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Company Information

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BAJAJ AUTO LTD.

22 May 2024 | 03:56

Industry >> Auto - 2 & 3 Wheelers

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ISIN No INE917I01010 BSE Code / NSE Code 532977 / BAJAJ-AUTO Book Value (Rs.) 1,037.41 Face Value 10.00
Bookclosure 14/06/2024 52Week High 9358 EPS 276.10 P/E 31.89
Market Cap. 245833.13 Cr. 52Week Low 4491 P/BV / Div Yield (%) 8.49 / 0.91 Market Lot 1.00
Security Type Other

DIRECTOR'S REPORT

You can view full text of the latest Director's Report for the company.
Year End :2023-03 

The directors present their Sixteenth Annual Report and Audited Financial Statements for the year ended 31 March 2023.

Financial Results

The financial results of the Company are elaborated in the report on Management Discussion and Analysis. Given below are the financial highlights:

Sales in numbers

FY2023

FY2022

Two-wheelers

3,437,966

3,836,856

Commercial vehicles

485,018

471,577

Total

3,922,984

4,308,433

Of which exports

1,821,240

2,506,626

(H In Crore)

Particulars

FY2023

FY2022

Total revenue

37,609.02

34,353.95

Total expenses

30,200.38

28,163.90

Profit before exceptional items and tax

7,408.64

6,190.05

Exceptional items

-

(315.28)

Profit before tax

7,408.64

6,505.33

Tax expense

1,781.04

1,486.46

Profit for the year

5,627.60

5,018.87

Earnings per share (J)

197.3

173.6

Closing balances in reserve/other equity

(H In Crore)

Particulars

FY2023

FY2022

General reserve

6,389.60

6,389.60

Retained earnings

17,821.40

19,340.40

Cash flow hedging reserve

-

54.33

Costs of hedging reserve

-

5.93

FVTOCI reserve

927.13

626.41

Capital redemption reserve

6.41

-

Share based payments reserve

62.09

32.27

Treasury shares

(63.73)

(69.51)

Total

25,142.90

26,379.43

Note: Detailed movement of above reserves can be seen in ‘Statement of Changes in Equity'.

Dividend Distribution Policy

Under the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Reguirements} Regulations, 2015 (‘the Listing Regulations, 2015'), as amended, the Company has formulated a dividend distribution policy, which sets out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders.

As a green initiative, the amended policy has been uploaded on the Company's website and can be accessed at https://www.bajajauto.com/investors/policies-codes

Dividend

The directors recommend for consideration of shareholders at the ensuing annual general meeting, payment of a dividend of H 140 per eguity share of H 10 each (1400%) for the year ended 31 March 2023.

For the year ended 31 March 2022 also, the dividend paid was H 140 per share of H 10 each (1400%).

The dividend recommended is in accordance with the principles and criteria as set out in the dividend distribution policy.

The dividend, if declared, will be taxable in the hands of the shareholders of the Company pursuant to Income Tax Act, 1961. For further details on taxability, please refer to Notice of annual general meeting.

Share Capital and Buyback

The paid-up eguity share capital as on 31 March 2023 was H 282.96 crore, while as on 31 March 2022, it was H 289.37 crore. 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 or sweat eguity shares. The reduction in share capital was as a result of buyback of 6,409,662 eguity shares made during the year utilising an aggregate amount of H 2,499.97 crore. As per approval given by the Board, at its meeting held on 27 June 2022, the buyback of the eguity shares of the Company was done through open market route through stock exchanges at a price not exceeding H 4,600 per eguity share. The buyback of eguity shares commenced on 4 July 2022 and was completed on 10 October 2022.

The details of buyback are available on the website of the Company at https://www.bajajauto.com/ investors/share-buyback

Operations

Detailed information on the Company's operations is in the report on Management Discussion and Analysis.

Capacity Expansion and New Projects

The Company's current installed capacity is 6.65 million units per annum.

Detailed information on capacity expansion and new projects is covered in the report on Management Discussion and Analysis.

Research and Development (R&D) and Technology Absorption

FY2023 was a challenging year with many regulatory changes for automotive products to be met under very tight timelines.

A) Products

Many new products were launched during the year under review. Pulsar has been consistently upgraded over the years to keep it in sync with changing times. Information on the new products is covered in the report on Management Discussion and Analysis.

B) Processes

R&D has been working on improving its operations in a number of areas as listed below:

• Manpower: R&D has expanded its team size in areas of design, analysis and validation to facilitate the rapidly expanding aspirations of the Company.

