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Directors Report of Hero MotoCorp Ltd.

Mar 31, 2015

Dear Members,

The Board of your Company is immensely delighted in presenting its 32nd Report. The Report is being presented along with the Audited Financial Statements for the Financial Year ended March 31,2015.

Financial Results - Standalone & Consolidated

Rs. crores

Standalone Particulars For the year ended March 31,2015 March 31,2014

Gross Sales 29,068.24 27,005.26

Net Sales and other Income 28,078.04 25,721.85

Profit before Finance Costs, Depreciation & Exceptional Items 4,034.92 3,986.44

Less: Finance Cost 11.09 11.82

Depreciation 539.97 1,107.37

Exceptional Items 155.04 -

Profit Before Tax (PBT) 3,328.82 2,867.25

Less: Provision for tax

- Current 898.91 828.21

- Deferred 44.27 (238.39)

- Minimum Alternate Tax Credit - 168.35

Profit After Tax (PAT) 2,385.64 2,109.08

Share of profit/(loss) of associates - -

Minority interest - -

Profit for the year 2,385.64 2,109.08

Add: Balance of profit brought forward 3,414.14 3,039.98

Less: On account of depreciation as per Schedule II of 22.97 - Companies Act, 2013 ("Act")

Balance available for appropriation 5,776.81 5,149.06

Appropriations

Dividend

- Interim 599.06 1.16

- Proposed Final 599.06 1,297.97

Corporate Dividend Tax 223.76 220.79

Transfer to General Reserve 250.00 215.00

Balance carried to Balance Sheet 4,104.93 3,414.14

Dividend (%) 3,000 3,250

Basic and Diluted Earnings Per Share (EPS)(Rs.)

- before exceptional items 127.23 105.61

- after exceptional items 119.46 105.61



Consolidated Particulars For the year ended March 31,2015 March 31, 2014

Gross Sales 29,020.98 27,005.26

Net Sales and other Income 28,030.14 25,719.66

Profit before Finance Costs, Depreciation & Exceptional Items 3,988.84 3,983.29

Less: Finance Cost 11.70 11.82

Depreciation 540.45 1,107.37

Exceptional Items 144.73 -

Profit Before Tax (PBT) 3,291.96 2,864.10

Less: Provision for tax

- Current 899.18 828.21

- Deferred 44.27 (238.39)

- Minimum Alternate Tax Credit - 168.35

Profit After Tax (PAT) 2,348.51 2,105.93

Share of profit/(loss) of associates 15.15 (3.62)

Minority interest (1.04) (0.35)

Profit for the year 2,364.70 2,102.66

Add: Balance of profit brought forward 3,407.72 3,039.98

Less: On account of depreciation as per Schedule II of 22.97 - Companies Act, 2013 ("Act")

Balance available for appropriation 5,749.45 5,142.64

Appropriations

Dividend

- Interim 599.06 1.16

- Proposed Final 599.06 1,297.97

Corporate Dividend Tax 223.76 220.79

Transfer to General Reserve 250.00 215.00

Balance carried to Balance Sheet 4,077.57 3,407.72

Dividend (%)

Basic and Diluted Earnings Per Share (EPS)(Rs.)

- before exceptional items 125.66 105.29

- after exceptional items 118.41 105.29

Company's Performance

During the Financial Year (FY) your Company clocked the sales of6,631,826 units depicting an increase of 6.2% over the previous FY 6,245,960 units. The total sale of products (net of excise duty) was increased by 8.86% from Rs. 25,124.91 crores in FY 2013-14 to Rs. 27,350.60 crores in FY 2014-15

Net Revenue from operations of your Company increased by 9.13%, from Rs. 25,275.47 crores in FY 2013-14 to Rs. 27,585.30 crores in FY 2014-15.

Profit Before Tax (PBT) after exceptional item has shown an increase of 16.10% from Rs. 2,867.25 crores in FY 2013-14 to Rs. 3,328.82 crores in FY 2014-15. Your Company's Profit After Tax (PAT) increased by 13.11% from Rs. 2,109.08 crores in FY 2013-14 to Rs. 2,385.64 crores in FY 2014- 15. Earnings Before Interest, Depreciation and Taxes (EBIDTA) margins stood at 12.84% in FY 2014-15 as compared to 14.01% in FY 2013-14.

During the year under review, your Company successfully launched the upgraded models of Karizma, ZMR, Xtreme, Passon Pro TR, Splendor Pro Classic, Splendor iSmart, HF Deluxe Eco and Pleasure. Overall the top 6 (six) two wheeler brands captures 53.5% market share of the Domestic Two Wheeler Market and out of 3 (three) models from Hero Stable "Splendor" remains at the top with the sales of 2,517,189 units and 15.7% market share.

The Two Wheeler market share of your Company marginally declined from 36.9% in the previous fiscal to 35.7% in FY 2014-15.

A detailed discussion on the business performance and future outlook has been given in 'Management Discussion and Analysis' (MDA).

Consolidated Financial Statement

In accordance with the Act and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates the audited consolidated Financial Statement is provided in the Annual Report.

Change in nature of Business

During the year under review there was no change in the nature of Business.

Capacity Expansion, New Projects & Strategic Alliances

The Garden Factory set up at Neemrana started despatch of two wheelers in the month of June 2014, and was formally inaugurated in the month of October 2014 by Ms. Vasundhara Raje Scindia, Hon'ble Chief Minister of Rajasthan. The production of this plant will add up to the total Annual Installed Capacity of 7.75 million units of two wheelers of the Company.

The State-of-the-art Global Parts Centre (GPC) at Neemrana, Rajasthan, built on Green Building concept also commenced its operations during the same period.

The prestigious 'Hero Centre of Global Innovation and Research & Design (R&D)' spread over an area of 250 acres at Kukas, near Jaipur in Rajasthan is nearing completion. Once commissioned it will be the largest two-wheeler R&D centre in the country of its class.

The construction of the fifth plant of your Company at Halol in Gujarat with an annual installed capacity of 18 (eighteen) lakhs units has been started and would be completed very soon. Your Company is determined to have no capacity constraints for ensuring long-term growth. Accordingly, during FY 2014-15, your Company has entered into an MoU with the Government of Andhra Pradesh for setting up of Manufacturing Plant in Sricity in Chittoor District of Andhra Pradesh. The plant with an investment of Rs. 1,600 crores (approx.), will have an annual production capacity of around 1.8 million units of two wheeler.

Your Directors are happy to announce that in the month of March 2015, HMC MM Auto Limited, the Joint Venture between Hero MotoCorp Ltd. and Milan (Italy) based Magneti Marelli inaugurated its first autonomous 'Production and Development Centre' at Manesar (Haryana). The new centre will serve as a production facility and innovation hub to develop new generation fuelling systems for Hero MotoCorp's two-wheeler. With the commencement of operations at the Development Centre, Hero MotoCorp is set to become India's first two-wheeler manufacturer to have its own EFI Product line.

The retail finance arm of your Company, Hero FinCorp Ltd. has been expanding in a phased manner and its services would be available at over 730 dealerships in various parts of the country by the end of March 2016.

Global Forays

During FY 2014-15 your Company launched the brand 'Hero' and its range of products in Colombia, Bangladesh, Nicaragua, Democratic Republic of Congo, Mozambique, Angola and Ethiopia. Your Company formed a wholly- owned subsidiary in Colombia, and commenced construction of a state-of- the-art manufacturing plant in Colombia. Further a Joint Venture with the Nitol Niloy Group of Bangladesh was formed to launch operations in Bangladesh. The construction of the plant is expected to commence soon.

Your Company plans to launch its operation in Europe by 2015 and in US by 2016. In the first phase of its foray into Europe, your Company aims to launch its products in Italy, Spain and France, followed by UK and Germany in the next phase of expansion.

Performance of Subsidiaries, Associate and Joint Venture Companies

HMCL Netherlands B.V. ('HNBV')

HNBV is a wholly owned subsidiary of Hero MotoCorp Ltd. incorporated as a Private Company with Limited Liability under the laws on Netherlands, in Amsterdam (The Netherlands). The Company has been incorporated with the primary objective of promoting overseas investments.

HNBV established its first wholly owned subsidiary named HMCL Colombia S.A.S. in Colombia. The subsidiary has commenced construction of a state- of-the-art manufacturing plant in the country. The 100% subsidiary - HMCL Colombia S.A.S. - has been incorporated in the industrial city of Cali, 300 kms southwest of Bogota with the project cost of US$ 70 million. HNBV will invest US$ 38 million in CAPEX, with the rest being utilised as working capital over the next 3 (three) year period.

The state-of-the-art manufacturing plant - spread over 17 (seventeen) acres of land at the Parque Sur Free Trade Zone in Villa Rica - is expected to go on stream during fiscal year 2015 with an initial installed capacity of 78.000 units which would go up to around 150.000 units by 2017-18.

During the period ended March 31,2015 it had incurred a net loss of Rs. 30.87 crores.

HNBV has also established a Joint Venture Company in Bangladesh named HMCL Niloy Bangladesh Limited ("HNBL") with Nitol Niloy Group of Bangladesh wherein it holds 55% of the equity capital. HNBL is in the process of setting up a manufacturing plant with a production capacity of 1.50 lakh two-wheelers per annum. During the period ended March 31, 2015 it had registered a gain of Rs. 0.31 crores.

During period ended March 31,2015 HNBV had a consolidated loss of Rs. 31.49 crores.

HMCL (NA) Inc

Your Company has another wholly owned subsidiary in Delaware, U.S.A. named HMCL (NA) Inc. It was incorporated with a similar objective of pursuing overseas investments. It invested in Erik Buell Racing, Inc. ("EBR"), a Delaware corporation by subscribing to its equity capital to the tune of 49%.

Subsequent to the year end, Erik Buell Racing Inc. (EBR) (alongwith its subsidiary Erik Buell Racing, LLC), an associate of HMCL (NA) Inc. has ceased their operations and entered into Assignment for the Benefit of Creditors under Chapter 128 of the Wisconsin Statutes ("Chapter 128 Process"), which is a process similar to the bankruptcy laws of U.S.A. Accordingly, HMCL (NA) Inc. has made a provision for permanent diminution in value of investment amounting to Rs.150.09 crores; being the carrying value in the books of HMCL (NA) Inc.

HMC MM Auto Limited

During the Financial Year 2013-14 Hero MotoCorp Ltd. in Joint Venture with Magneti Marelli, incorporated a Company named HMC MM Auto Limited in India for the purpose of carrying out the manufacture, assembly, sale and distribution of two wheeler fuel injection systems and parts. Hero MotoCorp Ltd. holds 60% of the equity capital of the Joint Venture. The Plant was commissioned in March 2015. The Company is presently developing products, which are under testing and regular production is likely to be commenced during FY 2015-16.

During the Financial Year 2014-15, HMC MM Auto Limited registered a loss of Rs. 2.94 crores.

