Bajaj Finserv Ltd

The directors present their fourth annual report and the audited statements of accountsfor the year ended 31 March 2011.

Financial results

The financial results of the company are elaborated in the annexed ManagementDiscussion and Analysis Report.

The highlights of the Standalone Financial Results are as under:

The highlights of the Consolidated Financial Results are as under:

Dividend

The directors recommend for consideration of the shareholders at the ensuing annualgeneral meeting, payment of a dividend of Rs 1.25 per share (25 per cent) for the yearended 31 March 2011. The amount of dividend is Rs 1,809 lakh .

Dividend paid for the year ended 31 March 2010 was Rs 1 per share (20 per cent). Theamount of dividend and the tax thereon aggregated to Rs 1,687 lakh.

Registration as a non-deposit taking NBFC

In response to the application made by the company to Reserve Bank of India, thecompany has been registered on 30 October 2009 as a Non-Banking Financial Institution(non-deposit taking). In terms of provisions of Non-Banking Financial (Non-DepositAccepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, yourcompany is categorised as a ‘systemically important non-deposit taking non-bankingfinancial company’ having total assets of Rs 100 crore and above. The company doesnot hold nor does it accept deposits from the public.

Operations

Detailed information on the operations of the different business lines of the companyare covered in Management Discussion and Analysis Report.

Conservation of energy

The company, being engaged in wind farm activities in addition to its financialservices activities, the subject of conservation of energy is applicable to the companyonly with regard to its wind farm business. Detailed information on this is contained inManagement Discussion and Analysis Report.

Foreign exchange earning & outgo

Total foreign exchange earned by the company was Nil during the year under review aswell as in previous year.

Total foreign exchange outflow during the year under review was Rs 2 lakh, as againstRs 4 lakh during the previous year.

Subsidiaries & Joint Venture

Following are the companies, which are the subsidiary & joint venture companies ofthe company as at 31 March 2011:

Detailed information on the operations of each subsidiary of the company are covered inManagement Discussion and Analysis Report.

Corporate Social Responsibility

During the year 2010-11, Bajaj Group continued its Corporate Social Responsibilityinitiatives in various fields. Activities in this area are set out in greater detail inthe annexed Corporate Social Responsibility Report.

Directors

Naresh Chandra and Rajiv Bajaj retire from the board by rotation this year and beingeligible, offer themselves for re-appointment.

Madhur Bajaj appointed as director in casual vacancy on the board with effect from 21July 2010.

Directors’ responsibility statement

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, directorsstate:

• that in the preparation of annual accounts, the applicable accounting standardshave been followed along with proper explanation relating to material departures.

• that the directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent, so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for that period.

• that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities.

• that the annual accounts have been prepared on a going concern basis.

Consolidated financial statements

The directors also present the audited consolidated financial statements incorporatingthe duly audited financial statements of the subsidiaries and joint ventures and asprepared in compliance with the accounting standards and listing agreement as prescribedby SEBI.

Information in aggregate for each subsidiary company is disclosed in consolidatedbalance sheet.

Statutory disclosures

The company made an application for an exemption from the Central Government undersection 212(8) of the Companies Act, 1956 with regard to attaching of the balance sheet,profit and loss account and other documents of five subsidiaries of the company for theyear 2010-11 and the approval for the same has been received. Also, the exemption isavailable under Ministry of Corporate Affairs General Circular no.2/2011 dated 8 February2011. The summary of the key financials of the company’s subsidiaries is included inthis annual report.

The annual accounts of the subsidiary companies and the related detailed informationwill be made available to the members of the company and its subsidiary companies, seekingsuch information at any point of time. The annual accounts of the subsidiary companieswill be kept for inspection by any member of the company at its registered office and alsoat the registered office of the concerned subsidiary company.

As required under the provisions of sub-section (2A) of section 217 of the CompaniesAct, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended,particulars of the employees are set out in an Annexure to the Directors’ Report. Asper provisions of section 219(1)(b)(iv) of the said Act, these particulars will be madeavailable to any shareholder on request.

The company, being by and large a financial services company, there are no particularsregarding technology absorption required to be given under section 217(1)(e) of theCompanies Act, 1956 and Companies (Disclosure of Particulars in the report of board ofdirectors) Rules, 1988 for the year under review. Particulars required to be givenrelating to conservation of energy in its wind energy generation business and foreignexchange earning and outgo have been set out separately in this report.

Directors’ Responsibility Statement as required by section 217(2AA) of theCompanies Act, 1956 appears in a preceding paragraph.

Certificate from auditors of the company regarding compliance of conditions ofcorporate governance is annexed to this report as Annexure 1.

Disclosures as prescribed by Non-Banking Financial (Non-Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions, 2007 and other NBFC regulations havebeen made in this annual report.

