CORPORATE GOVERNANCE

Corporate governance is about promoting fairness, transparency, accountability, commitment to values, ethical business conduct and considering the interest of all stakeholders while conducting business.

In accordance with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and amendments thereto (‘SEBI Listing Regulations’), given below are the corporate governance policies and practices of Bajaj Auto Ltd. (‘the Company’, ‘Bajaj Auto’ or ‘BAL’) for the year 2021-22 (or ‘FY2022’).

This report states compliance as per requirements of the Companies Act, 2013 (‘the Act’) and SEBI Listing Regulations, as applicable to the Company. As will be seen, Bajaj Auto’s corporate governance practices and disclosures have gone well beyond complying with the statutory and regulatory requirements stipulated in the applicable laws, including the SEBI Listing Regulations.

Philosophy

For us, corporate governance is a reflection of principles entrenched in our values and policies and also embedded in our day-to-day business practices, leading to value-driven growth. The commitment of the Bajaj group to the highest standards of good governance practices predate SEBI and the provisions of the SEBI Listing Regulations. Ethical dealings, transparency, fairness, disclosure and accountability are fundamental canons of the Bajaj group. Bajaj Auto Ltd. maintains the same tradition and commitment.

Rahul Bajaj, the chairman of the Bajaj group for several decades who sadly passed away on 12 February 2022, was a pioneer of Corporate Governance in India and he laid the foundation for several noteworthy corporate governance practices for the group in general and Bajaj Auto in particular.

Key elements of Bajaj Auto’s corporate governance

• Number of Board meetings exceed the statutory requirement, including meetings dedicated to discussing strategy, operating plans and risk.
• The Company’s Board comprises directors from diverse backgrounds and substantial experience, who are able to provide appropriate guidance to the executive management as required.
• The Board comprises independent directors with outstanding track record and reputation.
• All Board members are invited and encouraged to be present at committee meetings, even if they are not members.
• There are pre-audit committee meetings of the chairman of the audit committee with the statutory auditors, the internal auditor and such members of executive management who are process owners.
• There are separate meetings of independent directors without presence of non-independent directors or executive management.
• There is a confidential Board evaluation process where each Board member evaluates the performance of every other director, committees of the Board, the Chairman of the Board and the Board itself.
• Presentations by key senior management team members of the Company and its subsidiaries are regularly made to familiarise directors with key elements of each business.
• Complete and detailed information are provided in advance to Board members.
• Key governance policies are placed on Company’s website.
• A Half-yearly letter from the management is sent to all shareholders of the Company.
• The Company monitors its governance through a dedicated governance team.
• Adoption of key governance policies and codes by the Board in line with best practices, which are made available to stakeholders for downloading/viewing from the Company’s website. These include:

  —  Whistle blower policy/vigil mechanism;

  —  Policy on materiality of and dealing with related party transactions;

  —  Code of conduct;

  —  Dividend distribution policy;

  —  Policy on prevention of sexual harassment at workplace;

  —  Fair Practices Code;

  —  Policy on Human Rights;

  —  Equal Employment Opportunity and Non-Discrimination policy.

Further details of these principles are highlighted in the appropriate sections in this document.

Board of Directors

The Company’s policy is to have an appropriate blend of executive, independent and non-independent directors to maintain independence of the Board and to separate the Board functions of governance from that of management.

Composition

As per regulation 17(1)(b) of the SEBI Listing Regulations, where the Chairman is non-executive or a promoter, at least one half of the Board of a Company should consist of independent directors. As Table 1 shows, this provision is met at BAL.

As on 31 March 2022, the Board consisted of 14 directors, of whom three were executive (including the managing director), seven were non-executive as well as independent (including two women independent directors) and four were non-executive and non-independent. The Board has no institutional nominee director.

Further particulars about the directors are mentioned in the Board’s Report.

Number of meetings of the Board

During FY2022, the Board met five times: 29 April 2021, 22 July 2021, 27 October 2021, 19 January 2022 and 15 March 2022. The gap between any two meetings has been less than 120 days.

As per the relaxation given by MCA due to the Covid-19 pandemic, all the Board and committees meetings of the Company during the year under review were held in hybrid mode (Physical meeting plus meeting held through video conferencing).

Attendance record of directors

Table 1 gives the composition of Bajaj Auto’s Board and the attendance record of its directors.

