Eicher Motors Ltd
Chairman Speech
Dear Shareholders,
I trust you and your families are safe and doing well.
I am writing to you at a time when the world, as we know it, is changing. Over the last
few months, the Coronavirus global pandemic and the ensuing emergency have resulted in
disruptive changes in our world. We've seen a paradigm shift in the way we live, the way
we work, and in the way we connect, engage and collaborate with people.
At the Eicher Group, we've moved swiftly to tackle and respond to this situation and we
have taken several initiatives to secure the interests of our internal and external
stakeholders. We employed a three-pronged strategy to address and engage all stakeholders
outside our fences, close to our fences and within our fences. We worked to ensure our
commitment and support to our dealers and suppliers, and helped them with over Rs. 700
crores, as we believe that we need to ensure the sustainability of the entire ecosystem.
We have made an initial CSR commitment of Rs. 50 crores towards relief and support
measures to fight the pandemic in India and are committed to increasing spends to deploy
additional support and for longterm rehabilitation in the aftermath of the pandemic.
Businesses have been impacted too, and the automobile industry in India and across the
world has been considerably hit. At Eicher Motors - both at Royal Enfield and VECV - we
have witnessed the impact of this situation as several parts of the world, including India
went into lockdown.
Our manufacturing facilities and offices remained shut in compliance, and so did our
stores and service centres.
We believe we have built our business on sound fundamentals that gives us enough room
to tackle unprecedented situations such as this. We have a solid balance sheet and cash
position, a robust business model with a very focussed and cash- optimized approach, a
strong line-up of excellent products, among the best retail footprint, and overall an
exceptional management team at Royal Enfield and VECV. I am confident that we are able to
pursue our focus and investment for the long term, while we address near term challenges.
ROYAL ENFIELD
In the year ended March 2020, EML's consolidated net revenue from operations
(reflecting the business of Royal Enfield motorcycles) was Rs. 9,154 crores, Consolidated
EBITDA was Rs. 2,180 crores, and Profit After Tax was at Rs. 1,827 crores.
Royal Enfield sold 6,97,582 motorcycles in the financial year.
In an effort to increase the retail footprint in India and to cater to smaller towns
and cities, Royal Enfield announced the Studio Stores format and launched 600 new Studio
Stores during the year. These, together with the 921 dealerships, take Royal Enfield's
retail touchpoints to 1,521 across India. In the international markets, we now have 77
exclusive stores outside of India, and a retail network spread across 60 countries.
We have opened new consumer touchpoints in Thailand,
Brazil, Argentina, France and the UK, taking our total dealer touchpoints in
international markets to over 660 stores including multi-brand outlets.
On the back of a challenging year, growth momentum for the automobile industry was
sluggish and subdued. At Royal Enfield, we continued to push ahead with our long-term
plans, while adapting our strategies to tackle immediate challenges.
We remained focussed on creating more accessibility with the introduction of new
variants of motorcycles and on building engaging experiences for the customer.
It has been our constant endeavour to strengthen Royal Enfield's position as a true
global brand, and as a catalyst for pure motorcycling. In that context, it is a great
pleasure for me to report that we have had an excellent performance in markets outside of
India this year.
We have recorded an overall volume growth of 96%, in international markets which has
been highlighted by overwhelming growth across all geographies - both developing markets
and matured markets have performed exceedingly well, with Europe registering a 100% growth
over last year. The 650 Twin motorcycles, and the Himalayan have led this growth for us
across these markets, as these gorgeous motorcycles received unprecedented response from
consumers across the globe.
Royal Enfield expanded its retail footprint in the Asia-Pacific region this year by
setting up its first standalone, flagship store in Seoul, South Korea. The overall
footprint grew by 50% in key priority markets across the Asia-Pacific region. Royal
Enfield now features among the Top 5 brands, in terms of volumes, in the middleweight
segment in Thailand, Australia-New Zealand and South Korea. In Europe, we are now at No.6
among brands in the middleweight motorcycling segment. This year, we also started direct
operations of our Thailand subsidiary. This will be instrumental for us to grow the Royal
Enfield brand and the middleweight motorcycling segment in the Asia-Pacific markets.
We have continuously worked to strengthen our technical competencies. This year, we
completed the set-up of our Global Headquarters in Chennai which also houses a world-class
product development and technology centre. We now have the advantage of twin technology
centres in the UK and in India, that house world-class testing and development
capabilities and work in close collaboration across projects.
Our focus this year in India, has been to build accessibility and aspiration among
emerging markets within the country. With
this view, we launched the Royal Enfield Studio Stores this year. These are smaller
format stores, with leaner investment that gives us presence across smaller towns and
cities in India. We opened 600 Studio Stores across India taking our overall consumer
retail touchpoints to 1,521. We also launched new variants of the Royal Enfield Bullet 350
and the Classic 350 during the year, to further enhance accessibility for consumers.
This was a landmark year for the Indian automobile industry, as everyone transitioned
to the new emission norms. At Royal Enfield, we ensured complete BS VI compliance across
our portfolio much ahead of the mandated timelines. I am also very happy to report that we
were among the first automotive companies in India to successfully sell all existing
inventory of BS IV motorcycles before time. Astute production planning and close
collaboration with the retail network made this possible.
