Mobile Nav

Market

AUDITOR'S REPORT

Bajaj Finance Ltd.

You can view full text of the latest Auditor's Report for the company.
Market Cap. (₹) 190793.14 Cr. P/BV 9.29 Book Value (₹) 355.40
52 Week High/Low (₹) 3316/1906 FV/ML 2/1 P/E(X) 47.76
Bookclosure 25/07/2019 EPS (₹) 69.12 Div Yield (%) 0.00
Year End :2018-03 

We have audited the accompanying standalone financial statements of Bajaj Finance Ltd. (‘the Company’), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (‘the Act’) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Companies (Accounting Standards) Rules, 2006 (as amended) specified under section 133 of the Act, read with the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Board of Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31 March 2018, its profit, and its cash flows for the year ended on that date.

Other matter

The financial statements of the Company for the year ended 31 March 2017, included in these standalone financial statements, have been audited by the predecessor auditor who expressed an unmodified opinion on those statements on 17 May 2017.

Report on other legal and regulatory requirements

1.    As required by the Companies (Auditor’s report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2.    As required by section 143(3) of the Act, we report that:

(a)    We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b)    In our opinion proper books of account as required by Law have been kept by the Company so far as it appears from our examination of those books;

(c)    The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d)    In our opinion, the aforesaid standalone financial statements comply with the Companies (Accounting Standards) Rules, 2006 (as amended) specified under section 133 of the Act, read with the Companies (Accounts) Rules, 2014;

(e)    On the basis of written representations received from the directors as on 31 March 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018, from being appointed as a director in terms of section 164(2) of the Act;

(f)    With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure 2’ to this report;

(g)    With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i.    The Company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer note no. 24 to the standalone financial statements;

ii.    The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii.    There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure 1 to Independent Auditors’ Report

Annexure 1 referred to in paragraph under the heading ‘Report on other legal and regulatory requirements’ of our report of even date

1.    (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b)    Fixed assets have been physically verified by the Management during the year and no material discrepancies were identified on such verification.

(c)    According to the information and explanations given by the Management, the title deeds of immovable properties included in property, plant and equipment/fixed assets are held in the name of the Company.

2.    The Company’s business does not involve inventories and, accordingly, the requirements under clause 3(ii) of the Order are not applicable to the Company and hence not commented upon.

3.    According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

4.    In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Act are applicable and hence not commented upon.

5.    In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Act and the Rules framed there under, to the extent applicable, have been complied with. We are informed by the Management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

6.    To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under section 148(1) of the Act, for the services of the Company.

7.    (a) Undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities.

(b)    According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, service tax, sales tax, duty of custom, duty of excise, value added tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c)    According to the information and explanations given to us, the dues outstanding of income tax, sales tax,, service tax, customs duty, excise duty, value added tax and cess which have not been deposited on account of any dispute, are as follows:

                                                                                                                                                       (Rs. In Crore)

Name of the Statute

Nature of disputed dues

Amount disputed

Amount paid*

Period to which the amount relates

Forum where dispute is pending

           

Employees State Insurance Act, 1948

ESIC contribution

4.46

Nil

FY 1999-2000 to FY 2006-07

Employees State Insurance Court

Employees State Insurance Act, 1948

ESIC contribution

0.68

Nil

FY 1991-92 to FY 2002-03

Deputy Director Employee State Insurance Corporation

Income Tax Act, 1961

Income Tax

5.14

Nil

FY 2007-08, FY 2011-12 and FY 2013-14

Commissioner of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

1.62

Nil

FY 1996-97 to FY 2002-03, FY 2005-06 and FY 2008-09

Income Tax Appellate Tribunal (Pune)

Income Tax Act, 1961

Income Tax

35.12

Nil

FY 1995-96 to FY 2010-11

Mumbai High Court

Finance Act, 1994

Service Tax

1243.79**

10.00

FY 2010-11 -September 2016

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994

Service Tax

53.87

Nil

July 2012 to March 2016

Commissioner (Goods and Service Tax)

Finance Act, 1994

Service Tax

2.53

0.19

FY 2007-08 to September 2015

Customs, Excise and Service Tax Appellate Tribunal

 

Finance Act, 1994

Service Tax

0.04

Nil

FY 2014-15 and FY 2015-16

Commissioner (Appeals)

Finance Act, 1994

Service Tax

0.54

0.03

FY 2012-13 and FY 2013-14

Commissioner (Appeals)