• Facilities: R&D continued to enhance its design, computing, prototype manufacturing and validation facilities. A number of new test facilities and prototyping facilities were added.

• Regulatory requirements: R&D had to calibrate and homologate many more variants to meet the new BS6 0BD2 norms. The powertrain and vehicle configurations were adjusted to meet these new norms rapidly.

C) Technology

As in the past, new and improved technology has been introduced during the year. Such information is covered in the report on Management Discussion and Analysis.

D) Outgo

The expenditure on R&D during FY2023 and in the previous year was:

Particulars

FY2023

(H In Crore) FY2022

i. Capital (including technical know-how)

35.15

42.06

ii. Recurring

489.91

446.73

Total

525.06

488.79

iii. Total research and development expenditure as a percentage of sales

1.48%

1.52%

Conservation of Energy

Company continues its efforts to reduce and optimise the energy consumption at all its manufacturing facilities, including corporate office at Pune.

Significant reduction in energy consumption has been achieved as shown hereunder (key initiatives):

A) Electrical Energy

• Energy efficiency improved by replacing IE1 Motors by IE4/IE5 Motors for Slat Conveyor for Assembly Lines, Hot Water Spray Pump, Water Screen Pump.

• Use of ED bath voltage optimisation based on surface area of individual SKUs.

• Use of VFD and water temperature sensors for optimised running of cooling tower.

• Provision of energy efficient LED luminaries at various designated areas across all our factories for energy conservation.

• Improvement in power factor by addition of automatic power factor control system.

• Continued use of motion sensors for offices and washroom lights.

B) Water

• Rainwater storage pond with capacity 90,000 cubic meter at Waluj plant, 57,000 cubic meter at Pantnagar plant, and 83,500 cubic meter at Chakan plant are available for its use in process.

• Continuous reuse of treated water for processes like painting, cooling towers, etc. in addition to gardening.

• Freguent cleaning of water tank ventilation units.

• Continued rainwater harvesting across all plants.

• Use of one touch taps and sensor-based taps for hand wash at various areas across all plants.

• Reverse cascading of water at pre-treatment stages at paint shop.

• Change of underground water lines with above ground line for easy identification of leakage, if any.

C) LPG/Propane

• Provision of thermo-ceramic coating for oven inner wall in place of GI sheet for Paint Shops.

• Installation of IR heaters on pre-treatment line to reduce hot water generator PNG consumption.

• Exhaust modulation based on oven heating load.

• Automated process Startup and Shutdown System for PTED Line.

• Continued use of magnetic resonance in oven PNG supply.

• Continued use of low temperature chemical for pre-treatment process at paint shop.

• Provision of IR heaters in painting booth flash off zones to reduce ASU burner PNG consumption.

• Use of energy efficient burners in canteen in all plants.

D) Utilisation of Renewable Energy-Key Initiatives

• Usage of renewable solar power generation: 5MW at Waluj, 1MW at Pantnagar, 3.2MW at Akurdi and 2MW at Chakan; generating 155 lakh units per year renewable energy.

• Utilisation of solar water heater in canteen of all plants.

• Utilisation of hot water rooftop solar system for residential area for positive resource utilisation.

• Use of direct sunlight to illuminate shops by installation of ‘skylights' across all plants.

impact of Measures Taken

As a result of the initiatives taken for conservation of energy and natural resources, the Company has achieved an overall reduction in consumption as given in the table below;

% Reduction w.r.t. previous year

Description

FY2023

FY2022

Electricity consumption

# 1.19

3.95

Water consumption

# (4.53)

3.93

LPG/PNG consumption

4.22

17.84

# Impact of addition of new facilities and lower production volume of Motorcycles at Waluj.

investment/Savings

Description

FY2023

(H In Crore) FY2022

Investment for energy conservation activities

1.55

1.76

Recurring savings achieved through above activities

0.87

0.91

Awards and Accolades

• Upgradation of ‘Occupational Health and Safety Management Systems' from OHSAS 18001 to ISO 45001 by all plants of the Company.

• Pantnagar plant received ‘Platinum Award' in ‘Green Practices Award Competition' organised by CII.

• Pantnagar plant received ‘Silver Award' in ‘10th CII-National Excellence Practice Competition' organised by CII.

• Pantnagar plant won ‘Northern Region EHS Competition' organised by CII.

• Pantnagar plant is awarded ‘Best Practices in Energy Conservation' in ‘Green Practices Award Competition' organised by CII.