In addition to the BS VI compliant Classic 350, Bullet 350, the 650 Twin motorcycles,
Royal Enfield also launched the BS VI Himalayan in the fourth quarter of the fiscal year.
The Himalayan bS VI has a vibrant new look and improved features that have made it
instantly successful in India and across the world. The new motorcycle has received great
reviews from media, experts and from consumers.
The single-cylinder, 500cc Unit Construction Engine has been an iconic part of Royal
Enfield's heritage. In January this year, we bid adieu to the 500cc UCE platform with a
special Classic 500 Tribute Black edition. These motorcycles were the last in India to
carry the iconic long-stroke single cylinder UCE 500cc engine and were exclusively made to
order in a limited production run, that saw great response.
Over the last year, the 650 Twin motorcycles have brought in a lot of first time buyers
into Royal Enfield. In Europe, both motorcycles were very well received by riding
enthusiasts. The Interceptor INT 650 and the Continental GT 650 continued to win many
accolades and awards globally. The list of prestigious awards include - Thailand Bike of
the Year 2019 award in the 'Best Modern Classic MiddleWeight' category, 'Best LAMS Retro
Award' in Australia and 'Best Roadster' award in Philippines, MCN Retro Bike of The Year
2019 in the UK for Interceptor INT 650 and 2019 best-looking Naked/standard Motorcycle of
the year from Motorcyclist magazine USA for Continental GT 650.
Royal Enfield motorcycles have always been the ideal canvas for customization and over
the last few years we have been focussing on making this an integral part of our brand's
journey. The Royal Enfield Custom Programme was set up with a purpose of nurturing the
spirit of self expression among the community and deepening engagement with motorcycling.
This programme has seen significant forward thrust during this year, with several
interesting collaborations and participation across iconic trade shows and festivals
across the world. During the year 2019-20, our programme showcased 37 new Custom Builds
across 11 countries with several new properties being launched.
Rider Mania 2019 was a vibrant and exciting event, as we had the best ever
participation of around 8,000 Royal Enfield enthusiasts from across the world. We launched
several new exciting initiatives, and significant among them was the launch of the Royal
Enfield Slide School, the first demo of which was held at Rider Mania. The Slide School
was launched in an endeavour to revive the culture of fun and engaging flat track racing.
The first edition of the Slide School was held in February in Bengaluru and received
wonderful response from all participants.
With a view to bring in newer formats of rides, Royal Enfield focussed on greater
community inclusion and created new rides centred around customers' hobbies and interests.
This year, the first edition of Astral Ride - a distinctive ride that combines the passion
for astrophotography with the spirit of motorcycling
was conducted. We also conducted the first edition of the Himalayan Adventure -
Rongbuk, a treacherous ride across three of the Everest Base Camps.
We began a new journey towards Sustainability this year with the #LeaveEveryPlaceBetter
initiative, in an endeavour to promote sustainable tourism and transport, especially to
more ecologically fragile regions. We want to be able to preserve pristine tourist
destinations and restore and sustain delicate ecosystems, so that our generation and
future generations can enjoy them responsibly. Our first steps in this programme have been
towards encouraging riders to be wary of littering, mindful of plastic waste and leave
every place they travel to, cleaner than they found it. This year, the Himalayan Odyssey
and Rider Mania were conducted as a zero 'single-use-plastic' events. Participants in
these rides and events were delighted about this initiative and acted as catalysts to
spread the word further among their riding communities. In the years to come, we plan to
introduce many such initiatives that will reflect our commitment to sustainability and
towards our social mission and take the concept well beyond our riding community, to the
larger tourism industry.
We continue our journey towards environmental and community led sustainability
initiatives at our manufacturing locations. This year we focussed on building initiatives
to strengthen our resolve towards sustainability and improving performance standards. We
are making sure that we continue to remain water positive and have also facilitated
groundwater replenishment and renovation of traditional water bodies near our facilities.
In addition, to ensure more green cover, we have planted over 1000 trees around our
manufacturing locations.
Royal Enfield has the largest, the fastest growing and most engaged online motorcycle
brand community in the world.
We have a social media community of more than 7.5 million passionately engaged users as
of March 2020, an increase of 30% from the last year. Our on-ground and on-line
communities together make for a vibrant audience that share content and want to eagerly
engage with the brand.
For the past few months, during the lockdown, we initiated several digital campaigns
such as the #TripStory and the WhatsYourAdventure, with a focus to keep our audiences
engaged through contextual campaigns. Our overall community participation levels,
engagement levels and reach were at an all-time high, and Royal Enfield was reported the
second Most Engaging Brand in India during the lockdown.
We also introduced a new version of the Royal Enfield website to deliver a superior
user experience in terms of navigation and discoverability through a design that makes
interaction a lot more intuitive. We launched geofenced websites in 3 more markets this
year - Korea, Malaysia and Vietnam - taking our total website footprint to 21 countries
now. We now also have an online configurator that allows a user to visualize the product
with his or her preferred choice of accessories. This is truly a step forward in
delivering a vastly superior and continuous customer experience.
