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Notes to Accounts of Hero MotoCorp Ltd.

Mar 31, 2017

1. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

I n the application of the Company accounting policies, which are described in note 3, the management of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the areas of estimation uncertainty and critical judgments that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognized in the financial statements:-

Recoverability of intangible asset

Capitalization of cost in intangible assets under development is based on management''s judgment that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on evaluations carried out, the Company''s management has determined that here are no factors which indicates that these assets have suffered any impairment loss.

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss Contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2017 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

Investment in equity instruments of subsidiary and associate companies

During the year, the Company assessed the investment in equity instrument of subsidiary and associate companies carried at cost for impairment testing. Some of these companies are start-ups or are at early stage of their operations and are expected to generate positive cash flows in the future years. Detailed analysis has been carried out on the future projections and the Company is confident that the investments do not require any impairment.

B. Defined benefit plans:

In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lump sum payment to the employees at the time of separation from the service on completion of vested year of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Life Insurance Corporation of India with whom the plan assets are maintained.

These plans typically expose the Company to actuarial risks such as: investment risk, inherent interest rate risk , longevity risk and salary risk

Investment Risk The present value of the defined benefit plan liability (denominated in Indian Rupee) is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Currently for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Interest Rate Risk The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase Longevity Risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary Risk Higher than expected increases in salary will increase the defined benefit obligation

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2017 by Mr. Ritobrata Sarkar (Membership no. 5394), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.

The principal assumption used for the purpose of the actuarial valuations were as follows:-

The Company makes annual contribution to Life Insurance Contribution (LIC). As LIC does not disclose the composition of its portfolio investments, break-down of plan investments by investment type is not available to disclose.

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the year, while holding all other assumptions constant.

- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 7.27 crores (increase by Rs, 7.78 crores) ( as at March 31, 2016: Decrease by Rs, 5.89 crores (increase by Rs, 6.29 crores)(as at April 1, 2015: decrease by Rs, 5.22 crores (increase by Rs,5.58 crores)).

- If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs,7.89 crores (decrease by Rs, 7.44 crores) ( as at March 31, 2016: increase by Rs, 6.42 crores (decrease by Rs, 6.05 crores))(as at April 1, 2015: increase by Rs, 5.69 crores (decrease by Rs,5.37 crores)).

Sensitivities due to change in mortality rate and change in withdrawal rate are not material and hence impact of such change is not calculated.

Sensitivity Analysis

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of reporting year, which is same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

Asset-Liability Matching Study

There is no (deficit)/Surplus of liability and funds, hence asset liability matching study not performed.

The Company has other commitments, for purchase/sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employee''s benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

2. The Company primarily operates in the automotive segment. The automotive segment includes all activities related to development, design, manufacture, assembly and sale of vehicles, as well as sale of related parts and accessories.

The board of directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company’s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company as per the requirement of IND AS 108 “Operating Segments".

Geographical Locations: The Geographical segments have been considered for disclosure as the secondary segment, under which the domestic segment includes sales to customers located in India and overseas segment includes sales to customer located outside India.

a) Domestic segment includes sales and services to customers located in India.

b) Overseas segment includes sales and services rendered to customers located outside India.

c) There are no material non-current assets located outside India.

d) The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Revenue from operations have been allocated to segments on the basis of their relationship to the operating activities of the segment.

3. RELATED PARTY DISCLOSURES UNDER IND AS 24 A. Parties in respect of which the Company is an associate

Brijmohan Lall Om Prakash (Partnership firm)

B. Parties over which the Company has control Subsidiaries

HMCL (NA) Inc., USA

HMCL Americas Inc. USA (w.e.f June 26, 2015)

HMCL Netherlands BV HMC MM Auto Limited

Subsidiaries of HMCL Netherlands BV

- HMCL Colombia SAS

- HMCL Niloy Bangladesh Limited

Associate of the Company

Hero FinCorp Limited

Ather Energy Private Limited (w.e.f January 03, 2017)

C. Key management personnel and their relatives

Mr. Brijmohan Lall Munjal - Chairman (Up to May 31, 2015 and thereafter as Director Up to October 31, 2015)

Mr. Pawan Munjal - Chairman, (from June 1, 2015) Managing Director and CEO

Mr. Sunil Kant Munjal - Joint Managing Director (up to August 16, 2016)

Mr. Suman Kant Munjal - Director

Mr. Vikram Sitaram Kasbekar - Whole Time Director (w.e.f August 8, 2016)

Mr. Ravi Sud - Chief Financial Officer (Up to March 31, 2017)

Mr. Ilam C Kamboj - Company Secretary (Up to April 2, 2016)