• Chakan plant is awarded by CII for excellence in ‘Energy Management 2022-Energy Efficient Unit'.

• Waluj Rooftop Solar plant won ‘Excellence in Performance Award-Rooftop Solar' Award in CII Performance Excellence Awards 2022 for Solar and Wind plants.

• Waluj plant won ‘Energy Efficient Unit' Award in ‘23rd CII-National Award for Energy Excellence-2022', organised by CII.

international Business

FY2023 has been a difficult year for exports. During the year under review, Bajaj Auto sold 1.82 million

units versus 2.5 million vehicles in the previous year.

More detailed information is given in the report on Management Discussion and Analysis.

Foreign Exchange Earnings and Outgo

The Company continued to be a net foreign exchange earner during the year.

Total foreign exchange earned by the Company during the year under review was H 14,461.47 crore, as

compared to H 16,280.38 crore during the previous year.

Total foreign exchange outflow during the year under review was H 1,138.68 crore, as against H 902.08

crore during the previous year.

industrial Relations

Bajaj Auto's approach to its human resources is premised on the fundamental belief in fostering meritocracy in the organisation, which promotes diversity and offers equal opportunities to all employees. We believe in respecting human rights and actively developing people who will contribute to society by nurturing them and giving them opportunities to apply their skills.

In the financial year 2022-23, the Company continued to deliver on its commitment to excellence. Passing successive milestones, business excellence has been further strengthened by well-defined goals and employee engagement strategies. The overall employee relations with staff and workmen across all the plants viz. Akurdi, Waluj, Chakan and Pantnagar continued to be cordial during the year.

A core component of infusing joy at the workplace is to layer-in non-work activities that get people excited and encourage involvement. The Company has focused on 'Yutori' concept means ‘Joy at Workplace'. Below are three areas under Yutori, for fostering a more positive and fulfilling professional experience.

1. Body-Physical Happiness

Various initiatives were carried out to sustain and improve physical fitness. Some of them are workplace improvement in terms of ergonomics, work environment improvement, health improvement with medical check-up followed by consultation and physical fitness programs.

2. Mind-Mental Happiness

To improve mental happiness, we focused on education and training, stress-free operations, healthy communication and interpersonal relationships, rewards and recognition as well as personal and professional growth.

3. Soul-Spiritual Wellbeing

Various initiatives were taken for spiritual well-being like yoga and meditation sessions, women's day celebration, people involvement and participation through kaizen competition, trust building through family care and trekking activities and collaborative culture development.

With the active participation and involvement of all employees, we have been able to inculcate a TPM culture for excellence and continuous improvements across all plants. As a result, the plants have received numerous awards during the year from CII, IIIE, QCFI, Aditya Birla Group etc. Waluj plant has won two gold medals at the national level in the QCFI competition; both teams are qualified for international competition.

The Company has been developing and retaining a gender-diverse talent pool of motivated employees. The Company has taken active steps for engaging women's talent, contributing to improving women's workforce participation in the economy.

With continuous improvement activities through various committees, relations with workers and unions have improved and all wage settlements are taking place in time and without any trouble. The Company signed a long-term settlement with the union for a period of 3.5 years on 1 January 2023 at the Chakan plant.

Prioritising employees' health, various state-of-the-art sports and health facilities have been provided to the employees. Employees have bagged prizes in multiple sports events like weightlifting, swimming organised by Industrial Sports Association (ISA), Pune. Employees of Waluj plant won 8 gold medals,

5 silver medals and 6 bronze medals at 42nd National Athletics Championship.

With a view to serving the community, the employees were also involved in Company organised charitable events. These include donation drives, stalls for NGOs, blood donation camps, tree plantations etc.

The Company will continue its efforts for building and sustaining a high sense of belongingness and high-performance culture at the workplace.

Subsidiaries and Joint Ventures

PT. Bajaj Auto Indonesia (PT BAI)

Routine business operations of PT BAI, a 99.25% subsidiary of Bajaj Auto Ltd., remain discontinued. Indonesia is a targe two-wheelers market and hence of interest for PT BAI.

PT BAI would continue to study the evolving market and evaluate different possible opportunities.

Bajaj Auto International Holdings BV, Netherlands (BAIH BV)

BAIH BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd. Over the years from 2007 to 2013, through this subsidiary, Bajaj Auto Ltd. has invested a total of €198.1 million (H1,219 crore) and holds 49.9% stake in Pierer Bajaj AG (PBAG). 50.1% in PBAG is held by Pierer Group.