Hero FinCorp Ltd. (HFCL)

Hero FinCorp Ltd. an associate Company of Hero MotoCorp Ltd. was formed in the year 1991. Hero MotoCorp holds around 48.42% in the equity capital of HFCL. The Company is mainly engaged in providing Financial Services which includes two wheeler financing and providing credit to Hero MotoCorp's vendors and suppliers. Several new products such as Term Loans and Working Capital Loans have been added to the product suite.

During the Financial Year 2014-15, HFCL recorded a turnover of Rs. 298.62 crores and Net Profit of Rs. 33.15 crores.

Apart from the above there was no cessation/change noted in the Subsidiaries, Joint Venture and Associates Companies.

Material Subsidiaries

The Board of Directors of the Company in its meeting approved the policy for determining Material Subsidiaries. At present the Company does not have any Material Subsidiary. The Policy on Material Subsidiary has been posted on the website of the Company at the following link:

http://www.heromotocorp.com/en-in/ about-us/key-policies/policy-on-material. html

Directors

During the Financial Year ended March 31, 2015, your Company has appointed Ms. Shobana Kamineni as an Additional Director of the Company in the category of Non- Executive and Independent Directors with effect from March 27, 2015.

The Board also appointed the following as the Key Managerial Personnel ("KMP") of the Company with effect from April 1, 2014:

1. Mr. Brijmohan Lall Munjal* * Chairman & Whole Time Director

2. Mr. Pawan Munjal * Vice Chairman, CEO & Managing Director

3. Mr. Sunil Kant Munjal * Jt. Managing Director

4. Mr. Ravi Sud * Sr. Vice President & CFO

5. Mr. Ilam C. Kamboj * Asso. V. P. - Legal & Company Secretary * ceased to be a KMP w.e.f. June 1,2015

Further the following Directors were appointed as Independent Directors of the Company pursuant to Section 149 and other applicable provisions of the Act:

1. Mr. Pradeep Dinodia * Non Executive & Independent Director

2. Gen. (Retd.) V. P. Malik * Non Executive & Independent Director

3. Mr. Ravi Nath * Non Executive & Independent Director

4. Dr. Anand C. Burman * Non Executive & Independent Director

5. Dr. Pritam Singh * Non Executive & Independent Director

6. Mr. M. Damodaran * Non Executive & Independent Director

Declaration of Independence u/s 149(6)

The Board has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub- section (6) of Section 149 of the Act, and in the opinion of the Board they fulfils the conditions specified in the Act and the Rules made thereunder and are Independent of the management.

In terms of the Articles of Association of the Company and the applicable provisions of the Act, the office of Mr. Suman Kant Munjal, Director would be liable to determination by retirement of Director by rotation at this Annual General Meeting. The Board has recommended his re-appointment.

Brief resume/details of Mr. Suman Kant Munjal, who is to be re-appointed as mentioned herein above has been, furnished alongwith the Explanatory Statement to the Notice of the ensuing Annual General Meeting.

Chairman

The Board in its meeting held on June 1, 2015 considered and unanimously appointed Mr. Pawan Munjal as the Chairman of the Company. With this passing of baton, the top leadership plan, which was initiated in August last Fiscal, has come to its logical conclusion and a new future of global leadership beckons Hero MotoCorp. Under the astute leadership of Mr. Munjal, Hero MotoCorp has already expanded to over 22 countries in Asia, Africa, Central and South America over the past few years and it is well on its course to expand to a total of 50 countries by the year 2020. New manufacturing plants are coming up in Colombia and Bangladesh and the vision is to have more global footprints in the coming years.

As Mr. Brijmohan Lall Munjal leaves behind a glorious legacy, it is Mr. Pawan Munjal, who is shaping the future of Hero MotoCorp into a modern, technology & innovation-driven centre of excellence to produce winning products of the future.

Chairman Emeritus

Mr. Brijmohan Lall now the Chairman Emeritus of Hero MotoCorp Ltd. has seen him take Hero to the pinnacle of glory as the world's largest two-wheeler manufacturer. He has been an entrepreneur, a leader and a true gentleman. He has built his business empire on the foundation of enduring relationships. His ability at building relationships enabled the Company to develop an enviable distribution network of dealers which is today almost a 1,000-strong force, each one personally hand-picked by him. He believed in the empowerment of associates and workers; strove to constantly improve quality and productivity, and nurtured and maintained excellent relations with all stakeholders.

In his new role Mr. Munjal, will continue to be the guide and mentor of your Company and be part of the Board as a Non-Executive Director.

Board Meetings

During FY 2014-15, the Board met 6 (six) times on Wednesday, May 28, 2014, Friday, June 20, 2014, Tuesday, August 5, 2015, Tuesday, September 23, 2014, Thursday, October 16, 2014 and Tuesday, February 03, 2015.

Further the Board passed 14 (fourteen) matters by passing Resolutions by way of Circulation on Tuesday, May 20, 2014, Tuesday, July 15, 2014, Thursday, August 14, 2014, Friday, September 19, 2014, Friday, February 13, 2015, Friday, February 27, 2015, Wednesday, March 11, 2015 and Friday, March 27, 2015.

Annual Evaluation - Board and its Committees

The Nomination and Remuneration ("NR") Committee has laid down proper criteria and procedure to evaluate and scrutinize performance of the Chairperson, each director (including Executive, Non-Executive and Independent directors), of the Board as a whole and its Committee.

The criteria include different aspects covered under Administrative, Strategic, Operational and Compliance headings.

As per laid down procedure, the Independent Directors held a separate meeting to review the performance of the Chairperson of the Company after taking into account the views of Executive and Non Executive Directors. The substantial, and continuing, contribution of the Chairperson in the growth of the Company has been highly commended. The Independent Directors also reviewed performance of every Executive and Non Executive Director of the Board. The performance evaluation of each Independent Director was done by the entire Board (except the Independent Directors being evaluated).

The performance of each committee has been evaluated by its members and found to be highly satisfactory.

On the basis of this exercise, the NR Committee and the Board, after recognising the important contribution being made by each Independent Directors have decided that all Independent Directors should continue to be on the Board.

Familiarisation programme For Independent Directors

During FY 2014-15, the Board including all Independent Directors were explained about their roles, rights, responsibilities in the Company through detailed presentations on the changes in backdrop of the Companies Act, 2013 and Listing Agreement. The presentations/ deliberations were carried out through internal resources as well as outside experts.

A special session on training of Independent Directors was also conducted on September 23 -24, 2014 in Italy along with Board Meeting. A detailed programme was devised for the same which spanned for entire 2 (two) days. In the said programme, the Senior Leadership Team of Hero MotoCorp also participated and briefed the Board about the functioning of their respective areas and future outlook of the Company.

A Management expert Mr. Tarun Khanna who is working as Director, South Asia Institute and is Jorge Paulo Lemann Professor at Harvard Business School, was invited for deliberation with the Senior Leadership Team and the Board Members on Board functioning, strategic issues and future plans of the Company.

The Board including all Independent Directors was provided with relevant documents, reports and internal policies to enable them to familiarise with the Company's procedures and practices from time to time besides regular briefing by the members of the Senior Leadership Team.

The Familiarisation programme for Independent Directors is posted on the website www.heromotocorp.com and can be viewed at the following link - http:// www.heromotocorp.com/en-in/about-us/ familiarisation -program -of -independen- directors.html.

Remuneration Policy

Your Company has set up a Nomination and Remuneration ('NR') Committee pursuant to Section 178 of the Act which has formulated a policy for Directors' Appointment and remuneration for Directors, KMP and other employees. They have also developed the criteria for determining qualifications, positive attributes and independence of a Director including making payments to Non-Executive Directors.

During this process, the NR Committee takes into consideration the best remuneration practices being followed in the industry while fixing appropriate remuneration packages and to administer and superintend the long-term incentive plans, such as ESOPs, RSUs etc.

Further the compensation package for Directors, Key Managerial Personnel, Senior Management and other employees are designed based on the following set of principles:

* Aligning key executive and board remuneration with the longer term interests of the Company and its shareholders;

* Minimise complexity and ensure transparency;

* Link to long term strategy as well as annual business performance of the Company;

* Promotes a culture of meritocracy and is linked to key performance and business drivers; and

* Reflective of line expertise, market competitiveness so as to attract the best talent.

Your directors affirm that the remuneration paid to employees, KMP and Directors is as per the Remuneration Policy of the Company.

The Remuneration Policy of the Company is posted on the website www.heromotocorp. com and can be viewed at the following Link:

http://www.heromotocorp.com/en-in/ about-us/key-policies/remuneration- policy.html

Other remuneration details of the employees, KMPs and Directors along with the details of the ratio of the remuneration of each Director to the median employee's remuneration forms part of the report. And are attached as Annexure - I.

Employees' Stock Option Scheme

The NR Committee of the Board of the Company, inter alia, administers and monitors the Employees' Stock Option Scheme of the Company in accordance with the applicable SEBI Guidelines.

The applicable disclosures as stipulated under the SEBI Guidelines as on March 31, 2015 with regard to the Employees' Stock Option Scheme (ESOS) are provided in Annexure - II to this Report.

Your Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the members. The certificate would be placed at the Annual General Meeting for inspection by members.

Directors' Responsibility Statement

Your Directors make the following statement in terms of Section 134(3)(c) & (5) of the Act, which is to the best of their knowledge and belief and according to the information and explanations obtained by them:

1. that in the preparation of the annual accounts for the Financial Year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the State of Affairs as at March 31, 2015 and of the Profit of your Company for the Financial Year ended March 31,2015;

3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

4. that the annual accounts for the Financial Year ended March 31, 2015 have been prepared on a going concern basis;

5. that the Directors have laid down Internal Financial Controls which were followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

6. that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Management Discussion and Analysis Report

A detailed chapter on, 'Management Discussion and Analysis' (MDA), pursuant to Clause 49 of the Listing Agreement, is annexed and forms part of this Annual Report.

Corporate Governance

At Hero MotoCorp, it is our firm belief that the essence of Corporate Governance lies in the phrase 'Your Company'. It is 'Your' Company because it belongs to you - the shareholders. The Chairperson and Directors are 'Your' fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximises 'Your' long-term value.

Your Company is committed to benchmarking itself with global standards for providing good Corporate Governance. It has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with not only in letter but in spirit.

The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website of your Company www. heromotocorp.com. A Report on Corporate Governance along with the Auditors' Certificate on its compliance is annexed hereto as Annexure - III.

Transfer to General Reserve

In view of the vigorous financial strength of your Company, a sum of Rs. 250 crores being 10.47% of the Profit After Tax of the Financial Year under review has been transferred to the General Reserve of the Company.

Dividend

Continuing with its payout policy, your Directors are pleased to recommend for your approval a Final Dividend of 1,500% i.e. Rs. 30 per equity share of the face value of Rs. 2 each, in addition to an Interim Dividend of Rs. 30 per equity share of the face value of Rs. 2 each, paid in the month of August 2014, aggregating to Rs. 1,198.12 crores (exclusive of tax on dividend), for the Financial Year ended March 31, 2015. In the previous Financial Year a Dividend of 3,250% i.e. Rs. 65 was paid per Equity Share of the face value of Rs. 2 each. The Dividend, if approved will be paid to the eligible members well within the stipulated time.

