At the outset your Company's Board of directors commiserates with thefamilies of all employees members and others who succumbed to this dreadful COvid-19pandemic.
Your directors' present the Seventy Sixth Annual Report along with theaudited standalone and consolidated financial statements for FY2021.
Circulation of Annual Reports in electronic form
Pursuant to circulars from the Ministry of Corporate Affairs ('MCA')dated 8 April 2020 13 April 2020 5 May 2020 and 13 January 2021 read with SEBICirculars dated 12 May 2020 and 15 January 2021 the ensuing 76th Annual General Meeting(AGM) is being conducted through 'Video Conferencing or Other Audio Visual Means'(VC/OAVM).
Accordingly the financial statements (including Directors' ReportCorporate Governance Report Management Discussion and Analysis Report Auditors' Reportand other documents to be attached therewith) are being sent through electronic mode tothose members whose email addresses are registered with the Company's Registrar and ShareTransfer Agent viz. KFin Technologies Pvt. Ltd. (KFin) /Depository Participants andwhose names appear in the Register of Members as on Friday 18 June 2021. The Company hasalso made arrangements for those members who have not yet registered their email addressto get these registered by following the procedure prescribed in the notice of AGM.
The financial results of the Company are elaborated in the ManagementDiscussion and Analysis Report.
The highlights of the Standalone Financial Results are as under:
(Rs. in Crore)
|Particulars ||FY2021 ||FY2020 |
|Total income ||431.14 ||2205.86 |
|Total expenses ||121.23 ||157.77 |
|Profit before tax ||309.91 ||2048.09 |
|Tax expense ||111.32 ||221.22 |
|Profit for the year ||198.59 ||1826.87 |
|Earnings per share (Rs.) ||17.80 ||164.10 |
Closing balances in reserve/other equity
(Rs. in Crore)
|Particulars ||FY2021 ||FY2020 |
|Reserve fund in terms of section 45-IC(1) of Reserve Bank of India Act 1934 ||2147.06 ||2107.34 |
|Securities premium ||444.42 ||444.42 |
|General reserve ||3706.96 ||3706.96 |
|Retained earnings ||3647.69 ||3198.67 |
|Other reserves - Equity instruments through other comprehensive income ||3906.78 ||1089.11 |
|Other reserves- Debt instruments through other comprehensive income ||52.56 ||34.63 |
|Other reserves- Hedge instruments through other comprehensive income ||0.01 ||0.07 |
|Total ||13905.48 ||10581.20 |
Note: Detailed movement of above reserves can be seen in 'Statementof Changes in Equity'
The highlights of the Consolidated Financial Results are as under:
(Rs. in Crore)
|Particulars ||FY2021 ||FY2020 |
|Total income ||463.07 ||435.69 |
|Share of profits of associates ||3445.59 ||3057.81 |
|Profit before tax ||3765.74 ||3313.67 |
|Profit for the year ||3649.83 ||2992.00 |
|Earnings per share (Rs.) ||327.90 ||268.80 |
Transfer to reserve fund
Under section 45-IC of Reserve Bank of India Act 1934 non-bankingfinancial companies (NBFCs) are required to transfer a sum not less than 20% of its netprofit every year to reserve fund before declaration of any dividend. Accordingly theCompany has till date transferred a sum of Rs. 2147.06 crore to its reserve fund.
Detailed information on the operations of the Company and details onthe state of affairs of the Company are covered in the Management Discussion and AnalysisReport.
Presentation of Standalone and Consolidated Financial Statements
The financial statements of the Company for FY2021 on a standalone andconsolidated basis have been prepared in compliance with the Act applicable AccountingStandards and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015('SEBI Listing Regulations') and are disclosed in accordance with Schedule III of the Act.The consolidated financial statements incorporate the audited financial statements of thesubsidiaries and associates of the Company.
Dividend distribution policy
Pursuant to the provisions of 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 members.
The policy has been uploaded on the website of the Company and can beaccessed at
http://www.bhil.in/inv/codes_policies.html. A copy of the policy willbe made available to any shareholder on request by email.
The directors recommend for consideration of the members at theensuing Annual General Meeting dividend of Rs. 40 per equity share (400%) of face valueof Rs. 10 for the year ended 31 March 2021. The total dividend pay-out for FY2021 is Rs.445.17 crore.