I do believe that we are very well poised to expand and lead the middleweight
motorcycling segment globally. We endeavour to build and grow the pure motorcycling way of
life, and bring more and more people across the world to experience the joy of leisure
motorcycling. Our international markets are beginning to show significant and sustainable
growth trends on the back of motorcycles we have recently introduced - the Himalayan and
the 650 Twin motorcycles - and we believe we have strong potential for further growing
these markets for Royal Enfield.
We are committed to remain invested in these geographies and continue our efforts
towards building a robust ecosystem of rides, events, and community so we can further
mobilize more enthusiasts into experiencing Royal Enfield's pure motorcycling way of life.
The last few months have been challenging, but as the lockdown gradually begins to ease
out, we are witnessing strong initial customer interest and confidence. Going forward, we
do estimate an increased demand for personal transportation and two-wheelers as people
would be wary of using public transport. This we believe will augur well for us and for
the industry as a whole. At Royal Enfield, we continue to make concrete inroads to expand
our retail network, while we further strengthen our supply chain and vendor ecosystem.
With an aim to further build accessibility through a host of seamless digital solutions
and a variety of financial solutions, we are confident of capitalizing on this demand as
the situation stabilizes.
VECV
The commercial vehicle industry has been going through a very challenging time over the
last year. The medium and heavy commercial vehicles segment was severely impacted during
the year, and high discounting in the sector led to an impact on profitability. Apart from
this, VECV also had to tackle challenges in retail finance availability, change in
regulation leading to increase in payload, and the transition to new emission norms during
the year.
For the year ended March 2020, VECV's total revenue from operations was Rs. 8,524
crores, EBITDA* was Rs. 415 crores and Profit After Tax was Rs. 58 crores. VECV sold
48,721 trucks and buses in the year and 28,383 Medium-Duty engines (88% of which were
exported). VECV also exported 4,568 vehicles and began manufacturing trucks for the
Indonesia and South African markets under the UD brand, where we think there's a
significant growth potential. During the year, VECV has also been able to improve its
market share position across segments. While the industry witnessed a decline of 40%, VECV
was in a better place in comparison with a 33% volume drop.
VECV was the first company in the Commercial Vehicle Industry to migrate to BS VI norms
well before the mandated timeline. Given VECV's experience of more than six years, in
supplying Euro 6 compliant engines to Volvo, we have an edge in handling the challenges
posed by the BS VI technology.
In line with our vision to drive modernization in commercial transportation, VECV
introduced the Pro 2000 series, the new range of light and medium duty vehicles. These
vehicles set new industry benchmarks for industry-first features in enhanced reliability,
safety, comfort and efficiency. The new vehicles entailed indigenously developing two new
engines (two-litre and three-litre engines) designed from scratch and two new contemporary
style cabins 1.8 metre and 2 metre wide.
We also undertook a complete modernization of our fleet at VECV this year. We have
introduced several new state-of-the- art features in our trucks and buses aided by the
Volvo Group, making them relevant and more efficient for Indian conditions, while adapting
contemporary world-class technology.
During the year, VECV started operations at the new truck plant at Bagroda, near Bhopal
for the assembly of new engines for our Pro 2000 series. This manufacturing facility is
built to meet the Industry 4.0 standards. We expect new trucks
to start rolling out of this facility during this year. This new facility, together
with our manufacturing plant at Pithampur significantly increases our manufacturing
capacity.
We hold true to our brand promise of 'ensuring the best uptime in the industry', and
endeavour to be a commercially focussed organization. This year, we set up the 'Uptime
Centre', a first-of-its-kind initiative in the industry. These centres operate 24x7 and
can provide remote diagnostic services and real-time support to on-ground technicians by
logging into any truck at the dealer workshop or via the Roadside Assistance support team.
This will be extremely advantageous for our customers. Furthermore, we have plans to
introduce predictive maintenance to avoid potential breakdowns thereby increasing uptime
for our customers.
VECV continues to remain strong in the high-end niche segments of coal mining and
across other applications in the areas of construction, cargo movement among others.
In international markets, VECV has made further progress in high growth potential
markets like Indonesia and Malaysia in SouthEast Asia, few more markets of the Middle East
and Africa apart from our strong presence in India like markets of South Asia.
While we expect the current year to continue to be challenging, we remain focussed on
our long-term initiatives and are optimistic that the industry will be back on track soon,
largely led by investments in infrastructure. At the same time, we are bringing sharp
focus on cost management and improving productivity. Our superior technology and expertise
gives us the edge for the BS VI journey in future. We will continue to focus on driving
modernization in the commercial vehicle industry and we hope to better the market as the
economy improves and the industry comes back on track.
Looking ahead
The global economic impact of the COVID-19 pandemic is likely to be significant as
pointed out by several experts. As the virulence of the virus slows down, countries and
economies will begin to reboot. We do believe that recovery is likely to be gradual from
here, but there is marked optimism for economies like India. We will have to adapt to what
will be the new normal going forward.
At Eicher Motors, we have the experience of building resilient and profitable
businesses with very strong business models that are well prepared to meet such extraneous
challenges.
