital work in Progress total Fixed Assets Technical Know-how Investments In fixed income securities In subsidiaries, associates, joint ventures and others Current Assets, Loans and Advances a) Inventories b) sundry Debtors c) cash & Bank Balances d) other current Assets e) Loans and Advances Current Liabilities and Provisions a) current Liabilities b) Provisions Net working Capital Total Assets carried over

27,697.7 6,503.9 ,93.8 269.2 ,463.0 4.3 6,73.6 562.7 6,736.3 3,097.0 5,298.3 568.8 299.9 3,952.6 3,26.6 4,649.4 674.9 5,324.3 (2,07.7) 26,132.9 26,132.9

76

schedule 4 - Notes forming part of financial statements (Contd.)
Loans secured Loans Unsecured Loans Deferred Tax Liability (net) Net Worth Represented by: share capital (to be issued and allotted on the effective date) General Reserve net Worth Brought over 224.6 3,29.3 3,353.9 606.8 13,960.7 12,172.2 ,0.8 ,60.4 12,172.2 As at 3st March 2008 Rs. In Million 2 (A) contingent liabilities not provided for in respect of : (i) sales Bills Discounted (ii) claims against the company not acknowledged as debts (iii) Guarantees given by the company to Housing Development Finance corporation Ltd. - for loans to employees (iv) excise and customs demand - matters under dispute and claims for refund of excise Duty, if any, against excise Duty Refund received in the earlier year (v) Income-tax matters under dispute Appeal by company Appeal by Department (v) sales tax matters under dispute (vi) sales tax deferral liability devolving upon Bajaj Finserv Limited upon scheme of arrangement (vii) claims made by temporary workmen Pending before various courts in respect of similar matters adjudicated by the supreme court in the past.the matter is contingent on the facts and evidence presented before the courts / adjudicating authorities and not necessarily likely to be influenced by the supreme courts order (B) the company has imported capital Goods under the export Promotion capital Goods scheme, of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified exports, which have been entirely fulfilled by the close of the year. However, formal discharge from obligation by discharge of license by the appropriate authorities is in progress. estimated amounts of contracts remaining to be executed on capital account and not provided for,net of Advances. Payments to Auditors : — 5,04. 0. 792.8 — — 425.9 3,07.6 26,132.9

Liability unascertained

3 4

,942.4 cost Auditors 2007-08 Rs. In Million

2007-08 Rs. In Million (i) (ii) As Auditors In other capacity: For tax audit For limited review certificates & other matters

Auditors

4.2 0.7 — 2.7

0.3 — — —

(iii) For expenses

Sub-Total Total

7.9

7.6 0.3

0.3

0.3 —

77

schedule 4 - Notes forming part of financial statements (Contd.)

As at 3st March 2008 Rs. In Million

5

c.I.F Value of Imports, expenditure and earnings in Foreign currencies etc: (a) c.I.F. Value of Imports * (i) Raw materials: steel and non-Ferrous Material components (ii) Machinery spares (iii) capital Goods * excluding c.I.F. Value of stores, tools, etc. Rs. 34.7 million expenditure in foreign currencies: (i) travelling expenses (ii) Royalty, net of tax (iii) technical consultancy, net of tax (iv) commission on exports (v) Research and Development expenses (vi) Advertisement & publicity (vii) other matters (viii) capital expenditure at Dubai office (ix) capital expenditure at Indonesia office (x) capital expenditure at sri Lanka office earnings in foreign currencies: (i) F.o.B.Value of exports (ii) F.o.B.Value of exports - goods traded in (iii) Forwarding charges exports recovered (iv) Interest (v) Royalty (vi) technical Know how (vii) Asset sale (viii) others exchange differences on account of fluctuations in foreign currency rates (a) exchange difference gains / (loss) recognised in the Profit and Loss account. (i) relating to exports during the year as a part of “sales” (ii) on settlement of export receivables carried forward from the previous accounting period as a part of “other Income” (iii) on settlement of other transactions including cancellation of forward contracts as a part of “other income / (other expenses)” (iv) on realignment of open forward contracts against exports of the year (v) on realignment of open forward contracts against future exports (b) amount of premium / (discount) on open forward contracts (i) recognised for the year in the profit and loss account (ii) to be recognised in the subsequent accounting period Foreign exchange derivatives and exposures outstanding at close of the year: (disclosed in equivalent Us Dollars for sake of brevity, uniformity and comparability) Nature of Instrument (I) Foreign exchange Derivatives (a) Forward contracts Forward purchase Forward sale option sale (b) currency swaps (c) Interest swaps (d) currency and interest swaps (e) others open Foreign exchange exposures (a) Receivables (b) Payables (c) Loans (d) others Aggregate amount in US Dollars (Millions) As at 31st March 2008 nil 350.0 2.0 nil nil nil nil 4.8 9.4 — —

465.6 2,277.2 2,742.8 74.2 46.8 5.0 36.0 5.4 — .4 .9 8.5 0.6 — .2 20,458.0 20. 265.6 6.3 3.7 — 3.4 0.6 534.5 (20.6) 767.7 (0.) (67.0) 45.9 04. Purpose of Hedging / Speculations

(b)

(c)

(d)

(e)

Hedging Hedging

(II)

78

schedule 4 - Notes forming part of financial statements (Contd.)

2007- 2008 Rs. In Million

Rs. In Million 6 Managerial Remuneration: (a) computation of net Profits in accordance with section 98() and section 349 of companies Act,956 (i) Profit as per Profit and loss Account Add: Managing Directors’ Remuneration (including perquisites) Wholetime Directors’ Remuneration (including perquisites) commission to non-executive Directors Provision for taxation Less: excess of sales price over cost of assets sold Provision for doubtful debts and advances written back Provisions no longer required 20.3 78.7 3.8 3,787.8 8.3 0.5 583.6

7,557.8

3,890.6

592.4 Profit on which commission is payable (ii) commission to chairman - shri Rahul Bajaj commission payable as determined by the Board of Directors to be limited to an amount equal to thrice the annual salary for the year 0,856.0

2.6

(iii) commission to Wholetime Director - shri Madhur Bajaj commission payable as determined by the Board of Directors to be limited to an amount equal to thrice the annual salary for the year (iv) commission to Managing Director - shri Rajiv Bajaj commission payable as determined by the Board of Directors to be limited to an amount equal to thrice the annual salary for the year (v) commission to executive Director - shri sanjiv Bajaj commission payable as determined by the Board of Directors to be limited to an amount equal to thrice the annual salary for the year

5.3

3.5

9.9 08.6 3.8

(vi) commission to non-executive Directors commission @ % on Rs. 0,856.0 million Maximum commission restricted to Rs. 50,000/- per Board meeting or committee thereof attended, per person.

79

schedule 4 - Notes forming part of financial statements (Contd.)
(b) the Profit & Loss Account includes payments and provisions on account of remuneration to the Managing Director and Wholetime Directors as under
Managing Director For the period For the period 20th st April 2007 to February 2008 to 20th February 2008 3st March 2008 total for the (Pre-effective date) (Post-effective date) financial year Rs. In Million (i) salary 4.0 2.0 0.4 .5 0. (ii) commission (iii) Privilege Leave entitlement (iv) contribution to Provident Fund, superannuation & Gratuity (v) other perquisites (vi) estimated monetary value of perquisite in form of: Unfurnished Accommodation Furniture at Residence Rs. In Million 0.5 .5 0. 0.2 Rs. In Million 4.5 3.5 0.5 .7 0. Wholetime Directors For the period For the period 20th st April 2007 to February 2008 to total for the 20th February 2008 3st March 2008 financial year (Pre-effective date) (Post-effective date) Rs. In Million 4.3 4.6 .2 5. .9 Rs. In Million .8 5.2 0. 0.6 0.2 Rs. In Million 6. 46.8 .3 5.7 2.