Notes:

1.      Rahul Bajaj resigned as Chairman of the Company on 30 April 2021 and was appointed as Chairman Emeritus of the Company w.e.f. 1 May 2021. He later expired on 12 February 2022.

2.     Dr. Omkar Goswami resigned on 9 July 2021 and ceased to be an independent director of the Company w.e.f. 9 July 2021.

3.   *The equity shares also includes shares held in the capacity of trustee of private family trusts.

Board diversity

In compliance with the provisions of the SEBI Listing Regulations, the Board through nomination and remuneration committee has devised a policy on Board diversity. The Board comprises adequate number of members with diverse experience and skills, such that it best serves the governance and strategic needs of the Company. The directors are persons of eminence in areas such as business, industry, finance, law, administration, economics etc. and bring with them experience and skills which add value to the performance of the Board. The directors are selected purely on the basis of merit with no discrimination on race, colour, religion, gender or nationality.

A brief profile of the directors is available on the website of the Company at https://www.bajajauto.com/about-us/bajaj-team

Opinion of the Board

The Board confirms that, in its opinion, the independent directors on the Board fulfil the conditions specified in the SEBI Listing Regulations and the Act and are independent of the management.

Non-executive directors’ compensation

The shareholders of the Company through a special resolution passed at the annual general meeting of the Company held on 22 July 2021 have, by way of an enabling provision, approved payment of commission up to a sum not exceeding one percent of the net profits of the Company, calculated in accordance with the provisions of section 197 and 198 of the Act, to the non-executive directors, in the manner as may be decided by the Board of directors from time to time during the five year term up to 31 March 2026.

Consistent with this approval from the shareholders, non-executive directors of the Company are being paid, in addition to the sitting fee of ₹ 100,000 per meeting for every meeting of the Board and its Committees, commission at the rate of ₹ 250,000 per meeting of the Board and its Committees attended by them as member, subject to the overall ceiling of one percent of the net profits.

In consideration of the services rendered by Rahul Bajaj as Chairman for the month of April 2021, commission of ₹ 2,50,000 became due to be paid to him pursuant to necessary approvals obtained from the shareholders through a postal ballot on 16 March 2020. As stated earlier, he ceased to be Non-executive Chairman w.e.f. 1 May 2021.

The Company has adopted the Bajaj Auto Employee Stock Option Scheme 2019 for the benefit of the permanent employees and/or directors of the Company and/or its holding (if any, in future) and subsidiary company(ies), but excluding independent directors and any employee who is a promoter or belonging to the promoter group.

Compensation to the non-executive (including independent) directors reflects the time, effort, attendance and participation of such directors in Board and committee meetings. Payment to them is linked to their attendance.

Information supplied to the Board

In advance of each meeting, the Board is presented with relevant information on various matters related to the working of the Company, especially those which require deliberation at the highest level. Presentations are also made to the Board by different functional heads on important matters from time to time. Directors have separate and independent access to the officers of the Company. In addition to such items as required to be placed before the Board for its noting and/or approval, information is provided on various other significant items as well.

In terms of quality and importance, the information supplied by the management to the Board of the Company is far ahead of the list mandated under regulation 17(7) read with Part A of Schedule II to the SEBI Listing Regulations.

The independent directors of the Company at their meeting held on 15 March 2022 have expressed satisfaction on the quality, quantity and timeliness of flow of information between the Company’s management and the Board and have confirmed that these significantly aid the Board to effectively and reasonably perform its duties.

Pursuant to various regulatory requirements, and in compliance with applicable laws, and keeping in view the business requirements, the Board is, inter-alia, apprised on the following:

• Business plans, forecast and strategic initiatives.
• Capital expenditure and updates.
• Internal financial controls.
• Succession planning and organisation structure.
• Details of incidence of frauds and corrective action taken thereon.
• Performance of subsidiaries.
• Status of compliances with Companies Act, 2013, SEBI regulations and shareholder related matters.
• Various policies framed by Company from time to time.
• Risk management system, risk management policy and strategy followed.
• Compliance with corporate governance standards.
• Minutes of meetings of risk management and other Board committees.
• Compliance with fair practices code.
• Changes in regulatory landscape.