I am confident of the vision that both Vinod Dasari and Vinod Agarwal have for Royal
Enfield and VECV respectively, and believe that we are well poised to take Eicher Motors
to the next level. Both gentlemen have been inducted to the Board of EML, and this
strengthens not just our governance and leadership, but also fortifies our vision and
brings in better synergies.
We have robust business models for both Royal Enfield and VECV and have committed and
competent teams. Both companies have strong product pipelines and will continue to push
forward with our long-term strategic plans.
Siddhartha Lal
Managing Director Eicher Motors Limited
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Eicher Motors Ltd
Directors Reports
To the Members of Eicher Motors Limited
The Directors have pleasure in presenting the Thirty Eighth Annual Report along with
the Audited Financial Statements of your Company for the financial year ended March 31,
2020.
FINANCIAL RESULTS
Your Company has earned a Net revenue from operations of Rs. 9,077.47 crores during the
financial year 2019-20. The profit before depreciation and interest expense including
interest on lease liability (Ind AS 116) of Rs. 10.86 crores amounted to Rs. 2,203.78
crores, which is 24.3% of the total revenue. After accounting for other income of Rs.
615.34 crores, interest expense of Rs. 10.86 crores and depreciation of Rs. 377.92 crores,
profit before exceptional item and tax amounted to Rs. 2,430.34 crores.
Profit after tax amounted to Rs. 1,903.82 crores after income tax provision of Rs.
526.52 crores. Total Comprehensive Income for the year, net of tax amounted to Rs.
1,910.84 crores.
The financial results are summarized below:
| Net Revenue from operations |
9,077.47 |
9,794.48 |
| Profit before depreciation and interest |
2,203.78 |
2,944.38 |
| Interest |
10.86 |
2.99 |
| Depreciation |
377.92 |
298.93 |
| Profit before other income and tax |
1,815.00 |
2,642.46 |
| Other income |
615.34 |
508.04 |
| Profit before exceptional items and tax |
2,430.34 |
3,150.50 |
| Exceptional items |
- |
(17.52) |
| Profit before tax |
2,430.34 |
3,132.98 |
| Provision for tax (including Deferred tax) |
526.52 |
1,078.54 |
| Net profit after tax |
1,903.82 |
2,054.44 |
| Other comprehensive income |
7.02 |
(5.77) |
| Total Comprehensive income for the year/period, net of tax |
1,910.84 |
2,048.67 |
| Balance in statement of profit and loss brought forward from previous year |
6,576.63 |
4,871.26 |
| Amount available for appropriation (Excluding exchange difference in translation of
foreign operations) |
8,471.89 |
6,924.79 |
| Dividend for FY 2018-19 paid in 2019-20 |
- |
341.11 |
| Interim dividend proposed and paid in 2019-20 |
341.32 |
- |
| Tax on dividend |
70.16 |
56.14 |
| Earnings per share |
|
|
| - Basic (Rs.) |
697.50 |
753.37 |
| - Diluted (Rs.) |
697.16 |
752.54 |
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of the Company during the financial year
under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL poSITIoN of THE company THAT
HAVE OCCURRED AFTER MARCH 31, 2020 TILL THE DATE OF THIS REPORT
Due to COVID-19, the Company temporarily suspended the operations in all the units of
the Company. COVID-19 has impacted the normal business operations of the Company by way of
interruption in production, supply chain disruption,
unavailability of personnel, closure/lock down of production facilities, retail outlets
of dealers etc. However, production and sales/supply of goods have commenced during the
month of May 2020 with partial capacity.
The Company has performed a detailed assessment of its liquidity position and the
recoverability of the assets as at the Balance Sheet date and has concluded that based on
current indicators of future economic conditions, the carrying value of the assets will be
recovered. Management believes that it has fully considered all the possible impact of
known events in the preparation of the standalone financial results. However, the impact
assessment of COVID-19 is a continuing process, given the uncertainties associated with
its nature and duration. The Company will continue to monitor any material changes to
future economic conditions and the consequent impact on its business, if any.
DIVIDEND
The Board of Directors at its meeting held on March 11, 2020, has approved payment of
interim dividend of Rs. 125/- per Equity Share (@1250%) of face value of Rs. 10/- each,
out of the then profits of the Company for the financial year 2019-20 in accordance with
the Dividend Distribution Policy of the Company.
The entitlement of interim dividend has been determined in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialized form as per the
data made available by the National Securities Depository Limited (NSDL) and the Central
Depository Services (India) Limited (CDSL) as of the close of business hours on March 21,
2020 (record date);
b) To all Members in respect of shares held in physical form after giving effect to
valid transfer/transmission in respect of transfer/transmission requests lodged with the
Company on or before the close of business hours on March 21, 2020 (record date).
Out of the total Interim Dividend amount, the Company has completed remittance of
payment through electronic transfer. The Interim Dividend amount to be paid through
Warrants and Bank Demand Drafts is pending dispatch due to nationwide lockdown/movement
restrictions imposed by the Government on account of Covid-19 outbreak and the same will
be dispatched promptly once normalcy is restored.
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2019-20, no amount was transferred to General Reserve of the
Company.