— — —
2.3

— —
8.0

— —
20.3

4.4 .5 70.0

0.6 0.2 8.7

5.0 .7 78.7

note: a the executive Directors of erstwhile Bajaj Auto Ltd. have, upto the effective date, performed their functions in executive capacity, predominantly for the business of the Manufacturing Undertaking. consequently, in terms of the scheme, their executive functions have been transferred alongwith other employees of the said undertaking to this company, retrospectively. Hence the remuneration paid to them during the period the business was conducted in trust by Bajaj Auto Ltd. forthe company, has been considered as an expense and accordingly been shown in the above table. the executive function of the above directors of the company,as well as their remuneration, was formally established with effect from 20th February, 2008, the date on which the scheme became effective.

b

80

schedule 4 - Notes forming part of financial statements (Contd.)
2007-2008 7. Details of raw materials consumption, goods traded in and Machinery spares consumption (i) Raw materials (including components) consumed (a) Ferrous Metal (b) non-Ferrous Metal Mtrs. nos. M.t. M.t. 5,366 ,087 2,688 568.6 296.7 0. Unit Qty. Rs. In Million

(c) tyres & tubes (e) others

(d) other components

6,73,73

60,928.9 409.3 63,455.9

,252.3

Total (ii) Imported and indigenous raw material consumption (including components) (a) Imported (including customs Duty and other related charges ) Total (iii) Imported and indigenous Machinery spares consumed (a) Imported (including customs Duty and other related charges ) (b) Indigenous Total (iv) Details of goods traded in-Purchases two Wheelers

Rs. In Million ,504.2

Percentage 2.4

(b) Indigenous

6,95.7

97.6

63,455.9 Rs. In Million 20.5

00.0 Percentage 7.4

254.8 275.3 nos. —

92.6 00.0 Rs. In Million 3,384.6 3,397.8 —

Auto spare Parts

engineering products, for export Total

3.2

8

schedule 4 - Notes forming part of financial statements (Contd.)
2007-2008 8 Details of Licensed & Installed capacity, Production, stocks and turnover class of Goods (I) Motorised two Wheelers & three Wheelers upto 350 cc engine capacity (i) Licensed capacity (including two Wheelers c.k.d packs- 200,000 nos.) (a) (ii) Installed capacity (b) (iii) Production (iv) stocks: At commencement: as transferred under scheme of Arrangement (see note ) two & three-Wheelers Goods traded in: two Wheelers Auto spare Parts (c) engineering Products, for export Total At close two & three-Wheelers Goods traded in: two Wheelers Auto spare Parts (c) engineering Products, for export Total (iv) turnover two & three-Wheelers Goods traded in: two Wheelers Auto spare Parts (including factory made parts) engineering Products, for export Total other: Dismantled, scrapped,Free of charge (vii) Details of c.k.d.packs included in above stocks at commencement Production turnover: Maharashtra scooters Ltd. export stocks at close (II) special Purpose Machine tools (i) Licensed capacity (a) (ii) Installed capacity (b) (iii) Production (iv) capitalised (v) 4 5,37 29,327 — 28,706 4,938 80 80 66 66 2,45,407 — 62,396 — nos. Rs. In Million

,639,350 3,960,000 2,477,5

36,656 —

,23.2 — 38.4 — ,504.6 ,694.8 — 504.7 — 2,99.5 9,08. — 5,776.3 5. 96,899.5

82

schedule 4 - Notes forming part of financial statements (Contd.) notes: (a) Licensed capacity is stated as per the original License held by the erstwhile Bajaj Auto Ltd. (pre-demerger). However, the company’s products are exempt from Licensing requirements under new Industrial Policy in terms of notification no. s.o. 477 (e) dated 25th July, 99. As certified by the Vice President (engg) and being a technical matter, accepted by the Auditors as correct. Includes capacity installed at Pantnagar, Uttaranchal, which has been put to use during the year on 9th April 2007. the company has, with effect from 3rd september 2007, discontinued its vehicle assembly facilities at Akurdi Plant. the available infrastructure land, building and some machinery, with suitable modification, would be employed for business purposes including enhancing product and technology development capabilities. consequently, surplus / redundant machinery, dies, components and spares have been identified in respect of which the company has during the period recognised a provision estimated at Rs. 8.7 million towards assessed losses.

(b) 9.

0. significant Accounting Policies followed by the company are as stated in the statement annexed to this schedule. . this being the first financial year since incorporation, no statement of cash flows has been drawn up under the indirect method adopted by the company. 2. As the scheme became effective only on 20th February 2008 the titles to the assets vested and arising out of the business conducted thereafter could not, where necessary, be transferred, as at 3st March 2008. Hence the same were held in trust for the company by Bajaj Holdings and Investment Ltd. 3. Investments: a. Fixed Income securities transferred to and vested with the company, consequent to the demerger of erstwhile bajaj auto ltd. were as per the scheme of arrangement discussed in note no.  above recognised at their fair market values, where the carrying cost on st April 2007 was higher. Fair Market values as at st April 2007 have been determined with reference to the yield prevailing in the market for similar types of securities. the resulting diminution, net of deferred tax aggregating Rs. 323.7 million, amounting to Rs. 903.6 million, as per the said scheme, is provided for by a debit to the General Reserve. Investments made by the company other than those with a maturity of less than one year, being of longterm nature, diminution in the value of quoted Investments are not considered to be of a permanent nature. However, on an assessment of non-performing investments (quoted and unquoted) as per guidelines adopted by the company during the period ended 3st March 2008, the management has not determined any further provisions for possible diminution / losses.

b.

4. the Windfarm business transferred and vested with Bajaj Finserv Ltd. w.e.f. st April 2007, generated power which has been consumed / utilised by the manufacturing undertaking transferred and vested with the company. Accordingly, 90% of the estimated value of benefit availed by the company, payable to Bajaj Finserv Ltd., is recognised as expense in the Profit and Loss account. the said arrangement is pending finalisation of terms and conditions between the two parties. 5. the sales tax benefit availed by the company by virtue of assignment of incentives attached to the wind farm business, has been passed-on to the Bajaj Finserv Ltd. the obligation to repay could devolve on the company if not settled by Bajaj Finserv Ltd. the said arrangement is pending finalisation of terms and conditions between the two parties.