Bajaj Auto (Thailand) Ltd.

Bajaj Auto (Thailand) Ltd. was incorporated as a wholly owned subsidiary in Thailand with an issued and subscribed share capital of Thai Baht (THB) 45 million (H10 crore). An Engineering Design Centre (EDC) is set up under this subsidiary.

Bajaj Auto (Thailand) Ltd. has all necessary approvals from local authorities. The EDC is operational and international designers are working from this new facility in Bangkok.

Bajaj Auto Spain S.L.U.

Bajaj Auto Spain S.L.U. was incorporated as a wholly owned subsidiary in Barcelona, Spain with an issued and subscribed share capital of €600K (H 5 crore), the intent being to set up an Engineering Design Centre (EDC).

The EDC has just started operations with the facility being set-up and is expected to be fully operational in the coming year.

Chetak Technology Ltd. (CTL)

Given the stakes and likely impact of EVs on its business, Bajaj Auto Ltd. wants to be ahead of this curve. For effectively engaging in this domain, CTL was incorporated as a wholly owned subsidiary of the Company on 4 October 2021 with an issued and subscribed share capital of H 5 crore to develop new technologies and products, have dedicated manufacturing, sales, after-sales and offer customer centric experiences.

During the year under review, additional capital of H 465 crore has been infused in CTL by way of rights issue. Plans have also been drawn to set up a new state-of-the-art manufacturing facility at Akurdi.

Bajaj Auto Consumer Finance Ltd. (BACFL)

Financing is key to every automobile business. To increase geographic coverage and expand financing options for the retail customers of Bajaj Auto Ltd. and Chetak Technology Ltd., a wholly owned captive financing company i.e. BACFL was formed on 6 December 2021 with an issued and subscribed share capital of H 5 crore. During the year under review, additional capital of H 25 crore has been infused in BACFL by way of rights issue.

An application for registration of BACFL as NBFC has been made to RBI and the matter is under process.

Bajaj Do Brasil Comercio De Motocicletas Ltda

Brazil is an important market for motorcycles in Latin America, To address this, Bajaj Auto Ltd. has set up a wholly owned subsidiary on 31 March 2022 with a paid up equity share capital of BRL 30 million (? 48 crore). The subsidiary has just started operations after obtaining all necessary approvals. Full scale operations are likely to commence in the coming year.

More detailed information is given in the report on Management Discussion and Analysis.

The financial statements of the subsidiary companies are also available on the Company's website on https://www.bajajauto.com/investors/financial-and-operational-performance

The Company does not have any associate company, nor has it entered into a joint venture with any other company.

The Company's policy for determination of material subsidiary, as adopted by the Board of Directors, in conformity with regulation 16 of the Listing Regulations, 2015, can be accessed on the Company's website at https://www.bajajauto.com/investors/policies-codes

Anti-Corruption initiatives

The Company has established several policies to prevent corruption within Bajaj Auto Ltd. These are suitably integrated with the business operations. The Company also has adequate disclosure practices with regard to anti-corruption activities. Some of these practices are given below:

Signing of the Anti-Corruption initiative of World Economic Forum (WEF)

In support of the initiative taken by WEF, the Company is a signatory to the ‘Commitment to Anti-Corruption' and is supporting the ‘Partnering Against Corruption-Principles for Countering Bribery' derived from Transparency International's Business Principles. This calls for a commitment to two fundamental actions, viz. a zero-tolerance policy towards bribery and the development of a practical and effective implementation programme.

Adoption of the Confederation of Indian industry (Cii) Charters

Your Company, being a member of CII, has adopted the following Codes/Charters:

1. CII Code of Conduct for Affirmative Action.

2. Model Code of Conduct for Ethical Business practices.

3. Charters of Fair and Responsible Workplace Guidelines for Collaborative Employee Relations.

4. Charters on Fair and Responsible Workplace Guidelines for Contract Labour.

More details on the subject are given in the Business Responsibility and Sustainability Report hosted on the Company's website on https://www.bajajauto.com/investors/financial-and-operational-performance

Annual Return

A copy of the annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013 (‘the Act'), in the prescribed form, which will be filed with Registrar of Companies/MCA, is hosted on the Company's website and can be accessed at https://www.bajajauto.com/investors/financial-and-operational-performance

Number of Meetings of the Board

There were seven meetings of the Board held during the year. Detailed information is given in the Corporate Governance Report.

