Board of Directors Corporate Management Team Shekhar Bajaj, Chairman & Managing Director Shekhar Bajaj, Chairman & Managing Director Harsh Vardhan Goenka Anant Bajaj, Joint Managing Director Ashok Jalan L.K.Mehta, Executive Director (Not on the Board) Ajit Gulabchand P.S.Tandon, Executive Director (Not on the Board) V.B.Haribhakti A.S.Radhakrishna, President – Fans BU Madhur Bajaj C.G.S.Mani, President – Lighting BU Anant Bajaj, Jt.Managing Director (wef.1.4.2012) Vivek Sharma, Executive Vice President & Head – MR BU Dr.(Mrs.) Indu Shahani Siddhartha Kanodia, Executive Vice President & Head – Corporate Services R.Ramakrishnan, Executive Director (upto 29.2.2012) Pratap Gharge, Executive Vice President & CIO Dr.R.P.Singh R.Sundararajan, Executive Vice President & Head – Luminaires BU Atul Sharma, Executive Vice President – Human Resources & Administration Atul Pathak, Vice President & Head – Internal Audit A.R.Sreedhar, Vice President & Head – Branch Sales Support A.M.Purandare, Vice President & CFO Company Secretary Chakan Unit Mangesh Patil B.M.Mane, General Manager (Works) Ranjangaon Unit Jayant K.Deshmukh, Vice President – Operations, RU Auditors Dalal & Shah, Chartered Accountants Cost Auditors R Nanabhoy & Co., Cost Accountants Bankers State Bank of Bikaner and Jaipur Bank of India Contents Page No. Union Bank of India State Bank of India Notice 2 Yes Bank Ltd. Directors’ Report 4 IDBI Bank Ltd. Report on Corporate Governance 11 Registered Office Auditors’ Certificate on Corporate Governance 23 45-47, Veer Nariman Road, Mumbai 400 001 Management Discussion and Analysis 24 Report of the Auditors to the Members 50 Factories Chakan Unit : Mahalunge, Chakan Talegaon Road, Balance Sheet 54 Khed, Pune 410 501. Profit & Loss Account 55 Wind Farm : Village Vankusawade, Tal.:Satara, Cash Flow Statement 56 Dist.: Patan, Maharashtra Ranjangaon Unit : Village Dhoksanghvi, Taluka Shirur, Notes to Financial Statements 57 Ranjangaon, Dist. : Pune, Financial Position at a Glance 85 Maharashtra 412 210 Branches Ahmedabad, Bangalore, Bhubaneshwar, Chandigarh, Chennai, Cochin, Delhi, Guwahati, Hyderabad, Indore, A request Jaipur, Kolkata, Kundli, Lucknow, Mumbai, Nagpur, Noida, The practice of distributing the Annual Report at the Annual General Meeting Patna, Pune, Raipur. has been discontinued in view of the high cost of paper and printing. Depots Shareholders are therefore requested to bring their copies of the Annual Bhiwandi, Daman, Dehradun, Goa, Parwanoo, Ranchi & Report to the meeting. Zirakhpur. 1 Registered Office: 45-47, Veer Nariman Road, Mumbai 400 001. NOTICE NOTICE is hereby given that 73rd Annual General Meeting of the Members of Bajaj Electricals Limited will be held on Thursday, the 26th day of July, 2012 at 12.30 P.M. at Walchand Hirachand Hall, 4th Floor, Indian Merchants’ Chamber, IMC Marg, Churchgate, Mumbai 400 020 to transact the following business: 1. To consider and adopt the Profit and Loss Account for the financial year ended 31st March, 2012 and the Balance Sheet as at that date together with the Reports of the Board of Directors and Auditors thereon. 2. To declare dividend for the financial year ended 31st March, 2012. 3. To appoint a Director in place of Shri Madhur Bajaj, who retires by rotation and being eligible, offers himself for re-appointment. 4. To appoint a Director in place of Dr.(Mrs.) Indu Shahani, who retires by rotation and being eligible, offers herself for re- appointment. 5. To appoint Auditors and to fix their remuneration and in this regard to consider and if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution: “RESOLVED that Messrs.Dalal & Shah, Chartered Accountants, Mumbai, having Registration No.102021W issued by the Institute of Chartered Accountants of India (ICAI), be and are hereby re-appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting on a remuneration to be decided by the Board of Directors or Committee thereof in addition to reimbursement of service tax, as applicable, actual traveling and out-of-pocket expenses incurred by them.” NOTES: 1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. The proxies to be effective should be deposited at the registered office of the Company not later than 48 hours before the commencement of the meeting. 