West Bengal Value Added Tax Act, 2003

Value Added Tax

0.86

Nil

FY 2005-06 to FY 2008-09

Additional Commissioner, Sales Tax

Kerala Value Added Tax Act, 2003

Value Added Tax

0.09

Nil

FY 2005-06

VAT Appellate Tribunal

Rajasthan Value Added Tax Act, 2003

Value Added Tax

1.29

Nil

FY 2008-09 to July 2014

Supreme Court of India

Rajasthan Value Added Tax Act, 2003

Value Added Tax

0.15

Nil

July 2014 to March 2017

VAT Appellate Tribunal

* paid under protest ......Includes interest and penalty

8.    In our opinion and according to the information and explanations given by the Management, the Company has not defaulted in repayment of loans or borrowings to a financial institution or bank or dues to debenture holders.

9.    According to the information and explanations given by the Management, the Company has not raised any money by way of initial public offer or further public offer.

Further, monies raised by the Company by way of term loans were applied for the purpose for which those were raised, though idle/surplus funds which were not required for immediate utilisation were gainfully invested in liquid assets payable on demand.

10.    Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the Management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

11.    According to the information and explanations given by the Management, the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

12.    In our opinion, the Company is not a Nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

13.    According to the information and explanations given by the Management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

14.    According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has complied with provisions of section 42 of the Act in respect of the private placement of equity shares during the year. According to the information and explanations given by the Management, we report that the amount raised have been used for the purposes for which those were raised, though idle/surplus funds which were not required for immediate utilisation were gainfully invested in liquid assets payable on demand.

15.    According to the information and explanations given by the Management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.

16.    According to the information and explanations given to us, we report that the Company has registered as required, under section 45-IA of the Reserve Bank of India Act, 1934.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Arvind Sethi

Partner

Membership Number: 089802

Pune: 17 May 2018

 

 

 

 

1.1 Summary of significant accounting policies

(a)    Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on Management’s knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amount of assets and liabilities in future periods.

(b)    Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any.

Cost includes purchase price and directly attributable cost of bringing the asset to its working condition for the intended use.

Gain or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss when the asset is derecognised.

(c)    Depreciation on property, plant and equipment

i.    Depreciation is provided on a pro rata basis for all property, plant and equipment on straight line method over the useful life of assets, except buildings which is determined on written down value method.

ii.    Depreciation on leasehold improvements is provided for on straight line method over the primary period of lease of premises.

iii.    Depreciation on addition to assets and assets sold during the year is being provided for on a pro rata basis with reference to the month in which such asset is added or sold as the case may be.

iv.    Assets having unit value up to RS.5,000 is charged off fully in the year of purchase of assets.

v.    Useful lives of assets are determined by the Management by an internal technical assessment except where such assessment suggests a life significantly different from those prescribed by Schedule II - Part C of the Companies Act, 2013.

vi.    Property, plant and equipment which are depreciated over useful life different than those indicated in Schedule II are as under:

(d)    Intangible assets and amortisation thereof

Costs relating to acquisition and development of computer software are capitalised in accordance with the AS-26 ‘Intangible Assets’ issued by the Institute of Chartered Accountants of India (‘ICAI’) and are amortised using the straight line method over a period of five years, which is the Management’s estimate of its useful life.

(e)    Impairment of assets

The carrying amount of assets are reviewed at each Balance Sheet date if there is any indication of impairment, based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

(f)    Investments

Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as longterm investments. Current investment are carried in the financial statements at lower of cost and fair value except for certificate of deposits, commercial papers and treasury bills, which are valued at carrying cost determined in accordance with the NBFC Master Directions.

Quoted current investments for the purpose of valuation are grouped under categories and are carried at lower of cost or market value/net realisable value for each category.

Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

Long-term fixed income securities are stated at cost less amortisation of premium/discount as the case may be. [Refer note no. 2.1 (j)(ii)(d)]

(g)    Receivables under financing activity and provisioning/write-off of Assets

Receivables under financing activity represent principal and matured finance charges outstanding at the close of the year but net of amount written off.

The provisioning/write-off on overdue assets is as per the Management estimates, subject to the minimum provision required as per the NBFC Master Directions.

The Company assesses all receivables for their recoverability and accordingly makes provisions for non-performing assets (NPAs) and delinquent assets not yet NPAs as considered necessary including by accelerating provision to an early stage based on past experience, emerging trends and estimates which is disclosed under ‘Long-term provisions’ in note no.7 to the financial statements. However, the Company ensures that the said provisions are not lower than the provisions stipulated in the NBFC Master Directions.

