The directors present their Seventy First Annual Report and audited financialstatements for the year ended 31 March 2016.
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 ||1401.28 ||1006.46 |
|Total expenses ||42.72 ||41.96 |
|Profit before tax ||1358.56 ||964.50 |
|Tax expense ||88.05 ||79.58 |
|Profit after tax ||1270.51 ||884.92 |
|Profit for the year ||1270.51 ||867.73 |
|Transfer to Reserve fund u/s 45-IC(1) of Reserve Bank of India Act 1934 ||254.10 ||173.55 |
|Transfer to General reserve ||127.05 ||86.77 |
|Interim dividend (inclusive of dividend tax) ||334.87 || |
|Proposed dividend (inclusive of dividend tax) ||100.46 ||434.49 |
|Balance carried to Balance Sheet ||454.03 ||172.92 |
|Earnings per share (Rs ) ||114.2 ||78.0 |
The highlights of the Consolidated Financial Results are as under:
| || ||(Rs In Crore) |
|Particulars ||FY2016 ||FY2015 |
|Total revenue ||476.69 ||558.83 |
|Profit before tax ||429.90 ||513.19 |
|Income from associates after tax ||1923.65 ||1615.41 |
|Profit for the year ||2265.24 ||2029.24 |
|Earnings per share (Rs ) ||203.5 ||182.3 |
The Board at its meeting held on 9 March 2016 declared an interim dividend at the rateof Rs 25 per equity share (250%) for the year ended 31 March 2016 which was paid to allthe eligible 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 334.87 crore.
The directors now recommend for consideration of the shareholders at the ensuing annualgeneral meeting payment of final dividend of Rs 7.50 per equity share (75%) for thefinancial year ended 31 March 2016. The amount of final dividend and the tax thereon tothe extent applicable aggregate to Rs 100.46 crore.
For the year ended 31 March 2016 the total dividend including the interim dividendtherefore works out to Rs 32.50 per equity share of Rs 10 each (325%) and the totaldividend and the tax thereon to the extent applicable aggregate to Rs 435.33 crore.
For the year ended 31 March 2015 dividend paid was also Rs 32.50 per equity share(325%). The amount of dividend and the tax thereon to the extent applicable howeveraggregated to Rs 434.49 crore.
The paid up equity share capital as on 31 March 2016 was Rs 111.29 crore. There was nopublic issue rights issue bonus issue or preferential issue etc. during the year. TheCompany has not issued shares with differential voting rights sweat equity shares nor hasit granted any stock options.
Registration as a Systemically Important Non-Deposit taking NBFC
The Company has been registered with the Reserve Bank of India as a Non-BankingFinancial Institution (Non-Deposit taking). In terms of provisions of Non-BankingFinancial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions 2007 the Company is categorised as a Systemically Important Non-Deposittaking Non-Banking Financial Company. The Company has not accepted public depositsduring the year under review. The Company has formed Risk Management Committee and AssetLiability Management Committee in terms of the applicable directions/regulations of theReserve Bank of India in this regard.
Detailed information on the operations of the Company and details on the state ofaffairs of the Company are covered in the Management Discussion 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
There were seven meetings of the Board held during the year. Detailed information isgiven in the Corporate Governance Report.
Directors responsibility statement
As required under clause (c) of sub-section (3) of section 134 of Companies Act 2013directors 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 Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
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 are 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 Companys websitewww.bhil.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 technology absorption foreign exchange earnings and outgo
The Company primarily being an investment company and not involved in any industrial ormanufacturing activities the Company has no particulars to report regarding conservationof energy and technology absorption as required under section 134 of the Companies Act2013 and Rules made thereunder. During the year under review the Company did not have anyforeign exchange earnings whereas the foreign exchange outgo amounted to Rs 1.19 crore.
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 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 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.
Following are the companies which are subsidiary/joint venture/associate companies ofthe Company:
|Name of the company ||% shareholding of BHIL and its subsidiary ||Status |
|Bajaj Auto Ltd. ||31.49% ||Associate |
|Bajaj Finserv Ltd. ||39.29% ||Associate |
|Bajaj Auto Holdings Ltd. ||100% ||Subsidiary |
|Maharashtra Scooters Ltd. ||24% ||Joint Venture |
Detailed information on the performance and financial position of subsidiaryassociates and joint venture of the Company is covered in the Management Discussion andAnalysis Report.
As regards Maharashtra Scooters Ltd. (MSL) a company jointly promoted by the Company(erstwhile Bajaj Auto Ltd.) and Western Maharashtra Development Corporation Ltd. (WMDC)WMDC had offered to sell its 27% shareholding in MSL and the Company had confirmed itswillingness to purchase these shares.