Directors' Responsibility Statement

As reguired under clause (c) of sub-section (3) of section 134 of the Act, directors, to the best of their knowledge and belief, state that:

• in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

• they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year ended 31 March 2023;

• they have taken proper and sufficient care for the maintenance of adeguate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• they have overseen that the annual accounts have been prepared on a going concern basis;

• they have laid down internal financial controls to be followed by the Company and that, to the best of their knowledge, examination and analysis, such internal financial controls have been adeguate and were operating effectively; and

• they have ensured through oversight of the existence of proper systems to ensure compliance with the provisions of all applicable laws and that, to the best of their knowledge, such systems were adeguate and were operating effectively.

Details regarding Frauds reported by Auditors under section 143(12)

During the year under review, the auditors i.e. statutory auditors and secretarial auditors have not reported any matter under section 143(12) of the Act, and therefore, no details are reguired to be disclosed under section 134(3)(ca) of the Act.

Declaration by independent directors

The independent directors have submitted their declaration of independence, as reguired under section 149(7) of the Act stating that they meet the criteria of independence as provided in section 149 (6) of the Act, read with regulation 16 and 25 of the Listing Regulations, 2015, as amended. The independent directors have also confirmed compliance with the provisions of section 150 of the Act read with rule 6 of Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended, relating to inclusion of their name in the databank of independent directors.

The Board took on record the declaration and confirmation submitted by the independent directors regarding their meeting the prescribed criteria of independence, after undertaking due assessment of the veracity of the same as reguired under regulation 25 of the Listing Regulations, 2015.

Directors' remuneration policy and criteria for matters under section 178

The salient features and changes to the policy on directors' appointment and remuneration, including the criteria for determining Qualifications, positive attributes, independence of a director and other matters, as reguired under sub-section (3) of section 178 of the Act form a part of the Corporate Governance Report. The policy is on the Company's website https://www.bajajauto.com/investors/ policies-codes

Particulars of Loans, Guarantees or Investments

Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Act, are detailed in the financial statements.

Related Party Transactions

All contracts/arrangement/transactions entered into by the Company during FY2023 with related parties were in compliance with the applicable provisions of the Act and the Listing Regulations, 2015.

Prior omnibus approval of the audit committee is obtained for all related party transactions, which are foreseen and of repetitive nature. Pursuant to the said omnibus approval, details of transactions entered into are also reviewed by the audit committee on a Quarterly basis.

All related party transactions entered into during FY2023 were on an arm's length basis and in the ordinary course of business of the Company under the Act and not material under the Listing Regulations, 2015. However, during the year, prior approval of shareholders was obtained for the material transactions with KTM Sportmotorcycle GmbH (Associate of Bajaj Auto Ltd.'s 100% subsidiary, Bajaj Auto International Holdings BV, based in Netherlands) vide ordinary resolution through postal ballot on 21 November 2022 as it was estimated that the transaction value would cross the applicable materiality thresholds under the amended Listing Regulations, 2015 (i.e. H 1,000 crore, or 10% of the annual consolidated turnover as per the last audited financial statements of the listed entity, whichever is lower).

Details of transactions with related parties during FY2023 are provided in the notes to the financial statements. There were no transactions reguiring disclosure under section 134(3)(h) of the Act.

Hence, the prescribed Form A0C-2 does not form a part of this report.

The policy on materiality of and dealing with related party transactions is available on the Company's website at https://www.bajajauto.com/investors/policies-codes

Material Changes and Commitments

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

Risk Management Policy

Pursuant to regulation 21 of the Listing Regulations, 2015, as amended, risk management policy/ framework was adopted by the Board. This framework, inter alia, includes identification of internal and external risks faced by the Company, including financial, operational, sectoral, sustainability, information, cyber security, strategic or any other risk as may be determined by the risk management committee and the measures for risk mitigation, reporting of critical risks within the Company and business continuity plan.

Information on the development and implementation of a risk management policy for the Company is given in the Corporate Governance Report.

Corporate Social Responsibility (CSR)

The CSR policy including the composition of the CSR committee is hosted on the Company's website https://www.bajajauto.com/-/media/bajajauto/Investors/code-policy/BAL-Revised-CSR-Policy-29-April-2021.ashx

Taking into account the commitments made by the Company for the ongoing CSR projects/programs which are in progress and considering the project mode of CSR activity where the projects can extend beyond the financial year, as also the amount transferred to ‘Unspent CSR Account', there is no shortfall in the CSR expenditure mandated to be spent by the Company during the financial year ended 31 March 2023.