During FY2020 Dividend income received by the Company wassubstantially higher as compared to FY2021 as group companies had declared an InterimDividend in FY2020. Consequently there was no dividend declared in FY2021 by some ofthese companies. In order to keep the dividend declared stable and steady the Board hasfor FY2021 recommended dividend out of the Retained Earnings outstanding at the close ofthe year. Such payment of dividend from retained profits was not envisaged in the DividendDistribution policy which will be suitably revised.
Dividend paid for FY2020 was Rs. 40 per equity share (400%) of facevalue of Rs. 10 each. The amount of dividend pay-out and tax thereon aggregated to Rs.531.00 crore.
In view of the amendment to the Income Tax Act 1961 through theFinance Act 2020 imposition of Dividend Distribution Tax has been abolished. Thedividend if declared at the ensuing AGM will be taxable in the hands of the members ofthe Company. For further details on taxability please refer to the 'Notice of 76th AGM'.
Subsidiary/associates and joint ventures
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 ofthe Company and their contribution to the overall performance of the Company during theperiod under Report is covered in the Management Discussion and Analysis Report.
During FY2021 no new subsidiary was incorporated/acquired. Neither theCompany has entered into a joint venture with any company.
The financial statements of the subsidiary companies are also availablein a downloadable format under Investors section of the Company's website athttp://www.bhil.in/inv/annual_reports.html
A separate statement containing the salient features of thesubsidiaries in the prescribed form AOC-1 is attached to the consolidated financialstatements.
Directors and Key Managerial Personnel
A) Change in Directorate/Chairman:
i) Relinquishment of position of Chairman
Considering the increasing roles and responsibilities in various Bajajgroup entities Niraj Bajaj has relinquished his position as Chairman of the Company witheffect from close of business hours of 30 April 2021. Considering his valuable performanceas Chairman of the Company over the past two years and to leverage his experience theBoard at its meeting held on 29 April 2021 designated Niraj Bajaj as the vice-chairman ofthe Company with effect from 1 May 2021.
ii) Appointment of Independent Director
The Board of Directors at its meeting held on 29 April 2021 hasappointed Dr. Omkar Goswami as Independent Director for a period of five years with effectfrom 1 May 2021.
The Board is of the opinion that Dr. Omkar Goswami has the necessaryexperience and expertise concerning the business of the Company. Based on the declarationssubmitted by Dr. Goswami the Board is also of the opinion that he possesses the integrityto be appointed as an Independent Director of the Company.
iii) Appointment of Non-executive Director and Chairman of the Company
Considering the relinquishment of position of Chairman by Niraj Bajajthe Board at its meeting held on 29 April 2021 appointed Shekhar Bajaj as an AdditionalDirector and Non-executive Chairman with effect from 1 May 2021.
Necessary details regarding their appointments as required under theAct and SEBI Listing Regulations including their brief profile are given in the notice ofAGM. The appointment of Dr. Omkar Goswami and Shekhar Bajaj is subject to approval ofmembers at the ensuing AGM.
B) Director liable to retire by rotation:
The Company as on 31 March 2021 has 10 directors - 5 independentdirectors 4 non-executive non-independent and 1 executive director. As per theprovisions of Companies Act 2013 ('the Act') at least two-third of the total number ofdirectors (excluding independent directors) shall be liable to retire by rotation. Amongstthe said 5 directors Sanjiv Bajaj Managing Director is a director not liable to retireby rotation. Out of the remaining 4 directors liable to retire by rotation Madhur Bajajdirector being the longest in office retires from the Board by rotation this year andbeing eligible has offered his candidature for re-appointment.
Necessary details of Madhur Bajaj Director who is seekingre-appointment are given in the notice of AGM.
C) Change in KMP:
There was no change in Key Managerial Personnel of the Company duringthe year under review.
Declaration by independent directors
The independent directors have submitted a declaration of independencestating that they meet the criteria of independence as required pursuant to the provisionsof the Act as amended and SEBI Listing Regulations. The independent directors have alsoconfirmed compliance with the provisions of rule 6 of Companies (Appointment andQualifications of Directors) Rules 2014 as amended relating to inclusion of their namein the databank of independent directors.
