Bajaj Auto Ltd.

Vansh Lamba
1411664
5 BBA C

History
Bajaj Auto came into existence on 29 November 1944 as M/s Bachraj Trading Corporation
Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it
obtained a licence from the Government of India to manufacture two-wheelers and threewheelers and it became a public limited company in 1960. In 1970, it rolled out its 100,000th
vehicle. In 1977, it sold 100,000 vehicles in a financial year. In 1985, it started producing at
Waluj near Aurangabad. In 1986, it sold 500,000 vehicles in a financial year. In 1995, it
rolled out its ten millionth vehicle and produced and sold one million vehicles in a year.
With the launch of motorcycles in 1986, the company has changed its image from a scooter
manufacturer to a two-wheeler manufacturer.

2015 and 2016

Sales in Numbers

FY2016

FY2015

3,358,252

3,292,084

535,329

519,117

Total

3,893,581

3,811,201

Of which Exports

1,739,629

1,806,078

Two-wheelers

Three-wheelers

Quadricycle

(Rs.In Crore)

Particulars

Total revenue

FY2016

FY2015

23,600.86

22,194.43

Total expenses

18,215.68

17,769.35

5,385.18

4,425.08

Exceptional items

340.29

Profit before tax

5,385.18

4,084.79

Tax expense

1,732.77

1,271.05

Profit for the year

3,652.41

2,813.74

366.00

282.00

1,741.38

174.13

1,734.57

Profit before exceptional items and tax

Transfer to General Reserve

Interim dividend (inclusive of

dividend tax)

Proposed dividend (inclusive of

dividend tax)

Provision for dividend tax for previous

year written back

Balance carried to Balance Sheet

Earnings per share (Rs.)

(11.35)

1,382.25

797.17

126.2

97.2

Dividend
The Board at its meeting held on 9 March 2016 declared an interim
dividend at the rate of Rs. 50 per share (500%) for the year ended 31
March 2016, which was paid to all the eligible shareholders as on 17
March 2016, being the record date for the purpose of dividend. The
amount of dividend and the tax thereon to the extent applicable
aggregated to Rs. 1,741.38 crore.

The directors now recommend for consideration of the shareholders at

the ensuing annual general meeting, payment of final dividend at the
rate of Rs. 5 per equity share (50%) for the financial year ended 31
March 2016. The amount of final dividend and tax thereon to the extent
applicable aggregate to Rs. 174.13 crore.
For the year ended 31 March 2016, the total dividend including interim
dividend, therefore, works out to Rs. 55 per share (550%) and the total
dividend and tax thereon to the extent applicable aggregate to Rs.
1,915.51 crore.
For the year ended 31 March 2015, dividend paid was Rs. 50 per share
(500%). The amount of dividend and the tax thereon to the extent
applicable aggregated to Rs. 1,734.57 crore.
Share capital
The paid up equity share capital as on 31 March 2016 was Rs. 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, sweat equity shares, nor has it
granted any stock options.
Capacity expansion and new projects
The Company''s current installed capacity is 6.06 million units per
annum. The Company plans to increase the installed capacity to around
6.24 million units per annum by March 2017.
Detailed information on the quadricycle RE 60 and new projects, is
provided in the Management Discussion and Analysis Report.
Research and Development and technology absorption
A) Products

Many new products have been launched during the year under review.
Detailed information on the new products is covered in the Management
Discussion and Analysis Report.
B) Process
R&D has been working on improving its operations in a number of areas
as listed below:
- Manpower: R&D has been expanding its team size in areas of design,
analysis and validation in order to keep up with 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.
C) Technology
As in the past, new and improved technology has been introduced during
the year under review and the detailed information on the same is
covered in the Management Discussion and Analysis Report.

