Mar 31, 2023
Your Directors are pleased to present the fortieth annual report, together with the Company''s audited financial statements for the financial year ended March 31, 2023.
FINANCIAL RESULTS - STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
Particulars |
Standalone Year ended March 31, 2023 March 31, 2022 |
(''in crore) Consolidated Year ended March 31, 2023 March 31, 2022 |
||
Total Income |
34,370.81 |
29,802.38 |
34,727.39 |
30,106.29 |
Profit before Finance cost and Depreciation |
4,551.39 |
3,925.68 |
4,662.78 |
3,999.78 |
Expenses |
||||
Finance cost |
19.87 |
25.80 |
104.88 |
53.10 |
Depreciation and amortisation expenses |
656.96 |
649.75 |
697.39 |
689.52 |
Profit from ordinary activities before share of Profit / (Loss) of associates |
3,874.56 |
3,250.13 |
3,860.51 |
3,257.16 |
Profit/ (Loss) of associates |
||||
Share in net profit / (loss) of associates |
- |
- |
3.11 |
(199.05) |
Exceptional items - NCCD income |
||||
Exceptional items - VRS expenses |
||||
Profit from ordinary activities before tax |
3,874.56 |
3,250.13 |
3,863.62 |
3,058.11 |
Tax expense |
||||
Current tax |
941.90 |
797.91 |
947.69 |
805.44 |
Deferred tax |
22.08 |
(20.80) |
116.03 |
(76.38) |
963.98 |
777.11 |
1,063.72 |
729.06 |
|
Net Profit from ordinary activities after tax |
2,910.58 |
2,473.02 |
2,799.90 |
2,329.05 |
Other comprehensive income /(expense) (net of tax) |
(9.37) |
(5.44) |
(34.87) |
(0.60) |
Total comprehensive income for the year |
2,901.21 |
2,467.58 |
2,765.03 |
2,328.45 |
Net Profit / (loss) attributable to |
||||
a) Owners of the Company |
2,910.58 |
2,473.02 |
2,809.96 |
2,316.88 |
b) Non-controlling interest |
- |
- |
(10.06) |
12.17 |
Other comprehensive income attributable to |
||||
a) Owners of the Company |
(9.37) |
(5.44) |
(21.95) |
(2.44) |
b) Non-controlling interest |
- |
- |
(12.92) |
1.84 |
Total comprehensive income attributable to |
||||
a) Owners of the Company |
2,901.21 |
2,467.58 |
2,788.01 |
2,314.44 |
b) Non-controlling interest |
- |
- |
(22.98) |
14.01 |
Balance of profit brought forward |
13,031.60 |
12,462.15 |
13,060.05 |
12,648.70 |
Dividend |
||||
- Interim - 2022-23 |
1,298.96 |
1,198.87 |
1,298.96 |
1,198.87 |
- Final - 2022-23 |
699.37 |
699.26 |
699.37 |
699.26 |
Corporate Dividend Tax |
- |
- |
- |
1.12 |
Other comprehensive income arising from re-measurement of defined benefit obligation (net of income tax) |
- |
- |
(8.89) |
(6.28) |
Balance carried to Balance Sheet |
13,934.48 |
13,031.60 |
13,862.79 |
13,060.05 |
Earnings per equity share on Net Profit from ordinary activities after tax (face value '' 2/- each) (In Rupees) |
||||
- Basic |
145.66 |
123.78 |
140.62 |
115.96 |
- Diluted |
145.52 |
123.74 |
140.49 |
115.93 |
During FY 2022-23, your Company clocked sales of 53.29 lakh units over 49.44 lakh units in the previous FY. Revenue from operations was '' 33,805.65 crore as compared to '' 29,245.47 crore in FY 2021-22, registering an increase of 15.59%.
Profit before tax (PBT) in FY 2022-23 was '' 3,874.56 crore as compared to '' 3,250.13 crore in FY 2021-22, reflecting an increase of 19.21%. Profit after tax (PAT) was '' 2,910.58 crore as against '' 2,473.02 crore in FY 2021-22, an increase of 17.69% from the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 11.79% in FY 2022-23, as compared to 11.52% in FY 2021-22.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with provisions of the Companies Act, 201 3 (''the Act'') and Indian Accounting Standards (Ind AS)-110 on Consolidated Financial Statements, read with Ind AS-28 on Investments in Associates and Joint Ventures, the Audited Consolidated Financial Statements for the year ended March 31, 2023 along with Auditor''s Report are provided in this annual report.
UPDATE ON SIGNIFICANT MATTERS Vida - Launch of VIDA V1- India''s first fully-integrated electric scooter
During the year, the Company commenced customer deliveries of the VIDA V1 scooter, under the brand VIDA, in Delhi, Jaipur and Bengaluru. Each of the three cities have witnessed encouraging customer response. The Company plans to expand its electric two-wheeler range and the charging network to establish the brand wider into the market and to cater across multiple customer segments. The aim is to propagate clean mobility through a seamless and hassle-free customer experience through an omni-channel approach that is built on our custom tech-stack and create a âWorry-Free EV Ecosystem" of VIDA.
Income Tax matter
The Income Tax Department ("the Department") had conducted a Search activity ("the Search") under Section 132 of the Income Tax Act on the Company in March 2022. Subsequently, the Company has provided necessary support, cooperation and documents as requested by the Department. Currently, assessment / reassessment proceedings of earlier years by the Department are in progress and appropriate actions will be taken based on the outcome.
While the uncertainty exists regarding the outcome of the proceedings by the Department, the Company after considering all available information and facts as of date, has
not identified the need for any adjustments to the current or prior period financial results.
The above matter has been disclosed as an ''Emphasis of Matter'' in the Audit Report and has also been mentioned in note no. 34(c) of the standalone financial statements. The Audit Report on the audited financial results of the Company (standalone & consolidated) remains unmodified.
CHANGES IN CAPITAL STRUCTURE
During the year under review, 27,777 equity shares of '' 2/-each were allotted on exercise of Employee stock options and Restricted Stock Units by the employees of the Company. Consequently, the issued and paid-up share capital of the Company as on March 31, 2023 was '' 39,96,79,436 divided into 19,98,39,718 equity shares of '' 2/- each.
The Company has not issued any equity shares with differential rights, sweat equity shares or bonus shares. The Company has only one class of equity shares with face value of '' 2/- each, ranking pari-passu.
DIVIDEND
Your Directors are pleased to recommend for your approval a final dividend of '' 35/- per equity share (1,750%) of face value of '' 2/- each in addition to an interim dividend of '' 65/- per equity share (3,250%) declared in the month of February 2023, aggregating a total dividend payout of '' 100/- per equity share (5,000%) for FY 2022-23. In the previous year, total dividend payout of '' 95/- per equity share (4,750%) of face value of '' 2/- each was made. Final dividend, if approved at the ensuing annual general meeting, shall be paid to the eligible members within the stipulated time period.
Dividend Distribution Policy of the Company as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') is available at the following link: https://www.heromotocorp.com/content/dam/hero-
aem-website/investor-assets/disclosure-documents/ DividendDistributionPolicy.pdf
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company''s business in India and abroad, risk management systems and other material developments during the year under review.
CHANGE IN NATURE OF BUSINESS
During FY 2022-23, there was no change in the nature of Company''s business.
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
The FY23 was a fascinating year during which, your Company directed its resources on capitalising opportunities, strategic investments and working towards business resilience with focus on growth and further strengthening the product portfolio.
Due diligence on economic factors, commodity headwinds facilitated us to further evaluate our manufacturing capacity, and to view cross plant resource optimisation with a broader lens to optimise capacity utilisation.
As a proactive corporate, your Company released its fifth annual Sustainability Report encompassing ESG (Environment, Social and Governance) aspects. Long-term strategy has been formulated with the objective of making your Company one of the leaders in ESG and target to establish a resilient business eco-system.
Hero MotoCorp and Bharat Petroleum Corporation Limited (BPCL) have collaborated to set up charging infrastructure for two-wheeled electric vehicles (EVs) across the country, which makes Hero MotoCorp the first automotive OEM to tie up with the leading Public Sector Undertaking (PSU).
In the first phase, charging stations will be set up across nine cities starting with Delhi and Bengaluru. The Company will soon commence the infrastructure development in the two cities. Each charging station will feature multiple charging points including DC and AC chargers and will be available for use to all two-wheeled EVs.
In keeping with its vision âBe the Future of Mobility", your Company entered into a collaboration agreement with Zero Motorcycles, California (USA) - based manufacturer of electric motorcycles and powertrains, to collaborate on Premium Electric Motorcycles. Further, the Company also approved an equity investment of up to US$60 million in Zero Motorcycles. The collaboration combines the expertise of Zero in developing power trains and electric motorcycles with the scale of manufacturing, sourcing and marketing of Hero MotoCorp.
In the past year, your Company has made significant strides in expanding its global reach. We have successfully expanded our presence from 43 countries in FY22 to 47 countries in FY23, including signing an agreement to enter the Philippine market through a partnership with Terrafirma Motors Corporation (TMC) and relaunching key markets such as the Democratic Republic of the Congo and Liberia.
Despite the challenging market conditions and economic instability across major markets, we have been able to maintain our market share in several countries such as Mexico, Turkey, Tanzania, Argentina, South Africa, and Kenya. The focus has been on increasing our presence in the premium segment through the launch of new products in key markets
such as Bangladesh, Nepal, and Latin America. We believe that these efforts will help HMCL to grow and succeed in the global marketplace.
As part of our unwavering commitment to achieving excellence and maintaining a customer-centric approach, our organisation has placed a significant emphasis on cultivating a culture of innovation. This has resulted in a notable shift in our organisational culture, permeating across various functions and contributing to the overall success of Hero MotoCorp. Our collaborative and co-creative efforts have culminated in the global launch of the 9th Hero Idea Contest, providing our employees with a platform to share innovative ideas and inspiring solutions. This has led to overwhelming responses, with several of these ideas transformed into marketable products, including the Additional Lamp unit feature in Xoom and the Hero Dirt Biking challenge.
To further emphasise our commitment to excellence, we recently concluded the first-ever Hero Next Global Conference, where we recognised top-performing manufacturing teams and supply chain partners, aiming to deploy best practices across our manufacturing plants. Furthermore, our Hero Campus Challenge (HCC), now in its 8th edition, has received tremendous participation from academic institutions, demonstrating maximum outreach year after year.
While we continue to pursue standalone projects, our internal incubator program, Hero Hatch, has emerged as a formidable pillar in the development of new technologies and solutions that will shape the future of mobility. Projects launched under Hero Hatch, including Quark Motors, Wheels of Trust, and Freedo, have been driven by the goal of pushing boundaries and creating solutions that have a positive impact on society.
As we look to tap into global enablers to co-create and collaborate with ecosystem partners, we are expanding our focus from internal innovation to strategic innovation. Our vision for strategic innovation is to continue to leverage external networks and partnerships to drive sustainable innovation, further strengthening our global positioning. To this end, we are working with accelerators, incubators, academia, consortiums, and communities to drive innovation. Our collaboration with Plug and Play (P&P) has proven to be a valuable asset in our pursuit of strategic innovation by delivering promising results in its first year. Through this global partnership, we have leveraged the startup ecosystem to address immediate challenges in a cross-functional manner. We are confident that our continued collaboration with the ecosystem will further enhance our competitive edge in the global marketplace.
The new age technologies have ushered a boom in the fast pace business environment but are also coupled with exposure of risks to the integrity and privacy of data, both in storage and in transit. Your Company is agile to undertake requisite
steps in this direction and has secured its data by building well designed, secured and robust processes. The Company, being perceptive of the danger associated with these technologies, is educating the employees on cyber threats, awareness related to passwords, protection of data and widely used practices in cyber security field. Your Company has thoughtfully designed security awareness emails that emphasise the avoidance of clicking on links and attachments in email and these are regularly sent to the employees which also acts as an essential pillar of defense. We are also keeping a thorough watch on the cyber security breach incidents occurring in the industry and are adding new learnings from such events to maintain vigorous processes and enhance security controls in-line with the threat scenarios. All the relevant advisories issued by CERT-In/ CSIRT-Fin are followed by the organisation. Your Company has a dedicated Chief Information Security Officer to ensure information and network security, disaster recovery and business continuity.
Pledged to its ethical and responsible conduct, Hero MotoCorp believes in acting in the best interest of the customers, public, employees, business partners and all other stakeholders. Successful business and reputation are built on prioritising the interest of stakeholders and establishing a strong foundation of trust. Your Company follows rigorous product safety and quality standards to fulfil its fundamental responsibility to build faith of the customers in the quality of products. Supplier selection and purchases are based on need, quality, service, price and other terms and conditions. Supplier relationships are conducted by way of appropriate written contracts and are based on high standards of ethical business behavior. Duty to the Company requires its employees, to avoid and disclose actual and apparent conflicts of interest. No employee shall appropriate corporate business opportunities for themselves and use the Company information or position for personal gains. Your Company is committed to transparency in disclosures and public communications except where the need of business security dictates otherwise. Hero MotoCorp is committed to making full, fair, accurate, timely and understandable disclosure on all material aspects of its business including periodic financial reports that are filed with or submitted to regulatory authorities.
In line with our commitment to âset global benchmarks, achieve and sustain leadership in quality while creating a sustainable future", Hero has continued its journey towards Enterprisewide Quality in FY23. Having set up an independent Quality function in 2020, the Company adopted a multi-pronged approach to strengthen its Quality ecosystem starting with the roll out of the new Quality Policy. The 3-pronged approach of âStructured Restoration, Holistic Improvements and Cultural Excellence" covers multiple initiatives.
We have established an end-to-end integrated quality organisation structure to proactively manage the critical aspects of an OEMs entire value chain such as design, development, manufacturing of products at our supply chain partners and HMCL facilities, as well as field quality. This is to ensure higher quality of existing product line but also set the base for world-class quality in next-generation premium and EV products.
In our ardent pursuit of excellence and making Quality a strategic advantage for Hero, we have adopted a diverse yet pragmatic approach to sensitise every stakeholder and promote development of a culture of Quality across our entire value chain. Quality Champions, Strategic deployment through Hoshin Kanri, Quality 4.0, People development through Internal Training mechanism/Quality Colloquium, and Hero QUEST are few of the initiatives taken up by the Quality team, at the forefront of spreading awareness and sensitising their counterparts across the value chain of the importance and value of âQuality as a way of life" not only for Hero, but for the larger society as well.
While we continue to strive towards excellence and relentlessly pursue our vision âBe the Future of Mobility", we will keep coming up with much more innovative initiatives to fuel our journey towards Enterprise-wide Quality to delight all our stakeholders across the globe.
SAFETY AND WELL BEING OF EMPLOYEES
Hero MotoCorp is committed to provide safe and healthy working conditions to its employees and other persons who may be affected by its operations. We believe that safe work practices lead to better performance, motivated work force and higher productivity. The Company has an Occupational Health & Safety Policy to prevent any work related injury and ill health of employees, workmen, contractors, community and all interested parties by eliminating hazards and reducing risks. Company ensures compliance with all applicable legal and other requirements and promotes health and safety awareness and training amongst employees, workmen, suppliers and contractors. The cross-functional Total Productive Maintenance committee safeguards the pillars of safe work, a healthy workforce and increased productivity. The Company provide employees'' personal health resources, good physical, mental and psychosocial work environment and opportunity for involvement in community services. Your Company has mapped HIRA (Hazard identification & Risk Assessment) & CIRA (Context, Issues identification, risk & opportunity analysis) of hazardous job processes and the employees involved. Periodic occupational health check-ups are planned & implemented as per the HIRA & CIRA as part of statutory health check-up.
All the manufacturing units of the Company are certified with ISO -45001 (International Occupational health & safety management system and standards) and it is endeavored to implement best practices in occupational health and safety management.
DIVERSITY & INCLUSION
At Hero, we firmly believe that diversity is not just a buzzword but an integral part of our identity. We recognise that our success is driven by the collective power of our diverse workforce, encompassing individuals from various backgrounds, cultures, perspectives, and experiences. We have focused on fostering an inclusive workplace where every individual feels valued and empowered to contribute their best.
This year our focus has been on gender diversity which is a fundamental pillar of our inclusive company culture, and we firmly believe that a balanced workforce drives innovation and success. We have taken deliberate actions to attract, retain, and promote talented individuals of all genders; we also have inclusive policies which reflect our dedication to creating an environment where every individual feels valued, respected, and empowered to contribute their unique perspectives and talents. We are committed to remove barriers, promote equal opportunities, and ensure that diversity and inclusion are embedded in every aspect of our organisation.
We have also focused on providing mentorship and professional development opportunities for women, equipping them with the tools and support necessary to excel in their careers. Our leadership team is actively engaged in sponsoring and advocating for the advancement of talented women within our Company.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 2 associate companies and regularly monitors the performance of these companies.
The annual accounts of subsidiary companies are available on the website of the Company viz. www.heromotocorp.com and shall also be kept open for inspection at the registered office of the Company. The Company shall also make available the annual accounts of these companies to any member of the Company who may be interested in obtaining the same. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.
Subsidiary Companies
Hero Tech Center Germany GmbH (''HTCG'')
HTCG is a wholly owned subsidiary of your Company, incorporated in Germany to undertake research and development and such other ancillary activities for the manufacture, testing, validating etc. of two-wheelers and components / parts thereof. It also undertakes, coordinates and facilitates two-wheeler rally participation and development activities. During FY 2022-23, HTCG has reported unadjusted revenue of '' 106.18 crore and a net profit of '' 6.1 crore.
The Company''s Employees Well-Being Policy aims to establish positive health and well-being culture that includes awareness and understanding, effective processes, and positive behavior by staff at all levels. Your Company recognises that mental and physical health are equally important and acknowledges the potential impact that work can have on both. Specialist doctor consultation for employees and their dependents are organised covering multiple medical specialties. Further, EAP-Employee assistance program facilitates confidential mental health support and counselling services for all permanent employees and family members. Regular fitness contests are organised for employees at all locations and well-structured mediclaim facility provides employees and dependents with cashless hospitalisation facility at empaneled hospitals on pan India network. Policy, guidelines & SOPs have also been laid down for non-occupational medical services.
To ensure smooth flow of inbound and outbound vehicles, each location of the Company has developed a traffic plan defining the movement route maps, speed of movement, visual control, etc. Further, the employees are regularly advised on traffic rules and the safe ways of driving.
To prevent accidental fires, each plant and other locations undergo a Fire Safety Risk Assessment. Employees are trained to use fire extinguishers and live mock drills are conducted periodically which provides a real time experience and hands on practice extinguishing a fire.
At Hero MotoCorp, talent development ranks as one of the top-most priorities. Keeping with the strive towards providing learning opportunities to all its employees, the Company is conducting programmes like Master in Business Administration (MBA) and Bachelor of Technology (B.Tech) in collaboration with BITS Pilani and BML Munjal University for the employees to ensure their personal development in conjunction with the growth of the organisation. Your Company launched a learning campaign called as Learning Propeller which concentrates on building awareness of the learning ecosystem, importance of taking charge of professional acumen & learning and creating advocates for learning. In addition, the Company has various capability development programs like NexGen leaders, Transcend Leaders Program, Hero Virtual Learning Centre, etc.
To boost confidence of women employees and encourage more women in leadership roles, your Company conducts a ''Women in Leadership'' course in collaboration with BML Munjal University. The course is designed to implement unique leadership styles that propel success of women in their roles and imbibe a visionary thinking that energises problem solving skills and inspires to take ownership of their potential. The outcomes of the course have been incredible, resulting in more women employees pursuing it every year.
One of the core values of Hero is being ''Responsible'' which essentially means caring for everyone especially the employees who are the most important pillar of the Company.
HMCL Netherlands B.V. (''HNBV'')
HNBVis a wholly owned subsidiary ofyourCompany, incorporated in Amsterdam as a private company with limited liability under the laws of The Netherlands with the primary objective of promoting overseas investments. During FY 2022-23, it has reported net loss of '' 0.9 crore.
HMCL Colombia S.A.S. (''HMCLC'')
HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven Holdings LLC as a simplified stock corporation company. HNBV currently holds 68% equity in HMCLC and 32% equity is held by Woven Holdings LLC. The main business of HMCLC is to manufacture and sell two-wheelers in Colombia. It has a manufacturing facility with a production capacity of 80,000 units per annum. During the year ended March 31, 2023, the Company has reported unadjusted revenue of '' 394.5 crore and a net loss of '' 35.5 crore.
HMCL Niloy Bangladesh Limited (''HNBL'')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in HNBL and 45% equity is held by Niloy Motors Limited. The main business of HNBL is to manufacture and sell two wheelers. It has a manufacturing facility with a production capacity of 1,50,000 per annum. During FY 2022-23, HNBL reported unadjusted revenue of '' 569.2 crore and a net profit of '' 20 crore.
HMCL Americas Inc. (''HMCLA'')
HMCLA is a wholly owned subsidiary of your Company, incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America with the primary objective to pursue various global businesses. During the year ended March 31, 2023, HMCLA has reported unadjusted revenue of '' 0.07 crore and a net loss of '' 0.01 crore.
HMC MM Auto Limited (''HMCMMA'')
Your Company has a joint venture with Marelli Europe S.p.A, Italy, namely HMC MM Auto Limited in India, which is set up for the purpose of carrying out manufacturing, assembly, sale and distribution of two-wheeler fuel injection systems and parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2022-23, HMCMMA has reported unadjusted revenue of '' 267.8 crore and a net loss of '' 10.2 crore.
Associate Companies Hero FinCorp Limited (''HFCL'')
HFCL is an associate of your Company, incorporated in the year 1991. Your Company holds 41.19% in the equity share capital of HFCL. HFCL is a non-banking finance company engaged in providing financial services, including two-wheeler financing
and providing credit to Company''s vendors and suppliers. Over the years, it has added several new products and customers in its portfolio, like SME and commercial loans, loan against property etc.
During FY 2022-23, HFCL''s profit attributable to the Company is '' 150.9 crore.
Ather Energy Private Limited (''AEL'')
AEL is a private limited company, focused on developing, designing and selling premium electric two-wheelers. The shareholding of your Company in AEL is 36.54% which is equivalent to 33.11% on a fully diluted basis. During FY 2022-23, AEL''s loss attributable to the Company is '' 192.5 crore.
A statement containing salient features of financial statements of subsidiaries and associate companies is provided in Form AOC-1 and forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company (''the Board'') has approved a policy for determining material subsidiaries. At present, your Company does not have a material subsidiary. The Policy on material subsidiaries can be viewed on the Company''s website, www.heromotocorp.com at the following link: https://www.heromotocorp.com/content/ dam/hero-aem-website/investor-assets/disclosure-documents/20191126105356-code-policy-400.pdf
DIRECTORS AND KEY MANAGERIAL PERSONNELS
During the year under review, Mr. Vikram Sitaram Kasbekar was re-appointed as a Whole-time Director, designated as Executive Director-Operations (Plants) w.e.f August 8, 2022 for a term of two years. His term will end on August 7, 2024.
In terms of applicable provisions of the Act and the Articles of Association of the Company, Mr. Suman Kant Munjal, Director of the Company, retires by rotation at the ensuing annual general meeting and being eligible, has offered himself for re-appointment. Brief resume and other details of Mr. Suman Kant Munjal have been furnished in the Annexure of the notice of the annual general meeting.
Prof. Jagmohan Singh Raju was appointed as an Independent Director w.e.f November 15, 2018 for a period of five (5) years. His term is due to expire on November 14, 2023. Being eligible in terms of the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board on recommendation of the Nomination and Remuneration Committee has approved re-appointment of Prof. Raju for a period of five (5) years, subject to passing of special resolution by the shareholders. Brief resume and other details of Prof. Jagmohan Singh Raju have been furnished in the Annexure of the notice of annual general meeting.
The appointment of new directors is recommended by the Nomination and Remuneration Committee (''NRC'') on the basis of requisite skills, proficiency, experience and competencies as identified and finalised by the Board considering the industry and sector in which the Company operates. For appointment of an independent director, the NRC evaluate the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, determine the role and capabilities required of an independent director. The Board, on the recommendation of the NRC, evaluates and if found suitable, confirms an appointment to the Board. The appointments are based on the merits of the candidate and due regard is given to diversity including factors like gender, age, cultural, educational & geographical background, ethnicity, etc.
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed in the Act and the Listing Regulations.
In the opinion of the Board, the Independent Directors of the Company are persons of high repute, integrity and possesses the relevant expertise and experience in the respective fields. They fulfil the conditions specified in the Act, Rules made thereunder and Listing Regulations and are independent of the management.
In compliance with Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the details of all the Independent Directors have been registered with the databank maintained by the Indian Institute of Corporate Affairs (IICA). Further, all the Independent Directors have passed the online proficiency self-assessment test conducted by IICA except those who have been exempted by the Act.
The Company has a robust succession planning process which is overseen by the Nomination and Remuneration Committee.
Mr. M. Damodaran ceased to be a Director of the Company with effect from end of day of May 3, 2022, due to completion of his term of three (3) years as an Independent Director.
None of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any other statutory authority.
Key Managerial Personnels
During the year, the Board elevated Mr. Niranjan Gupta, Chief Financial Officer, as the Chief Executive Officer of the Company with effect from May 1, 2023.
Dr. Pawan Munjal, Executive Chairman & Whole-time Director, Mr. Niranjan Gupta, Chief Executive Officer & Chief Financial Officer and Mr. Dhiraj Kapoor, Company Secretary and Compliance Officer are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014.
During FY 2022-23, seven meetings of the Board of Directors were held. For details of these Board meetings, please refer to the section on Corporate Governance of this annual report.
During FY 2022-23, various committee meetings were conducted by the Company. For details of these Committee meetings, please refer to the section on Corporate Governance of this annual report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it''s Committees, the Chairman and the individual Directors was carried out for FY 2022-23. Led by the Nomination and Remuneration Committee, the evaluation was carried out using structured questionnaires covering, amongst others, composition of the Board, conduct as per Company values & beliefs, contribution towards development of the strategy & business plan, risk management, receipt of regular inputs and information, codes & policies for strengthening governance, functioning, performance & structure of Board Committees, skill set, knowledge & expertise of Directors, preparation & contribution at Board meetings, leadership, etc.
Further, the Committees were evaluated in terms of receipt of appropriate material for agenda topics in advance with right information and insights to enable them to perform their duties effectively, review of committee charter, update to the Board on key developments, major recommendations & action plans, stakeholder engagement, devoting sufficient time & attention on its key focus areas with open, impartial & meaningful participation and adequate deliberations before approving important transactions & decisions.
As part of the evaluation process, the performance of NonIndependent Directors, the Chairman and the Board was conducted by the Independent Directors. The performance evaluation of the respective Committees and that of Independent and Non-Independent Directors was done by the Board excluding the Director being evaluated.
The actions emerging from the Board evaluation process were collated and presented before the Nomination and Remuneration Committee as well as the Board. The Directors were satisfied with the Board''s engagement, experience, diversity and expertise. The Board committees have also been functioning well and contributing effectively. The performance of individual directors was found satisfactory. Suggestions/ feedback concerning strategic, governance and operational matters were actioned upon by the team.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 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, 2023, the applicable accounting standards were followed, along with proper explanation relating to material departures;
2. that appropriate accounting policies were selected and applied consistently and judgments and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs as at March 31, 2023 and of the profit and loss of your Company for the financial year ended March 31, 2023;
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, 2013 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, 2023 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.
REMUNERATION AND BOARD DIVERSITY POLICY
Pursuant to provisions of the Act, the Nomination and Remuneration Committee of your Board has formulated a Remuneration and Board Diversity Policy for the appointment and determination of remuneration of the Directors, Key Managerial Personnel, senior management and other employees of your Company and to ensure diversity at the Board level. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while fixing appropriate remuneration packages and for administering the long-term incentive plans, such as employee stock options, restricted stock units, etc. Further, the compensation package of the Directors, Key Managerial Personnel, senior management and other employees is designed based on the set of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial Personnels, senior management and other employees is as per the Remuneration Policy of your Company.
