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Bajaj Finserv Ltd.

BSE: 532978 Sector: Financials
NSE: BAJAJFINSV ISIN Code: INE918I01018
BSE LIVE 15:40 | 07 Dec 2958.10 -37.85
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NSE LIVE 15:56 | 07 Dec 2957.20 -41.80
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3020.00

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OPEN 3013.55
PREVIOUS CLOSE 2995.95
VOLUME 6488
52-Week high 3479.10
52-Week low 1575.70
P/E 22.76
Mkt Cap.(Rs cr) 47075.20
Buy Price 2958.10
Buy Qty 200.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3013.55
CLOSE 2995.95
VOLUME 6488
52-Week high 3479.10
52-Week low 1575.70
P/E 22.76
Mkt Cap.(Rs cr) 47075.20
Buy Price 2958.10
Buy Qty 200.00
Sell Price 0.00
Sell Qty 0.00

Bajaj Finserv Ltd. (BAJAJFINSV) - Director Report

Company director report

The directors present their Ninth Annual Report and audited financial statements forthe year ended 31 March 2016.

Financial results

The financial results of the Company are elaborated in the Management Discussion andAnalysis Report.

The highlights of the Standalone Financial Results are as under:

(Rs. In Crore)
Particulars FY2016 FY2015
Total revenue 251.45 211.66
Total expenses 56.64 53.56
Profit before tax 194.81 158.10
Tax expense 31.68 32.17
Profit for the year 163.13 125.93
Transfer to Reserve fund u/s 45-IC(1) of Reserve Bank of India Act 1934 25.19
Transfer to General reserve 16.31 12.59
Interim dividend 27.85
Proposed dividend 27.85
Balance carried to Balance Sheet 118.97 60.30
Earnings per share (H) 10.3 7.9

The highlights of the Consolidated Financial Results are as under:

(Rs. In Crore)
Particulars FY2016 FY2015
Gross revenue:
i. Gross written premium
a) Life insurance - Bajaj Allianz Life Insurance Co. Ltd. 5897.31 6017.30
b) General insurance - Bajaj Allianz General Insurance Co. Ltd. 5900.65 5300.66
ii. Gross income - Bajaj Finance Ltd. 7383.66 5418.28
iii. Income from windpower generation - Bajaj Finserv Ltd. 58.37 50.31
iv. Investment income (excluding accretions on unit linked investment) 2996.09 2685.38
v. Others 127.52 117.33
Total 22363.60 19589.26

 

(Rs. In Crore)
Particulars FY2016 FY2015
Revenue from operations and other income 9135.30 7102.49
Amount transferred from the policyholders' account 311.44 487.89
Total revenue 9446.74 7590.38
Profit before tax 3804.05 3246.15
Tax expense 1029.51 841.94
Profit after tax 2774.54 2404.21
Tax(debits)/credits pertaining to earlier years 0.02 4.96
Minority interest 911.29 719.38
Profit for the year 1863.27 1689.79
Earnings per share (H) 117.1 106.2

Dividend

The Board at its meeting held on 9 March 2016 declared an interim dividend at the rateof Rs. 1.75 per share (35%) for the year ended 31 March 2016 which was paid to all theeligible shareholders as on 17 March 2016 being the record date for the purpose ofdividend. The amount of dividend and the tax thereon to the extent applicable aggregatedto Rs. 27.85 crore.

The directors recommend for consideration of the shareholders at the ensuing annualgeneral meeting the above-referred interim dividend as final dividend for the financialyear ended 31 March 2016.

Dividend paid for the year ended 31 March 2015 was also Rs. 1.75 per share (35%). Theamount of dividend and the tax thereon to the extent applicable aggregated to Rs. 27.85crore.

Share capital

The paid up equity share capital as on 31 March 2016 was Rs. 79.57 crore. During theRights Issue of equity shares made by the Company in 2012 certain shares had been kept inabeyance as required by law. With resolution of a few cases during the year under reviewthe Company has allotted 6269 equity shares of the face value of Rs. 5 each at theoriginal Rights Issue price of Rs. 650 per share to the eligible shareholders.

There was no public issue rights issue bonus issue or preferential issue etc. duringthe year under review. The Company has not issued shares with differential voting rightssweat equity shares nor has it granted any stock options.

Classification of the Company as a Core Investment Company (CIC)

The Company having satisfied the criteria specified for being a CIC not requiringregistration with RBI pursuant to the provisions of section 45-IA of RBI Act 1934 hadapplied to RBI in this regard on 26 June 2015.