As per provisions of section 135(6) of the Act, any amount remaining unspent under section 135(5) pursuant to any ongoing project shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company. Accordingly, such amount has been transferred by the Company to the specified account within the prescribed period.

Detailed information on CSR policy, its salient features, CSR initiatives undertaken during the year, details pertaining to spent and unspent amount forms part of Annual Report on CSR activities, which is annexed to this Report.

The Chief Financial Officer has certified that the funds disbursed have been utilised for the purpose and in the manner approved by the Board for FY2023.

Formal Annual Evaluation of the Performance of the Board, its committees, chairman and individual directors

lnformation on the manner in which a formal annual evaluation has been made by the Board of its own performance and that of its committees, chairman and individual directors is given in the Corporate Governance Report.

Presentation of Financial Statements

The financial statements of the Company for the year ended 31 March 2023 have been disclosed as per Division ll of Schedule Ill to the Act.

Indian Accounting Standards, 2015

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

Consolidated Financial Statements

The audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, as prepared in compliance with the Act, applicable accounting standards and Listing Regulations, 2015 along with all relevant documents and the Auditors' Report form a part of this Report.

internal Audit

At the beginning of each financial year, an audit plan is rolled out with approval by the Company's audit committee. The plan is aimed at evaluation of the efficacy and adeguacy of internal control systems and compliance thereof, robustness of internal processes, policies and accounting procedures and compliance with laws and regulations. Based on the reports of internal audit, process owners undertake corrective action in their respective areas. Significant audit observations and corrective actions are periodically presented to the audit committee of the Board.

Statutory Disclosures

The summary of the key financials of the Company's subsidiaries (Form AOC-1) is included in this Annual Report. A copy of the audited financial statements for each of the subsidiary companies will be made available to members of the Company, seeking such information at any point of time.

The financial statements of the Company and its subsidiaries are placed on the Company's website at https://www.bajajauto.com/investors/financial-and-operational-performance

Details as reguired under the provisions of section 197(12) of the Act, read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, inter alia, ratio of remuneration of directors and KMP to median remuneration of employees and percentage increase in the median remuneration are annexed to this Report.

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as reguired under the provisions of section 197(12) of the Act, read with rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, which form part of the Directors' Report, will be made available to any shareholder on reguest, as per provisions of section 136(1) of the said Act.

The provisions of section 148 of the Act relating to maintenance of cost records and cost audit are not applicable to the Company.

Pursuant to the legislation ‘The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013', the Company has a policy on Prevention of Sexual Harassment at Workplace. During the year under review, no complaint has been received from employees. There was no other case reported during the year under review under the said policy.

There is no change in the nature of business of the Company during FY2023.

The securities of the Company were not suspended from trading during the year on account of corporate actions or otherwise.

A cash flow statement for 2022-23 is attached to the Balance Sheet.

The Managing Director, as per the terms of his appointment, does not draw any commission or remuneration from subsidiary companies. Hence, no disclosure as reguired under section 197(14) of the Act has been made.

Details as prescribed under section 134 of the Act and Rules made thereunder, applicable to the Company, have been specifically given in this Report, wherever applicable.

Directors' and Key Managerial Personnel-Changes

I. Changes in Directorate

Shekhar Bajaj, Non-executive non-independent director of the Company tendered his resignation with effect from close of business hours on 30 June 2022. The Board places on record its deep appreciation of valuable guidance provided by him during his very long tenure on the Board.

II. Retirement by Rotation

Independent directors hold office for a fixed term not exceeding five years from the date of their appointment and are not liable to retire by rotation.

The Act mandates that at least two-thirds of the total number of directors (excluding independent directors) shall be liable to retire by rotation.

Accordingly, Niraj Bajaj (DIN 00028261), Sanjiv Bajaj (DIN 0001461 5) and Madhur Bajaj (DIN 00014593), directors, being the longest in the office among the directors liable to retire by rotation, retire from the Board this year and, being eligible, have offered themselves for re-appointment.

Brief details of Niraj Bajaj, Sanjiv Bajaj and Madhur Bajaj are given in the notice of annual general meeting.

III. Appointment/Re-appointment of Directors

Rakesh Sharma (DIN 08262670) was appointed as a Whole-time director of the Company for a period of five years from 1 January 2019 up to 31 December 2023. The Board, on recommendation of nomination and remuneration committee and after evaluating his performance and the valuable contribution made by him in the progress of the Company, has approved his re-appointment for another term of five years commencing from 1 January 2024, subject to approval of shareholders.