Ms. Neerja Sharma - Company Secretary (w.e.f August 8, 2016)

Non Executive and Independent Directors

Mr. Pradeep Dinodia Gen.(Retd) Ved Prakash Malik Dr. Pritam Singh Mr. M.Damodaran Mr. Ravi Nath Dr Anand C. Burman Ms. Shobana Kamineni Mr. Paul Edgerley

Enterprises over which key management personnel and their relatives are able to control:

A.G. Industries Private Limited, A.G Industries (Bawal) Pvt Limited, Rockman Industries Limited, Cosmic Kitchen Private Limited, Hero Management Services Private Limited, Hero Mindmine Institute Private Limited, Hero Solar Energy Private Limited, BML University, Serendepity Arts & Trust and Raman Kant Munjal Foundation

List of other related parties- Post employment benefit plan of the Company

Hero MotoCorp Limited Employees’ Gratuity Fund Trust Hero MotoCorp Limited Employees’ Superannuation Fund Trust

Refer Note 29 of information on transaction with the above mentioned post employment benefits plan.

4. SHARE-BASED PAYMENTS Employee Stock Option/RSU Plan

The Employee Stock Options Scheme titled “Employee Incentive Scheme 2014 - Options and Restricted Stock Unit" hereafter referred to as “Employee Incentive Scheme 2014" or “the Scheme" was approved by the shareholders of the Company through postal ballot on September 22, 2014. The Scheme covered 49,90,000 options/ restricted units for 49,90,000 equity shares. The Scheme allows the issue of options/restricted stock units (RSU) to employees of the Company which are convertible to one equity share of the Company. As per the Scheme, the Nomination and Remuneration Committee grants the options/RSU to the employees deemed eligible. The options and RSU granted vest over a period of 4 and 3 years respectively from the date of the grant in proportions specified in the respective ESOP Plans. Options/RSU may be exercised by the employees after vesting period within 7 years from the date of grant. The fair value as on the date of the grant of the options/RSU, representing Stock compensation charge, is expensed over the vesting period.

Fair value of share options/ RSU granted during the year

The fair value of options/RSU granted is estimated using the Black Scholes Option Pricing Model after applying the key assumption which are tabulated below. The expected volatility has been calculated using the daily stock returns on NSE, based on expected life options/RSU of each vest. The expected life of share option is based on historical data and current expectation and not necessarily indicative of exercise pattern that may occur.

5. FINANCIAL INSTRUMENTS

6. Capital Management

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to stakeholders through efficient allocation of capital towards expansion of business, optimization of working capital requirements and deployment of surplus funds into various investment options. The Company does not have debts and meets its capital requirement through equity.

The Company is not subject to any externally imposed capital requirements

The management of the Company reviews the capital structure of the Company on regular basis. As part of this review, the Board considers the cost of capital and the risks associated with the movement in the working capital.

7. Fair value measurements

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

The following is the basis of categorizing the financial instruments measured at fair value into Level 1 to Level 3: Level 1: This level includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: This level includes financial assets and liabilities, measured using inputs other than quoted prices included within

Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3: This level includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

Fair value of the Company''s financial assets that are measured at fair value on a recurring basis:

There are certain Company''s financial assets which are measured at fair value at the end of each reporting period. Following table gives information about how the fair values of these financial assets are determined:

The fair value of the financial assets and financial liabilities are included at the amount that would be received to sell an asset and paid to transfer a liability in an orderly transaction between the market participants. The following methods and assumptions were used to estimate the fair values:

- Investments traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (NAV) for investments in mutual funds declared by mutual fund house, quoted price of equity shares in the stock exchange etc.

- The fair value of bonds is based on direct and market observable inputs.

- Trade receivables, cash & cash equivalents, other bank balances, loans, other current financial assets, trade payables and other current financial liabilities: Approximate their carrying amounts largely due to short-term maturities of these instruments.

- Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

- There are no transfers between Level 1 and Level 2 during the year Financial risk management objectives and Policies

8. Financial risk management objectives

The Company''s Corporate Treasury function monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company seeks to minimise the effects of these risks by using derivative financial instruments, diversification of investments, credit limit to exposures, etc., to hedge risk exposures. The use of financial instruments is governed by the Company''s policies on foreign exchange risk and the investment. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates risk/ liquidity which impact returns on investments. The Company enters into derivative financial instruments to manage its exposure to foreign currency risk including export receivables and import payables. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency sensitivity

The following table details the Company''s sensitivity to a 5% increase and decrease in the '' against the relevant foreign currencies. ( )(-)5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit or equity where the '' strengthens ( )(-)5% against the relevant currency. For a 5% weakening of the '' against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be positive or negative.