2014 and 2015

Sales in numbers
Motorcycles

FY 2015

FY 2014

3,292,084

3,422,403

519,117

447,674

Total

3,811,201

3,870,077

Of which exports

1,806,078

1,583,935

Three-wheelers

(Rs. In Crore)
Particulars

FY 2015

FY 2014

Total revenue

22,194.43

20,855.92

Total expenses

17,769.35

16,223.87

4,425.08

4,632.05

Profit before exceptional items

and tax
Exceptional items

340.29

Profit before tax

4,084.79

4,632.05

Tax expense

1,271.05

1,390.10

Profit after tax

2,813.74

3,241.95

Profit for the year

2,813.74

3,243.32

282.00

325.00

1,734.57

1,692.73

Transfer to General reserve

Proposed dividend (inclusive of

dividend tax)
Provision of dividend tax for
previous year written back
Balance carried to Balance Sheet
Earnings per share (D)

(4.60)

797.17

1,230.19

97.2

112.1

Dividend
The directors recommend for consideration of the shareholders at the
ensuing annual general meeting, payment of a dividend of B 50 per
share, (500%) for the year ended 31 March 2015. The amount of dividend
and the tax thereon aggregate to B 1,734.57 crore.

Dividend paid for the year ended 31 March 2014 was also B 50 per share
(500%). The amount of dividend and the tax thereon aggregated to B
1,692.73 crore.
Share capital
The paid up equity share capital as on 31 March 2015 was B 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,
sweat equity shares nor has it granted any stock options.
Operations
Detailed information on the operations of the Company are covered in
the Management Discussion and Analysis Report.
Capacity expansion and new projects
The Company''s current installed capacity is 6.06 million units per
annum. The Company plans to increase the installed capacity to around
6.12 million units per annum by March 2016.
As regards our quadricycle - RE 60, the product is ready for launch.
Detailed information on the same is provided in the Management
Discussion and Analysis Report.
Research and Development and technology absorption
A) Products
Many new products have been launched during the year under review.
Detailed information on the new products is covered in the Management

Discussion and Analysis Report.

B) Process
R&D has been working on improving its operations in a number of areas
as listed below:
- Manpower: R&D has been expanding its team size in areas of design,
analysis and validation in order to keep up with the rapidly expanding
aspirations of the Company.
- Facilities: R&D continued to enhance its design, computing,
proto-type manufacturing and validation facilities. Such enhancement
efforts have enabled R&D to develop durable and refined products. A
number of new test facilities and proto typing facilities were added.
C) Technology
- ABS on Pulsar RS 200 - As the best balance for cost and safety, the
vehicle has front wheel ABS that offers safe braking with good vehicle
stability. It also controls the rear wheel lift-up behavior, which is
associated with emergency front wheel braking. This augments and
supplements the race sports nature of the vehicle.
- EVAP systems for KTM offerings for USA and China markets - This
system conforms to the evaporative emission norms of US EPA. The
evaporative emission from fuel tank is controlled through use of
charcoal canisters to absorb the fuel vapours from escaping into the
atmosphere, and an electronically controlled purge valves to purge the
absorbed vapour back into the intake system of the engine.

2013

INCOME
Revenue From Operations [Gross]

20,617.87

Less: Excise/Sevice Tax/Other Levies

1,128.91

Revenue From Operations [Net]

Other Operating Revenues
Total Operating Revenues
Other Income
Total Revenue

19,488.96
508.29
19,997.25
795.49
20,792.74

EXPENSES
Cost Of Materials Consumed
Purchase Of Stock-In Trade
Operating And Direct Expenses
Changes In Inventories Of FG,WIP And Stock-In Trade
Employee Benefit Expenses
Finance Costs
Depreciation And Amortisation Expenses
Other Expenses
Less: Amounts Transfer To Capital Accounts
Total Expenses

13,523.74
858.83
0.00
24.00
639.48
0.54
163.97
1,378.80
62.85
16,526.51

2012

Revenue From Operations [Gross]

Less: Excise/Sevice Tax/Other Levies
Revenue From Operations [Net]
Other Operating Revenues
Total Operating Revenues
Other Income
Total Revenue

19,827.03
946.76
18,880.27
648.71
19,528.98
608.04
20,137.02

Cost Of Materials Consumed

Purchase Of Stock-In Trade
Operating And Direct Expenses

13,445.54
751.15
0.00

Changes In Inventories Of FG,WIP And Stock-In Trade

-94.15

Employee Benefit Expenses

540.11

Finance Costs
Depreciation And Amortisation Expenses
Other Expenses
Less: Amounts Transfer To Capital Accounts
Total Expenses

