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Bajaj Holdings & Investment Ltd.

BSE: 500490 Sector: Financials
NSE: BAJAJHLDNG ISIN Code: INE118A01012
BSE 00:00 | 13 Apr 3347.55 64.35
(1.96%)
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3374.35

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NSE 00:00 | 13 Apr 3331.00 51.05
(1.56%)
OPEN

3264.05

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OPEN 3263.00
PREVIOUS CLOSE 3283.20
VOLUME 1452
52-Week high 3784.80
52-Week low 1850.00
P/E 29.31
Mkt Cap.(Rs cr) 37,255
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3263.00
CLOSE 3283.20
VOLUME 1452
52-Week high 3784.80
52-Week low 1850.00
P/E 29.31
Mkt Cap.(Rs cr) 37,255
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bajaj Holdings & Investment Ltd. (BAJAJHLDNG) - Director Report

Company director report

The Directors' present their Seventy Fifth Annual Report and Audited FinancialStatements for the year ended 31 March 2020.

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 FY2020 FY2019
Total income 2205.86 998.27
Total expenses 157.77 88.63
Profit before tax 2048.09 909.64
Tax expense 221.22 121.45
Profit for the year 1826.87 788.19
Earnings per share (in H ) 164.1 70.8

Closing balances in reserve/other equity

(Rs. In Crore)
Particulars FY2020 FY2019
Reserve fund in terms of section 45-IC(1) of
Reserve Bank of India Act 1934 2107.34 1741.97
Securities premium 444.42 444.42
General reserve 3706.96 3706.96
Retained earnings 3198.67 2543.02
Other reserves - Equity instruments through other comprehensive income 1089.11 2441.76
Other reserves - Debt instruments through other comprehensive income 34.63 -
Other reserves - Hedge instruments through other comprehensive income 0.07 -
Total 10581.20 10878.13

The highlights of the Consolidated Financial Results are as under:

(Rs. In Crore)
Particulars FY2020 FY2019
Total Income 435.69 431.35
Share of profits of associates and joint venture 3057.81 2827.33
Profit before tax 3313.67 3170.02
Profit for the year 2992.00 3048.38
Earnings per share (in Rs. ) 268.8 273.9

Dividend

Pursuant to the provisions of Regulation 43A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI Listing Regulations) as amended theCompany has formulated a Dividend Distribution Policy. The Policy sets out the parametersand circumstances that will be taken into account by the Board in determining thedistribution of dividend to its shareholders.

As a green initiative the policy has been uploaded on the website of the Company andcan be accessed at http://www.bhil.in/inv/codes_policies.html A copy of the policy will bemade available to any shareholder on request by email.

The Board of Directors at its meeting held on 21 February 2020 declared an interimdividend of Rs. 40/- per equity share (400%) of face value of Rs. 10/- payable toshareholders holding shares as on 4 March 2020. The amount of interim dividend and taxthereon aggregate to Rs. 531 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 2020.

Dividend paid for FY2019 was Rs. 32.50 per equity share (325%) of face value of Rs. 10.The amount of dividend and tax thereon aggregated to Rs. 436 crore.

Share Capital

The paid-up equity share capital as on 31 March 2020 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 or sweat equity shares norhas it 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 Company - Systemically Important Non-Deposit taking Company and Deposit takingCompany (Reserve Bank) Directions 2016 the Company is categorised as a‘Systemically Important Non-Deposit taking Non-Banking Financial Company'. TheCompany has not accepted public deposits during the year under review.

Operations

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.

Annual Return

The extract of annual return as provided under section 92(3) of the Companies Act 2013(‘the Act') in the prescribed form MGT-9 is annexed to this Report and also on theCompany's website at http://www.bhil.in/inv/annual_reports.html

Number of meetings of the Board

Six meetings of the Board were held during FY2020. Details of the meetings andattendance thereat form a part of the Corporate Governance Report.

Directors' responsibility statement

In compliance of section 134(5) of the Act the directors 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 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 were adequate and operatingeffectively.

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

During the year under review no frauds were reported by the auditors to the AuditCommittee or the Board under section 143(12) of the Act.