Contingent provision against standard asset, as required by the NBFC Master Directions, is also made by the Company on the standard assets outstanding which is disclosed under ‘Provisions’ in note no. 7 to the financial statements.

(h)    Operating leases

As a lessee: Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease.

(i)    Foreign currency translation

Initial recognition:

Foreign currency transactions are recorded at exchange rate prevailing on date of transaction.

Conversion:

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Nonmonetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

Exchange differences:

Exchange differences arising on the settlement of monetary items or on monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

(j) Revenue recognition

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i.    Revenue from operations

Interest, finance charges, service charges etc. are recognised as income on accrual basis with reference to the terms of contractual commitments such as interest subsidy and finance agreements entered into with borrowers, as the case may be, except in the case of delinquent assets provided for, penal, dishonour, foreclosure charges etc., where income is recognised on realisation basis.

ii.    Income from investment

a.    Dividend income is recognised when the Company’s right to receive dividend is established by the Balance Sheet date.

b.    Interest on securities is accounted for on accrual basis except where the ultimate collection cannot be established with reasonable certainty.

c.    Profit/loss earned on sale of investments is recognised on settlement date basis. Profit or loss on sale of investments is determined on the basis of weighted average cost method. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

d.    In order to reflect the contracted yield as interest income, the premium/discount on long-term fixed income securities is amortised with reference to the ‘yield to maturity’ prevailing on acquisition.

iii.    Income from assignment

a.    In case of assignment of loans, the loans assigned are derecognised when all the rights, title, future receivables and interest thereof along with all the risks and rewards of ownership are transferred to the purchasers of assigned loans. On derecognition, loss arising is recognised upfront, however premium is amortised based on receivables over the remaining tenure of loans.

b.    Income on retained interest in the assigned asset, if any, is accounted on accrual basis except in case of non-performing assets wherein interest income is recognised on receipt basis as per master directions.

c.    Servicing fee received is accounted for based on the underlying deal structure of the transaction as per the agreement.

iv.    Profit/loss on sale of non-performing assets

Gain/loss on sale of non-performing assets is recognised in line with the extant RBI guidelines.

v.    Other income

Other income is accounted on accrual basis, except in case of significant uncertainties.

(k) Retirement and other employee benefits

i.    Gratuity

Payment for present liability of future payment of gratuity is being fully made to the approved gratuity fund viz. Bajaj Auto Ltd. Gratuity Fund Trust, which covers the same under cash accumulation policy and debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALICL). However, any deficits in plan assets managed by LIC and BALICL as compared to actuarial liability determined using the projected unit credit method are recognised as a liability in accordance with AS-15 ‘Employee benefits’. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the period in which they arise.

ii.    Superannuation

Defined contribution to superannuation fund is being made as per the scheme of the Company.

iii.    Provident fund

Retirement benefit in the form of provident fund is a defined benefit obligation. Contributions are made to Bajaj Auto Ltd. Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the Company and recognised as an expense. Shortfall in fund assets over present obligation determined using the projected unit credit method by an appointed actuary is recognised as a liability.

iv.    Privilege leave

Privilege leave entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment, the liability using the projected unit credit method is recognised at the actuarially determined value by an appointed actuary.

v.    Defined contribution to Employees’ Pension Scheme, 1995 is made to Government provident fund authority.

(l) Income taxes

Provision for taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act,1961. Deferred tax resulting from timing differences between book profits and tax profits is accounted for at the current rate of tax or the substantively enacted rate of tax to the extent the timing differences are expected to crystalise, in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised. However, deferred tax asset arising on account of unabsorbed depreciation and business losses are recognised only if there is virtual certainty supported by convincing evidence that there would be adequate future taxable income against which the same can be realised/set off.

(m) Earnings per share

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

(n) Provisions

A provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(o) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

(p) Cash and cash equivalent

Cash and cash equivalents for the purpose of cash flow statement comprises of cash in hand and balance with bank including fixed deposit and short-term highly liquid investment with an original maturity of three months or less.