Transfer to Investor Education and Protection Fund (IEPF)

During the year under review, your Company has transferred unpaid / unclaimed dividend for the Financial Year 2006-07 (final) amounting to Rs. 1.91 crores (approx.) to IEPF.

Material Changes and Commitments

No material changes and commitments affecting the financial position of your Company have occurred between April 1, 2015 and the date of signing of this Report.

Loans, Guarantees and Investments

Details of Loans and Investments covered under the provisions of Section 186 of the Act, are as follows:

Rs. crores

Loans u/s 186

Principal Interest due Interest Amount but not paid accrued Total but not due

Opening Balance 43.27 - - 43.27

Addition 40.35 - - 40.35

Reduction 29.67 - - 29.67

Closing Balance 53.95 - - 53.95

Rs. crores

Investments u/s 186

Principal Amount Principal Amount (Shares) (Bond/Debenture) Total

Opening Balance 229.59 406.83 636.42

Addition * 255.39 51.12 306.51

Reduction ** 155.04 82.61 237.65

Closing Balance 329.94 375.34 705.28

* HMC MM Auto- Rs. 11.07 crores, HMC (NA), Inc- Rs. Nil, HMC Netherlands BV- Rs. 76.42 crores, Hero FinCorp Ltd- Rs. 167.90 crores & Religare Enterprises Ltd (NCD)- Rs. 51.12 crores

** Provision for diminution-HMC (NA), Inc- Rs. 155.04 crores,

Further during the FY 2014-15 your Company has not provided any guarantee pursuant to provisions of Section 186 of the Act.

Related Party Transactions

All related party transactions pursuant to Section 188(1) of the Act that were entered into during the Financial Year were on an arm's length basis and in the ordinary course of business. There were no materially significant related party transactions made by your Company with its Promoters, Directors, Key Managerial Personnels or other designated persons which might have a potential conflict with the interest of the Company at large.

Related Party Transactions were placed before the Audit Committee for its approval. There was no matter requiring approval of the Board therefore no detail is required to be provided in AOC-2. Your Company has developed Standard Operating Procedures for the purpose of identification of Related Party Transactions and monitoring on a regular basis. Related party transactions were disclosed to the Board on a regular basis as per AS- 18.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website at www.heromotocorp.com and can be viewed at the following link:

http://www.heromotocorp.com/en-in/ about-us/key-policies/related-party- transactions.html

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

Risk Management System

Your Company follows a comprehensive system of Risk Management and has adopted a procedure for risk assessment and its minimisation. It ensures that all the risk are timely defined and mitigated in accordance with the Risk Management Process, including identification of elements of risk which might threaten the existence of the Company. During FY 2014-15, your Company has also constituted a Risk Management Committee which intensely monitors the Risk Management Process in the Company and the same is periodically reviewed by the Board.

Vigil Mechanism/ Whistle Blower Policy

Your Company has in place a well formulated Vigil Mechanism/ Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The policy enables the employees, Directors and other stakeholders to raise their concern. There was no incident when the access to the Audit Committee was denied to any employees with respect to vigil mechanism. The policy is posted on the website of the Company at the following link:

http://www.heromotocorp.com/en-in/ about-us/key-policies/vigil-mechanism- policy.html

Corporate Social Responsibility

Your Company has constituted a Corporate Social Responsibility (CSR) Committee which works under the direct supervision of Mr. Pawan Munjal, Chairman, Managing Director & CEO who also acts as the Chairperson of the Committee. Gen. (Retd.) V. P. Malik and Mr. Pradeep Dinodia, both Non-Executive and Independent Directors, members of the Committee. The Committee manages and overviews the CSR projects of your Company. The CSR activities are based on the CSR policy approved by the Board which is available at the website of your Company at the below mentioned link:

http://www.heromotocorp.com/en-in/ about-us/key-policies/corporate-social-responsibility.html

The CSR Policy of your Company as adopted by the Board covers the following:

To direct HMCL's CSR Programmes, inter alia, towards achieving one or more of the following:

* enhancing environmental and natural capital;

* supporting rural development;

* promoting education including skill development; providing preventive healthcare, providing sanitation and drinking water;

* creating livelihoods for people, especially those from disadvantaged sections of society, in rural and urban India and preserving and promoting sports.;

To develop the required capability and self-reliance of beneficiaries at the grass roots, in the belief that these are prerequisites for social and economic development;

To engage in affirmative action/ interventions such as skill building and vocational training, to enhance employability and generate livelihoods for persons including from disadvantaged sections of society;

To pursue CSR Programmes primarily in areas that fall within the economic vicinity of the Company's operations to enable close supervision and ensure maximum development impact;

To carry out CSR Programmes in relevant local areas to fulfil commitments arising from requests by government/regulatory authorities and to earmark amounts of monies and to spend such monies through such administrative bodies of the government and/or directly by way of developmental works in the local areas around which the Company operates; To carry out activities at the time of natural calamity or engage in Disaster Management System;

To contribute to the Prime Minister' National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women;

To contribute or provide funds to technology incubators located within academic institutions which are approved by the Central Government; To contribute to any fund setup by the Central Government or State Government(s) including Chief Minister's Relief Fund, which may be recognised as CSR activity; and To promote sustainability in partnership with industry associations, like the Confederation of Indian Industry (CII), PHD, FICCI, etc. in order to have a multiplier impact.

During FY 2014-15, your Company focussed on lot of activities related to CSR across the country. Some of the major initiatives are as follows:

Providing financial support to girl students;

Setting up of a RO Plant for providing potable drinking water in the village Hansaka;

Providing support to Flood victims of J&K;

Carrying out Animal Health camps across various villages; and

Training programmes on Road Safety Education.

Your Company already has in place a robust plan, monitoring mechanism and enabling infrastructure to ensure that CSR activities initiated by the Company are sustainable and truly beneficial to the society in the long run. However, the formal initiatives on CSR could start only in the later part of the Financial Year after the approval of CSR policy by the Board. While the work was initiated only on few programmes, pre-work activities have been detailed out for most of the initiatives and during FY 2015-16, your Company would see a huge action and corresponding spend on CSR. The current financial year will not only see the statutory spending but will also make up the deficiency of FY 2014-15, wherein the ground work has taken place.

The Annual Report on the CSR is attached as Annexure - IV and forms an integral part of this report.

Audit Committee

The Audit Committee of your Company comprises of the following Non-Executive and Independent Directors:

1. Mr. Pradeep Dinodia - Chairperson

2. Gen. (Retd.) V. P. Malik - Member

3. Dr. Pritam Singh - Member

4. Mr. M. Damodaran - Member

The details about Audit Committee and its terms of reference etc. have been given in Corporate Governance Report.

During the Year under review there was no such recommendation of the Audit Committee which was not accepted by the Board.

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants (FR No. 015125N), New Delhi, Statutory Auditors were appointed for 3 (three) Financial Years upto FY 2016-17 and in view of the provisions of the Act, their appointment needs to be ratified annually. Your Company has received an eligibility letter from the auditors to the effect that the ratification of their appointment, would be in accordance with Sections 139 and 141 of the Act. The Board recommends the ratification of their appointment.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and rules made thereof, your Company has appointed M/s. Arvind Kohli & Associates, Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the Financial Year ended March 31, 2015 is annexed herewith as Annexure - V.

Auditors' Report

The observations of Auditors in their Report, read with the relevant notes to accounts are self-explanatory and therefore do not require further explanation pursuant to Section 134(3)(f)(i).

The Secretarial Audit Report for FY 2014-15 also does not bear any adverse comments or observations that require any explanation pursuant to Section 134(3)(f)(ii).

Internal Control Systems

Your Company has a proper and adequate system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and those transactions are authorised, recorded and reported correctly.

An extensive programme of internal audits and management reviews supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down for this purpose. The Internal Control System has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

Your Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

Insider Trading Code

In compliance with the SEBI regulation on prevention of insider trading, your Company had instituted a comprehensive Code of Conduct for regulating, monitoring and reporting of trading by Insiders. The said Code laid down guidelines, which advised them on procedures to be followed and disclosures to be made, while dealing with shares of the Company and cautioned them on consequences of non-compliances.

Further your Company has put in place a Code of practices and procedures of fair disclosures of unpublished price sensitive information. Both the aforesaid Codes are in lines with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

Ratings

ICRA Limited and CRISIL Limited have reaffirmed the following ratings to the Company:

ICRA Limited

Rating Pronounced Programme/Category

"[ICRA]AAA" ICRA triple A Line(s) of Credit Long term rating

"[ICRA]A1 " ICRA A one plus Line(s) of Credit Short term rating

"IrAAA" IR triple A Issuer rating

"[ICRA]AAA" ICRA triple A Non-Convertible Debentures (NCD)

Rating Outlook

"[ICRA]AAA" Stable

"[ICRA]A1 " -

"IrAAA" Stable

"[ICRA]AAA" Stable

CRISIL Limited

Rating Pronounced Programme/Category

"FAAA/Stable" F triple A Fixed Deposit Programme

"CRISIL AAA/Stable" CRISIL triple A NCD

CRISIL AAA/ Stable CRISIL triple A Long term rating

CRISIL A1 CRISIL A one plus Short term rating

Rating Outlook

"FAAA/Stable" Stable

"CRISIL AAA/Stable" Stable

CRISIL AAA/ Stable Stable

CRISIL A1 -

Business Responsibility Report

The Business Responsibility Report (BRR) required to be prepared by top 100 listed companies, based on market capitalisation at BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) has been prepared and forms part of the Annual Report. The Report has been mandated by SEBI for providing initiatives taken by the companies from Environmental, Social and Governance perspective.

Listing

The shares of your Company are presently listed on BSE and NSE.

Personnel

As on March 31,2015, the total numbers of employees on the records of your Company were 7,334.

Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, co- operation and support have enabled the Company to cross new milestones on a continual basis.

A detailed note on personnel is given in the Management Discussion and Analysis, which forms part of this Annual Report.

Particulars of Employees

In terms of the provisions of Section 197(12) of the Act read with rules made thereof a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are disclosed in this report

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with rules made thereof are disclosed in this report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate Annexure forming part of this Report. Further, the Report and the Accounts are being sent to the members excluding the aforesaid Annexure. In terms of Section 136 of the Act, the said Annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Extract of Annual Return

The details forming part of the extract of the Annual Return pursuant to Sections 92(2) and 134(3)(a) of the Act and rules made thereof in form MGT 9 is annexed herewith as Annexure - VI.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Information required under Section 134(3) (m) of the Act, read with rules made thereof is annexed hereto as Annexure - VIII and forms an integral part of this Report.