83

schedule 4 - Notes forming part of financial statements (Contd.)
6. Liability for employee benefits has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the accounting standard 5 (Revised) the details of which are as hereunder. (Rs. In Million) Amount To Be Recognised in Balance Sheet As at 3 March 2008 Gratuity Compensated Absences ,006.3 — — 286.7 (569.) — 437.2 286.7 437.2 — 437.2 286.7 — 286.7

Present Value of Funded obligations Present Value of Unfunded obligations Fair Value of Plan Assets (managed by insurer) Net Liability Amounts in Balance sheet Liability Assets Net Liability Expense To Be Recognized in the Statement of P&L current service cost Interest on Defined Benefit obligation expected Return on Plan Assets net Actuarial Losses / (Gains) Recognized in Year Losses / (Gains) on “curtailments & settlements” Total, Included in “Employee Benefit Expense” Actual Return on Plan Assets Reconciliation of Benefit Obligations & Plan Assets For the Period Change in Defined Benefit Obligation Opening Defined Benefit Obligation current service cost Interest cost Actuarial Losses / (Gains) Actuarial Losses / (Gains) due to curtailment Benefits Paid Closing Defined Benefit Obligation Change in Fair Value of Assets Opening Fair Value of Plan Assets expected Return on Plan Assets Actuarial Gains / (Losses) contributions by employer Benefits Paid Closing Fair Value of Plan Assets Principal Actuarial Assumptions (Expressed as Weighted Averages) Discount Rate (p.a.) expected Rate of Return on Assets (p.a.) salary escalation Rate (p.a.) - senior staff salary escalation Rate (p.a.) - Junior staff

45.2 68.9 (39.8) 04.2 3.7 192.2 45.0 81.6

872.9 45.2 68.9 09.4 3.7 (03.8) 1,006.3 521.2 39.8 5.2 06.7 (03.8) 569.1

7.65% 7.50% 7.00% 6.00%

7.65% 7.00% 6.00%

84

schedule 4 - Notes forming part of financial statements (Contd.)
7. Deferred tax adjustments recognised in the financial statements are as under: (Rs. In Million) Particulars Balance Arising against Arising during assigned on adjustments the period demerger to General ended 31st As at 1st Reserve, on March 2008 April, 2007 accounting treatment specified in the Scheme ,405.8 Total Deferred Tax Assets: on account of timing difference in ,405.8 — — 3.6 3.6 Balance carried As at 31st March, 2008

Deferred Tax Liabilities: on account of timing difference in a) Depreciation and Amortisation

,49.4 ,49.4

b) Inventory Valuation (section 45 A of the Income tax Act ,956)

a) Voluntary Retirement scheme costs

230.4 92.6

— — — — — — — — 323.7 323.7 (323.7)

88.3 92.0

48.7 84.6

d) Provision for bad and doubtful debts, DePB, IcDs etc. e) Provision for privilege leave etc. f) taxes, duties etc

c) Diminution in the value of investments

9.2

—

9.2

20.4 24.5 79.8 20.6 — 799.0 606.8 Net

2.5

6.3

3.9 —

36.7 24.5

25.4

g) Amortisation of premium / discount on acquisition of fixed income securities h) Adjustments on account of gratuity provisions

(6.4) 28.0 (25.2) 86.9 (73.3)

63.4 48.6 98.5 ,309.6 09.8

i) transitional provision for diminution in value of investments Total

8. Balances with non-scheduled foreign banks (current Accounts): name of Bank country Balance as at 3st March Maximum Balance outstanding during the year 2.2

(Rs. In Million) (Rs. In Million) 2 standard chartered Bank  citiBank Indonesia Indonesia Total sri Lanka Dubai 0.3 0. .7

4 standard chartered Bank

3 Danamon

0.2

0.

.

0.

0.7

85

schedule 4 - Notes forming part of financial statements (Contd.)
9. Deposits include a sum of Rs. 80 million against use of premises on a Leave License basis, placed with Directors and their relatives, jointly and severally. 20. the company during the period, acquired 24.45% equity in KtM Power sports AG through its wholly owned subsidiary Bajaj Auto International Holdings BV. 2. Future minimum lease rental in respect of assets (i) given on operating lease in the form of office premises after April , 200 Minimum future lease payments as on March 3, 2008: (a) (b) (c) (ii) Receivable within one year - Rs. 2.3 million Receivable between one year and five years - Rs. 6.8 million Receivable after five years - Rs. nil

taken on operating lease in the form of office premises after April , 200 Minimum future lease payments as on March 3, 2008: (a) (b) (c) Payable within one year- Rs. 30. million Payable between one year and five years- Rs. 48.5 million Payable after five years - Rs. 3.9 million

22. segment Information based on the consolidated Financial statements attached to the Independent Financial statements has been disclosed in the statement annexed to this schedule. 23. Disclosure of transactions with Related Parties, as required by Accounting standard 8 ‘Related Party Disclosures’ has been set out in a separate statement annexed to this schedule. Related parties as defined under clause 3 of the Accounting standard have been identified based on representations made by key managerial personnel and information available with the company. 24. since the company has been extended credit period of 45 days by its vendors and payments being released on a timely basis, there is no liability towards interest on delayed payments under “the Micro, small and Medium enterprises Development Act 2006” during the year. there is also no amount of outstanding interest in this regard, brought forward from previous years. the above information is on basis of intimation received, on requests made by the company, with regards to vendors registration under the said Act. 25. Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed. 26. this being the first financial year of the company, previous years figures have not been disclosed.

signature to schedules “” to “4”
As per our attached report of even date For and on behalf of Dalal and shah chartered Accountants Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008 Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj chairman Vice chairman Managing Director executive Director

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

}

Directors

86

Annexure referred to in Note No. 10 in Schedule 14 to the Financial Statements for the financial year ended 31st March 2008
Statement of Significant Accounting Policies 1) System of Accounting i) ii) iii) the company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties. Financial statements are prepared under the Historical cost convention. these costs are not adjusted to reflect the impact of changing value in the purchasing power of money. estimates and Assumptions used in the preparation of the financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the Financial statements, which may differ from the actual results at a subsequent date.

2)

Revenue recognition: a) Sales: i) ii) b) Domestic sales are accounted for on despatch from the point of sale. export sales are recognised on the basis of the dates of the Mate’s Receipt and initially recorded at the relevant exchange rates prevailing on the date of the transaction.

Income: the company recognises income on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty. () (2) (3) (4) Interest income is accrued over the period of the loan / investment and net of amortisation of premium / discount with respect to fixed income securities, thereby recognising the implicit yield to maturity. Dividend is accrued in the year in which it is declared whereby a right to receive is established. Profit / loss on sale of investments is recognised on the contract date. Benefit on account of entitlement to import goods free of duty under the “Duty entitlement Pass Book scheme” is accounted in the year of export if the same can be measured with reasonable accuracy.

3)

Fixed Assets and Depreciation (A) Fixed Assets Fixed Assets except freehold land are carried at cost of acquisition, construction or at manufacturing cost, as the case may be, including pre-operative expenses in the case of self manufactured assets / plants / undertakings, less accumulated depreciation and amortisation. (B) Depreciation and Amortisation: (a) Leasehold land: Premium on leasehold land is amortised over the period of lease.

87

Annexure referred to in Note 10 in Schedule 14 to the Financial Statements for the financial year ended 31st March 2008
(b) on Plant & Machinery given on Lease: Depreciation on Plant & Machinery and Dies and Moulds given on lease is being provided at the rates worked out on straight Line Method over the primary period of lease as stated in the Lease Agreement or at the rates specified in schedule XIV to the companies Act, 956 whichever is higher, on Pro-rata basis with reference to the month of commencement of lease period. Assets Rate on straight Line Method over the primary Period of lease % 33.33 20.00 As specified in schedule XIV % status As at 3st March, 2008

Dies and Moulds Primary period 3 years Primary period 5 years (c) on Pressure Die casting (PDc) Dies:

.3 .3

Fully Provided for Fully Provided for

Depreciation on certain PDc Dies is provided over the estimated economic life of the dies or at the rates specified in schedule XIV to the companies Act,956, whichever is higher, proportionate from the month they are put to use. (d) on other Fixed Assets Depreciation on all assets is provided on ‘ straight Line basis ‘ in accordance with the provisions of section 205 (2) (b) of the companies Act 956, in the manner and at the rates specified in schedule XIV to the said Act. i. ii. 4) Depreciation on additions is being provided on prorata basis from the month of such additions. Depreciation on assets sold, discarded or demolished during the year is being provided at their rates upto the month in which such assets are sold, discarded or demolished.