Declaration by independent directors

The Independent Directors have submitted declaration of independence as required undersection 149(7) of the Act stating that they meet the criteria of independence as providedin section 149(6) of the Act as amended and Regulation 16 of the SEBI Listing Regulationsas amended.

The Board took on record the declaration and confirmation submitted by the IndependentDirectors regarding their meeting the prescribed criteria of independence afterundertaking due assessment of the veracity of the same as required under Regulation 25 ofthe SEBI Listing Regulations.

The Ministry of Corporate Affairs vide its circular dated 22 October 2019 furtheramended the Companies (Appointment and Qualification of Directors) Rules 2014 byrequiring an Independent Director to apply online within 1 May 2020 to the Institute ofCorporate Affairs for inclusion of his/her name in the data bank for such period tillhe/she continues to hold office of an independent director in any company. The IndependentDirectors were also required to submit a declaration of compliance in this regard. All theIndependent Directors of the Company have submitted the declaration with respect to thesame.

Directors' Remuneration Policy and criteria for matters under section 178

The Board at its meeting held on 14 March 2019 has revised the sitting fees from H50000 to H 100000 and commission from H 100000 to H 200000 payable per meeting to allnon-executive directors (including independent directors) for meetings of the Board and/orCommittee's attended by them from and after 1 April 2019.

The salient features and changes to the Policy on directors' appointment andremuneration form a part of the ‘Corporate Governance Report'. The said policy isplaced on the Company's website at http://www.bhil.in/inv/codes_policies.html

Particulars of loans guarantees or investments

During the year under review the Company did not give loans to any person. Informationregarding investments covered under the provisions of section 186 of the Act are detailedin the financial statements.

Related party transactions

No Related Party Transactions (RPTs) were entered into by the Company during thefinancial year 2019-20 which attracted the provisions of section 188 of the Act. Therebeing no ‘material' related party transactions as defined under regulation 23 of SEBIListing Regulations there are no details to be disclosed in Form AOC-2 in that regard.

During the year 2019-20 pursuant to section 177 of the Act and regulation 23 of SEBIListing Regulations all RPTs were placed before the Audit Committee for its approval.Pursuant to regulation 23 of SEBI Listing Regulations the Board at its meeting held on14 March 2019 has revised the policy on materiality of RPTs and on dealing with RPTsinter alia by including clear threshold limits.

The said revised policy is placed on the Company's website athttp://www.bhil.in/inv/codes_policies.html and is also included in this Annual Report.

Conservation of energy technology absorption foreign exchange earnings and outgo

Conservation of energy

The Company has taken inter alia following measures to reduce energy consumption:

• Switched from conventional lighting systems to LED lights at Mumbai location;

• Selecting and designing offices to facilitate maximum natural light utilisation.

Technology absorption

The Company primarily being an investment company and not involved in any industrialor manufacturing activities has no particulars to report regarding technology absorptionas required under section 134 of the Act and Rules made thereunder.

Foreign exchange earnings and outgo

During the year under review the total foreign exchange earned by the Company was Nil(as against Rs. 180.70 crore during the previous year).

The total foreign exchange outflow during the year under review was Rs. 36.68 crore (asagainst Rs. 207.23 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 report on the Corporate Social Responsibility Policy developed and implementedby the Company on CSR initiatives taken during the year pursuant to section 135 of the Actis given in the Annual Report on CSR activities.

Formal annual evaluation of the performance of the 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.

Presentation of Financial Statements

The financial statements of the Company for the year ended 31 March 2020 have beendisclosed as per Division ll of Schedule III to the Act.

Indian Accounting Standards 2015

The annexed financial statements comply in all material aspects with Indian AccountingStandards (Ind AS) notified under section 133 of the Act Companies (Indian AccountingStandards) Rules 2015 and other relevant provisions of the Act.

Consolidated Financial Statements

The directors also present the audited consolidated financial statements incorporatingthe duly audited financial statements of the subsidiaries and as prepared in compliancewith the Act applicable Accounting Standards and SEBI Listing Regulations.