The remuneration details of the Directors, Chief Financial Officer and Company Secretary, along with details of ratio of remuneration of each Director to the median remuneration of employees of the Company for the year under review are provided as Annexure - I.
The Remuneration and Board Diversity Policy of the Company was amended during the year to include the changes introduced by the SEBI and other minor changes to enhance uniformity and cohesion. The Remuneration and Board Diversity Policy of your Company can be viewed at the following link: https://www.heromotocorp.com/en-in/ uploads/code policv/20191126105210-code-policy-421.pdf
The salient features of the Remuneration and Board Diversity Policy are as under:
1. To determine remuneration of Directors, KMPs, other senior management personnel and other employees, keeping in view all relevant factors including industry trends and practices.
2. At the Board meeting, only the Non-Executive and Independent Directors shall participate in approving the remuneration paid to the Executive Directors.
3. The remuneration structure for the Executive Directors would include basic salary, commission, perquisites & allowances, contribution to Provident Fund and other funds. If the Company has no profits or its profits are inadequate, they shall be entitled to minimum remuneration as prescribed under the Act.
4. The Non-Executive and/or Independent Directors will also be entitled to remuneration by way of commission aggregating upto 1% of net profits of the Company pursuant to the provisions of Sections 197 and 198 of the Act, in addition to sitting fees.
5. The compensation for Key Managerial Personnel, senior management and other employees is based on the external competitiveness and internal parity through periodic benchmarking surveys. It includes basic salary, allowances, perquisites, loans and/or advances as per relevant HR policies, retirement benefits, performance linked pay out, benefits under welfare schemes, etc. besides long term incentives/ESOPs/RSUs/Performance shares or such other means as may be decided by the NRC.
6. Performance goals of senior management personnel shall be quantifiable and assessment of individual performance to be done accordingly. A significant part of senior management compensation will be variable and based upon Company performance.
7. To ensure adequate diversity at Board level, all appointments to be made on the basis of merit and due regard shall be given to other diversity attributes also. The NRC shall recommend the appointment or continuation of members to achieve optimum combination at the Board and periodically assess the specific requirements in relation to Board diversity.
In terms of the erstwhile SEBI (Share Based Employee Benefits) Regulations, 2014, and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended from time to time (''SEBI Regulations''), the NRC of your Board, inter-alia, administers and monitors the Employees'' Incentive Scheme, 2014 of your Company.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the Employees'' Stock Option Scheme are available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp.com/en-in/investors/
download-reports/annual-report.html. Further, there is no material change in the scheme and the scheme is in compliance with the applicable regulations.
Your Company has received a certificate from M/s Sanjay Grover & Associates, Secretarial Auditors (Firm Registration No. P2001DE052900) that the Employees'' Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI Regulations and the resolution passed by the members in their general meeting. The certificate would be placed/available at the ensuing annual general meeting for inspection by the members.
Voluntary Retirement Scheme
In keeping with the objective of building a robust organisation in a rapidly evolving dynamic environment while retaining employee welfare at its core, your Company launched a voluntary retirement scheme (VRS) for its staff in April 2023. The VRS offered a generous package that included - among other benefits - a one-time lump-sum amount, variable pay, medical coverage, retention of company car, relocation assistance, career support etc. The VRS was designed in line with the vision to make the organisation agile and ''future-ready''. As the VRS was announced post completion of financial year 2022-23, there is no financial impact for the year ended March 31, 2023.
Your Company is committed to benchmarking itself with global standards of Corporate Governance. It has put in place an effective Corporate Governance system which ensures that provisions of the Act and Listing Regulations are duly complied with, not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of good Corporate Governance and best management practices that are followed globally. The Code is available on your Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp.com/en-in/uploads/code policv/20191224114146-code-policy-495.pdf
In terms of Listing Regulations, a report on Corporate Governance along with the certificate from M/s Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) confirming compliance of the conditions of Corporate Governance is annexed hereto and forms part of this annual report as Annexure - II and Annexure - III respectively.
During the year under review, no amount has been transferred to General Reserve of the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, your Company has transferred unpaid/ unclaimed dividend, amounting to '' 3.38 crore for FY 2014-15 (Final Dividend) and 12,135 shares to the Investor Education and Protection Fund (IEPF) Authority of the Central Government of India. Further, dividend pertaining to the shares transferred to demat account of the IEPF Authority amounting to '' 7.85 crore (after deduction of tax) was also transferred to the IEPF Authority.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Company has occurred between the end of financial year and the date of this report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2022-23, your Company has not given any loan or guarantee pursuant to provisions of Section 186 of the Act. Details of investments made in terms of Section 186 of the Act are as under:
('' in crore) |
|||
Principal n Amount (Shares) Am°un'' (Bonds/ Debentures) |
Total |
||
Opening |
2,365.53 |
1,157.93 |
3,523.46 |
Addition |
1,568.91 |
528.82 |
2,097.73 |
Reduction |
- |
109.60 |
109.60 |
Closing Balance |
3,934.44 |
1,577.15 |
5,511.59 |
Your Company has neither accepted nor renewed any deposits during FY 2022-23 in terms of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2022-23, all contracts/arrangements/transactions entered into by your Company were in compliance with the applicable provisions of the Act and the SEBI LODR. During FY 2022-23, your Company has not entered into any contract/ arrangement/transaction with related parties which could be considered ''material'' in accordance with its Policy on Materiality of Related Party Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2022-23, there were no materially significant related party transactions entered into by your Company with the Promoters/Promoter Group, Directors, Key Managerial Personnel or other designated persons, which might have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee and are approved only by independent non-conflicted members. The approval of the Board for related party transactions has also been taken in accordance with the applicable provisions of the Companies Act, 2013 and the SEBI LODR, wherever required. During FY under review, the Audit Committee has approved transactions through the omnibus mode in accordance with the provisions of the Act and Listing Regulations. Related party transactions were disclosed to the Board on regular basis as per the Act & Ind AS-24. Details of related party transactions as per Ind AS-24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp.com/ content/dam/hero-aem-website/investor-assets/disclosure-documents/20191126104550-code-policy-434.pdf
The Risk Management Committee of the Board continues to guide the Management Team in operating a comprehensive risk management framework.
The Company''s risk management procedures take into consideration external as well as internal threats to devise strategies to mitigate a diverse set of strategic, operational, regulatory and technology related risks. Risk identification, analysis, mitigation and monitoring is undertaken periodically by the Management Team and is overseen by the Risk Management Committee (RMC). Several management and leadership team members are actively involved to ensure consistency in the overall process. Post assessment, a calendar to detail the mitigation plans is prepared and the RMC is updated accordingly. On a quarterly/ periodic basis the RMC is updated per plan and with regards new developments.
The Head of Risk works with the Risk Steering Committee who are responsible to update the board on the status of the risks and also update the organisational risk register as per internal and external environment.
In addition, your Company focused on developing a robust Business Continuity Plan to manage any unforeseen and anticipated scenarios. Your Company focused on some of the other key risk areas as well and developed mitigation plans. Some of those risks were -
Semiconductor shortage - Semiconductor shortage affected almost every automobile OEM. There was an increase in leadtime and many orders remained pending. However, your Company made sure that the shortage did not significantly impact the supply chain and manufacturing. Your Company reached out to identify alternate sources for critical components and started tracking inventories at a child part level. As we expand our operations in the electric vehicle segment, a continued shortage of semiconductors could pose a credible threat and your Company is already developing plans to manage the risk well.
Shifting consumer preferences towards electric mobility - The
2W industry has continued to grow in EV adoption. Your Company has plans to gain from this segmental shift as scooters are expected to be the first in EV adoption for 2W. The first in house 2W EV product was launched in H2 of FY23. The Company also has investments in other EV brands such as Ather Energy.
Geopolitical uncertainties in key global markets - The
business sentiment continued to remain challenging with many global economies losing steam. The logistics and supply chain industry too was hit hard. However, your Company was able to manage these risks by realising volumes from countries that soon returned to pre pandemic growth and output levels. Also, on the supply chain, your Company has built a strong local base and that made sure that your Company''s operations were not impacted.
Cost pressures in material sourcing - As cost pressures continued to affect margins, your Company evaluated options to develop alternate and innovative strategies for part manufacturing. A significant amount of cost increase could be offset because of the savings from the LEAP and LEAD programs.
Your Company remains committed to protecting the interests of its customers, investors, shareholders, employees and each person or entity with whom it is associated.
The details of the Committee along with its charter are set out in the Corporate Governance Report forming part of this report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY/ CODE OF CONDUCT
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated the Vigil Mechanism/Whistle
Blower Policy which provides a robust framework for dealing with genuine concerns and grievances. Your Company has an ethics hotline managed by a third party which can be used by employees, Directors, vendors, suppliers, dealers etc. to report any violations to the Code of Conduct. Specifically, employees can raise concerns regarding any discrimination, harassment, victimisation, any other unfair practice being adopted against them or any instances of fraud by or against your Company.
All employees of your Company underwent a mandatory Code of Conduct training which covered the eight (8) pillars of your Company''s Code of Conduct and included guidance on all governing principles such as Anti-bribery & Anti-corruption, conflict of interest, fair business practices, transparency and emphasis on equal opportunities while embracing a diverse and inclusive culture.
During the year under review, 13 complaints were received through various reporting channels and 1 complaint was carried forward from the previous year. Out of these, 13 complaints have been investigated and remaining 1 complaint is under investigation.
During FY 2022-23, no individual was denied access to the Audit Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company''s website, www. heromotocorp.com and can be viewed at the following link: https://www.heromotocorp.com/content/dam/hero-
aem-website/investor-assets/disclosure-documents/ VigilMechanismPolicy.pdf
SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Hero MotoCorp, as a responsible corporate citizen, has been consciously fulfilling its obligations, commitments and overall corporate responsibility within its local and global environments. The Company has been responsibly managing not only its business performance but also its environmental and social impact. While the Company''s sustainability strategy revolves around five pillars - inclusive growth, eco-efficiency, people, responsible value chain, and product stewardship, the corporate social responsibility (CSR) vision of the Company is to ''have a greener, safer and equitable world''. Within this mandate, the Company recognises the role of biodiversity in achieving sustainable economic growth and has therefore expanded and strengthened its initiatives for biodiversity protection and resource conservation. This also aligns with the Company''s commitment to the Sustainable Development Goals (SDGs).
We understand that adopting and implementing sustainable business practices is the Company''s responsibility, and equally importantly, that sustainability strategy and CSR activities are intertwined and complement as well as supplement each
other. Therefore, at Hero MotoCorp, both these aspects are governed together by a common decision-making team that focuses on initiatives with the shared vision of a larger, longterm and sustainable impact.
Sustainability and Corporate Social Responsibility Committee
The Company''s Sustainability and Corporate Social Responsibility (SCSR) Committee functions under the direct supervision of Dr. Pawan Munjal, Executive Chairman & Whole-time Director and also the Chairman of the SCSR Committee. Other members of the Committee are: Mr. Pradeep Dinodia, Non-Executive Director, Prof. Jagmohan Singh Raju, Independent Director, and Ms. Tina Trikha, Independent Director.
Policy
The CSR Policy of the Company can be viewed at the following link: https://www.heromotocorp.com/en-in/uploads/code policy/20191126104858-code-policy-35.pdf
The salient features of the CSR Policy are as under:
1. The philosophy of the Company is guided by the belief that a company''s performance must be measured by its triple ( one) bottom line contribution to building economic, social and environmental capital, thereby enhancing societal sustainability along with governance.
2. It believes that in the strategic context of business, enterprises possessâbeyond mere financial resourcesâ the transformational capacity to create game changing development models by unleashing their power of entrepreneurial vitality, innovation and creativity. In line with this belief, the Company will continue to craft unique models to generate livelihoods and create a better society.
3. The broad guiding principles for selection of CSR activities include needs assessment, if required, and the requirement that programmes identified/adopted should be adaptive and flexible to meet the changing dynamics with focus on long-term sustained impact rather than one-time impact or requiring continuous intervention.
4. The implementation of the identified CSR activities shall be carried out either directly by the Company and/or through an implementing agency. The Company shall clearly define the objectives along with the desired timelines to effectively implement the activities within the given time frame and work towards active engagement of all employees to achieve maximum benefits. The modalities of execution shall be defined with every identified project.
5. There shall be a robust monitoring system to ensure that the identified CSR activities are carried out to reap optimal benefits for the beneficiaries. There shall be a periodic
review by the Committee for the projects undertaken. The Committee may suggest modifications in the planned activities considering the existing scenario/circumstances.
6. The Committee will place for the Board''s approval an annual action plan delineating the CSR Programmes to be carried out during the financial year and the succeeding years in the case of Ongoing Projects, along with the specified budgets thereof.
FY 2022-23 update
During the year under review, your Company spent '' 77.83 crore on its CSR activities. The CSR initiatives undertaken by your Company, along with other details, form part of the annual report on CSR activities for FY 2022-23, which is
annexed as Annexure - VI. The overview of CSR activities
carried out in FY 2022-23 is provided in a separate section in this annual report.
The Audit Committee of your Company comprises of the following Non-Executive and/or Independent Directors:
1. Ms. Tina Trikha - Chairperson
2. Mr. Pradeep Dinodia - Member
3. Air Chief Marshal B.S. Dhanoa (Retd.) - Member
The details on the Audit Committee and its terms of reference etc. have been furnished in Corporate Governance Report which forms part of this report as Annexure - II.
During the year under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company.
AUDITORS AND AUDITORS'' REPORT
Statutory Auditors
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W / W-100018) were appointed in 2022 as the Statutory Auditors of the Company until the conclusion of the 44th Annual General Meeting of the Company. They have audited the financial statements of the Company for the year under review. The observations of Statutory Auditors in their Report, read with relevant Notes to Accounts are selfexplanatory and, therefore, do not require further explanation. The Auditors'' Report is unmodified and does not contain any qualification, reservation or adverse remark. Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
Cost Auditors
The Board had appointed M/s R J Goel & Co., Cost Accountants (Firm Registration No. 000026), as Cost Auditors for conducting the audit of cost records of the Company for the Financial Year
2022-23. The Cost Auditors will submit their report for the FY 2022-23 on or before the due date. Further, there were no frauds reported by the Cost Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
The Board, on the recommendation of Audit Committee, has approved the appointment of M/s R J Goel & Co., Cost Accountants, as Cost Auditors for the financial year ending March 31, 2024.
In accordance with the provisions of Section 148 of the Act read with Companies (Audit & Auditors) Rules, 2014, your Company is required to maintain cost records and accordingly, such accounts and records are maintained by the Company. Further, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by members at the ensuing annual general meeting.
Secretarial Auditors
M/s Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY 2022-23.
The Secretarial Audit Report for the said year is annexed herewith and forms part of this report as Annexure - VII. The Report does not contain any qualification, reservation or adverse remark. Further, there were no frauds reported by the Secretarial Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
The Board, on the recommendation of Audit Committee, has approved the appointment of M/s SGS Associates LLP, Company Secretaries (Firm Registration No. L2021DL011600) as Secretarial Auditor of your Company for the financial year ending March 31, 2024.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. Comprehensive policies, guidelines and procedures are laid down for all business processes. The internal control system has been designed to ensure that financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.
An extensive risk based programme of internal audits and management reviews provides assurance to the Board regarding the adequacy and efficacy of internal controls. The internal audit plan is dynamic and aligned to the business objectives of the Company and is reviewed by the Audit Committee each quarter. Further, the Audit Committee also monitors the status of management actions emanating from internal audit reviews. Such actions are tracked through an automated tool.
During the year, such controls were assessed and no reportable material weaknesses in the design or operation were observed.
PREVENTION OF INSIDER TRADING CODE
In compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015 (''PIT Regulations''), your Company has revised its Code of Conduct for regulating, monitoring and reporting of trading by Designated Persons to align it with the industry practices and regulatory changes. The said Code lays down guidelines which provide for the procedure to be followed and disclosures whilst dealing with shares of the Company and while sharing Unpublished Price Sensitive Information. The Code includes the Company''s obligation to maintain the structured digital database (''SDD''), obligation of designated persons, mechanism for prevention of insider trading and handling of UPSI. Further, the Company has complied with the standardised reporting of violations related to code of conduct under SEBI (Prohibition of Insider Trading) Regulations, 2015. The Company has also revised its Code of practices and procedures of fair disclosure of unpublished price sensitive information alongwith policy for determination of legitimate purposes, institutional mechanism for prevention of insider trading and policy for inquiry in case of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information. The Company has set up a mechanism for weekly tracking of the dealings of equity shares of the Company by the Designated persons and their immediate relatives having access to unpublished price sensitive information. A report covering trading by DPs under the PIT Regulations is placed before the Audit Committee on quarterly basis.
The Company periodically circulates the informatory e-mails along with the code and policies on Insider Trading, Do''s and Don''ts etc. to the employees to familiarise them with the provisions of the Code. The officials of the secretarial department conducts an induction programme for all the employees joining the organisation and various other workshops/ training sessions to educate and sensitise the employees/ designated persons.
As part of the awareness programme, an extensive campaign was run across the organisation, in the form of desktop wallpapers and posters on the Company''s employee application providing important information on the provisions of the Code. Also, standees and danglers were also placed at all conspicuous places across locations highlighting the important aspects of the Code of Prevention of Insider Trading and SEBI Regulations.
Quarterly certificate on compliance with the requirement and maintenance of SDD pursuant to provisions of Regulation 3(5) and 3(6) of PIT Regulations were duly filed with the stock exchanges within the stipulated time.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
Keeping up the commitment to sustainability, your Company has prepared the Business Responsibility & Sustainability Report (''BRSR'') which forms part of the annual report as Annexure - VIII. The Report provides a detailed overview of initiatives taken by your Company from environmental, social and governance perspectives.
LISTING
The equity shares of your Company are presently listed on the BSE Limited (''BSE'') and the National Stock Exchange of India Limited (''NSE'').
PERSONNEL
As on March 31, 2023, total number of employees on the records of your Company were 9,215 as against 9,173 in the previous year.
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.
PARTICULARS OF EMPLOYEES
The statement of disclosure of Remuneration under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (''Rules''), is appended as Annexure - I to this report. The information as per Rule 5(2) & 5(3) of the Rules forms part of this report. However, the report and Financial Statements are being sent to the members of the Company excluding the statement of particulars of employees under Rule 5(2) & 5(3) of the Rules. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the registered office of the Company.
ANNUAL RETURN
In terms of Sections 92(3) and 134(3)(a) of the Act, annual return is available under the ''Investors'' section of the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp. com/en-in/investors/shareholder-resources/downloads. html?year=2021-22#annualreturn
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is fully compliant with the applicable Secretarial Standards (SS) viz. SS-1 & SS-2 on Meetings of the Board of Directors and General Meetings respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rules made thereunder is annexed to this report as Annexure - IX.
STATUTORY DISCLOSURES
Your Directors state that there being no transactions with respect to following items during the year under review, no disclosure or reporting is required in respect of the same:
1. Deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
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 your Company under any scheme, save and except ESOS referred to in this report.
4. The Whole-time Directors of your Company have not received 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.
6. Buy-back of shares or under Section 67(3).
7. No application was made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
8. No settlements have been done with banks or financial institutions.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Hero MotoCorp has in place a Policy towards Prevention of Sexual Harassment at Workplace for Women. This policy is in line with the requirements of ''The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013''.
All employees, whether permanent, contractual, temporary and trainees or belonging to any other category as per the definition of POSH are covered under this Policy. An Internal Complaints Committee (IC) had been constituted to redress complaints received regarding Sexual Harassment and the Company has complied with the provisions relating to the constitution of ICC under POSH Act.
Our Company aims at providing a safe workplace free from sexual harassment to its employees. It also has a ''Zero Tolerance'' Policy towards POSH. To achieve this objective, effective communication is the key and thus the Company regularly organises awareness sessions at all locations to sensitise its employees and conducts frequent sessions in a professional manner.
During FY 2022-23, over 394 POSH Workshops, Webinar Sessions were organised and in addition POSH Sessions were planned through the e-module mode. These POSH sessions were well attended by the employees from across the organisation. All new workmen and women associates joining undergo a mandatory session on POSH.
As per the said Policy, an Internal Committee (IC) is also in place towards redressal of complaints received towards Sexual Harassment. Following is the summary of complaints received and disposed off during the year under review:
No. of complaints received: 17
No. of complaints disposed off: 16
No. of complaints withdrawn: 0
No. of complaints pending: 1
DISCLOSURE UNDER THE HUMAN IMMUNODEFICIENCY VIRUS AND ACQUIRED IMMUNE DEFICIENCY SYNDROME (PREVENTION AND CONTROL) ACT, 2017
During the year under review, no complaints were received by the Complaints Officer under the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017.
FACILITATION TO SHAREHOLDERS
Your Company has always endeavored to keep its shareholders informed of all relevant, sufficient and reliable information on a timely and regular basis pertaining to the business, its processes and regulatory affairs to enable them to take informed decision. As a voluntary initiative, the Company emails the quarterly and annual financial results to all the shareholders whose email addresses are registered with the Company / RTA to keep them updated with the financial position and performance of the Company. Further, the Company has issued a Shareholders'' Referencer covering rights of shareholders, grievance redressal framework, timelines for various procedures, processes followed by the Company, etc. to empower them through facts and information. The website of the Company has a dedicated section which serves as a knowledge bank for shareholders to keep them sufficiently informed of the statutory changes as well as other pertinent information. All the queries of the shareholders are responded
within the prescribed timelines and the Company ensures timely and accurate disclosure on all material matters. Your Company has always encouraged effective shareholder participation in key corporate governance decisions and exercise of voting rights by the shareholders.
CENTRALISED COMPLIANCE MANAGEMENT
The Company has an automated Compliance Framework that monitors and updates all applicable laws and compliance obligations on a regular basis. Automated alerts are sent to compliance owners to ensure that they are complying with regulations within the set timeframe. This proactive measure helps keep everyone on track and avoid any penalties or other legal issues that could arise from non-compliance. The compliance owners certify the compliance status which is reviewed by compliance approvers. A certificate of compliance of all applicable laws and regulations along with exceptions report and mitigation plan, if any, is placed before the Board of Directors on a quarterly basis.
During the year, the Company received multiple awards and recognition. Some of them are listed below:
1. VIDA V1 won the following awards:
a) Best Design Award at the 2023 Acko Drive Awards
b) Best EV Award at the 2023 Acko Drive Awards
c) Best Scooter Award at the 2023 Acko Drive Awards
d) Best Overall Bike of the Year Award at the 2023 Acko Drive Awards
e) EV Scooter of the Year Award at the 2023 Bike India Awards
f) Green Two-wheeler of the Year Award at the 2023 Turbocharged Magazine Awards
2. XPulse 200 4V won the following awards:
a) BBC TopGear India Awards 2022 for the Best ADV of the Year (300cc)
b) Bike Variant of the Year at the 2022 Autocar Awards
c) Adventure Motorcycle of the Year at the CnB Awards 2022
d) Bike of the Year at the Zee Auto Awards 2022
3. Splendor won ''Bike of the Decade'' at the Zee Auto Awards 2022
4. Significant Achievement in HR Excellence by the 13th CII National HR Excellence Award Confluence
5. Hero MotoCorp won Best Medical & Wellness Centre category at the ET Health Award
6. Campaign #LadkiChalaRahiHai bagged Gold at the IMPACT Digital Influencers Awards 2022 in two categories: Best Automobile Category & Best Cause-Led Campaign
7. One of the "Best Organisations for Women" by The Economic Times.
The Board of Directors would like to express their sincere thanks to the shareholders and investors of the Company for the trust reposed in the Company over the past several years. Your Directors would also like to thank the central government, state governments, financial institutions, banks, customers, employees, dealers, vendors and ancillary undertakings for their co-operation and assistance. The Board would like to reiterate its commitment to continue to build the organisation into a truly world-class enterprise in all aspects.
For and on behalf of the Board
Dr. Pawan Munjal
Executive Chairman & Whole-time Director
DIN: 00004223
Date: May 4, 2023 Place: Tirupati
Mar 31, 2022
Your Directors are pleased to present the thirty ninth annual report, together with the Company''s audited financial statements for the financial year ended March 31, 2022.
FINANCIAL RESULTS - STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
('' in crore) |
||||
Standalone |
Consolidated |
|||
Particulars |
Year ended |
Year ended |
||
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
|
Total Income |
29,802.38 |
31,380.47 |
30,106.29 |
31,517.09 |
Profit before Finance cost and Depreciation |
3,925.68 |
4,599.09 |
3,999.78 |
4,657.41 |
Expenses |
||||
Finance cost |
25.80 |
21.84 |
53.10 |
46.41 |
Depreciation and amortisation expenses |
649.75 |
676.87 |
689.52 |
715.12 |
Profit from ordinary activities before share of Profit / (Loss) of associates |
3,250.13 |
3,900.38 |
3,257.16 |
3,895.88 |
Profit/(Loss) of associates |
||||
Share in net profit/(loss) of associates |
- |
- |
(199.05) |
(46.56) |
Profit from ordinary activities before tax |
3,250.13 |
3,900.38 |
3,058.11 |
3,849.32 |
Tax expense |
||||
Current tax |
797.91 |
924.92 |
805.44 |
931.38 |
Deferred tax |
(20.80) |
11.26 |
(76.38) |
(18.11) |
777.11 |
936.18 |
729.06 |
913.27 |
|
Net Profit from ordinary activities after tax |
2,473.02 |
2,964.20 |
2,329.05 |
2,936.05 |
Other comprehensive income/(expense) (net of tax) |
(5.44) |
(21.06) |
(0.60) |
(25.87) |
Total comprehensive income for the year |
2,467.58 |
2,943.14 |
2,328.45 |
2,910.18 |
Net Profit/(loss) attributable to |
||||
a) Owners of the Company |
2,473.02 |
2,964.20 |
2,316.88 |
2,917.75 |
b) Non-controlling interest |
- |
- |
12.17 |
18.30 |
Other comprehensive income attributable to |
||||
a) Owners of the Company |
(5.44) |
(21.06) |
(2.44) |
(24.01) |
b) Non-controlling interest |
- |
- |
1.84 |
(1.86) |
Total comprehensive income attributable to |
||||
a) Owners of the Company |
2,467.58 |
2,943.14 |
2,314.44 |
2,893.74 |
b) Non-controlling interest |
- |
- |
14.01 |
16.44 |
Balance of profit brought forward |
12,462.15 |
11,416.82 |
12,648.70 |
11,652.06 |
Dividend |
||||
- Interim - 2021-22 |
1,198.87 |
1,398.46 |
1,198.87 |
1,398.46 |
- Final - 2020-21 |
699.26 |
499.35 |
699.26 |
499.35 |
Corporate Dividend Tax |
- |
- |
1.12 |
2.49 |
Other comprehensive income arising from re-measurement of defined benefit obligation (net of income tax) |
- |
- |
(6.28) |
(20.81) |
Balance carried to Balance Sheet |
13,031.60 |
12,462.15 |
13,060.05 |
12,648.70 |
Earnings per equity share on Net Profit from ordinary activities after tax (face value '' 2/- each) (In Rupees) |
||||
- Basic |
123.78 |
148.39 |
115.96 |
146.07 |
- Diluted |
123.74 |
148.37 |
115.93 |
146.04 |
During FY 2021-22, your Company clocked sales of 49.44 lakh units over 58.00 lakh units in the previous FY. Revenue from
operations was '' 29,245.47 crore as compared to '' 30,800.62 crore in FY 2020-21, registering a decrease of 5.05%.