22.24
145.62
1,215.77
49.43
15,976.85

2011

Revenue From Operations [Gross]

Less: Excise/Sevice Tax/Other Levies
Revenue From Operations [Net]
Other Operating Revenues
Total Operating Revenues
Other Income

16,830.23
933.41
15,896.82
501.41
16,398.23
576.51

Total Revenue

16,974.74

Cost Of Materials Consumed

11,311.89

Purchase Of Stock-In Trade

Operating And Direct Expenses

568.41
0.00

Changes In Inventories Of FG,WIP And Stock-In Trade

-82.79

Employee Benefit Expenses

493.58

Finance Costs

1.69

Depreciation And Amortisation Expenses

122.84

Other Expenses

952.58

Less: Amounts Transfer To Capital Accounts

Total Expenses

16.66
13,351.54

2010

Revenue From Operations [Gross]

Less: Excise/Sevice Tax/Other Levies
Revenue From Operations [Net]
Other Operating Revenues
Total Operating Revenues
Other Income
Total Revenue

Cost Of Materials Consumed

Purchase Of Stock-In Trade
Operating And Direct Expenses

12,420.95
607.70
11,813.25
0.00
11,813.25
200.92
12,014.17

7,837.65
419.81
57.54

Changes In Inventories Of FG,WIP And Stock-In Trade

-47.60

Employee Benefit Expenses

595.06

Finance Costs

5.98

Depreciation And Amortisation Expenses

136.45

Other Expenses

647.72

Less: Amounts Transfer To Capital Accounts

Total Expenses

Of the above
i. 144,683,510 equity shares were allotted as fully paid bonus shares
by capitalisation of General reserve by the Company on 13 September
2010.
ii. 1,805,071 equity shares thereof (excluding 1,805,071 equity shares
allotted as bonus shares thereon) are deemed to be issued by way of

0.00
9,652.61

Euro Equity Issue represented by Global Depository Receipts (GDR)

evidencing Global Depository Shares outstanding on the record date.
Outstanding GDRs at the close of the year were 52,844 (60,044)
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. The interim dividend declared by the Board of Directors and
the dividend proposed by the Board of Directors and approved by the
shareholders in the annual general meeting is paid in Indian rupees. In
the event of liquidation of the Company, the holders of equity shares
will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
1. Derivative hedging instruments
The Company has adopted the accounting treatment and disclosures in
accordance with the principles laid down in Accounting Standard 30 and
Accounting Standard 32 on foreign currency derivative contracts.
The Company holds foreign currency derivative to hedge its foreign
currency exposure. Derivatives are initially recognised at fair value
on the date a derivative contract is entered into and are subsequently
re-measured at their fair value. The Company designates foreign
currency derivatives as hedges of foreign currency risk associated with
a highly probable forecast transaction (cash flow hedge).
The Company has entered into simple forward contracts and par forward
contracts to hedge highly probable forecast export transactions. These
instruments meet the Management''s foreign exchange risk management
objectives and also qualify for hedge accounting as per the principles
of hedge accounting. The market value of instruments outstanding at the
close of the year is a gain of Rs.9.38 crore as against a gain of Rs.

2.92 crore in the previous year.

The Company has also entered into range forward contracts to hedge
highly probable forecast transactions, where the export realisations of
the Company are protected below a minimum pre-determined foreign
exchange rate whereas the realisation advantages are available to the
Company there from up to a higher pre-determined foreign exchange rate.
The Company does not benefit by rupee depreciating beyond the
pre-determined foreign exchange rate. These instruments meet the
Management''s foreign exchange risk management objectives and also
qualify for hedge accounting as per the principles of hedge accounting.
MTM gains/losses in respect of effective hedges is carried to the Hedge
reserve and ineffectiveness, if any, including the time value of option
contracts is recognised in the results, as per the principles of
Accounting Standard 30. The market value of instruments outstanding at
the close of the year indicate a gain aggregating to Rs.3.50 crore as
against a gain of Rs. 53.22 crore in the previous year.
The time value of option contracts from the current year aggregating a
net gain of Rs. 105.49 crore after reversals, has been recognised as
''Other income'' being recurring in nature, against a net loss of Rs.
50.22 crore in the previous year recognised as ''Other expenses''.
Risk Management Policy and other disclosures
The exports of the Company, presently constituting substantial portion
of the turnover, are at prices predetermined for each product in each
region. These prices are fixed in USD based on an assumed USD/INR rate.
(Budgeted rate of realisation). Exports are then effected at such price
and hence it is desirable for the Company to shield itself from adverse
movements in forex rates at a future date.
The Company also imports raw materials and components for its
motorcycles etc. However, the value of such imports is not material as