Accordingly, resolution seeking his re-appointment for a further term of five years and brief details of Rakesh Sharma are given in the notice of annual general meeting.

There was no other change in the directors and key managerial personnel during the year under review since the last report.

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 by the regulators or courts or tribunals, which may impact the going concern status of the Company 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 essential components of various critical processes, both physical and operational. This includes its design, implementation and maintenance, along with periodic internal review of operational effectiveness and sustenance and whether these are commensurate with the nature of its business and the size and complexity of its operations.

This ensures orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Internal financial controls with reference to the financial statements were adequate and operating effectively.

Corporate Governance

Pursuant to the Listing Regulations, 2015, a separate chapter titled ‘Corporate Governance' has been included in this Annual Report, along with the reports on Management Discussion and Analysis and General Shareholder information.

All Board members and senior management personnel have affirmed compliance with the Code of Conduct for FY2023. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report.

The Managing Director (CEO) and Chief Financial Officer have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the Listing Regulations, 2015.

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

Employee Stock Option Scheme

The Company grants share-based benefits to eligible employees with a view to attracting and retaining talent, to encourage employees to align individual performance with the Company objectives and to promote their increased participation in the growth of the Company.

During the year under review, there has been no change in the Bajaj Auto Employee Stock Option Scheme 2019 (BAL-ESOS 2019) of the Company. BAL-ESOS 2019 is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, and this has been certified by the secretarial auditor of the Company.

In line with regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, a statement giving complete details, as at 31 March 2023, is available on the website of the Company at https://www.bajajauto.com/investors/financial-and-operational-performance

Details of options vested, exercised and cancelled are provided in the notes to the standalone financial statements.

Business Responsibility and Sustainability Report

Pursuant to amendment in the Listing Regulations, 2015, top 1,000 listed entities based on market capitalisation are required to submit a Business Responsibility and Sustainability Report ('BRSR') with effect from the FY2023.

Accordingly, a detailed BRSR in the format prescribed by SEBI describing various initiatives, actions and process of the Company in conducting its business in line with its environmental, social and governance obligations has been hosted on Company's website and can be accessed at https://www.bajajauto.com/ investors/financial-and-operational-performance

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

Secretarial Standards of ICSI

The Company has complied with the requirements prescribed under the Secretarial 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.

Statutory Auditor

Pursuant to the provisions of section 139 of the Act, the members at the annual general meeting of the Company held on 26 July 2022 appointed S R B C & CO LLP (Firm Registration No. 324982E/E300003) as statutory auditors of the Company from the conclusion of 15th annual general meeting till the conclusion of 20th annual general meeting, covering second term of five consecutive years.

The statutory auditors have confirmed that they are not disqualified from continuing as auditors of the Company.

The statutory audit report for the financial year 2022-23 does not contain any qualification, reservation 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, the Company has appointed, Shyamprasad D Limaye, Practising Company Secretary (Membership No.1 587, CP No. 572) to undertake the secretarial audit of the Company. Secretarial audit report for the financial year 2022-23 issued by him in the prescribed form MR-3 is annexed to this Report.

In addition to the above, pursuant to regulation 24A(2) of the Listing Regulations, 2015, a report on secretarial compliance for the financial year ended 31 March 2023 has been issued by Shyamprasad D Limaye and the same will be submitted with the stock exchanges within the given timeframe. The report will be made available on the website of the Company.

There are no observations, reservations or qualifications or adverse remark in any of the aforesaid reports.

On behalf of the Board of Directors,

Niraj Bajaj Chairman DIN: 00028261 Pune: 25 April 2023

Annual Report on CSR activities

1. Brief outline of Company's CSR Policy

introduction

The vision and philosophy of late Jamnalal Bajaj, the founder of Bajaj Group, guide the Corporate Social Responsibility (CSR) activities of the group. He embodied the concept of trusteeship in business and common good, and laid the foundation for ethical, value-based and transparent functioning.

Bajaj Group believes that true and full measure of growth, success and progress lies beyond Balance Sheets or conventional economic indices. It is best reflected in the difference that business and industry make to the lives of people.

Through its social investments, Bajaj Group addresses the needs of communities residing in the vicinity of its facilities by taking sustainable initiatives in the areas of health, education, environment conservation, infrastructure and community development, and response to natural calamities.

For society, however, Bajaj is more than a corporate identity. It is a catalyst for social empowerment and the reason behind the smiles that light up a million faces.

It is this goodwill that has made us "The World's Favourite Indian!”