Profit before tax (PBT) in FY 2021-22 was '' 3,250.13 crore as compared to '' 3,900.38 crore in FY 2020-21, reflecting a decrease of 16.67%. Profit after tax (PAT) was '' 2,473.02 crore as against '' 2,964.20 crore in FY 2020-21, a decrease of 16.57 % from the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 11.52% in FY 2021-22, as compared to 13.05% in FY 2020-21.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with provisions of the Companies Act, 2013 (''the Act'') and Indian Accounting Standards (Ind AS)-110 on
Consolidated Financial Statements, read with Ind AS-28 on Investments in Associates and Joint Ventures, the Audited Consolidated Financial Statements for the year ended March 31, 2022 are provided in this annual report.
UPDATE ON PANDEMIC AND OTHER MATTERS COVID-19
During the year, the auto industry witnessed disruptions triggered by Coronavirus pandemic, restricting movement of logistics and dampening customer sentiments. Despite such challenges, your Company remained resilient, positive and
continued to grow. Your Company took several steps to protect the employees and the operations, while also initiating relief measures to aid the efforts initiated by your organization, and
various governments and institutions. Strategic initiatives such as a strict discipline on expenses and prioritization of projects, aided in substantially reducing general overhead costs and capex.
The Company remains optimistic about growth in the next
financial year as pandemic restrictions are witnessing a gradual withdrawal due to a steady decline in Covid-19 cases and reopening of all the sectors of economy.
Vida - Brand for Emerging Mobility Solutions
With a focus on sustainability and keeping up with the relentless pursuit towards its vision - Be the Future of Mobility, your Company unveiled Vida, powered by Hero, a brand-new identity for its emerging mobility solutions, including upcoming Electric
Vehicles (EV).
Vida means life and the brand''s sole purpose is to create a positive impact on the world with the vision of a flourishing, meaningful world for future generations.
Income Tax matter
The Income Tax Department (âthe Department") conducted a Search activity (âthe Search") under Section 132 of the Income Tax Act on the Company in March 2022. Subsequently, the Company has provided all support, cooperation and the necessary documents to the Department. The Company is examining and reviewing the details of the matter and will take appropriate actions, including addressing regulatory actions, if and when they occur.
While the uncertainty exists regarding the outcome of the proceedings by the Department, the Company after considering all available information and facts as of date, has not identified the need for any adjustments to the current or prior period
financial results.
The above matter has been disclosed as an ''Emphasis of Matter'' in the Audit Report and has also been mentioned in note no. 34(c) of the standalone financial statements. The Audit Report on the audited financial results of the Company (standalone & consolidated) remains unmodified.
During the year under review, 31,724 equity shares of '' 2/-each were allotted on exercise of Employee stock options and Restricted Stock Units (RSUs) by the employees of the Company. Consequently, the issued and paid-up share capital
of the Company as on March 31, 2022 was '' 39,96,23,882 divided into 19,98,11,941 equity shares of '' 2/- each.
The Company has not issued any equity shares with differential rights, sweat equity shares or bonus shares. The Company has only one class of equity shares with face value of '' 2/- each, ranking pari passu.
Your Directors are pleased to recommend for your approval a
final dividend of '' 35/- per equity share (1,750%) of face value of '' 2/- each in addition to an interim dividend of '' 60/- per equity share (3000%) declared in the month of February 2022, aggregating a total dividend payout of '' 95/- per equity share (4,750%) for FY 2021-22. In the previous year, total dividend payout of '' 105/- per equity share (5,250%) of face value of '' 2/- each was made. Final dividend, if approved at the ensuing annual general meeting, shall be paid to the eligible members within the stipulated time period.
Dividend Distribution Policy of the Company as per the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') is available at the following link: https://www.heromotocorp.com/en-in/uploads/code policy/20191126105519-code-pol icy-149.pdf.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and gives details of the overall
industry structure, economic developments, performance and state of affairs of your Company''s business in India and abroad, risk management systems and other material developments during the year under review.
During FY 2021-22, there was no change in the nature of
Company''s business.
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
The fiscal 2022 was a fascinating year during which your Company directed its resources on capitalizing opportunities, healthy investments and working towards business resilience with focus on growth and further strengthening the product portfolio. Due - Diligence on economic factors, commodity headwinds facilitated us to further evaluate our manufacturing capacity to view cross plant resource optimization with a broader lens to optimize capacity utilization.
The complete value chain eco-system quickly re-energized itself and the turnaround post business re-opening of COVID-19 pandemic was phenomenal considering the changed paradigm and facilitated your Company to revert on growth trajectory
with stable sales volume and positive customer sentiment.
Your Company has the overall capacity of 9.3 million for all plants. The overseas plants of your Company in Bangladesh and Colombia have continuously augmented their respective
capacities and with significant momentum in market share.
As a proactive corporate, your Company released its fourth annual Sustainability Report encompassing ESG (Environment, Social and Governance) aspects. Long-term strategy has been formulated with the objective of making your Company one of
the leaders in ESG and target to establish a resilient business eco-system.
Agreement with Harley-Davidson - As part of its growth strategy, Hero MotoCorp is focused on growing market share in the rapidly expanding Premium motorcycle segment. In
October 2020, the Company signed a distribution agreement with Harley-Davidson (H-D), under which the Company will sell and service H-D motorcycles, and sell parts and accessories and general merchandise riding gear and apparel in India. The Company has inducted 11 dealers of Harley-Davidson into its own distribution network. Starting January 1, 2021, Hero MotoCorp Ltd. has become the distributor for Harley-Davidson in India.
Hero MotoCorp Ltd. and Harley-Davidson also signed a Licensing agreement under which the Company will develop and sell a range of premium motorcycles under the H-D brand name.
Partnership with Gogoro® Inc. - Your Company recently entered into a strategic partnership with Gogoro® Inc. to accelerate the shift from fuel based mobility to sustainable electric mobility in India. This partnership would bring together the Company and Gogoro® Inc., the global leader in urban battery swapping and smart mobility innovation and this joint venture is aimed to bring Gogoro''s industry leading battery swapping platform to India. The Companies would also collaborate on electric vehicle development to bring Hero branded, powered by Gogoro Network vehicles to market
GLOBAL FORAYS
Your Company continues to strengthen its presence in global markets. During FY 2022, your Company''s footprint increased to 43 markets outside India. The focus was on increasing the presence in the premium segment through new product launches in the key markets of Bangladesh, Nepal and Latin America. As a result, the premium segment sales grew by 63% in FY 2022 over previous year.
Despite the tough Covid restrictions & unstable economy in some markets, your Company managed to gain market share in 6 out of 7 focus markets.
Your Company also relaunched the Hero brand in markets like Argentina, Kenya, Honduras and Nicaragua.
INNOVATION
In the last few years, there has been a strong focus to foster innovation inside the Company and we have seen a huge wave of cultural shift cutting across the functions organisation-wide. Multiple cross-functional/within-function initiatives were taken to find solutions collaboratively. Our Idea platform: HeroIC in its 3 rd year engaged users significantly and hosted campaigns tapping the latent opportunities harnessing internally residing diverse unique talents. It is appealing to confirm that thousands of unique ideas were registered in the last 3 years.
We started HeroHatch (Internal Incubator programme)
sometime back which was supplemented by Vision Labs ideas with the potential to become stand-alone projects. Internal startups have emerged as a strong pillar by solving the end problems of our customers, developing potential revenue streams, and inculcating a fast-paced and startup-like culture within the organisation. The three projects which were launched under Hero Hatch continue to grow impressively.
We are now starting to expand our base from Innovation inside to ecosystem support. This involves the scouting of startups, and mobility partners externally to explore opportunities
in "Future of Mobility". This year, we will tap into the global
innovation enablers to help us acquire multiple opportunities to co-create and collaborate, the first one of which is a partnership with Plug and Play (P&P). This ecosystem partnership will enable Hero to have access from the P&P team regarding the introduction of hand-picked start-ups in the emerging mobility & tech space within private deal flows, which are meant to solve a specific technological use case or aspirations of Hero''s Internal business unit.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 2 associate companies and regularly monitors the performance of these companies.
The annual accounts of subsidiary companies are available on the website of the Company viz. www.heromotocorp.com and shall also be kept open for inspection at the registered office of the Company. The Company shall also make available the
annual accounts of these companies to any member of the Company who may be interested in obtaining the same. The
consolidated financial statements presented by the Company include the financial results of its subsidiary companies.
Subsidiary Companies
Hero Tech Center Germany GmbH (''HTCG'')
HTCG is a wholly owned subsidiary of your Company, incorporated in Germany to undertake research and development and such other ancillary activities for the manufacture, testing, validating etc. of two-wheelers and components/parts thereof. It also undertakes, coordinates and facilitates two-wheeler rally participation and development activities. During FY 2021-22, HTCG has reported unadjusted revenue of '' 114.1 crore and a net profit of '' 5.8 crore.
HMCL Netherlands B.V. (''HNBV'')
HNBV is a wholly owned subsidiary of your Company, incorporated in Amsterdam as a private company with limited liability under the laws of The Netherlands with the primary
objective of promoting overseas investments. During FY 202122, it has reported unadjusted revenue of '' 10.08 crore and a net profit of '' 8.8 crore.
HMCL Colombia S.A.S. (''HMCLC'')
HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven Holdings LLC as a simplified stock corporation company. HNBV currently holds 68% equity in HMCLC and 32% equity is held by Woven Holdings LLC. The main business of HMCLC is to manufacture and sell two-wheelers in Colombia. It has a manufacturing facility with a production capacity of 80,000 units per annum. During the year ended March 31, 2022, the Company has reported unadjusted revenue of '' 378.8 crore and a net loss of '' 1.8 crore.
HMCL Niloy Bangladesh Limited (''HNBL'')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in HNBL and 45% equity is held by Nitol Niloy Group, Bangladesh. The main business of HNBL is to manufacture and sell two-wheelers. It has a manufacturing facility with a production capacity of 1,50,000 per annum. During FY 2021-22, HNBL reported unadjusted revenue of '' 659.2 crore and a net profit of '' 38.3 crore.
HMCL Americas Inc. (''HMCLA'')
HMCLA is a wholly owned subsidiary of your Company, incorporated as a Corporation pursuant to the General
Corporation Law of the State of Delaware, United States of America with the primary objective to pursue various global
businesses. During the year ended March 31, 2022, HMCLA has reported unadjusted revenue of '' 0.01 crore and a net loss of '' 0.06 crore.
HMC MM Auto Limited (''HMCMMA'')
Your Company has a joint venture with Marelli Europe S.p.A, Italy, namely HMC MM Auto Limited in India, which is set up for
the purpose of carrying out manufacturing, assembly, sale and distribution of two-wheeler fuel injection systems and parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2021-22, HMCMMA has reported unadjusted revenue of '' 228.4 crore and a net loss of '' 11.3 crore.
Associate Companies
Hero FinCorp Limited (''HFCL'')
HFCL is an associate of your Company, incorporated in the year 1991. Your Company holds 41.19% in the equity share capital of HFCL. HFCL is a non-banking finance company engaged in providing financial services, including two-wheeler financing and providing credit to Company''s vendors and suppliers. Over the years, it has added several new products and customers in its portfolio, like SME and commercial loans, loan against property etc.
During FY 2021-22, HFCL''s loss attributable to the Company is '' 63.1 crore.
Ather Energy Private Limited (''AEL'')
AEL is a private limited company, focused on developing,
designing and selling premium electric two-wheelers. The shareholding of your Company in AEL is 37.65% which is equivalent to 34.04% on a fully diluted basis. During FY 2021-22, AEL''s loss attributable to the Company is '' 94.5 crore.
A statement containing salient features of financial statements of subsidiary and associate companies forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company (''the Board'') has approved a policy for determining material subsidiaries. At
present, your Company does not have a material subsidiary. The Policy on material subsidiaries can be viewed on the Company''s website, www.heromotocorp.com at the following link: https://www.heromotocorp.com/en-in/uploads/code
policy/20191126105356-code-policy-400.pdf.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr. Pawan Munjal was re-appointed as the Chairman, Whole-time Director and CEO of the Company, designated as ''Chairman & CEO'', for a term of five (5) years with effect from October 1, 2021.
During the year under review, your Company has appointed Ms. Camille Tang and Mr. Rajnish Kumar as Non-Executive and
Independent Directors for a term of 3 years w.e.f November 19, 2021 and November 25, 2021, respectively. Ms. Vasudha Dinodia was appointed as Non-Executive & Non Independent Director of the Company effective November 25, 2021.
Mr. Vikram Sitaram Kasbekar was re-appointed as Whole-time Director, designated as Executive Director - Operations (Plants) for a term of three years w.e.f August 8, 2019. His term will end on August 7, 2022. Now, the Board at its meeting held on May 3, 2022 has recommended the re-appointment of Mr. Kasbekar as Whole-time Director designated as Executive Director -Operations (Plants) for another term of two (2) years effective August 8, 2022. Further, in terms of applicable provisions of the Act and the Articles of Association of the Company, Mr. Vikram Sitaram Kasbekar, Director of the Company, retires by rotation at the ensuing annual general meeting and being eligible, has offered himself for re-appointment. Brief resume and other details of Mr. Kasbekar have been furnished in the explanatory statement to the notice of the ensuing annual general meeting.
The appointment of new directors is recommended by the Nomination and Remuneration Committee (''NRC'') on the basis of requisite skills, proficiency, experience and competencies as identified and finalized by the Board considering the industry and sector in which the Company operates. The Board, on the recommendation of the NRC, independently evaluates and if found suitable, confirms an appointment to the Board. The appointments are based on the merits of the candidate and due regard is given to diversity including factors like gender, age, cultural, educational & geographical background, ethnicity, etc.
In the opinion of the Board, the Independent Directors appointed during the year are persons of high repute, integrity and possesses the relevant expertise and experience in the respective fields.
The Company has a robust succession planning process which is overseen by the Nomination and Remuneration Committee.
The tenure of Mr. M. Damodaran on the Board of Hero MotoCorp Ltd. is until the end of day of May 3, 2022.
None of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as director of the Company by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any other
statutory authority.
Key Managerial Personnel
Ms. Neerja Sharma resigned and ceased to be the Company Secretary and Chief Compliance Officer of the Company with effect from January 31, 2022. Mr. Dhiraj Kapoor has been appointed as the Company Secretary and Compliance Officer of
the Company w.e.f. February 1, 2022. He has a rich experience of over 20 years in corporate laws and compliance.
Dr. Pawan Munjal, Chairman, Whole-time Director & CEO, Mr. Niranjan Gupta, Chief Financial Officer and Mr. Dhiraj
Kapoor, Company Secretary and Compliance Officer are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed in the Act and the Listing Regulations.
In the opinion of the Board, Independent Directors fulfil the conditions specified in the Act, Rules made thereunder and Listing Regulations and are independent of the management.
BOARD MEETINGS
During FY 2021-22, nine meetings of the Board of Directors
were held. For details of these Board meetings, please refer to the section on Corporate Governance of this annual report.
COMMITTEE MEETINGS
During FY 2021-22, various committee meetings were conducted by the Company. For details of these Committee meetings, please refer to the section on Corporate Governance of this annual report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it''s Committees, the Chairman and the individual Directors was carried out for FY 2021-22. Led by the Nomination and
Remuneration Committee, the evaluation was carried out using individual questionnaires covering, amongst others, composition of Board, conduct as per company values & beliefs, contribution towards development of the strategy &
business plan, risk management, receipt of regular inputs and information, codes & policies for strengthening governance, functioning, performance & structure of Board Committees, skill set, knowledge & expertise of Directors, preparation & contribution at Board meetings, leadership, etc.
Further, the Committees were evaluated in terms of receipt of appropriate material for agenda topics in advance with right
information and insights to enable them to perform their duties effectively, review of committee charter, updation to the Board on key developments, major recommendations & action plans, stakeholder engagement, devoting sufficient time & attention on its key focus areas with open, impartial & meaningful participation and adequate deliberations before approving important transactions & decisions.
As part of the evaluation process, the performance of Non-Independent Directors, the Chairman and the Board was conducted by the Independent Directors. The performance evaluation of the respective Committees and that of Independent and Non-Independent Directors was done by the Board excluding the Director being evaluated.
The actions emerging from the Board evaluation process were collated and presented before the Nomination and Remuneration Committee as well as the Board. Suggestions/ feedback concerning strategic, governance and operational matters were actioned upon by the team.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 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, 2022, the applicable accounting standards were followed, along with proper explanation relating to material departures;
2. t hat appropriate accounting policies were selected and applied consistently and judgements and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs as at March 31, 2022 and of the profit and loss of your Company for the financial year ended March 31, 2022;
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, 2013 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, 2022 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.
REMUNERATION AND BOARD DIVERSITY POLICY
Pursuant to provisions of the Act, the Nomination and Remuneration Committee of your Board has formulated a Remuneration and Board Diversity Policy for the appointment
and determination of remuneration of the Directors, Key Managerial Personnel, senior management and other employees of your Company and to ensure diversity at the Board level. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to Executive and Non-Executive Directors of the Company.
The Nomination & Remuneration Committee (NRC) takes into consideration the best remuneration practices in the industry while fixing appropriate remuneration packages and for administering the long-term incentive plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key Managerial Personnel, senior management and other employees is designed based on the set of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, senior management and other employees is as per the Remuneration Policy of your Company.
The remuneration details of the Directors, Chief Financial Officer and Company Secretary, along with details of ratio of remuneration of each Director to the median remuneration of employees of the Company for the year under review are provided as Annexure - I.
There has been no change in the Remuneration and Board Diversity Policy of the Company during the year. The
Remuneration and Board Diversity Policy of your Company can be viewed at the following link: https://www.heromotocorp. com/en-in/uploads/code policy/20191126105210-code-policy-421.pdf
The salient features of the Remuneration and Board Diversity Policy are as under:
1. To determine remuneration of Directors, KMP, other senior management personnel and other employees, keeping in view all relevant factors including industry trends and practices.
2. At the Board meeting, only the Non-Executive and Independent Directors shall participate in approving the
remuneration paid to the Executive Directors.
3. The remuneration structure for the Executive Directors would include basic salary, commission, perquisites & allowances, contribution to Provident Fund and other funds. If the Company has no profits or its profits are inadequate, they shall be entitled to minimum remuneration as prescribed under the Act.
4. The Non-Executive and/or Independent Directors will also be entitled to remuneration by way of commission aggregating up to 1% of net profits of the Company
pursuant to the provisions of Sections 197 and 198 of the Act, in addition to sitting fees.
5. The compensation for Key Managerial Personnel, senior management and other employees is based on the external competitiveness and internal parity through periodic
benchmarking surveys. It includes basic salary, allowances, perquisites, loans and/or advances as per relevant HR policies, retirement benefits, performance linked pay out, benefits under welfare schemes, etc. besides long-term incentives/ ESOPs/ RSUs/ Performance shares or such other means as may be decided by the NRC.
6. Performance goals of senior management personnel shall be quantifiable and assessment of individual performance to be done accordingly. A significant part of senior management compensation will be variable and based
upon Company''s performance.
7. To ensure adequate diversity at Board level, all appointments to be made on the basis of merit and due regard shall be given to other diversity attributes also. The NRC shall recommend the appointment or continuation of members to achieve optimum combination at the Board and periodically assess the specific requirements in relation to Board diversity.
In terms of the erstwhile SEBI (Share Based Employee Benefits) Regulations, 2014, and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended from time to time (''SEBI Regulations''), the NRC of your Board, inter-alia, administers and monitors the Employees'' Incentive Scheme, 2014 of your Company and the Employees'' Stock Option / Restricted Stock Units plans framed thereunder.
Further, the NRC has, at its meeting held on August 11, 2021 approved grant of 39,210 Restricted Stock Units (RSUs) at face value of '' 2/- per unit vesting in three years in the ratio of 33.33%:33.33%:33.33% as per RSU Plan, 2021 and 34,895
Performance Restricted Stock Units (PRSUs) at face value of '' 2/- per unit vesting after completion of three years as per PRSU Plan, 2021 to certain eligible employees of the Company.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the Employees'' Stock Option Scheme are available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp. com/en-in/investors/annual-reports.html. Further, there is no material change in the scheme and the scheme is in compliance with the applicable regulations.
Your Company has received a certificate from M/s Sanjay
Grover & Associates, Secretarial Auditors (Firm Registration No. P2001DE052900) that the Employees'' Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI Regulations and the resolution passed by the members of the Company. The certificate would be placed/ available at the ensuing annual general meeting for inspection by the members.
Your Company is committed to benchmarking itself with global
standards of Corporate Governance. It has put in place an effective Corporate Governance system which ensures that provisions of the Act and Listing Regulations are duly complied with, not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of good Corporate Governance and best management practices that are followed globally. The Code is available on your Company''s website, www.heromotocorp. com and can be viewed at the following link: https://www. heromotocorD.com/en-in/about-us/code-of-conduct.html.
In terms of Listing Regulations, a report on Corporate Governance along with the certificate from M/s. Sanjay Grover
& Associates, Company Secretaries (Firm Registration No. P2001DE052900) confirming compliance of the conditions of
Corporate Governance is annexed hereto and forms part of this annual report as Annexure - II and Annexure - III respectively.
During the year under review, no amount has been transferred to General Reserve of the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, your Company has transferred unpaid/unclaimed dividend, amounting to '' 10.45 crore for FY 2013-14 (Final Dividend) & FY 2014-15 (Interim Dividend)
and 20,829 shares to the Investor Education and Protection
Fund (IEPF) Authority of the Central Government of India.
Further, dividend pertaining to the shares transferred to demat account of the IEPF Authority amounting to '' 7.55 crore (after
deduction of tax) was also transferred to the IEPF Authority.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial
position of your Company has occurred between April 1, 2022 and the date of signing of this report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2021-22, your Company has not given any loan or
guarantee pursuant to provisions of Section 186 of the Act. Details of investments made in terms of Section 186 of the Act are as under:
('' in crore) |
|||
Principal Amount (Shares) |
Principal Amount (Bonds/ Debentures) |
Total |
|
Opening |
2,365.53 |
652.78 |
3,018.31 |
Addition* |
- |
554.28# |
554.28 |
Reduction** |
- |
(49.13) |
(49.13) |
Closing Balance |
2,365.53 |
1,157.93 |
3,523.46 |
*HMC MM Auto Limited - Nil, HMCL Netherlands BV - Nil, HMCL Americas Inc. - Nil, Hero Tech Center Germany GmbH - Nil, Hero FinCorp Limited - Nil #Includes investment in Compulsorily Convertible Debentures of Ather Energy Private Limited - '' 150 crore **Maturity of bonds and debentures
DEPOSITS
Your Company has neither accepted nor renewed any deposits during FY 2021-22 in terms of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2021-22, all contracts/ arrangements/ transactions entered into by your Company with related parties under Section 188(1) of the Act were in the ordinary course of business and on an arm''s length basis. During FY 2021-22, your Company has not entered into any contract/ arrangement/ transaction with related parties which could be considered ''material'' in accordance with its Policy on Materiality of Related Party Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2021 -22, there were no materially significant related party transactions entered into by your Company with
the Promoters, Directors, Key Managerial Personnel or other designated persons, which might have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval. There was no related party transaction requiring approval of the Board. During FY under review, the Audit Committee has approved transactions through the omnibus mode in accordance with the provisions of the Act and Listing Regulations. Related party transactions were disclosed to the Board on regular basis as per Ind AS-24. Details of related party transactions as per Ind AS-24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp. com/en-in/uploads/code policy/20191126104550-code-policy-434.pdf.
The Risk Management Committee of the Board continues to
guide the Management Team in operating a comprehensive risk management framework.
The Company''s risk management procedures take into
consideration external as well as internal threats to devise efficient strategies for mitigating a diverse set of risks. Risk identification, analysis, mitigation and monitoring is undertaken
periodically by the Management Team and is overseen by the Risk Management Committee. Several management and leadership team members are actively involved to ensure
consistency in the overall process. Post assessment, mitigation plans are developed and a report is submitted periodically to the Risk Management Committee of the Board.
COVID continued to impact lives and livelihood. However, your
company was well prepared for managing the impact. A special task force used to frequently meet to assess the situation as it evolved across manufacturing plants, sales network, supply chain partners and offices and identify additional initiatives to
ensure business continuity.
In addition to developing a robust Business Continuity Plan to manage the COVID related disruptions, your company focused on some of the other key risk areas as well and developed mitigation plans. Some of those risks were -
Semiconductor shortage - Semiconductor shortage affected almost every automobile OEM. There was an increase in lead-time and many orders remained pending. However, your company made sure that the shortage did not significantly affect the supply chain and manufacturing. Your Company reached out to identify alternate sources for critical components and started tracking inventories at a child part level. As we plan to enter the electric vehicle segment, the shortage of semiconductors could pose a credible threat and your company is already developing plans to manage the risk well.
Shifting consumer preferences towards electric mobility -
The 2W industry has shown an unprecedented growth in EV adoption this year. Your Company is prepared to gain from
this segmental shift. The first in house 2W EV product will be launched under the new brand VIDA that means Life.
Risk due to climate change - Rising global temperatures are making it mandatory for manufacturers to contribute
towards emission reduction initiatives. While investing in electric mobility is definitely a step towards addressing this challenge, your company is also exploring ways in which shared mobility can be promoted. A risk mitigation plan to this effect is already developed.
Geopolitical uncertainties in key global markets - The
business sentiment continued to remain challenging with many global economies losing steam. The logistics and supply chain industry too was hit hard. However, your company was able to manage these risks by realising volumes from countries that soon returned to pre pandemic growth and output levels. Also, on the supply chain, your Company has built a strong local base and that made sure that your Company''s operations were not impacted.
Cost pressures in material sourcing - As cost pressures
continued to affect margins, your company evaluated
options to develop alternate and innovative strategies for part manufacturing. A significant amount of cost increase could be offset because of the savings from the LEAP and LEAD programmes.
Your Company remains committed to protecting the interests of its customers, investors, shareholders, employees and each person or entity with whom it is associated.
The details of the Committee along with its charter are set out in the Corporate Governance Report forming part of this report.
VIGIL MECHANISM/ WHISTLE-BLOWER POLICY/ CODE OF CONDUCT
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of
Directors have formulated the Vigil Mechanism/Whistle-Blower Policy which provides a robust framework for dealing with genuine concerns and grievances. Your Company has an ethics hotline managed by a third party which can be used by employees, Directors, vendors, suppliers, dealers etc. to report any violations to the Code of Conduct. Specifically, employees can raise concerns regarding any discrimination, harassment, victimisation, any other unfair practice being adopted against them or any instances of fraud by or against your Company.
During the year, your Company''s Compliance programme was further strengthened by conducting an assessment of the existing policies and procedures from an Anti-Bribery and AntiCorruption perspective. Based on the assessment, your Company
further made revisions to its key policies and procedures and instituted in place an Anti-Bribery and Anti-Corruption ("ABAC") policy in line with the leading industry practices and applicable laws such as The Prevention of Corruption Act, 1988, The Foreign Corrupt Practices Act (US), 1977 and the UK Bribery Act, 2010. Subsequent to the institutionalisation of the ABAC policy, your Company plans to conduct entity-wide trainings educating the employees about the applicability of laws, importance of its abidance and guidance in place to safeguard your Company from the associated risks.
In continuation to the Code of Conduct which was refreshed during the last financial year, all employees of your Company
underwent a mandatory Code of Conduct training which covered the eight (8) pillars of your Company''s Code of Conduct and included guidance on all governing principles such as Antibribery & Anti-corruption, conflict of interest, fair business practices, transparency and emphasis on equal opportunities while embracing a diverse and inclusive culture.
During the year under review, 24 complaints were received through various reporting channels and 8 complaints were carried forward from the previous year. Out of these, 28 complaints have been investigated, 3 complaints were reviewed and handed over for closure to the procurement team and remaining 1 complaint is under investigation.