compared to the value of exports. Nevertheless, the Company may wish to

secure its procurement prices in terms of INR to be able to forecast
its pricing and profitability. Consequently, the Company may wish to
hedge such exposures, future and current, to achieve the aforesaid
objective.
The exchange rate between the Indian rupee and foreign currencies has
changed substantially in recent periods and may continue to fluctuate
substantially in the future. Consequently, the Company uses derivative
financial instruments, such as foreign exchange forward and option
contracts, to mitigate the risk of changes in foreign currency exchange
rates in respect of its forecasted cash flows and trade receivables.
The details in respect of the outstanding foreign exchange forward
contracts including range forward and par forward contracts are given
below. These contracts are due for maturity between one to twelve
months. The table below summarises the notional amounts (amounts of
contracts booked and outstanding) of foreign currency forward contracts
into relevant maturity groupings based on the remaining period as at
the 31 March 2016:
In respect of foreign currency derivative contracts designated as cash
flow hedges for par forward contracts, the Company has recorded a net
gain of Rs. 9.38 crore and Rs.2.92 crore, as a component of equity
(Hedge reserve) as at 31 March 2016 and 2015 respectively and a net
gain of Rs. 2.33 crore and a net gain of Rs.8.40 crore as part of
revenue during the year ended 31 March 2016, and 2015 respectively.
In respect of foreign currency derivative contracts designated as cash
flow hedges for range forward contracts, the Company has recorded a net
gain of Rs. 27.12 crore and Rs. 182.32 crore, as a component of equity
(Hedge reserve) as at 31 March 2016 and 2015 respectively and a net
gain of Rs. 19.18 crore and a net gain of Rs. 85.10 crore as part of
revenue during the year ended 31 March 2016 and 2015 respectively and a

gain of Rs. 0.13 crore (previous year Rs.Nil) to the Statement of

Profit and Loss on a break in the designation of the hedge.
Amount that was removed from appropriate equity account (Hedge reserve
account) during the year ended 2016 and 2015 in respect of forecast
transaction for which hedge accounting had previously been used, but
which is no longer expected to occur is a gain of Rs.0.13 crore and
previous year Rs.Nil respectively.
Amount that was removed from appropriate equity account (Hedge reserve
account) during the period and included in the initial cost or other
carrying amount of a non-financial asset or non-financial liability
whose acquisition or incurrence was a hedged highly probable forecast
transaction is Rs. Nil.
Amount in respect of the ineffectiveness which relates to time value of
option contracts recognised in the Statement of Profit and Loss that
arises from cash flow hedges is a loss of Rs. 23.62 crore as on 31
March 2016.
In respect of the Company''s foreign currency derivative contracts
outstanding as on 31 March 2016, a 10% increase in the exchange rates
of the currency, underlying such contracts, as given by the banks would
have resulted in an adverse movement by approximately Rs.360.32 crore
in the fair value of outstanding contracts.
In respect of the Company''s foreign currency derivative contracts
outstanding as on 31 March 2016, a 10% decrease in the exchange rates
of the currency, underlying such contracts, as given by the banks would
have resulted in a positive movement by approximately Rs. 560.58 crore
in the fair value of outstanding contracts.
Counter-party risk
Counter-party risk encompasses settlement risk on foreign currency