2. Corporate members intending to send their authorized representatives to attend the Meeting are requested to send to the Company a certified copy of the Board Resolution authorizing their representative to attend and vote on their behalf at the meeting. 3. The Register of Members and Share Transfer Books of the Company will remain closed from 20th day of July, 2012 to 26th day of July, 2012 (both days inclusive). 4. Members/Proxies are requested to bring their copies of Annual Report together with the duly filled in attendance slip to the Meeting. 5. Members desiring any information pertaining to the accounts are requested to write to the Company Secretary at an early date so as to enable the Management to reply at the AGM. 6. Pursuant to the provisions of clause 47(f) of the Listing Agreement, the Company has designated a dedicated e-mail id [email protected] exclusively for registering grievances and complaints of the Shareholders. All the Shareholders are requested to lodge their complaints and grievances etc., if any, at the said e-mail id. 7. Disclosure pursuant to Clause 49 of the Listing Agreement with respect to the Directors seeking re-appointment at the forthcoming Annual General Meeting is given below:- 2 Details of Directors seeking Re-appointment in the forthcoming Annual General Meeting: Name of Director Shri Madhur Bajaj Dr. (Mrs.) Indu Shahani Brief Resume & Functional Aged about 59 years, B.Com, MBA from Aged about 60 years, Ph.D in Commerce Expertise Institute of Management Development, from University of Mumbai on enhancing Lausanne, Switzerland, a member of the Academia Institutional linkages Board since 1994, Industrialist with over Academician with over three decades of 29 years of experience. He is also the Vice- teaching experience at University and Chairman of Bajaj Auto Ltd. Degree College, member of University Grant’s Commission, member of various Committees, Academic Council, Audit & Corporate Governance Committee of HSBC, Director of the Rotary Club of Bombay and Member Junior/Youth Red Cross of the Indian Red Cross Society and has pioneering linkages with various bodies such as CII, BC, CI, IMC. She was awarded the Honorary Doctor of Letters degree by the University of Westminster in London. She is the Hon’ble Sheriff of Mumbai and the Principal of H.R.College of Commerce & Economics. Appointment / Reappointment Re-appointment on retirement by rotation Re-appointment on retirement by rotation No. of Shares held in the Company 17,57,835 Nil List of Directorship held in other 1. Bajaj Auto Ltd. 1.Indian Oil Corporation Ltd. Companies 2. Bajaj Finance Ltd. 2.Euroka Forbes Ltd. 3. Maharashtra Scooters Ltd. 3.Colgate Palmolive (India) Ltd. 4. Bajaj Finserv Ltd. 5. Bajaj Holdings & Investment Ltd. Committee Membership Nil Nil By Order of the Board of Directors For Bajaj Electricals Limited Mangesh Patil Mumbai, May 28, 2012 Company Secretary 3 FY 2011-12 from Rs.631 crore in the previous financial year. The CFL (Compact Fluorescent Lamps) sales has increased by 41% over last year and crossed Rs.250 crore mark. During the year, Lighting and Luminaires, both have seen improvement in their margins. The thrust is on developing energy-efficient consumer luminaire and lighting products based on LED and lighting control technologies which is a DIRECTORS’ REPORT global mandate to arrest global warming. Dear Shareholders, Consumer Durables Your Directors are pleased to present the 73rd Annual Report The turnover of consumer durables, which include fans and and the audited accounts for the financial year ended 31st small appliances, increased by over 17.5 % at Rs.1,500 crore March, 2012. during the year under review from Rs.1,277 crore in the previous year. The Company’s Morphy Richard brand has Financial Performance: emerged as the fastest growing brand in premium segment Rs. in crore with a growth of 36% and a CAGR of 35%. The Company FY FY has continued to introduce new range of products with varied 2011-12 2010-11 models and improve the technology and quality in order to Revenue from Operations & gain a competitive advantage. Other Income (Gross) 3144.31 2781.47 The slowdown in the housing and real estate sector has Gross Profit before Finance Cost & adversely affected the fan industry. For the first time since