Intangible Assets a) technical know-how acquired expenditure on technical know-how acquired (including Income-tax and R& D cess) is being amortised equally over a period of six years. b) technical know-how developed by the company i) expenditure incurred on know-how developed by the company, post research stage, is recognised as an intangible asset, if and only if the future economic benefits attributable are probable to flow to the company and the costs can be measured reliably. the cost of technical Know-how developed is amortised equally over its estimated life i.e. generally three years.

ii) 5)

Investments a) Investments transferred to and vested with the company consequent to the demerger of erstwhile bajaj auto ltd. discussed in note no.  above, are carried at their fair market values with reference to the yield prevailing in the market for similar types of securities as at st April 2007 where the carrying cost of such investments are higher than the so arrived fair market value, less amortisation of premium / discount thereafter, as the case may be. the provision for such diminution has been debited to the General Reserve as per the said scheme.

88

Annexure referred to in Note 10 in Schedule 14 to the Financial Statements for the financial year ended 31st March 2008
b) c) d) other Fixed income securities are carried at cost, less amortisation of premium / discount, as the case may be, and provision for diminution, if any, as considered necessary. Investments other than fixed income securities are valued at cost of acquisition, less provision for diminution as necessary. Investments made by the company are of a long-term nature, hence diminutions in value of quoted Investments are generally not considered to be of a permanent nature. However, current investments representing fixed income securities with a maturity less than  year are stated at cost adjusted for amortisation and diminution as considered necessary. the management has laid out guidelines for the purpose of assessing likely impairments in investments and for making provisions based on given criteria. Appropriate provisions are accordingly made, which in the opinion of the management are considered adequate.

e)

6)

Inventories cost of inventories have been computed to include all costs of purchases, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. a) b) c) Finished stocks, Auto spare parts and Work-in-progress are valued at cost or net realisable value whichever is lower. Finished stocks lying in the factory premises, Branches, Depots are valued inclusive of excise duty. stores and tools are valued at cost arrived at on weighted average basis. However, obsolete and slow moving items are valued at cost or estimated realisable value whichever is lower. Raw materials and components are valued at cost arrived at on weighted average basis or net realisable value, whichever is lower. However, obsolete and slow moving items are valued at cost or estimated realisable value whichever is lower. Machinery spares and Maintenance materials are charged out as expense in the year of purchase. However Machinery spares forming key components specific to a machinery and held as insurance spares are capitalised along with the cost of the Asset. Goods in transit are stated at actual cost incurred upto the date of Balance sheet.

d)

e) 7)

Foreign Currency Transactions a) b) current Assets and Liabilities in foreign currency outstanding at the close of financial year are revalorised at the appropriate exchange rates prevailing at the close of the year. the gain or loss on decrease / increase in reporting currency due to fluctuations in foreign exchange rates, in case of current assets and liabilities in foreign currency, are recognised in the profit and loss account in the manner detailed in note no. 5 (d) in schedule 4 to the accounts. Fixed Assets purchased at overseas Branches in foreign exchange are recorded at their historical cost computed with reference to the average rate of foreign exchange remitted to the Branch. Foreign exchange contracts / Derivatives (as Hedging instruments): i) ii) Premium / Discounts are recognised over the life of the contract. Profits and losses arising from either cancellation or utilisation of contracts and on revalorising contracts to cover foreign exchange receivables and liabilities at the close of the year are recognised in the profit and loss account as detailed in note no. 5 (d) in schedule 4 to the accounts.

c) d)

89

Annexure referred to in Note 10 in Schedule 14 to the Financial Statements for the financial year ended 31st March 2008 iii) outstanding foreign exchange contracts / Derivatives to cover future receivables / liabilities resulting, under each category, in an aggregate loss at the close of the year due to revalorisation are provided for as a matter of prudence and recognised in the profit and loss account. Gains, if any, are carried forward for future recognition either on utilisation or cancellation.

8)

Research & Development Expenditure Research & Development expenditure is charged to revenue under the natural heads of account in the year in which it is incurred. Payments for R&D work by contracted agency are being expensed out upto the stage of completion. However, expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic benefits to the company, is considered as an Intangible asset and accounted in the manner specified in clause 4 b) above.

9)

Employee Benefits a) Privilege Leave entitlements Privilege leave entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the company. As accumulated leave can be availed and / or encashed at any time during the tenure of employment the liability is recognised at the actuarially determined value by an Appointed Actuary. b) Gratuity Payment for present liability of future payment of gratuity is being made to approved Gratuity Fund, which fully covers the same under cash Accumulation Policy of the Life Insurance corporation of India. However, any deficit in Plan Assets managed by LIc as compared to the actuarial liability is recognised as a liability immediately. c) Superannuation Defined contribution to superannuation fund is being made as per the scheme of the company. d) e) Provident Fund Contributions are made to company’s Provident Fund trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the company and recognised as an expense. Defined Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority.

10) Taxation a) b) Provision for taxation is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with the Income tax Act, 96. Deferred tax resulting from timing difference between book profits and taxable profits are accounted for to the extent deferred tax liabilities are expected to crystalise with reasonable certainty. However, in case of deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognised, if and only if there is virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realised. Deferred tax is recognised on adjustments to revenue reserves to the extent the adjustments are allowable as deductions in determination of taxable income and they would reverse out in future periods.

11) Provisions necessary provisions are made for present obligations that arise out of events prior to the balance sheet date entailing future outflow of economic resources. such provisions reflect best estimates based on available information.

90

Disclosure of transactions with Related Parties as required by the Accounting standard - 8
2007-08 name of related party and nature of relationship nature of transaction transaction Value Rs. In Million [a] Subsidiaries: Bajaj Auto International Holding BV Amsterdam netherlands (Fully owned subsidiary) Pt. Bajaj Auto Indonesia (97.5 % shares held by Bajaj Auto Ltd.) contribution to equity and share Premium (2,000 shares of euro 00 each) outstanding amounts carried in the Balance sheet

Rs. In Million

5,692.2

5,692.2

[b] Associates, Joint Ventures and investing parties: Bajaj Holdings & Investment Ltd. [BHIL] (enterprise controlling Bajaj Auto Limited)

contribution to equity [2,875 shares of UsD 00 each] sale of spare Parts & Vehicles sKD Interest Received Warranty Paid sale of capital goods & other material

2.8 474.3 2.6 2.3 3.6

566.8 227.9 — — —

contribution made to equity by BHIL [43,500,000 shares of Rs. 0 each] Preliminiary expenses incurred by Bajaj Holdings & Investment Ltd. sale of securities against inter company borrowing

435.0 0.6 ,528.2

435.0 — —

[c] Directors & Relatives: Mr. Rahul Bajaj - chairman (Also key management personnel)

Remuneration commission Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease Remuneration commission Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease Remuneration commission Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease Remuneration commission

6.5 2.6 0.2 9.0 4.3 0.0 5.3 0.2 8.8 4. 6.7 3.5 0.2 9.0 4.3 4.9 9.9

— 2.6 — 9.0 — — 5.3 — 8.8 — — 3.5 — 9.0 — — 9.9

Mr. Madhur Bajaj - Wholetime Director (Also key management personnel)

Mr. Rajiv Bajaj - Managing Director (Also key management personnel)

Mr. sanjiv Bajaj - executive Director (Also key management personnel)