BRIEF DESCRIPTION OF THE STATE OF THE COMPANY'S AFFAIRS/ BUSINESS pERFORMANCE
Your Company has sold 6,98,216 motorcycles in the financial year 2019-20, 15.2% lower
when compared to financial year 2018-19 sales of 8,23,828 motorcycles. Out of 6,98,216
motorcycles sold in 2019-20, 39,296 motorcycles were exported, a growth of 88.7% over the
volume of 20,825 motorcycles exported in financial year 2018-19.
Net Revenue from operations for financial year 2019-20 year was Rs. 9,077.47 crores,
7.3% lower when compared with previous financial year (Rs. 9,794.48 crores). Net Sales of
spare parts, gears and services increased to Rs. 1,075.18 crores in financial year 2019-20
from Rs. 1,056.39 crores in the previous financial year, registering a growth of 1.8%.
Your Company's profit before depreciation, interest, exceptional item and tax was Rs.
2,203.78 crores in financial
year 2019-20, lower by 25.2% over Rs. 2,944.38 crores recorded in financial year
2018-19.
MARKET AND FUTURE PROSPECTS
Please refer to Management Discussion & Analysis Report which forms part of the
Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings
and outgo, as required to be given pursuant to the provisions of Section 134 of the
Companies Act, 2013 ("the Act"), read with the Companies (Accounts) Rules, 2014
is provided under Annexure-1.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL
RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential
rights during the financial year 2019-20.
CHANGES IN SHARE CARITAL & THE COMPANY'S EMPLOYEE STOCK OPTION PLAN, 2006AND
RESTRICTED STOCK UNITS PLAN, 2019
The paid up Equity Share Capital of the Company as on March 31, 2020, was Rs.
27,30,45,700/-. During the year under review, the Company has issued 22,000 Equity Shares
of face value of Rs. 10/- each pursuant to its Employees Stock Option Plan, 2006
("ESOP, 2006"). No shares have been issued under the Company's Restricted Stock
Units Plan, 2019 ("RSU Plan, 2019").
A Statement giving complete details as at March 31,
2020, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits)
Regulations, 2014 is available on the website of the Company and the weblink for the same
is https://www.eicher.in/uploads/1594715939_Eicher-Motors- ESOP-Statement-2019-20.pdf
ESOP, 2006 and RSU Plan, 2019, for grant of stock options have been implemented in
accordance with the aforesaid SEBI Regulations. A certificate from M/s S.R. Batliboi &
Co.,
LLP, Statutory Auditors, in this regard will be available for inspection on the website
of the Company under "Investors" Section. The Company has not changed its ESOP,
2006 and RSU Plan, 2019 during the year under review.
Further, details of options granted and exercised are included in Note no. 50 in the
notes to accounts forming part of consolidated financial statements.
DEPOSITS
The Company has not accepted any deposits from the public/members under Section 73 of
the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial
year under review. The Company has not renewed/ accepted fixed deposits after May 29,
2009. There are no deposits that remain unclaimed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with Section 149(7) of the Act, all the Independent Directors of the
Company have given written declarations to the Company confirming that they meet the
criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of
SEBI (LODR) Regulations,
2015. As on March 31, 2020, all Independent Directors of the Company have registered
themselves in the Independent Director's databank maintained by Indian Institute of
Corporate Affairs in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of
the Companies (Appointment and Qualifications of Directors) Rules, 2014.
In accordance with the provisions of Section 152 and other applicable provisions of the
Act & the Articles of Association of the Company, Mr. Vinod K. Aggarwal, Non-Executive
Director, retires by rotation and being eligible offers himself for re-appointment at the
ensuing AGM. The Board of Directors of the Company at its meeting held on February 6,
2020, re-appointed Mr. S. Sandilya and Ms. Manvi Sinha, as Independent Directors of the
Company for a period of 5 (five) consecutive years each with effect from February 13,
2020, after taking into consideration recommendations of the Nomination & Remuneration
Committee of the Company and subject to requisite approval of the shareholders at the
ensuing AGM. In the opinion of the Board, Mr. S. Sandilya and Ms. Manvi Sinha possess
requisite skills & expertise in the context of business of the Company. For details on
skills/expertise/competencies of Mr. Sandilya and Ms. Sinha respectively, please refer
Corporate Governance Report forming part of this Annual Report.
During the year under review, Mr. Vinod Kumar Dasari, Whole-time Director &
CEO-Royal Enfield and Mr. Vinod Kumar Aggarwal, Non-Executive Director, were appointed on
the Board of the Company w.e.f. April 1, 2019, with requisite approvals of the
shareholders obtained at the 37th Annual General Meeting held on August 1,
2019. There has been no other change in the Directors and Key Managerial Personnel of the
Company during the financial year under review. Further, the Board at its meeting held on
May 6, 2020 has appointed Mr. Kaleeswaran Arunachalam as the Chief Financial Officer of
the Company with effect from May 6, 2020 in place of Mr. Lalit Malik, who shall continue
as the Chief Commercial Officer of the Company.