In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year/ in future years.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Company''s exposure and wherever appropriate, the credit ratings of its counterparties are continuously monitored and spread amongst various counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management of the Company. Financial instruments that are subject to concentrations of credit risk, principally consist of balance with banks, investments in debt instruments/ bonds, trade receivables, loans and advances and derivative financial instruments. None of the financial instruments of the Company result in material concentrations of credit risks.

Balances with banks were not past due or impaired as at the year end. In other financial assets that are not past dues and not impaired, there were no indication of default in repayment as at the year end.

The age analysis of trade receivables as of the balance sheet date have been considered from the due date and disclosed in the note no. 15 above.

The Company has used a practical expedient by computing the expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information’s.

Other price risks including interest rate risk

The Company has deployed its surplus funds into various financial instruments including units of mutual funds, bonds debentures, etc. The Company is exposed to NAV (net asset value) price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates , liquidity and credit quality of underlying securities.

NAV price sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to NAV price risks at the end of the reporting period. If NAV prices had been 1% higher/lower:

-profit for the year ended March 31, 2017 would increase/decrease by Rs, 31.23 crores (for the year ended March 31, 2016: increase/decrease by '' 40.06 crores). Liquidity risk

Liquidity risk represents the inability of the Company to meet its financial obligations within stipulated time. To mitigate this risk, the Company maintains sufficient liquidity by way of readily convertible instruments and working capital limits from banks.

Maturity profile of financial liabilities:

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date.

9. The Company''s borrowing facilities, comprising fund based and non-fund based limits from various bankers, are secured by way hypothecation of inventories, receivables, movable assets and other current assets.

10. The financial statements where approved for issue by the board of directors on May 10, 2017

11. FIRST-TIME IND AS ADOPTION RECONCILIATIONS


Mar 31, 2015

1 Corporate Information

Hero MotoCorp Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on January 19, 1984. The name of the Company has been changed from Hero Honda Motors Limited to Hero MotoCorp Limited on July 29, 2011. The shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company is engaged in the manufacturing and selling of motorised two-wheelers, spare parts and related services. The Company is a leading two wheeler manufacturer and has a dominant presence in domestic market.

2 (i) There is no movement in share capital during the year, previous year and immediately preceding previous year.

(ii) Rights, preference and restriction attached to shares:

Equity shares of Rs. 2 each:

a. In respect of equity shares , voting right shall be in same proportion as the capital paid upon such equity share.

b. The dividend proposed by the Board of Directors which is subject to the approval of the shareholders in the Annual General Meeting shall be in the same proportion as the capital paid upon such equity share.

c. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion to capital paid upon such equity share.

3 (i) According to the records available with the Company, dues payable to entities that are classified as Micro and Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 during the year is Rs. Nil (previous year Rs. 0.01 crores). Further no interest has been paid or was payable to such parties under the said Act during the year.

Dues to Micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Company. This has been relied upon by the auditors.

(i) In year 2010-11, the Company has entered into a Memorandum of Understanding (MOU) with Honda Motor Company Limited Japan (Honda) for right and license to manufacture, assemble, sell and distribute certain products/parts and export license for certain products and their service parts under the intellectual property rights. Liability payable upto June 30, 2014 has been included under other current liabilities above.

4 (i) Unclaimed dividend does not include any amount outstanding as on March 31,2015 which are required to be credited to the Investor Education and Protection Fund (Fund).

(ii) Defined benefit plans

In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lumpsum payment to the employees at the time of separation from the service on completion of vested year of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Life Insurance Corporation of India by whom the plan assets are maintained.

5 Contingent Liabilities and Commitments (to the extent not provided for) Rs. crores

Particulars As at As at March 31,2015 March 31,2014

(a) Contingent liabilities

(i) In respect of excise matters 4.09 29.24

The above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of the management, have a material effect on the result of operations or the financial position of the Company.

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for 812.33 458.39 (Net of advances paid amounting to Rs. 181.13 crores (previous year Rs. 438.61 crores))

Other commitments (Refer note below)

Total 816.42 487.63

The Company has other commitments for purchase /sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employees benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which have a material impact on the financial statements.

5 As the Company's business activity falls within a single primary business segment viz. "Two wheelers, its parts and ancillary services" and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting" are not applicable.

