Dear Members,

The Directors have pleasure in presenting their Eighty Sixth annual report and the audited financial statements for the year ended March 31, 2018.

Financial highlights

The summarised financial results of the Company for the year ended March 31, 2018 are presented below:

Rs. Crore

On a standalone basis, the Company achieved a turnover (including other income) of Rs.6,105.31crore for the year ended March 31, 2018 as compared to Rs.4,780.91 crore in the previous year. The Loss after tax is Rs.423.19 crore as compared to the profit of Rs.7.40 crore in the previous year. On a consolidated basis, the turnover including other income is Rs.6,043.69 crore as compared to Rs.4,729.75 crore in the previous year. The loss after tax and minority interest is Rs.499.64 crore as against loss of Rs.91.98 crore in the previous year.

Dividend

In view of loss during the year under review, your Directors do not recommend any dividend for the current Financial Year. (Previous year - Nil)

Dividend distribution policy

The Board of Directors at its meeting held on February 13, 2017 approved the Dividend Distribution Policy containing the requirements mentioned in regulations 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The policy is annexed as “Annexure I” and forms part of this Report.

Operations

The Company continues to be the leading sugar and ethanol manufacturing Company in India with its fourteen sugar plants having an aggregate sugarcane crushing capacity of 1,36,000 TCD, six distilleries having aggregate capacity to produce Industrial Alcohol of 800 kilolitres per day and fourteen co-generation plants having a total power generation capacity of 449 MW.

During the year, the operations at all the sugar, distillery and co-generation plants were satisfactory.

Sugar

During the year ended March 31, 2018, the Company crushed 14.765 MMT of sugarcane as against 12.509 MMT in the previous year. The average recovery of sugar from sugarcane is higher due to conducive weather condition and high yield cane varieties. This year, sugar recovery was 10.62% as against 10.23% in the previous year. During the year, the Company produced 15,60,093 MT sugar (previous year 12,72,424 MT) and 6,90,184 MT molasses (previous year 5,94,958 MT).

The Company sold 14,62,198 MT of sugar and 1,21,136 MT of molasses during the year as against 10,46,122 MT of sugar and 10,058 MT of molasses during the previous year.

Distillery

The Industrial Alcohol / Ethanol production was 1,13,165 KL as against 1,11,934 KL in the previous year. Alcohol / Ethanol sale during the year was at 1,17,323 KL as against 1,09,820 KL during the previous year.

Power

The operations of power generation were smooth at all the fourteen plants. While most of the power generated by us continued to be used for captive consumption to run our plants, the surplus power was sold to the Uttar Pradesh state grid.

During the year, Power generation was at 8,52,209 MW as against 7,29,431 MW in the previous year. The Company exported 3,16,493 MW of power as against 2,67,257 MW during the previous year.

Debt restructuring

The Company has implemented the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) introduced by Reserve Bank of India and inter alia completed the following:

- Allotted 34,83,24,626 fully paid-up Optionally Convertible Debentures (OCDs) of face value Rs.100/- each aggregating to Rs.34,83,24,62,600 upon conversion of Part-B (Unsustainable Loan) to JLF Lenders

- Promoter group entities sold and transferred 11,99,87,344 equity shares of Rs.1 each to JLF lenders. Consequently the promoters’ shareholding stands reduced to 15.43%

- Pursuant to the implementation of the said Scheme, total funded debt exposure of Rs.8,284.59 crore was divided into two categories:

Part A (Sustainable) : Rs.4,789.34 crore

Part B (Unsustainable) : Rs.3,495.25 crore

- Out of Part B loan, a sum of Rs.3,483.25 crore has been converted into Optionally Convertible Debentures (OCDs) carrying a coupon rate of 0.01% to 2.5%. The Redemption of such OCDs shall be in 13 equal annual instalments, commencing at the end of 8th year (March 31, 2025) from date of issuance. The remaining Rs.12 crore of Part B loan has been adjusted against consideration payable to the promoters against acquisition of 10.59% of their shareholding in BHSL

- For Part A, interest and principal obligation of Term Loan and Working Capital will continue as per the existing repayment schedule. Debt servicing shall be made out of cash flows from operations, without any change in terms of repayment

Listing of securities

The Company’s equity shares are listed on the BSE Limited and The National Stock Exchange of India Limited. The Annual Listing fees to each of these Stock Exchanges have been paid by the Company.