Statutory Disclosures

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Deposit from the public falling within the ambit of Section 73 of the Act and rules made thereof.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. Neither the Managing Director(s) nor the Whole-time Director(s) of the Company receive any remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

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

Your Directors, further state that during the year under review, there were no cases filed, pursuant to the SHWWA and rules made thereof.

Acknowledgement

It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, State Government(s), Financial Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Pawan Munjal Chairman, Managing Director & CEO DIN: 00004223

New Delhi June 1,2015


Mar 31, 2014

DEAR MEMBERS,

The Board of your Company is immensely delighted in presenting its 31 st Report. The Report is being presented along with the Audited Statement of Accounts for the financial year ended March 31,2014.

FINANCIAL RESULTS - STANDALONE AND CONSOLIDATED

(RS. in crores)

Standalone Consolidated Particulars For the year ended March 31''2014 March 31, 2013 March 31'' 2014

Gross Sales of Products 27,005.26 25,474.54 27,005.26

Total Revenue 25,721.85 24,166.49 25,719.66

Profit before Finance Costs & Depreciation 3,986.44 3,682.86 3,983.29

Less: Finance Cost 11.82 11.91 11.82

Depreciation 1,107.37 1,141.75 1,107.37

Profit before tax (PBT) 2,867.25 2,529.20 2,864.10

Less: Provision for tax

- Current 828.21 502.61 828.21

- Deferred (238.39) (75.85) (238.39)

- Minimum Alternate Tax Credit 168.35 (15.72) 168.35

Profit after tax (PAT) 2,109.08 2,118.16 2,105.93

Share of profit/(loss) of associates (3.62)

Minority interest 0.35

Profit for the year 2,102.66

Add: Balance of profit brought forward 3,039.98 2,538.57 3,039.98

Balance available for appropriation 5,149.06 4,656.73 5,142.64

Appropriations

Dividend

- Interim 1.16 1.16

- Proposed Final 1,297.97 1,198.13 1,297.97

Corporate Dividend Tax 220.79 203.62 220.59

Transfer to General Reserve 215.00 215.00 215.00

Balance carried to Balance Sheet 3,414.14 3,039.98 3,407.72

Dividend (%) 3,250 3,000

Basic and Diluted Earnings Per Share (EPS)(Rs.)

- before exceptional items 105.61 106.07 105.29

- after exceptional items 105.61 106.07 105.29

BUSINESS PERFORMANCE

During the Financial year (FY) your Company clocked the sales of 6,245,960 units depicting an increase of 2.8% over the previous FY 60,75,583 units. The total sales of products (net of excise duty) was increased by 6.5% to Rs. 25,125 crores in the FY under review from Rs. 23,583 crores in previous FY.

Net Revenue from Operations of the Company increased by 6.3%, from Rs. 23,768 crores in FY 2012-13 to Rs. 25,275 crores in FY 2013-14.

Profit before Tax (PBT) has shown a increase of 13.37% from Rs. 2,529 crores in 2012-13 to 2,867 crores in 2013-14. The Company''s Profit After Tax (PAT) decreased by 0.4% from Rs. 2,118 crores in 2012-13 to 2,109 crores in 2013-14. Earnings before Interest, Depreciation and Taxes (EBIDTA) margins stood at 14.01% in FY 2013-14 as compared to 13.82% in FY 2012-13. Similarly the operating margins stood at 9.62% in FY 2013-14 as compared to 9.02% in FY 2012-13.

During the year under reviewyour Company successfully launched the upgraded models of HF Dawn, HF Deluxe, HF Dlx Eco, Passion Pro, Splendor Pro, Splendor Pro Long Seat, Super Splendor, Glamour, Glamour Fl, I smart. Pleasure IBS and Pleasure Upgrade. You will be delighted to note thaf''Splendor" continues to be the largest selling brand in FY 2013-14 as well with 19.6% market share coming from sales of 1,967,006 units.

Though the market share declined from 38.4% in the previous year to 36.4% in the financial year under review, the Company has retained its position as the World''s largest Two-Wheeler manufacturer Company for the 12th year in a row.

A detailed discussion on the business performance and future outlook has been given in the chapter on ''Management Discussion and Analysis''(MDA).

DIVIDEND

Continuing with its payout policy, your Directors are pleased to recommend for your approval a Dividend of 3,250% i.e. Rs. 65 (3,000% i.e. Rs. 60 in 2012-13) per Equity Share of the face value of Rs. 2 each, aggregating to Rs. 1,297.97 crores (exclusive of tax on Dividend), for the financial year ended March 31, 2014. The Dividend, if approved will be paid to the eligible members well within the stipulated time.

TRANSFERTO GENERAL RESERVE

In view of the vigorous financial strength of the Company, a sum of Rs. 215 crores being 10.19% of the Profit After Tax of the year under review has been transferred to the General Reserve of the Company.

TRANSFERTO INVESTOR EDUCATION AND PROTECTION FUND(IEPF)

During theyear under review, the Company has transferred unpaid / unclaimed dividend for the financial year 2005-06 (final) amounting to Rs. 2.37 crores (approx.) to IEPF.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company have occurred between April 1, 2014 and the date of signing of this Report.

AMALGAMATION

As you are aware, that the Company had started the process of amalgamating Hero Investments Pvt. Ltd. (HIPL), its Promoter Company holding 43.33% of the equity share capital with the Company in the FY 2012-13. You will be pleased to note that the same was completed during the year under review with the allotment of shares to the shareholders of HIPL.

CAPACITY EXPANSION, NEW PROJECTS & STARTEGIC ALLIANCES

The construction of the fourth manufacturing plant with an installed capacity of 7.5 lakhs units per annum and a State-of-the-art Global Parts Centre (GPC) at Neemrana, Rajasthan respectively which was commenced in the FY under review is likely to be completed in the current FY. These two facilities would have a total investment of approx. Rs. 550 crores. Both the facilities are coming up over an area of 82 acres and will provide direct employment to over 1,400 people. As part of your Company''s philosophy to grow sustainably, these facilities are being set up on Green Building Concept.

Further the construction of the prestigious "Hero Centre of Global Innovation and Research & Design (R&D)" spread over an area of 250 acres at Kukas, near Jaipur in Rajasthan has commenced during the FY 2013-14. This will be the largest two-wheeler R&D centre in the country of its class.This facility would havea total investment of approx. Rs. 450 crores.

Your Company is also creating capacities to ensure long term growth by setting up its fifth plant at Halol in Gujarat with an annual installed capacity of 18 lakhs units. The construction of this plant is expected to start soon.

Your Directors are happy to announce the formation of a strategic joint venture agreement with Italian components giant Magneti Marelli aimed at the production of power train systems for the two wheeler market. Accordingly a JV Company HMC MM Auto Limited was incorporated on November 11, 2013 and was operationalised. This JV is targeting sales of around $100 million in the first five years. The construction of a JV''s production plant has been planned by 2015.

The retail finance arm. Hero FinCorp Ltd. of the Company has been expanding in a phased manner and its services would be available at over 550 dealerships in various parts of the country by the end of March 2015.

GLOBAL FORAYS

During the FY under review your Company made its first ever investment in equity of Erik Buell Racing (EBR) for an aggregate amount of US$ 25 million. This investment will acquire a 49.2% holding in the invested Company.

Also the Company expanded its global footprint by launching brand "Hero" and its range of products in Central America (Guatemala, Honduras & El Salvador); South America (Peru & Ecuador); East Africa (Kenya), West Africa (Burkina Fasoand Ivory Coast) and most recently Asia (Turkey & Egypt).

Your Directors are happy to announce the launch of operations in Turkey through a Distribution Agreement with Asya Makina, subsidiary of Soysal Group to distribute Hero MotoCorp two wheelers through its network of 50 outlets spread across Turkey.

The Company has established its International Assembly units at Kenya,Tanzania and Uganda in East Africa.

During the current FY, the Company entered into its first overseas Joint venture in Bangladesh to set up a two-wheeler manufacturing plant with Nitol Niloy group, in which the Company will hold majority stake of 55%.

BOARD OF DIRECTORS

In terms of the Articles of Association of the Company and the applicable provisions of Companies Act, 1956, the office of Mr. Pradeep Dinodia, Gen. (Retd.) V. P. Malik and Mr. Brijmohan Lall Munjal, Directors would be liable to determination by retirement of Directors by rotation at this Annual General Meeting.

Your Board recommends the re-appointment of Mr. Brijmohan Lall Munjal, Chairman and Whole-Time Director of the Company and appointment of Mr. Pradeep Dinodia and Gen. (Retd.) V. P. Malik as Independent Directors of the Company in terms of Sections 149 and 152 of the Companies Act, 2013, who in the opinion of the Board fulfils the conditions specified in the Act and the rules made thereunderand are Independent of the management.

Further in terms of the provisions of the Companies Act, 2013, Mr. Ravi Nath, Dr. Anand C. Burman, Dr. Pritam Singh and Mr. M. Damodaran, Non-Executive and Independent Directors of the Company whose office are liable to determination by retirement of Directors by rotation have been appointed as Independent Directors in term of Sections 149 and 152 of the Companies Act, 2013 for 5 (five) consecutive years from the date of the 31a Annual General Meeting for a term upto the conclusion of the 36th Annual General Meeting of the Company in the Calendar year 2019.

The Board has received declarations from all the Independent Directors of the Company confirming that they meet with the

criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and who in the opinion of the Board fulfils the conditions specified in the Act and the rules made thereunder and are Independent of the management. Thus the Board recommend theirappointmentas Independent Directors.

Brief resume/details of the Director, who is/are to be appointed/ re-appointed as mentioned herein above has been furnished alongwith the Explanatory Statement to the Notice of the ensuing Annual General Meeting.

For DELOITTE HASKINS & SELLS Chartered Accountants

(Firm Registration No. 015125N)

Vijay Agarwal

New Delhi Partner

May 28,2014 (Membership No. 094468)


Mar 31, 2013

DEAR MEMBERS,

The Directors of Hero MotoCorp Ltd., with immense pleasure present the 30th Annual Report for the financial year 2012-13. The Report is being presented along with the Audited Statement of Accounts for the financial year ended March 31, 2013.

FINANCIAL RESULTS

Rs. crores

For the year ended

Particulars March 31, 2013 March 31, 2012

Gross Sales of Products 25,474.54 25,024.04

Total Revenue 24,166.49 23,943.60

Profit before Finance Costs & Depreciation 3,682.86 3,983.35

Less: Finance Costs 11.91 21.30

Depreciation 1,141.75 1,097.34

Profit before tax (PBT) 2,529.20 2,864.71

Less: Provision for tax

- Current 502.61 569.76

- Minimum Alternate Tax (15.72) (44.67)

- Deferred (75.85) (38.51)

Profit after tax (PAT) 2,118.16 2,378.13

Add: Balance of profit brought forward 2,538.57 1,444.80

Balance available for appropriation 4,656.73 3,822.93

Appropriations

Dividend

Proposed Final 1,198.13 898.59

Corporate Dividend Tax 203.62 145.77

Transfer to General Reserve 215.00 240.00

Balance carried to Balance Sheet 3,039.98 2,538.57

Dividend (%) 3000 2250

Basic and Diluted Earnings Per Equity Share (EPS)(Rs.)

