Hero MotoCorp Ltd
Chairman Speech
Inspiring the Future of Mobility
The current fiscal year is a milestone year for everyone in the Hero
ecosystem. July 1, 2023, marked the 100th birth anniversary of our Founder Chairman and my
beloved father, Dr. Brijmohan Lall Munjal.
| Dr. Pawan Munjal |
| Executive Chairman, Hero MotoCorp |
Dear Stakeholders,
I am delighted to present to you our Annual Report for the Financial
Year (FY) 2022-23. Before I reflect on the year gone by, I must mention that July 1, 2023,
marked the centenary birth anniversary of Dr. Brijmohan Lall Munjal. An
entrepreneur-par-excellence, an institution builder, a philanthropist, an innovator, a
statesman, a spiritual soul, and above all, a proud Indian, he continues to be an
inspiration to everyone in the Hero family and beyond. While we embark on this journey
celebrating his legacy, this Annual Report also pays a heartfelt tribute to him.
Reflections on the year gone by
I feel proud of the way Hero MotoCorp has navigated through a volatile
and challenging environment in FY 2022-_23. Despite slackening demand in the two-wheeler
industry, the Company has been focused and resilient, and delivered double-digit growth
over the previous year, successfully retaining its coveted position of being the
world's largest manufacturer of motorcycles and scooters for 22 consecutive years.
This performance is a testament to the trust the consumer has reposed on Brand Hero –
a conviction built on the unwavering commitment to quality and value that our products and
services offer.
Guided by our Vision – ‘Be the Future of Mobility',
we envisage Hero MotoCorp as a catalyst in bringing advanced mobility solutions that
exceed the ever-evolving requirements of a diverse set of customers. Additionally, we are
also launching new and innovative products, developing a worry-free ecosystem for green
mobility, nurturing the market through better customer connect, and increasing the
affordability of our products and services.
Hero – a partner in the ‘journey of life'
So, what makes Hero an integral part in the lives of millions of our
customers for generations? Since its inception in 1984, Hero has been instrumental in
providing convenient fuel-efficient mobility solutions to its customers, empowering them
to move ahead in life. Brand Hero and the India story have grown together. Hero has played
the role of a catalyst by making a significant contribution to India's rise from a
‘developing' nation to a formidable global power. Beginning with a small plant,
manufacturing bicycle parts in the early 1950s to mopeds in 1974, then moving on to
motorcycles in 1984, and to the present day with a global footprint in 47 countries and
counting, the ‘Made in India' Hero has been a key growth enabler in the
automotive industry.
We have led defining moments in the industry. Our joint venture with
Honda saw the Company take a giant leap in developing products, processes, and
technologies on a global scale. We ushered in the industry's first four-stroke
motorcycle and went on to achieve market leadership through a combination of factors,
including continuous innovation and development of new models. Today, we are on the cusp
of developing new-age products for the future.
The next-gen two-wheelers will address an even broader market in which
the electric vehicle segment, premium motorcycles, and scooters are likely to be the
dominant categories.
Geopolitical turbulence keeps the world on edge
Socio-political and economic developments in any part of the world
today have a ripple effect globally. Just when everyone was expecting a return to normalcy
after the pandemic, the world continues to remain uncertain due to the volatile
geopolitical situation created by the protracted Russia-Ukraine conflict. Central banks of
major economies are continuing their efforts to control inflation that has originated from
this long conflict and to navigate recessionary trends so that the economic slowdown can
be controlled. They have succeeded to a certain extent with global headline inflation
slackening on the back of lower commodity prices. However, the International Monetary Fund
(IMF) predicts that underlying core inflation will likely decline slowly, remaining around
7% levels in FY 2022-231. Understandably, consumption demand remains subdued.
With China alternating between Covid outbreaks, its economy has failed to provide succour
and the US and European economies have limited hope to offer as they face a prolonged
period of low GDP growth that can carry forward into FY 2023-242.
India holds out hope, epitomises resilience
Amid global headwinds, India has emerged as an oasis of economic
resurgence. Well-timed core sector spending, targeted fiscal interventions
1 https://www.imf.org/en/Publications/
WEO/Issues/2023/04/11/world-economic-outlook-april-2023
2 https://www.morganstanley.com/ideas/
economic-outlook-mid-year-2023-global-gdp-slowing from the government, a burgeoning
digital economy and favourable demographics have all led to a healthy revival in
consumption demand. Although inflation remains high, it is gradually entering into the
Reserve Bank of India's (RBI) comfort range. India is currently passing through a
golden phase - aptly called ‘Amrit Kaal' - on the way to becoming a
‘developed' economy when it celebrates its centenary year of independence in
2047.