Guiding principles

The Bajaj Group believes that social investments should:

Benefit generations: The Company believes in ‘investment in resource creation' for use over generations. The Company tries to identify sustainable projects which will benefit the society over long periods.

Educate for self-reliance and growth: To usher in a growth-oriented society and thereby a very strong and prosperous nation, by educating each and every Indian.

Promote health: The Company believes good health is a pre-requisite for both education and productivity.

Encourage for self-help: To guide and do hand holding for self-help, individually and collectively to create excellence for self and for the team.

Be focused: The Company believes that activities should be focused around locations where it has a presence and hence can effectively guide, monitor and implement specific projects.

Target those who need it most: Care for the sections of the society, which are socially at the lowest rung irrespective of their religion, caste, language or colour.

Sustain natural resources: The Company encourages balanced development and ensures least adverse impact on environment - Growth with Mother Nature's blessings.

Brief contents of CSR Policy

Section 135 of the Companies Act, 2013 (‘the Act') and the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been amended substantially with effect from 22 January 2021. Accordingly, the CSR Policy was amended on 29 April 2021, with approvals of the CSR Committee and Board of Directors. The policy, inter alia, covers the following:

• Philosophy, Approach and Direction

• Guiding Principles for selection, implementation and monitoring of activities

• Guiding Principles for formulation of Annual Action Plan

2. Composition of the CSR Committee

Designation/ Nature of

Sr. No. Name of Director Directorship

Number of meetings of CSR Committee held during the year

Number of meetings of CSR Committee attended during the year

1 Rajiv Bajaj

Chairman

3

2 Pradeep Shrivastava

Member

3

3

3 Dr. Naushad Forbes

Member

3

3. Web-link where the following are disclosed on the website of the Company:

Composition of CSR committee https://www.bajajauto.com/about-us/bajaj-team

CSR Policy https://www.bajajauto.com/-/media/bajajauto/Investors/code-policy/BAL-Revised-CSR-Policy-29-April-2021.ashx

CSR projects approved by the Board https://www.bajajauto.com/corporate/corporate-social-responsibility

4. The executive summary along with web-link(s) of impact assessment of CSR projects carried out

in pursuance of sub-rule (3) of rule 8, if applicable. As per table below

Web-link of impact assessment reports: https://www.bajajauto.com/-/media/bajaj-auto/Corporate-Social-Responsibility/lmpact-Assessment-reports--FY-22-23.ashx

Sr.

No.

Project Title

Implemen

ting

Agency

Location

Date of Completion of Project

Actual Amount Utilised (J in cr)

Date of Impact Assessment Report

Highlights of the assessment

1

Expansion of Project on School Infrastructure

Round Table India Trust

Multiple,

Maharashtra

1.02.2021

3.57

27.09.2022

The project has benefitted 3,383 underprivileged children from 13 schools resulting in increased school enrolments and reduced absenteeism of students.

2

Rahul Bajaj Technology Innovation Centre (RBTIC)

Indian Institute of Technology Bombay

Mumbai,

Maharashtra

31.05.2021

12.50

27.09.2022

Total of 9 floors are constructed on total built-up area of 18,600 sq.mt. with 2,250 sq.mt. each floor, including the basement and ground floor.

The facility enables cross utilisation of talented, skilled, and technical resources.

8. Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the financial year: No

9. Specify the reason(s), if the company has failed to spend two percent of the average net profit as per sub-section (5) of section 135:

(a) Taking into account the commitments made by the company for the ongoing CSR projects/ programs which are in progress and considering the project mode of CSR activity where the projects can extend beyond the financial year, there is no shortfall in the CSR expenditure mandated to be spent by the company during the financial year ended 31 March 2023.

(b) Further, in light of the circular dated 25 August 2021 issued by Ministry of Corporate Affairs ('MCA') on the Frequently Asked Questions on CSR, mere disbursal of funds for implementation of a project does not amount to spending unless the implementing agency utilises the whole amount.

(c) As per provisions of section 135(6) of the Act, any amount remaining unspent under section 135(5) pursuant to any ongoing project shall be transferred by the company within a period of 30 days from the end of the financial year to a special account to be opened by the company. Accordingly, such amount has been transferred by the Company to the specified account so opened within the prescribed period. As per the said circular of MCA, this amounts to meeting of the obligation and due compliance under section 135 of the said Act and hence there is no shortfall of spends.

Rajiv Bajaj

Managing Director and CEO and

Chairman of CSR Committee

DIN: 00018262

Pune: 25 April 2023