To leverage technology and move towards paperless systems, the Company has, since several years, adopted a web-based application for transmitting Board/committee meetings papers. Directors of the Company receive Board papers in electronic form through this application. This application meets high standards of security and integrity required for storage and transmission of Board/committee papers in electronic form.

Directors and officers liability insurance (D&O policy)

The Company has in place a D&O policy which is renewed every year. It covers directors (including independent directors) of the Company. The Board is of the opinion that the quantum and risks presently covered are adequate.

Orderly succession to Board and senior management

One of the key functions of the Board of directors is selecting, compensating, monitoring, and when necessary, replacing key managerial personnel and overseeing succession planning.

Pursuant to regulation 17(4) of the SEBI Listing Regulations, the framework of succession planning for the Board and senior management is placed before the Board for its review. During the year under review, the Board of the Company satisfied itself that plans are in place for orderly succession of such appointments.

Directorships and memberships of Board committees

Details of directorships and memberships in the various committees as held by the directors of the Company are given in Table 2.

Notes: None of the directors holds office as a director, including as alternate director, in more than 20 companies at the same time. None has directorships in more than 10 public companies. For reckoning the limit of public companies, directorships of private companies that are either holding or subsidiary company of a public company are included and directorships in dormant companies are excluded.

For the purpose of considering the limit of the committees in which a director can serve, all public limited companies, whether listed or not, have been included and all other companies including private limited companies, foreign companies and companies under section 8 of the Act have been excluded. Only audit committees and stakeholders’ relationship committees are considered for the purpose of reckoning committee positions.

As per declarations received, none of the directors serves as an independent director in more than seven equity listed companies or in more than three equity listed companies in case he or she is a whole-time director in any listed company. Further, the managing director of Bajaj Auto does not serve as an independent director in any equity listed company.

None of the directors was a member in more than 10 committees, nor a chairperson in more than five committees across all companies in which he/she was a director.

Notwithstanding the number of directorships, as has been highlighted herein, the outstanding attendance record and participation of the directors in Board and committee meetings indicate their commitment and ability to devote adequate time to their responsibilities as the Company’s fiduciaries.

Directorships held by directors in equity listed companies

Table 3 gives the names of equity listed entities where directors of Bajaj Auto held directorships.

Certificate from practising Company Secretary

The Company has received a certificate from Shyamprasad D Limaye, practising Company Secretary to the effect that none of the directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as directors of the Company by the Ministry of Corporate Affairs or any other statutory authority. This certificate forms part of this report.

Review of legal compliance reports

The Board periodically reviews compliance reports with respect to the various laws applicable to the Company, as prepared and placed before it by the management.

Code of conduct

Regulation 17(5) of the SEBI Listing Regulations, requires listed companies to lay down a code of conduct for its directors and senior management, incorporating duties of directors as laid down in the Act.

The Board at its meeting held on 15 September 2014 adopted a revised code of conduct for all directors and senior management of the Company which has been placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

All directors and senior management personnel have affirmed compliance with the code for FY2022. A declaration to this effect signed by the Managing Director and CEO is given in this annual report.

Maximum tenure of independent directors

The maximum tenure of independent directors is in accordance with the Act and regulation 25(2) of the SEBI Listing Regulations.

Formal letter of appointment to independent directors

The Company issues a formal letter of appointment to independent directors in the manner as provided in the Act. As per regulation 46(2) of the SEBI Listing Regulations, the terms and conditions of appointment of independent directors are on the Company’s website www.bajajauto.com/investors/miscellaneous

Performance evaluation of the Board, its committees, the chairman and the directors

Pursuant to the provisions of the Act and the SEBI Listing Regulations, the Board has carried out an annual performance evaluation of its own performance and that of its committees, chairman and individual directors.

The manner in which formal annual evaluation of performance was made by the Board is given below:

• The nomination and remuneration committee at its meeting held on 15 March 2017, approved the revised criteria for such an evaluation. This is available on the website of the Company at https://www.bajajauto.com/investors/policies-codes
• The Company sent an email which informed directors regarding the automated process to carry out annual performance evaluation through an IT platform called ‘HR Craft’.
• From the individual ratings received from the directors, a report on summary of the ratings in respect of performance evaluation of the Board, committees, the chairman and directors for FY2022 and a consolidated report thereof were arrived at.
• This report was then discussed and noted by the Board at its meeting held on 15 March 2022.
• The nomination and remuneration committee reviewed the implementation and compliance of the performance evaluation at its meeting held on 15 March 2022. Based on the report of performance evaluation, the Board and nomination and remuneration committee at their meetings held on 15 March 2022, determined as required under law that the appointment of independent directors may continue.
• Details on the evaluation of Board, non-independent directors and Chairperson of the Company as carried out by the independent directors at their meeting held on 15 March 2022 have been furnished in a separate para elsewhere in this Report.
• During FY2022, the criteria and the process followed by the Company were reviewed by the nomination and remuneration committee and the Board and were found in order.