Depreciation 251.52 271.01 2002-03, the industry, which has been growing at 20-25% Less : Finance Cost 63.05 36.65 on a year-on-year basis for the last couple of years, has Less : Depreciation 12.52 10.80 recorded negative growth of about 6.16% in production and Profit before Taxes & Provisions 175.95 223.56 6.18% in domestic sales during the year. Less :Provision for Irrecoverable portion of Loan - 5.00 The production at Chakan Unit showed increased during the Less : Provision for Taxation 58.07 73.99 year under review with production of 4,68,347 nos. of fans as against 4,28,259 nos. of fans in the previous year. Less : Taxes in respect of earlier years - 0.78 Engineering & Projects Profit after Tax 117.88 143.79 Add : Balance in Profit & Loss Account 43.47 32.02 During the year, the top line performance of E & P BU was Balance available for appropriation 161.35 175.81 flat at Rs.830 crore as compared to Rs.832 crore in the previous year. The Ranjangaon Unit produced 4,655 nos. of Less : Appropriations : Highmasts and 53,279 nos. of Street Lighting Poles as (i) Dividend paid on exercise of Stock against 4,200 nos. and 45,000 nos. respectively in the Options including dividend previous year. The Unit also manufactured 24,035 MT of distribution tax 0.24 0.17 transmission line towers as against 19,004 MT in the previous (ii) Proposed Dividend on Equity Shares 27.90 27.68 year. The BU’s order book position at the end of the year (iii) Tax on Dividend 4.52 4.49 2011-12 stood at Rs.604 crore. The year gone by was tough (iv)Transferred to General Reserve 100.00 100.00 for the BU as its performance was adversely impacted by Closing Balance 28.69 43.47 slower order inflow, increased competition, pressure on margins and time and cost overrun in some of the projects. Results of Operations: The infrastructure development continues to be the FY 2011-12 was a challenging year. The global economy Government’s focus area. Projects under Restructured- witnessed lower economic growth resulting primarily from Accelerated Power Development and Reform Programme high commodity and oil prices. Despite the challenging (R-APDRP), new packages under Rajeev Gandhi Gramin environment, the Company performed reasonably well and Vidyutikaran Yojana and Governments plan to add power the highlights of the performance are as under : generation capacity will give good opportunity to this division to improve its growth and profitability in the future. Gross Revenue from operations increased by 13.1% to Rs.3125.13 crore. Wind Energy PBDIT decreased by 7.2% to Rs.251.52 crore. The 2.8 MW Wind Farm at Village Vankusawade in PBT decreased by 21.3% to Rs.175.95 crore. Maharashtra generated 46,49,716 electrical units during the Net Profit decreased by 18.0% to Rs.117.88 crore year under review (Previous Year 36,02,359 units). Lighting Increase in number of shares The turnover of lighting products viz. Lamps, Tubes and The increase in number of shares is due to the issue of Luminaires increased by about 21.1% at Rs.765 crore during 7,95,522 equity shares of Rs.2 each to the employees upon 4 exercise of their stock options. These shares were included, Risk Management on weighted average basis, for the computation of EPS. Risk management forms an integral part of the business Dividend planning and review cycle. The Company’s Risk Management Policy is backed by strong internal control systems. The risk Your Directors have recommended a dividend of Rs.2.80 per management framework consists of policies and procedures equity share (Previous year Rs.2.80 per equity share) for designed to provide reasonable assurance that objectives the financial year ended 31st March, 2012, amounting to Rs. are met by integrating management control into the daily 32.43 crore (inclusive of tax of Rs.4.53 crore). The dividend operations, by ensuring compliance with legal requirements will be paid to the members whose names appear in the and by safeguarding the integrity of the company’s financial Register of Members as on 26th July, 2012; in respect of reporting and its related disclosures. It makes management shares held in dematerialized form, it will be paid to members responsible for identifying the critical business risks and take whose names are furnished by National Securities