During FY 2021-22, no individual was denied access to the Audit Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle-Blower Policy of the Company is available on the Company''s website, www. heromotocorD.com and can be viewed at the following link:
https://www.heromotocorp.com/en-in/uploads/code
policv/2020090306Q455-code-policv-95.pdf
SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Hero MotoCorp, as a responsible corporate citizen, has been consciously fulfilling its obligations, commitments and overall corporate responsibility within its local and global environments. The Company has been responsibly managing not only its business performance but also its environmental and social impact. While the Company''s sustainability strategy revolves around five pillars - inclusive growth, eco-efficiency, people, responsible value chain, and product stewardship, the Corporate Social Responsibility (CSR) vision of the Company is to ''have a greener, safer and equitable world''. Within this mandate, the Company recognises the role of biodiversity in achieving sustainable economic growth and has therefore expanded and strengthened its initiatives for biodiversity protection and resource conservation. This also aligns with the Company''s commitment to the Sustainable Development Goals (SDGs).
We understand that adopting and implementing sustainable business practices is the Company''s ''responsibility'', and equally
5. There shall be a robust monitoring system to ensure that the identified CSR activities are carried out to reap optimal benefits for the beneficiaries. There shall be a periodic review by the Committee for the projects undertaken. The Committee may suggest modifications in the planned activities considering the existing scenario/circumstances.
6. The Committee will place for the Board''s approval an annual action plan delineating the CSR Programmes to be carried out during the financial year and the succeeding
years in the case of Ongoing Projects, along with the specified budgets thereof.
FY 2021-22 update
During the year under review, your Company spent '' 87.85 crore on its CSR activities which is more than 2% of the average net profits of previous three financial years. The CSR initiatives undertaken by your Company, along with other details, form part of the annual report on CSR activities for FY 2021-22, which is annexed as Annexure - VI.
AUDIT COMMITTEE
The Audit Committee of your Company comprises of the following Non-Executive and Independent Directors:
1. |
Mr. M. Damodaran |
- Chairman |
2. |
Mr. Pradeep Dinodia |
- Member |
3. |
Ms. Tina Trikha |
- Member |
4. |
Air Chief Marshal B.S. Dhanoa (Retd.) |
- Member |
importantly, that sustainability strategy and CSR activities are intertwined and complement as well as supplement each other. Therefore, at Hero MotoCorp, both these aspects are governed together by a common decision-making team that focuses on initiatives with the shared vision of a larger, long-term and sustainable impact.
Sustainability and Corporate Social Responsibility Committee
The Company''s Sustainability and Corporate Social Responsibility (SCSR) Committee functions under the direct supervision of Dr. Pawan Munjal, Chairman & CEO of the Company, and also the Chairman of the CSR Committee. Other members of the Committee are: Mr. Pradeep Dinodia, NonExecutive Director, Prof. Jagmohan Singh Raju, Independent Director, and Ms. Tina Trikha, Independent Director.
Policy
The CSR Policy of the Company can be viewed at the following link: https://www.heromotocorp.com/en-in/uploads/code
policv/20191126104858-code-policv-35.pdf.
The salient features of the updated CSR Policy are as under:
1. The philosophy of the Company is guided by the belief
that a company''s performance must be measured by its triple ( one) bottom line contribution to building economic, social and environmental capital, thereby enhancing
societal sustainability along with governance.
2. It believes that in the strategic context of business, enterprises possess-beyond mere financial resources-the transformational capacity to create game-changing development models by unleashing their power of entrepreneurial vitality, innovation and creativity. In line with this belief, the Company will continue to craft unique models to generate livelihoods and create a better society.
3. The broad guiding principles for selection of CSR activities include need assessment, if required, and the requirement that programmes identified/adopted should be adaptive and flexible to meet the changing dynamics with focus on long-term sustained impact rather than one-time impact or requiring continuous intervention.
4. The implementation of the identified CSR activities shall be carried out either directly by the Company and/or through an implementing agency. The Company shall clearly
define the objectives along with the desired timelines to effectively implement the activities within the given time frame and work towards active engagement of all employees to achieve maximum benefits. The modalities of execution shall be defined with every identified project.
The details on the Audit Committee and its terms of reference etc. have been furnished in Corporate Governance Report which forms part of this report as Annexure - II.
During the year under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company.
AUDITORS AND AUDITORS'' REPORT Statutory Auditors
M/s. BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed in 2017 as the Statutory Auditors of the Company until the conclusion of the 39th annual general meeting of the Company. They have audited the financial statements of the Company for the year under review. The observations of Statutory Auditors in their Report, read with relevant Notes to Accounts are self-explanatory and, therefore, do not require further explanation. The Auditors'' Report does not contain any qualification, reservation or adverse remark. The tenure of the Statutory Auditors will end at the ensuing annual general meeting of the Company.
Cost Auditors
The Board, on the recommendation of Audit Committee,
has approved the appointment of M/s R J Goel & Co., Cost Accountants, as Cost Auditors for the financial year ending March 31, 2023. The Cost Auditors will submit their report for the FY 2021 -22 on or before the due date.
In accordance with the provisions of Section 148 of the Act read with Companies (Audit & Auditors) Rules, 2014, your Company is required to maintain cost records and accordingly, such accounts and records are maintained by the Company. Further, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by members at the ensuing annual general meeting.
Secretarial Auditors
M/s. Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY 2021 -22.
The Secretarial Audit Report for the said year is annexed herewith and forms part of this report as Annexure - VII. The Report does not contain any qualification, reservation or adverse remark.
Further, there were no frauds reported by the Statutory Auditors, Secretarial Auditors and Cost Auditors to the Audit
Committee or the Board under Section 143(12) of the Act.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. Comprehensive policies, guidelines and
procedures are laid down for all business processes. The internal control system has been designed to ensure that financial and other records are reliable for preparing financial and other
statements and for maintaining accountability of assets.
An extensive risk based programme of internal audits and management reviews provides assurance to the Board regarding the adequacy and efficacy of internal controls. The internal audit plan is dynamic and aligned to the business objectives of the Company and is reviewed by the Audit Committee each quarter. Further, the Audit Committee also monitors the status of management actions emanating from internal audit reviews. Such actions are now being tracked through an automated tool.
During the year, such controls were assessed and no reportable material weaknesses in the design or operation were observed.
CODE FOR PREVENTION OF INSIDER TRADING
In compliance with the Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 2015 (''the PIT Regulations'') on prevention of insider trading, your Company
during the year has revised its Code of Conduct for regulating, monitoring and reporting of trading by Designated Persons in line with the relevant amendments in the listing and PIT Regulations. The said Code lays down guidelines, which advise Designated Persons on the procedures to be followed and disclosures to be made in dealing with the shares of the Company and cautions them on consequences of non-compliances.
Your Company also has a Code of practices and procedures of fair disclosures of unpublished price sensitive information including a policy for determination of legitimate purposes along with the Institutional Mechanism for prevention of insider trading and Policy and procedures for inquiry in case of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information. Further, your Company has put in place adequate and effective system of internal controls and standard processes have been set to ensure compliance with the requirements given in these regulations to prevent insider trading.
To increase awareness on the prevention of insider trading in the organisation and to help the Designated Persons to identify and fulfill their obligations, a comprehensive campaign was run at all locations of Hero MotoCorp Ltd. This included display of relevant and useful content by way of posters on the notice boards & other strategic locations, placement of standees at common areas, key messaging through desktop wallpapers and screensavers, placement of permanent wall posters, orientation sessions as part of regular employee induction, conducting Company-wide workshop for all Designated Persons by a subject matter expert, sending text messages for closure of trading window and submission of periodic disclosures, etc. In addition to the above, a Handbook on Prevention of Insider Trading Code was also prepared and sent to all the designated employees to educate and promote awareness.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
Keeping up the commitment to sustainability, your Company has voluntarily prepared the Business Responsibility & Sustainability Report (''BRSR'') which forms part of the annual report as Annexure - VIII. The Report provides a detailed overview of initiatives taken by your Company from environmental, social and governance perspectives.
LISTING
The equity shares of your Company are presently listed on the BSE Limited (''BSE'') and the National Stock Exchange of India
Limited (''NSE'').
PERSONNEL
As on March 31, 2022, total number of employees on the
records of your Company were 9,173 as against 8,793 in the previous year.
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.
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 (''Rules''), is appended as Annexure I to the report. The information as per Rule 5(2) of the Rules forms part of this report. However, in terms of provisions of Section 136 of the Companies Act, 2013, the report and Financial Statements are being sent to the members of the Company excluding the statement of particulars of employees under Rule 5(2) of the Rules. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the registered office of the Company.
ANNUAL RETURN
In terms of Sections 92(3) and 134(3)(a) of the Act, annual return is available under the ''Investors'' section of the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp.com/en-in/ investor-downloads.html.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is fully compliant with the applicable Secretarial
Standards (SS) viz. SS-1 & SS-2 on Meetings of the Board of Directors and General Meetings respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read
with Rules made thereunder is annexed to this report as Annexure - IX.
STATUTORY DISCLOSURES
Your Directors state that there being no transactions with respect to following items during the year under review, no disclosure or reporting is required in respect of the same:
1. Deposits from the public falling within the ambit of Section
73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
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 your Company under any scheme, save and except ESOS referred to in this report.
4. The Whole-time Directors of your Company didn''t
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.
6. Buy-back of shares or under Section 67(3).
7. No application was made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
8. No settlements have been done with banks or financial institutions.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Hero MotoCorp has in place a policy towards Prevention of Sexual Harassment at Workplace. This policy is in line with the requirements of ''The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013''. All employees, whether permanent, contractual, temporary and trainees or belonging to any other category as per the definition of POSH are covered under this Policy.
Our Company aims at providing a safe workplace free from sexual harassment to its employees. It also has a ''Zero Tolerance'' Policy towards POSH. To achieve this objective, effective communication is the key and thus the Company regularly organizes awareness sessions at all locations to sensitise its employees and conducts frequent sessions in a professional manner.
During FY 2021-22, over 36 POSH Webinar Sessions were organised and in addition POSH Sessions were planned through the e-module mode. In all, POSH sessions were attended by 4,257 employees from across the organisation indicating a 95% coverage percentage. All new workmen and women associates,on joining the Company undergo a mandatory session on POSH.
In addition to the above, the Training Module of ''Unconscious
Bias'' was undertaken for Senior Managerial Staff covering 83%.
As per the said Policy, an Internal Committee (IC) is also in place towards redressal of complaints received regarding sexual harassment. Following is the summary of complaints received and disposed off during the year under review:
No. of complaints received: 7 No. of complaints disposed off: 7 No. of complaints withdrawn: 0 No. of complaints pending: 0
DISCLOSURE UNDER THE HUMAN IMMUNODEFICIENCY VIRUS AND ACQUIRED IMMUNE DEFICIENCY SYNDROME (PREVENTION AND CONTROL) ACT, 2017
During the year under review, no complaints were received by the Complaints Officer under the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention
âir^vArf onn
During the year, the Company received multiple awards and recognition. Some of them are listed below:
⢠''Manufacturer of the Year 2021'' by Bike India (Magazine)
⢠''Best Workplaces for Women 2021'' by the Economic Times to Neemrana Plant
⢠The Centre of Innovation & Technology was conferred with CII GreenCo Platinum award.
⢠Energy Efficient Unit Award by CII to the Haridwar Plant
⢠Gold Award by CII National Safety Practices to the Neemrana Plant
⢠''State Safety Award 2021'' by Government of Rajasthan to Global Parts Centre, Neemrana
The Board of Directors would like to express their sincere thanks to the shareholders and investors of the Company for the trust reposed in the Company over the past several years. Your Directors would also like to thank the central government, state governments, financial institutions, banks, customers, employees, dealers, vendors and ancillary undertakings for their co-operation and assistance. The Board would like to reiterate its commitment to continue to build the organisation into a truly world-class enterprise in all aspects.
For and on behalf of the Board Dr. Pawan Munjal
Place: New Delhi Chairman & CEO
Date: May 3, 2022 DIN: 00004223
Mar 31, 2021
Your Directors are pleased to present the thirty eighth annual report, together with the Company''s audited financial statements for the financial year ended March 31, 2021.
The standalone and consolidated financial highlights of your Company are as follows:
(H in crore) |
||||
Standalone |
Consolidated |
|||
Particulars |
Year ended |
Year ended |
||
March 31, 2021 |
March 31, 2020 |
March 31, 2021 |
March 31, 2020 |
|
Total Income |
31,380.47 |
29,614.43 |
31,517.09 |
29,985.88 |
Profit before Finance cost and Depreciation |
4,599.09 |
4,736.30 |
4,657.41 |
4,791.48 |
Expenses |
||||
Finance cost |
21.84 |
22.02 |
46.41 |
46.64 |
Depreciation and amortisation expenses |
676.87 |
817.96 |
715.12 |
845.76 |
Profit from ordinary activities before share of Profit / (Loss) of associates |
3,900.38 |
3,896.32 |
3,895.88 |
3,899.08 |
Profit/ (Loss) of associates |
||||
Share in net profit / (loss) of associates |
- |
- |
(46.56) |
34.63 |
Exceptional items - NCCD income |
- |
737.48 |
- |
737.48 |
Exceptional items - VRS expenses |
- |
(60.11) |
- |
(60.11) |
Profit from ordinary activities before tax |
3,900.38 |
4,573.69 |
3,849.32 |
4,611.08 |
Tax expense |
||||
Current tax |
924.92 |
1,084.11 |
931.38 |
1,096.79 |
Deferred tax |
11.26 |
(143.68) |
(18.11) |
(145.12) |
936.18 |
940.43 |
913.27 |
951.67 |
|
Net Profit from ordinary activities after tax |
2,964.20 |
3,633.26 |
2,936.05 |
3,659.41 |
Other comprehensive income /(expense) (net of tax) |
(21.06) |
(31.78) |
(25.87) |
(18.29) |
Total comprehensive income for the year |
2,943.14 |
3,601.48 |
2,910.18 |
3,641.12 |
Net Profit / (loss) attributable to |
||||
a) Owners of the Company |
2,964.20 |
3,633.26 |
2,917.75 |
3,638.11 |
b) Non-controlling interest |
- |
- |
18.30 |
21.30 |
Other comprehensive income attributable to |
||||
a) Owners of the Company |
(21.06) |
(31.78) |
(24.01) |
(23.61) |
b) Non-controlling interest |
- |
- |
(1.86) |
5.32 |
Total comprehensive income attributable to |
||||
a) Owners of the Company |
2,943.14 |
3,601.48 |
2,893.74 |
3,614.50 |
b) Non-controlling interest |
- |
- |
16.44 |
26.62 |
Balance of profit brought forward |
11,416.82 |
10,147.81 |
11,652.06 |
10,385.31 |
Dividend |
||||
- Interim - 2020-21 |
1,398.46 |
1,298.31 |
1,398.46 |
1,298.31 |
- Final - 2019-20 |
499.35 |
639.13 |
499.35 |
639.13 |
Corporate Dividend Tax |
- |
395.03 |
2.49 |
410.46 |
Other comprehensive income arising from re-measurement of defined benefit obligation (net of income tax) |
- |
- |
(20.81) |
(32.46) |
Balance carried to Balance Sheet |
12,462.15 |
11,416.82 |
12,648.70 |
11,652.06 |
Earnings per equity share on Net Profit from ordinary activities after tax (face value J 2/- each) (In J) |
||||
- Basic |
148.39 |
181.91 |
146.07 |
182.15 |
- Diluted |
148.37 |
181.91 |
146.04 |
182.15 |
During FY 2020-21, your Company clocked sales of 58.00 lakh units over 63.98 lakh units in the previous financial year. Revenue from operations was H 30,800.62 crore as compared to H 28,836.09 crore in FY 2019-20, registering an increase of 6.81%.
Profit before tax (PBT) in FY 2020-21 was H 3,900.38 crore as compared to H 4,573.69 crore in FY 2019-20, reflecting a decrease of 14.72%. Profit after tax (PAT) was H 2,964.20 crore as against H 3,633.26 crore in FY 2019-20, a decrease of 18.41% over the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 13.05% in FY 2020-21, as compared to 13.73% in FY 2019-20.
In accordance with provisions of the Companies Act, 2013 (''the Act'') and Indian Accounting Standards (Ind AS)-110 on Consolidated Financial Statements, read with Ind AS-28 on Investments in Associates and Joint Ventures, the Audited Consolidated Financial Statements for the year ended March 31, 2021 are provided in this annual report.
The financial year 2020-21 was a highly disruptive and challenging year wherein the auto industry and the entire global economy faced unprecedented times owing to the Covid-19 pandemic. Despite the challenges posed by the pandemic, the Company adapted to the changing business needs and continued its growth momentum. The state of preparedness and quick countermeasures taken by the Company led to its growth in sales and other milestones achieved by it during the year.
The Company remains optimistic about growth in the next financial year, as a credible recovery in the Indian economy and a positive momentum towards personal mobility is likely to further strengthen the demand for two-wheelers. The wide range of best-in-class products and consistent alignment of new technologies and services will also ensure Company''s strong growth impetus.
During the year under review, 40,849 equity shares of H 2/-each were allotted on exercise of employee stock options and Restricted Stock Units (RSUs) by the employees of the Company. Consequently, the issued and paid-up share capital of the Company as on March 31, 2021 was H 39,95,60,434 divided into 19,97,80,217 equity shares of H 2/- each.
Further, on May 5, 2021, 9,672 equity shares of H 2/- each were allotted on exercise of employee stock options/RSUs by the eligible employees of the Company. Thus, the issued and paid-up share capital of the Company was increased to H 39,95,79,778 divided into 19,97,89,889 equity shares of H 2/- each.
The Company has not issued any equity shares with differential rights, sweat equity shares or bonus shares. The Company has
only one class of equity shares with face value of H 2/- each, ranking pari-passu.
Your Directors are pleased to recommend for your approval a final dividend of H 35/- per equity share (1750%) of face value of H 2/-each (comprising of final dividend @ 1250% i.e. H 25/- per equity share and a special dividend @ 500% i.e. H 10/- per equity share) in addition to an interim dividend of H 70/- per equity share (3500%) (comprising of interim dividend @ 3250% i.e. H 65/- per equity share and a special interim dividend @ 250% i.e. H 5/- per equity share) declared in the month of February 2021, aggregating a total dividend payout of H 105/- per equity share (5250%) for FY 2020-21. The special final and interim dividend has been considered and declared to mark the achievement of historic milestone of achieving 100 million cumulative production of two-wheelers. In the previous year, total dividend payout of H 90/- per equity share (4500%) of face value of H 2/- each was made. Final dividend, if approved at the ensuing annual general meeting, shall be paid to the eligible members within the stipulated time period. Dividend Distribution Policy of the Company as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') is available at the following link: https://www.heromotocorp.com/ en-in/uploads/code policy/20191126105519-code-policy-149. pdf and is also provided as Annexure - I.
The management discussion and analysis report forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company''s business in India and abroad, risk management systems and other material developments during the year under review.
During FY 2020-21, there was no change in the nature of Company''s business.
During FY 2020-21, your Company focused on optimizing investments and ensuring business continuity to enhance market share across platforms. Capacity benchmarking and cross plant resource optimization have been consistently focused in the previous year to ensure improved efficiencies in overall ecosystem. The overall value chain turnaround post business re-opening of Covid-19 pandemic was phenomenal considering the challenging situation and facilitated your Company to regain volumes and market share promptly. With a strong recovery post Q2 and overall festive demand coupled with positive market sentiments, your Company enhanced the capacity of Halol (Gujarat) plant by 0.4 million per annum thereby consolidating the overall capacity to 9.3 million for domestic plants.
The overseas plants of your Company in Bangladesh and Colombia have continuously augmented their respective capacities during FY 2020-21 and retained a decent market share.
As a responsible corporate, your Company released its third annual Sustainability Report encompassing ESG (Environment, Social and Governance) aspects. Long-term strategy has been formulated with the objective of making your Company one of the most sustainable organisations.
Investment in Ather Energy - Electric is widely recognized as one of the most exciting areas in emerging mobility space. In 2016, Hero MotoCorp invested in Ather Energy, a two-wheeler electric vehicle company which went on to launch multiple products. As a follow up, Hero MotoCorp participated in other investment rounds. In July 2020, the Company invested H 84 crore in Ather Energy, taking up its shareholding in the company to 34.58%. Subsequently, in November 2020, Hero MotoCorp again invested in Series D round in the Electric Vehicle startup.
Agreement with Harley-Davidson - As part of its growth strategy, Hero MotoCorp is focused on growing market share in the rapidly expanding Premium motorcycle segment. In October 2020, the Company signed a distribution agreement with Harley-Davidson (H-D), under which the Company will sell and service H-D motorcycles, and sell parts and accessories and general merchandise riding gear and apparel in India. The Company has inducted 11 dealers of Harley-Davidson into its own distribution network. Starting January 1, 2021, Hero MotoCorp Ltd. has become the distributor for Harley-Davidson in India.
Hero MotoCorp Ltd. and Harley-Davidson also signed a Licensing agreement under which the Company will develop and sell a range of premium motorcycles under the H-D brand name.
Partnership with Gogoro® Inc. - Your Company recently entered into a strategic partnership with Gogoro® Inc. to accelerate the shift from fuel based mobility to sustainable electric mobility in India. This partnership would bring together the Company and Gogoro® Inc., the global leader in urban battery swapping and smart mobility innovation and this joint venture is aimed to bring Gogoro''s industry leading battery swapping platform to India. The Companies would also collaborate on electric vehicle development to bring Hero branded, powered by Gogoro Network vehicles to market.
Your Company continues to strengthen its presence in global markets. During FY 2020-21, your Company entered into Mexico market and the footprint of your Company reached 41 markets outside India. The focus was on increasing the presence in premium segment through new product launches in the key markets of Bangladesh, Nepal and Latin America. As a result, the premium segment sales grew by 58% in FY 2020-21 over previous year.
Despite the tough Covid year, your Company managed to gain market share in 6 out of 9 focus markets.
Your Company also relaunched Hero brand in markets like Kenya, Honduras and Nicaragua. Plans are afoot to relaunch in Argentina as well.
The three projects which were launched under HeroHatch continue to make significant progress.
The Company-wide Idea Contest was undertaken for the 8th consecutive year in FY 2020-21 and for the 2nd time on the new platform. In addition, the platform was accessed all-year-round by employees for submitting ideas and facilitated crowd-source solutions on specific problem statements. It is pleasing to confirm that several of the winning ideas from 6th and 7th Idea Contest have already been implemented.
Hero MotoCorp launched its 2nd organization-wide Innovation Survey in FY 2020-21 and saw a 3% increase in favorability compared to the last survey.
The Company has 6 subsidiaries including step down subsidiaries and 2 associate companies and regularly monitors the performance of these companies.
The annual accounts of subsidiary companies are available on the website of the Company viz. www.heromotocorp.com and shall also be kept open for inspection at the registered office of the Company and respective subsidiary companies. The Company shall also make available the annual accounts of these companies to any member of the Company who may be interested in obtaining the same. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.
Subsidiary Companies
Hero Tech Center Germany GmbH (''HTCG'')
HTCG is a wholly owned subsidiary of your Company, incorporated in Germany to undertake research and development and such other ancillary activities for the manufacture, testing, validating etc. of two-wheelers and components / parts thereof. It also undertakes, coordinates and facilitates two-wheeler rally participation and development activities. During FY 2020-21, HTCG has reported unadjusted revenue of H 79.90 crore and a net profit of H 4.24 crore.
HMCL Netherlands B.V. (''HNBV'')
HNBV is a wholly owned subsidiary of your Company, incorporated in Amsterdam as a private company with limited liability under the laws of The Netherlands with the primary objective of promoting overseas investments. HNBV has invested in operating companies in Colombia and Bangladesh and during FY 2020-21, it has reported unadjusted revenue of H 22.47 crore and a net profit of H 21.44 crore.
HMCL Colombia S.A.S. (''HMCLC'')
HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven Holdings LLC as a simplified stock corporation company. HNBV currently holds 68% equity in HMCLC and 32%
equity is held by Woven Holdings LLC. The main business of HMCLC is to manufacture and sell two-wheelers in Colombia. It has a manufacturing facility with a production capacity of 80,000 units per annum. During the year ended March 31, 2021, the Company has reported unadjusted revenue of H 230.65 crore and a net loss of H 7.26 crore.
HMCL Niloy Bangladesh Limited (''HNBL'')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in HNBL and 45% equity is held by Nitol Niloy Group, Bangladesh. The main business of HNBL is to manufacture and sell two-wheelers. It has a manufacturing facility with a production capacity of 1,50,000 units per annum. During FY 2020-21, HNBL reported unadjusted revenue of H 502.72 crore and a net profit of H 40.76 crore.
HMCL Americas Inc. (''HMCLA'')
HMCLA is a wholly owned subsidiary of your Company, incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America with the primary objective to pursue various global businesses. During the year ended March 31, 2021, HMCLA has reported unadjusted revenue of H 0.11 crore and a net loss of H 0.03 crore.
HMC MM Auto Limited (''HMCMMA'')
Your Company has a joint venture with Marelli Europe S.p.A, Italy, namely HMC MM Auto Limited in India, which is set up for the purpose of carrying out manufacturing, assembly, sale and distribution of two-wheeler fuel injection systems and parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2020-21, HMCMMA has reported unadjusted revenue of H 458.46 crore and a net profit of H 4.77 crore.
Associate Companies Hero FinCorp Limited (''HFCL'')
HFCL is an associate of your Company, incorporated in the year 1991. Your Company holds 41.19% in the equity share capital of HFCL. HFCL is a non-banking finance company engaged in providing financial services, including two-wheeler financing and providing credit to Company''s vendors and suppliers. Over the years, it has added several new products and customers in its portfolio, like SME and commercial loans, loan against property etc.
During FY 2020-21, HFCL''s profit attributable to the Company is H 22.90 crore.
Ather Energy Private Limited (''AEL'')
AEL is a private limited company, focused on developing, designing and selling premium electric two-wheelers. The shareholding of your Company in AEL is 38.08% which is equivalent to 34.81% on a fully diluted basis. During FY 2020-21, AEL''s loss attributable to the Company is H 69.46 crore.
A statement containing salient features of financial statements of subsidiary and associate companies forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company (''the Board'') has approved a policy for determining material subsidiaries. At present, your Company does not have a material subsidiary. The Policy on material subsidiaries can be viewed on the Company''s website, www.heromotocorp.com at the following link: https:/www.heromotocorp.com/en-in/uploads/code
policy/20191126105356-code-policy-400.pdf.
Dr. Pawan Munjal was appointed as the Chairman, Managing Director and CEO of the Company for a term of five (5) years with effect from October 1, 2016. Now, the Board at its meeting held on May 6, 2021 has recommended the re-appointment of Dr. Pawan Munjal as Whole-time Director designated as the Chairman and CEO of the Company for another term of five (5) years effective October 1, 2021. The details of re-appointment have been furnished in the explanatory statement to the notice of the ensuing annual general meeting.
In terms of applicable provisions of the Act and the Articles of Association of the Company, Mr. Pradeep Dinodia, Director of the Company retires by rotation at the ensuing annual general meeting and being eligible, has offered himself for re-appointment. Brief resume and other details of Mr. Pradeep Dinodia, who is proposed to be re-appointed as a Director of your Company, have been furnished in the explanatory statement to the notice of the ensuing annual general meeting.
During the year under review, your Company has appointed Air Chief Marshal B. S. Dhanoa (Retd.) as an Additional Director of the Company as Non-Executive and Independent Director effective October 1, 2020. The Board recommends his appointment as an Independent Director of the Company. The Company has received a notice, in writing, under Section 160 of the Act from a member proposing the candidature of Air Chief Marshal B. S. Dhanoa (Retd.).