Subsidiary and Associate Companies

As on March 31, 2018, the Company had the following Subsidiaries and Associates, all of them are presently unlisted: Subsidiaries:

1. Bajaj Aviation Private Limited (BAPL) - (Holding 100%).

2. Bajaj Power Generation Private Limited (BPGPL) - (Holding 100%).

3. Bajaj Hindusthan (Singapore) Private Limited (BHSPL) - (Holding 100%).

4. PT. Batu Bumi Persada, Indonesia - (step down subsidiary being 99.00% subsidiary of BHSPL).

5. PT. Jangkar Prima, Indonesia - (step down subsidiary being 99.88% subsidiary of BHSPL).

Associate:

1. Bajaj Ebiz Private Limited - (Holding 49.50%).

Performance and financial positions of subsidiaries and associates

a) Bajaj Aviation Private Limited: BAPL continued to provide Air Transport Services through Air Craft - Falcon LX 2000. In addition to this, the Company also leased out its Helicopter - Bell 407 to another Company providing Air Transportation Services.

b) Bajaj Power Generation Private Limited: No substantial progress could be made as regards to proposed 1980 MW (3x 660 MW) power project to be set up by the Company through its wholly-owned subsidiary, Bajaj Power Generation Private Limited (BPGPL), primarily due to non-execution of water use agreement. While the Company continued its all-out efforts to seek confirmation from Uttar Pradesh Power Corporation Limited (UPPCL) to facilitate supply of water, in absence thereof it could not obtain coal linkage from Standing Linkage Committee. On the other hand, the Company received a termination notice from UPPCL to terminate Power Purchase Agreement (PPA). The Notice was duly contested by the Company, leading to litigation in this regard. Consequently pursuant to an Order passed by Uttar Pradesh Electricity Regulatory Commission, the PPA stands terminated.

In view of progress already made during the earlier years, BPGPL is exploring various alternatives and taking necessary steps for setting up the project.

c) Bajaj Hindusthan (Singapore) Private Limited: BHSPL through its two subsidiaries in Indonesia, continued to hold coal mines in Indonesia which are in the process of being developed.

d) PT. Jangkar Prima (PTJP), Indonesia and PT. Batu Bumi Persada (PTBBP), Indonesia: PTJP and PTBBP are engaged in the business of Mining and Mining services including consulting, planning, implementation and testing of equipment in the field of construction of mining. These subsidiaries are in the process of development of a coal mine and received various clearances in this regard except for the forestry clearance and the clearance for the jetty site for which necessary efforts to expedite the matter with concerned authorities are being made. Operation of coal mine is expected to start in the next one year.

e) Bajaj Ebiz Private Limited: Bajaj Ebiz did not carry out any business during the year.

Pursuant to the provisions of Section 129 of the Companies Act, 2013 and Rule 5 of the Companies (Accounts) Rules 2014, statement containing the salient features of the financial statements of its subsidiaries/associate companies in the manner prescribed under the Companies Act, 2013 is given as Annexure to the Consolidated Financial Statements.

Consolidated financial statements

In compliance with Section 129(3) of the Companies Act, 2013 and Rules made thereunder, Indian Accounting Standard (Ind AS) 110, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Consolidated Financial Statements form part of this Annual Report. Consolidated Financial Statements presented by your Company include financial information about its aforesaid subsidiaries and associates. The standalone financial statements of BHSL as well as its aforesaid subsidiaries and its associates will be available on the website of the Company (www.bajajhindusthan. com).

Directors and Key Managerial Personnel

Retirement by rotation

Mr. Kushagra Bajaj, (DIN: 00017575) Chairman and Managing Director of the Company will retire by rotation and being eligible offers himself for reappointment.

Appointment of Mr. Kushagra Bajaj is in compliance with the provisions of Section 164(2) of the Companies Act, 2013.

Cessation of Director

Mr. R.V. Ruia, (DIN: 00035853) Independent director resigned from the Board with effect from November 1, 2017.

Mr. Mukeshkumar S. Dave, (DIN: 07708691) Nominee director ceased to be a director of the Company with effect from March 29, 2018 pursuant to withdrawal of nomination by Punjab National Bank.

The Board placed on record its appreciation for the valuable services rendered by the aforesaid directors.

Appointment of Directors and Key managerial personnel

In accordance with the Master Restructuring Agreement with Joint Lenders, Mr. Rajeeva, (DIN: 08128796) was appointed as Nominee Director of Punjab National Bank with effect from May 26, 2018 in place of Mr. Mukeshkumar S. Dave.

Mr. Rajeeva aged 50 years is a professional banker having 25 years of experience. Mr. Rajeeva is presently designated as Circle Head, Punjab National Bank, Noida. Mr. Rajeeva holds the degree of M.A., CAIIB, MBA (Banking and Finance).

During the year under review, there is no change in Key Managerial Personnel.

Board evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and other Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Induction and training of Board members

The process followed by the Company for induction and training to Board members has been explained in the Corporate Governance Report.

Independent directors’ declaration

The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Directors’ responsibility statement

Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of loss of the Company for that year;

(iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the directors had prepared the annual accounts on a going concern basis;

(v) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors and auditors’ report

Auditors and their report

M/s. Chaturvedi & Shah, Chartered Accountants (Firm Registration No.101720W) were appointed as Auditors of the Company for five consecutive years at the conclusion of the 83rd Annual General Meeting till conclusion of the 88th Annual General Meeting. The said appointment is required to be ratified by the members at the ensuing 86th Annual General Meeting.