6 Related party disclosures under Accounting Standard 18

a) Parties over which the Company has control Subsidiaries

HMCL (NA) Inc. (w.e.f. May 29, 2013)

HMCL Netherlands BV (w.e.f. June 20, 2014)

HMC MM Auto Limited (w.e.f. November 11,2013)

Subsidiaries of HMCL Netherlands BV

* HMCL Colombia S.A.S. (w.e.f. April 22, 2014)

* HMCL Niloy Bangladesh Limited (w.e.f. June 24, 2014)

b) Parties in respect of which the Company is an associate. { refer note no 36}

Hero Investment Private Limited (upto May 16, 2013)

Brijmohan Lall Om Prakash (Firm; from May 17, 2013)

c) Associate of the Company

Hero FinCorp Limited

e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:-

Brijmohan Lall & Associates, A.G. Industries Private Limited, Rockman Industries Limited, Cosmic Kitchen Private Limited, Hero InvestCorp Limited, Hero Management Services Limited, Hero Cycles Limited, Hero Corporate Services Limited, Hero Mindmine Institute Limited, Abhyuday Manufacturing and Automotive Limited, Hero Solar Energy Private Limited and Raman Kant Munjal Foundation.

7 Pursuant to Scheme of Arrangement (the Scheme) for amalgamation of Hero Investments Private Limited (HIPL) approved by the Hon'ble High Court of Delhi, which became effective from May 16, 2013 (for which appointed date was January 01,2013), all the properties and assets, present or future or contingent or of whatsoever nature, be transferred and/or deemed to be transferred to and vested with Hero MotoCorp Limited (HMCL) so as to become the properties of HMCL on the same terms and conditions as were applicable to HIPL.

8 Subsequent to the year end, Erik Buell Racing Inc. (EBR) (alongwith its subsidiary Erik Buell Racing, LLC), an associate of HMCL (NA) Inc. a wholly owned subsidiary of the Company 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. The said filing has been occasioned by inability of EBR to honor outstanding creditors. Consequently the net worth of HMCL (NA) Inc. has eroded. In view of the above, the Company has made a provision of Rs. 155.04 crores being the diminution in value of its investment held in HMCL (NA) Inc. under the head "Exceptional items" in the statement of profit and loss.

9 The ESOP scheme titled " Employee Incentive Scheme 2014- Options and Restricted Stock Unit" hereafter referred to as "Employee Incentive Scheme 2014" or "the Scheme" was approved by the shareholders through postal ballot on September 22, 2014. 4,990,000 options are covered under the Scheme for 4,990,000 shares. The Scheme allows the issue of options to employees of the Company. Each option comprises one underlying equity share. As per the Scheme, the Remuneration / Compensation Committee grants the options to the employees deemed eligible. The exercise price of each option shall be Rs. 2,159 as defined in the Scheme. The options granted vest over a period of 4 years from the date of the grant in proportions specified in the Scheme. Options may be exercised within 7 years of granting. The difference between the fair price of the share underlying the options granted on the date of grant of option and the exercise price of the option (being the intrinsic value of the option) representing Stock compensation expense is expensed over the vesting period.

10 Previous Year figures have been regrouped/ reclassified wherever necessary to correspond with the current year classifications / disclosures.


Mar 31, 2014

Hero MotoCorp Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on January 19,1984.The name of the Company has been changed from Hero Honda Motors Limited to Hero MotoCorp Limited on July 29,2011. The shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).The Company is engaged in the manufacturing and selling of motorised two-wheelers, spare parts and related services. The Company is a leading two wheeler manufacturer and has a dominant presence in domestic market.

CONTINGENT LIABILITIES AND COMMITMENTS

(TOTHE EXTENT NOT PROVIDED FOR) Rs. crores

Particulars As at March 31,2013

(a) Contingent liabilities

(i) In respect of excise matters 29.24 47.09

The above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of the management, have a material effect on the result of operations or the financial position of the Company.

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account 458.39 454.91 and not provided for (Net of advances paid amounting to Rs. 438.61 crores (previous year Rs. 255.24 crores)) Other commitments (Refer note below)

Total 487.63 502.00

The Company has other commitments for purchase /sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employees benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which have a material impact on the financial statements.

As the Company''s business activity falls within a single primary business segment viz."Two wheelers, its parts and ancillary services" and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", notified in the Companies (Accounting Standards) Rules, 2006 are not applicable.

RELATED PARTY DISCLOSURES UNDER ACCOUNTING STANDARD 18

a) Parties over which the Company has control-Subsidiary companies

HMCL (NA) Inc (w.e.f May 29, 2013)

HMC MM Auto Limited (w.e.f November 11,2013)

b) Parties in respect of which the Company is an associate. {refer note no 36}

Hero Investment Private Limited (upto May 16,2013) Brijmohan Lall Om Prakash (Firm; from May 17,2013)

c) Associate of the Company

Hero FinCorp Limited

d) Key management personnel and their relative

Mr. Brijmohan Lall Munjal - Chairman

Mr. Pawan Munjal - Managing Director

Mr. Sunil Kant Munjal - Joint Managing Director

Mr. Suman Kant Munjal - Director

e) Enterprises over which key management personnel and their relatives are able to exercise significant influence