- before exceptional items 106.07 119.09

- after exceptional items 106.07 119.09

BUSINESS PERFORMANCE

The sales for the financial year under review were 6,075,583 units as compared to 6,235,205 units for the previous financial year, lower by 2.6% in line with the downtrend across the entire industry. However in value terms total sales of products (net of excise duty) increased by 0.90% to Rs. 23,583 crores in the financial year under review from Rs. 23,368 crores in previous financial year.

The market share declined from 40.3% in the previous financial year to 38.4% in the year under review. The Company retained its position as the World''s largest two-wheeler manufacturer company. Net revenue from operations of the Company grew by 0.80%, from Rs. 23,579 crores in 2011-12 to Rs. 23,768 crores in 2012-13. Profit Before Tax (PBT) has shown a decline of 11.72% from Rs. 2,865 crores in 2011-12 to Rs. 2,529 crores in 2012-13. The Company''s Profit after Tax (PAT) decreased by 10.9% from Rs. 2,378 crores in 2011-12 to Rs. 2,118 crores in 2012-13. Earnings before Interest,

Depreciation and Taxes (EBIDTA) margins stand at 13.82% in 2012-13 as compared to 15.35% in 2011-12. The Operating margins stood at 9.02% in 2012-13 as compared to 10.7% in 2011-12.

The Company successfully launched 2 (two) new models of two wheelers i.e. "Ignitor" in 125cc category, and "PassionXPro" in 110 cc category including variants of various models under brand transition during the year under review. Splendor continues to be the largest selling product in 2012-13 as well with 23.2% market share.

A detailed discussion on the business performance and future outlook has been given in the chapter on ''Management Discussion and Analysis'' (MDA).

DIVIDEND

Continuing with its liberal payout policies, your Directors are pleased to recommend for your approval a higher dividend of 3000% i.e. Rs. 60 (2250% i.e. Rs. 45 in 2011-12) per equity share of the face value of Rs. 2, aggregating to Rs. 1,198.13 crores (exclusive of tax on Dividend), for the financial year ended March 31, 2013. The dividend, if approved, will be paid to the eligible members well within the stipulated time.

TRANSFER TO GENERAL RESERVE

In view of the robust financial strength of the Company, a sum of Rs. 215 crores being 10.15% of the Profit After Tax of the year under review has been transferred to the General Reserve of the Company.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

During the year under review, the Company transferred unpaid / unclaimed dividend for the financial year 2004-05 (final) amounting to Rs. 2.32 crores to IEPF.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company have occurred between April 1, 2013 and the date of signing of this Report.

EMPLOYEE STOCK OPTION PLAN (ESOP)

During the year under review, your Company approved the ESOP by passing a special resolution through Postal Ballot. The aggregate number of Options to be granted under the said ESOP Scheme shall not be more than 2,000,000 (Twenty lakhs). The necessary disclosure as required under the ESOP guidelines shall be made as and when the Options are granted.

AMALGAMATION

During the year under review, your Company had started the process of amalgamation of Hero Investments Pvt. Ltd. (HIPL), a promoter company holding, 43.33% of the equity share capital, subject to the necessary approvals. In the month of May, 2013 the Company received the final approval from the Hon''ble High Court of Delhi and accordingly HIPL was amalgamated on May 16, 2013. However the process of completing the allotment of shares to the shareholders of HIPL is being complied with.

CAPACITY EXPANSION, NEW PROJECTS & ALLIANCES

During the year under review, your Company has augmented capacity at its existing plants to approx. 7 million units. The construction of the fourth manufacturing plant and a new state-of- the-art Global Parts Centre (GPC) at Neemrana, Rajasthan was started. These two facilities would have a total investment of approx. Rs. 550 crores and expected to be operational towards the end of the financial year 2013-14. Both the facilities are coming up over an area of 82 acres and will provide direct employment to over 1,400 people. The fourth plant will have an installed capacity of 750,000 units per annum. As part of your Company''s philosophy to grow sustainably, these facilities will be set up on Green Building Concept.

The Company will also soon set up an integrated state-of-the-art Technology/R&D centre spread over an area of 250 acres at Kukas, Jaipur in Rajasthan. This will be the largest two-wheeler R&D centre in the country.

Your Directors are happy to announce a Global alliance with Engines Engineering (EE) to augment technology & design capabilities and bring a next generation product line-up. Set up in 1979, Bologna based EE has become Europe''s No.1 end-to-end motorcycle designer i.e. from conception and design right down to styling, online assembly, industrialisation and marketing.

The Company has also launched its own retail finance arm, Hero FinCorp Ltd. This arm will expand in a phased manner. The initial plan is to make the services available at about 200 dealerships in various parts of the Country by March 2014. Further by March 2015, the plan is to bring around 450 dealerships under the financing ambit of Hero FinCorp Ltd.

FOREIGN FOOTPRINT

During the current financial year, the first off-shore 100% investment subsidiary was set up in Netherlands to expedite & catapult its global expansion including overseas investments and merger and acquisition opportunities. This will stand out to be a major growth driver in the future. Another subsidiary was incorporated in US to strengthen Hero MotoCorp''s international presence.

BOARD OF DIRECTORS

In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Dr. Pritam Singh, Mr. M. Damodaran and Mr. Paul Edgerley, Directors of the Company retire by rotation and being eligible, offer themselves for re-appointment.

Brief resume/details of the Directors, who are to be re-appointed as mentioned here in above has been furnished along with the Explanatory Statement to the Notice of the ensuing Annual General Meeting.

The Board recommends their re-appointment at the ensuing Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956, which is to the best of their knowledge and belief and according to the information and explanations obtained by them:

1. that in the preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards have been followed;

2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the State of Affairs as at March 31, 2013 and of the Profit of the Company for the financial year ended March 31, 2013;

3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. that the annual accounts for the year ended March 31, 2013 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed chapter on ''Management Discussion and Analysis'' (MDA), pursuant to Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report.

CORPORATE GOVERNANCE

At Hero MotoCorp Ltd., it is our firm belief that the essence of Corporate Governance lies in the phrase ''Your Company''. It is ''Your'' Company because it belongs to you - the shareholders. The Chairman and Directors are ''Your'' fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximises ''Your'' long-term value.

Your Company is committed to benchmarking itself with global standards for providing good Corporate Governance. It has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with.

The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website of the Company www.heromotocorp.com. A Report on Corporate Governance along with the Auditors'' Certificate on its compliance is annexed hereto as Annexure - I.

INTERNAL CONTROL SYSTEMS

The Company has a proper and adequate system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and those transactions are authorised, recorded and reported correctly.

An extensive programme of internal audits and management reviews supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

The Company also has an Audit Committee, comprising 4 (four) Non-Executive & Independent and professionally qualified Directors, who interact with the Statutory Auditors, Internal Auditors, Cost Auditors and Auditees in dealing with matters within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and internal controls. During the year under review, the Audit Committee met 5 (five) times.

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, disclosure of the same is not required in this Report.

RISK MANAGEMENT SYSTEM

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for risk assessment and its minimisation. It ensures that all the Risks are timely defined and mitigated in accordance with the well structured Risk Management Process. The Audit Committee and Board reviews periodically the Risk Management Process.

RATINGS

The rating agency ICRA Limited, has reviewed and reaffirmed [ICRA] AAA (pronounced ICRA triple A) and [ICRA] A1 (pronounced A one plus) rating for the bank facilities. ICRA has also reaffirmed [ICRA] AAA rating for non convertible debenture programme of the Company and issuer rating of IRAAA (pronounced I R triple A). The long-term rating has been assigned a "Stable" outlook.

CRISIL, during the year under review, has reviewed and reaffirmed the rating of "CRISIL AAA" in Long term instrument category, Rating of "FAAA" for Fixed Deposits, Commercial Paper Rating of "CRISIL A1 " for short term category and CRISIL GVC Level 1 for Governance and Value Creation Rating respectively to your Company.

FIXED DEPOSITS

During the year under review, the Company has not accepted any deposit under Sections 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, New Delhi, Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re- appointment. The Company has received a certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 224(1B) of the Companies Act, 1956. The Board recommends their re-appointment.

AUDITORS'' REPORT

The observations of Auditors in their Report, read with the relevant notes to accounts are self explanatory and therefore do not require further explanation.

COST AUDITORS

The Board has re-appointed M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, as the Cost Auditors of the Company in accordance with Section 233B of the Companies Act, 1956 for the financial year 2013-14 and the necessary approval has been received from the Central Government. The Cost Auditors'' Report for the financial year 2012-13 will be forwarded to the Central Government in pursuance of the provisions of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required under Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto as Annexure - II and forms an integral part of this Report.

BUSINESS RESPONSIBILITY REPORT

SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated August 13, 2012, mandated the top 100 listed entities, based on market capitalisation at BSE Limited (BSE) and National Stock Exchange of India Limited (NSE), to include Business Responsibility Report as part of the Annual Report describing the initiatives taken by the companies from Environmental, Social and Governance perspective. Accordingly, the Business Responsibility Report is annexed and forms part of the Annual Report.

LISTING

The shares of your Company are presently listed on BSE and NSE.

PERSONNEL

As on March 31, 2013, the total numbers of employees on the records of the Company were over 5,800.

Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, co- operation and support have enabled the Company to cross new milestones on a continual basis.

A detailed note is given in the chapter "Talent Management" of Management Discussion and Analysis, which forms part of this Annual Report.

PARTICULARS OF EMPLOYEES

Information of Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 forms an integral part of this Report. As per the provisions of Section 219(1)(b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the members of the Company excluding the Statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any member interested in obtaining a copy of such statement may write to the A.V.P.- Legal & Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENT

It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, State Government(s), Financial Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Brijmohan Lall.Munjal

Chairman

New Delhi

July 24, 2013


Mar 31, 2012

The, the Directors of Hero Moto Corp Ltd., are delighted to present the 29th Annual Report for the financial year 2011-12. The Report is being presented along with the Audited Statement of Accounts of the Company for the financial year ended March 31, 2012, of its first complete financial year since embarking its solo journey.

FINANCIAL RESULTS

Rs. crores

Particulars For theyear ended

March 31, 2012 March 31, 2011

Gross Sales of Products 25,024.04 20,662.39

Total Revenue 23,943.60 19,687.55

Profit before Finance Costs & Depreciation 3,983.35 2,822.31

Less: Finance Costs 21.30 15.17

Depreciation 1,097.34 402.38

Profit before tax (PBT) 2,864.71 2,404.76 Less: Provision for tax

- Current 569.76 475.76

- Deferred -38.51 94.02

- Minimum Alternate Tax Credit -44.67 -92.92

Profit after tax (PAT) 2,378.13 1,927.90

Add: Balance of profit brought forward 1,444.80 2,146.55

Balance available for appropriation 3,822.93 4,074.45 Appropriations

Dividend

- Interim - 1,397.81

- Proposed Final 898.59 698.91

Corporate Dividend Tax 145.77 340.14

Transfer to General Reserve 240.00 192.79

Balance carried to Balance

Sheet 2,538.57 1,444.80

Dividend (%) 2,250 5,250

Basic and Diluted Earnings Per Share (EPS) (Rs.)

