BAJAJ HOLDINGS & INVESTMENT LIMITED 76th ANNUAL REPORT 2020-21 CONTENTS Corporate Information ...............................................................................................................02 Directors’ Report ....................................................................................................................... 05 (including Annual Report on CSR activities) Management Discussion and Analysis ................................................................................... 25 Corporate Governance ..............................................................................................................35 General Shareholder Information ........................................................................................... 52 Standalone Financial Statements .............................................................................................61 Consolidated Financial Statements ........................................................................................133 BAJAJ HOLDINGS & INVESTMENT LIMITED 76th Annual Report 2020-21 CORPORATE INFORMATION Board of Directors Audit Committee Niraj Bajaj Pradip P Shah Chairman Chairman Sanjiv Bajaj Dr. Naushad Forbes Managing Director & CEO Dr. Gita Piramal D J Balaji Rao Manish Kejriwal Dr. Gita Piramal Dr. Naushad Forbes Nomination & Remuneration Committee Anami N Roy Dr. Gita Piramal Chairperson Pradip P Shah D J Balaji Rao Rajiv Bajaj Niraj Bajaj Madhur Bajaj Manish Kejriwal Risk Management Committee Pradip P Shah Chairman Emeritus Chairman Rahul Bajaj Sanjiv Bajaj Anish P Amin 2 Corporate Information Corporate Overview Statutory Reports Financial Statements 02-04 05-60 61-195 Stakeholders’ Relationship Committee Auditors Dr. Gita Piramal S R B C & CO LLP Chairperson Chartered Accountants Dr. Naushad Forbes Secretarial Auditor Manish Kejriwal Shyamprasad D. Limaye Practising Company Secretary Corporate Social Responsibility Committee Bankers Sanjiv Bajaj Chairman Citibank N A HDFC Bank Dr. Naushad Forbes Anami N Roy Registered Office Mumbai-Pune Road, CFO Akurdi, Pune - 411 035. Anant Marathe CIN: L65100PN1945PLC004656 Company Secretary Sriram Subbramaniam 3 BAJAJ HOLDINGS & INVESTMENT LIMITED 76th Annual Report 2020-21 Niraj Bajaj Sanjiv Bajaj Chairman Managing Director & CEO Anant Marathe CFO 4 Corporate Overview Statutory Reports Financial Statements 02-04 05-60 61-195 DIRECTORS’ REPORT At the outset, your Company’s Board of directors commiserates with the families of all employees, members and others who succumbed to this dreadful COVid-19 pandemic. Your directors’ present the Seventy Sixth Annual Report along with the audited 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 SEBI Circulars 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’ Report, Corporate Governance Report, Management Discussion and Analysis Report, Auditors’ Report and other documents to be attached therewith) are being sent through electronic mode to those members whose email addresses are registered with the Company’s Registrar and Share Transfer Agent viz., KFin Technologies Pvt. Ltd. (KFin) /Depository Participants, and whose names appear in the Register of Members as on Friday, 18 June 2021. The Company has also made arrangements for those members who have not yet registered their email address to get these registered by following the procedure prescribed in the notice of AGM. Financial results The financial results of the Company are elaborated in the Management Discussion and Analysis Report. The highlights of the Standalone Financial Results are as under: (` In Crore) Particulars FY2021 FY2020 Total income 431.14 2,205.86 Total expenses 121.23 157.77 Profit before tax 309.91 2,048.09 Tax expense 111.32 221.22 Profit for the year 198.59 1,826.87 Earnings per share (`) 17.80 164.10 5 BAJAJ HOLDINGS & INVESTMENT LIMITED 76th Annual Report 2020-21 Closing balances in reserve/other equity (` In Crore) Particulars FY2021 FY2020 Reserve fund in terms of section 45-IC(1) of Reserve Bank of India Act, 1934 2,147.06 2,107.34 Securities premium 444.42 444.42 General reserve 3,706.96 3,706.96 Retained earnings 3,647.69 3,198.67 Other reserves - Equity instruments through other comprehensive income 3,906.78 1,089.11 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 13,905.48 10,581.20 Note: Detailed movement of above reserves can be seen in ‘Statement of Changes in Equity’ The highlights of the Consolidated Financial Results are as under: (` In Crore) Particulars FY2021 FY2020 Total income 463.07 435.69 Share of profits of associates 3,445.59 3,057.81 Profit before tax 3,765.74 3,313.67 Profit for the year 3,649.83 2,992.00 Earnings per share (`) 327.90 268.80 Transfer to reserve fund Under section 45-IC of Reserve Bank of India Act, 1934, non-banking financial companies (NBFCs) are required to transfer a sum not less than 20% of its net profit every year to reserve fund before declaration of any dividend. Accordingly, the Company has till date transferred a sum of ` 2,147.06 crore to its reserve fund. 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. Presentation of Standalone and Consolidated Financial Statements The financial statements of the Company for FY2021, on a standalone and consolidated basis, have been prepared in compliance with the Act, applicable Accounting Standards 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 the subsidiaries and associates of the Company. 6 Corporate Overview Statutory Reports Financial Statements 02-04 05-60 61-195 Dividend distribution policy Pursuant to the provisions of SEBI Listing Regulations as amended, the Company has formulated a Dividend Distribution Policy. The Policy sets out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its members. The policy has been uploaded on the website of the Company and can be accessed at http://www.bhil.in/inv/codes_policies.html. A copy of the policy will be made available to any shareholder on request, by email. Dividend The directors recommend, for consideration of the members at the ensuing Annual General Meeting, dividend of ` 40 per equity share (400%) of face value of ` 10 for the year ended 31 March 2021. The total dividend pay-out for FY2021 is ` 445.17 crore. During FY2020, Dividend income received by the Company was substantially higher as compared to FY2021 as group companies had declared an Interim Dividend in FY2020. Consequently, there was no dividend declared in FY2021 by some of these companies. In order to keep the dividend declared stable and steady, the Board has, for FY2021, recommended dividend out of the Retained Earnings outstanding at the close of the year. Such payment of dividend from retained profits was not envisaged in the Dividend Distribution policy, which will be suitably revised. Dividend paid for FY2020 was ` 40 per equity share (400%) of face value of ` 10 each. The amount of dividend pay-out and tax thereon aggregated to ` 531.00 crore. In view of the amendment to the Income Tax Act, 1961 through the Finance Act, 2020, imposition of Dividend Distribution Tax has been abolished. The dividend, if declared at the ensuing AGM will be taxable in the hands of the members of the 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 of the Company and their contribution to the overall performance of the Company during the period under Report is covered in the Management Discussion and Analysis Report. During FY2021, no new subsidiary was incorporated/acquired. Neither the Company has entered into a joint venture with any company. The financial statements of the subsidiary companies are also available in a downloadable format under Investors section of the Company’s website at http://www.bhil.in/inv/annual_reports.html A separate statement containing the salient features of the subsidiaries in the prescribed form AOC–1 is attached to the consolidated financial statements. 7 BAJAJ HOLDINGS & INVESTMENT LIMITED 76th Annual Report 2020-21 Directors and Key Managerial Personnel A) Change in Directorate/Chairman: i) Relinquishment of position of Chairman Considering the increasing roles and responsibilities in various Bajaj group entities, Niraj Bajaj has relinquished his position as Chairman of the Company with effect from close of business