In response to the above RBI vide its Order dated 23 October 2015 has cancelled thecertificate of registration to carry on the business of NBFC issued to the Company and hasconfirmed the qualification of the Company as a Core Investment Company not requiringregistration with RBI pursuant to the provisions of section 45-IA of the RBI Act 1934.

Operations

Detailed information on the operations of the different business lines of the Companyand details on the state of affairs of the Company are covered in the ManagementDiscussion and Analysis Report.

Extract of annual return

The extract of annual return as provided under sub-section (3) of section 92 of theCompanies Act 2013 in the prescribed Form MGT-9 is annexed to this Report.

Number of meetings of the Board

Seven meetings of the Board were held during the year. Detailed information is given inthe Corporate Governance Report.

Directors’ responsibility statement

As required under clause (c) of sub-section (3) of section 134 of the Companies Act2013 directors to the best of their knowledge and belief state that -

• in the preparation of the annual accounts the applicable Accounting Standardshad been followed along with proper explanation relating to material departures;

• the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;

• the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

• the directors had prepared the annual accounts on a going concern basis;

• the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls were adequate and were operatingeffectively; and

• the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and were operatingeffectively.

Details in respect of frauds reported by auditors under section 143(12)

During the year under review there were no frauds reported by the auditors to theAudit Committee or the Board under section 143(12) of the Companies Act 2013.

Declaration by independent directors

The independent directors have submitted the declaration of independence as requiredpursuant to section 149(7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in sub-section (6).

Directors’ Remuneration Policy and criteria for matters under section 178

Information regarding directors’ Remuneration Policy and criteria for determiningqualifications positive attributes independence of a director and other matters providedunder sub-section (3) of section 178 are provided in the Corporate Governance Report.

Particulars of loans guarantees or investments

Information regarding loans guarantees and investments covered under the provisions ofsection 186 of the Companies Act 2013 are detailed in the financial statements.

Related party transactions

There were no Related Party Transactions (RPTs) entered into by the Company during thefinancial year which attracted the provisions of section 188 of the Companies Act 2013.There being no ‘material’ related party transactions as defined under regulation23 of the SEBI Listing Regulations 2015 there are no details to be disclosed in FormAOC-2 in that regard.

During the year 2015-16 pursuant to section 177 of the Companies Act 2013 andregulation 23 of the SEBI Listing Regulations 2015 all RPTs were placed before the AuditCommittee for its approval.

The policy on RPTs as approved by Board is uploaded on the Company’s websitewww.bajajfinserv.in

Material changes and commitments

There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this Report.

Conservation of energy and technology absorption

The Company is engaged in wind-farm activities in addition to its financial servicesactivities. Hence the subject of conservation of energy is applicable to the Company onlywith regard to its wind-farm business for the Company. Being essentially a financialservices company there are no particulars regarding technology absorption required to begiven in this Report.

Particulars regarding conservation of energy are given below:

a) The steps taken on conservation of energy and for utilising alternate sources ofenergy:

The Company has installed renewable energy (wind) project with a capacity of 65.2MW.During the year under review it generated 772 lakh units which it sold to third parties.It however is unable to make captive use of wind energy because new regulations do notpermit the same where monthly demand is less than 700 KW. The Company has installed LEDlamps in place of failed tube lights and CFL thereby reducing energy consumption inlighting by around 2 KW during the year.

b) The capital investment on energy conservation equipment:

Not applicable since BFS is a non-manufacturing company not coming under the notifiedindustries covered under Energy Conservation Act 2001. Also energy demand/connected loadof building utilised for the Company’s corporate/commercial activities etc. is lessthan 500 KW which is the minimum threshold for applicability of the Energy ConservationAct 2001.

Foreign exchange earnings and outgo

Total foreign exchange earned by the Company was Nil during the year under review aswell as during the previous year.

Total foreign exchange outflow during the year under review was Rs. 0.62 crore asagainst Rs. 1.53 crore during the previous year.

Risk Management Policy

Information on the development and implementation of a Risk Management Policy for theCompany including identification therein of elements of risk which in the opinion of theBoard may threaten the existence of the Company is given in the Corporate GovernanceReport.

Corporate Social Responsibility (CSR)

Detailed information on the Corporate Social Responsibility Policy developed andimplemented by the Company on CSR initiatives taken during the year pursuant to section135 of the Companies Act 2013 is given in the annexed Annual Report on CSR activities.