- before exceptional items 119.09 100.53

- after exceptional items 119.09 96.54

BUSINESS PERFORMANCE

Fuelled by its landmark sales of over 62,35,205 units in this financial year compared to 54,02,444 units for the last financial, your Company notched 15.41% growth in sales. In value terms total sales (net of excise duty) increased by 21.42% to Rs. 23,368 crores from Rs. 19,245 crores in 2010-11.

During the year, the Company not only retained its position as the World's largest Two-Wheeler manufacturer Company but continued to lead with the domestic market share of around 45%.

Net Income from Operations of the Company grew by 21.55%, from Rs. 19,398 crores to Rs. 23,579 crores in 2011-12. The Company's Earnings before Interest Depreciation and Taxes (EBITDA) margins stands at 15.35% in 2011-12. Profit before Tax increased by 19.13% from Rs. 2,405 crores in 2010-11 to Rs. 2,865 crores in 2011-12.

The operating margin stands at 10.69% in 2011-12 as compared to 11.39% in 2010-11 on account of higher prices of raw materials & components. The Company's Profit after Tax (PAT) increased by 23.35% from Rs. 1,928 crores in 2010-11 to Rs. 2,378 crores in 2011-12.

The Company successfully launched 3 new models including variants during the year under review.

A detailed discussion on the Company overview has been given in the chapter on 'Management Discussion and Analysis' (MDA).

DIVIDEND

Due to strength of the operations and the resultant strong financial position, your Directors are pleased to recommend a Dividend of 2,250% i.e. Rs. 45 per Equity Share of the face value of Rs. 2 per share, aggregating to Rs. 898.59 crores (exclusive of tax on Dividend), for the financial year ended March 31, 2012 for your approval. The Dividend, if approved will be paid to the eligible members well within the stipulated period.

TRANSFER TO GENERAL RESERVE

Reaffirming the financial strength of the Company, a sum of Rs. 240 crores has been transferred to the General Reserve of the Company for the financial year 2011-12.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, the Company has transferred unpaid / unclaimed dividend for 2003-04 (final) amounting to Rs. 3.03 crores to Investor Education and Protection Fund (IEPF) of Government of India.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company have occurred between April 1, 2012 and the date on which this Report has been signed.

CAPACITY EXPANSION, NEW PROJECTS & ALLIANCES

Your Company proposes to raise the bar by bringing in technologically-advanced two-wheelers with value-added features in the financial year 2013. Further, to be able to meet growing demand for the products, your Company would add capacity at its three existing plants. Also a Parts Centre to cater to the rising volumes would be established soon. With these initiatives in pipeline about 400 more touch points would be added to the existing distribution network.

Your Directors are happy to announce the forging of alliances with the US-based Erik Buell Racing (EBR) and Austria based AVL for quickly scaling- up and supplementing the own in-house R&D capabilities and engine technologies.

BOARD OF DIRECTORS

In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Mr. Ravi Nath, Dr. Anand C Burman and Mr. Suman Kant Munjal, Directors of the Company, shall retire by rotation and being eligible, offer themselves for re-appointment.

Mr. Analjit Singh, Director of the Company also retires by rotation alongwith the aforementioned Directors at the ensuing Annual General Meeting. He being over stretched with many commitments expressed his willingness to not to be re-appointed as Director at the ensuing Annual General Meeting.

Your Directors place on record their deep appreciation and wish to thank him for his immense and fruitful contribution during his tenure as Director on the Board.

Brief resume/details of the Directors, who are to be re-appointed as mentioned herein above has been furnished along with the Notice of the ensuing Annual General Meeting.

The Board recommends their re-appointment at the ensuing Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

1. that in the preparation of the annual accounts for the year ended March 31, 2012, the applicable accounting standards have been followed;

2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2012 and of the profit of the Company for the financial year ended March 31, 2012;

3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. that the annual accounts for the year ended March 31, 2012 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A detailed chapter on, "Management Discussion and Analysis" (MDA), pursuant to Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report.

CORPORATE GOVERNANCE

At Hero Moto Corp Ltd., it is our firm belief that the essence of Corporate Governance lies in the phrase "Your Company". It is "Your" Company because it belongs to you - the shareholders. The Chairman and Directors are "Your" fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximizes "Your" long-term value.

Your Company is committed to benchmarking itself with global standards for providing good Corporate Governance. It has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with.

The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website of the Company www.heromotocorp.com. A Report on Corporate Governance along with the Auditors' Certificate on its compliance is annexed hereto as Annexure - I.

INTERNAL CONTROL SYSTEMS

The Company has a proper and adequate system of internal controls. This Ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly.

An extensive programme of internal audits and management reviews supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

The Company also has an Audit Committee, comprising 4 (four) Non-Executive & Independent, professionally qualified Directors, who interact with the Statutory Auditors, Internal Auditors, Cost Auditors and Audi tees in dealing with matters within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and internal controls. During the year under review, the Audit Committee met 5 (five) times.

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for the disclosure of the same in this Report.

RISK MANAGEMENT SYSTEM

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for risk assessment and its minimization. It ensures that all the Risks are timely defined and mitigated in accordance with the well structured Risk Management Process. The Audit Committee and Board reviews periodically the Risk Management Process.

RATINGS

The rating agency ICRA Limited, has reviewed and reaffirmed [ICRA] AAA (pronounced ICRA triple

A) and [ICRA] A1 (pronounced A one plus) rating for the bank facilities. ICRA has also reaffirmed [ICRA] AAA rating for non convertible debenture programme of the Company and issuer rating of IrAAA (pronounced IR triple A). The long-term rating has been assigned a "Stable" outlook.

The rating agency CRISIL, during the year under review, assigned the rating of "CRISIL AAA" for Long term instrument Category. Rating of "FAAA" for Fixed Deposits, Rating of "CRISIL A1 " for Short term Category and CRISIL GVC Level 1 for Governance and Value Creation Rating respectively to your Company.

FIXED DEPOSITS

During the year under review, the Company has not accepted any deposit under Section 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

AUDITORS

During the year under review, M/s. A. F. Ferguson & Co., Chartered Accountants, New Delhi, Auditors of the Company have submitted their resignation vide letter dated April 26, 2012 as Auditors of the Company at the forthcoming Annual General Meeting.

The Board in its meeting held on May 2, 2012 considered and recommended for the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors, in place of M/s. A. F. Ferguson & Co., after considering the recommendation of Audit Committee. Further the Company has received a certificate dated April 26, 2012 from M/s. Deloitte Haskins & Sells to the effect that their appointment, if made, would be in accordance with Section 224(1 B) of the Companies Act, 1956 and they are not disqualified in terms of Section 226 of the Companies Act, 1956 from being appointed as Statutory Auditors of the Company.

AUDITORS' REPORT

The observations of Auditors in their Report, read with the relevant notes to accounts are self explanatory and therefore do not require further explanation.

COST AUDITORS

The Board has re-appointed M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the financial year 2012-13 and the necessary application for obtaining the requisite approval has been filed with the Central Government. The Cost Auditors" Report for the financial year 2011-12 will be filed with the Central Government in pursuance of the provisions of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as Annexure - II and forms an integral part of this Report.

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY INITIATIVES

The Ministry of Corporate Affairs had in July 2011, come out with the "National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business". Further SEBI has in-principally approved the reporting of measures taken by the Companies along with the key principals elucidated in the above referred Guidelines. The Board of Directors wish to place on record that in this Annual Report, the same are covered at appropriate places, though may be not in a structured manner. Your Company has taken number of initiatives and achieved many milestones in the areas of Economic, Environmental and Social Sustainability and the same are reported to concerned agencies from time to time.

Now the appropriate framework is being prepared for such reporting in the future.

LISTING

The shares of your Company are presently listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).

PERSONNEL

As on March 31, 2012 the total numbers of employees on the records of the Company were 6,106.

Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, co-operation and support have enabled the Company to cross new milestones on a continual basis.

A detailed note is given in the chapter "Talent Management" of Management Discussion & Analysis, which forms part of this Annual Report.

PARTICULARS OF EMPLOYEES

Information of Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 forms an integral part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the members of the Company excluding the Statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any member interested in obtaining a copy of such statement may write to the Sr. G.M. Legal & Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENT

It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, State Government(s), Financial Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Brijmohan Lall Munjal

Chairman

New Delhi

June 4, 2012


Mar 31, 2011

Dear Members,

We, the Directors of HeroMotoCorp Ltd., are delighted to present the 28th Annual Report for the financial year 2010-11. The report is being presented along with the Audited Statement of Accounts for the financial year ended March 31,2011.

FINANCIAL RESULTS

(Rs. in crores)

Particulars For the year ended

March 31, 2011 March 31,2010

Gross Sales 20,662.39 16,780.62

Net Sales and other Income 19,669.90 16,098.79

Profit before Interest and Depreciation 2,805.29 3,002.58

Less: Interest (Net) (1.85) (20.62)

-Depreciation 402.38 191.47

Profit before tax (PBT) 2,404.76 2,831.73

Less: Provision for tax

-Current 475.76 591.58

- Deferred 94.02 8.32

-Minimum Alternate Tax Credit (92.92) -

Profit after tax (PAT) 1,927.90 2,231.83

Add: Balance of profit brought forward 2,146.55 2,707.28

Balance available for appropriation 4,074.45 4,939.11

Appropriations

Dividend

- Interim 1,397.81 1,597.50

- Proposed Final 698.91 599.06

Corporate Dividend Tax 340.14 371.00

Transfer to General Reserve 192.79 225.00

Balance carried to Balance Sheet 1,444.80 2,146.55

Dividend (%) 5,250 5,500

Basic and Diluted Earnings Per Share (EPS) (Rs.)

- Before exceptional items 100.53 111.77

- After exceptional items 96.54 111.77

BUSINESS PERFORMANCE

During the yearyour Company notched 17.44% growth in sales, with volumes of 54,02,444 units compared to 46,00,130 units in 2009-10. In value terms total sales (net of excise duty) increased by 22.13% to Rs. 19,245.03 crores in 2010-11 from Rs. 15,758.18 crores in 2009-10.

Your Company continued to lead the domestic motor cycle market with 54.6% market share. The Company successfully launched six new models including variants during the year under review.

Total income of the Company grew by 22.18%, from Rs. 16,098.79 crores to Rs. 19,669.90 crores in 2010-11. The Company's Profit After Tax (PAT) declined by 13.62% to Rs. 1,927.90 crores from Rs. 2,231.83 crores in the previous fiscal.