As reported in the past in the matter of Appeal No.153 of 2010 concerning in theAward of the Arbitrator between BHIL and WMDC the Division Bench of the HonbleBombay High Court had pronounced its Order on 8 May 2015 inter alia stipulating thefollowing:
1. The Companys Appeal No.153 of 2010 is allowed and the impugned order of theSingle Judge dated 15 February 2010 is set aside in so far as it set aside the arbitralAward on the ground that clause 7 of the Protocol Agreement was in the nature of arestriction on free transferability of the shares and was therefore contrary to section111A of the Companies Act 1956.
2. The Cross Objections filed by the Respondent (WMDC) have no merit and thereforestand dismissed.
3. In the peculiar circumstances of the case and in the interest of justice theAppellant (BHIL) for the purchase of the 3085712 equity shares of MSL shall pay to theRespondent (WMDC) a sum of Rs 46.79 crore (calculated at Arbitral Award price of Rs 151.63per share) together with simple interest @ 18% per annum from 14 January 2006 (date ofArbitral Award) till payment.
WMDC has subsequently filed a Special Leave Petition (SLP) in the Supreme Court on 15September 2015 which is registered as SLP No. - 27194-95 of 2015 against the impugnedDivision Bench judgment of the Hon'ble Bombay High Court dated 8 May 2015 challenging thejudgment amongst other grounds on the basis of validity of the Protocol Agreement in thecontext of section 111A of the Companies Act 1956 prescribing free transferability ofshares.
The above mentioned SLP filed by WMDC is currently pending before the Supreme Court.
Directors and Key Managerial Personnel-changes
The Directors regret to report about the sad demise of S Rs Khan an independentdirector of the Company on 12 January 2016. The directors record their whole-heartedappreciation of the valuable contribution made by him during his long tenure as directorin the Company.
There was no other change in the directors and Key Managerial Personnel during the yearunder review.
In light of the provisions of the Companies Act 2013 Manish Kejriwal retires from theBoard by rotation this year and being eligible offers himself for re-appointment. Theinformation as required to be disclosed under regulation 36(3) of the SEBI ListingRegulations 2015 in case of re-appointment of the director is provided in the Notice ofthe ensuing annual general meeting.
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 toCompanys 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 including the associates andjoint venture and as prepared in compliance with the Companies Act 2013 applicableAccounting Standards and SEBI Listing Regulations 2015.
A separate statement containing the salient features of the subsidiaries (includingassociates and joint venture) in the prescribed form (AOC-1) is annexed separately.
The summary of the key financials of the Companys subsidiary associate companyand joint venture (Form AOC-1) is included in this Annual Report. A copy of auditedfinancial statements of the said companies will be made available to the members of theCompany seeking such information at any point of time. The audited financial statementsof the said companies will be kept for inspection by any member of the Company at itsregistered office during business hours. The same are placed on the Companys websitewww.bhil.in
Details as required under the provisions of section 197(12) of the Companies Act 2013read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are placed on the Companys website www.bhil.in as an annexure to theDirectors Report. A physical copy of the same will be made available to anyshareholder 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 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.
Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions 2007 RBI Regulatory Framework2014 and other applicable NBFC Regulations have been made in this Annual Report.
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 a Policy on Prevention of Sexual Harassmentat Workplace. There was no case reported during the year under review under the saidPolicy.
Secretarial Standards of ICSI
Pursuant to the approval given on 10 April 2015 by 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.
Pursuant to the SEBI Listing Regulations 2015 a separate chapter titledCorporate 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 (CEO) of the Company is contained in this Annual Report.
The Managing Director (CEO) and CFO have certified to the Board with regard to thefinancial statements and other matters as required under regulation 17(8) of the SEBIListing Regulations 2015.
Certificate from auditors of the Company regarding compliance of conditions ofcorporate governance is annexed to this Report.
Pursuant to the provisions of section 139 of the Companies Act 2013 and the Rules madethereunder the current auditors of the Company Dalal & Shah LLP CharteredAccountants (registration number: 102021W/W100110) were appointed by the members at the69th annual general meeting to hold office until the conclusion of the 72nd 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.
Pursuant to the provisions of section 204 of the Companies Act 2013 and Rules madethereunder the Company has re-appointed Shyamprasad D Limaye Practising CompanySecretary (Membership No. 1587) to undertake the secretarial audit of the Company.Secretarial Audit Report for the year 2015-16 as issued by him in the prescribed form MR-3is annexed to this Report.
The said Secretarial Audit Report does not contain any qualification reservation oradverse remark or disclaimer made by the secretarial auditor.
On behalf of the Board of Directors
Rahul Bajaj Chairman
Pune: 25 May 2016