9

Disclosure of transactions with Related Parties as required by the Accounting standard - 8
2007-08 name of related party and nature of relationship nature of transaction transaction Value Rs. In Million Rahulkumar Bajaj (HUF) Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease commission sitting fees (Rs. 20,000) Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease commission sitting fees commission sitting Fees (Rs. 20,000) Rent paid for premises Deposit paid against premises taken on lease Deposit refunded against premises taken on lease 0.2 9.0 4.3 0.2 9.0 4.3 0.3 — 0.2 8.8 4. 0.2 8.8 4. 0.2 8.8 4. 0.2 — 0.3 — 0.2 8.8 4. outstanding amounts carried in the Balance sheet — 9.0 — — 9.0 — 0.3 — — 8.8 — — 8.8 — — 8.8 — 0.2 — 0.3 — — 8.8 —

Rs. In Million

Rahulkumar Bajaj Jt. (A/c Kamalnayan Bajaj (HUF))

shekhar Bajaj - non executive Director

shekhar Bajaj (A/c shekhar Bajaj (HUF))

Ramkrishna Bajaj (HUF)

niraj Bajaj - non executive Director Mr.Manish Kejriwal - non executive Director niraj Bajaj (HUF)

[d] Key Management Personnel: Mr. D. s. Mehta (Key management personnel upto 3.07.2007)

Remuneration commission sitting fees (Rs. 20,000)

0.5 0.2 —

— 0.2 —

92

Disclosure of transactions with Related Parties as required by the Accounting standard - 8
2007-08 name of related party and nature of relationship nature of transaction transaction Value Rs. In Million [e] Enterprise over which any person described in (c) or (d) above is able to exercise significant influence: Mukand Ltd. scrap sale other Debits Rent paid Purchases other credits Services received Purchases sale of Material other debits other credits Advance Recovered Interest received Warranty debits Purchases sale of Material other Debits tooling advance recovered Warranty debits other credits equity shares sold [300,000 shares of Rs. 0 each] Purchases sale of Material other debits Warranty debits 4.3 0.2 0. .3 0.6 44.4 8,89.8 2.5 44. 3.5 50.0 9.4 25.7 803.7 4.7 0.2 .5 9.5 0.3 (3.0) 3,640.0 83. 0. 2.2 0.2 — — — — (0.7) (604.0) — — — — — — (29.0) — — — — — — (229.8) — — — outstanding amounts carried in the Balance sheet

Rs. In Million

Bajaj electricals Ltd.

Hind Musafir Agency Pvt. Ltd. Varroc engg Ltd.

Varroc Lighting Pvt. Ltd.

endurance systems (India) Pvt. Ltd.

93

Disclosure of transactions with Related Parties as required by the Accounting standard - 8
2007-08 name of related party and nature of relationship nature of transaction transaction Value Rs. In Million endurance technologies Purchases sale of Material sale of DePB License other Debit Warranty Debits other credits contribution to equity [565,000 shares of Rs. 0 each] contribution to 2.5% Preference shares [,30,000 shares of Rs. 0 each] Purchases Warranty debits other Debit Purchases eD on Loan Materials chakan plant land sale other Debit sale of Materials Interest received Purchases sale of Materials sale of DePB License Warranty other Debits other credits Purchases 0,35. 2,462.0 58.6 . .7 . — — 277.6 0.2 0.3 424.4 .5 50.2 0. 0.6 3.8 ,444.6 298.4 . 0.7 .2 7.3 450.2 outstanding amounts carried in the Balance sheet (428.) — — — — — 5.7 .3 (28.0) — — (42.9) — — — — — (92.8) — — — — — (9.8)

Rs. In Million

Durovalves (I) Pvt. Ltd.

Varroc Polymers (Previously Mouldcraft)

High technology transmissions

Varroc exhaust systems P Ltd.

94

Disclosure of transactions with Related Parties as required by the Accounting standard - 8
2007-08 name of related party and nature of relationship nature of transaction transaction Value Rs. In Million Varroc elastomers P Ltd. Bajaj Ventures Ltd. KtM Power sports AG KtM sportmotorcycle AG Purchases Purchases nil Purchase of Motorcycles 7.9 — — 0.7 outstanding amounts carried in the Balance sheet (.8) — — —

Rs. In Million

Following is the list of related parties coming under (e) above with whom Bajaj Auto Ltd. does not have any transation during 2007-08: Anant trading co. Bachhraj & co. Pvt. Ltd. Bachhraj Factories Pvt. Ltd. Bachhraj trading co. Bajaj Hindusthan Ltd. Bajaj International Pvt. Ltd. Bajaj sevashram Pvt. Ltd. Bajaj trading co. Baroda Industries Pvt. Ltd. catalyst Finance Ltd. conquest Investments & Finance Ltd. econium Investments & Finance Ltd. Fusion Investments & Financial services Ltd. Hercules Hoists Ltd. Hospet steels Ltd. Jamnalal sons Pvt. Ltd. Kamalnayan Investments & trading Pvt. Ltd. Lineage Investments Ltd. Madhur securities Pvt. Ltd. Mukand engineers Ltd. Mukand International Ltd. niraj Holdings Pvt. Ltd. Primus Investments & Finance Ltd. Rahul securities Pvt. Ltd. Rishabh trading co. shekhar Holdings Pvt. Ltd. shishir Holdings Pvt. Ltd. sikkim Janseva Pratisthan Pvt. Ltd.

95

Segment wise Revenue, Results and Capital employed for the period ended March 31, 2008 (a) Primary Segment : Business Segment Automotive Revenue external sales and other Income Inter segment sales and other Income Total Revenue Segment Result Interest expense Income taxes Net Profit segment Assets Unallocated corporate Assets Total Assets segment Liabilities Unallocated corporate Liabilities Total Liabilities Capital Employed Capital Expenditure Depreciation and write downs Non Cash Expenses other than Depreciation Rs. In Million 90,43. — 90,413.1 9,999.7 5.6 — 9,948.1 32,020.0 — 32,020.0 ,49.8 — 11,491.8 20,528.2 3,286.0 ,746. 9.0 Investments Rs. In Million ,226.9 — 1,226.9 ,226.9 — — 1,226.9 2,504.0 — 12,504.0 — — — 12,504.0 — — — Consolidated Rs. In Million 9,640.0 — 91,640.0 ,226.6 5.6 3,684.2 7,490.8 44,524.0 3,986.9 48,510.9 ,49.8 7,346.5 18,838.3 29,672.6 3,286.0 ,746. 9.0

Business segments of the consolidated group have been identified as distinguishable components that are engaged in a group of related product or services and that are subject to risks and returns different from other business segments. Accordingly Automotive and Investments have been identified as the business segments. (b) Secondary Segment: Geographic Segment India segment revenue external sales and other Income segment assets capital expenditure Rest of the world 20,429.7 6,99.8 22.0 Consolidated

