Directors' Report The directors present their Seventy First Annual Report and audited financial statements for the year ended 31 March 2016. Dividend The Board at its meeting held on 9 March 2016 declared an interim dividend at the rate of Rs. 25 per equity share (250%) 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. 334.87 crore. The directors now recommend for consideration of the shareholders at the ensuing annual general meeting, payment of final dividend of Rs. 7.50 per equity share (75%) for the financial year ended 31 March 2016. The amount of final dividend and the tax thereon to the extent applicable aggregate to Rs. 100.46 crore. For the year ended 31 March 2016, the total dividend including the interim dividend, therefore, works out to Rs. 32.50 per equity share of Rs. 10 each (325%) and the total dividend and the tax thereon to the extent applicable aggregate to Rs. 435.33 crore. For the year ended 31 March 2015, dividend paid was also Rs. 32.50 per equity share (325%). The amount of dividend and the tax thereon to the extent applicable however aggregated to Rs. 434.49 crore. Share Capital The paid up equity share capital as on 31 March 2016 was Rs. 111.29 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. Registration as a Systemically Important Non-Deposit taking NBFC The Company has been registered with the Reserve Bank of India as a Non-Banking Financial Institution (Non-Deposit taking). In terms of provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, the Company is categorised as a 'Systemically Important Non-Deposit taking Non-Banking Financial Company'. The Company has not accepted public deposits during the year under review. The Company has formed Risk Management Committee and Asset Liability Management Committee in terms of the applicable directions/regulations of the Reserve Bank of India in this regard. Operations Detailed information on the operations of the Company and details on the state of affairs of the Company are covered in the Management Discussion and Analysis Report. Extract of annual return The extract of annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013, in the prescribed Form MGT-9 is annexed to this Report. 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 required under clause (c) of sub-section (3) of section 134 of Companies Act, 2013, directors, to the best of their knowledge and belief, state that - • in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures; • the directors had 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 that period; • the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; • the directors had prepared the annual accounts on a going concern basis; • the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and • the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and were operating effectively. Details in respect of frauds reported by auditors under section 143(12) During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under section 143(12) of the Companies Act, 2013. Declaration by independent directors The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section (6). Directors' Remuneration Policy and criteria for matters under section 178 Information regarding directors' Remuneration Policy and criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 are provided in the Corporate Governance Report. Particulars of loans, guarantees or investments Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are detailed in the financial statements. Related party transactions There were no related party transactions (RPTs) entered into by the Company during the financial year, which attracted the provisions of section 188 of the Companies Act, 2013. There being no 'material' related party transactions as defined under regulation 23 of the SEBI Listing Regulations, 2015, there are no details to be disclosed in Form AOC-2 in that regard. During the year 2015-16, pursuant to section 177 of the Companies Act, 2013 and regulation 23 of the SEBI Listing Regulations, 2015, all RPTs were placed before the Audit Committee for its approval. The Policy on RPTs as approved by Board is uploaded on the Company's website www.bhil.in 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 of the Company and the date of this Report. Conservation of energy, technology absorption, foreign exchange earnings and outgo The Company primarily being an investment company and not involved in any industrial or manufacturing activities, the Company has no particulars to report regarding conservation of energy and technology absorption as required under section 134 of the Companies Act, 2013 and Rules made thereunder. During the year under review, the Company did not have any foreign exchange earnings, whereas the foreign exchange outgo amounted to Rs. 1.19 crore. Risk Management Policy Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk which in the opinion of the Board may threaten the existence of the Company is given in the Corporate Governance Report. Corporate Social Responsibility (CSR) Detailed information on Corporate Social Responsibility Policy developed and implemented by the Company on CSR initiatives taken during the year pursuant to section 135 of the Companies Act, 2013 is given in the Annual Report on CSR activities. Formal annual evaluation of the performance of Board, its Committees and Directors Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is given in the Corporate Governance Report. Subsidiary/joint venture/associates Detailed information on the performance and financial position of subsidiary, associates and joint venture of the Company is covered in the Management Discussion and Analysis Report. As regards Maharashtra Scooters Ltd. (MSL), a company jointly promoted by the Company (erstwhile Bajaj Auto Ltd.) and Western Maharashtra Development Corporation Ltd. (WMDC), WMDC had offered to sell its 27% shareholding in MSL and the Company had confirmed its willingness to purchase these shares. As reported in the past, in the matter of Appeal No.153 of 2010, concerning in the Award of the Arbitrator between BHIL and WMDC, the Division Bench of the Hon'ble Bombay High Court had pronounced its Order on 8 May 2015, inter alia, stipulating the following: 1. The Company's Appeal No.153 of 2010 is allowed and the impugned order of the Single Judge dated 15 February 2010 is set aside in so far as it set aside the arbitral Award on the ground that clause 7 of the Protocol Agreement was in the nature of a restriction on free transferability of the shares and was therefore contrary to section 111A of the Companies Act, 1956. 