The Board took on record the declaration and confirmation submitted bythe independent directors regarding them meeting the prescribed criteria ofindependence after undertaking due assessment of the veracity of the same in terms of theSEBI Listing Regulations.
Policy on directors' appointment and remuneration
The salient features of the Policy on directors' appointment andremuneration form a part of the 'Corporate Governance Report'. The said policy is placedon the Company's website at http://www.bhil.in/inv/codes_policies.html.
A copy of the annual return as required under the Act in the prescribedform which will be filed with the Registrar of Companies/Ministry of Corporate Affairswithin the regulatory timelines is hosted on the Company's website athttp://www.bhil.in/inv/annual_reports.html
Number of meetings of the Board
Five meetings of the Board were held during FY2021. Details of themeetings and attendance thereat form a part of the Corporate Governance Report.
Directors' responsibility statement
In accordance with the provisions of the Act and based on theinformation provided by the Management the directors state that:
in the preparation of the annual accounts the applicableAccounting Standards had been followed along with proper explanation relating to materialdepartures;
they have 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 of the Company for that period;
they have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls to be followedby the Company and that such internal financial controls are adequate and were operatingeffectively; and
they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Particulars of loans guarantees or investments
During the year under review the Company did not give loans to anyperson. Information regarding investments covered under the provisions of the Act aredetailed in the financial statements.
The paid-up equity share capital as on 31 March 2021 was Rs. 111.29crore. There was no public issue rights issue bonus issue or preferential issue etc.during the year. The Company has not issued shares with differential voting rights orsweat equity shares nor has it granted any stock options.
Continued classification as Systemically Important Non-Deposit takingNBFC
The Company has been registered with the Reserve Bank of India as aNon-Banking Financial Institution (Non-Deposit taking). In terms of provisions ofNon-Banking Financial Company - Systemically Important Non-Deposit taking Company andDeposit taking Company (Reserve Bank) Directions 2016 the Company is categorised as a'Systemically Important Non-Deposit taking Non-Banking Financial Company'. The Company hasnot accepted public deposits during the year under review.
Details in respect of frauds reported by auditors under section 143(12)of the Act
During the year under review no frauds were reported by the auditorsto the Audit Committee or the Board pursuant to the Act.
Related party transactions
All contracts/arrangements/transactions entered by the Company duringFY2021 with related parties were in compliance with the applicable provisions of the Actand SEBI Listing Regulations. Prior omnibus approval of the Audit Committee is obtainedfor all related party transactions which are of foreseen and repetitive nature. Pursuantto the said omnibus approval details of related party transactions entered into are alsoreviewed by the Audit Committee on a quarterly basis.
All related party transactions entered during FY2021 were on arm'slength basis and in the ordinary course of business of the Company under the Act and notmaterial under the SEBI Listing Regulations or extant RBI guidelines. None of thetransactions required members' prior approval under the Act or SEBI Listing Regulations.
Details of transactions with related parties during FY2021 are providedin the notes to the financial statements. There were no material related partytransactions requiring disclosure as per the Act. Hence the prescribed Form AOC-2 doesnot form a part of this report.
The Company has formulated a policy on materiality of related partytransactions for dealing with related party transactions including clear threshold limitsduly approved by the Board. The Board has reviewed the policy and has not recommended anychange to either the policy or prescribed threshold.
The said policy is placed on the Company's website athttp://www.bhil.in/inv/codes_policies.html.
Material changes and commitments
There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear of the Company and the date of this Report.
Conservation of energy technology absorption foreign exchangeearnings and outgo
Conservation of energy
The Company has taken intef alia following measures to reduceenergy consumption:
(a) Switched from conventional lighting systems to LED lights at Mumbailocation; and
(b) Selecting and designing offices to facilitate maximum natural lightutilisation.
The Company primarily being an investment company and not involved inany industrial or manufacturing activities has no particulars to report regardingtechnology absorption as required under the Act and Rules made thereunder.
Foreign exchange earnings and outgo
During the year under review no foreign exchange was earned by theCompany. No foreign exchange was earned by the Company during FY2020 as well.
The total foreign exchange outflow during the year under review was Rs.37.04 crore (as against Rs. 36.68 crore during the previous year).