Remuneration policy

On the recommendation of the nomination and remuneration committee, the Board has framed a remuneration policy. This policy, inter-alia, provides (a) the criteria for determining qualifications, positive attributes and independence of directors (b) a policy on remuneration for directors, key managerial personnel and other employees and (c) details of the employee stock option scheme. The policy is directed towards a compensation philosophy and structure that will reward and retain talent and provides for a balance between fixed and incentive pay, reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. This remuneration policy is placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

Board diversity policy

In compliance with the SEBI Listing Regulations, the Board, through its nomination and remuneration committee, has devised a policy on Board diversity. The objective of this policy is to ensure that the Board comprises an adequate number of members with diverse experience and skills, such that it best serves the governance and strategic needs of the Company. The Board composition as at present meets with the above objective.

Familiarisation programme

To familiarise independent directors with the Company’s operations, as required under regulation 25(7) of the SEBI Listing Regulations, the Company has held various programmes for the independent directors throughout the year on an ongoing and continuous basis. Details of these are placed on https://www.bajajauto.com/investors/policies-codes

During FY2022, the directors were updated extensively on the following through presentations at Board meetings:

• Risk Management Framework including Business and Operational risks, Financial risks and Information risks.
• Updates on Domestic Motorcycle business, Domestic three-wheeler and Qute business, Export business, Budget and Volume Opportunities for KTM, Husqvarna and EV Markets.

Whistle blower policy/Vigil mechanism

Pursuant to section 177(9) of the Act, regulation 22 of the SEBI Listing Regulations and SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended, the Board at its meeting held on 13 March 2019 amended the existing whistle blower policy.

The whistle blower policy/vigil mechanism provides a route for directors/employees to report, without fear of victimisation, any unethical behaviour, suspected or actual fraud, violation of the Company’s code of conduct and instances of leak of unpublished price sensitive information, which are detrimental to the organisation’s interest. The mechanism protects whistle blower from any kind of discrimination, harassment, victimisation or any other unfair employment practice.

The policy is placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

The directors in all cases and employees in appropriate cases have direct access to the chairman of the audit committee. The Company affirms that no employee has been denied access to the audit committee, which is charged with overseeing this policy.

During the year, no complaint was received under the above mechanism.

Dividend distribution policy

The Company has adopted a dividend distribution policy. The Board at its meeting held on 17 March 2021 amended the existing dividend distribution policy. More particulars are given in the Directors’ Report.

Subsidiary companies

The Company has five overseas subsidiaries, viz. PT Bajaj Auto Indonesia, Bajaj Auto International Holdings BV, Netherlands, Bajaj Auto (Thailand) Ltd., Thailand, Bajaj Auto Spain, S. L. and Bajaj Do Brasil Comercio De Motocicletas LTDA and two Indian subsidiaries viz. Chetak Technology Ltd. and Bajaj Auto Consumer Finance Ltd. These are not ‘material subsidiaries’ as defined under regulation 16(1)(c) of the SEBI Listing Regulations.

The revised policy on ‘material subsidiaries’ in terms of regulation 16(1)(c) of the SEBI Listing Regulations as approved by the Board at its meeting held on 13 March 2019 is placed on https://www.bajajauto.com/investors/policies-codes

Provisions to the extent applicable and as required under regulation 24 of the SEBI Listing Regulations with reference to subsidiary companies were duly complied with.

During the year, the audit committee reviewed the financial statements (in particular, the investments made) of its unlisted subsidiary companies, to the extent applicable. Minutes of the Board meetings of the subsidiary companies as well as a statement of significant transactions and arrangements entered into by the subsidiaries, as applicable, were regularly placed before the Board of the Company.