The Company's Earnings Before Interest Depreciation and Taxes (EBITDA) margins decreased from 17.45% in 2009-10 to 13.49% in 2010-11. Operating profit (PBT before other income) decreased from Rs. 2,575.48 crores in 2009-10 to Rs. 2,214.61 crores in 2010-11. The margin fell despite a healthy growth in the sales volume on account of higher prices of raw materials & components.

During the year, the Company also retained, for the tenth year in a row, its position as the World's No. 1 Two Wheeler Company.

A detailed discussion on the business performance and future outlook has been given in the Management Discussion & Analysis.

DIVIDEND

Given the strong financial position, your Company declared and paid an Interim Dividend of 3500% i.e. Rs. 70 per Equity Share of the face value of Rs. 2 each, totaling Rs. 1,397.81 crores (exclusive of tax on Dividend).

Your Directors are pleased to recommend a Final Dividend of 1750% i.e. Rs. 35 per Equity Share of the face value of Rs. 2 per share, aggregating to Rs. 698.91 crores (exclusive of tax on Dividend), for the financial year ended March 31, 2011 for your approval. The final dividend, if approved will be paid to the eligible members well within the stipulated period.

TRANSFER TO GENERAL RESERVE

Reaffirming the financial strength of the Company, a sum of Rs. 192.79 crores has been transferred to the General Reserve of the Company for the financial year 2010-11.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company have occurred between April 1, 2011 and the date on which this Report has been signed.

PROMOTER GROUP REALIGNMENT AND IMPLICATIONS

During the year, the Indian Promoter Group of the Company, which comprised of Hero Investments Private Limited ("HIPL"), Bahadur Chand Investment Private Limited ("BCIPL") and Hero Cycles Limited ("Hero Cycles"), re-aligned the shareholding in the Company, following a family agreement. As a result. Hero Cycles transferred its shareholding in the Company to HIPL on May 28,2010.

As a result of these transactions, the Indian Promoter Group of the Company now comprises of HIPL and BCIPL owned and controlled entirely by the Munjal Family headed by Mr. Brijmohan Lall Munjal, Chairman of the Company.

Also, during the year, the Indian Promoter Group and Honda Motor Co. Ltd., Japan ("Honda") entered into a Share Transfer Agreement ("the Agreement") on January 22, 2011. As per the terms of the Agreement, Honda had agreed to transfer its entire shareholding of 26% in the Company to the Indian Promoter Group, bringing an end to the joint venture between the two promoter groups of the Company. The acquisition was completed on March 22, 2011 and the shares held by Honda were transferred to the Indian Joint Venture partner.

In addition to the Agreement, the Indian Promoter Group and Honda also entered into a License Agreement on January 1,2011. As per this Agreement, Honda has given to the Company, the right and license to manufacture, assemble, sell and distribute certain products and their service parts under their Intellectual Property Rights.

The amount to be paid by the Company for licenses involve: Rs. 1,928.37 crores for manufacture, assembly, selling and distribution and Rs. 550.96 crores for exports. The amounts have been capitalised as Intangible Assets (along with applicable cess and duty), based on the probability that the future economic benefits attributable to these assets will flow to the Company. This is because w.e.f. January 1, 2011 the Company's liability to pay ongoing royalty for all existing/modified products/parts would cease.

These Intangible Assets have been amortised over a period of 42 months up to June 30,2014. Accordingly, liability payable up to March 31, 2011 has been included under current liabilities and the balance has been disclosed as Defer payment credits.

CHANGE OF NAME

During the current financial year, in view of the separation of the joint venture partners, your Company had started the process of change of name of the Company from "Hero Honda Motors Limited" to "Hero MotoCorp Limited". The new name was approved by the members of the Company in their Extra-ordinary General Meeting held on June 17, 2011 and subsequently fresh certificate of incorporation consequent to change of name dated July 28, 2011 has been received by the Company. Also, the new Corporate Identity (new Corporate Logo) was adopted by the Board of Directors of the Company on August 17,2011 for all future practical purposes.

BOARD OF DIRECTORS

Appointment/re-appointment

During the year under review, Mr. Toshiaki Nakagawa was re-appointed as the Jt. Managing Director w.e.f. February 1, 2011 for a further period of 6 (six) months.

Also, Mr. Paul Edgerley was appointed as Non-Executive Director of the Company w.e.f. May 4, 2011. The Board extends its warm welcome to Mr. Edgerley on the Board and wishes him a successful tenure with the Company.

In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Mr. Pradeep Dinodia, Gen. (Retd.) V.P. Malik, Mr. Brijmohan Lall Munjal and Mr. Sunil Kant Munjal will retire by rotation at the ensuing Annual General Meeting and being eligible.offerthemselvesfor re-appointment.

The present term of appointment of Mr. Brijmohan Lall Munjal, Chairman and Director in the Whole-time employment of the Company has expired on August 2, 2011. Further the term of the appointment of Mr. Pawan Munjal, Managing Director & CEO will come to an end on September 30, 2011. The Board has, on the recommendation of Remuneration Committee and subject to your approval in the general meeting and such other

approvals, if any, has re-appointed them for a further period of 5 (five) years respectively.

The Board has also appointed Mr. Sunil Kant Munjal as the Jt. Managing Director of the Company for a term of 5 (five) years effective August 17,2011.

Brief resume/details of the Directors, who are to be appointed/ re-appointed as mentioned herein above have been furnished alongwith the Explanatory Statement to the Notice of the ensuing Annual General Meeting.

The Board recommends their re-appointment/appointment at the ensuing Annual General Meeting.

Resignations

Mr. Om Prakash Munjal resigned from the Board w.e.f July 29, 2010 and Mr. Toshiaki Nakagawa and Mr. Sumihisa Fukuda resigned from the Company w.e.f. March 22,2011 in view of the abovestated changes in the promoter group.

Further, Mr. Yuji Shiga and Ms. Shobhana Bhartia resigned from the Board of the Company w.e.f. April 13,2011. Thereafter Mr. Toshiyuki Inuma, who was appointed as a Non-Executive Director of the Company w.e.f. April 13, 2011 and Mr. Takashi Nagai resigned from the Board of the Company w.e.f. August 8,2011.

The Board appreciates and expresses gratitude for the valuable contribution made by all the outgoing Directors during their fruitful tenure as the Directors of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

1. that in the preparation of the annual accounts for the year ended March 31,2011, the applicable accounting standards have been followed;

2. that appropriate accounting policies have been selected and applied consistently and judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2011 and of the profit of the Company for the financial year ended March 31,2011;

3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. that the annual accounts for the year ended March 31,2011 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A detailed chapter on, 'Management Discussion and Analysis' (MDA), pursuant to Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is an integral part of the Company ethos. The Company supports the Raman Kant Munjal Foundation, which in turn runs a school and a hospital. The Foundation also conducts various outreach programs in the villages around the Company's factories. These programs are conducted in partnership with leading NGOs, and over the years, there have been significant spinoffs.

CORPORATE GOVERNANCE

At Hero MotoCorp, it is our firm belief that the essence of Corporate Governance lies in the phrase 'Your Company'. It is 'Your' Company because it belongs to you - the shareholders. The Chairman and Directors are 'Your' fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximises 'Your' long-term value.

Your Company is committed to benchmarking itself with global standards for providing good Corporate Governance. It has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with.

The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website of the Company www.heromotocorp.com. A Report on Corporate Governance along with the Auditors' Certificate on its compliance is annexed hereto as Annexure-1.

INTERNAL CONTROL SYSTEMS

The Company has a proper and adequate system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and those transactions are authorised, recorded and reported correctly.

An extensive programme of internal audits and management reviews supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down forthis purpose.The internal control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

The Company also has an Audit Committee, comprising four Non-Executive & Independent and professionally qualified Directors, who interact with the Statutory Auditors, Internal Auditors, Cost Auditors and Auditees in dealing with matters within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and internal controls. During the year under review, the Committee met 4 (four) times.

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need forthe disclosure of the same in this Report.

RISK MANAGEMENT SYSTEM

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for risk assessment and its minimisation. It ensures that all the Risks are timely defined and mitigated in accordance with the well structured Risk Management Process. The Audit Committee and Board reviews periodically the Risk Management Process.

RATINGS

The rating agency ICRA Limited, has reviewed and reaffirmed the rating assigned to the Company for its Non-convertible Debenture Programme as LAAA [pronounced "L triple A"] indicating the highest credit quality and A1 [pronounced "A one Plus"] for its Non-fund based facilities and LAAA [pronounced "L triple A"] to Fund based facilities indicating the highest credit quality rating carrying lowest credit risk. ICRA also has LRAAA [pronounced "L R triple A"] issuer rating assigned for the Company.

The rating agency CRISIL, during the year under review, assigned the bank loan ratings of "A A A/Stable" and P1 to the Cash Credit Limit & Letter of Credit Limit Facility respectively to the Company.

FIXED DEPOSITS

During the year under review, the Company has not accepted any deposit under Section 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

AUDITORS

M/s. A. F. Ferguson & Co., Chartered Accountants, New Delhi, Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible.

offer themselves for re-appointment. The Company has received a certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 224(1 B) of the Companies Act, 1956. The Board recommends their re-appointment.

AUDITORS' REPORT

The observations of Auditors in their report, read with the relevant notes to accounts are self explanatory and therefore do not require further explanation.

COST AUDITORS

The Board has re-appointed M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the financial year 2011-12 and the necessary application for obtaining the requisite approval has been filed with the Central Government. The Cost Auditors' Report for 2010-11 will be forwarded to the Central Government in pursuance of the provisions of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as Annexure- II and forms an integral part of this Report.

LISTING

The shares of your Company are presently listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

PERSONNEL

As on March 31, 2011 the total number of employees on the records of the Company were 5,257.

Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, co-operation and support have enabled the Company to cross new milestones on a continual basis.

A detailed note is given in the chapter "People Approach" (Human Resource Management) of Management Discussion & Analysis, which forms part of this Annual Report.

PARTICULARS OF EMPLOYEES

Information of Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 forms an integral part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders of the Company excluding the statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of such statement may write to the Sr. G.M. Legal & Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENT

It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, State Government(s), Financial Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings. The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by the promoter companies and for the encouragement and assurance, which our former collaborator has given for the growth and development of the Company.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Brijmohan Lall Munjal

Chairman

New Delhi

August 17, 2011


Mar 31, 2010

We the Directors of Hero Honda Motors Limited feel elated to present the 27th Annual Report for the financial year 2009-10. The Report is being presented along with the Audited Statement of Accounts for the financial year ended March 31,2010.