Brijmohan Lall & Associates, A.G. Industries Private Limited, Highway Industries Limited (upto previous year), Rockman Industries Limited, Cosmic Kitchen Private Limited, Hero Management Services Limited, Hero Cycles Limited, Hero Corporate Services Limited, Hero Mindmine Institute Limited, Easy Bill Limited(upto previous year), Abhyuday Manufacturing and Automotive Limited and

The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease arrangements are cancellable in nature and range between two to fouryears.The aggregate lease rentals under these arrangements amounting toRs. 21.75 crores (previousyearRs. 18.69crores) have been charged underlease rentals"in Note 26.

Information pursuant to clause 4 (ix) (b) of the Companies (Auditor''s Report) Order, 2003 in respect of disputed dues, not deposited as at March 31,2014, pending with various authorities:

* Amount as per demand orders including interest and penalty wherever indicated in the order and excludes disputed fully paid.

** Appeal along with stay application has been filed

*** Balance of unpaid amount has been stayed as the said cases have been decided in the favour of Company in the previous assessment years in similar matters.

The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:

Supreme Court CESTAT High Court High Court

Income Tax Appellate Tribunal

The Company''s borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way of hypothecation of inventories, receivables, movable assets and other current assets.

NOTE NO. 36- Pursuant to Scheme of Arrangement (the Scheme) for amalgamation of Hero Investments Private Limited (HIPL) which is engaged in the business of holding securities other than trading, approved by the Hon''ble High Court of Delhi, which became effective from May 16,2013 (for which appointed date was January 01,2013) upon filing of the copy with the Registrar of Companies, NCT of Delhi & Haryana, all the properties and assets, present or future or contingent or of whatsoever nature, be transferred and/or deemed to be transferred to and vested with Hero MotoCorp Limited (HMCL) so as to become the properties of HMCL on the same terms and conditions as were applicable to HIPL.

Previous Year figures have been regrouped/ reclassified wherever necessary to correspond with the current year classifications / disclosures. Current year figures have been arrived at after giving effect to the scheme and include figures of operations of HIPLand thus are not comparable with the figures for the previous year.


Mar 31, 2013

NOTE NO 1 CORPORATE INFORMATION

Hero MotoCorp Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on January 19, 1984. The name of the Company has been changed from Hero Honda Motors Limited to Hero MotoCorp Limited on July 29, 2011. The shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company is engaged in the manufacturing and selling of motorised two-wheelers, spare parts and related services. The Company is a leading two wheeler manufacturer and has a dominant presence in domestic market.

NOTE NO 2.

As the Company''s business activity falls within a single primary business segment viz. "Two wheelers, its parts and ancillary services" and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", notified in the Companies (Accounting Standards) Rules, 2006 are not applicable.

NOTE NO 3.

RELATED PARTY DISCLOSURES UNDER ACCOUNTING STANDARD 18

a) Parties in respect of which the Company is an associate.

Hero Investment Private Limited

b) Associate of the Company

Hero FinCorp Limited (formally called Hero Honda Finlease limited)

c) Key management personnel and their relative

Mr. Brijmohan Lall Munjal - Chairman

Mr. Pawan Munjal - Managing Director

Mr. Sunil Kant Munjal - Joint Managing Director (w.e.f August 17, 2011)

Mr. Suman Kant Munjal - Director

d) Enterprises over which key management personnel and their relatives are able to exercise significant influence:-

Brijmohan Lall & Associates, A.G. Industries Private Limited, Highway Industries Limited, Rockman Industries Limited, Cosmic Kitchen Private Limited, Hero Management Services Limited, Hero Cycles Limited, Hero Corporate Services Limited, Hero Mindmine Institute Limited, Easy Bill Limited and Raman Kant Munjal Foundation.

NOTE NO 4

The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease arrangements are cancellable in nature and range between two to four years. The aggregate lease rentals under these arrangements amounting to Rs. 18.69 crores (previous year Rs. 12.13 crores) have been charged under "Lease rentals" in Note 26.

Information pursuant to clause 4 (ix) (b) of the Companies (Auditor''s Report) Order, 2003 in respect of disputed dues, not deposited as at March 31, 2013, pending with various authorities:

* Amount as per demand orders including interest and penalty wherever indicated in the order and excludes disputed fully paid.

** Balance of unpaid amount has been stayed as case decided in favour of the company in past on similar matter.

# The Company has received a demand notice for non-deduction of tax at source, disallowance of certain expenses, considering certain expenses of capital nature, considering tax on capital gain on investments as normal business income and others matters.

The management of the Company is of the view that there would be no material liability that would arise in the matter.