Formal annual evaluation of the performance of Board its Committees and Directors

Information on the manner in which formal annual evaluation has been made by the Boardof its own performance and that of its Committees and individual directors is given in theCorporate Governance Report.

Subsidiary and Joint Venture

Following are the subsidiary and joint venture companies of the Company as at 31 March2016:

Name of the company % Shareholding Status
Bajaj Allianz Life Insurance Company Ltd. 74% Subsidiary
Bajaj Allianz General Insurance Company Ltd. 74% Subsidiary
Bajaj Finance Ltd. 57.28% Subsidiary
Bajaj Housing Finance Ltd. (100% subsidiary of Bajaj Finance Ltd.) Subsidiary
Bajaj Financial Securities Ltd. (100% subsidiary of Bajaj Housing Finance Ltd.) Subsidiary
Bajaj Financial Holdings Ltd. 100% Subsidiary
Bajaj Allianz Financial Distributors Ltd. 50% Joint Venture
Bajaj Allianz Staffing Solutions Ltd. (100% subsidiary of Bajaj Allianz Financial Distributors Ltd.) Joint Venture

During the year under review the Company has subscribed to 925000 warrants fullyconvertible into equity shares issued by its subsidiary Bajaj Finance Ltd. at aconversion price of Rs. 4412 per share pursuant to the provisions of Chapter VII of SEBI(Issue of Capital and Disclosure Requirements) Regulations 2009.

For this purpose the Company has invested Rs. 102 crore in June 2015 i.e. 25% ofissue price of warrants at the time of subscription as initial payment and balance Rs. 306crore will be invested at the time of conversion on or before 1 December 2016 i.e.within a period of 18 months from the date of allotment of the warrants.

During the year under review Bajaj Housing Finance Ltd. received the certificate ofregistration from National Housing Bank and is in the process of setting up its housingfinance business.

Detailed information on the performance and financial position of each subsidiary/jointventure of the Company is covered in the annexed Management Discussion and AnalysisReport.

Directors and Key Managerial Personnel - Changes

The directors regret to report the sad demise of S Rs. Khan an independent director ofthe Company on 12 January 2016. The directors record their whole-hearted appreciation ofthe valuable contribution made by him during his long tenure as director in the Company.

In light of the provisions of the Companies Act 2013 Madhur Bajaj retires from theBoard by rotation this year and being eligible offers himself for reappointment. Theinformation as required to be disclosed under regulation 36(3) of the SEBI ListingRegulations 2015 in case of reappointment of the director is provided in the Notice ofthe ensuing annual general meeting.

There was no other change in the Directors and Key Managerial Personnel during the yearunder review.

As decided by the Board at its meeting held on 3 February 2016 Naresh Chandra tookover as the Chairman of the Nomination and Remuneration Committee in place of S Rs. Khanand Dr. Gita Piramal was appointed as the Chairperson of the Stakeholders RelationshipCommittee in place of Nanoo Pamnani who however continued as its member.

Nanoo Pamnani took over as an independent director on the board of insurancesubsidiaries in place of S Rs. Khan under regulation 24(1) of the SEBI ListingRegulations 2015.

Detailed information on the directors is provided in the Corporate Governance Report.

Significant and material orders passed by the regulators or courts

During the year under review there were no significant and material orders passed bythe regulators or courts or tribunals which may impact the going concern status of theCompany and its operations in future.

Details of internal financial controls with reference to the financial statements

The Company has documented its internal financial controls considering the essentialcomponents of various critical processes physical and operational which includes itsdesign implementation and maintenance along with periodical internal review ofoperational effectiveness and sustenance.

This ensures orderly and efficient conduct of its business including adherence to theCompany’s policies safeguarding of its assets prevention of errors accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation.

The internal financial controls with reference to the financial statements wereadequate and operating effectively.

Presentation of financial statements

The financial statements of the Company for the year ended 31 March 2016 have beendisclosed as per Schedule III to the Companies Act 2013.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporatingthe duly audited financial statements of the subsidiaries and joint ventures and asprepared in compliance with the Companies Act 2013 applicable Accounting Standards andthe SEBI Listing Regulations 2015.

A separate statement containing the salient features of the subsidiaries and jointventures in the prescribed form (AOC-1) is annexed separately.