Subsidiary/associates

Following are the subsidiary/associate companies of the Company:

Name of the company % shareholding of BHIL and its subsidiaries Status
Bajaj Auto Ltd. 35.77% Associate
Bajaj Finserv Ltd. 41.63% Associate
Bajaj Auto Holdings Ltd. 100% Subsidiary
Maharashtra Scooters Ltd. 51% Subsidiary

The financial highlights of performance of subsidiary and associates of the Company andtheir contribution to the overall performance of the Company during the period underreport is covered in the Management Discussion and Analysis Report.

With respect to the litigation between the Company and Western Maharashtra DevelopmentCorporation Ltd. (WMDC) in connection with the sale of 27% shareholding in MaharashtraScooters Ltd. (MSL) i.e. 3085712 equity shares by WMDC to the Company the Hon'bleSupreme Court of India passed an Order dated 9 January 2019 directing WMDC to transfer3085712 shares held by it in MSL to the Company upon payment to WMDC an amount of H 232per share (in place of Rs. 151.63 per share awarded by the Arbitrator) along with interest@ 18% p.a. from the date of the Arbitral Award. WMDC after receipt of amount of Rs.222.48 crore (net of TDS) on 14 June 2019 had on 17 June 2019 transferred its 27% stakein MSL to the Company. Consequent upon the same MSL has become a subsidiary of theCompany with effect from 17 June 2019.

Directors and Key Managerial Personnel

A) Change in Directorate:

i. Cessation of Independent Director

Your Directors express their profound grief on the sudden demise of Nanoo Pamnani.

He passed away on 22 February 2020 and consequently ceased to be a director of theCompany. The Board places on record its sincere appreciation for guidance services andmentorship provided by late Nanoo Pamnani as an independent director of the Company.

ii. Appointment of an Independent Director

The Board of Directors by way of a circular resolution dated 25 March 2020 appointedPradip P Shah as Independent Director for a period of five years with effect from thatdate.

Necessary details regarding his appointment as required under the Act and SEBI ListingRegulations including his brief profile are given in the notice of Annual General Meeting(AGM). The aforesaid appointment is subject to approval of shareholders at the ensuingAGM.

The Board is of the opinion that Pradip Shah has the necessary experience and expertiseconcerning the business of the Company. Based on the declarations submitted by PradipShah the Board is also of the opinion thaThe possesses the integrity to be appointed asan Independent Director of the Company.

iii. Directors liable to retire by rotation

The Company in total has 10 directors - 5 independent directors 4 non-executives nonindependent and 1 executive director. As per section 152 of the Act at leasttwo–thirds of the total number of directors (excluding independent directors) shallbe liable to retire by rotation. Amongst the said 5 directors Sanjiv Bajaj ManagingDirector is a director not liable to retire by rotation. Of the remaining 4 directorsliable to retire by rotation Manish Kejriwal (DIN 00040055) director being the longestin office retires from the Board by rotation this year and being eligible has offeredhis candidature for re–appointment.

Brie f details of Manish Kejriwal Director who is seeking re–appointment aregiven in the notice of AGM.

B) Change in KMP:

There was no change in Key Management Personnel during the year under review.

Internal audit

At the beginning of each financial year an audit plan is rolled out after the same hasbeen approved by Audit Committee. The audit plan is aimed at evaluation of the efficacyand adequacy of internal control systems and compliance thereof robustness of internalprocesses policies and accounting procedures compliance with laws and regulations. Basedon the reports of internal audit process owners undertake corrective action in theirrespective areas.

Significant audit observations and corrective actions thereon are presented to theAudit Committee of Board.

Adequacy 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. This includes itsdesign implementation and maintenance along with periodical internal review ofoperational effectiveness and sustenance which are commensurate with the nature of itsbusiness and the size and complexity of its operations.

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.

Postal Ballot

During FY2020 approval of shareholders was sought for the below businesses through aPostal Ballot. All the resolutions were passed by overwhelming majority.