7,20.3 4,59. 3,264.0

9,640.0 48,50.9 3,286.0

96

Statement showing particulars as prescribed in the amendment to Schedule VI to the Companies Act, 1956 vide Notification No.G.S.R.388 (E) dated 15 May 1995:
BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE (PART IV) I REGISTRATION DETAILS Registration no. state code Balance sheet date II CAPITAL RAISED DURING THE YEAR ENDED 31ST MARCH, 2008 Public Issue Rights Issue Bonus Issue Private Placement others POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS AS AT 31ST MARCH,2008 total liabilities total assets SOURCES OF FUNDS: Paid-up capital Reserves and surplus secured loans Unsecured loans Deferred tax Adjustments APPLICATION OF FUNDS: net Fixed Assets Investments net current Assets Misc.expenditure-technical Know-how IV PERFORMANCE OF THE COMPANY FOR THE YEAR ENDED MARCH 31, 2008 i) turnover (sale of products and other income) ii) total expenditure iii) Profit before tax and extraordinary items iv) Profit after tax v) expenses for earlier years vi) Net Profit vii) earning per share Rs. (see note 2)(Face Value Rs.0/-) viii) Dividend Rate (%) PRODUCTS OF THE COMPANY Item code no. (Itc code) : 87 Product Description : scooters, Autorickshaws, Motorcycles and Mopeds Notes : 1. 2. The above particulars should be read along with the balance sheet as at 31st March, 2008, the profit and loss account for the year ended on that date and the schedules forming part thereof. U65993Pn2007PLc30076 25 3st March,2008 Rs. in Thousands — — — — ,446,835 ,446,835 III Rs. in Thousands 29,329,76 29,329,76 ,446,835 4,429,85 69,427 3,273,96 09,83 29,329,76 2,928,98 8,57,427 (2,275,779) 05,330 29,329,76 Rs. in Thousands 9,688,473 80,34,233 11,347,240 7,559,505 ,674 7,557,831 54.2 200%

V.

Earning per share is arrived at by dividing the Net Profit by weighted average number of shares.

Mumbai: 22 May 2008

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

chairman Vice chairman Managing Director executive Director

}

Directors

97

statement pursuant to section 22 of the companies Act, 956 relating to subsidiary companies
 2 3 4 name of the subsidiary Financial year of the subsidiary ended on Holding company’s interest : equity share capital Profit or Loss for the current financial year so far as concern the Members of the Holding company, not dealt with or provided for in the Accounts of the Holding Company Net aggregate Profits or Losses for the previous financial years since becoming subsidiary so far as concern the Members of the Holding company,not dealt with or provided for in the Accounts of the Holding company net aggregate amounts received as dividends for previous financial years since becoming subsidiary dealt with in the accounts of the Holding company in relevent years Pt. Bajaj Auto Indonesia 3st March 2008 97.5% Bajaj Auto International Holdings BV. 3st March 2008 00%

Loss Rs. 254.6 million

Profit Rs. 32.3 million

5

Loss Rs. 74.6 million

nil

6

nil

nil

As per our attached report of even date For and on behalf of Dalal and shah chartered Accountants Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

chairman Vice chairman Managing Director executive Director

}

Directors

98

Report of the Auditors on the consolidated Financial statements. to the Board of Directors Bajaj Auto Limited We have examined the attached consolidated Balance sheet of Bajaj Auto Ltd. and its subsidiaries as at 3st March, 2008, and the consolidated Profit and Loss account for the year then ended. these financial statements are the responsibility of Bajaj Auto Limited’s management. our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in India. those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures 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. We believe that our audit provides a reasonable basis for our opinion. the financial statements of Pt. Bajaj Auto Indonesia, a subsidiary, whose financial statements for the year ended 3st March, 2008 reflect total assets of IDR 33877 million and total revenues of IDR 3,549 million, have been audited by an independent firm of Registered Public Accountants. our opinion, in so far as it relates to the amounts included in respect of this subsidiary is based on their report. the financial statements of Bajaj Auto International Holdings BV, a subsidiary, whose financial statements for the period 25th october, 2007 to 3st March, 2008 reflect total assets of euro 02.08 million and total revenues of euro 3.66 million, which have been consolidated for the first time, have been audited by us. We report that the consolidated financial statements have been prepared by the company in accordance with the requirements of Accounting standards issued by the Institute of chartered Accountants of India viz. Accounting standard (As) 2, consolidated Financial statements, (As) 23, the Accounting standard Interpretations and amendments issued thereto, to the extent applicable for the year ended 3st March 2008 and on the basis of the separate audited statements of Bajaj Auto Limited and it’s subsidiaries included in the consolidated financial statements. on the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited financial statements of Bajaj Auto Ltd. and it’s aforesaid subsidiaries: a) the consolidated Balance sheet read together with notes thereon, gives a true and fair view of the consolidated state of affairs of Bajaj Auto Ltd. and it’s subsidiaries as at 3st March 2008; and the consolidated Profit & Loss account read together with notes thereon, gives a true and fair view of the consolidated results of operations of Bajaj Auto Ltd and it’s subsidiaries for the year then ended. For and on behalf of Dalal & Shah chartered Accountants Anish Amin Partner Membership no. 4045

b)

Mumbai : 22 May 2008.

99

consolidated Balance sheet as at 3 March, 2008 schedule I. Sources of Funds . shareholders’ Funds a) share capital b) Reserves & surplus 2. Minority Interest 3. Loan Funds a) secured Loans b) Unsecured Loans 4. Deferred tax liability (net) II. Application of Funds . Fixed Assets a) Gross Block b) Less: Depreciation and write downs 29,895.8 7,267.9 3 4 69.5 3,394.3  2 ,446.8 4,788.9 Rs. In Million Rs. In Million

6,235.7 4.2

Total

3,463.8 09.8 29,83.5

c) net Block d) capital Work in progress,expenditure to date Goodwill on investments in associates technical Know-how Investments Deferred tax asset (net)

5

2,627.9 347.4

2,975.3 3,7.2 05.3 5,632.6 40.9

2. 3. 4. 5.

6 7 8

6. current Assets, Loans and Advances a) Inventories b) sundry Debtors c) cash and Bank Balances d) other current Assets e) Loans and Advances Less: current Liabilities and Provisions a) Liabilities b) Provisions net current Assets

6,680.5 9

3,66.3 2,528.5 72.4 799.5 8,978.8

0,497.0 8,34.3 8,838.3 (2,57.8) 29,83.5

Total notes forming part of the Financial statements As per our attached report of even date For and on behalf of Dalal and shah chartered Accountants Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008 4 Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj chairman Vice chairman Managing Director executive Director

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

}

Directors

00

consolidated Profit and Loss Account for the financial year ended 3 March, 2008 schedule Income sales including excise duty Less: excise Duty net sales other Income Expenditure Materials other expenses Interest Depreciation and write downs Less: expenses, included in above items, capitalised compensation Paid Under Voluntary Retirement scheme Profit for the year before income from associate & taxation Income from associate of subsidiary Profit for the year before taxation taxation current tax [ including Rs. 7.5 million for Wealth tax] Deferred tax Fringe Benefit tax Profit for the year Prior Period expenses Minority Interest transfer to General Reserve Proposed Dividend corporate Dividend tax thereon Balance carried to Balance sheet notes forming part of the Financial statements Basic and diluted Earnings Per Share (Rs.) nominal value per share (Rs.) net Profit (Rs. In Million) Weighted average number of shares (In Million) As per our attached report of even date For and on behalf of Dalal and shah chartered Accountants Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008 Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj chairman Vice chairman Managing Director executive Director 4 0  2 3 Rs. In Million 96,925.8 0,266.6 86,659.2 4,980.8 66,92.9 ,92.4 5.6 ,746. 79,903.0 230.4 79,672.6 ,023.6 80,696.2 0,943.8 23.2 ,75.0 3,927.5 (276.8) 33.5 3,684.2 7,490.8 .7 7,489. (6.5) 7,495.6 4,0. 2,893.7 49.8 — 53.7 0.0 9,640.0 Rs. In Million

7,489. 39.5

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

}

Directors

0

schedules no -4

annexed to and forming part of the Balance sheet as at and the Profit and Loss Account for the financial year ended 3st March, 2008 As at 3st March, 2008 Rs. In Million

schedule  - share capital

Authorised 50,000,000 shares of Rs. 0 each

Issued,Subscribed and Paid up 44,683,50 equity shares of Rs. 0 each Notes

,500.0 ,446.8

Total

,446.8

of the above:-

. 43,500,000 equity shares of Rs. 0 each were issued, subscribed and allotted to erstwhile Bajaj Auto Ltd. and its nominees, now known as Bajaj Holdings & Investment Ltd.