(q) Employee Stock Option Scheme

The Company operates its Employee Stock Option Scheme through a trust formed for the purpose. Equity shares are issued to the trust on the basis of the Company’s expectation of the options being exercised by its employees. Cost of benefit, if any, is recognised as an expense by the Company. The Company use intrinsic value method to account for the compensation cost of stock options to employees of the Company. The balance equity shares not exercised and held by the trust are disclosed as a reduction from the share capital and securities premium account with an equivalent adjustment to the subscription loan advanced to the trust. (Refer note no. 29)

(r) Borrowing costs

All borrowing costs are charged to Statement of Profit and Loss in the year in which they are incurred.

(s) Share issue expenses

Share issue expenses are debited to securities premium account in accordance with the provisions of section 52 of the Companies Act, 2013.

 

 

 

 

1    Corporate information

Bajaj Finance Ltd. (‘the Company’) is a public limited company domiciled in India and incorporated under the provisions of Companies Act, 1956. The Company is a non-banking financial company (‘NBFC’) registered with the Reserve Bank of India (‘RBI’) with effect from 5 MarcRs.1998 with Registration No. A-13.00243. The Company is engaged in the business of lending and primarily deals in financing of two and three-wheelers, consumer durables, small business loans, personal loans, mortgage loans, loan against securities, etc. The RBI vide its letter dated 7 October 2010, has re-classified the Company as a ‘Loan Company’ from an ‘Asset Finance Company’.

2    Basis of preparation

The financial statements have been prepared in conformity with generally accepted accounting principles in India (‘Indian GAAP’) to comply in all material respects with the notified Accounting Standards (‘AS’) under section 133 of the Companies Act, 2013 (‘the Act’), read with rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016 and the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 (‘the NBFC Master Directions’) issued by RBI. The financial statements have been prepared on an accrual basis and under the historical cost convention except as detailed in note no. 2.1(j)(i).

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The complete financial statements have been prepared along with all disclosures.

All assets and liabilities have been classified as current and non-current as per the criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of the products and services and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of its assets and liabilities, except for receivables considered doubtful, which are shown as non-current.

2.1 Change in accounting estimates

During the year, the Company has revised its estimate for charging off receivables under financing activity considered as bad debts. Had the Company applied the estimates followed in the previous year, the profit before tax for the period would have been higher by RS.57.43 crore.

(a) Terms/rights/restrictions attached to equity shares

(i)    The Company has only one class of equity shares having a par value of H2 per share. Each holder of equity shares is entitled to one vote per share. The dividend recommended 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.

(ii)    Pursuant to the SEBI (Issue of Capital and Disclosure Requirements) Regulations-2009, 9,250,000 equity shares held by Bajaj Finserv Ltd. are restricted from transfer up to 11 December 2019.

Consequent to the opinion expressed by the ‘Expert Advisory Committee’ of the Institute of Chartered Accountants of India on the applicability of clause 22A.1 of the SEBI Guidelines, the balance unexercised equity shares held by the trust at the close of the year have been reduced against the share capital as if the trust is administered by the Company itself. The securities premium related to the unexercised equity shares held by the trust at the close of the year aggregating RS.917,873,582 (As at 31 March 2017 RS.622,283,779) has also been reduced from securities premium account and adjusted against the loan outstanding from the trust.

Dividends declared by the Company do not accrete to unexercised options. Accordingly, any dividend received by the ESOP trust is remitted to the Company and adjusted against the source from which dividend has been paid.

(b) Proposed dividend

The final dividend proposed on equity shares for the year is as follows:

3 Computation of Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period after deducting preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating the diluted earnings per share, the net profit or loss for the period attributable to the equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

(i)    The Company is of the opinion that the above demands are not sustainable and expects to succeed in its appeals/defense.

(ii)    The Commissioner, Service Tax Commissionerate, Pune, through an order dated 31 March 2017, has confirmed the demand of RS.644.65 crore for service tax and penalties of RS.198.95 crore from the Company in relation to the interest subsidy the Company received from manufacturers and dealers in the period 1 April 2010 to 30 September 2016. In addition, the Commissioner has demanded the payment of interest on the service tax amount confirmed up until the date the Company pays the service tax demanded, which as at 31 March 2018 totalled RS.400.20 crore. In accordance with legal advice, the Company filed an appeal on 6 July 2017 with the Customs, Excise and Service Tax Appellate Tribunal, Mumbai disputing the demands. The Company, in line with the opinion obtained from a legal counsel, is of view that the said demands are not tenable.