Alteration of Objects Clause of Memorandum of Association

The Objects clause in the Memorandum of Association was amended by altering theexisting clause III of the Objects of the Company with a new clause III with an intent torevamp the entire provisions to bring the same in line with the provisions of the Act andto make it in conformity with the current Objects of the Company.

Amendment to Articles of Association

The Articles of Association of the Company were amended in its entirety as per the formspecified in Table F in Schedule I to the Act including insertion of an enabling provisionfor appointment of any person who has rendered significant or distinguished services tothe Company or to the industry to which the Company's business relates or in the publicfield as "Chairman Emeritus".

Investment limit of Foreign Portfolio Investors

The Ministry of Finance (Department of Economic Affairs) vide its notification dated17 October 2019 superseded the Foreign Exchange Management (Transfer or Issue of Securityby a Person Resident Outside India) Regulations 2017 and the Foreign Exchange Management(Acquisition and Transfer of Immovable Property in India) Regulations 2018 with theintroduction of Foreign Exchange Management (Non-debt Instruments) Rules 2019.

As per the said rules the existing FPI limit with effect from 1 April 2020 will bethe sectoral cap i.e. 100 per cent in case of the Company. The said limit can be changedto 24 or 49 or 74 per cent with approval of the Board and the shareholders. Accordinglypursuant to the approval of the shareholders by means of a special resolution through aPostal Ballot the investment limit of Foreign Portfolio Investors was fixed at 24 percent of the paid up equity share capital of the Company. As per the said rules the saidlimit can be enhanced to 49 per cent 74 per cent or 100 per cent but cannot be reduced.For details of the shareholding of Foreign Portfolio Investors please refer the annexed‘Extract of Annual Return'.

Approval for payment of Remuneration to Managing Director and CEO of the Company

An enabling approval was sought from the members for the financial year 2019-20 and forthe remaining term of his tenure up to 31 March 2022 for remuneration payable to SanjivBajaj notwithstanding that it may exceed 2.5% or 5% of net profits as per the provisionsof the Act.

RBI guidelines

The Company continues to fulfill all the norms and standards laid down by the RBIpertaining to non–performing assets capital adequacy statutory liquidity assetsetc. As against the RBI norm of 15% the capital adequacy ratio of the Company was 97% ason 31 March 2020. In line with the RBI guidelines for asset liability management (ALM)system for NBFCs the Company has an Asset Liability Management Committee which meetsyearly once to review its ALM risks and opportunities.

The Company is in compliance with the NBFC – Corporate Governance (Reserve Bank)Directions 2015.

Harmonisation of different categories of NBFCs

The Reserve Bank of India vide its circular no. DNBR (PD)CC.No.097/03.10.001/2018-19dated 22 February 2019 harmonised different categories of NBFCs into fewer ones on thebasis of the principle of regulation by activity rather than regulation by entity in orderto provide greater operational flexibility.

Accordingly the three categories of NBFCs viz. Asset Finance Companies (AFCs) LoanCompanies (LCs) and Investment Companies (ICs) have been merged into a new category calledNBFC - Investment and Credit Company (NBFC-ICC).

The Company now is categorised as NBFC- Investment and Credit Company (NBFC-ICC).

Policy on dividend distribution

Information about the policy on dividend distribution is given in the annexed‘Corporate Governance Report'.

Statutory disclosures

• A summary of the key financials of the Company's subsidiaries and associates inForm AOC-1 is included in this Annual Report. A copy of audited financial statements foreach of the Company's subsidiaries and associates will be made available to the members ofthe Company seeking such information at any point of time by e-mail.

• The audited financial statements of the said companies will be available forinspection upto the date of AGM by any member of the Company on the Company's website atwww.bhil.in

• Details as required under the provisions of section 197(12) of the CompaniesAct 2013 read with rule 5(1) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended containing inter alia ratio of remuneration ofdirectors and KMP to median remuneration of employees and percentage increase in themedian remuneration are annexed to this Report.

• Details as required under the provisions of section 197(12) of the Act read withrule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended which form part of the Directors' Report will be made availableto any member by way of email as per provisions of section 136(1) of the said Act.

