Corporate Governance

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Bajaj Auto Limited.

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Introduction to Bajaj groups and Company

Bajaj Auto is the flagship of the Bajaj group of companies. The group comprises of 34 companies and was founded in the year 1926. The companies in the group are: Bajaj Sevashram Pvt. Ltd.

Bajaj Auto Ltd.

Bajaj Holdings & Investment Ltd. Bajaj Finserv

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Jamnalal Sons Pvt. Ltd. Rahul Securities Pvt Ltd Shekhar Holdings Pvt Ltd Madhur Securities Pvt Ltd Niraj Holdings Pvt Ltd Shishir Holdings Pvt Ltd Kamalnayan Investments & Trading Pvt Ltd Sanraj Nayan Investments Pvt. Ltd. Hercules Hoists Ltd. Hind Musafir Agency Pvt. Ltd. Bajaj International Pvt. Ltd. Bachhraj Factories Pvt. Ltd. Baroda Industries Pvt. Ltd. Jeevan Ltd. Bachhraj & Co Pvt Ltd The Hindustan Housing Co. Ltd. Hospet Steels Ltd

Introduction to Company

The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance. The group's flagship company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South 2/8/13

Company History

Founded in 1926, at the height of India's movement for independence from the British, the group has an illustrious history.

The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth during those days of relentless devotion to a common cause.

Jamnalal Bajaj, founder of the group, was a close confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with 2/8/13 much time to spend on his newly launched

Evolution

His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He too was close to Gandhiji and it was only after Independence in 1947, that he was able to give his full attention to the business. 2/8/13

Rajiv Bajaj MD & CEO, Bajaj Auto Ltd.

Rajiv Bajaj, 42, is the eldest son of Indias leading industrialist Rahul Bajaj. When he joined his family business in the late 90s, Bajaj, Indias undisputed two wheeler maker of several leaders was slowly losing ground to motorcycles made by international joint venture companies. Rajiv fought back making his own motorcycles and today, Bajajs Pulsar is a sought after bike by the Indian youth. An engineer at heart, Rajiv dislikes the management discipline and

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Major Stakeholders

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Major Stakeholder

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Shares held by non-executive directors

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Board Members

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As on 31 March 2012, the Board of Bajaj Auto consisted of sixteen directors, of whom four directors were executive. Nine out of twelve non-executive directors were independent. The Board has no institutional nominee directors.
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Board Procedures

During 2011-12, the Board of Directors met six times: on 18 May 2011, 14 July 2011, 16 September 2011, 20 October 2011, 19 January 2012 and 27 March 2012. The gap between any two meetings has been less than four months. The Board meeting held on 27 March 2012 was done with Video Conferencing facility in terms of the circulars issued by Ministry of Corporate Affairs. 2/8/13

Audit Committee

After the demerger of erstwhile BAL in 2008, the new Bajaj Auto set up its audit committee in 2008. The company has been reviewing the working of the committee from time to time to bring about greater effectiveness in order to comply with various requirements under the Companies Act, 1956 and clause 49 2/8/13 of the listing agreement.

Remuneration and Nomination Committee

Bajaj Auto constituted the remuneration committee of the Board on 30 January 2008.Subsequently, the Board of Directors at its meeting held on 16 January 2009 extended the terms of reference of the said committee to include nomination functions and restyled the said committee as Remuneration and Nomination Committee.

The committee has the following members: 1. D J Balaji Rao, Chairman 2. S H Khan 3. Naresh Chandra 4. Rahul Bajaj Independent Independent Non-Executive. Independent

During the year, the committee met twice on 16 September 2011 2/8/13 27 March 2012. S H Khan attended the meeting of 27 March and

Corporate Governance

Bajaj Groups commitment to good corporate governance practices predates SEBI and clause 49 of the listing agreements. Transparency, fairness, disclosure and accountability are the main thrust to the working of the Bajaj Group. Bajaj Auto Limited (BAL or The Company or Bajaj Auto) maintains 2/8/13

Analysis: Measuring Goodwill

Based on environmental and social impact performance, Bajaj Auto Limitedhas received an overall Scientific Rating of4.1, which is18% lowerthan the average for all Company Ratings.

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ENVIRONMENTAL Transparency Environmental Management Governance Policies Reporting Supply Chain Resource Use General Resource Management Materials Water Energy

PERFORMANCE 1.6 4 4 4 4 4 5.5 6 4 6 6 4 4 4 4 4

Environmental Impacts Biodiversity Emissions General Emissions Greenhouse Gases

Criteria and Hazardous Air Pollutants 4 Water Pollution Waste 4 4

SOCIAL PERFORMANCE Transparency Management Governance Policies Reporting Supply Chain Workers General Occupational Health and Safety Diversity and Equal Opportunity Human Rights General Human Rights Freedom of Assoc. & Collect. Bargaining Child Labor Forced and Compulsory Labor Indigenous Rights Community Public Policy Stakeholder Engagement Community Relationships Consumers Customer Health and Safety Product and Service Labeling Marketing Communications

2 4.6 4.6 6 4 4 5.3 5 5 7 4.2 5 4 4 4 4 4.8 4 4 6.5 4.3 5 4 4

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Analysis: CRISIL Rating

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CRISIL RATING FOR BAL

CRISILs ratings on the debt instruments of Bajaj Auto Ltd (Bajaj Auto) continue to reflect Bajaj Autos established position in Indias motorcycle and passenger carrier three-wheeler segments, and robust financial risk profile marked by a strong capital structure and ample liquidity. These rating strengths are partially offset by Bajaj Autos moderate presence in the executive segment of the motorcycles market. The company is likely to maintain its near debtfree status over the medium term, given that its 2/8/13 average capital expenditure (capex) requirements

Bajaj Autos substantial portfolio of liquid investments and cash surpluses (over Rs.55 billion as on March 31, 2012) provides steady treasury income, besides enhancing its financial flexibility. CRISIL believes that Bajaj Autos robust financial risk profile helps the company to withstand any competitive challenges in terms of pricing flexibility, the necessary expenditure for product launches and upgrades, or 2/8/13 any sluggishness in revenue

References

http:// www.moneycontrol.com/news_html_files/news_attachm Bajaj Auto limited Annual Report 2011-2012 http://www.bajajauto.com/bajaj_corporate.asp

http:// crisil.com/Ratings/RatingList/RatingDocs/BajajAutoLtd_
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Ninad V Deogharkar. PG-11-068

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