THE COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's Hiring & Employment Policy:
A number of factors are considered towards selecting candidates at the Board level
which include:
? Ability to contribute to strategic thinking
? Proficiency in Governance norms, policies and mechanisms at the Board level
? Relevant cross industry/functional experience, educational background, skills and
experience
? Wherever relevant, independence of Directors in terms of applicable regulations.
With respect to core competencies and personal reputation, our practices ensure through
the selection process that all Directors:
? Exhibit integrity and accountability
? Exercise informed judgement
? Are financially literate
? Are mature and confident individuals
? Operate with high performance standards
Removal of Directors
Under extreme circumstances and in highly unusual situations it may become necessary to
remove a member from the Board of Directors. Reasons for doing so, may relate to any of
the following (indicative; other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfil the fiduciary duties of a Director for the Company
iv. Acting in any other manner which is against the interests of the Company
The Company's Remuneration Policy:
The Company's Compensation Strategy defines the principles underlying compensation
philosophy for its employees. Compensation is a critical piece of overall human-resources
strategy and broadly refers to all forms of financial returns and tangible benefits that
employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate
and retain manpower. This Policy applies to Directors and Senior Management including Key
Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Executive Director, Key Managerial Personnel
(KMPs) and CXOs of the Company is recommended by the Nomination and Remuneration Committee
based on criteria such as industry benchmarks, the Company's performance vis-a-vis the
industry, responsibilities and performance assessment. The Company pays remuneration by
way of salary, perquisites and allowances (fixed component), incentive remuneration and/or
commission (variable components).
Loans/advances may be extended to employees for various personal purposes or to aid
business functions, from time to time, on a case to case basis, in accordance with the
relevant Human Resource guidelines/policies in force or as may be approved by the Chief
Financial Officer, the Chief Human
Resource Officer of the Company, or any person authorized by them, including for
relocation viz. school deposits/expenses, travel/logistics expenses, housing advance,
housing deposits/ brokerage, any other expenses towards relocation; advance submission of
tax deducted at source by the Company on behalf of employee; advance towards medical
insurance premiums; loans granted to enable grantees exercise ESOPs and towards deposit of
perquisite tax thereon; loans/advances covered under Employees Union recognized by the
Company as per Union Agreement; medical emergency advances etc.
Additionally, in the event of exigencies arising due to calamities, the Company may
provide financial assistance to any affected employee by way of extending interest free
loan in an amount not exceeding his/her two months' gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by
the Board of Directors within the ceiling of a sum, not exceeding 1% of the annual net
profits of the Company in each of the financial year, calculated in accordance with the
provisions of the Act and as approved by the members by passing a resolution in the
general meeting.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites,
allowances, performance incentives and employee stock options granted pursuant to the
Employees Stock Option Plan of the Company. The components of remuneration vary for
different employee levels and are governed by industry patterns, qualifications and
experience of the employee and his/her responsibility areas, employee performance
assessment etc.
The said Policy is also available on the website of the Company at
http://www.eicher.in/uploads/1561782697_remuneration-policy.pdf
ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its
Committees and individual Directors was carried out pursuant to the Board Performance
Evaluation Policy of the Company and provisions of the Companies Act, 2013 and SEBI (LODR)
Regulations, 2015.
The Nomination and Remuneration Committee specified the criteria for effective
performance evaluation of the Board, its Committees and Individual Directors of the
Company. The performance of the Board and Committees was evaluated after seeking inputs
from all the Directors on the basis of the criteria such as Board/ Committee constitution,
frequency of meetings, effectiveness of processes etc. The performance of individual
Directors (including Independent Directors) was evaluated by the Board (excluding the
Director being evaluated) after seeking inputs from all Directors on the basis of the
criteria such as thought contribution, business insights and applied knowledge. After the
Board carried out aforesaid evaluation, the Nomination & Remuneration Committee
reviewed implementation of the manner specified by it for performance evaluation &
effectiveness of the process.
A separate meeting of Independent Directors was also held to review the performance of
the Managing Director,
performance of the Board as a whole and performance of the Chairperson of the Company.
Review of the performance of the Chairperson was done after taking into account the views
of the Executive Director and Non-Executive Directors (excluding the Chairperson being
evaluated).
MEETINGS OF BOARD OF DIRECTORS
Eight (8) meetings of the Board of Directors of the Company were conducted during the
financial year under review.
The details of Board/Committees/Shareholder meetings are provided under the Corporate
Governance Report which forms part of the Annual Report.
DETAILS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT
The details of loans, guarantees and investments made by the Company during the
financial year under review which are covered under Section 186 of the Companies Act, 2013
form part of the notes to the financial statements provided in this Annual Report.
PARTICULARS OF RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered into by the Company during the
financial year with related parties are in compliance with the applicable provisions of
the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. Requisite approval of the Audit
Committee and the Board (wherever required) was obtained by the Company for all Related
Party Transactions.
There were no materially significant Related Party Transactions made by the Company
with Promoters, Directors or Key Managerial Personnel, subsidiaries, joint ventures and
associate companies which may have a potential conflict with the interest of the Company.
There are no transactions that are required to be reported in Form AOC-2, hence the said
form does not form part of this report. However, the details of the transactions with
related parties are provided in the Company's financial statements in accordance with
Indian Accounting Standards.