The appointment of new directors is recommended by the Nomination and Remuneration Committee (''NRC'') on the basis of requisite skills, proficiency, experience and competencies as identified and finalized by the Board considering the industry and sector in which the Company operates. The Board, on the recommendation of the NRC, independently evaluates and if found suitable, confirms an appointment to the Board. The appointments are based on the merits of the candidate and due regard is given to diversity including factors like gender, age, cultural, educational & geographical background, ethnicity, etc.
In the opinion of the Board, the Independent Director appointed during the year under review is a person of high repute, integrity and possesses the relevant expertise and experience in the respective fields.
The Company has a robust succession planning process for Directors as well as senior management personnel which is overseen by the Nomination and Remuneration Committee.
Mr. Paul B. Edgerley ceased to be a Director of the Company effective May 4, 2021, due to completion of his term of five (5) years as an Independent Director. The Board places on record its
appreciation for the guidance and support provided by Mr. Edgerley during his tenure with the Company.
Key Managerial Personnel
Dr. Pawan Munjal, Chairman, Managing Director & CEO, Mr. Niranjan Gupta, Chief Financial Officer and Ms. Neerja Sharma, Company Secretary and Chief Compliance Officer are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed in the Act and the Listing Regulations.
In the opinion of the Board, Independent Directors fulfil the conditions specified in the Act, Rules made thereunder and Listing Regulations and are independent of the management.
During FY 2020-21, five meetings of the Board of Directors were held. For details of these Board meetings, please refer to the section on Corporate Governance of this annual report.
A formal evaluation of the performance of the Board, it''s Committees, the Chairman and the individual Directors was carried out for FY 2020-21. Led by the Nomination and Remuneration Committee, the evaluation was carried out using individual questionnaires covering, amongst others, composition of Board, conduct as per company values and beliefs, contribution towards development of the strategy & business plan, risk management, receipt of regular inputs and information, codes & policies for strengthening governance, functioning, performance & structure of Board Committees, skill set, knowledge & expertise of Directors, preparation & contribution at Board meetings, leadership, etc.
Further, the Committees were evaluated in terms of receipt of appropriate material for agenda topics in advance with right information and insights to enable them to perform their duties effectively, review of committee charter, updation to the Board on key developments, major recommendations & action plans, stakeholder engagement, devoting sufficient time & attention on its key focus areas with open, impartial & meaningful participation and adequate deliberations before approving important transactions & decisions.
As part of the evaluation process, the performance of NonIndependent Directors, the Chairman and the Board was conducted by the Independent Directors. The performance evaluation of the respective Committees and that of Independent and Non-Independent Directors was done by the Board excluding the Director being evaluated.
The actions emerging from the Board evaluation process were collated and presented before the Nomination and Remuneration Committee as well as the Board. Suggestions/feedback concerning strategic, governance and operational matters were actioned upon by the team.
Your Directors make the following statement in terms of Section 134 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, 2021, the applicable accounting standards were followed, along with proper explanation relating to material departures;
2. that appropriate accounting policies were selected and applied consistently and judgments and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs as at March 31, 2021 and of the profit and loss of your Company for the financial year ended March 31, 2021;
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, 2013 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, 2021 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.
Pursuant to provisions of the Act, the Nomination and Remuneration Committee of your Board has formulated a Remuneration and Board Diversity Policy for the appointment and determination of remuneration of the Directors, Key Managerial Personnel (''KMP''), senior management and other employees of your Company and to ensure diversity at the Board level. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while fixing appropriate remuneration packages and for administering the long-term incentive plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key Managerial Personnel, senior management and other employees is designed based on the set of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, senior management and other employees is as per the Remuneration and Board Diversity Policy of your Company.
The remuneration details of the Directors, Chief Financial Officer and Company Secretary, along with details of ratio of remuneration of each Director to the median remuneration of employees of the Company for the year under review are provided as Annexure - II.
There has been no change in the Remuneration and Board Diversity Policy of the Company during the year. The Remuneration and Board Diversity Policy of your Company can be viewed at the following link: https://www.heromotocorp.com/en-in/uploads/ code policy/20191126105210-code-policy-421.pdf.
The salient features of the Remuneration and Board Diversity Policy are as under:
1. To determine remuneration of Directors, KMP, other senior management personnel and other employees, keeping in view all relevant factors including industry trends and practices.
2. At the Board meeting, only the Non-Executive and Independent Directors shall participate in approving the remuneration paid to the Executive Directors.
3. The remuneration structure for the Executive Directors would include basic salary, commission, perquisites & allowances, contribution to Provident Fund and other funds. If the Company has no profits or its profits are inadequate, they shall be entitled to minimum remuneration as prescribed under the Act.
4. The Non-Executive and/or Independent Directors will also be entitled to remuneration by way of commission aggregating upto 1% of net profits of the Company pursuant to the provisions of Sections 197 and 198 of the Act, in addition to sitting fees.
5. The compensation for Key Managerial Personnel, senior management and other employees is based on the external competitiveness and internal parity through periodic benchmarking surveys. It includes basic salary, allowances, perquisites, loans and/or advances as per relevant HR policies, retirement benefits, performance linked pay out, benefits under welfare schemes, etc. besides long term incentives/ ESOPs/RSUs/Performance shares or such other means as may be decided by the NRC.
6. Performance goals of senior management personnel shall be quantifiable and assessment of individual performance to be done accordingly. A significant part of senior management compensation will be variable and based upon Company performance.
7. To ensure adequate diversity at Board level, all appointments to be made on the basis of merit and due regard shall be given to other diversity attributes also. The NRC shall recommend the appointment or continuation of members to achieve
optimum combination at the Board and periodically assess the specific requirements in relation to Board diversity.
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time (''SEBI Regulations''), the NRC of your Board, inter alia, administers and monitors the Employees'' Incentive Scheme, 2014 of your Company and the Employees'' Stock Option plans framed thereunder.
Further, the NRC has, at its meeting held on October 27, 2020 approved grant of 1,01,375 Stock Options at an exercise price of H 2,085/- per option under ESOP Plan, 2020 and 1,560 Restricted Stock Units (RSUs) at face value of H 2/- per unit under RSU Plan, 2020 to certain eligible employees of the Company.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the Employees'' Stock Option Scheme are provided as Annexure - III to this report and are available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https://www.heromotocorp.com/en-in/investors/ annual-reports.html.
Your Company has received a certificate from M/s BSR & Co. LLP, Statutory Auditors (Firm Registration No. 101248W/W-100022) that the Employees'' Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI Regulations and the resolution passed by the members in their general meeting. The certificate would be placed/available at the ensuing annual general meeting for inspection by the members.
Your Company is committed to benchmarking itself with global standards of Corporate Governance. It has put in place an effective Corporate Governance system which ensures that provisions of the Act and Listing Regulations are duly complied with, not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of good Corporate Governance and best management practices that are followed globally. The Code is available on your Company''s website, www.heromotocorp. com and can be viewed at the following link: https:/www. heromotocorp.com/en-in/about-us/code-of-conduct.html.
In terms of Listing Regulations, a report on Corporate Governance along with the certificate from M/s Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) confirming compliance of the conditions of Corporate Governance is annexed hereto and forms part of this annual report as Annexure - IV and Annexure - V respectively.
During the year under review, no amount has been transferred to General Reserve of the Company.
During the year under review, your Company has transferred unpaid/ unclaimed dividend, amounting to H 6.97 crore for FY 2012-13 and 18,760 shares to the Investor Education and Protection Fund (IEPF) Authority of the Central Government of India. Further, dividend pertaining to the shares transferred to demat account of the IEPF Authority amounting to H 7.65 crore (after deduction of tax) was also transferred to the IEPF Authority.
No material change and/or commitment affecting the financial position of your Company has occurred between April 1, 2021 and the date of signing of this report. However, in view of the ongoing Covid-19 pandemic, your Company carried out a comprehensive assessment of possible impact on its business operations, financial assets, contractual obligations and its overall liquidity position, based on the internal and external sources of information and application of reasonable estimates. Your Company did not foresee any significant incremental risk to the recoverability of its assets or in meeting its financial obligations over the foreseeable future, given early and required steps taken to contain, protect and mitigate the exposure.
During FY 2020-21, your Company has not given any loan or guarantee pursuant to provisions of Section 186 of the Act. Details of investments made in terms of Section 186 of the Act are as under:
(H in crore) |
|||
Particulars |
Principal Amount (Shares) |
Principal Amount (Bonds/ Debentures) |
Total |
Opening |
1,982.95 |
274.99 |
2,257.94 |
Addition* |
382.58 |
457.75 |
840.33 |
Reduction** |
- |
(79.96) |
(79.96) |
Closing Balance |
2,365.53 |
652.78 |
3,018.31 |
* HMC MM Auto Limited - Nil, HMCL Netherlands BV - H 14.21 crore, HMCL Americas Inc. - Nil, Hero Tech Center Germany GmbH - Nil, Hero FinCorp Limited - H 194.37 crore, Ather Energy Private Limited - H 174 crore (consequent to conversion of compulsorily convertible debentures into compulsorily convertible preference shares)
** Maturity of bonds and amortization
Your Company has neither accepted nor renewed any deposits during FY 2020-21 in terms of Chapter V of the Act.
During FY 2020-21, all contracts/arrangements/transactions entered into by your Company with related parties under Section 188(1) of the Act were in the ordinary course of business and on an arm''s length basis. During FY 2020-21, your Company has not entered into any contract/arrangement/transaction with related parties which could be considered ''material'' in accordance with its Policy on Materiality of Related Party Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2020-21, there were no materially significant related party transactions entered into by your Company with the Promoters, Directors, Key Managerial Personnel or other designated persons, which might have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval. There was no related party transaction requiring approval of the Board. During the year under review, the Audit Committee approved transactions through the omnibus mode in accordance with the provisions of the Act and Listing Regulations. Related party transactions were disclosed to the Board on regular basis as per Ind AS-24. Details of related party transactions as per Ind AS-24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https^www.heromotocorp.com/en-in/ uploads/code policy/70191176104550-code-policy-434.pdf.
The Board entrusted Risk Management Committee (''RMC'') continued to guide the management team of RMC towards a comprehensive risk management process in your organization.
Last year, the lockdown imposed significant hardships on the entire human race and tested their survival. Many businesses were forced to adopt varied cost cutting measures. However, your Company ensured that not just there were no salary cuts or layoffs, there were in effect even more investments on employee well-being measures.
Your Company''s response to Covid-19 was prepared well in advance and therefore, Hero MotoCorp Ltd. was amongst the first ones to restart operations when the Government order allowed. Your Company also refreshed the Risk Register and raised the profile of some of the risks that were traditionally low profile risks. This was done taking cognizance of the new threats posed by Covid-19. Your Company came up with a comprehensive risk mitigation plan and a dedicated team to manage Covid-19 risk.
Some of the risk mitigation steps were:
1. frequent interactions with dealers, suppliers, investors so that the ecosystem remained motivated;
2. proactive announcement of Work from Home policy, Corona FAQ''s, Chatbots, travel bans and an increased hygiene level at the workplace;
3. stronger demand forecasting conducted for an even more accurate planning;
4. manufacturing at all the plants was proactively suspended, however with preparedness to restart at a short notice;
5. support offered to dealers and supply chain partners to ensure sustainability;
6. digital interventions introduced at dealerships to obviate showroom visits thereby ensuring customer safety;
7. multiple communications sent to employees on end user awareness due to increased risk of cyber-attacks. Your Company also used Artificial Intelligence to identify attacks, strengthened firewalls and actively monitored the dark web to fight the threats.
When the economy opened up, there were risks that emerged because of shortage of parts because of certain restrictions in the global supply chain. With a multi-sourcing strategy plan for every part, your Company was able to successfully manage this risk.
The BSVI transition was another major event of FY 2020-21. Your Company was well prepared to manage the risk both from a technology as well as a market operations standpoint. Your Company successfully transitioned to BSVI technology across the range of its products.
Your Company remains committed to protect the interests of its customers, stakeholders, investors, shareholders, employees and each person or entity with whom it is associated.
The details of the RMC along with its charter are set out in the Corporate Governance Report, forming part of this report.
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated Vigil Mechanism/Whistle Blower Policy which provides a robust framework for dealing with genuine concerns and grievances. Your Company has an ethics hotline managed by a third party which can be used by employees, Directors, vendors, suppliers, dealers etc. to report any violations to the Code of Conduct. Specifically, employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company.
During the year, your Company''s Code of Conduct was refreshed and aligned with the new mission and vision statement of the Company. The revised Code of Conduct retained the essence of
all governing principles and its applicability was unified to include employees, directors and internal/external stakeholders. The other modifications included amendments related to the clauses on anti-bribery and anti-corruption, mandatory disclosure of all personal relationships for employees, strengthening of ''conflict of interest'' section and emphasis on being an equal opportunity employer while embracing diverse and inclusive culture. Also, the induction module of new joiners at the Company was updated to include the updated Code of Conduct and case studies associated with the governing principles of the Code of Conduct. The incident reporting channels of the vigil management framework were made simpler to encourage reporting culture and instill confidence in the users. The new facilities include 24*7 IVR service, an email address and a dedicated web based reporting page.
During the year under review, 48 complaints were received through various reporting channels and 4 complaints were carried forward from previous year. Out of these, 34 complaints have been investigated and acted upon, 6 and 4 complaints were reviewed and handed over for closure to Sales and After Sales and HR respectively and remaining 8 are under investigation.
During FY 2020-21, no individual was denied access to the Audit Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company''s website, www.heromotocorp.com and can be viewed at the following link: https:/www.heromotocorp. com/en-in/uploads/code policy/20200903060455-code-policy-95.pdf.
Your Company has constituted a Corporate Social Responsibility (CSR) Committee which functions under direct supervision of Dr. Pawan Munjal, Chairman, Managing Director & CEO of your Company, who is also the Chairman of the CSR Committee. Other members of the Committee are Mr. Pradeep Dinodia, Non-Executive Director, Prof. Jagmohan Singh Raju and Ms. Tina Trikha, who are the Independent Directors of your Company. Ms. Tina Trikha has been inducted in the CSR Committee on October 28, 2020.
The Company has also been doing a lot of work around sustainability in order to make the operations, business and the Company as a whole, a sustainable organization. The Company''s sustainability strategy rests on the following five pillars:
1. Inclusive Growth
2. Eco-efficiency
3. People
4. Responsible Value Chain
5. Product Stewardship
In today''s ever-evolving world, it is difficult to separate a corporate''s responsibility towards society from the obligation of having a sustainable business and both the concepts are intertwined. From a strong governance perspective, it is imperative that both be run from a common strategic view point and direction, to have maximum long term impact. Accordingly, the ambit of the
CSR Committee was expanded to include the terms of reference with respect to Sustainability and thus, the CSR Committee was renamed as Sustainability and Corporate Social Responsibility Committee.
The CSR policy of the Company was changed during the year due to the recent amendments brought by the Ministry of Corporate Affairs in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and as a part of standard review. The CSR Policy of your Company can be viewed at the following link: https://www.heromotocorp.com/en-in/uploads/code
policy/70191176104858-code-policy-35.pdf.
The salient features of the updated CSR Policy are as under:
1. The philosophy of the Company provides that a company''s performance must be measured by its triple ( one) bottom line contribution to building economic, social and environmental capital thereby enhancing societal sustainability along with governance.
2. It believes that in the strategic context of business, enterprises possess, beyond mere financial resources, the transformational capacity to create game-changing development models by unleashing their power of entrepreneurial vitality, innovation and creativity. In line with this belief, the Company will continue to craft unique models to generate livelihoods and create a better society.
3. The broad guiding principles for selection of CSR activities include needs assessment, if required, programmes identified/adopted should be adaptive and flexible to meet the changing dynamics with focus on long-term sustained impact rather than one-time impact or requiring continuous intervention.
4. The implementation of the identified CSR activities shall be carried out either directly by the Company and/or through an implementing agency. The Company shall clearly define the objectives along with the desired timelines to effectively implement the activities within the given time frame and work towards active engagement of all employees to achieve maximum benefits. The modalities of execution shall be defined with every identified project.
5. There shall be a robust monitoring system to ensure that the identified CSR activities are carried out to reap optimal benefits for the beneficiaries. There shall be a periodic review by the Committee for the projects undertaken. The Committee may suggest modifications in the planned activities considering the existing scenario/circumstances.
6. The Committee will place for the Board''s approval, an annual action plan delineating the CSR Programmes to be carried out during the financial year and the succeeding years in the case of Ongoing Projects along with the specified budgets thereof.
During the year under review, your Company spent H 99.73 crore on its CSR activities (including the amount of H 31.38 crore to be set-off), which is more than 2% of the average net profits of previous three financial years. The contribution of H 31.38 crore was made to PM-CARES Fund on March 31, 2020 in pursuance of the appeal to contribute to PM-CARES Fund by the Secretary,
Ministry of Corporate Affairs. The CSR initiatives undertaken by your Company, along with other details form part of the annual report on CSR activities for FY 2020-21, which is annexed as Annexure - VIII. The overview of CSR activities carried out in FY 2020-21 is provided in a separate section in this annual report.
The Audit Committee of your Company comprises of the following Non-Executive and Independent Directors:
1. |
Mr. M. Damodaran |
Chairman |
2. |
Mr. Pradeep Dinodia |
Member |
3. |
Ms. Tina Trikha |
Member |
4. |
Air Chief Marshal B. S. Dhanoa (Retd.) |
Member |
Mr. Paul B. Edgerley ceased to be member of the Audit Committee due to completion of his term of five (5) years as an Independent Director.
Air Chief Marshal B. S. Dhanoa (Retd.) has been inducted in the Audit Committee on October 28, 2020. Further details on the Audit Committee and its terms of reference etc. have been furnished in Corporate Governance Report which forms part of this report as Annexure - IV.
During the year under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company.
Statutory Auditors
M/s BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed in 2017 as the Statutory Auditors of the Company until the conclusion of the 39th annual general meeting of the Company.
M/s BSR & Co. LLP is one of the leading & recognized audit firms, affiliated to a renowned global brand. Its experience as an audit firm is commensurate with the requirements as regards the size and competencies necessary for rendering auditing services to the Company. The Company, as part of rotation of statutory auditors, appointed M/s BSR & Co. LLP having evaluated its competencies on various parameters including experience of the firm, partner and team in relevant industry, use of latest technology and auditing tools, peer review process for ensuring quality of audit and documentation. The firm performs its obligations in adherence to recognised auditing standards and periodically certifies its independence from the management.
They have audited the financial statements of the Company for the year under review. The observations of Statutory Auditors in their Report read with relevant Notes to Accounts are self-explanatory and therefore, do not require further explanation. The Auditors'' Report does not contain any qualification, reservation or adverse remark. Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
Cost Auditors
The Board, on the recommendation of Audit Committee, has approved the appointment of M/s R J Goel & Co., Cost Accountants, as Cost Auditors for the financial year ending March 31, 2022. The erstwhile Cost Auditors, M/s Ramanath Iyer & Co. will submit their report for the FY 2020-21 on or before the due date.
In accordance with the provisions of Section 148 of the Act read with Companies (Audit & Auditors) Rules, 2014, your Company is required to maintain cost records and accordingly, such accounts and records are maintained by the Company. Further, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by members at the ensuing annual general meeting.
Secretarial Auditors
M/s Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY 2020-21.
The Secretarial Audit Report for the said year is annexed herewith and forms part of this report as Annexure - IX. The Report does not contain any qualification, reservation or adverse remark.
Your Company has a robust and well embedded system of internal controls. Comprehensive policies, guidelines and procedures are laid down for all business processes. The internal control system has been designed to ensure that financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.
An extensive risk based programme of internal audits and management reviews provides assurance to the Board regarding the adequacy and efficacy of internal controls. The internal audit plan is dynamic and aligned to the business objectives of the Company and is reviewed by the Audit Committee each quarter. Further, the Audit Committee also monitors the status of management actions emanating from internal audit reviews. Such actions are now being tracked through an automated tool.
During the year, such controls were assessed and no reportable material weaknesses in the design or operation were observed.
In compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (''the PIT Regulations'') on prevention of insider trading, your Company has in place a Code of Conduct for regulating, monitoring and reporting of trading by Designated Persons. The said Code lays down guidelines, which advise Designated Persons on the procedures to be followed and disclosures to be made in dealing with the shares of the Company and cautions them on consequences of non-compliances.
Your Company also has a Code of practices and procedures of fair disclosures of unpublished price sensitive information including a policy for determination of legitimate purposes along with the Institutional Mechanism for prevention of insider trading and
Policy and procedures for inquiry in case of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information. Further, your Company has put in place adequate and effective system of internal controls and standard processes have been set to ensure compliance with the requirements given in these regulations to prevent insider trading.
To increase awareness on the prevention of insider trading in the organization and to help the Designated Persons to identify and fulfill their obligations, a comprehensive campaign was run at all locations of Hero MotoCorp Ltd. This included display of relevant and useful content by way of posters on the notice boards & other strategic locations, placement of standees at common areas, key messaging through desktop wallpapers and screensavers, placement of permanent wall posters, orientation sessions as part of regular employee induction, conducting Company-wide workshop for all Designated Persons by a subject matter expert, sending text messages for closure of trading window and submission of periodic disclosures, etc. In addition to the above, an e-learning module was also developed and rolled out with an in-built assessment, for all the designated employees to educate and promote awareness.
Business Responsibility Report
As stipulated under the Listing Regulations, the Business Responsibility Report (''BRR'') has been prepared and forms part of the annual report as Annexure - X. The Report provides a detailed overview of initiatives taken by your Company from environmental, social and governance perspectives.
Listing
The equity shares of your Company are presently listed on the BSE Limited (''BSE'') and the National Stock Exchange of India Limited (''NSE'').
Personnel
As on March 31, 2021, total number of employees on the records of your Company were 8,793 as against 8,599 in the previous year.
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.
Particulars of Employees
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (''Rules''), is appended as Annexure - II to the report. The information as per Rule 5(2) of the Rules forms part of this report. However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Rules, the report and Financial Statements are being sent to the members of the Company excluding the statement of particulars of employees under Rule 5(2) of the Rules. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the registered office of the Company.
Annual Return
In terms of Sections 92(3) and 134(3)(a) of the Act, annual return is available under the ''Investors'' section of the Company''s website, www.heromotocorp.com and can be viewed at the following link: https:/www.heromotocorp.com/en-in/investor-downloads.html.
Compliance with Secretarial Standards
The Company is fully compliant with the applicable Secretarial Standards (SS) viz. SS-1 & SS-2 on Meetings of the Board of Directors and General Meetings respectively.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Information required under Section 134(3)(m) of the Act read with Rules made thereunder is annexed to this report as Annexure - XI.
Statutory Disclosures
Your Directors state that there being no transactions with respect to following items during the year under review, no disclosure or reporting is required in respect of the same:
1. Deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
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 your Company under any scheme, save and except ESOS referred to in this report.
4. Neither the Managing Director nor the Whole-time Director of your 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.
6. Buy-back of shares or under Section 67(3).
7. No application was made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
8. No settlements have been done with banks or financial institutions.
Disclosure under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace. This policy is in line with the requirements of The Sexual Harassment of Women at the
Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees, whether permanent, contractual, temporary and trainees are covered under this Policy. The Company aims at providing a workplace that enables employees to work without gender bias and sexual harassment. To achieve this objective, the Company regularly organizes awareness sessions at all locations to sensitise the employees and conduct themselves in a professional manner. During FY 2020-21, over 120 POSH sessions were organized which were attended by more than 6,400 employees including workmen.
In addition to the above, over 20 gender sensitization sessions along with approximately 15 webinars on unconscious bias were conducted which were attended by more than 800 and 300 employees respectively.
As per the said Policy, an Internal Committee is also in place to redress complaints received regarding sexual harassment. Following is the summary of complaints received and disposed off during the year under review:
No. of complaints received: 2 No. of complaints disposed off: 2 No. of complaints withdrawn: 0 No. of complaints pending: 0
Note: One of the complaints pending from the previous year was also disposed off.
Disclosure under the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017
During the year under review, no complaints were received by the Complaints Officer under the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017.
Awards and Recognition
During the year, the Company received multiple awards and recognition. Some of them are listed below:
1. Significant Achievement Award in Corporate Excellence in Sustainability by CII
2. CII-Environmental Best Practice Award 2020 for Zero Waste to Landfill - Most Innovative Environmental Project for Neemrana Plant
3. CII National Award for Excellence in Water Management 2020 to Gurgaon Plant under ''Within the Fence'' category
4. CII National Award for Excellence in Water Management 2020 to Neemrana Plant as ''Noteworthy Project'' under ''Beyond the Fence'' category
5. GreenCo Star Performer Award 2020 by CII to Neemrana Plant for sustaining and continuously improving the environmental performance
6. National Award for Water Management 2020 by CII to Global Parts Center (GPC) and Neemrana Plant for an innovative, community led water management program
7. Premium Commuter Motorcycle of the year to Xtreme 160R by Car & Bike
8. CNB viewer''s choice motorcycle of the year to Xtreme 160R by Car & Bike
9. Commuter Motorcycle of the year to Passion Pro by Car & Bike
10. Bike of the year upto 160cc to Xtreme 160R by Bike India
11. Best of 2020 to Xtreme 160R by Auto X
12. Commuter Motorcycle of the year to Passion Pro by Motoring World
13. Premium Commuter Motorcycle of the year to Xtreme 160R by Motoring World
14. Two-Wheeler Manufacturer of the year by Bike India
In addition to the above, the Company surpassed the monumental
100 million cumulative production milestone on January 21, 2021
and became the only Indian automotive manufacturer to achieve
the incredible landmark. The 100 millionth motorcycle, the Xtreme
160R, was rolled-out of the Company''s manufacturing facility in Haridwar, in the northern Indian hill state of Uttarakhand. To mark the occasion, your Company also introduced six celebration edition models. These included four motorcycles - Splendor , Xtreme 160R, Passion Pro and Glamour and two scooters - Destini 125 & Maestro Edge 110.
The Board of Directors would like to express their sincere thanks to the shareholders and investors of the Company for the trust reposed in the Company over the past several years. Your Directors would also like to thank the central government, state governments, financial institutions, banks, customers, employees, dealers, vendors and ancillary undertakings for their co-operation and assistance. The Board would like to reiterate its commitment to continue to build the organization into a truly world-class enterprise in all aspects.
For and on behalf of the Board Pawan Munjal
Date: May 6, 2021 Chairman
Place: New Delhi DIN: 00004223
Mar 31, 2019
Dear Members,
The Directors are pleased to present the Thirty Sixth Annual Report, together with the Companyâs audited financial statements for the financial year ended March 31, 2019.
