The directors present their Seventy Third Annual Report and audited financialstatements for the year ended 31 MarcRs. 2018.
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 ||FY2018 ||FY2017 |
|Total revenue ||1474.42 ||888.43 |
|Total expenses ||70.12 ||215.94 |
|Profit before tax ||1404.30 ||672.49 |
|Tax expense ||90.75 ||134.31 |
|Profit for the year ||1313.55 ||538.18 |
|Transfer to Reserve fund u/s 45-IC(1) of Reserve Bank of India Act 1934 ||262.71 ||107.64 |
|Transfer to General reserve || ||53.82 |
|Balance carried to Balance Sheet ||1050.84 ||376.72 |
|Earnings per share (H) ||118.0 ||48.4 |
|Proposed dividend (%) ||400% ||325% |
|Dividend and tax thereon ||536.68 ||435.33 |
The highlights of the Consolidated Financial Results are as under:
| || ||(Rs. In Crore) |
|Particulars ||FY2018 ||FY2017 |
|Total revenue ||964.83 ||850.08 |
|Profit before tax ||889.60 ||630.26 |
|Share of profit after tax of associates ||2387.48 ||1977.50 |
|Profit for the year ||3185.68 ||2473.19 |
|Earnings per share (H) ||286.2 ||222.2 |
The directors recommend for consideration of the shareholders at the ensuing annualgeneral meeting payment of dividend of RS. 40 per equity share (400%) for the year ended31 MarcRs. 2018. The amount of dividend and the tax thereon to the extent applicableaggregate to RS. 536.68 crore.
For the year ended 31 MarcRs. 2017 the dividend paid was RS. 32.50 per equity share ofRS. 10 each (325%) and the total dividend and the tax thereon to the extent applicableaggregated to RS. 435.33 crore.
The paid up equity share capital as on 31 MarcRs. 2018 was RS. 111.29 crore. There wasno public issue rights issue bonus issue or preferential issue etc. during the year.The Company has not issued shares with differential voting rights or sweat equity sharesnor has 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 aSystemically Important Non-Deposit taking Non-Banking Financial Company'. TheCompany has not accepted public deposits during the year under review. The Company hasformed a Risk Management Committee and Asset Liability Management Committee in terms ofthe applicable directions/regulations of the Reserve Bank of India in this regard. AnInformation Technology (IT) Strategy Committee has also been formed under the RBI ITframework.
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
Six 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 the 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 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 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 section 149(6) of the said Act.
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
No related party transactions (RPTs) were 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 regulation 23of the SEBI Listing Regulations 2015 there are no details to be disclosed in Form AOC-2in that regard.
During the year 2017-18 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 the Board is uploaded on theCompany's website www.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 has no particulars to report regarding conservation of energyand technology absorption as required under section 134 of the Companies Act 2013 andRules made thereunder. During the year under review the Company did not have any foreignexchange earnings whereas the foreign exchange outgo amounted to RS. 1.21 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 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 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.
Following are the subsidiary/joint venture/associate companies of the Company:
|Name of the company ||% shareholding of BHIL and its subsidiary ||Status |
|Bajaj Auto Ltd. ||31.54% ||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 the Awardof the Arbitrator between BHIL and WMDC passed on 14 January 2006 the Division Bench ofthe Hon'ble Bombay High Court had pronounced its Order on 8 May 2015 inter aliastipulating the following:
1. The Company's Appeal No. 153 of 2010 is allowed and the impugned order of the SingleJudge dated 15 February 2010 is set aside in so far as it set aside the arbitral Award onthe ground that clause 7 of the Protocol Agreement was in the nature of a restriction onfree transferability of the shares and was therefore contrary to section 111A of theCompanies 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.151.63 per share) together with simple interest @ 18% per annum from 14 January 2006 (dateof Arbitral 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 the sad demise of Naresh Chandra an independentdirector of the Company on 9 July 2017. The Directors record their very sincereappreciation of the valuable contribution made by him during his long tenure as directorof the Company.