Related party transactions

All related party transactions (RPTs) which were entered into by the Company during the year under review, were on arms’ length basis and in the ordinary course of business, did not attract provisions of section 188 of the Act and were also not material RPTs as per regulation 23 of the SEBI Listing Regulations.

All RPTs during FY2022 were entered into with the approval of the audit committee. On a quarterly basis, details of such transactions were placed before the audit committee for noting/review.

A statement showing the disclosure of transactions with related parties as required under Indian Accounting Standard 24 (Ind-AS 24) is set out separately in this Annual Report. Disclosures relating to RPTs on a half-yearly basis are filed with the stock exchanges. There were no material transactions entered into with related parties, during the period under review, which may have had any potential conflict with the interests of the Company.

During the year under review, SEBI made substantial amendments in the matter relating to RPTs.

The revised policy on materiality of RPTs — stipulating threshold limits and also on dealing with RPTs including material modifications definitions — which was approved by the Board at its meeting held on 15 March 2022, pursuant to the amended SEBI Listing Regulations, has been placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

Disclosures

Suitable disclosures have been made in the financial statements, together with the management’s explanation in the event of any treatment being different from that prescribed in the Ind-AS.

Core skills/Expertise/Competencies

As stipulated under Schedule V of the SEBI Listing Regulations, core skills/expertise/competencies, as required in the context of the business and sector for it to function effectively and those actually available with the Board have been identified by the Board of directors.

As a green initiative, the chart/matrix of such core skills/expertise/competence along with the names of directors who possess such skills has been placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

Audit Committee

The Company has constituted an audit committee. The Board reviews the working of the Committee from time to time to bring about greater effectiveness in order to comply with the various requirements under the Act and the SEBI Listing Regulations.

In compliance with the provisions of the Act and the SEBI Listing Regulations, all members of the audit committee are independent, non–executive directors, are financially literate and have accounting or related financial management expertise.

Pursuant to provisions of the SEBI Listing Regulations, as amended, the terms of reference of the committee were revised by the Board at its meeting held on 13 March 2019. The revised terms of reference are in accordance with the Act and the SEBI Listing Regulations. These are on the Company’s website https://www.bajajauto.com/investors/policies-codes

Meetings and attendance

During FY2022, the audit committee met five times: 29 April 2021, 22 July 2021, 27 October 2021, 19 January 2022 and 15 March 2022. These meetings were scheduled well in advance and not more than one hundred and twenty days elapsed between any two such meetings.

In addition to members of the audit committee, these meetings were attended by the heads of finance and internal audit functions and the statutory auditor of the Company and such executives who were considered necessary for providing inputs to the committee.

The company secretary acted as the secretary to the audit committee.

The audit committee, inter-alia, discussed and deliberated on the financial results, appointment/re-appointment of statutory auditors, review of internal audit functions, review and approval of RPTs including granting of omnibus approval for the proposed transactions, review of investment-related reports of the Company, utilisation of loans and/or advances from/investment by the Company in subsidiaries, etc.

Anami N. Roy, chairman of the audit committee, was present at the Company’s annual general meeting held on 22 July 2021.

Nomination and remuneration committee

The Company has constituted a nomination and remuneration committee. During the year under review, SEBI vide notification dated 3 August 2021 made certain amendments in the matter relating to role of nomination and remuneration committee to take effect from 1 January 2022. Hence, its terms of reference were revised by the Board at its meeting held on 19 January 2022. The committee also acts as a compensation committee for implementation of the Bajaj Auto Employee Stock Option Scheme 2019.

The detailed terms of reference of the committee have been placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

During FY2022, the committee met three times: 29 April 2021, 22 July 2021 and 15 March 2022.

* Ceased to be a member of the committee w.e.f. 30 April 2021

** Appointed as a member of the committee w.e.f. 1 May 2021

The company secretary acted as the secretary to this committee.