Several transformational pillars of growth have been identified that
will propel the country forward towards this goal. Measures designed to reduce income
disparity, extend infrastructural reach, enhance prosperity across the length and breadth
of the country, deepen reach and access of technology along with accelerated enterprise
and self-reliance are all going to be the vehicles of this transformation. Much of this is
already underway including massive public infrastructure creation and financial inclusion.
Currently, India has a 145,000 km long road network increasing at the
rate of 40–50 km per day. This is the second longest road network in the world and is
projected to grow to a length of 290,000 km by the end of 2047 and augers very well for
the automotive industry and for our Company. The possibility of accessing every remote
village now no longer seems farfetched. Furthermore, India's stated target of
achieving Net Zero emissions by 2070 is another defining factor towards building a
sustainable future.
A commitment to address diverse mobility needs of the customer
Demand for motorcycles and scooters in India is led by rural and
semi-urban markets – regions that experienced challenging circumstances during the
year. However, the structural growth drivers continue to remain intact. Given the
country's young skilled population, the strong economic growth potential of rural and
semi-urban areas, easier access to consumer credit and a swelling demand for
last-mile-connectivity, we remain confident that Hero MotoCorp will lead the way to a
successful FY 2023-24. During FY 2022-23, we sold 5.4 million units of motorcycles and
scooters, an increase from ~4.9 million units sold in FY 2021-22. Although we recorded
lower sales in the Entry and the Deluxe 125 cc segments, it was offset by the sales in
Deluxe 100/110 cc, and the Premium segments, with an increase in market share in the
below-200cc Premium segment. Furthermore, we kept the excitement levels high across our
product categories with new launches. ‘Premiumisation' of our product portfolio
gained further pace, with the feature rich XTEC series doing well across segments and
gaining market share.
FY 2022-23 also ushered in a new era of sustainable and clean mobility
with the launch of our first electric vehicle (EV) VIDA V1. We commenced customer
deliveries in three cities – Bengaluru, Jaipur, and Delhi with more than 300 VIDA
public charging stations across 50 locations in these cities. We have already expanded to
eight more cities – Pune, Ahmedabad, Nagpur, Nashik, Hyderabad, Chennai, Kozhikode,
and Kochi. In keeping with our vision to democratise green mobility and accelerate the
growth of the EV category, we will be expanding the presence of VIDA V1 to 100+ cities by
the end of the calendar year 2023.
During the year, we also made significant progress in our partnership
with the iconic American motorcycle brand Harley-Davidson, Inc. Our co-developed
Harley-Davidson X440 motorcycle has been launched exemplifying the finest ideals of
passion, creativity, innovation, and collaboration. This will mark a significant chapter
in the Premium journey of Hero MotoCorp. Our Research & Development (R&D)
ecosystem – which includes the Centre for Innovation and Technology at Jaipur in
India and the Hero Tech Centre, Germany – are developing contemporary,
state-of-the-art, and technologically advanced mobility solutions for our customers. The
launch of our first EV product, VIDA V1 and best-in-class featured scooter, the XOOM 110
are outcomes of this ingenuity.
Expanding choices, ensuring accessibility and affordability
Customer-centricity has always been the hallmark of our Company's
vision and strategy. In keeping with this philosophy, our product development strategy
maintains a sharp focus on the needs of the customer. We deploy innovative outreach
programmes and surveys, including conducting focus group sessions to gain in depth
insights into evolving consumer aspirations. During the year, we launched the
‘Hero Sure - Powered by Wheels of Trust' platform to tap
the replacement market effectively. The platform will enable buying, selling and exchange
of pre-owned two-wheelers in a convenient, hassle-free way. The service will help the
customer to get the best price for their vehicle through a transparent evaluation process,
with the option of upgrading to a new Hero product.
Digital strategy
With massive digital transformation underway across functions within
the organisation, digitalisation is playing a significant role in our customer outreach,
thereby directly contributing to our growth. We have invested significantly in upgrading
our Information Technology systems, adopting advanced analytics and Artificial
Intelligence (AI) tools, and in implementing cutting-edge automation technologies. The
wide array of digital platforms and solutions we offer enable our customers to
effortlessly engage with our products and services from discovery to purchase and beyond.
We have set an ambitious goal of achieving 30% of our sales through digital channels by
the year 2030. We have augmented the user interface of our digital channels, which have
emerged as a preferred destination for our customers pre-and-post purchase needs. This has
led to better customer engagement, resulting in a 10% increase in organic traffic via the
corporate website and a 22% rise in product-related queries via digital channels.
To optimise our digital workflows, we have introduced Internet of
Things (IoT) systems for real-time monitoring of our shop floors. These systems are
instrumental in providing immediate insights and enabling prompt actions based on early
warning signals. Our flagship project ‘Digital Factory Lighthouse' installed in
the manufacturing facility at Tirupati in Andhra Pradesh targets boosting productivity by
20% by the end of the current fiscal.