Risk Management Policy
Information on the development and implementation of a Risk ManagementPolicy for the Company i^>tef alia including identification of the elements ofrisks which in the opinion of the Board could significantly impact the Company is givenin the Corporate Governance Report.
Corporate Social Responsibility (CSR)
The CSR committee comprises of three directors viz. Sanjiv Bajaj asChairman Anami N Roy and Dr. Naushad Forbes as other members. During FY2021 theCommittee met once the attendance record of members are given in the 'Annual Report onCSR activities'. Section 135 of the Act and the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 have been amended substantially with effect from 22 January 2021.
In terms of the provisions of the Act read with amended Companies(Corporate Social Responsibility Policy) Rules 2014 the Annual Report on CSR activitiesunder the format prescribed under Annexure II of the said Rules is annexed to this Report.
In line with the said amendments the Board at its meeting held on 29April 2021 amended the existing Policy. The Policy is uploaded on the website of theCompany at http://www.bhil.in/inv/corporate-social-responsibility.html
The Chief Financial Officer has certified that the funds disbursed havebeen utilised for the purpose and in the manner approved by the Board for FY2021.
Formal annual evaluation of the performance of the Board itsCommittees and Directors
Information on the manner in which formal annual evaluation has beenmade by the Board of its own performance and that of its Committees and individualdirectors is given 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 materialorders passed by the regulators or courts or tribunals which may impact the going concernstatus of the Company and its operations in future.
The Audit Committee comprises of Pradip P Shah as Chairman Dr. NaushadForbes Dr. Gita Piramal and Manish Kejriwal as other members.
The brief terms of reference and attendance record of members are givenin the 'Corporate Governance Report'.
At the beginning of each financial year an audit plan is rolled outafter the same has been approved by Audit Committee. The audit plan is aimed at evaluationof the efficacy and adequacy of internal control systems and compliance thereofrobustness of internal processes policies and accounting procedures compliance with lawsand regulations. Based on the reports of internal audit process owners undertakecorrective action in their respective areas.
Significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.
The Reserve Bank of India vide its circular dated 3 February 2021 hasintroduced Risk based Internal Audit (RBIA) for NBFCs. In terms of the said circularapplicable NBFCs shall put forth a Risk Based Internal Audit Framework by 31 March 2022.
The Board on the recommendation of the Audit Committee has approved apolicy process and plan for internal audit as per the said RBI circular which is beingimplemented from 1 April 2021.
Internal Financial Controls
The Company has in place adequate financial controls commensurate withits size scale and complexity of operations with reference to its financial statements.These have been designed to provide reasonable assurance about recording and providingreliable financial information ensuring integrity in conducting business accuracy andcompleteness in maintaining accounting records and prevention and detection of frauds anderrors.
Whistle blower policy/vigil mechanism
The Company has a whistle blower policy encompassing vigil mechanismpursuant to the provisions of the Act and SEBI Listing Regulations. The Audit Committeereviews the functioning of the whistle blower policy. The policy/vigil mechanism enablesdirectors and employees to report to the management their concerns about unethicalbehaviour actual or suspected fraud or violation of the Company's code of conduct orethics policy and leak or suspected leak of unpublished price sensitive information. Moredetails are given in 'Corporate Governance Report'.
The whistle blower policy is uploaded on the website of the Company andcan be accessed at http://bhil.in/inv/codes_policies.html
The Company continues to fulfill all the norms and standards laid downby the RBI pertaining to non-performing assets capital adequacy statutory liquidityassets etc. As against the RBI norm of 15% the capital adequacy ratio of the Company was112% as on 31 March 2021. In line with the RBI guidelines for asset liability management(ALM) system for NBFCs the Company has an Asset Liability Management Committee whichmeet yearly once to review its ALM risks and opportunities.
Your Company is in compliance with the NBFC - Corporate Governance(Reserve Bank) Directions 2015.
The financial results of the Company and its subsidiaries areplaced on the Company's website at www.bhil.in
Details as required under the provisions of the Act read withrule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended containing intef alia ratio of remuneration of Directors tomedian remuneration of employees and percentage increase in the median remuneration areannexed to this Report.
Details as required under the provisions 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 on request as per provisions of section 136(1) of the said Act.