As provided under the terms of reference of the nomination and remuneration committee, the members, inter-alia, deliberated on the following:

1. Noting of the resignation of Rahul Bajaj as Non-executive Chairman and conferring the status and title of Chairman Emeritus to Rahul Bajaj w.e.f. 1 May 2021 and approving payment and facilities to be extended to him
2. Recommendation for payment of special commission to Rahul Bajaj as Non-executive Chairman for the year 2021-22 (only one month upto 30 April 2021)
3. Approval for second grant of stock options under Bajaj Auto Employee Stock Option Scheme 2019
4. Recommendation for renewal of approval of payment of commission to Non-executive Directors
5. Noting and approval of commission payable to Rajiv Bajaj, Managing Director and CEO for the year 2020-21
6. Noting of resignation of Dr. Omkar Goswami
7. Recommendation of remuneration payable to senior management
8. Consideration of revision in the remuneration payable to Executive Directors effective from 1 April 2021
9. Consideration of revision in the remuneration payable to Managing Director effective from 1 April 2021
10. Changes to Agreements of Managerial Personnel
11. Noting of revised terms of reference of the committee
12. Noting of the sad demise of Rahul Bajaj and recommendation for remuneration to Late Rahul Bajaj as Chairman Emeritus for the period 1 May 2021 to 12 February 2022
13. Noting of appointment of Dinesh Thapar as Chief Financial Officer and Key Managerial Personnel of the Company and terms of appointment
14. To review the implementation and compliance of effective evaluation of performance of Board, its committees, chairperson and individual directors

D J Balaji Rao, chairman of the nomination and remuneration committee, was present at the annual general meeting of the Company held on 22 July 2021.

Bajaj Auto Employee Stock Option Scheme 2019(BAL-ESOS 2019)

BAL-ESOS 2019 has been formulated by the nomination and remuneration committee of the Board to provide competitive remuneration opportunities to employees of the Company, through annual and long-term incentive plans. It was approved by the Board at its meeting held on 30 January 2019,and by members of the Company by a special resolution through postal ballot on 13 March 2019.

Risk management committee

The Company has a risk management committee, the composition of which is given in Table 6 below. The terms of reference of this committee were revised by the Board at its meeting held on 22 July 2021.

SEBI, vide its notification dated 5 May 2021, has brought into force various amendments in SEBI Listing Regulations. One of the amendments pertains to the role of the risk management committee.

As per regulation 21, read with Schedule II – Part D, the role of the committee shall, inter-alia, include the following:

1.      To formulate a detailed risk management policy which shall include:

a)   A framework for identification of internal and external risks specifically faced by the listed entity, in particular including financial, operational, sectoral, sustainability (particularly, ESG related risks), information, cyber security risks or any other risk as may be determined by the Committee.

b)   Measures for risk mitigation including systems and processes for internal control of identified risks.

c)   Business continuity plan.

2.    To ensure that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company;

3.     To monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems;

4.    To periodically review the risk management policy, at least once in two years, including by considering the changing industry dynamics and evolving complexity;

5.     To keep the Board of directors informed about the nature and content of its discussions, recommendations and actions to be taken;

6.    The appointment, removal and terms of remuneration of the Chief Risk Officer (if any) shall be subject to review by the risk management committee;

7.     The risk management committee shall coordinate its activities with other committees, in instances where there is any overlap with activities of such committees, as per the framework laid down by the Board of directors.

The detailed terms of reference of the committee have been placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

The Company has a Board-approved risk management framework. The committee and the Board periodically review the company’s risk assessment and minimisation procedures to ensure that management identifies and controls risk through a properly defined framework.

In the year, the Company neither traded in nor had any exposure in commodities markets.

During FY2022, the committee met two times: 27 October 2021 and 15 March 2022. The frequency of the meetings has been maintained to have a closer oversight of the risk management practices and to meet the amended SEBI Listing Regulations.

* Ceased to be a member of the committee w.e.f. 21 December 2021

** Appointed as a member of the committee w.e.f. 19 January 2022

Stakeholders’ relationship committee

The Company has a stakeholders’ relationship committee to specifically oversee shareholders’ and investors’ complaints on matters relating to transfer of shares, non-receipt of annual report, non-receipt of dividend, payment of unclaimed dividends etc. The terms of reference of the committee were revised by the Board at its meeting held on 13 March 2019. These have been placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

During FY2022, the committee met on 19 January 2022 to review the status of investors’ services rendered. At the meeting, the committee also discussed on matters that can facilitate better investor services and relations. The Board was apprised of all the major developments on investors’ issues through various reports and statements furnished to the Board from time to time throughout the year.

* Ceased to be a member of the committee w.e.f. 9 July 2021

** Appointed as a member of the committee w.e.f. 22 July 2021

The company secretary acts as the compliance officer and as the secretary to the committee. The secretarial auditor was also present at the meeting.