2. 0,83,50 equity shares of Rs. 0 each are deemed to be issued, subscribed and fully paid up in terms of the scheme of arrangement, detailed in note no.  in schedule 4 to the stand alone Financial statements, becoming operative from 20th February 2008 (effective Date), since allotted on 3rd April 2008. ,805,07 equity shares thereof are deemed to be issued by way of euro equity Issue represented by Global Depository Receipts (GDR) evidencing Global Depository shares outstanding on the record date i.e. 25th March 2008 , in terms of scheme of arrangement.

schedule 2 - Reserves and surplus
Rs. In Million Foreign exchange difference on paid-up capital of subsidiary General Reserve As computed in terms of the scheme of arrangement Less: Diminution in the value of Fixed Income securities, net of deferred tax Add: Adjustments on account of change in share of net assets of associate Add: set aside this financial year Foreign currency translation reserve

As at 3st March, 2008 Rs. In Million (0.8) ,085.8 0,82.2 22.0 4,0. 903.6

Total

4,34.3 485.4

4,788.9

schedule 3 - secured Loans

As at 3st March, 2008 Rs. In Million

From Banks, against hypothecation of stores, Raw Materials Finished Goods, stock in Process and Book Debts cash credit

Total

69.5

69.5

02

schedule 4 - Unsecured Loans
Rs. In Million sales tax deferral Liability / Loan, an incentive under Package scheme of Incentives 983,988,993 and 998 - Interest free 3,480.6

As at 3st March, 2008 Rs. In Million

Less: deferral attached to the Wind Farm Business, assigned to and availed by the company, passed on to Bajaj Finserv Ltd. under an arrangement. Fixed Deposits, unclaimed short term bank loan

207.2 3,273.4 0.5 20.4

Total

3,394.3

schedule 5 - Fixed Assets
Gross Block (a) Particulars As at st April, 2007 Rs. In Million Land Freehold Land Leasehold Buildings (b) & (d) Waterpumps, Reservoirs and Mains Plant & Machinery Dies & Jigs electric Installations Factory equipments Furniture, Fixtures, Office equipment etc electric Fittings Vehicles & Aircraft Leased Assets : Dies & Moulds total Share of fixed assets of joint ventures (a) (b) (c) (d) (e) 72.5 27,73.9 — — 3,286.0 — 4.5 ,22. — 68.0 29,895.8 — 72.5 6,504.6 — 4.5 982.8 — — ,746. — 68.0 7,267.9 — — 2,627.9 — 357.6 26.4 56. 92.1 34.2 284.3 35.6 22.3 5.5 414.1 38.3 748.9 174.7 72.5 35.5 30.0 20.9 30.0 22.1 4.8 38.7 166.8 56.4 44.2 247.3 8.9 604.7 7.0 6,80.3 3,457.2 64.4 ,638.6 56.6 65.5 244.0 88.4 355.9 — 655.5 28.0 6.8 50. 27.6 6,76.3 3,573.2 64.0 ,844.4 35.4 ,75.4 2,409. 266. 766. — 59.0 09.6 56.3 35.2 5.4 ,080.7 309.0 25.6 55.4 40.8 2,205. 2,608.5 235.4 786.3 86.8 4,556.2 964.7 405.6 ,058. 99.7 564.3 3,42.8 Additions Rs. In Million 22. — ,302.9 Deductions and Adjustments Rs. In Million — 6.5 6.3 As at 3st March, 2008 Rs. In Million 3.8 557.8 4,709.4 As at st April, 2007 Rs. In Million — — 857.3 Depreciation Deductions and Adjustments Rs. In Million — — 5.3 For the Year (c) & (e) Rs. In Million — — 04.4 Upto 3st March, 2008 Rs. In Million — — 956.4 net Block As at 3st March, 2008 Rs. In Million 3.8 557.8 3,753.0

At cost, except leasehold land which is at cost,less amounts written off. Includes Premises on ownership basis in co-operative society Rs. 58.4 million and cost of shares therein Rs. ,750/Refer Para 3(A) & (B) of Statement on Significant Accounting Policies annexed to the Stand alone Accounts. Includes premises purchased during the year, pending registration amounting to Rs.83.7 million. Depreciation for the year includes assets written down to the realiasable value by Rs. 8.7 million being marked for disposal.

03

schedule 6 - technical Know- How

As at 3st March, 2008 Rs. In Million

(i) Acquired by the company transferred and vested with the company under the scheme of arrangement Less: Written off during the year (ii) Developed by the company transferred and vested with the company under the scheme of arrangement Add: expenses incurred on development completed during the year (incurred during the year Rs. 9.2 million) Less: Written off / amortised upto date of transfer Written off / amortised during the year

2.2 2.2 —

.7 25.6 37.3 8.4 0.2

8.6 8.7 86.6

Development in Progress

Total

05.3

schedule 7 - Investments, at cost (Unless otherwise stated)
Rs. In Million In Government and trust securities In fully Paid Preference shares In equity shares Long term: Associate company others 3,320.2 5.7

As at 3st March, 2008 Rs. In Million 4,534.2 .3

3,325.9 In Debentures, Bonds and secured Premium notes In Bonds In Mutual Fund Units In certificate of Deposits Less: Provision for diminution in value of Investments ,242.7 6,268.0 ,090.0 49.4 6,52.5 888.9 5,632.6

Total

04

schedule 8 - current Assets, Loans and Advances
Rs. In Million (a) Inventories stores, at cost * tools, at cost * stock-in-trade, at cost or market value whichever is lower : Raw Materials and components Work-in-progress (including factory made components Rs. 03.6 million) Finished Goods: Vehicles Auto spare parts, etc. As valued and certified by Management Goods in transit, at cost to date (b) Sundry Debtors, Unsecured outstanding for a period exceeding six months : Good Doubtful Less: Provision Rs. In Million 56.2 78.9

As at 3st March, 2008 Rs. In Million

,038. 79.4 ,673.7 504.7 3,53.0 30.3 3,66.3

4.0 22.7 22.7 — 4.0 2,524.5 2,528.5

others, Good (c) Cash and Bank Balances cash on hand (including cheques on hand Rs. nil) Bank Balances : With scheduled Banks: In current account In margin deposits In fixed deposits Interest accrued on fixed deposits With other Banks : In current account carried over

0.7

546. 0.0 3.2 0. 559.4 52.3 72.4 6,902.2

05

schedule 8 - current Assets, Loans and Advances (contd.)
Rs. In Million (d) Other Current Assets, good (Unless otherwise stated) Brought over Rs. In Million

As at 3st March, 2008 Rs. In Million 6,902.2

Interest receivable on Loans, Deposits etc. export Incentives Receivable

Dividend and Interest receivable on Investments

77.3

20.2

8.0

(e) Loans and Advances, unsecured, good (Unless otherwise stated) Loan to Bajaj Auto Finance Limited 405.0

799.5

Advances Recoverable in cash or in kind or for value to be received: @ others, Good Doubtful Due from subsidiaries

Loan to suppliers

283.8

,4.5 42.5

—

Less: Provision

42.5 —

VAt refund receivable sundry Deposits

Advances for capital assets Balances with customs and central excise Departments

,4.5 ,335.6 265.7 440.3 830.8

tax paid in Advance Total * except obsolete and slow moving inventory at estimated realisable value Maximum balance outstanding during the year Rs. 82,500

4,006.