Depository appropriate actions to mitigate risks. The risk policy and Limited and Central Depository Services (India) Limited, as internal Audit Reports are periodically reviewed by the Board beneficial owners as on that date. and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment. Shares that may be allotted on exercise of Options granted under the Employee Stock Option Scheme before the Book Corporate Governance Closure for payment of dividend will rank pari passu with the existing shares and be entitled to receive the dividend. The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Employees Stock Option Scheme Governance requirements set out by SEBI. The Company The Company implemented the Employees Stock Option has also implemented several best Corporate Governance Scheme (“Scheme”) in accordance with the Securities and practices. Exchange Board of India (Employee Stock Option Scheme The Report on Corporate Governance as stipulated under and Employee Stock Purchase Scheme) Guidelines, 1999 Clause 49 of the Listing Agreement forms part of the Annual (‘the SEBI Guidelines’). The applicable disclosures as Report. stipulated under the SEBI Guidelines as at March 31, 2012 are provided in Annexure I to this Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate During the year under review, 24,55,000 Options were Governance as stipulated under the aforesaid Clause 49, is granted on 29th August, 2011 and 1,40,000 Options were granted on 28th March, 2012 under Growth Plan to the attached to this Report. eligible employees at the prices of Rs.164.85 and Rs.182.20 Management Discussion and Analysis Report per option respectively, being the closing equity prices of the Company on the National Stock Exchange of India Ltd. A Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing The issuance of equity shares pursuant to exercise of Options Agreement with the Stock Exchanges in India, is presented granted under Growth Plan does not affect the profit and in a separate section forming part of the Annual Report. loss account of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes Social Initiatives as applicable. Your Company is a socially responsible corporate citizen. In None of the management employees or Whole-time Directors keeping with the Company’s commitment towards has received options exceeding 5% of the value of the options contribution to community welfare, the Company and its issued for the year ended March 31, 2012. Likewise, no employees continue to support and closely associated with employee has been issued share options, during the year “Paryavaran Mitra” (Friends of Environment) a non- equal to or exceeding 1% of the issued capital of the government organization (NGO) and involved in numerous Company at the time of grant. activities like tree plantation, cleanliness drive, tobacco free The Company has received a certificate from the Auditors of environment and creation of social awareness, training & the Company that the Scheme has been implemented in dissemination of information concerning Paryavaran accordance with the SEBI Guidelines and the resolution (Environment) and Pollution and host of other activities for passed by the shareholders. The Certificate would be placed the cause of environment protection at Company’s various at the Annual General Meeting for inspection of members. locations. The Company also sponsored Mumbai, Delhi & Hyderabad Marathons, which received overwhelming Depository System participation from the employees to propagate the cause of environment protection. As the members are aware, the Company’s shares are compulsorily tradable in electronic form. As on March 31, Subsidiaries 2012, almost 96.94% of the Company’s total paid-up capital representing 9,65,85,099 shares were in dematerialised form. The Company has no subsidiary as on 31st March, 2012. 5 Directors all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may In accordance with the provisions of the Companies Act, write to the Company Secretary at the Registered Office of 1956, Shri Madhur Bajaj and Dr.