derivative contracts. Exposure to these risks is closely monitored and

kept within predetermined parameters. The Company does not expect any
losses from non-performance by these counter-parties.
The Company''s policy is to transact with creditworthy banks, which are
reviewed on an on-going basis. The following table depicts that the
majority of the foreign currency derivatives are placed in highly rated
banks:
2. Considering the Company has been extended credit period upto 45 days
by its vendors and payments being released on a timely basis, there is
no liability towards interest on delayed payments under ''The Micro,
Small and Medium Enterprises Development Act 2006'' during the year.
There is also no amount of outstanding interest in this regard, brought
forward from previous years. Information in this regard is on basis of
intimation received, on requests made by the Company, with regards to
registration of vendors under the said Act.
3. The consolidated financial statements of the Company along with its
subsidiaries are attached to these standalone financial statements. The
details of the group regarding the nature of relationship and the basis
of consolidation can be referred to in note 1 to the said consolidated
financial statements.

How do foreign exchange rate fluctuations affect your business?

The foreign currency market is one of the most volatile trading platforms in the world, and
exchange rates can move by as much as 10% in a matter of days.
For example, in 2014 the Pound Sterling to Euro (GBP/EUR) exchange rate moved between
lows of 1.1913 and highs of 1.2872.

Similarly, the Pound Sterling to US Dollar (GBP/USD) currency pair brushed a high of
1.7160 that year and also tumbled to a low of 1.5578.
Even small fluctuations in an exchange rate can mean you get less of a return on your
exchange.
Lets take the GBP/EUR movement outlined above as an example If your business imports
goods on a monthly basis, 5,000 would have secured you 5,956.5 to spend on produce
when the GBP/EUR pairing was at its lowest point, but 6,436 to spend when the market was
stronger a difference of 479.5.
Businesses with regular international money transfers to manage could find themselves
seriously out of pocket if they fail to capitalise on positive foreign exchange rate fluctuations
or leave themselves exposed to negative ones.
Currency movements are dictated by many things, making predicting the direction an
exchange rate will take particularly tricky. However, some experts say you can pre-empt
market fluctuations to a certain extent by being aware of key economic events (such as the
release of growth, employment and inflation reports) and monitoring commodity shifts.
That being said, further exchange rate instability can come in the form of geopolitical
tensions. If, for example, your business requires the trading of Sterling for the Australian
Dollar (GBP/AUD), a factor known as risk aversion can affect how many Aussies you get
for your Pounds. The Australian Dollar is considered a higher risk currency and as world
conflicts and geopolitical tensions cause trader risk appetite to dampen, events of this sort can
weaken the Australian Dollar meaning youll get more for your money.
So, should your business require iron ore from Australia at a time when geopolitical tensions
(such as an escalation of ISIS concerns) have caused the Australian Dollar to decline, you
could get more iron ore for your Pounds. Conversely, if the conflict was resolved and the
Aussie advanced due to increased demand for high-yielding assets, iron ore would become
more expensive to purchase.
So how do you safeguard your business against a dramatic currency fluctuation?

Its impossible to predict exactly how an exchange rate might move, but with expert support
and guidance your business could take a proactive approach to managing foreign currency
exchange requirements and limit your exposure to risk.
To that end, currency brokers can offer your business access to a service by which you can fix
a favourable exchange rate for up to two years in advance of a trade. So if you know youll
need to purchase Australian iron ore in the future, it would be sensible to fix the Pound
Sterling to Australian Dollar (GBP/AUD) exchange rate whilst the Aussie is in a position of
weakness.
In so doing, youll know exactly how many Australian Dollars youll get for your Pounds and
can budget effectively. The disadvantage of such a move, however, is the possibility that you
could fix your rate too early and miss out on a more significant Australian Dollar declination.
Managing regular overseas payments, like a foreign payroll or recurrent import/export costs,
can also be more advantageous when you use a broker. Unlike many banks, brokers dont
charge transfer fees or commission costs and can secure you a more competitive exchange
rate.
As highlighted above, currency fluctuations can have a marked impact on the profitability of
a business with foreign exchange requirements. Market movements and trends can be tracked
to a certain extent, but many varied influences, including geopolitics and commodity
fluctuations, can change the rate youre able to secure. If you want to protect your business
bottom line, its recommended that you seek expert advice regarding safe-guarding your
transactions against foreign currency fluctuations.