8,978.8 6,680.5

@ Includes amount due from an officer of the company Rs. 67,500

06

schedule 9 - current Liabilities and Provisions
Rs. In Million (a) Liabilities sundry creditors:

As at 3st March, 2008 Rs. In Million

Dues to Micro and small enterprises

other than dues to Micro and small enterprises Advances against orders

9,495.3

3.8 9,509. 948.4 39.5 0,497.0 —

Deposit from Dealers and others (b) Provisions

Investor education Protection Fund (Rs. 20,260)

Provision for taxation Proposed Dividend

Provision for employee Benefits

Provision for Warranty claims

3,96.0 2,893.7 49.8

723.9

270.9

Provision for corporate Dividend tax on Proposed Dividend

8,34.3 Total 8,838.3

07

schedule 0 - other Income

For the Financial Year ended 3st March 2008 Rs. In Million Rs. In Million 3.7 486. 53.8 248. ,28.3 6.4 ,264.9 .8 5.5 33.3

Royalty

Interest

on Government securities on Loans other

on Debentures and Bonds

Less: Amortisation of premium / discount on acquisition of fixed income securities

Rent

Insurance claims export Incentives Miscellaneous Receipts

,653.4 ,62.6

surplus on sale of Assets

Profit on sale of Investments,net Bad Debts Recovered

surplus on redemption of securities sundry credit balances appropriated

205.6

7.6 2.9 3.5

Provisions for Doubtful Debts and Advances written back Less: Write backs on account of amounts written off during the year,as per contra

0.5 0.

.3

Provisions no longer required Total

583.6

0.4

4,980.8

08

schedule  - Materials

For the Financial Year ended 3st March 2008 Rs. In Million Rs. In Million 63,424.0 —

(a) Raw materials and components consumed (b) Finished Goods purchases Auto spare-Parts two Wheelers

engineering Products, for export (c) Excise duty on increase / (decrease) in stocks of finished goods, at Plant stocks at close (d) (Increase) / Decrease in Stocks Work in progress(including factory made components Rs.03.6 million - opening Rs. 89.6 million ) Finished Goods Auto spare Parts Less: stocks at commencement, transferred under the scheme of arrangement Rs. 89.6 million) Finished Goods Auto spare Parts Work in progress (including factory made components

3,384.6

3.2 3,397.8 28.5

79.4 ,673.7 504.7 2,357.8

95.8 ,23.2 38.4 ,700.4 (657.4) Total 66,92.9

09

schedule 2 - others expenses

For the Financial Year ended 3st March 2008 Rs. In Million Rs. In Million 753. 692.6 20.9 499.3 26.9 2,775.3 395. 296.9

stores and tools consumed Power,fuel and water Repairs Buildings and Roads Machinery other employees’ emoluments salaries, wages, bonus etc. contribution to Provident and other funds and schemes Welfare expenses Rent Rates and taxes Insurance Auditors’ Remuneration Directors’ fees and travelling expenses Managing Directors’ remuneration salary commission Wholetime Directors’ remuneration salary commission commission to non executive Directors Miscellaneous expenses sales tax / VAt expenses Packing,forwarding etc. Advertisement Vehicle service charges and other expenses commission and Discount Incentives & sales Promotion Royalty Donations Bad debts and other irrecoverable debit balances written off Less: Provisions made in earlier years in respect of amounts written off during the year,adjusted as per contra Loss on assets sold,demolished,discarded and scrapped Provision for Doubtful Debts and Advances Amount written off against technical Know-how Amount written off against leasehold land Preliminary expenses written off Total

737.

3,467.3 73. .2 9.3 7.9 0.5

4.5 3.5 6. 46.8

8.0

0.5 0.

62.9 3.8 ,398.8 368.6 ,487.9 ,399. 767. 08.7 344.7 35.8 52.5

0.4 63.3 8.5 2.4 6.6 .2 ,92.4

schedule 3 - Interest
Interest: on Fixed Loans (Rs. ,24) others Total

Rs. In Million — 5.6 5.6

0

schedule 4 - notes forming part of the Accounts
 the consolidated Financial statements include results of all the subsidiaries, Associates and Joint Ventures of Bajaj Auto Ltd. Name of the Company Pt. Bajaj Auto Indonesia Bajaj Auto International Holdings BV Country of incorporation Indonesia netherlands % Shareholding of Bajaj Auto Ltd. 97.5% 00% Consolidated as subsidiary subsidiary

• the consolidated Financial statements of Bajaj Auto International Holdings BV (which include 24.45% interest in KtM Powersports AG as an associate) are for the period 25th october 2007 (date of incorporation) to 3st March 2008. 2. notes to these consolidated Financial statements are intended to serve as a means of informative disclosure and a guide to better understanding of the consolidated position of the companies. Recognising this purpose, the company has disclosed only such notes from the individual financial statements, which fairly present the needed disclosures. 3. the accounting policies of the parent are best viewed in its independent financial statements, note no 0 of schedule 4). Differences in accounting policies followed by the other entities consolidated have been reviewed and no adjustments have been made, since the impact of these differences is not significant. 4. consolidated contingent Liability is same as contingent liability of stand alone Bajaj Auto Limited. 5. consolidated capital commitments are same as capital commitments of stand alone Bajaj Auto Limited. 6. Deferred taxes Particulars As at 3st March, 2008 (Rs. In Million) ,49.4 ,450.5 (3.)

Liabilities Assets net

7. this being the first financial year since incorporation, no statement of cash flows has been drawn up under the indirect method adopted by the company. 8. consolidated related party transactions are same as related party transactions of stand alone Bajaj Auto Limited. 9. statement of additional financial information, directed to be disclosed as a condition put forth by the ministry of company affairs for grant of exemption from the applicability of section 22() of the companies Act, 956, is attached hereto. 0. this being the first financial year of the company, previous years figures have not been disclosed.

signature to schedules “” to “4”
For and on behalf of Dalal and shah chartered Accountants Rahul Bajaj Madhur Bajaj Rajiv Bajaj sanjiv Bajaj chairman Vice chairman Managing Director executive Director

Anish Amin Partner Membership no. 4045 Mumbai: 22 May 2008

J. sridhar company secretary

D.s. Mehta Kantikumar R. Podar shekhar Bajaj D. J. Balaji Rao J. n. Godrej s.H. Khan

suman Kirloskar naresh chandra nanoo Pamnani Manish Kejriwal P. Murari niraj Bajaj

}

Directors



Financial information of subsidiaries for the year ended March 3, 2008
Particulars Pt. Bajaj Auto Indonesia Rs. In Million (a) Paid -Up share capital (b) share Premium other reserves (c) total Assets (d) total Liabilities (e) Investments* (f) turnover (g) Profit Before Taxation (h) Provision for taxation (i) Profit After Taxation (j) Proposed Dividend closing exchange rates  euro = Rs. 63.4375  UsD = Indonesian Rupiah 927  UsD = Rs. 40.2 * For details of investments refer schedule 7 of the consolidated financial statement. 509.0 Bajaj Auto International Holdings BV. Rs. In Million 2.7 6,229.6 35.4 6,277.7 6,277.7 6,239.8 5.4 32.3

—
(34.0) 582.3 582.3

—
498.9 (364.7) (03.6) (261.1)

—
32.3

—

—

2