The Statutory Audit Report does not contain any qualification, adverse remark or disclaimer made by the Statutory Auditor.

Cost auditors and their report

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of the Audit Committee appointed M/s. B.J.D. Nanabhoy & Co., Cost Accountants, Mumbai (Firm Registration No. 000011) as the Cost Auditors of the Company for financial year 2018-19 and has recommended their remuneration to the shareholders for ratification at the ensuing Annual General Meeting. The Cost Audit Reports for the financial year ended March 31, 2017 for the products Sugar, Industrial Alcohol and Electricity was filed with the Ministry of Corporate Affairs on October 06, 2017.

Secretarial auditors and their report

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Anant B Khamankar & Co., Company Secretaries were appointed as Secretarial Auditor of the Company. The Secretarial Audit Report is annexed as “Annexure II” and forms part of this report. The report does not contain any qualification, reservation or adverse remark or disclaimer.

Public deposits

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Deposits unclaimed at the end of the year was nil.

Particulars of loans, guarantees or investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in “Annexure III” and forms part of this report.

Audit committee

The Company constituted Audit Committee as required under Section 177 of the Companies Act, 2013 and Regulation 18 of Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Composition of Audit Committee is given in Corporate Governance Report. There is no such instance during the year under review where the Board had not accepted any recommendation of Audit of the Audit Committee.

Related party transactions

The details of transactions entered into with the Related Parties are enclosed in Form no. AOC 2 is annexed herewith as “Annexure IV” and forms part of this report.

Internal financial control

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of fraud and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as “Annexure V” and forms part of this report.

Corporate Social Responsibility

As required under Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility (CSR) Committee. As per recommendation of the CSR Committee, the Board at its meeting held on September 25, 2014 approved the CSR Policy of the Company. Report on CSR Activities/Initiatives is enclosed as “Annexure VI” and forms part of this report.

Policies

Policy for determining material subsidiary

During the year ended March 31, 2018, the Company does not have any material listed/unlisted subsidiary companies as defined in Regulation 16 (c) of Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has framed a policy for determining “material subsidiary” and the same is available on the Company’s website at www.bajajhindusthan.com/investorcorner-policies.php

Policy on remuneration and other aspects of directors and KMP

The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of director and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The detailed remuneration policy is placed on the Company’s website at www.bajajhindusthan.com/investorcorner-policies. php

Vigil mechanism/Whistle blower policy

The Company has formulated a Vigil Mechanism/Whistle Blower Policy in accordance with Section 177(9) of the Companies Act, 2013 and Regulation 22 of Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of the Vigil Mechanism/Whistle Blower Policy are provided in the Corporate Governance Report and also posted on the website of the Company at www.bajajhindusthan.com/ investorcorner-policies.php

Risk management policy

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business.

Related party transaction policy

Policy on dealing with Related Party Transactions as approved by the Board is uploaded on the Company’s website at www.bajajhindusthan.com/investorcorner-policies.php

Corporate Social Responsibility (CSR) policy

Contents of Corporate Social Responsibility Policy in the Board’s report are given in the Report on CSR Activities in “Annexure VI” and on the Company’s website at www.bajajhindusthan.com/investorcorner-policies.php

Anti sexual harassment policy

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal committee has been set up to redress the complaints received regarding sexual harassment at workplace. All employees including trainees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed of during the current financial year.

Number of Complaints received: Nil

Number of Complaints disposed of: Nil

Compliance with secretarial standards

The Company has complied with the secretarial standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

Significant and material orders passed by the regulators or courts or tribunals

There have been no significant and material orders passed by the courts or regulators or tribunals impacting the going concern status and Company’s operations. However, members attention is drawn to the statments on contingent liabilities and commitments in the notes forming part of the financial statements.

Particulars of employees and related disclosures

As required under the provision of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company are set out in “Annexure VII” and forms part of this report.

Transfer of unclaimed dividend and unclaimed shares to investor education and protection fund

The details of Unclaimed Dividend and Unclaimed Shares forms part of the Corporate Governance Report.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The relevant particulars regarding the above are given in “Annexure VIII” and forms part of this report.

Corporate governance

The Company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under the Listing Regulations. A separate section on corporate governance practices followed by the Company, together with a certificate from the Auditors confirming compliance is annexed and forms part of this Report.

Management Discussion and Analysis and Business Responsibility Report

As per Regulation 34 of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report and Business Responsibility Report are prescribed in separate Sections forming part of this Annual Report.

Acknowledgements

Industrial relations have been cordial at all the plants of the Company. The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government authorities, bankers, customers and suppliers and business associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company’s employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.

For and on behalf of the Board of Directors

Kushagra Bajaj

Chairman & Managing Director

(DIN: 00017575)

Mumbai, May 26, 2018