Presented by:Divya Bakshi ; B-03Mohini Nagpal ;B-10

Audit Committee-Oversees the integrity of our financial reporting, internal controls, disclosure controls and internal audit function. Also oversees our compliance with legal and regulatory requirements and auditor independence requirements. Monitors transactions involving related parties, conflicts of interest, the use and disclosure of confidential and personal information, and standards of business conduct.

Governance and Nominating Committee- Develops, reviews and assesses corporate governance principles and systems on an ongoing basis. Responsible for director succession, orientation and compensation.

Remuneration/Compensation Committee-Assists the Board in its oversight of human resources strategies, executive compensation, senior executive performance assessments and management succession.

Risk Review Committee- Oversees the identification, documentation, measurement and management of significant risks. Monitors compliance with risk-related regulatory requirements and with internal risk management policies and procedures.

BAJAJ AUTO LIMITED CASE--BEST CORPORATE GOVERNANCE

PRACTICES (2006-2007)

Bajajauto was top-5 company with respect to corporate governance practices 2006-07

BOARD OF DIRECTORS Bajaj Auto had obtained approval of the central

government to increase the number of directors from 15 to 18

Composition- Consisted of 16 directors, 11 :non-executive, and

5:whole-time executives. Eight out of the 11 non-executive directors were

independent According to clause 49, if the Chairman is an

executive, at least half of the board should consist of non-executive, independent directors.

BOARD PROCEDURES

The board of directors met six times: on 19 May 2006, 15 July 2006, 9 September 2006, 18 October 2006, 16 January 2007 and 17 March 2007.

The gap between any two meetings has been less than three months.

INFORMATION SUPPLIED TO THE BOARD

In advance of each meeting, the board is presented

with all relevant information on various matters related to the working of the Company

Directors have separate and independent access to senior management at all times

In terms of quality and importance, the information supplied by management to the board of Bajaj Auto is far ahead of the list mandated under clause 49 of the listing agreement

Review of legal compliance reports Board periodically reviewed compliance reports with

respect to the various laws applicable to the Company, as prepared and placed before it by the management.

Code of conduct The board laid down a code of conduct for all

directors and senior management of the Company, which has been posted on the web-site www.bajajauto.com.

All directors and senior management personnel have affirmed compliance with the code

A declaration to this effect signed by the CEO is given in this annual report.

AUDIT COMMITTEE

Bajaj Auto set up its audit committee in 1987. Since then, the company has been reviewing and

making appropriate changes in the composition and working of the committee from time to time to bring greater effectiveness

All members of the audit committee are independent, non-executive directors and are ‘financially literate’ as required by clause 49

Audit committee met four times: 18 May 2006, 15 July 2006, 18 October 2006 and 16

January 2007. The meetings were scheduled well in advance

Reviewed the financial statements (in particular, the investments made) of each unlisted Indian subsidiary company:

Bajaj Auto Holdings Ltd. (BAHL) Bajaj Allianz General Insurance Company Ltd.

(BAGICL) Bajaj Allianz Life Insurance Company Ltd. (BALICL)

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 accounting standards.

The Remuneration Committee

The remuneration committee is established to ensure that remuneration arrangements support the strategic aims of the business and enable the recruitment, motivation and retention of senior executives while complying with the requirements of regulatory and governance bodies, satisfying the expectations of shareholders and remaining consistent with the expectations of the wider employee population.

Bajaj Auto constituted a remuneration committee of the board on 16 January 2002. For 2006-07, the committee consisted of the following non-executive independent directors

1. D J Balaji Rao, Chairman 2. S H Khan3. Naresh Chandra.

Non-executive directorsThe criteria of making payments to non-executive directors as approved by the board at its meeting held on 19 May 2006 have been put on the company’s web-site www.bajajauto.com. A sitting fee of Rs.20,000 per meeting is paid to non-executive directors, including independent directors, for every meeting of the board or committees of the board attended. This has been fixed by the BOD. They were also paid commission on net profits as separately stated in this report. The non-executive directors who held shares in the company held as on 31 March 2007:Name of director Number of shares 1. Shekhar Bajaj 779,6902. Manish Kejriwal 1003. Niraj Bajaj 1,248,488Executive directorsOn their retirement, all the executive directors, excluding D S Mehta, are entitled to superannuation benefits payable in the form of an annuity from the Life Insurance Corporation of India — and these form a part of the perquisites allowed to them. No pension is paid by the Company.

Management•Management discussion and analysis•Disclosure of material transactions-Senior management made periodical disclosures to the board relating to all material financial and commercial transactions where they had personal interest that might have been in potential conflict with the interest of the company.•Warning against insider trading-Comprehensive guidelines in accordance with the SEBI regulations are in place. The code of conduct and corporate disclosure practices framed by the company have helped in ensuring compliance with the requirements. Communication to shareholdersQuarterly, half-yearly and annual financial results are published in numerous leading dailies, such as Hindustan Times, Times of India, The Economic Times, Sakal, Kesari, Financial Express, Hindu Businessline and Business Standard along with the official press release. In addition, the half-yearly and annual financial results are published in the Financial Times, UK. The company also sends the half-yearly financial results, along with a detailed write-up, to each household of shareholders.

Information on general body meetings The last three annual general meetings of the company were held at the registered office of the company at Mumbai-Pune road, Akurdi, Pune 411 035 on the following dates and time :59 AGM 31 July, 2004 at 11.30 a.m.60 AGM 16 July, 2005 at 11.30 a.m.61 AGM 15 July, 2006 at 11.30 a.m.So far, the company has not adopted postal ballot for passing any resolution at the general meetings, because there has been no occasion for doing so.

Shareholders’ and investors’ grievance committeeThe board of directors of Bajaj Auto constituted its shareholders’ and investors’ grievance committee in 2000. This committee specifically looks into the shareholders’ and investors’ complaints on matters relating to transfer of shares, non-receipt of annual report, non-receipt of dividend etc. In addition, the committee also looks into matters that can facilitate better investor services and relations.

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