FINANCIAL RESULTS - STANDALONE S CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
(Rs. in crore)
Particulars |
Standalone Year ended |
Consolidated Year ended |
||
March 31, 2019 |
March 31, 2018 |
March 31, 2019 |
March 31, 2018 |
|
Total Income |
34,341.79 |
33,397.64 |
34,658.96 |
33,624.11 |
Profit before Finance cost and Depreciation |
5,621.34 |
5,806.01 |
5,705.16 |
5,848.22 |
Expenses |
||||
Finance cost |
8.60 |
6.25 |
37.18 |
30.80 |
Depreciation and amortisation expenses |
602.01 |
555.60 |
624.44 |
574.98 |
Profit from ordinary activities before share of Profit / (Loss) of associates |
5,010.73 |
5,244.16 |
5,043.54 |
5,242.44 |
Profit/ (Loss) of associates |
||||
Share in net profit / (loss) of associates |
- |
- |
60.76 |
49.66 |
Profit from ordinary activities before tax |
5,010.73 |
5,244.16 |
5,104.30 |
5,292.10 |
Tax expense |
||||
Current tax |
1,601.02 |
1,446.95 |
1,608.81 |
1,450.99 |
Deferred tax |
24.84 |
99.85 |
29.14 |
118.94 |
1,625.86 |
1,546.80 |
1,637.95 |
1,569.93 |
|
Net Profit from ordinary activities after tax |
3,384.87 |
3,697.36 |
3,466.35 |
3,722.17 |
Other comprehensive income /(expense) (net of tax) |
(17.81) |
(4.71) |
(14.98) |
(7.26) |
Total comprehensive income for the year |
3,367.06 |
3,692.65 |
3,451.37 |
3,714.91 |
Net Profit / (loss) attributable to |
||||
a) Owners of the Company |
3,384.87 |
3,697.36 |
3,444.09 |
3,720.40 |
b) Non-controlling interest |
- |
- |
22.26 |
1.77 |
Other comprehensive income attributable to |
||||
a) Owners of the Company |
(17.81) |
(4.71) |
(16.32) |
(5.89) |
b) Non-controlling interest |
- |
- |
1.34 |
(1.37) |
Total comprehensive income attributable to |
||||
a) Owners of the Company |
3,367.06 |
3,692.65 |
3,427.77 |
3,714.51 |
b) Non-controlling interest |
- |
- |
23.60 |
0.40 |
Balance of profit brought forward |
9,068.11 |
7,418.53 |
9,247.01 |
7,597.60 |
Dividend |
||||
- Interim - 2018-19 |
1,098.50 |
1,098.41 |
1,098.50 |
1,098.41 |
- Final - 2017-18 |
798.85 |
599.09 |
798.85 |
599.09 |
Corporate Dividend Tax |
390.01 |
345.57 |
390.01 |
345.57 |
Adjustment on account of change in controlling interest |
- |
- |
- |
(23.50) |
Other Comprehensive income arising from remeasurement of defined benefit obligation (net of income tax) |
- |
- |
(18.43) |
(4.42) |
Balance carried to Balance Sheet |
10,147.81 |
9,068.11 |
10,385.31 |
9,247.01 |
Earnings per equity share on Net Profit from ordinary activities after tax (face value Rs.2/- each) (In Rs.) |
||||
- Basic |
169.48 |
185.14 |
172.45 |
186.30 |
- Diluted |
169.47 |
185.13 |
172.44 |
186.29 |
FINANCIAL HIGHLIGHTS
During FY 2018-19 under review, your Company clocked sales of 78,20,745 units over 75,87,154 units in the previous FY.
During FY 2018-19, revenue from operations was Rs.33,650.54 crore as compared to Rs.32,871.82 crore in FY 2017-18, registering an increase of 2.37%.
Profit before tax [PBT) in FY 2018-19 was Rs.5,010.73 crore as compared to Rs.5,244.16 crore in FY 2017-18, reflecting a decrease of 4.45%. Profit after tax [PAT) was Rs.3,384.87 crore as against Rs.3,697.36 crore in FY 2017-18, a decrease of 8.45% from the previous year.
Earnings before Interest, Depreciation and Taxes [EBIDTA) stood at 14.65% in FY 2018-19, as compared to 16.38% in FY 2017-18.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Companies Act, 2013 [âthe Actâ) and Indian Accounting Standard [Ind AS)-110 on Consolidated Financial Statements, read with Ind AS-28 on Investments in Associates and Joint Ventures, the Audited Consolidated Financial Statements for the FY ended March 31, 2019 are provided in this Annual Report.
CHANGES IN CAPITAL STRUCTURE
During the FY under review, 15,429 equity shares of Rs.2 each were allotted on exercise of employee stock options by the employees of the Company. Consequently, the issued and paid-up share capital of the Company as on March 31, 2019 was Rs.39,94,53,768 divided into 19,97,26,884 equity shares of Rs.2 each.
The Company has not issued any equity shares with differential rights, sweat equity shares or bonus shares. The Company has only one class of equity shares with face value of Rs.2 each, ranking pari-passu.
DIVIDEND
Your Directors are pleased to recommend for your approval a final dividend of Rs.32 per equity share [1600%) of face value of Rs.2 each, in addition to an interim dividend of Rs.55 per equity share [2750%) declared in the month of January 2019, aggregating a total dividend payout of Rs.87 per equity share [4350%) for FY 2018-19. In the previous FY, total dividend payout of Rs.95 per equity share of the face value of Rs.2 each was made. Final dividend, if approved at the ensuing Annual General Meeting, shall be paid to the eligible Members within the stipulated time period. Dividend Distribution Policy of the Company as per the SEBI [Listing Obligations and Disclosure Requirements) Regulations, 2015 [âListing Regulationsâ) is available at the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/dividend-distribution-policy.html and is also provided as Annexure - I.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Companyâs business in India and abroad, risk management systems and other material developments during the FY under review.
CHANGE IN NATURE OF BUSINESS
During FY 2018-19, there was no change in the nature of Companyâs business.
CAPACITY EXPANSION, NEW PROJECTS S STRATEGIC ALLIANCES
During FY 2018-19, construction of sixth manufacturing facility at Sricity in Chittoor District in the state of Andhra Pradesh has reached at an advanced stage with an annual installed capacity of 1.8 million units. Your Company has invested approx. Rs.650 crore in Phase I out of total projected investment of Rs.1,600 crore in setting up the manufacturing facility. Phase I is expected to be operational by October 2019.
Further, the overseas plant of your Company at Jessore in Bangladesh achieved its designed production capacity of 1.5 lakh units during FY 2018-19 and consolidated decent market share.
Transition to BS VI emission norms has been a key focus area in FY 2018-19 and your Company is consolidating all efforts to optimize capacities and investments across all locations.
Your Company is constantly expanding the boundaries on innovation - both internal and external. It has been running internal idea generation contests successfully involving employees for many years now. As a responsible corporate, your Company voluntarily took important steps to release its first ever Sustainability Report encompassing ESG [Environment, Social and Governance) aspects at organization level. Your Company has also formulated a long term strategy âHATS 2020" to address the material issues with the objective of making it one of the sustainable organizations.
GLOBAL FORAYS
Your Company continues to strengthen its presence in Global Markets. During FY 2018-19, the focus was on the existing markets and continued innovation efforts across these markets. Despite the tough macroeconomic environment in many of the markets, your Company managed to increase its volumes in the global markets. Your Company achieved the number one position in Bangladesh during the festive season. In significant markets such as Colombia, your Company was able to reach close to the set targets. Your Company has taken innumerable innovation efforts helping it offer differentiated retail financing, unmatched lending and leasing solutions and increased digital footprints through innovative region-specific marketing and communication efforts.
Working closely with strong and allied business partners has been the key for your Company to grow in the global markets. Your Company introduced world class motorcycle and scooter models across its markets and also showcased its models in various Auto Shows across the globe including the ones in Italy, Colombia, Argentina, Turkey, Bangladesh, Nepal, Sri Lanka and Bolivia.
INNOVATION
Your Company accelerated the momentum on fostering a culture of innovation. Your Company has created an incubation center - HeroHatch - to enable internal teams work like startups. Your Company initiated two projects at this incubation center through a few handpicked employees who came together to launch their own âstartups".
The Company-wide Idea Contest was undertaken for the 6th year in FY 2018-19, but in an evolved format. Your Company also tapped the external innovation ecosystem through the Open Innovation project. The Company completed a couple of projects successfully while the others provided valuable learnings. Your Company also launched an organization wide Innovation Survey in FY 2018-19.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 7 subsidiaries including step down subsidiaries and 3 associate companies. During the FY under review, the Company has set up a Tech Center in Germany as its wholly owned subsidiary under the name, Hero Tech Center Germany GmbH. The Company regularly monitors the performance of these companies.
The Company shall make available the annual accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and respective subsidiary companies. Further, the annual accounts of the subsidiaries are also available on the website of the Company viz. www. heromotocorp.com. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.
Subsidiaries
Hero Tech Center Germany GmbH (âHTCGâ)
HTCG has been incorporated as a wholly owned subsidiary in Germany to undertake research and development and such other ancillary activities for the manufacture, testing, validating etc. of two wheelers and components / parts thereof. It will also undertake, coordinate and facilitate two-wheeler rally participation and development activities. During the period ended FY 2018-19, HTCG has reported unadjusted revenue of Rs.1.77 crore and a net loss of Rs.0.48 crore.
HMCL Netherlands B.V. (âHNBVâ)
HNBV, a wholly owned subsidiary of your Company was incorporated in Amsterdam as a private company with limited liability under the laws of The Netherlands with the primary objective of promoting overseas investments. During FY 201819, HNBV has invested in operating companies in Colombia and Bangladesh and has reported unadjusted revenue of Rs.20.01 crore and a net profit of Rs.19.27 crore.
HMCL Colombia S.A.S. (âHMCLCâ)
HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven Holdings LLC as a simplified stock corporation company. HNBV currently holds 68% equity in HMCLC and 32% equity is held by Woven Holdings LLC. The main business of HMCLC is to manufacture and sell two-wheelers in Colombia. It has a manufacturing facility with a production capacity of 60,000 per annum. During the year ended March 31, 2019, the Company has reported unadjusted revenue of Rs.167.98 crore and a net loss of Rs.34.49 crore.
HMCL Niloy Bangladesh Limited (âHNBLâ)
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in HNBL and 45% equity is held by Nitol Niloy Group, Bangladesh. The main business of HNBL is to manufacture and sell two-wheelers. During FY 2018-19, HNBL reported unadjusted revenue of Rs.735.09 crore and a net profit of Rs.80.43 crore.
HMCL (NA) Inc.
HMCL (NA) Inc., a wholly owned subsidiary of your Company was incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America. HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (âEBRâ), a Delaware corporation by subscribing to 49.20% of its equity share capital. During the period ended March 31, 2019, HMCL (NA) Inc. has reported Nil revenue (unadjusted) and a net loss of Rs.0.01 crore.
HMCL Americas Inc. (âHMCLAâ)
HMCLA, a wholly owned subsidiary of your Company, was incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America with the primary objective to pursue various global businesses. During the year ended March 31, 2019, HMCLA has reported unadjusted revenue of Rs.0.24 crore and a net loss of Rs.0.08 crore.
HMC MM Auto Limited (âHMCMMAâ)
Your Company has a joint venture with Magneti Marelli S.p.A Italy, namely HMC MM Auto Limited in India, which is set up for the purpose of carrying out manufacturing, assembly, sale and distribution of two-wheeler fuel injection systems and parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2018-19, HMCMMA has reported unadjusted revenue of Rs.26.39 crore and a net loss of Rs.7.24 crore.
Associate Companies Hero FinCorp Ltd. (âHFCLâ)
HFCL, an associate of your Company, was incorporated in the year 1991. Your Company holds 41.18% in the equity share capital of HFCL. HFCL is a non-banking finance company engaged in providing financial services, including two-wheeler financing and providing credit to Companyâs vendors and suppliers. Over the years, it has added several new products and customers in its portfolio, like SME and commercial loans, loan against property etc.
During FY 2018-19, HFCLâs profit attributable to the Company is Rs.83.26 crore.
Ather Energy Private Ltd. (âAELâ)
AEL is a private limited company, focused on developing, designing and selling premium electric two-wheelers. During FY 2018-19, AELâs loss attributable to the Company is Rs.34.73 crore.
Erik Buell Racing, Inc. (âEBRâ)
Your Company through its subsidiary, HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (âEBRâ), a Delaware Corporation by subscribing to 49.20% of its equity share capital. EBR has ceased its operations and entered into Assignment for the Benefit of Creditors under Chapter 128 of the Wisconsin Statutes (âChapter 128 Processâ).
A statement containing salient features of financial statements of subsidiaries and associate companies forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company (âthe Boardâ) has approved a policy for determining Material Subsidiaries. At present, your Company does not have a Material Subsidiary. The Policy on Material Subsidiaries can be viewed on the Companyâs website, www.heromotocorp.com at the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/ policy-on-material.html.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of applicable provisions of the Act and the Articles of Association of the Company, Mr. Vikram S. Kasbekar, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment. It is also proposed to re-appoint Mr. Kasbekar as Executive Director - Operations (Plants) for a period upto 3 years. Brief resume and other details of Mr. Vikram S. Kasbekar, who is proposed to be re-appointed as a Director of your Company, have been furnished in the Explanatory Statement to the Notice of the ensuing Annual General Meeting.
During the FY under review, your Company has appointed Prof. Jagmohan Singh Raju as an Additional Director of the Company in the category of Non-Executive and Independent Directors effective November 15, 2018. The Board recommends his appointment as an Independent Director of the Company for a term of 5 years.
As per the provisions of Section 149 of the Act, the Board recommends the re-appointment of Mr. M. Damodaran for his second term upto May 3, 2022 as an Independent Director of your Company. Further, due to the change in status of Mr. Pradeep Dinodia from Independent Director to Non-Executive Director, the Board recommends the re-appointment of Mr. Pradeep Dinodia as a Non-Executive Director, liable to retire by rotation, pursuant to Section 152 of the Act, effective April 25, 2019.
The Company has received a notice, in writing, under Section 160 of the Act from the members proposing the candidature of Prof. Raju, Mr. Damodaran and Mr. Dinodia.
During the year, Gen. (Retd.) V. P. Malik and Dr. Pritam Singh ceased to be the Directors of the Company effective March 31, 2019, due to operation of law and relevant provisions of the Listing Regulations. The Board placed on record its appreciation for the guidance and support provided by Gen. (Retd.) Malik and Dr. Singh during their tenure with the Company.
Key Managerial Personnel
Dr. Pawan Munjal, Chairman, Managing Director S CEO, Mr. Niranjan Gupta, Chief Financial Officer and Ms. Neerja Sharma, Company Secretary S Chief Compliance Officer are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed in the Act and the Listing Regulations.
In the opinion of the Board, Independent Directors fulfil the conditions specified in the Act, Rules made thereunder and Listing Regulations and are independent of the management.
BOARD MEETINGS
During FY 2018-19, four meetings of the Board of Directors were held. For details of these Board meetings, please refer to the section on Corporate Governance of this Annual Report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, itâs Committees, the Chairman and the individual Directors was carried out for FY 2018-19. Led by the Nomination S Remuneration Committee, the evaluation was carried out using individual questionnaires covering, amongst others, composition of Board, conduct as per Company values S beliefs, contribution towards development of the strategy S business plan, risk management, receipt of regular inputs and information, codes S policies for strengthening governance, functioning, performance S structure of Board Committees, skill set, knowledge S expertise of Directors, preparation S contribution at Board meetings, leadership, etc.
As part of the evaluation process, the performance of NonIndependent Directors, the Chairman and the Board was conducted by the Independent Directors. The performance evaluation of the respective Committees and that of Independent and Non-Independent Directors was done by the Board excluding the Director being evaluated.
DIRECTORSâ RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 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, 2019, the applicable accounting standards were followed, along with proper explanation relating to material departures;
2. that appropriate accounting policies were selected and applied consistently and judgments and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs as at March 31, 2019 and of the profit and loss of your Company for the financial year ended March 31, 2019;
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, 2013 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, 2019 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.
REMUNERATION POLICY
Pursuant to provisions of the Act, the Nomination and Remuneration Committee (âNRCâ) of your Board has formulated a Remuneration Policy for the appointment and determination of remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of your Company. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while fixing appropriate remuneration packages and for administering the long-term incentive plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key Managerial Personnel, Senior Management and other employees is designed based on the set of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, Senior Management and other employees is as per the Remuneration Policy of your Company.
The Remuneration details of the Directors, Chief Financial Officer and Company Secretary, along with details of ratio of remuneration of each Director to the median remuneration of employees of the Company for the FY under review are provided as Annexure - II.
The Remuneration Policy of your Company can be viewed at the following link: http://www.heromotocorp.com/en-in/aboutus/ key-policies/remuneration-policy.html. There has been no material change in the Remuneration Policy of the Company. The salient features of the Remuneration Policy are as under:
1. To determine remuneration of Directors, KMPs and other senior management personnel, keeping in view all relevant factors including industry trends and practices.
2. At the Board meeting, only the Non-Executive and Independent Directors shall participate in approving the remuneration paid to the Executive Directors.
3. The remuneration structure for the Executive Directors would include Basic Salary, Commission, Perquisites S Allowances, Contribution to Provident Fund and other funds. If the Company has no profits or its profits are inadequate, they shall be entitled to minimum remuneration as prescribed under the Act.
4. The Non-Executive and/ or Independent Directors will also be entitled to remuneration by way of commission aggregating upto 1% of net profits of the Company pursuant to the provisions of Sections 197 and 198 of the Act, in addition to sitting fees.
5. The compensation for Key Managerial Personnel, senior management and other employees is based on the external competitiveness and internal parity through annual benchmarking surveys. It includes basic salary, allowances, perquisites, loans and/or advances as per relevant HR policies, retirement benefits, performance linked pay out, benefits under welfare schemes, etc.
EMPLOYEESâ INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time (âSEBI Regulationsâ), the NRC of your Board, inter-alia, administers and monitors the Employeesâ Incentive Scheme, 2014 of your Company and the Employeesâ Stock Option plans framed thereunder.
Further, the NRC has, at its meetings held on January 31, 2019 and March 25, 2019 approved grant of 17,760 Restricted Stock Units (RSUs) at face value of Rs.2/- per unit under RSU Plan 2018 and 1,25,000 stock options at an exercise price of Rs.2,033/- per option under ESOP Plan 2018, respectively to certain eligible employees of the Company.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the Employeesâ Stock Option Scheme are provided as Annexure - III to this Report and is available on the Companyâs website, www.heromotocorp.com and can be viewed on the following link: http://www.heromotocorp.com/en-in/esop.php.
Your Company has received a certificate from M/s BSR S Co. LLP, Statutory Auditors (Firm Registration No. 101248W/W-100022) that the Employeesâ Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI Regulations and the resolution passed by the Members in their general meeting. The certificate would be placed at the ensuing Annual General Meeting for inspection by the Members.
CORPORATE GOVERNANCE
Your Company is committed to benchmarking itself with global standards of Corporate Governance. It has put in place an effective Corporate Governance system which ensures that provisions of the Act and Listing Regulations are duly complied with, not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of good Corporate Governance and best management practices that are followed globally. The Code is available on your Companyâs website, www. heromotocorp.com and can be viewed at the following link: http://www.heromotocorp.com/en-in/about-us/code-of-conduct.html.
In terms of Listing Regulations, a report on Corporate Governance along with the certificate from M/s Sanjay Grover S Associates, Company Secretaries (Firm Registration No. P2001DE052900) confirming compliance of the conditions of Corporate Governance is annexed hereto and forms part of this Annual Report as Annexure - IV and Annexure - V respectively.
TRANSFER TO GENERAL RESERVE
During the FY under review, no amount has been transferred to General Reserve of the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review, your Company has transferred unpaid/ unclaimed dividend, amounting to Rs.12.78 crore for FY 2010-11 and 21,296 shares to the Investor Education and Protection Fund (IEPF) Authority of the Central Government of India. As on March 31, 2019, total shares lying in the demat account of IEPF Authority was 10,00,068.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Company has occurred between April 1, 2019 and the date of signing of this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2018-19, your Company has not given any loan or guarantee pursuant to provisions of Section 186 of the Act. Details of investments made in terms of Section 186 of the Act are as under:
(Rs.in crore)
Principal Amount (Shares) |
Principal Amount (Bonds/ Debentures) |
Total |
|
Opening |
1,021.54 |
220.89 |
1,242.43 |
Addition |
551.87* |
130.00 |
681.87 |
Reduction** |
- |
(0.14) |
(0.14) |
Closing Balance |
1,573.41 |
350.75 |
1,924.16 |
* HMC MM Auto Limited - Rs.9.93 crore, HMCL(NA) Inc. - Nil, HMCL Netherlands BV - Rs.24.07 crore, HMCL Americas Inc. - Nil, Hero Tech Center Germany GmbH -Rs.19.56 crore, Hero FinCorp Limited - Rs.498.30 crore, Ather Energy Private Limited - Nil ** Maturity of bonds and amortization
DEPOSITS
Your Company has neither accepted nor renewed any deposits during FY 2018-19 in terms of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2018-19, all contracts/arrangements/transactions entered into by your Company with related parties under Section 188(1) of the Act were in the ordinary course of business and on an armâs length basis. During FY 2018-19, your Company has not entered into any contract/arrangement/transaction with related parties which could be considered âmaterialâ in accordance with its Policy on Materiality of Related Party Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2018-19, there were no materially significant related party transactions entered into by your Company with the Promoters, Directors, Key Managerial Personnel or other designated persons, which might have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval. There was no related party transaction requiring approval of the Board. During FY under review, the Audit Committee has approved transactions through the omnibus mode in accordance with the provisions of the Act and Listing Regulations. Related party transactions were disclosed to the Board on regular basis as per Ind AS-24. Details of related party transactions as per Ind AS-24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Companyâs website, www.heromotocorp.com and can be viewed at the following link: http://www.heromotocorp.com/en-in/ aboutus/key-policies/related-party-transactions.html.
RISK MANAGEMENT FRAMEWORK
Your Company continues to follow a robust risk management process. For FY 2018-19, some of the illustrative risk areas where your Company focused on, in addition to many others, were-
a) Study of regulatory risks in key global markets and strategy thereof
b) Strengthening the IT infrastructure
Specifically on the IT infrastructure strengthening, the current times have seen numerous data thefts/attacks on large organizations. Your Company has in place appropriate measures through deployment of technological infrastructure solutions and regular / periodic awareness sessions and mailers. You would be pleased to know that your Company is one of the early adopters of cyber insurance that insures an organization against losses during an unforeseen eventuality of a cyber-attack.
The Risk Management Committee periodically oversees the risks and their mitigation plans. The Committee provides its inputs on critical risks and shares its understanding on complex matters. The details of the Committee along with its charter are set out in the Corporate Governance Report, forming part of this Report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated Vigil Mechanism/Whistle Blower Policy which provides a robust framework for dealing with genuine concerns S grievances. Your Company has an ethics hotline managed by a third party which can be used by employees, Directors, vendors, suppliers, dealers, etc. to report any violations to the Code of Conduct. Specifically, employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company. During FY under review, 16 complaints were received and 2 complaints were carried forward from previous FY. Out of these, 15 complaints have been investigated S acted upon and remaining 3 are under investigation.
During FY 2018-19, no individual was denied access to the Audit Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Companyâs website, www.heromotocorp. com and can be viewed 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 (âCSRâ) Committee which functions under direct supervision of Dr. Pawan Munjal, Chairman, Managing Director S CEO of the Company, who is also the Chairman of the CSR Committee. Other members of the Committee are Mr. Pradeep Dinodia, NonExecutive Director and Prof. Jagmohan Singh Raju, Independent Director. Prof. Jagmohan Singh Raju has been appointed as an additional director effective November 15, 2018 and has been inducted in the CSR Committee on January 31, 2019.
Your Company has in place a CSR Policy. The CSR policy lays down CSR activities to be undertaken by your Company. The CSR activities undertaken by your Company are based on the approved CSR policy, which is available on the Companyâs website, www.heromotocorp.com and can be viewed at the following link: http://www.heromotocorp.com/en-in/ about-us/key-policies/corporate-social-responsibility.html. There has been no material change in the CSR Policy of the Company.
The CSR Policy of your Company, as adopted by the Board, broadly covers the following focus areas:
a) To direct the Companyâs 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;
b) To develop the required capability and self-reliance of beneficiaries at the grass roots, in the belief that these are pre-requisites for social and economic development;
c) 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;
d) To pursue CSR Programmes primarily in areas that fall within the economic vicinity of the Companyâs operations, to enable close supervision and ensure maximum development impact;
e) 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;
f) To carry out activities at the time of natural calamity or engage in Disaster Management System;
g) To contribute to the Prime Ministerâs 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;
h) To contribute or provide funds to technology incubators located within academic institutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s) including Chief Ministerâs Relief Fund, which may be recognised as CSR activity;
j) To promote sustainability in partnership with industry associations, like CII, PHD, FICCI, etc. in order to have a multiplier impact.
During the FY under review, your Company spent Rs.101.95 crore on its CSR activities, which is more than 2% of the average net profits of previous three financial years. The CSR initiatives undertaken by your Company, along with other details form part of the Annual Report on CSR activities for FY 2018-19, which is annexed as Annexure - VIII. The overview of CSR activities carried out in FY 2018-19 is provided in a separate section in this Annual Report.
AUDIT COMMITTEE
The Audit Committee of your Company comprises of the following Non-Executive and Independent Directors:
1. Mr. M. Damodaran - Chairman (effective April 26, 2019)
2. Mr. Pradeep Dinodia - Member
3. Mr. Paul B. Edgerley - Member
Mr. Paul B. Edgerley has been inducted in the Audit Committee on January 31, 2019. Further details on the Audit Committee and its terms of reference etc. have been furnished in Corporate Governance Report which forms part of this Report as Annexure - IV.
During the FY under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company.
AUDITORS AND AUDITORSâ REPORT Statutory Auditors
M/s BSR S Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed in 2017 as the Statutory Auditors of the Company until the conclusion of the 39th Annual General Meeting of the Company. They have audited the financial statements of the Company for the FY under review. The observations of Statutory Auditors in their Report read with relevant Notes to Accounts are self-explanatory and therefore, do not require further explanation. The Auditorsâ Report does not contain any qualification, reservation or adverse remark. Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
Cost Auditors
The Board, on the recommendation of Audit Committee, has approved the appointment of M/s Ramanath Iyer S Co., Cost Accountants, as Cost Auditors for the financial year ending March 31, 2020. The Cost Auditors will submit their report for the FY 2018-19 on or before the due date.
In accordance with the provisions of Section 148 of the Act read with Companies (Audit S Auditors) Rules, 2014, your Company is required to maintain cost records and accordingly, such accounts and records are maintained by the Company. Further, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by Members at the ensuing AGM.
Secretarial Auditors
M/s Sanjay Grover S Associates, Company Secretaries (Firm Registration No. P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY 2018-19.
The Secretarial Audit Report for the said FY is annexed herewith and forms part of this Report as Annexure - IX. The Report does not contain any qualification, reservation or adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and all transactions are authorised, recorded and reported correctly.
An extensive risk based programme of internal audits and management reviews provides assurance to the Board regarding the adequacy and efficacy of internal controls. The internal audit plan is also aligned to the business objectives of the Company which is reviewed and approved by the Audit Committee. Further, the Audit Committee monitors the adequacy and effectiveness of your Companyâs internal control framework.
Comprehensive policies, guidelines and procedures are laid down for all business processes. The internal control system has been designed to ensure that financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (âthe PIT Regulationsâ) on prevention of insider trading, your Company has revised its Code of Conduct for regulating, monitoring and reporting of trading by Designated Persons in line with the recent amendments brought by SEBI in the PIT Regulations. The said Code lays down guidelines, which advise Designated Persons on the procedures to be followed and disclosures to be made in dealing with the shares of the Company and cautions them on consequences of non-compliances.
Your Company has also updated its Code of practices and procedures of fair disclosures of unpublished price sensitive information by including a policy for determination of legitimate purposes. Further, your Company has put in place adequate S effective system of internal controls and standard processes have been set to ensure compliance with the requirements given in these regulations to prevent insider trading.
BUSINESS RESPONSIBILITY REPORT
As stipulated under the Listing Regulations, the Business Responsibility Report (âBRRâ) has been prepared and forms part of the Annual Report as Annexure - X. The Report provides a detailed overview of initiatives taken by your Company from environmental, social and governance perspectives.
LISTING
The equity shares of your Company are presently listed on the BSE Limited (âBSEâ) and the National Stock Exchange of India Limited (âNSEâ).
PERSONNEL
As on March 31, 2019, total number of employees on the records of your Company were 8,551 as against 8,266 in the previous FY.
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.