FINANCIAL RESULTS

(Rupees in crores)

For the year ended

March 31,2010 March 31,2009

Gross Sales 16,780.62 13,543.09

Net Sales and other Income 16,098.79 12,565.21

Profit before Interest and Depreciation 3,002.58 1,930.44

Less: Interest (net) (20.62) (31.68)

Depreciation 191.47 180.66

Profit before tax (PBT) 2,831.73 1,781.46

Less: Provision for taxation

- Current 591.58 475.65

- Deferred 8.32 19.06

Fringe Benefit - 4.99

Profit after tax (PAT) 2,231.83 1,281.76

Add: Balance of profit brought forward 2,707.28 2,021.77

Balance available for appropriation 4,939.11 3,303.53

Appropriations

Dividend

- Interim (Silver Jubilee Special Dividend) 1,597.50 --

- Proposed Final 599.06 399.38

Tax on Dividend 371.00 67.87

Transfer to General Reserve 225.00 129.00

Balance carried to Balance Sheet 2,146.55 2,707.28

Dividend (%) 5500 1000 Basic and Diluted Earnings Per Share (EPS)(Rs.) 111.77 64.19

BUSINESS PERFORMANCE

During the year under review, your Company, the worlds largest two-wheeler manufacturer for the past nine years in a row recorded its highest-ever annual revenue, operating income and earnings per share. The Company reported a consolidated turnover (Net sales and other income) of Rs. 16,098.79 crores, a whopping growth of 28.12 percent over the consolidated turnover recorded in the previous financial year, i.e. Rs. 12,565.21 crores. For the year under review, the Company has recorded an EBIDTA margin of 17.45 per cent as compared to 14.13 per cent inthefinancialyear2008-09.

The year under review was also a witness to significant milestones in the history of your Company. During the year, your Company achieved the significant landmark of recording total cumulative sales of 30 million two- wheelers, with the milestone surpassed in the month of March, 2010. Also, the Company recorded a million units sales in each quarter of fiscal 10, capping the year with the highest-ever quarter sales of 11,86,536 two-wheelers in the fourth quarter.

Further, during the year, nine new models were launched by your Company across various segments. It is heartening to note that the sales of Hero Honda Pleasure (the 100 cc scooter) has surpassed the threshold of 20,000 units per month and further looks promising.

DIVIDEND

Your Directors, celebrating the strength of its operations and the resulting strong financial position, declared and paid an Interim Silver Jubilee Special Dividend of 4,000% i.e. Rs. 80 per Equity Share of the face value of Rs. 2 each, aggregating to Rs. 1,597.5 crores (exclusive of Tax on Dividend). The dividend, in percentage terms, is the highest pay out by an Indian company till date.

Further, following the policy laid down by the Company in regard to funds which, if not re-invested for capital investments, should be optimally distributed to shareholders, your Directors are pleased to recommend a final Dividend of 1,500% i.e. Rs. 30 per Equity Share of the face value of Rs. 2 per share, aggregating to Rs. 599.06 crores (exclusive of Tax on Dividend), for the financial year ended March 31, 2010 for your approval. The final dividend, if approved, will be paid to the eligible members well within the stipulated period.

TRANSFER TO GENERAL RESERVE

Reaffirming the financial strength of the Company, a sum of Rs. 225 crores has been transferred to the General Reserve of the Company for the financial year 2009-10.

MATERIAL CHANGES AND COMMITMENTS No material changes and commitments affecting the financial position of the Company have occurred between April 1,2010 and the date of this Report.

BOARD OF DIRECTORS

During the period under review, Mr. Arun Nath Maira resigned from the Directorship of the Company w.e.f. July 23,2009. Mr. Ravi Nath and Dr. Anand C. Burman were appointed as Additional Directors in the category of Non- Executive and Independent Directors with effect from October 14,2009and January 13,2010 respectively.

During the current financial year, Mr. Satoshi Matsuzawa, Alternate Director to Mr. Takashi Nagai, resigned from the Board of Directors with effect from April 1, 2010. Further Mr. MasahiroTakedagawa also resigned from the Directorship of the Company w.e.f. April 1,2010. Also, Mr. O. P. Munjal has resigned from the Board of Directors of the Company w.e.f. July 29,2010.The Board appreciated and expressed gratitude forthe valuable contribution made by Mr. Satoshi Matsuzawa, Mr. Masahiro Takedagawa and Mr. Om Prakash Munjal during their fruitful tenure as Directors of the Company and wished them all the best for their future endeavours. Subsequently, Mr. Yuji Shiga has been appointed as a Director w.e.f. April 19, 2010 consequent to the casual vacancy caused due to resignation of Mr. Masahiro Takedagawa. Also, Mr. Suman Kant Munjal has been appointed as an Additional Director of the Company w.e.f. July 29,2010.

The Directors extend their warm welcome to the new members on the Board and wish them a successful and fruitful tenure with theCompany.

In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Mr. Analjit Singh, Dr. Pritam Singh, Mr. Sumihisa Fukuda and Mr. M. Damodaran Directors, will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment. Brief resume/details of the Directors, who are to be appointed/re-appointed as mentioned herein above has been furnished alongwith the Explanatory Statement to the Notice of the ensuing Annual General Meeting.

Your Directors recommend their re-appointment at the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

1. that in the preparation of the annual accounts for the year ended March 31, 2010, the applicable accounting standards have been followed;

2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31,2010 and of the Profit of the Company forthe financial yearendedMarch31,2010;

3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. that the annual accounts for the financial year ended March 31, 2010 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Clause 49 of the Listing Agreement, a detailed section on Management Discussion and Analysis (MDA), formsan integral partoftheAnnual Report.

CORPORATE SOCIAL RESPONSIBILITY At Hero Honda, Corporate Social Responsibility (CSR) encompasses much more than social outreach programs and is an integral part of the way the Company conducts its business. Detailed information on the initiatives of the Company towards CSR activities is provided in the Corporate Social Responsibility section ofthe MDA.

CORPORATE GOVERNANCE Hero Honda believes that the essence of Corporate Governance lies in the phrase Your Company. It is Your Company because it belongs to You - the shareholders. The Chairman and the Directors are Your fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximises Your long-term value.

Your Company is committed to benchmark itself with global standards for practicing good Corporate Governance and has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreementareduly complied with.

The Board has also evolved and adopted a Code of Conduct (Code) based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website ofthe Company - www.herohonda.com. A Report on Corporate Governance, along with the Auditors Certificate on its compliance is annexed hereto as Annexure-1.

The Ministry of Corporate Affairs has issued Corporate Governance Voluntary Guidelines 2009 ("Guidelines") for voluntary adoption ofthe same by the Companies, which are in addition to the mandatory requirements of Clause 49 of the Listing Agreement.

The Guidelines broadly outline a framework for corporate sector on important parameters like appointment of Directors (including Independent Directors), guiding principles to remunerate Directors, responsibilities of the Board, risk management, the enhanced role of Audit Committee, rotation of audit partners and firms and conduct of secretarial audit.

The Board of Directors of the Company discussed and reviewed the same at its meeting held on April 19,2010. Your Company while already complying with a major part of these various requirements has already initiated appropriate actionfor compliance.

INTERNAL CONTROL SYSTEMS Hero Honda has a proper, efficient & adequate system of internal control. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and the transactions are authorised, recorded and reported correctly.

An extensive programme of internal audit and management review supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal control system has been designed so as to ensure that the financial and other records ofthe Company are reliable for preparing the financial and other statements and for maintaining accountability of assets ofthe Company.

The Company has also appointed an Audit Committee, comprising of four Independent, Non-Executive and professionally qualified Directors, who regularly interact with the Statutory Auditors, Internal Auditors, Cost Auditors and Auditees in dealing with matters specified within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and internal controls. During the year under review, the Committee met seven times. A detailed synopsis of the functioning and role of the Audit Committee, its composition and the details of attendance of its members at various meetings of the Committee held during the year has been substantiated in the Report on Corporate Governance annexed alongwith this Report as Annexure-1.

AUDIT COMMITTEE RECOMMENDATION During the year under review there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for disclosure of the same in this Report.

RISK MANAGEMENT SYSTEM Your Company follows a comprehensive & effective system of Risk Management. The Company has adopted a procedure for risk assessment and its minimization. It ensures that all the Risks are timely identified and mitigated in accordance with the well structured Risk Management Process. The Board of Directors & the Audit Committee periodically review the Risk Management System.

RATINGS

ICRA Limited, a leading rating agency has reviewed and reaffirmed the rating assigned to the Company for its Non- Convertible Debenture Programme and Fund Based Limits from Bankas "LAAA" [pronounced "L triple A"] indicating the highest credit quality and "A1 +" [pronounced "A one Plus"] for its Non-fund based facilities and "LAAA" [pronounced "L triple A with"] to Fund based facilities indicating the highest creditquality rating carrying lowest credit risk.

During the year under review, rating agency CRISIL assigned the bank loan ratings of "AAA/Stable" and "P1 +" to the Cash Credit Limit & Letter of Credit Limit Facility respectively to yourCompany.

FIXED DEPOSITS

During the year under review, the Company has not accepted any deposit under Sections 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

AUDITORS

M/s. A. F. Ferguson & Co., Chartered Accountants, New Delhi, Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a certificate from the auditors to the effect that their re- appointment, if made, at the ensuing Annual General Meeting would be in accordance with Section 224(1 B) of the Companies Act, 1956. Further, the Auditors have represented that they hold a valid Peer Review Certificate issued by the Peer Review Board of ICAI.

The Board accordingly recommends their re-appointment.

AUDITORS REPORT

The observations of Auditors in their report, read with the relevant notes to accounts are self explanatory and therefore do not require further explanation.

COST AUDITORS

The Board has re-appointed M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the financial year 2010-11 and the necessary approval in regard to appointment of M/s. Ramanath Iyer & Co. as the Cost Auditors, has been granted by the Central Government vide its letter dated May 26,2010. The Cost Auditors Report for 2009-10 will be forwarded to the Central Government in pursuance of the provisions of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as per Annexure - II and forms an integral part of this Report.

LISTING

The shares of your Company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The delisting application filed with the Calcutta Stock Exchange Association Limited (CSE) was approved by the Committee of the exchange vide its letter dated December 7,2009.

PERSONNEL

As on March 31,2010 the total number of employees on the records of the Company was4,751.

Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, co- operation and support have enabled the Company to cross new milestones on a continual basis.

A detailed note is given in the chapter "Human Resource Management" of Management Discussion & Analysis, which forms a part of this Annual Report.

PARTICULARS OF EMPLOYEES Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 forms an integral part of this Report. In terms of the proviso to Section 219(1) of the Companies Act, 1956 the Report and Accounts are being sent to the shareholders of the Company excluding the statement of particulars of employees under Section 217(2A)ofthe Companies Act, 1956. Any member

interested in obtaining a copy of such statement may write to the Sr. G.M. Legal & Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENT

It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. The Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, State Government(s), Financial Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings. The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Hero Cycles Ltd. and Honda Motor Co., Ltd., Japan and for the encouragement and assurance, which our collaborator has given for the growth and developmentofthe Company.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Brijmohan Lall Munjal Chairman

New Delhi July 29,2010

 
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