NOTE NO 5.

The Company''s borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way of hypothecation of inventories, receivables, movable assets and other current assets.

NOTE NO 6

The Board of Directors of Hero MotoCorp Limited ("the Company" / "HMCL") in their meeting held on June 4, 2012 have approved the Scheme of Amalgamation ("the Scheme") between the Company, Hero Investments Private Limited ("Transferor Company" / "HIPL"), and their respective Equity Shareholders and Creditors under sections 391 to 394 and other applicable provisions of the Companies Act, 1956, providing for merger of HIPL into the Company. The Appointed date of the Scheme is January 1, 2013.

The Scheme has been approved by the Hon''ble High Court of Delhi on March 1, 2013, however, the certified copy of the Order is still awaited. Pending completion of the formalities for effectuation of the Scheme, the effect of above has not been considered in these accounts.

Previous year''s figures have been recast/regrouped wherever necessary.


Mar 31, 2012

(i) According to the records available with the Company, dues payable to entities that are classified as Micro and Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 during the year is Rs. Nil (previous year Rs. 2.87 crores). Further no interest has been paid or was payable to such parties under the said Act in the previous year.

Dues to Micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Company. This has been relied upon by the auditors.

Note :

# Includes land of Rs. 48.46 crores at Haridwar and Rs. 61.31 crores at Jaipur pending for registration in the name of the Company.

* Includes net increase of Rs. 379.15 crores (previous year net decrease of Rs. 88.44 crores) due to fluctuation in exchange rates.

In line with Notification No. G.S.R. 378 (E) dated May 11, 2011 issued by The Ministry of Corporate Affairs, Government of India, the exchange differences arising after April 1, 2007 on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.

* Investments listed on Stock Exchange but for which quotes are not available have been considered as unquoted.

# The Company has entered into Discretionary Portfolio Management Agreements, administered through Escorts Securities Limited, Reliance Capital Asset Management Ltd, collectively called Portfolio Managers. In terms of the said agreements, the Portfolio Managers have dealt in mutual funds, debentures, bonds, government securities, equity shares, equity stock futures, equity stock options, equity index options and such other securities, made on behalf of the Company. These investments are being held in the name of the Portfolio Managers as envisaged in the aforesaid Agreements. However, there are no outstanding derivative contracts as at March 31, 2012.

(ii) Defined benefit plans

In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lump sum payment to the employees at the time of separation from the service on completion of vested period of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Life Insurance Corporation of India by whom the plan assets are maintained.

Since information in respect of 2008-09 and 2007-08 is not available, the same has not been disclosed

The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company makes annual contribution to Life Insurance Corporation (LIC). As LIC does not disclose the composition of its portfolio investments, accordingly break-down of plan assets by investment type has not been disclosed.

Rs. crores

As at March 31, 20121 As at March 31, 2011

(A) CONTINGENT LIABILITIES

(i) In respect of excise matters 39.99 30.36

The above matters are subject to legal pro ceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of the management, have a material effect on the result of operations or the financial position of the Company.

(B) COMMITMENTS

Estimated amount of contracts remaining to be executed on capital 212.63 101.54

account and not provided for (Net of advances paid amounting to Rs. 155.11 crores (previous year Rs. 75.18 crores))

Other commitments (Refer note below)

The Company has other commitments for purchase /sales orders which are issued after considering requirements per operating cycle for purchase /sale of goods and services, employees benefits including union agreement in normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which might have a material impact on the financial statements.

1 As the Company's business activity falls within a single primary business segment viz. "Two wheelers, its parts and ancillary services" and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", notified in the Companies (Accounting Standards) Rules, 2006 are not applicable.

ii) Parties in respect of which the Company is an associate. Hero Investment Private Limited (w.e.f March 22, 2011)

iii) Associate of the Company

Hero FinCorp Limited (formerly Hero Honda Fin lease limited)

c) Enterprises over which key management personnel and their relatives are able to exercise significant influence:-

Brijmohan Lall & Associates, A.G. Industries Private Limited, Highway Industries Limited, Rockman Industries Limited, Cosmic Kitchen Private Limited, Hero Management Services Limited, Hero Cycles Limited (w.e.f May 31, 2010), Hero Corporate Services Limited, Hero Mindmine Institute Limited, Easy Bill Limited and Raman Kant Munjal Foundation.

2 The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease arrangements are cancellable in nature and range between two to four years. The aggregate lease rentals under these arrangements amounting to Rs. 12.13 crores (previous year Rs. 12.40 crores) have been charged under "Lease rentals" in Note 26.

* Amount as per demand orders including interest and penalty wherever indicated in the order and excludes disputed fully paid.