(iii)    The Company has received a show cause notice from service tax authorities claiming service tax on penal interest/charges, aggregating RS.53.87 crore. The Company, in line with the opinion obtained from a legal counsel is of view that the said demand is not tenable and has filed reply on 23 March 2018.

(iv)    It is not practicable for the Company to estimate the timings of the cash flows, if any, in respect of the above pending resolution of the respective proceedings.

4    Segment information

The Company operates in a single reportable segment i.e. financing, which has similar risks and returns for the purpose of AS-17 on ‘Segment reporting’. The Company operates in a single geographical segment, i.e. domestic.

5    Liability for long-term employee benefits has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the Accounting Standard 15 (Revised) as prescribed by Companies (Accounting Standards) Rules, 2006, the details of which are as hereunder:

(A) Provident fund

In case of certain employees, the Provident Fund contribution is made to Bajaj Auto Ltd. Provident Fund Trust. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident Fund liability based on the assumptions listed below and determined that there is no shortfall as of 31 March 2018. The assumptions used in determining the present value of obligation of interest rate guarantee under deterministic approach are:

6 Employee stock option plan

The Board of Directors at its meeting held on 14 October 2009, approved an issue of Stock Options up to a maximum of 5% of the then issued equity capital of the Company aggregating to 1,829,803 equity shares of the face value of RS.10 each in a manner provided in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 subject to the approval of the shareholders under section 81(1A) of the Companies Act, 1956. The shareholders of the Company vide their special resolution passed through postal ballot on 15 December 2009 approved the issue of equity shares of the Company under one or more Employee Stock Option Scheme(s). The shareholders, at the Annual General Meeting held on 16 July 2014, approved an additional issue of 677,313 stock options i.e. from 1,829,803 to 2,507,116 options of the face value of RS.10 each under the Stock Options schemes of the Company i.e. Employee Stock Option Plan 2009.

Pursuant to the sub-division of each equity share of face value of RS.10 into five equity shares of face value of RS.2 on 10 September 2016 and allotment of bonus equity share in the proportion of one equity share of face value of RS.2 for every one equity share on 14 September 2016, the aggregate number of equity shares which would be available for future grants under the Employee Stock Option Scheme, 2009 were adjusted from 2,507,116 equity shares of face value of RS.10 to 25,071,160 equity shares equity shares of face value of RS.2 each.

The Nomination and Remuneration Committee has approved the following grants to select senior level executives of the Company in accordance with the Stock Option Scheme. Under the scheme, twelve grants have been made, details of which as on 31 March 2018 are given as under:

Method used for accounting for share based payment plan

The Company has elected to use intrinsic value method to account for the compensation cost of stock options to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

The fair value of options used to compute pro-forma net profit and earnings per share have been estimated on the date of grant using the Black - Scholes Model. The key assumptions used in Black - Scholes Model for calculating fair value as on the date of grant are:

Impact of fair value method on net profit and earnings per share

Had compensation cost for the stock option plans outstanding been determined based on the fair value approach, the net profit and earnings per share would have been as per the pro-forma amounts indicated below:

7 Disclosures required by various Reserve Bank of India Regulations, to the extent applicable, pertaining to Non-Banking Financial Companies are set out in Annexure to and forming an integral part of these Financial Statements.

8 Operating leases

The Company’s significant leasing arrangements are in respect of operating leases for premises which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellation by either party or certain agreements contains clause for escalation of lease payments. The non-cancellable operating lease agreements are ranging from 36 to 60 months. There are no sub-leases. Lease payments during the year are charged to the Statement of Profit and Loss.

9    In accordance with the Reserve Bank of India circular no. RBI/2006-07/225 DNBS (PD) C.C No. 87/03.02.004/2006-07 dated 4 January 2007, the Company has created a floating charge on the statutory liquid assets comprising of investment in Government securities to the extent of RS.612.67 crore (Previous year RS.557.38 crore) in favor of trustees representing the public deposit holders of the Company.

10    Previous period financial statements were audited by the Company’s previous auditors and figures have been regrouped/rearranged, wherever necessary, to conform to current period presentation.

11    Amounts less than RS.50,000 have been shown at actual against respective line items statutorily required to be disclosed.

 

Attention Investors :
Prevent Unauthorised transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile / email at the end of the day .......... Issued in the interest of investors
Attention Investors :
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL on the same day......................issued in the interest of investors.
Attention Investors :
KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Attention Investors :
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
“Investment in securities market are subject to market risks, read all the related documents carefully before investing”.