A Cash Flow Statement for the year 2010-11 is attached to the balance sheet.

Corporate governance

Pursuant to Clause 49 of the Listing Agreement with stock exchanges, a separate sectiontitled ‘Corporate Governance’ has been included in this annual report, alongwith the reports on Management Discussion and Analysis and General ShareholderInformation.

All board members and senior management personnel have affirmed compliance with thecode of conduct for the year 2010-11. A declaration to this effect signed by the ManagingDirector/CEO of the company is contained in this annual report.

The Managing Director/CEO and CFO have certified to the board with regard to thefinancial statements and other matters as required in clause 49 of the listing agreementand the said Certificate is contained in this annual report.

Secretarial standards of ICSI

Secretarial standards issued by the Institute of Company Secretaries of India from timeto time are currently recommendatory in nature. Your company is, however, complying withthe same.

Group

Pursuant to an intimation from the Promoters, the names of the Promoters and entitiescomprising "Group" as defined under the

Monopolies and Restrictive Trade Practices Act, 1969 are disclosed in the Annual Reportfor the purpose of Regulation 3(1)(e) of the SEBI (Substantial Acquisition of Shares andTakeovers) Regulations, 1997.

Auditors’ report

The observations made in the Auditors’ Report, read together with the relevantnotes thereon are self-explanatory and hence, do not call for any comments under section217 of the Companies Act, 1956.

Auditors

The directors recommend the appointment of Messrs Dalal & Shah, CharteredAccountants as auditors for the period from the conclusion of the ensuing annual generalmeeting till the conclusion of the next annual general meeting and to fix theirremuneration.

On behalf of the board of directors

Certificate by Auditors on Corporate Governance

To the Members of

Bajaj Finserv Limited

We have reviewed the records concerning the Company’s compliance of conditions ofCorporate Governance as stipulated in Clause 49 of the Listing Agreement entered into, bythe Company, with the Stock Exchanges of India, for the financial year ended 31 March2011.

The compliance of conditions of corporate governance is the responsibility of themanagement. Our examination was limited to procedures and implementation thereof, adoptedby the Company for ensuring the compliance of conditions of Corporate Governance. It isneither an audit nor an expression of opinion on the financial statements of the Company.

We have conducted our review on the basis of the relevant records and documentsmaintained by the Company and furnished to us for the review, and the information andexplanations given to us by the Company.

Based on such a review, and to the best of our information and according to theexplanations given to us, in our opinion, the Company has complied with the conditions ofCorporate Governance, as stipulated in Clause 49 of the Listing Agreements.

We further state that, such compliance is neither an assurance as to the futureviability of the Company, nor as to the e_ciency or effectiveness with which themanagement has conducted the affairs of the Company.

For Dalal and Shah

Firm Registration Number: 102021W

Chartered Accountants

Anish P Amin

Partner

Membership Number: 40451

Pune: 17 May 2011

Annexure 2

Declaration by Chief Executive Officer (CEO)

I, Sanjiv Bajaj, Managing Director of Bajaj Finserv Limited hereby declare that all theboard members and senior managerial personnel have affirmed for the year ended 31 March2011 compliance with the code of conduct of the company laid down for them.

Sanjiv Bajaj

Managing Director

Pune : 17 May 2011

Annexure 3

Chief Executive Officer (CEO) and Chief Financial Officer (CFO) Certification

We, Sanjiv Bajaj, Managing Director and Kevin D’sa, CFO & President (BusinessDevelopment) of Bajaj Finserv Limited, certify:

1. That we have reviewed the financial statements and the cash flow statement for theyear ended 31 March 2011 and that to the best of our knowledge and belief; l thesestatements do not contain any materially untrue statement nor omit any material fact norcontain statements that might be misleading, and l these statements present a trueand fair view of the company’s affairs and are in compliance with the existingaccounting standards, applicable laws and regulations.

2. That there are, to the best of our knowledge and belief, no transactions enteredinto by the company during the year, which are fraudulent, illegal or violative of thecompany’s code of conduct;

3. That we accept responsibility for establishing and maintaining internal controls, wehave evaluated the effectiveness of the internal control systems of the company and wehave disclosed to the auditors and the audit committee, deficiencies in the design oroperation of internal controls, if any, of which we are aware and the steps that we havetaken or propose to take to rectify the identified deficiencies; and

4. That we have informed the auditors and the audit committee of:

i. significant changes in internal control during the year;

ii. significant changes in accounting policies during the year and that the same havebeen disclosed in the notes to the financial statements; and

iii. instances of significant fraud of which we have become aware and the involvementtherein, if any, of the management or an employee having a significant role in thecompany’s internal control system.