** Balance of unpaid amount has been stayed as the said cases have been decided in favour of the Company in previous assessment years on the same matters.

# The Company has received a demand notice for non-deduction of tax at source, disallowance of certain expenses, considering certain expenses of capital nature, considering tax on capital gain on investments as normal business income and others matters.

The Company has obtained a legal opinion and has filed an appeal and an application for stay of such demand to ITAT. Based on the legal opinion and after considering matters decided in favour of the Company in the past, the management of the Company is of the view that there would be no material liability that would arise in the matter.

The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:

3 The Company's borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way of hypothecation of inventories, receivables, movable assets and other current assets.

4 Exceptional item of Rs. Nil (Previous year Rs. 79.84 crores) represents estimates made mainly for probable claims arising out of litigations/disputes pending with statutory authorities in accordance with Accounting Standard (AS-29) "Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets" specified in the Companies (Accounting Standard) Rules, 2006.

5 Two wheeler sales are covered by a warranty period of two/three years. The details of provision for warranties are as under:

* Includes items sold to ancillaries on cost to cost basis for assembling of components.

6 The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. Contingent Liabilities:

(Rs. in crores)

As at March 31,2011 As at March 31,2010

i) In respect of excise matters 30.36 13.72

The above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 101.54 crores (previous year Rs. 59.32 crores).

3. The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease arrangements are cancellable in nature and range between two to four years. The aggregate lease rentals under these arrangements amounting to Rs. 12.40 crores (previous year Rs. 9.04 crores) have been charged under "Lease rentals" in Schedule 10.

4. As the Company's business activity falls within a single primary business segment viz. "Two wheelers and its parts" and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", notified in the Companies (Accounting Standards) Rules, 2006 are not applicable

5. Related party disclosures under Accounting Standard 18

a) i) Parties in respect of which the Company is a joint venture (upto March 22,2011) refer note 15.

Honda Motor Co. Limited, Japan Hero Cycles Limited (upto May 30,2010) Bhadurchand Investments Private Limited Hero Investments Private Limited

ii) Parties in respect of which the Company is an associate. Hero Investment Private Limited (w.e.f March 22,2011)

iii) Associate of the Company Hero Honda Finlease Limited

b) Key management personnel and their relative

Mr. Brijmohan Lall Munjal - Chairman

Mr. Pawan Munjal - Managing Director & CEO

Mr. Toshiaki Nakagawa -Joint Managing Director (upto March 22,2011)

Mr. Sumihisa Fukuda - Whole time Director (upto March 22,2011)

Mr. Suman Kant Munjal -Relative

Mr. Sunil Kant Munjal -Relative

c) Enterprises over which key management personnel and their relatives are able to exercise significant influence:-

Brijmohan Lall & Associates, A.G. Industries Private Limited, Highway Industries Limited, Rockman Industries Limited, Cosmic Kitchen Private Limited, Hero Management Services Limited, Hero Cycles Limited (w.e.f May 31, 2010), Hero Corporate Services Limited, Hero Mindmine Institute Limited, Easy Bill Limited and Raman Kant Munjal Foundation.

Enterprises not related party in the current year

Majestic Auto Limited, Munjal Auto Industries Limited, Munjal Showa Limited, Sunbeam Auto Limited, Satyam Auto Components Limited, Hero Motors Limited, Shivam Autotech Limited and Indian School of Business.

6. The Company has entered into Discretionary Portfolio Management Agreements, administered through ICICI Prudential Asset Management Company Limited-PMS, Escorts Securities Limited, Reliance Capital Asset Management Ltd, Birla Sunlife Asset Management Company Private Limited collectively called Portfolio Managers. In terms of the said agreements, the Portfolio Managers have dealt in mutual funds, debentures, bonds, government securities, equity shares, equity stock futures, equity stock options, equity index options and such other securities, made on behalf of the Company. However, there are no outstanding derivative contracts as at March 31,2011.

7. The Company's borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way of hypothecation of inventories, receivables, movable assets and other current assets.

8. The Company has identified parties covered under the "The Micro, Small, and Medium Enterprises Development Act, 2006' on the basis of the confirmation received. The outstanding balance payable as at the close of the financial year to such parties amount to Rs. 2.87 crores. Further, no interest has been paid or payable to such parties under the said Act.

9. Employee Benefits

Defined benefit plans

In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lumpsum payment to the employees at the time of separation from the service on completion of vested period of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Life Insurance Corporation of India by whom the plan assets are maintained.

10. During the year, the Company has entered into a Memorandum of Understanding (MOU) with Honda Motor Company Limited Japan (Honda) dated December 16,2010 which is effective from January 1,2011, and in accordance therewith has entered into New License Agreements pursuant to the Share Transfer agreement, wherein Honda has given to the Company right and license to manufacture, assemble, sell and distribute certain products/parts and export license for certain products and their service parts under the intellectual property rights.