Pursuant to section 149 and regulation 17(1)(b) read with regulation 25(6) of the SEBIListing Regulations 2015 the Board at its meeting held on 15 September 2017 appointedDr. Naushad Forbes as an Additional Director in the category of non-executive independentdirector in place of Late Naresh Chandra to hold office up to the date of the ensuingannual general meeting of the Company.
As required under the said Act and the Rules made thereunder the same is now put upfor approval of shareholders at the ensuing annual general meeting. Necessary details havebeen annexed to the Notice of the meeting in terms of section 102(1) of the Companies Act2013 and regulation 36(3) of the SEBI Listing Regulations 2015. Dr. Forbes has submittedthe declaration of independence as required pursuant to section 149(7) of the CompaniesAct 2013 stating that he meets the criteria of independence as provided in section 149(6)and regulation 16(1)(b) of the SEBI Listing Regulations 2015.
As per the provisions of the Companies Act 2013 Rahul Bajaj retires from the Board byrotation this year and being eligible offers himself for re-appointment. The informationas required to be disclosed under regulation 36(3) of the SEBI Listing Regulations 2015in case of re-appointment of the director is provided in the Notice of the ensuing annualgeneral meeting.
Apart from the above there was no change in the directors and Key Managerial Personnelduring the year under review.
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. 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.
Presentation of financial statements
The financial statements of the Company for the year ended 31 MarcRs. 2018 have beendisclosed as per Division I of 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 the SEBI Listing Regulations 2015.
A statement containing the salient features of the subsidiaries (including associatesand joint venture) in the prescribed form AOC-1 is annexed separately.
The summary of the key financials of the Company's subsidiary associate companies andjoint venture (Form AOC-1) is included in this Annual Report. A copy of the 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 statements ofthe 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 Company's 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 as amended are annexed to this Report.
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 as amended which form part of the Directors' Report will be madeavailable to any shareholder on request as per the provisions of section 136(1) of thesaid Act.
Disclosures as prescribed under the Non-Banking Financial Company-SystemicallyImportant Non- Deposit taking Company and Deposit taking Company (Reserve Bank)Directions 2016 and other applicable NBFC Regulations have been made in this AnnualReport.
A Cash Flow Statement for the year 2017-18 is attached to the Balance Sheet.
Pursuant to the legislation The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013' the Company has a Policy on Preventionof Sexual Harassment at Workplace. There was no case reported during the year under reviewunder the said Policy.
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 the Board members and Senior Management personnel have affirmed compliance with theCode of Conduct for the year 2017-18. 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 the statutory auditors of the Companyregarding compliance of conditions of corporate governance is annexed to this Report.
Business Responsibility Report
Regulation 34(2) of the SEBI Listing Regulations 2015 as amended inter aliaprovides that the annual report of the top 500 listed entities based on marketcapitalisation (calculated as on 31 March of every financial year) shall include aBusiness Responsibility Report (BRR).
Since BHIL is one of the top 500 listed companies the Company as in the previousyears has presented its BRR for the financial year 2017-18 which is part of this AnnualReport. As a green initiative the BRR has been hosted on the Company's websitewww.bhil.in
A physical copy of the BRR will be made available to any shareholder on request.
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 made effective from 1 October 2017. The Company is in compliance with the same.
Pursuant to the provisions of section 139 of the Companies Act 2013 the members atthe Annual General Meeting of the Company held on 20 July 2017 appointed S R B C & COLLP Chartered Accountants (Firm Registration No. 324982E/E300003) as statutory auditorsof the Company from the conclusion of the seventy second annual general meeting till theconclusion of the seventy seventh annual general meeting covering one term of fiveconsecutive years subject to ratification by the members at each intervening annualgeneral meeting.
In view of the amendment to the said section 139 through the Companies (Amendment) Act2017 notified on 7 May 2018 ratification of auditors' appointment is no longer required.However as required under section 142 of the Companies Act 2013 a proposal is put upfor approval of members for authorising the Board of Directors of the Company to fixAuditors' remuneration for the year 2018-19 and thereafter. The members are requested toapprove the same.
The statutory audit report for the year 2017-18 does not contain any qualificationreservation or adverse remark 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 2017-18 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
Pune: 18 May 2018