The Company has a Policy on materiality of and dealing with Related Party Transactions,
as approved by the Board, which is available on its website www.eichermotors.com.
AUDIT COMMITTEE
The Audit Committee of the Company is constituted pursuant to the requirements of the
Companies Act, 2013 and SEBI (LODR) Regulations, 2015. At present, members of the Audit
Committee are:
| Sl. No. Name of Members |
| 1 Mr. S Sandilya (Chairman) |
| 2 Mr. Siddhartha Lal |
| 3 Ms. Manvi Sinha |
| 4 Mr. Inder Mohan Singh |
During the year under review, the Board at its Meeting held on November 8, 2019,
appointed Mr. Inder Mohan Singh, Non-Executive Independent Director as Member of the Audit
Committee.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for
Directors, employees, dealers and vendors of the Company to report concerns about
unethical behavior, actual or suspected fraud or violation of the Company's Code of
Conduct or Ethics Policy or to report genuine concerns or grievances including instances
of leak or suspected leak of unpublished price sensitive information pursuant to SEBI
(Prohibition of Insider Trading) Regulations, 2015. The Whistle Blower Policy of the
Company is available at https://
www.eicher.in/uploads/1581075167_whistle_blower_policy.pdf.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
Highlights of performance of subsidiaries and joint venture companies and their
contribution to the overall performance of the Company during the year under review:
Royal Enfield North America Limited (RENA)
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to
manage the distribution and sales of Royal Enfield products and services including,
motorcycles, spares and gear in North America. It sold 3,322 motorcycles (excluding 301
motorcycles sold to Royal Enfield Canada Limited, 100% subsidiary of RENA) during the year
2019-20 and achieved revenue of Rs.114.63 crores (including revenue of Rs. 9.45 crores by
sales to Royal Enfield Canada Limited).
As of March 2020, RENA had contracted with 108 multi brand outlets in USA.
Royal Enfield Canada Limited (RECA)
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to
manage the distribution and sales of Royal Enfield products and services including,
motorcycles, spares and gear in Canada. During the year 2019-20, the Company sold 301
motorcycles and achieved revenue of Rs. 10.10 crores. As of March 2020, RECA had
contracted with 12 multi brand outlets in Canada.
Royal Enfield Brasil Comercio De Motocicletas Ltda. (REBRA)
Royal Enfield started its operations in Brazil through a direct distribution company by
the name of Royal Enfield Brasil Comercio de Motocicletas Ltda in 2016. During the year
the Company sold 2,300 motorcycles and achieved revenue of Rs. 45.29 crores.
Royal Enfield (Thailand) Ltd (RETH)
Royal Enfield (Thailand) Ltd. was incorporated on September 18, 2018 and commenced
sales operations from September 2019. The Company's footprints have grown to 14 exclusive
stores and 12 Authorized Sales & Service Points. In the year
2019, the Company received two awards from the Grand Prix group for Interceptor being
the "Best Modern Classic" and Himalayan being "Best Lightweight
Tourer" motorcycle. The Company plans to commence assembly operations from the year
2021 to cater to ASEAN region. During the year 2019-20, the Company sold 690 motorcycles
and achieved revenue of Rs. 26.06 crores.
Royal Enfield (UK) Limited (REUK)
Royal Enfield (UK) Limited, was incorporated on August 20, 2019 to engage in the
wholesale business of motorcycles, apparels, spares & accessories. The Company is yet
to commence trading operations as at March 31, 2020.
Eicher Polaris Private Limited (EPPL)
Eicher Polaris Private Limited, a joint venture company, was involved in manufacturing
and sales of personal utility vehicles.
The Board of Directors and Shareholders of EPPL at their respective meetings held on
February 18, 2020 approved voluntary liquidation (solvent liquidation) of EPPL and
appointed an insolvency professional as the liquidator. The liquidation process is under
progress currently.
VE Commercial Vehicles Limited and its step-down subsidiaries
Overview of performance covered separately in the Annual Report.