Pursuant to RBI Master Direction-Information TechnologyFramework for the NBFC sector the Company has constituted an IT Strategy Committee toreview the IT strategies in line with the corporate strategies board policy cybersecurity arrangements and any other matter related to IT governance.
The provision of section 148 of the Act relating to maintenanceof cost records and cost audit are not applicable to the Company.
The Company has a policy on prevention of sexual harassment atthe workplace.
The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. The number of complaintsreceived disposed-off and pending during FY2021 is given in the annexed 'CorporateGovernance Report'.
There is no change in the nature of business of the Companyduring FY2021.
Pursuant to the SEBI Listing Regulations a separate chapter titled'Corporate Governance' has been included in this Annual Report along with the reports onManagement Discussion and Analysis and General Shareholder Information.
All the Board members and Senior Management personnel have affirmedcompliance with the Code of Conduct for FY2021. 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 Boardwith regard to the financial statements and other matters as required under SEBI ListingRegulations.
Certificate from the statutory auditors of the Company regardingcompliance of conditions of corporate governance is annexed to this Report.
Business Responsibility Report
According to the provisions of the SEBI Listing Regulations a BusinessResponsibility Report (BRR) has been hosted on the website and can be accessed athttp://bhil.in/inv/annual_reports.html The BRR highlights the initiatives actionsprocess and the way the Company conducts its business in line with its environmentalsocial and governance obligations.
Towards the end of March 2020 the Prime Minister announced aNationwide Lockdown in view of the heightened concern over the spread of Corona Virus('COVID-19') which had adversely affected all the industrial operations.
In line with the lockdowns announced by the Central Government alloffices of the Company were closed from 23 March 2020 providing 'Work from Home' facilityto employees to ensure continuity of operations of the Company. Considering the nature ofbusiness of BHIL i.e. being an investment company with no customer interface theoperations of the Company went uninterrupted and the impact of COVID-19 on the businesswas minimal.
The only cause for concern at present is the huge surge in infectionsthat started with the second wave beginning in early March 2021. Hopefully the outreachof vaccination drive across the country coupled with proper wearing of masks and socialdistancing will bring this surge down and we expect the situation to normalize soon.
Secretarial Standards of ICSI
The Company has complied with the requirements prescribed under theSecretarial Standards on meetings of the Board of directors (SS-1) and general meetings(SS-2) read with the MCA Circulars granting exemptions in view of the COvID-19 pandemic.
Pursuant to the provisions of the Act the members at the AnnualGeneral Meeting of the Company held on 20 July 2017 appointed S R B C & CO LLPChartered Accountants (Firm Registration No. 324982E/E300003) as statutory auditors of theCompany from the conclusion of the seventy second annual general meeting till theconclusion of the seventy seventh annual general meeting.
The statutory auditors have confirmed they are not disqualified fromcontinuing as auditors of the Company.
The audit report by S R B C & CO LLP for FY2021 is unmodifiedi.e. it does not contain any qualification reservation or adverse remark or disclaimer.
In terms of the RBI Master Directions - Non-Banking Financial CompaniesAuditor's Report (Reserve Bank) Directions 2016 the auditors have also submitted anadditional report dated 21 July 2020 for the financial year 2020 which has been filedwith RBI. There were no comments or adverse remarks in the said report.
Pursuant to the provisions of the Act the Board has appointedShyamprasad D Limaye practising company secretary (FCS No. 1587 CP No. 572) toundertake secretarial audit of the Company.
A report from the secretarial auditor in the prescribed Form MR-3 isannexed to this Report. It does not contain any qualification reservation or adverseremark or disclaimer.
In addition to the above and pursuant to SEBI circular dated 8 February2019 a report on secretarial compliance by Shyamprasad D Limaye for FY2021 has beensubmitted with the stock exchanges. There are no observations reservations orqualifications in that report.
Since the auditors i.e. statutory auditors and secretarial auditorshave not reported any matter under section 143(12) of the Act no detail is required to bedisclosed under section 134(3)(ca) of the Act.
The Board places its gratitude and appreciation for the support andcooperation from its members the RBI and other regulators and banks. The Board alsoplaces on record its sincere appreciation for the commitment and hard work put in by themanagement and the employees in these trying times.
|On behalf of the Board of Directors |
|Niraj Bajaj |
|Pune: 29 April 2021 |