The amount to be paid by the Company for licenses granted as stated above of Rs. 1928.37 crores for manufacture, assembly, selling and distribution and Rs. 550.96 crores for export license, has been capitalised as Intangible Assets along with applicable Cess and taxes, based on probability that the future economic benefits attributable to these assets will flow to the Company, as with effect from January 1, 2011 onwards the company's liability to pay ongoing royalty for all the existing / modified products/ parts would cease.

These Intangible Asset has been amortised over a period of forty two months uptoJune30,2014. Accordingly, liability payable upto March 31, 2012 has been included under Current Liabilities and the balance has been disclosed as Deferred Payment Credit.

Further, joint venture has ceased on March 22, 2011 pursuant to transfer of shares held by Honda Motor Company to the Indian joint venture partners.

11. Exceptional item of Rs. 79.84 crores represents estimates made mainly for probable claims arising out of litigations/ disputes pending with statutory authorities in accordance with Accounting Standard (AS-29) "Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets" specified in the Companies (Accounting Standard) Rules, 2006.

12. In line with Notification No. G.S.R. 225(E) dated March 31,2009 issued byThe Ministry of Corporate Affairs, Government of India, the exchange differences arising after April 1,2007 on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated overthe balance useful life of the asset.

13. Previous year's figures have been recast/regrouped wherever necessary.

14. Schedules 1 to 12 form an integral part of the accounts.


Mar 31, 2010

1. CONTINGENT LIABILITIES: (Rupees in crores)

As at March As at March 31,2010 31,2009

i) In respect of excise matters 13.72 8.17

The above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately concluded will not in the opinion of management, have a material effect on the result of operations or the financial position of the Company.

2 Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 59.32 crores (previous year Rs. 92.37 crores).

3 The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease arrangements are cancellable in natureand range between two to fouryears.The aggregate lease rentals underthese arrangements amounting to Rs. 9.04 crores (previous year Rs. 10.51 crores) have been charged under "Lease rentals" in Schedule 10.

4 As the Companys business activity falls within a single primary business segment viz. "Two wheelers and its parts" and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", notified in the Companies (Accounting Standards) Rules, 2006arenotapplicable.

5 Related party disclosures under Accounting Standard 18

a) i) Parties in respect of which the Company is a joint venture.

Honda MotorCo. Limited, Japan

Hero Cycles Limited

Bhadurchand Investments Private Limited

Hero Investments Private Limited

ii) AssociateoftheCompany Hero Honda Finlease Limited

b) Key management personnel

Mr. Brijmohan Lall Munjal - Chairman

Mr. Pawan Munjal - Managing Director & CEO

Mr. Toshiaki Nakagawa - Joint Managing Director

Mr. Yutaka Kudo - Whole time director (upto May 30,2008)

Mr. Sumihisa Fukuda - Whole time director (w.e.f. June 1,2008)

c) Enterprises over which key management personnel and their relatives areable to exercise significant influence:- Brijmohan Lall Associates, A.G. Industries Private Limited, Hero Corporate Services Limited, Highway Industries Limited, Majestic Auto Limited, Munjal Auto Industries Limited, Munjal Showa Limited, Rockman Industries Limited, Sunbeam Auto Limited, Satyam Auto Components Limited, Hero Motors Limited, Shivam Autotech Limited, Cosmic Kitchen Private Limited, Easy Bill Limited, Hero Mindmine Institute Limited, Indian School of Business and Raman Kant Munjal Foundation.

6 The Company has entered into Discretionary Portfolio Management Agreements, administered through ICICI Prudential Asset Management Company Limited-PMS, Escorts Securities Limited, Reliance Capital Asset Management Ltd, Fortis Investment Management, Birla Sunlife Asset Management Company Private Limited collectively called Portfolio Managers. In terms of the said agreements, the Portfolio Managers have dealt in mutual funds, debentures, bonds, government securities, equity shares, equity stockfutures, equity stock options, equity index options and such other securities, made on behalf of the Company. However, there are no outstanding derivative contracts as at March 31,2010.

7 The Companys borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way of hypothecation of inventories, receivables, movable assets and other current assets.

8 The Company has identified parties covered under the "The Micro, Small and Medium Enterprises Development Act, 2006" on the basis of the confirmation received. There is no outstanding balance payable as at the close of the financial year to such parties. Further, no interest has been paid or payable to such parties under the said Act.

9. Previous years figures have been recast/regrouped wherever necessary.

10. Schedules 1 to 12 form an integral part of the accounts.

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