The committee expressed its satisfaction on the overall status of compliance and actions taken on various investor-related matters.

D J Balaji Rao, chairman of the stakeholders’ relationship committee, was present at the annual general meeting of the Company held on 22 July 2021.

Pursuant to regulation 39(4) of the SEBI Listing Regulations for dealing with physical unclaimed shares, the Company has a demat account with HDFC Bank, titled ‘Bajaj Auto Ltd.-Unclaimed Suspense Account’, to which all the unclaimed shares stand transferred. Details on this subject and on shareholders’ related matters have been furnished in the chapter on General Shareholder Information.

Duplicate share certificate issuance committee

To meet the requirement of section 46 of the Act, read with rule 6 of the Companies (Share Capital and Debentures) Rules, 2014 and regulation 39 of the SEBI Listing Regulations, the Company has a duplicate share certificate issuance committee to approve issuing of duplicate share certificate in lieu of original share certificate(s) that were lost or misplaced, the composition of which is given in Table 9 below.

As a measure to enhance ease of dealing in securities market by the investors, SEBI through its circular dated 25 January 2022 has mandated listed entities to issue of securities in dematerialised form only while processing any service request including issue of duplicate share certificate.

Independent directors’ meeting

In compliance with Schedule IV to the Act and regulation 25(3) of the SEBI Listing Regulations, the independent directors held their separate meeting on 15 March 2022, without the attendance of non-independent directors and members of management, to discuss the following:

i)     Noting of the report of performance evaluation of Board and its committees for 2021-22, sent by the Chairman of the Board.

ii)    Review the performance of non-independent directors and the Board as a whole.

ii)    Review the performance of the Chairman of the Company, taking into account the views of executive directors and non-executive directors.

iv)   Assess the quality, quantity and timeliness of flow of information between the Company’s management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

v)    Noting and review of the informal meeting with senior management.

All independent directors were present at the meeting.

The independent directors present elected Dr. Naushad Forbes as Chairman for the meeting, deliberated on the above and expressed their satisfaction on each of the above matters.

In addition, the independent directors had separate meeting with senior management regarding its views pertaining to the business and functions.

Remuneration of directors

Pecuniary relationship/transaction with non-executive directors

During the year, there was no pecuniary relationship or transaction with any non-executive director of the Company, apart from their remuneration as directors.

The register of contracts is maintained by the Company pursuant to section 189 of the Act. This is signed by all the directors present at respective Board meetings.

Criteria of making payments to non-executive directors

As stated earlier, the remuneration policy disclosing the criteria of making payments to directors, key managerial personnel and employees is placed on the Company’s website https://www.bajajauto.com/investors/policies-codes

Non-executive directors

As stated earlier in this report, non-executive directors are paid sitting fees and commission.

Executive directors

During the year, the Company paid remuneration to Rajiv Bajaj, Managing Director and CEO and Pradeep Shrivastava and Rakesh Sharma, executive directors of the Company as provided in detail in Form MGT-7, i.e. the annual return. The same can be accessed athttps://www.bajajauto.com/investors/financial-and-operational-performance

Executive directors are entitled to superannuation benefits payable in the form of an annuity from an approved life insurance company, which form part of the perquisites allowed to them. No pension is paid by the Company.

Details of remuneration to directors

As stated elsewhere in this report, the Company has adopted the Bajaj Auto Employee Stock Option Scheme 2019 for the benefit of the permanent employees and/or directors of the Company and/or its holding (if any, in future) and subsidiary Company(ies), but excluding independent directors and any employee who is a promoter or belongs to the promoter group.

During the year, none of the directors was paid any performance-linked incentive, apart from Pradeep Shrivastava and Rakesh Sharma, who are executive directors.

In FY2022, the Company did not advance any loans to any of the non-executive directors and/or the managing director. Details of remuneration paid/payable to non-executive directors for the year are provided in Form MGT-7, i.e. the annual return, which is available on the website of the Company at https://www.bajajauto.com/investors/financial-and-operational-performance

Management

Management discussion and analysis

This is given as separate chapter in the Annual Report.

Disclosure of material transactions

Pursuant to regulation 26(5) of the SEBI Listing Regulations, senior management has made periodical disclosures to the Board relating to all material financial and commercial transactions, where they had (or were deemed to have had) personal interest that might have been in potential conflict with the interest of the Company. There was only one case involving a member of the senior management. In this instance, the disclosure was discussed, reviewed and found in order by the Board.