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (âRulesâ), is appended as Annexure - II to the Report. The information as per Rule 5(2) of the Rules forms part of this Report. However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Rules, the Report and Financial Statements are being sent to the Members of the Company excluding the statement of particulars of employees under Rule 5(2) of the Rules. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(3) and 134(3)(a) of the Act and rules made thereunder, extract of the Annual Return in Form No. MGT-9 is annexed to this Report as Annexure - XI and is also available under the âInvestorsâ section of the Companyâs website, www.heromotocorp.com.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is fully compliant with the applicable Secretarial Standards (SS) viz. SS-1 S SS-2 on Meetings of the Board of Directors and General Meetings respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rules made thereunder is annexed to this report as Annexure - XII.
STATUTORY DISCLOSURES
Your Directors state that there being no transactions with respect to following items during FY under review, no disclosure or reporting is required in respect of the same:
1. Deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
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 your Company under any scheme, save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Director of your 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 Companyâs operations in future.
6. Buy back of shares.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION S REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace. This policy is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition S Redressal) Act, 2013. All employees, whether permanent, contractual, temporary and trainees are covered under this Policy.
As per the said Policy, an Internal Committee is also in place to redress complaints received regarding sexual harassment. Following is the summary of complaints received and disposed off during FY under review:
No. of complaints received: 4
No. of complaints disposed off: 2*
No. of complaints withdrawn: 1
No. of complaints pending: 1
* One of the complaints was disposed off on April 9, 2019.
DISCLOSURE UNDER THE HUMAN IMMUNODEFICIENCY VIRUS AND ACQUIRED IMMUNE DEFICIENCY SYNDROME (PREVENTION AND CONTROL) ACT, 2017
The Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017 has been notified by the Central Government on September 10, 2018. During the period under review (i.e. from September 10, 2018 till March 31, 2019), no complaints were received by the Complaints Officer.
AWARDS AND RECOGNITION
During FY under review, the Company received multiple awards and recognition. Some of them are listed below:
1. National Award for Excellence in Energy Management 2018 -Energy Efficient Unit Award by CII, for Companyâs plants at Haridwar S Dharuhera.
2. Excellence in Environment Management by CII for Outstanding Policy, Practice and Results in the field of Environment Management.
3. Green Co Platinum Award by CII for being a world class manufacturing facility (Neemrana) in the area of sustainability.
4. Golden Peacock Global Award 2018 for Sustainability and CSR.
5. Bhamashah Award for CSR by the Rajasthan Government.
6. Diamond Certificate for Best CSR Practices at Haryana CSR Summit 2018.
ACKNOWLEDGEMENTS
The Board of Directors would like to express their sincere thanks to the shareholders S investors of the Company for the trust reposed on the Company over the past several years. Your Directors would also like to thank the central government, state governments, financial institutions, banks, customers, employees, dealers, vendors and ancillary undertakings for their co-operation and assistance. The Board would like to reiterate its commitment to continue to build the organisation into a truly world class enterprise in all respects.
For and on behalf of the Board
Pawan Munjal
Date: April 26, 2019 Chairman
Place: New Delhi DIN: 00004223
Mar 31, 2018
BOARD''S REPORT 2017-18
Dear Members,
The Directors are pleased to present the Thirty Fifth Annual Report, together with the Company''s audited financial statements for the financial year ended March 31, 2018.
FINANCIAL RESULTS - STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
(Rs, in crores)
Particulars |
Standalone |
Consolidated |
||
Year ended |
Year ended |
|||
March 31, 2018 |
March 31, 2017 |
March 31, 2018 |
March 31, 2017 |
|
Total Income |
33,397.64 |
31,394.02 |
33,624.11 |
31,505.61 |
Profit before Finance cost and Depreciation |
5,806.01 |
5,157.24 |
5,848.22 |
5,097.92 |
Expenses |
||||
Finance costs |
6.25 |
6.05 |
30.80 |
27.28 |
Depreciation and amortisation expenses |
555.60 |
492.73 |
574.98 |
502.25 |
Profit from ordinary activities before share of Profit / (Loss) of associates |
5,244.16 |
4,658.46 |
5,242.44 |
4,568.39 |
Profit/ (Loss) of associates |
||||
Share in net profit / (loss) of associates |
- |
- |
49.66 |
54.92 |
Gain on dilution of interest in an associate |
- |
- |
- |
262.09 |
Profit from ordinary activities before tax |
5,244.16 |
4,658.46 |
5,292.10 |
4,885.40 |
Tax expense |
||||
Current tax |
1,446.95 |
1,082.08 |
1,450.99 |
1,082.24 |
Deferred tax |
99.85 |
199.26 |
118.94 |
256.86 |
1,546.80 |
1,281.34 |
1,569.93 |
1,339.10 |
|
Net Profit from ordinary activities after tax |
3,697.36 |
3,377.12 |
3,722.17 |
3,546.30 |
Other comprehensive income /(expense) (net of tax) |
(4.71) |
(14.08) |
(7.26) |
(18.71) |
Total comprehensive income for the period |
3,692.65 |
3,363.04 |
3,714.91 |
3,527.59 |
Net Profit / (Loss) attributable to |
||||
a) Owners of the Company |
3,697.36 |
3,377.12 |
3,720.40 |
3,584.27 |
b) Non-controlling interest |
- |
- |
1.77 |
(37.97) |
Other comprehensive income attributable to |
||||
a) Owners of the Company |
(4.71) |
(14.08) |
(5.89) |
(16.71) |
b) Non-controlling interest |
- |
- |
(1.37) |
(2.00) |
Total comprehensive income attributable to |
||||
a) Owners of the Company |
3,692.65 |
3,363.04 |
3,714.51 |
3,567.56 |
b) Non-controlling interest |
- |
- |
0.40 |
(39.97) |
Balance of profit brought forward |
7,418.53 |
6,146.52 |
7,597.60 |
6,118.53 |
Dividend |
||||
- Interim - 2017-18 |
1,098.41 |
1,098.33 |
1,098.41 |
1,098.33 |
- Final - 2016-17 |
599.09 |
639.01 |
599.09 |
639.00 |
Corporate Dividend Tax |
345.57 |
353.69 |
345.57 |
353.69 |
Adjustment on account of change in controlling interest |
- |
- |
(23.50) |
- |
Transfer to Foreign Currency Translation Reserve |
- |
- |
(4.42) |
(14.17) |
Balance carried to Balance Sheet |
9,068.11 |
7,418.53 |
9,247.01 |
7,597.60 |
Earning per equity share on Net Profit from ordinary activities after tax (face value Rs, 2/- each) (In Rs,) |
||||
- Basic |
185.14 |
169.12 |
186.30 |
179.49 |
- Diluted |
185.13 |
169.12 |
186.29 |
179.49 |
FINANCIAL HIGHLIGHTS
During FY 2017-18 under review, your Company clocked sales of 7,587,154 units over 6,664,240 units in the previous FY.
During FY 2017-18, revenue from operations was Rs, 32,871.82 crores as compared to Rs, 30,871.59 crores in FY 2016-17, registering an increase of 6.48%.
Profit before tax (PBT) in FY 2017-18 was Rs, 5,244.16 crores as compared to Rs, 4,658.46 crores in FY 2016-17, reflecting an increase of 12.57%. Profit after tax (PAT) was Rs, 3,697.36 crores as against Rs, 3,377.12 crores in FY 2016-17, an increase of 9.48 % over the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 17.38 % in FY 2017-18, as compared to 16.42% in FY 2016-17.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Companies Act, 2013 (''the Act'') and Indian Accounting Standard (Ind AS)-110 on Consolidated Financial Statements, read with Ind AS-28 on Investments in Associates and Joint Ventures, the Audited Consolidated Financial Statements for the FY ended March 31, 2018 are provided in this Annual Report.
CHANGES IN CAPITAL STRUCTURE
During the FY under review, 14,617 equity shares of Rs, 2 each were allotted on exercise of employee stock options by the employees of the Company. Consequently, the issued and paid-up share capital of the Company as on March 31, 2018 was Rs, 399,422,910 divided into 199,711,455 equity shares of Rs, 2 each.
The Company has not issued any equity shares with differential rights, sweat equity shares or bonus shares. The Company has only one class of equity shares with face value of Rs, 2 each, ranking pari-passu.
DIVIDEND
Your Directors are pleased to recommend for your approval a final dividend of Rs, 40 per equity share (2000%) of face value of Rs, 2 each, in addition to an interim dividend of Rs, 55 per equity share (2750%) declared in the month of February 2018, aggregating a total dividend payout of Rs, 95 per equity share for FY 2017-18. In the previous FY, total dividend payout of Rs, 85 per equity share of the face value of Rs, 2 each was made. Final dividend, if approved at the ensuing Annual General Meeting, shall be paid to the eligible Members within the stipulated time period. Dividend Distribution Policy of the Company as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') is available at the following link:https://www.heromotocorp.com/ en-in/about-us/key-policies/dividend-distribution-policy.htmland is also provided as Annexure - I.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company''s business in India and abroad, risk management systems and other material developments during the FY under review.
CHANGE IN NATURE OF BUSINESS
During FY 2017-18, there was no change in the nature of Company''s business.
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
During FY 2017-18, construction of sixth manufacturing facility at Sricity in Chittoor District in the state of Andhra Pradesh has commenced with a proposed capacity of 1.8 million units per annum. Your Company will invest Rs, 1,600 crores in setting up this manufacturing facility. The plant is expected to be operational in FY 2019-20.
During FY 2017-18, the second overseas plant of your Company at Jessore in Bangladesh started commercial production during the first quarter.
Your Company is constantly expanding the boundaries on innovation - both internal and external. It has been running internal idea generation contests successfully involving employees for many years now. In FY 2017-18, your Company took important steps to tap into the external innovation ecosystem. It piloted ''crowd sourcing'' where a few identified problems are thrown as challenges to the external innovation ecosystem to solve.
GLOBAL FORAYS
Your Company continues its march to strengthen the reach of Global Business. During FY 2017-18, your Company added two markets -Trinidad & Tobago and Guyana - to grow the countries in which HMCL is present in, to 37. More importantly, it strived to increase market share in the large markets across South Asia, Africa & Middle East and Latin America in which the Company is already present. The Company increased its despatches to Bangladesh by close to 200%, leveraging a 70% increase in the industry and substantially growing the market share. Your Company also commissioned a plant through a joint venture in Bangladesh.
Continuing with the past strategy, your Company works closely with strong, allied distributor partners, offering differentiated financing, vehicle models and after sales solutions. Your Company''s focus is to enhance salesmen skills at the dealerships, optimize the channel coverage and execute targeted brand building and marketing campaigns.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 3 associate companies. The Company regularly monitors the performance of these companies.
The Company shall make available the annual accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and respective subsidiary companies. Further, the annual accounts of the subsidiaries are also available on the website of the Company viz. www.heromotocorp.com. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.
Subsidiaries
HMCL Netherlands B.V. (''HNBV'')
HNBV, a wholly owned subsidiary of your Company was incorporated in Amsterdam as a private company with limited liability under the laws of The Netherlands with the primary objective of promoting overseas investments. During FY 2017-18, HNBV has invested in operating companies in Colombia and Bangladesh and has reported Nil revenue (unadjusted) and a net loss of Rs, 0.48 crores.
HMCL Colombia S.A.S. (''HMCLC'')
HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven Holdings LLC as a simplified stock corporation company. During the FY under review, HNBV increased its holding to 68% equity in HMCLC and 32% equity is now held by Woven Holdings LLC. The main business of HMCLC is to manufacture and sell two-wheelers in Colombia. It has a manufacturing facility with a production capacity of 60,000 per annum. During the year ended March 31, 2018, the Company has reported unadjusted revenue of Rs, 123.17 crores and a net loss of Rs, 60.58 crores.
HMCL Niloy Bangladesh Limited (''HNBL'')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in HNBL and 45% equity is held by Nitol Niloy Group, Bangladesh. HNBL has set up a manufacturing plant at Jessore in Bangladesh and started commercial operations on June 01, 2017. The main business of HNBL is to manufacture and sell two-wheelers. During FY 2017-18, HNBL reported unadjusted revenue of Rs, 541.80 crores and a net profit of Rs, 77.16 crores.
HMCL (NA) Inc.
HMCL (NA) Inc., a wholly owned subsidiary of your Company, was incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America. HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (''EBR''), a Delaware Corporation by subscribing to 49.2% of its equity share capital. During the period ended March 31, 2018, HMCL (NA) Inc. has reported Nil revenue (unadjusted) and a net loss of Rs, 0.01 crores.
HMCL Americas Inc. (''HMCLA'')
HMCLA, a wholly owned subsidiary of your Company, was incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America with the primary objective to pursue various global businesses. During the year ended March 31, 2018, HMCLA has reported Nil revenue (unadjusted) and a net loss of Rs, 0.12 crores.
HMC MM Auto Limited (''HMCMMA'')
Your Company has a joint venture with Magneti Marelli S.p.A Italy, named HMC MM Auto Limited in India, which is set up for the purpose of carrying out manufacturing, assembly, sale and distribution of two wheeler fuel injection systems and parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2017-18, HMCMMA has reported unadjusted revenue of Rs, 34.64 crores and a net loss of Rs, 8.17 crores.
Associate Companies Hero FinCorp Ltd. (''HFCL'')
HFCL, an associate of your Company, was incorporated in the year 1991. Your Company holds 41.03% in the equity share capital of HFCL. HFCL is a non-banking finance company engaged in providing financial services, including two-wheeler financing and providing credit to Company''s vendors and suppliers. Over the years, it has added several new products and customers in its portfolio, like SME and commercial loans, loan against property etc.
During FY 2017-18, HFCL''s profit attributable to the Company is Rs, 55.75 crores.
Ather Energy Private Ltd. (''AEL'')
AEL is a private limited company, focused on developing, designing and selling premium electric two-wheelers. During FY 2017-18, AEL''s loss attributable to the Company is Rs, 11.84 crores.
Erik Buell Racing, Inc. (''EBR'')
Your Company through its subsidiary, HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (''EBR''), a Delaware Corporation by subscribing to 49.2% of its equity share capital. EBR has ceased its operations and entered into Assignment for the Benefit of Creditors under Chapter 128 of the Wisconsin Statutes (''Chapter 128 Process'').
A statement containing salient features of financial statement of subsidiaries and associate companies forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company (''the Board'') has approved a policy for determining Material Subsidiaries. At present, your Company does not have a Material Subsidiary. The Policy on Material Subsidiaries can be viewed on the Company''s website, www.heromotocorp.comat the following link: https://www.heromotocorp.com/en-in/about-us/key-policies/ policy-on-material.html.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of the applicable provisions of the Act and the Articles of Association of the Company, Mr. Suman Kant Munjal, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. Brief resume and other details of Mr. Suman Kant Munjal, who is proposed to be re-appointed as a Director of your Company, have been furnished in the Explanatory Statement to the Notice of the ensuing Annual General Meeting.
Key Managerial Personnel (KMP)
Mr. Pawan Munjal, Chairman, Managing Director & CEO, Mr. Niranjan Gupta, Chief Financial Officer and Ms. Neerja Sharma, Company Secretary are the KMP of your Company in accordance with the provisions of Section 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed in the Act and the Listing Regulations.
In the opinion of the Board, Independent Directors fulfill the conditions specified in the Act, Rules made there under and Listing Regulations and are independent of the management.
BOARD MEETINGS
During FY 2017-18, five meetings of the Board of Directors were held. For details of these Board meetings, please refer to the section on Corporate Governance of this Annual Report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it''s Committees, the Chairman and the individual Directors was carried out for FY 2017-18. Led by the Nomination & Remuneration Committee (''NRC''), the evaluation was carried out using individual questionnaires covering, amongst others, composition of Board, conduct as per Company values & beliefs, contribution towards development of strategy & business plan, risk management, receipt of regular inputs and information, codes & policies for strengthening governance, functioning, performance & structure of Board Committees, skill set, knowledge & expertise of Directors, preparation & contribution at Board meetings, leadership etc.
As part of the evaluation process, the performance of Non Independent Directors, the Chairman and the Board was conducted by the Independent Directors. The performance evaluation of the respective Committees and that of Independent and Non Independent Directors was done by the Board excluding the Director being evaluated.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 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, 2018, the applicable accounting standards were followed, along with proper explanation relating to material departures;
2. that appropriate accounting policies were selected and applied consistently and judgments and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs as at March 31, 2018 and of the profit and loss of your Company for the financial year ended March 31, 2018;
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, 2013 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, 2018 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 are 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.
REMUNERATION POLICY
Pursuant to provisions of the Act, the Nomination and Remuneration Committee (''NRC'') of your Board has formulated a Remuneration Policy for the appointment and determination of remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of your Company. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while fixing appropriate remuneration packages and for administering the long-term incentive plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key Managerial Personnel, Senior Management and other employees is designed based on the set of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, Senior Management and other employees is as per the Remuneration Policy of your Company.
The Remuneration details of the Directors, Chief Financial Officer and Company Secretary, along with details of ratio of remuneration of each Director to the median remuneration of employees of the Company for the FY under review are provided as Annexure - II.
The Remuneration Policy of your Company can be viewed at the following link:https://www.heromotocorp.com/en-in/about-us/key-policies/remuneration-policy.htmland is also provided as Annexure - III.
EMPLOYEES'' INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time (''SEBI Regulations''), the NRC of your Board, inter-alia, administers and monitors the Employees'' Incentive Scheme, 2014 of your Company and the Employees'' Stock Option Plans framed there under.
Further, the NRC has, at its meeting held on October 31, 2017 granted 29,800 stock options under ESOP Plan 2017 to the eligible employees at an exercise option price of Rs, 2,818 per option. In addition, the NRC also approved grant of 15,769 Restricted Stock Units under RSU Plan, 2017 to the eligible employees at the face value of Rs, 2 per unit.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the Employees'' Stock Option Scheme are provided as Annexure - IV to this Report and is available on the Company''s website, www.heromotocorp.comand can be viewed at the following link: https://www.heromotocorp.com/en-in/esop.php.
Your Company has received a certificate from M/s B S R & Co. LLP, Statutory Auditors (Firm Registration No. 101248W/W-100022) that the Employees'' Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI Regulations and the resolution passed by the Members in their general meeting. The certificate would be placed at the ensuing Annual General Meeting for inspection by the Members.
CORPORATE GOVERNANCE
Your Company is committed to benchmarking itself with global standards of Corporate Governance. It has put in place an effective Corporate Governance system which ensures that provisions of the Act and Listing Regulations are duly complied with, not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of good Corporate Governance and best management practices that are followed globally. The Code is available on your Company''s website, www.heromotocorp.comand can be viewed at the following link: https://www.heromotocorp.com/en-in/about-us/code-of-conduct.html.
In terms of Listing Regulations, a report on Corporate Governance along with the certificate from M/s Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) confirming compliance of the conditions of Corporate Governance is annexed hereto and forms part of this Annual Report as Annexure - V and Annexure - VI respectively.
TRANSFER TO GENERAL RESERVE
During the FY under review, no amount has been transferred to General Reserve of the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review, your Company has transferred unpaid/ unclaimed dividend amounting to Rs, 13.43 crores for FY 2009-10 along with the relevant shares to the Investor Education and Protection Fund (IEPF) of the Central Government of India.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Company has occurred between April 1, 2018 and the date of signing of this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2017-18, your Company has not given any loan or guarantee pursuant to provisions of Section 186 of the Act. Details of investments made in terms of Section 186 of the Act are as under:
(Rs, in crores)
Principal Amount (Shares) |
Principal Amount (Bonds/Debentures) |
Total |
|
Opening |
868.01 |
284.55 |
1,152.56 |
Addition * |
163.53 |
- |
163.53 |
Reduction 1 |
- |
(63.66) |
(63.66) |
Closing Balance |
1,031.54 |
220.89 |
1,252.43 |
* HMC MM Auto Limited - Rs, 3.00 crores, HMCL(NA) Inc. - Nil, HMCL Netherlands BV - Rs, 70.44 crores, HMCL Americas Inc - Nil, Hero FinCorp Limited - Rs, 70.03 crores, Ather Energy Private Limited - Rs, 20.06 crores
DEPOSITS
Your Company has neither accepted nor renewed any deposits during FY 2017-18 in terms of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2017-18, all contracts/arrangements/transactions entered into by your Company with related parties under Section 188(1) of the Act were in the ordinary course of business and on an arm''s length basis. During FY 2017-18, your Company has not entered into any contract/arrangement/transaction with related parties which could be considered ''material'' in accordance with its Policy on Materiality of Related Party Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2017-18, there were no materially significant related party transactions entered into by your Company with the Promoters, Directors, Key Managerial Personnel or other designated persons which might have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval. There was no related party transaction requiring approval of the Board. During FY under review, the Audit Committee has approved transactions through the omnibus mode in accordance with the provisions of the Act and Listing Regulations. Related party transactions were disclosed to the Board on regular basis as per Ind AS-24. Details of related party transactions as per Ind AS-24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company''s website, www.heromotocorp.comand can be viewed at the following link: https://www.heromotocorp.com/en-in/about-us/ key-policies/related-party-transactions.html.
RISK MANAGEMENT FRAMEWORK
Your Company follows an exhaustive risk identification exercise, backed by targeted risk mitigation plan. It enables your Company to identify the risks in advance and galvanize the appropriate stakeholders from the Company to blunt them.
FY 2017-18 saw a few new risks driven by the dynamic nature of the external environment. A few illustrative ones included the following:
a) Gearing up post demonetization
b) Preparing for the GST transition
Your Company deployed internal teams for creating and executing risk mitigation strategies. It also took advice from external agencies and engaged with the Company''s stakeholders such as the suppliers and dealers. You will be pleased to learn that your Company was one of the very first ones to completely transition to the GST regime. For other identified risks, the Company took a number of measures including but not limited to, revisiting policies, developing new distribution models and expanding the risk realm to current no competitors.
This FY, your Company also updated a Risk Management Framework. This framework is aimed at standardizing the risk management exercise across the organization. The Board continues to review the risk management practices at your Company and provides critical inputs.
Your Company has constituted a Risk Management Committee to oversee the risk management efforts under the Chairmanship of Mr. M. Damodaran, Independent Director. The details of the Committee along with its charter are set out in the Corporate Governance Report, forming part of this Report. The Board periodically reviews the Company''s risks and their mitigation plans.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to the highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated a Vigil Mechanism/Whistle Blower Policy which provides a robust framework for dealing with genuine concerns & grievances. Your Company has an ethics hotline managed by a third party which can be used by employees, Directors, vendors, suppliers, dealers etc. to report any violations to the Code of Conduct. Specifically, employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company. During FY under review, 14 complaints were received and processed. Out of these, 12 complaints have been investigated & acted upon and remaining 2 are under investigation.
During FY 2017-18, no individual was denied access to the Audit Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company''s website, www.heromotocorp.comand can be viewed at the following link: https://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 functions under direct supervision of Mr. Pawan Munjal, Chairman, Managing Director & CEO of HMCL, who is also the Chairman of the CSR Committee. Other members of the Committee are Gen. (Retd.) V. P. Malik and Mr. Pradeep Dinodia, who are Non-Executive and Independent Directors of your Company.
Your Company has implemented the CSR Policy, duly formulated and recommended by the CSR Committee to the Board. The CSR policy lays down CSR activities to be undertaken by your Company. The CSR activities undertaken by your Company are based on the approved CSR Policy, which is available on the Company''s website, www.heromotocorp.comand can be viewed at the following link: https://www.heromotocorp.com/en-in/about-us/key-policies/ corporate-social-responsibility.html.
The CSR Policy of your Company, as adopted by the Board, broadly covers the following focus areas:
a) 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;
b) To develop the required capability and self-reliance of beneficiaries at the grass roots, in the belief that these are pre-requisites for social and economic development;
c) 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;
d) 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;
e) To carry out CSR Programmes in relevant local areas to fulfill 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;
f) To carry out activities at the time of natural calamity or engage in Disaster Management System;
g) To contribute to the Prime Minister''s 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;
h) To contribute or provide funds to technology incubators located within academic institutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s) including Chief Minister''s Relief Fund, which may be recognized as CSR activity;
j) 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 the FY under review, your Company spent Rs, 84.34 crores on its CSR activities, which amounts to 2.04% of the average net profits of previous three financial years. The CSR initiatives undertaken by your Company along with other details form part of the Annual Report on CSR activities for FY 2017-18, which is annexed as Annexure - VIII.
AUDIT COMMITTEE
The Audit Committee of your Company comprises of the following Non-Executive and Independent Directors:
1. Mr. Pradeep Dinodia Chairman
2. Mr. M. Damodaran Member
3. Gen. (Retd.) V. P. Malik Member
4. Dr. Pritam Singh Member
Further details on the Audit Committee and its terms of reference etc. have been furnished in Corporate Governance Report which forms part of this Report as Annexure - V.
During the FY under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company.
AUDITORS AND AUDITORS'' REPORT Statutory Auditors
M/s BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed at the previous AGM as the Statutory Auditors of the Company until the conclusion of 39th Annual General Meeting of the Company. They have audited the financial statements of the Company for the FY under review. The observations of Statutory Auditors in their Report read with relevant Notes to Accounts are self-explanatory and therefore, do not require further explanation. The Auditors'' Report does not contain any qualification, reservation or adverse remark. Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
Cost Auditors
The Board, on the recommendation of Audit Committee, has approved the appointment of M/s Ramanath Iyer & Co., Cost Accountants, as Cost Auditors for the financial year ending March 31, 2019. The Cost Auditors will submit their report for the FY 2017-18 on or before the due date.
In accordance with the provisions of Section 148 of the Act read with Companies (Audit & Auditors) Rules, 2014, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by Members at the ensuing AGM.
Secretarial Auditors
M/s Sanjay Grover & Associates, Company Secretaries (Firm Registration No. P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY 2017-18.
The Secretarial Audit Report for the said FY is annexed herewith and forms part of this Report as Annexure - IX. The Report does not contain any qualification, reservation or adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and all financial transactions are authorized, recorded and reported correctly.
An extensive risk based programme of internal audits and management reviews provides assurance to the Board regarding the adequacy and efficacy of internal controls. The internal audit plan is also aligned to the business objectives of the Company. Comprehensive policies, guidelines and procedures are laid down for all business processes. The internal control system has been designed to ensure that financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (''the PIT Regulations'') on prevention of insider trading, your Company has a comprehensive Code of Conduct for regulating, monitoring and reporting of trading by Insiders. The said Code lays down guidelines, which advise Insiders on the procedures to be followed and disclosures to be made in dealing with the shares of the Company and cautions them on consequences of non-compliances.
Your Company also has a Code of practices and procedures of fair disclosures of unpublished price sensitive information. Both the aforesaid Codes are in line with the PIT Regulations.
BUSINESS RESPONSIBILITY REPORT
As stipulated under the Listing Regulations, the Business Responsibility Report (''BRR'') has been prepared and forms part of the Annual Report as Annexure - X. The Report provides a detailed overview of initiatives taken by your Company from environmental, social and governance perspectives.
LISTING
The equity shares of your Company are presently listed on the BSE Limited (''BSE'') and the National Stock Exchange of India Limited (''NSE'').
PERSONNEL
As on March 31, 2018, total number of employees on the records of your Company were 8,266 as against 8,069 in the previous FY.
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.
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (''Rules''), is appended as Annexure - II to the Report. The information as per Rule 5(2) of the Rules forms part of this Report. However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Rules, the Report and Financial Statements are being sent to the Members of the Company excluding the statement of particulars of employees under Rule 5(2) of the Rules. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(3) and 134(3)(a) of the Act and Rules made there under, extract of the Annual Return in Form No. MGT-9 is annexed to this Report as Annexure - XI.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is fully compliant with the applicable Secretarial Standards (SS) viz. SS-1 & SS-2 on Meetings of the Board of Directors and General Meetings respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rules made there under is annexed to this report as Annexure - XII.
STATUTORY DISCLOSURES
Your Directors state that there being no transactions with respect to following items during FY under review, no disclosure or reporting is required in respect of the same:
1. Deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
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 your Company under any scheme, save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Director of your 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.