Building a sustainable world is a collective responsibility
Creating a sustainable world requires synchronised efforts at various
levels. We have joined forces with India's drive towards decarbonisation through our
green mobility solutions. Our project ‘Hero NEXT' is an initiative to
make our operations more sustainable. We have set a target of becoming 100% carbon neutral
operation by 2030, 500% water positive facilities and 100% waste neutral facilities in
India by 2025. Our ‘beyond-the-fence' initiatives accelerate our efforts on
sustainability. Through the Sustainable Partner Development Programme (SPDP), we
have been conducting sustainability assessments of all our supply chain partners. It is
imperative that our suppliers and vendors adhere to our Manufacturing Codes of Conduct and
they wish to continue to partner with us on this sustainable manufacturing journey. Our
teams continuously engage with our suppliers to support them to make the shift.
We are also working towards transitioning our existing authorised
dealer networks to 100% green dealerships by 2030.
The development of VIDA V1 is a step towards making sustainable product
offerings. In addition, we have partnered with ZERO Motorcycles, the California-based
manufacturer of premium electric motorcycles and powertrains. The collaboration combines
the expertise of Zero with the scale of manufacturing, sourcing, and marketing of Hero
MotoCorp.
Being a responsible corporate citizen has always been integral to our
business strategy. Aligned with the UN Sustainable Development Goals, our initiatives
under the Corporate Social Responsibility (CSR) umbrella ‘Hero WeCare'
strive to make a lasting impact on the communities around our operational areas and
beyond.
Our people are our greatest asset. As an organisation, we make every
effort to provide them with a conducive workplace to nurture their full potential. As a
part of our Diversity, Equity, and Inclusion (DE&I) commitment, we have set a target
of achieving 30% gender diversity by the year 2030. It gives us an immense sense of
satisfaction that this initiative has been recognised by the Bloomberg Gender Equality
Index for 2023.
Exciting future ahead with new possibilities
With its immense potential and possibilities, the future is exciting
for Hero. As India moves closer to realising its ambition of becoming a US$ 5 trillion3
economy by the year 2027, incredible opportunities have emerged, which will have
significant growth
3 As per the Chief Economic Advisor to the Govt. of India, Dr. V
Anantha Nageswaran impact for businesses, both big and small. With India's transition
to green energy gaining momentum, demand for sustainable solutions, including for mobility
– will grow exponentially. As we move forward, we remain committed to delighting our
customers by delivering new and technologically advanced products; to our employees by
providing them with growth opportunities and to our shareholders by delivering long-term
value.
I thank our valued shareholders, dealers, distributors, supply chain
partners, associates, our entire workforce, our customers in India and across the world,
for their unstinted support and faith in our Company, our people and our products. I wish
everyone a healthy, safe, and prosperous FY 2023-24.
| Dr. Pawan Munjal |
| Executive Chairman |
| Hero MotoCorp |
Hero MotoCorp Ltd
Directors Reports
Dear Members,
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:
( ` in crore)
|
Standalone |
Consolidated |
| Particulars |
Year ended |
Year ended |
|
March 31, 2023 |
March 31, 2022 |
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 |
- |
- |
(8.89) |
(6.28) |
| defined benefit obligation (net of income tax) |
|
|
|
|
| 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 |
FINANCIAL HIGHLIGHTS
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, 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, 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 "Worry-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
MANAGEMENTDISCUSSIONANDANALYSIS 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 "Be 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.
GLOBAL FORAYS
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.
INNOVATION
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.
CYBER SECURITY
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.
ETHICAL PRACTICES
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.
QUALITY
In line with our commitment to "set global benchmarks, achieve and
sustain leadership in quality while creating a sustainable future", Hero has
continued its journey towards Enterprise-wide 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 "Structured 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
"Quality 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
"Be 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.
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 conductingprogrammeslikeMasterinBusinessAdministration (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.
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/partsthereof.Italsoundertakes,coordinatesand 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.
HMCL Netherlands B.V. (‘HNBV')
HNBVisawhollyownedsubsidiaryofyourCompany,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.
YourCompanyhasreceiveddeclarationsfromalltheIndependent 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,MinistryofCorporateAffairsoranyotherstatutoryauthority.
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.
BOARD MEETINGS
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.
COMMITTEE MEETINGS
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 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. 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_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, 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.
EMPLOYEES' INCENTIVE SCHEME
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.
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 at the following link: https://www.heromotocorp.com/en-in/uploads/code_
policy/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.
TRANSFER TO GENERAL RESERVE
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 Amount (Shares) |
Principal Amount (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 |
DEPOSITS
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
RISK MANAGEMENT FRAMEWORK
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 lead-time 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, 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, 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
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, 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.
AUDIT COMMITTEE
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 self-explanatory 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.
AWARDS AND RECOGNITION
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.
ACKNOWLEDGEMENTS
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 |