(Mrs.) Indu Shahani retire the Company. by rotation and being eligible, offer themselves for re- appointment. Directors’ Responsibility Statement Brief resumes of the Directors proposed to be re-appointed Pursuant to the requirement under Section 217(2AA) of the as required under Clause 49 of the Listing Agreement are Companies Act, 1956, with respect to Directors Responsibility provided in the Notice of the Annual General Meeting forming Statement, it is hereby confirmed that: part of the Annual Report. (a) in the preparation of the annual accounts for the year Auditors ended March 31, 2012, the applicable accounting standards read with requirements set out under M/s. Dalal & Shah, Chartered Accountants, Statutory Auditors Schedule VI of the Companies Act, 1956, have been of the Company, hold office until the conclusion of the ensuing followed and that no material departures have been Annual General Meeting and are eligible for reappointment. made from the same; The Company has received a certificate from them to the (b) the Directors have selected such accounting policies effect that their reappointment , if made, would be within the and applied them consistently and made judgements prescribed limits under Section 224(1B) of the Companies and estimates that are reasonable and prudent so as to Act, 1956 and that they are not disqualified for reappointment give a true and fair view of the state of affairs of the within the meaning of Section 226 of the said Act. Company as at March 31, 2012 and of the profit of the The observations made in the Auditors’ Report read together Company for the year ended on that date; with the relevant notes thereon, are self-explanatory and (c) the Directors have taken proper and sufficient care for hence do not call for any comments under section 217 of the the maintenance of adequate accounting records in Companies Act, 1956. accordance with the provisions of the Companies Act, In conformity with the directives of the Central Government, 1956, for safeguarding the assets of the Company and the Company has appointed R Nanabhoy & Co, cost for preventing and detecting fraud and other accountants, ICWA Membership No. 1337, with address at irregularities; and Jer Mansion, 70, August Kranti Marg, Mumbai 400 036, as (d) the Directors have prepared the annual accounts on a the cost auditor under Section 233B of the Companies Act, ‘going concern’ basis. 1956 to conduct the cost audits of Bajaj Electricals Ltd for the year 2012-13. For the year ended 31st March, 2011, the Transfer of amounts to Investor Education and Protection due date of filing the cost audit report was 30th September, Fund 2011 and the actual date of filing the cost audit report was Pursuant to the provision of Section 205A(5) of the 24th August, 2011. Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of 7 years have been Energy Conservation, Technology Absorption and transferred by the Company to the Investor Education and Foreign Exchange Earnings and Outgo Protection Fund. The particulars relating to energy conservation, technology Industrial Relations absorption, foreign exchange earnings and outgo, as required to be disclosed under section 217(1)(e) of the Companies The relations with the employees of the Company have Act, 1956 read with the Companies (Disclosure of Particulars continued to remain cordial. in the Report of Board of Directors) Rules, 1988 are set out in the Annexure-II to this Report. Acknowledgement Particulars of Employees Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the In terms of the provision of Section 217(2A) of the Companies financial institutions, banks, customers, investors, business Act, 1956, read with the Companies (Particulars of associates, vendors, regulatory and government authorities Employees) Rules, 1975, as amended, the names and other and members during the year under review. particulars of the employees are set out in the annexure to Your Directors also wish to place on record their deep sense the Directors’ Report. However, having regard to the of appreciation for the sincere efforts put in by the executives, provisions of Section 219(1)(b)(iv) of the said Act, the Annual staff and workers of the Company, in helping it reach its Report excluding the aforesaid information is being sent to current growth levels. For and on behalf of the Board of Directors Mangesh Patil Anant Bajaj Shekhar Bajaj Company Secretary Jt. Managing Director Chairman & Managing Director Mumbai, May 28, 2012 6