• The directors' responsibility statement as required by section 134(5) of theAct appears in a preceding paragraph.

• Pursuan t to RBI Master Direction-Information Technology Framework for the NBFCsector the Company has constituted an IT Strategy Committee to review the IT strategiesin line with the corporate strategies board policy reviews cyber security arrangementsand any other matter related to IT governance.

• Cash Flow Statement for FY2020 is attached to the Balance Sheet.

• The provisions of section 148 of the Act are not applicable to the Company.Accordingly there is no requirement of maintenance of cost records as specified undersub-section (1) of section 148 of the Act.

• The Company has a policy on prevention of sexual harassment at the workplace.The Company has complied with the provisions relating to the constitution of InternalComplaints Committee under Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. There was no case reported during the year underreview under the said Policy.

Corporate governance

Pursuant to the SEBI Listing Regulations a separate chapter titled ‘CorporateGovernance' has been included in this Annual Report along with the reports on ManagementDiscussion and Analysis and General Shareholder Information.

All the Board members and Senior Management personnel have affirmed compliance with theCode of Conduct for the financial year 2019-20. A declaration to this effect signed by theManaging Director & CEO of the Company is contained in this Annual Report.

The Managing Director & CEO and the CFO have certified to the Board with regard tothe financial statements and other matters as required under regulation 17(8) of the SEBIListing Regulations.

Certificate from the statutory auditors of the Company regarding compliance ofconditions of corporate governance is annexed to this Report.

Business Responsibility Report

Pursuant to the provisions of the SEBI Listing Regulations the Company is required togive Business Responsibility Report (‘BRR') in the Annual Report.

As a part of green initiative the BRR for financial year 2019-20 has been placed onthe Company's website at http://www.bhil.in/inv/annual_reports.html A copy of the BRR willbe made available to any members on request by e-mail.

Significant and material orders

During FY2020 no significant and material orders were passed by any regulator or courtor tribunal impacting the going concern status and Company's operations in future.

COVID-19

Towards the end of March 2020 many of the States/Union Territories across the countryin view of the heightened concern over the spread of Corona Virus (‘COVID-19")issued directives inter-alia to facilitate work from home for majority of its employees.In line with the lockdown announced by the Central Government all offices of the Companywere closed from 25 March 2020 providing employees facility to "Work from Home"to ensure continuity of operations of the Company.

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. These Secretarial Standards were then revisedand were made effective from 1 October 2017. The Company is in compliance with the same.

Auditors

Statutory auditor

Pursuant to the provisions of section 139 of the Act the members at the Annual GeneralMeeting of the Company held on 20 July 2017 appointed S R B C & CO LLP CharteredAccountants (Firm Registration No. 324982E/E300003) as statutory auditors of the Companyfrom the conclusion of the seventy second annual general meeting till the conclusion ofthe seventy seventh annual general meeting.

The statutory audit report for the year 2019-20 does not contain any qualificationreservation or adverse remark or disclaimer made by statutory auditor.

Secretarial Auditor

Pursuant to the provisions of section 204 of the Act and Rules made thereunder theCompany has re-appointed Shyamprasad D Limaye Practising Company Secretary (FCS No.1587 CP No. 572) to undertake the secretarial audit of the Company. Secretarial auditreport for the financial year 2019-20 as issued by him in the prescribed form MR-3 isannexed to this Report.

The said secretarial audit report does not contain any qualification reservation oradverse remark or disclaimer made by the secretarial auditor.

In addition to the above and pursuant to SEBI circular dated 8 February 2019 a reporton secretarial compliance by Shyamprasad D Limaye for the financial year ended 31 March2020 is being submitted to stock exchanges. There are no observations reservations orqualifications in the said report.

Acknowledgement

The Board of Directors would like to express its gratitude and its appreciation for thesupport and co–operation from its members RBI and other regulators and banks.

The Board of Directors also places on record its sincere appreciation of the commitmentand hard work put in by the Management and the employees of the Company and thank them foryet another excellent year.

On behalf of the Board of Directors

Niraj Bajaj

Chairman

21 May 2020

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