Statutory disclosures

The summary of the key financials of the Company’s subsidiaries and joint venture(Form AOC-1) is included in this Annual Report. A copy of the audited financialstatements of the said companies will be made available to members of the Company seekingsuch information at any point of time. The audited financial statements for each of thesubsidiaries will be kept for inspection by any member of the Company at its registeredoffice during business hours. The same are placed on the Company’s websitewww.bajajfinserv.in

Details as required under the provisions of section 197(12) of the Companies Act 2013read with rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are placed on the Company’s website www.bajajfinserv.in as anannexure to the Directors’ Report. A physical copy of the same will be made availableto any shareholder on request.

Details as required under the provisions of section 197(12) of the Companies Act 2013read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 which form part of the Directors’ Report will be madeavailable to any shareholder on request as per provisions of section 136(1) of the saidAct.

A Cash Flow Statement for the year 2015-16 is attached to the Balance Sheet.

Pursuant to the legislation 'Prevention Prohibition and Redressal of Sexual Harassmentof Women at Workplace Act 2013' introduced by the Government of India which came intoeffect from 9 December 2013 the Company has framed a Policy on Prevention of SexualHarassment at Workplace. There was no case reported during the year under review under thesaid Policy.

Corporate governance

Pursuant to the SEBI Listing Regulations 2015 a separate section titled‘Corporate Governance’ has been included in this Annual Report along with thereports on Management Discussion and Analysis and General Shareholder Information.

All Board members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year 2015-16. A declaration to this effect signed by the ManagingDirector of the Company is contained in this Annual Report.

The Managing Director (CEO) and CFO have provided to the Board the compliancecertificate with regard to the financial statements and other matters as required underregulation 17(8) of the SEBI Listing Regulations 2015.

A certificate from the auditors of the Company regarding compliance of conditions ofcorporate governance is annexed to this Report.

Business Responsibility Report

Regulation 34(2) of the SEBI Listing Regulations 2015 inter alia provides that theannual report of the top 100 listed entities based on market capitalisation (calculated ason 31 March of every financial year) shall include a Business Responsibility Report(BRR).

Since BFS is one of the top 100 listed companies by way of market capitalisation as on31 March 2015 the Company has presented its maiden BRR for the financial year 2015-16which is part of this Annual Report. As a green initiative the BRR has been hosted on theCompany’s website www.bajajfinserv.in

A physical copy of the BR Report will be made available to any shareholder on request.

Secretarial standards of ICSI

Pursuant to the approval given on 10 April 2015 by the Central Government to theSecretarial Standards specified by the Institute of Company Secretaries of India theSecretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings(SS-2) came into effect from 1 July 2015. The Company is in compliance with the same.

Auditors

Statutory Auditor

Pursuant to the provisions of section 139 of the Companies Act 2013 and the Rulesmade thereunder the current auditors of the Company Dalal & Shah LLP CharteredAccountants (registration number: 102021W/W100110) were appointed by the members at the7th Annual General Meeting to hold office until the conclusion of the 10th Annual GeneralMeeting subject to ratification by members at each annual general meeting.

The members are requested to ratify the appointment of Dalal & Shah LLP CharteredAccountants (registration number: 102021W/W100110) as statutory auditors of the Companyand to fix their remuneration for the year 2016-17.

The statutory audit report does not contain any qualification reservation or adverseremark or disclaimer made by statutory auditor.

Secretarial Auditor

Pursuant to the provisions of section 204 of the Companies Act 2013 and the Rulesmade thereunder the Company has re-appointed Shyamprasad D Limaye (membership number1587) Company Secretary in Practice to undertake the secretarial audit of the Company.The Secretarial Audit Report for the year 2015-16 as issued by him in the prescribed formMR-3 is annexed to this Report.

The said Secretarial Audit Report does not contain any qualification reservation oradverse remark or disclaimer made by the secretarial auditor.

Cost Auditor

Pursuant to section 148 of the Companies Act 2013 and the Rules made thereunder theBoard of Directors had on the recommendation of the Audit Committee reappointedDhananjay V Joshi & Associates (firm registration number: 000030) Cost Accountantsto audit the cost accounts of the Company for the financial year 2016-17 on a remunerationof Rs. 50000 plus service tax out-of pocket and travel and living expenses subject toratification by the shareholders at the annual general meeting. Accordingly a resolutionseeking members’ ratification for the remuneration payable to the cost auditor isincluded in the Notice convening the annual general meeting.

On behalf of the Board of Directors

Rahul Bajaj

Chairman

Pune: 24 May 2016

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