Compliances regarding insider trading

Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended, (‘SEBI PIT Regulations’) the Company has a Board approved code of conduct to regulate, monitor and report trading by insiders (‘Code of Conduct’) and a code of practices and procedures for fair disclosure of unpublished price sensitive information (‘Code of Fair Disclosure’).

Wherever non-compliance by an employee concerned was observed, penalty was levied and the amount was remitted to the stipulated fund.

By frequent communication, the Company makes designated employees conversant of the obligations under the insider trading regulations.

The status of compliance with SEBI PIT Regulations is also reviewed by audit committee and Board.

Means of communication

Quarterly, half-yearly and annual financial results and other public notices issued for the shareholders are published in numerous leading dailies, such as Financial Express, Business Standard, Kesari, Mint and Hindu Business Line. An official press release is also issued.

The Company also sends its half-yearly financial results along with a detailed write-up to shareholders.

The Company website, www.bajajauto.com, contains all important public domain information including presentations, if any, made to the media, analysts and institutional investors. It contains information as prescribed under the Act and SEBI Listing Regulations including details of the corporate contact persons and share transfer agent of the Company, shareholding pattern etc.

Section 20 and 136 of the Act, read with Companies (Accounts) Rules, 2014 permit companies to service delivery of documents electronically at the registered members’/shareholders’ email addresses.

During the year under review, the Company sent documents, such as notice calling the general meeting, audited financial statements, directors’ report, auditors’ report, credit of dividend intimation letters, etc. in electronic form at the email addresses provided by the shareholders and made available by them to the Company through the depositories. Shareholders desiring to receive the said documents in physical form continued to get these physically upon request.

All financial and other vital official news releases and documents under the SEBI Listing Regulations are also communicated to the concerned stock exchanges, besides being placed on the Company’s website.

Information on general body meetings and special resolution(s) passed

During the previous three years, the annual general meetings (AGM) of the Company were held at the registered office at Mumbai-Pune Road, Akurdi, Pune 411 035 on the following dates and time. In these, the following special resolutions were passed:

All resolutions proposed by the Board have been passed with requisite majority by the shareholders.

Postal ballot

No resolution of shareholders was passed through postal ballot during the year under review.

Details of capital market non-compliance, if any

There was no non-compliance of any legal requirements; nor has there been any penalty or structure imposed on the Company by any stock exchange, SEBI or any statutory authority on any matter related to capital markets during the last three years.

Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

This disclosure is given in the Directors’ Report.

Compliance certificate

The Managing Director and CEO and the CFO have certified to the Board regarding the financial statements and other such matters as required under regulation 17(8) read with Part B of Schedule II to the SEBI Listing Regulations.

Report on corporate governance

This chapter, read together with the information given in the Directors’ Report and the chapters on Management Discussion and Analysis and General Shareholder Information, constitute the compliance report on corporate governance during FY2022. The Company has been regularly forwarding the quarterly compliance report to the stock exchanges as required under regulation 27(2) of the SEBI Listing Regulations.

Statutory auditors

S R B C & CO LLP are the statutory auditors of the Company. Total fees paid by the Company and its subsidiaries, on a consolidated basis to the auditors including all entities in their network firm/entity of which they are a part is given below:

Auditors’ certificate on corporate governance

The Company has obtained the certificate from its statutory auditors regarding compliance with the provisions relating to corporate governance laid down in Part E of Schedule V to the SEBI Listing Regulations. This is annexed to the Directors’ Report and will be sent to the stock exchanges, along with the Annual Report to be filed by the Company.

Compliance of mandatory and discretionary requirements

Mandatory

The Company has complied with all the mandatory requirements of the SEBI Listing Regulations.

Discretionary

The Company has also complied with the discretionary requirements as under:

1.      The Board

A Chairman’s office has been made available for the non-executive Chairman. He is allowed reimbursement of expenses incurred in performance of his duties.

2.     Shareholder rights

A half-yearly declaration of financial performance including summary of significant events in the preceding six months is sent to each household of shareholders.

3.    Modified opinion(s) in audit report

The Company confirms that its financial statements are with unmodified audit opinion.

4.    Reporting of the Internal Auditor

The internal auditor reports directly to the audit committee.