6. Buy back of shares.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace. This policy is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees, whether permanent, contractual, temporary and trainees are covered under this Policy.
As per the said Policy, an Internal Complaints Committee is also in place to redress complaints received regarding sexual harassment. Following is the summary of complaints received and disposed off during FY under review:
No. of complaints received: 2 No. of complaints disposed off: 2
AWARDS AND RECOGNITION
During FY under review, the Company has received multiple awards and recognition. Some of them are listed below:
1. State Level Bhamashah Respect Certificate by the Rajasthan Government.
2. Best CSR Practices in private sector by CSR Leadership Summit & Awards.
3. Energy Efficient Award by CII.
4. International Fire and Security Exhibition and Conference (IFSEC) Award for Excellence in Physical Security.
5. National Safety Award by Ministry of Labour & Employment.
6. Platinum Rating in GreenCo assessment (commensurate to world class manufacturing) by CII.
ACKNOWLEDGMENTS
The Board of Directors would like to express their sincere thanks to the shareholders & investors of the Company for the trust reposed on the Company over the past several years. Your Directors would also like to thank the central government, state governments, financial institutions, banks, customers, employees, dealers, vendors and ancillary undertakings for their co-operation and assistance. We would like to reiterate our commitment to continue to build our organization into a truly world class enterprise in all respects.
For and on behalf of the Board
Pawan Munjal
Date: May 2, 2018 Chairman
Place: New Delhi DIN: 00004223
Mar 31, 2017
Dear Members,
The Directors are pleased to present the Thirty Fourth Annual Report, together with the Company''s audited financial statements for the financial year ended March 31, 2017.
FINANCIAL RESULTS - STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
(Rs, crores)
Particulars |
Standalone |
Consolidated |
||
Year ended |
Year ended |
|||
March 31, 2017 |
March 31, 2016 |
March 31, 2017 |
March 31, 2016 |
|
Net Sales and Other Income |
31,368.55 |
31,123.31 |
31,480.14 |
31,128.16 |
Profit before Finance costs and Depreciation |
5,157.24 |
4,877.40 |
5,097.92 |
4,810.53 |
Expenses |
||||
Finance cost |
6.05 |
4.89 |
27.28 |
14.61 |
Depreciation and amortisation expenses |
492.73 |
437.64 |
502.25 |
443.25 |
Profit from ordinary activities before share of Profit / (Loss) of associates |
4,658.46 |
4,434.87 |
4,568.39 |
4,352.67 |
Profit/ (loss) from associates |
||||
Share in net profit / (loss) of associates |
- |
- |
54.92 |
34.33 |
Gain on dilution of interest in an associate |
- |
- |
262.09 |
- |
Profit from ordinary activities before tax |
4,658.46 |
4,434.87 |
4,885.40 |
4,387.00 |
Tax expense |
||||
Current tax |
1,082.08 |
960.88 |
1,082.24 |
960.91 |
Deferred tax |
199.26 |
313.80 |
256.86 |
313.80 |
1,281.34 |
1,274.68 |
1,339.10 |
1,274.71 |
|
Net Profit from ordinary activities after tax |
3,377.12 |
3,160.19 |
3,546.30 |
3,112.29 |
Other comprehensive income /(expense) (net of tax) |
(14.08) |
(2.37) |
(18.71) |
(3.42) |
Total comprehensive income for the period |
3,363.04 |
3,157.82 |
3,527.59 |
3,108.87 |
Net Profit / (loss) attributable to |
||||
a) Owners of the Company |
3,377.12 |
3,160.19 |
3,584.27 |
3,141.98 |
b) Non controlling interest |
- |
- |
(37.97) |
(29.69) |
Other comprehensive income attributable to |
||||
a) Owners of the Company |
(14.08) |
(2.37) |
(16.71) |
(2.56) |
b) Non controlling interest |
- |
- |
(2.00) |
(0.86) |
Total comprehensive income attributable to |
||||
a) Owners of the Company |
3,363.04 |
3,157.82 |
3,567.56 |
3,139.42 |
b) Non controlling interest |
- |
- |
(39.97) |
(30.55) |
Balance of profit brought forward |
6,146.52 |
4,921.06 |
6,118.53 |
4,911.26 |
Dividend |
||||
- Interim |
1,098.33 |
798.75 |
1,098.33 |
798.75 |
- Proposed Final |
639.00 |
599.06 |
639.00 |
599.06 |
Corporate Dividend Tax |
353.70 |
284.55 |
353.69 |
284.55 |
Transfer to General Reserve |
- |
250.00 |
- |
250.00 |
Transfer to Foreign Currency Translation Reserve |
- |
- |
(14.17) |
(2.35) |
Balance carried to Balance Sheet |
7,418.53 |
6,146.52 |
7,597.60 |
6,118.53 |
Basic & diluted earning per equity share on Net profit from ordinary activities after tax (face value Rs, 2/- each) (In Rupees) |
169.12 |
158.26 |
179.49 |
157.34 |
FINANCIAL HIGHLIGHTS
During the Financial Year (FY) 2016-17 under review, your Company clocked sales of 6,664,240 units over 6,632,322 units in the previous FY.
During FY 2016-17, revenue from operations was '' 30,846.12 crores as compared to Rs, 30,700.88 crores in FY 2015-16, registering an increase of 0.47%.
Profit before tax (PBT) was Rs, 4,658.46 crores as compared to Rs, 4,434.87 crores in FY 2015-16, reflecting an increase of 5.04%. Profit after Tax (PAT) was Rs, 3,377.12 crores as against Rs, 3160.19 crores in FY 2015-16, an increase of 6.86% over the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 15.03% in FY 2016-17, as compared to 14.51% in FY 2015-16.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Companies Act 2013 (''the Act'') and Indian Accounting Standard (AS)-110 on Consolidated Financial Statements, read with IND AS-28 Investments in Associates and Joint Ventures the Audited Consolidated Financial Statement for the FY ended March 31, 2017 is provided in this Annual Report.
CHANGES IN CAPITAL STRUCTURE
During the financial year under review, 6,750 equity shares of Rs, 2 each were allotted on exercise of employee stock options by the employees of the Company. Consequently, the issued and paid up capital of the Company as on March 31, 2017 was Rs, 399,393,676 divided into 199,696,838 equity shares of Rs, 2 each.
The Company has not issued any equity shares with differential rights, sweat equity shares or bonus shares. The Company has only one class of equity shares with face value of Rs, 2 each, ranking pari-passu.
DIVIDEND
Further improving on the dividend pay-out, your Directors are pleased to recommend for your approval a final dividend of Rs, 30 per equity share (1500%) of face value of Rs, 2 each, in addition to an interim dividend of Rs, 55 per equity share (2750%) declared in the month of March 2017, aggregating a total final dividend payout of Rs, 1,697.42 crores (excluding tax on dividend) during FY ended March 31, 2017. In the previous FY, total final dividend payout of Rs, 72 per Equity Share of the face value of Rs, 2 each was made. Final dividend, if approved at the ensuing Annual General Meeting, shall be paid to the eligible members within the stipulated time period. During FY 2016-17, the Board of Directors has approved a Dividend Distribution Policy as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') which is available at the following link: http://www.heromotocorp. com/en-in/about-us/key-policies/dividend-distribution-policy.html
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company''s business in India and abroad, risk management systems and other material developments during the financial year under review.
CHANGE IN NATURE OF BUSINESS
During FY 2016-17, there was no change in the nature of Company''s business.
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
During FY 2016-17, the fifth plant of your Company at Halol, Gujarat started commercial production during the 3rd quarter. Your Company signed a sale deed with the Andhra Pradesh Industrial Infrastructure Corporation Limited for setting up its sixth manufacturing facility at Sricity in Chittoor District in the state of Andhra Pradesh.
The construction of the second overseas plant of your Company at Jessore in Bangladesh, with an annual installed capacity of 1.5 lakh units, is in full swing and is slated to be operational in the first half of FY 2017-18.
GLOBAL FORAYS
Company''s aggressive global expansion plans are in top gear. HMCL added five new markets in FY 2017 to take its global presence to 35 countries with a commitment to expand to 50 countries by 2020. The Company has commenced its operations in Argentina, the 35th market to its rapidly growing global footprint. During FY under review, your Company launched the brand âHero" and its range of products in Myanmar, Ghana, Guinea, Liberia and Argentina.
Over the years, your Company has set global benchmarks in creating world class manufacturing and operational facilities to ensure best in class products on design, technology and quality. In the coming years, your Company plans to strengthen its operations across South Asia, Africa & Middle East and Latin America with the introduction of new products.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 3 associate companies. The Company regularly monitors the performance of these companies.
The Company shall make available the annual accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and respective subsidiary companies. Further, the annual accounts of the subsidiaries are also available on the website of the Company viz. www. heromotocorp.com. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.
Subsidiaries
HMCL Netherlands B.V. (HNBV)
HNBV, a wholly owned subsidiary of your Company was incorporated in Amsterdam as a private company with limited liability under the laws of The Netherlands with the primary objective of promoting overseas investments. During FY 2016-17, HNBV has invested in operating companies in Colombia and Bangladesh and has reported a net loss of Rs, 0.83 crores.
HMCL Colombia S.A.S. ( HMCLC )
HMCLC was incorporated in Colombia as a joint venture between HNMV and Woven Holdings LLC as a simplified stock corporation company. HNBV currently holds 51% equity in HMCLC and 49% equity shares are held by Woven Holdings LLC. The main business of HMCLC is to manufacture and sell two wheelers in Colombia and is having a manufacturing facility with a production capacity of 60,000 per annum. During the year ended March 31, 2017, the Company has reported a net loss of Rs, 65.30 crores.
HMCL Niloy Bangladesh Limited (''HNBL'')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in HNBL and 45% equity shares are held by Nitol Niloy Group, Bangladesh. The main business of HNBL is to manufacture and sell two-wheelers. HNBL is in the process of setting up a manufacturing facility with a production capacity of 1.50 lakh two-wheelers per annum. During FY 2016-17, HNBL reported a net loss of Rs, 4.83 crores.
HMCL (NA) Inc.
HMCL (NA) Inc., a wholly owned subsidiary of your Company was incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America. HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (''EBR''), a Delaware corporation by subscribing to 49.2% of its equity share capital. During the period ended March 31, 2017, HMCL (NA) Inc. has incurred a loss of Rs, 0.01 crores.
HMCL Americas Inc. (''HMCLA'')
HMCLA a wholly owned subsidiary of your Company was incorporated as a Corporation pursuant to the General Corporation Law of the State of Delaware, United States of America with the primary objective to pursue various global businesses. During the year ended March 31, 2017, HMCLA has incurred a loss of Rs, 0.52 crores.
HMC MM Auto Limited (''HMCMMA'')
Your Company has a joint venture with Magneti Marelli S.p.A Italy, namely HMC MM Auto Limited in India, set up for the purpose of carrying out manufacturing, assembly, sale and distribution of two wheeler fuel injection systems and parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2016-17, HMCMMA has incurred a loss of Rs, 9.49 crores.
Associate Companies Hero FinCorp Ltd. (''HFCL'')
HFCL, an associate of your Company was incorporated in the year 1991. Your Company holds 41.03% in the equity share capital of HFCL. HFCL is a non-banking finance company engaged in providing financial services, including two wheeler financing and providing credit to Company''s vendors and suppliers. Over the years, it has added several new products and customers in its portfolio, like SME and commercial loans, loan against property etc.
During FY 2016-17, HFCL recorded an income from operations of Rs, 1,317.14 crores and a profit of Rs, 249.39 crores.
Ather Energy Private Ltd. (''AEL'')
AEL is a private limited company, focused on developing designing and selling premium electric two wheeler. During the year, your company has acquired 30.1% stake in AEL, which reported a loss of Rs, 1.27 crores.
Erik Buell Racing, Inc. (''EBR'')
Your Company through its subsidiary, HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (''EBR''), a Delaware corporation by subscribing to 49.2% of its equity share capital. EBR has ceased its operations and entered into Assignment for the Benefit of Creditors under Chapter 128 of the Wisconsin Statutes (''Chapter 128 Process'').
A statement containing salient features of financial statement of subsidiaries and associate companies forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company (''the Board'') has approved a policy for determining Material Subsidiaries. At present, your Company does not have a Material Subsidiary. The Policy on Material Subsidiaries can be viewed on the Company''s website, www. heromotocorp.com at the following link: http://www.heromotocorp. com/en-in/about-us/key-policies/policy-on-material.html
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During FY 2016-17, Mr. Sunil Kant Munjal, stepped down from the Board of Directors on completion of his tenure as Joint Managing Director on August 16, 2016. The Board is grateful for his contributions during his tenure and wishes him success in all his future endeavors.
At the previous Annual General Meeting of the Company, the shareholders had approved the appointments of Mr. Pawan Munjal as Chairman, Managing Director & CEO for a period of 5 years and Mr. Vikram S. Kasbekar as Whole-time Director for a period of 3 years. Mr. Paul Bradford Edgerley was also appointed as Non Executive & Independent Director for 5 years.
In terms of the applicable provisions of the Act and the Articles of Association of the Company, Mr. Vikram S. Kasbekar, Director of the Company retires by rotation at the ensuing Annual General Meeting and, being eligible, has offered himself for re-appointment. Brief resume and other details of Mr. Vikram S. Kasbekar, who is proposed to be re-appointed as a Director of your Company have been furnished, along with the Explanatory Statement to the Notice of the ensuing Annual General Meeting.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed in the Act and the Listing Regulations.
In the opinion of the Board, Independent Directors fulfill the conditions specified in the Act, Rules made there under and Listing Regulations and are independent of the management.
Key Managerial Personnel (KMP)
Mr. Pawan Munjal, Chairman, Managing Director & CEO, Mr. Niranjan Gupta, Chief Financial Officer and Ms. Neerja Sharma, Company Secretary are the KMPs of your Company in accordance with the provisions of Section 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
On March 31, 2017, Mr. Ravi Sud superannuated and ceased to be the Chief Financial Officer of the Company. W.e.f. April 1, 2017, Mr. Niranjan Gupta was appointed as the Chief Financial Officer of the Company. He has a rich and international experience of over two decades in finance leadership roles.
BOARD MEETINGS
During FY 2016-17, five meetings of the Board of Directors were held. For details of these Board meetings, please refer to the Corporate Governance section of this Annual Report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it''s Committees, the Chairman and the individual Directors was carried out for FY 2016-17. Led by the Nomination & Remuneration Committee (''NRC''), the evaluation was carried out using individual questionnaires covering amongst others composition of Board, conduct as per company values & beliefs, contribution towards development of the strategy & business plan, risk management, receipt of regular inputs and information, codes & policies for strengthening governance, functioning, performance & structure of Board Committees, skill set, knowledge & expertise of Directors, preparation & contribution at Board meetings, leadership etc.
As part of the evaluation process, the performance of no independent Directors, the Chairman and the Board was conducted by the independent Directors. The performance evaluation of the respective Committees and that of independent and no independent Directors was done by the Board excluding the Director being evaluated.
DIRECTORSâ RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 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, 2017, the applicable accounting standards have been followed, along with proper explanation relating to material departures;
2. t hat 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, 2017 and of the profit and loss of your Company for the financial year ended March 31, 2017;
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, 2013 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, 2017 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.
REMUNERATION POLICY
Pursuant to provisions of the Act, the NR Committee of your Board has formulated a Remuneration Policy for the appointment and determination of remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of your Company. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while fixing appropriate remuneration packages and for administering the long-term incentive plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key Managerial Personnel, Senior Management and other employees is designed based on the set of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, Senior Management and other employees is as per the Remuneration Policy of your Company.
The Remuneration details of the Directors, Chief Financial Officer and Company Secretary, along with details of ratio of remuneration of each Director to the median remuneration of employees of the Company for the FY under review are provided as Annexure I.
The Remuneration Policy of your Company can be viewed on the following link- http://www.heromotocorp.com/en-in/about-us/key-policies/remuneration-policy.html and is also provided as Annexure II.
EMPLOYEESâ INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time (''SEBI Regulations''), the NRC of your Board, inter alia, administers and monitors the Employees'' Incentive Scheme, 2014 of your Company and the Employees'' Stock Option plans framed there under.
Further, the NRC has, at its meeting held on August 22, 2016 granted 49,950 stock options under ESOP Plan 2016 to the eligible employees at an exercise option price of '' 2,469/- per option. In addition, the NRC also approved grant of 11,194 Restricted Stock Units under RSU Plan, 2016 to the eligible employees at the face value of '' 2/- per unit.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the Employees'' Stock Option Scheme are provided as Annexure III to this Report and is available on the Company''s website, www.heromotocorp.com and can be viewed on the following link: http://www.heromotocorp.com/en-in/esop.php
Your Company has received a certificate from M/s Deloitte Haskins & Sells, Gurgaon, Haryana, Statutory Auditors (Firm Registration No. 015125N) that the Employees'' Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI Regulations and the resolution passed by the members in their general meeting. The certificate would be placed at the ensuing Annual General Meeting for inspection by the members.
CORPORATE GOVERNANCE
Your Company is committed to benchmarking itself with global standards of Corporate Governance. It has put in place an effective Corporate Governance system which ensures that provisions of the Act and Listing Regulations are duly complied with, not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of good Corporate Governance and best management practices that are followed globally. The Code is available on your Company''s website, www.heromotocorp.com and can be viewed on the following link: http://www.heromotocorp. com/en-in/about-us/code-of-conduct.html
In terms of Listing Regulations, a report on Corporate Governance, along with the certificate from Mr. Sanjay Grover, Managing Partner (CP No. 3850), M/s Sanjay Grover & Associates, Company Secretaries, New Delhi, confirming compliance of the conditions of corporate governance is annexed hereto and forms part of this Annual Report as Annexure IV.
TRANSFER TO GENERAL RESERVE
During the FY under review, no amount has been transferred to the General Reserve of the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review, your Company has transferred unpaid/ unclaimed dividend, amounting to Rs, 2.37 crores for FY 2008-09 to the Investor Education and Protection Fund (IEPF) of the Central Government of India.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Company have occurred between April 1, 2017 and the date of signing of this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2016-17, your Company has not given any loan or guarantee pursuant to provisions of Section 186 of the Act. Details of investments made in terms of Section 186 of the Act are as under:
Principal Amount (Shares) |
Principal Amount (Bonds/Debentures) |
Total |
|
Opening |
593.70 |
362.40 |
956.10 |
Addition * |
274.31 |
0.69 |
275.00 |
Reduction 1 |
- |
78.54 |
78.54 |
Closing Balance |
868.01 |
284.55 |
1,152.56 |
* HMCL MM Auto Limited Rs, 6.60 crores, HMCL(NA) Rs, Nil, HMCL Netherlands BV Rs, 50.79 crores, HMCL Americas Inc. Rs, Nil, Hero FinCorp Limited Rs, 36.40 crores, Ather Energy Private Limited Rs, 180.52 crores including mark to market adjustment of Bonds Rs, 0.69 crores.
DEPOSITS
Your Company has neither accepted nor renewed any deposits during FY 2016-17 in terms of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2016-17, all contracts/arrangements/transactions entered into by your Company with related parties under Section 188(1) of the Act were in the ordinary course of business and on an arm''s length basis. During FY 2016-17, your Company has not entered into any contracts/arrangements/transactions with related parties which could be considered ''material'' in accordance with its Policy on Materiality of Related Party Transactions. Thus, there are no transactions required to be reported in form AOC-2.
Further, during FY 2016-17, there were no materially significant related party transactions made by your Company with the
Promoters, Directors, Key Managerial Personnel or other designated persons, which might have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval. There was no matter requiring approval of the Board. During FY under review, the Audit Committee has approved transactions through the Omnibus mode in accordance with the provisions of the Act and Listing Regulations. Related party transactions were disclosed to the Board on regular basis as per IND AS 24. Details of related party transactions as per IND AS 24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company''s website, www.heromotocorp.com and can be viewed on the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/related-party-transactions.html
RISK MANAGEMENT FRAMEWORK
Your Company follows a comprehensive system of Risk Management. It has adopted a policy and procedure for rapid identification, definition of risk mitigation plans and execution. Actions include adjustments in prices, dispatch plan for specific durations across models, inventory build-up, aligning product line-up as per regulatory mandates and active participation in regulatory mechanisms. Many of these risks can be foreseen through systematic tracking. Major risks can be categorized across following:
1. Changes in regulations
2. Market contraction due to macro-economic factors
3. Socio-economic-political disruptions
Your Company has constituted a Risk Management Committee to oversee the risk management efforts under the Chairmanship of Mr. M. Damodaran, Independent Director. The details of the Committee along with its charter are set out in the Corporate Governance Report, forming part of this report. The Board periodically reviews the Risk Management framework of the Company.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated Vigil Mechanism/Whistle Blower Policy which provides a robust framework for dealing with genuine concerns & grievances. Your Company has an ethics hotline managed by a third party which can be used by employees, Directors, vendors, suppliers, dealers etc. to report any violations to the Code of Conduct. Specifically, employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company. During FY under review, three complaints were received and processed. Out of these, two complaints have been investigated & acted upon and remaining one is under investigation.
During FY 2016-17, no individual was denied access to the Audit Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company''s website, www.heromotocorp.com and can be viewed on 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 functions under direct supervision of Mr. Pawan Munjal, Chairman, Managing Director & CEO of your Company, who is also the Chairman of the CSR Committee. Other members of the Committee are Gen. (Retd.) V. P. Malik and Mr. Pradeep Dinodia, who are Non-Executive and Independent Directors of your Company.
Your Company has implemented the CSR Policy, duly formulated and recommended by the CSR Committee to the Board. The CSR policy lays down CSR activities to be undertaken by your Company. The CSR activities undertaken by your Company are based on the approved CSR policy, which is available on the Company''s website, www.heromotocorp.com and can be viewed on the following 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, broadly covers the following focus areas:
a) 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.;
b) 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;
c) 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;
d) 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;
e) To carry out CSR Programmes in relevant local areas to fulfill 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;
f) To carry out activities at the time of natural calamity or engage in Disaster Management system;
g) To contribute to the Prime Minister''s National Relief Fund or any other fund set up by the Central Government for socioeconomic development and relief and welfare of the Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women;
h) To contribute or provide funds to technology incubators located within academic institutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s) including Chief Minister''s Relief Fund, which may be recognized as CSR activity;
j) 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 the FY under review, your Company spent Rs, 85.14 crores on its CSR activities, which amounts to 2.41% of the average net profits of previous three financial years. CSR initiatives undertaken by your Company, along with other details form part of the Annual Report on CSR activities for FY 2016-17, which is annexed and forms part of this Report as Annexure V.
AUDIT COMMITTEE
The Audit Committee of your Company comprises the following Non-Executive and Independent Directors:
1. Mr. Pradeep Dinodia - Chairman
2. Mr. M. Damodaran - Member
3. Gen. (Retd.) V. P. Malik - Member
4. Dr. Pritam Singh - Member
Further details on the Audit Committee and its terms of reference etc. have been furnished in Corporate Governance Report which forms part of this Report as Annexure IV.
During the FY under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company.
AUDITORS AND AUDITORSâ REPORT Statutory Auditors
M/s Deloitte Haskins & Sells, Chartered Accountants, Gurgaon, (FR No. 015125N), Statutory Auditors of the Company were appointed until the conclusion of the 34th Annual General Meeting of the Company in calendar year 2017. They have audited the financial statements of the Company for the FY under review. The observations of Statutory Auditors in their Report, read with relevant Notes to Accounts are self-explanatory and, therefore, do not require further explanation. The Auditors'' Report does not contain any qualification, reservation or adverse remark. Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the Act.
The Board of Directors in its meeting held on May 10, 2017 have approved the appointment of M/s BSR & Co. LLP (FR No. 101248W/ W-100022) as the Statutory Auditors of the Company for a period of 5 years. Your Company has received an eligibility letter from the Auditors for their appointment in accordance with Sections 139 and 141 of the Act. Their appointment is being placed before the shareholders for approval in the ensuing Annual General Meeting of the Company.
Cost Auditors
M/s Ramanath Iyer & Co., Cost Accountants, New Delhi (FR No. 000019) were appointed as the Cost Auditors of the Company for FY 2016-17 to audit the cost accounts of the Company. They have been re-appointed as Cost Auditors for FY 2017-18.
Secretarial Auditors
Mr. Arvind Kohli, Proprietor (CP No. 2818), M/s Arvind Kohli & Associates, Company Secretaries, Gurgaon, Haryana, was appointed to conduct Secretarial Audit of your Company during FY 2016-17.
The Secretarial Audit Report for the said FY is annexed herewith and forms part of this Report as Annexure VI. The Report does not contain any qualification, reservation or adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and all financial transactions are authorized, recorded and reported correctly.
An extensive risk based programme of internal audits and management reviews provides assurance to the Board regarding the adequacy and efficacy of internal controls. The internal audit plan is also aligned to the business objectives of the Company. Comprehensive policies, guidelines and procedures are laid down for all business processes. The internal control system has been designed to ensure that financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (''the PIT Regulations'') 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 lays down guidelines, which advise insiders on the procedures to be followed and disclosures to be made in dealing with the shares of the Company and cautions them on consequences of noncomplianceâs. During FY 2016-17, your Company has strengthened the Code to ensure its effective implementation and meaningful application of the Listing Regulations.
Your Company has further put in place a Code of practices and procedures of fair disclosures of unpublished price sensitive information. Both the aforesaid Codes are in line with the PIT Regulations.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report (''BRR'') has been prepared and forms part of the Annual Report as Annexure VII. The Report provides a detailed overview of initiatives taken by your Company from environmental, social and governance perspectives.
LISTING
The equity shares of your Company are presently listed on the BSE Limited and the National Stock Exchange of India Limited (NSE).
PERSONNEL
As on March 31 2017, total number of employees on the records of your Company were 8,069 as against 7,592 in the previous financial year.
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 ''People at Hero'' forms part of Management Discussion and Analysis.
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (âRules"), is appended as Annexure I to the Report. The information as per Rule 5(2) of the Rules, forms part of this Report. However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Rules, the Report and Financial Statements are being sent to the Members of the Company excluding the statement of particulars of employees under Rule 5(2) of the Rules. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(2) and 134(3)(a) of the Act and rules made there under, extracts of Annual Return in Form MGT 9 is annexed to this report as Annexure VIII.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act, read with rules made there under is annexed to this report as Annexure IX.
STATUTORY DISCLOSURES
Your Directors state that there being no transactions with respect to following items during FY under review, no disclosure or reporting is required in respect of the same:
1. Deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.
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 your Company under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Director of your 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.
6. Buy back of shares.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace. This policy is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees, whether permanent, contractual, temporary and trainees are covered under this Policy.
As per the said Policy, an Internal Complaints Committee is also in place to redress complaints received regarding sexual harassment. Following is the summary of complaints received and disposed of during FY under review:
No. of complaints received: Nil No. of complaints disposed of: NA
AWARDS AND RECOGNITION
During the FY under review, we have received multiple awards and recognition. Some of them are listed below:
1. Your Company has been adjudged as âIndian MNC of the year" by the All India Management Association (AIMA)
2. NDTV Manufacturer of the year
3. International Fire and Security Exhibition and Conference (IFSEC) Award for Excellence in Manufacturing Security.
4. Golden Peacock Award for HR Excellence in Automobile Sector, organized by Institute of Directors.
APPRECIATION
The Board of Directors would like to express their sincere thanks to the Shareholders & Investors of the Company for the trust reposed on us over the past several years. Your Directors would also like to thank the Central Government, State Governments, Financial Institutions, Banks, Customers, Employees, Dealers, Vendors and Ancillary Undertakings for their co-operation and assistance. We would like to reiterate our commitment to continue to build our organization into a truly world class enterprise in all respects.
For and on behalf of the Board
Pawan Munjal
Chairman
Date: May 10, 2017 DIN: 00004223
Place: New Delhi
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