2. The Cross Objections filed by the Respondent (WMDC) have no merit and therefore stand dismissed. 3. In the peculiar circumstances of the case and in the interest of justice, the Appellant (BHIL), for the purchase of the 3,085,712 equity shares of MSL, shall pay to the Respondent (WMDC) a sum of H 46.79 crore (calculated at Arbitral Award price of H 151.63 per share) together with simple interest @ 18% per annum from 14 January 2006 (date of Arbitral Award) till payment. WMDC has subsequently filed a Special Leave Petition (SLP) in the Supreme Court on 15 September 2015 which is registered as SLP No. - 27194-95 of 2015, against the impugned Division Bench judgment of the Hon'ble Bombay High Court dated 8 May 2015, challenging the judgment amongst other grounds, on the basis of validity of the Protocol Agreement in the context of section 111A of the Companies Act, 1956, prescribing free transferability of shares. The above mentioned SLP filed by WMDC is currently pending before the Supreme Court. Directors and Key Managerial Personnel-changes The Directors regret to report about the sad demise of S H Khan, an independent director of the Company, on 12 January 2016. The directors record their whole-hearted appreciation of the valuable contribution made by him during his long tenure as director in the Company. There was no other change in the directors and Key Managerial Personnel during the year under review. In light of the provisions of the Companies Act, 2013, Manish Kejriwal retires from the Board by rotation this year and being eligible, offers himself for re-appointment. The information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations, 2015 in case of re-appointment of the director is provided in the Notice of the ensuing annual general meeting. 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, physical and operational, which includes its design, implementation and maintenance along with periodical internal review of operational effectiveness and sustenance. This ensures orderly and efficient conduct of its business, including adherence to 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. The internal financial controls with reference to the financial statements were adequate and operating effectively. Presentation of financial statements The financial statements of the Company for the year ended 31 March 2016 have been disclosed as per Schedule III to the Companies Act, 2013. Consolidated financial statements The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, including the associates and joint venture and as prepared in compliance with the Companies Act, 2013, applicable Accounting Standards and SEBI Listing Regulations, 2015. A separate statement containing the salient features of the subsidiaries (including associates and joint venture) in the prescribed form (AOC-1) is annexed separately. . Statutory disclosures The summary of the key financials of the Company's subsidiary, associate company and joint venture (Form AOC-1), is included in this Annual Report. A copy of audited financial statements of the said companies will be made available to the members of the Company, seeking such information at any point of time. The audited financial statements of the said companies will be kept for inspection by any member of the Company at its registered office during business hours. The same are placed on the Company's website www.bhil.in Details as required under the provisions of section 197(12) of the Companies Act, 2013 read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are placed on the Company's website www.bhil.in as an annexure to the Directors' Report. A physical copy of the same will be made available to any shareholder on request. Details as required under the provisions of section 197(12) of the Companies Act, 2013 read with rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which form part of the Directors' Report, will be made available to any shareholder on request, as per provisions of section 136(1) of the said Act. Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, RBI Regulatory Framework, 2014 and other applicable NBFC Regulations have been made in this Annual Report. A Cash Flow Statement for the year 2015-16 is attached to the Balance Sheet. Pursuant to the legislation 'Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013' introduced by the Government of India, which came into effect from 9 December 2013, the Company has a Policy on Prevention of Sexual Harassment at Workplace. There was no case reported during the year under review under the said Policy. Secretarial Standards of ICSI Pursuant to the approval given on 10 April 2015 by Central Government to the Secretarial Standards specified by the Institute of Company Secretaries of India, the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) came into effect from 1 July 2015. The Company is in compliance with the same. Corporate governance Pursuant to the SEBI 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 the year 2015-16. 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 CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015. Certificate from auditors of the Company regarding compliance of conditions of corporate governance is annexed to this Report. Auditors Statutory auditor Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules made thereunder, the current auditors of the Company, Dalal & Shah LLP, Chartered Accountants (registration number: 102021W/W100110) were appointed by the members at the 69th annual general meeting to hold office until the conclusion of the 72nd annual general meeting, subject to ratification by members at each annual general meeting. The members are requested to ratify the appointment of Dalal & Shah LLP, Chartered Accountants (registration number: 102021W/W100110) as statutory auditors of the Company and to fix their remuneration for the year 2016-17. The statutory audit report 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 Companies Act, 2013 and Rules made thereunder, the Company has re-appointed, Shyamprasad D Limaye, Practising Company Secretary (Membership No. 1587) to undertake the secretarial audit of the Company. Secretarial Audit Report for the year 2015-16 as issued by him in the prescribed form MR-3 is annexed to this Report. The said Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer made by the secretarial auditor. On behalf of the Board of Directors Rahul Bajaj Chairman Pune: 25 May 2016 |