Report containing salient features of financial statements of subsidiaries and joint
venture companies
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient
features of the financial statements of the Company's subsidiaries and joint venture
company in Form AOC-1 is attached as Annexure-2.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE THE COMPANY'S SUBSIDIARIES,
JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE FINANCIAL YEAR
During the financial year under review, Royal Enfield (UK) Ltd. ("REUK") was
incorporated on August 20, 2019 as wholly owned subsidiary of the Company. No other
company has become or ceased to be the Company's subsidiary, joint venture or associate
company during the financial year 2019-20.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE
There are no significant material orders passed by the Regulators or Courts or
Tribunals which would impact the going concern status of the Company and its future
operations. However, members' attention is drawn to the statement on contingent
liabilities, commitments in the notes forming part of the Financial Statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE
FINANCIAL STATEMENTS
Details of internal financial control and its adequacy are included in the Management
Discussion and Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee and has
framed a Corporate Social Responsibility Policy and identified Healthcare, Children's
education, Road safety, Environmental sustainability, Local Area Development in, including
but not limited to, areas around the Company's establishments & in Himalayas and
Livelihood development including vocational training for underprivileged as some of the
key areas. The Company will continue to support social projects that are consistent with
the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr. S Sandilya - Chairman
2. Mr. Siddhartha Lal
3. Mr. Inder Mohan Singh
Annual Report on CSR activities is annexed as Annexure-3.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance
with the requirements of Indian Accounting Standard ("Ind AS")-110
"Consolidated Financial Statements" and Ind AS 28 "Investment in Associates
and Joint ventures", prescribed under Section 133 of the Companies Act, 2013, read
with the rules issued thereunder. The Company, its subsidiaries and jointly controlled
entities adopted Ind AS from April 1, 2016. The consolidated financial statements are
provided in the Annual Report. A statement containing the salient features of the
financial statements of each of the subsidiary and joint venture company in the prescribed
Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial
statements and separate accounts of the subsidiaries are available on the website of the
Company at www.eichermotors.com. The Company shall provide the copies of the financial
statements of the Company and its subsidiary companies to the shareholders upon their
request received on investors@eichermotors.com. The consolidated total comprehensive
income of the Company and its subsidiaries amounted to Rs. 1,838.62 crores for the
financial year 2019-20 as compared to Rs. 2,196.53 crores for the previous financial year
2018-19.
AUDITORS
(a) Statutory Auditors and Their Report
M/s S.R. Batliboi & Co., LLP, Chartered Accountants (Firm Registration Number: FRN
301003E/E300005) were appointed as Statutory Auditors in the 35th (Thirty Fifth)
Annual General Meeting (AGM) of the Company for a period of five years, from the
conclusion of 35th AGM till the conclusion of the 40th AGM of the Company, subject to
ratification of their appointment at every AGM by the shareholders, if required pursuant
to the provisions of the Companies Act, 2013 ("Act"). Central Government vide
the Companies (Amendment) Act, 2017 has amended the provisions of Section 139 of the Act
and ratification of appointment of Statutory Auditors in every AGM is no longer required.
The Statutory Auditors have confirmed their eligibility under Section 141 of the Companies
Act, 2013 and the Rules made thereunder to continue to act as Statutory Auditors of the
Company.
The Statutory Auditors had carried out audit of financial statements of the Company for
the financial year ended March 31, 2020 pursuant to the provisions of the Act. The reports
of Statutory Auditors form part of the Annual Report. The reports are self-explanatory and
do not contain any qualifications, reservations or adverse remarks.
(b) Secretarial Auditors and Their Report
The Board of Directors has appointed M/s. Shweta Banerjee & Associates, Company
Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2020. As
required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is
annexed as Annexure-4 to this Report. The Secretarial Auditors' Report is
self-explanatory and does not contain any qualifications or adverse remarks which require
any clarification or explanation.
(c) Cost Auditor
In terms of Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies
(Accounts) Rules, 2014, it is hereby confirmed that the cost accounts and records are made
and maintained by the Company as specified by the Central Government under sub-section (1)
of Section 148 of the Companies Act, 2013.
Ms. Jyothi Satish, a qualified Cost Accountant, has been appointed as the cost auditor
to carry out audit of the cost records of the Company for the financial year 2019-20
pursuant to the provisions of the Companies Act, 2013. The Cost Auditor shall submit its
report to the Board of Directors within the time prescribed under the Companies Act, 2013
and the rules made thereunder.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY
REPORTS
As per SEBI (LODR) Regulations, 2015, Corporate Governance Report together with the
Auditors' certificate regarding compliance of conditions of Corporate Governance,
Management Discussion & Analysis Report and Business Responsibility Report form part
of the Annual Report.
SUSTAINABILITY REPORT
The Company in its commitment to a sustainable global economy has voluntarily prepared
a Sustainability Report based on GRI Sustainability Reporting Standards, which will help
stakeholders to understand the Company's economic, environmental, social and governance
performance more effectively and analyzing the financial and non-financial performance of
the Company. With this, stakeholders shall also have a better understanding of the
Company's long term perspective.
The Sustainability Report captures our passion along with the responsibilities for
communicating sustainability performance and its impact on our stakeholders through
various aspects such as responsible consumption, clean water and sanitation, gender
equality, innovation, infrastructure etc. The Sustainability Report for the financial year
2019-20 is available on the Company's website at https://www.eicher.in/
sustainability-report
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Sections 134 & 92(3) of the Companies Act, 2013, the
details forming part of the extract of the Annual Return in Form MGT-9 is annexed as Annexure-5
to this Report and which is also available on the website of the Company
www.eichermotors.com.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and
explanations obtained by them, your Directors make the following statements in terms of
Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the Annual Financial Statements for the year ended March
31, 2020, the applicable accounting standards have been followed along with proper
explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no.
3 of the Notes to the Financial Statements have been selected and applied consistently
and judgement and estimates have been made that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company as at March 31, 2020 and of the
profits of the Company for the year ended on that date;
c) 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 the Company and for preventing and detecting fraud and other
irregularities;
d) that the annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid
down and that the financial controls are adequate and were operating effectively; and
f) that proper systems have been devised to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF EMPLOYEES
Disclosures as required under Section 197(12) of the
Companies Act, 2013 read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel)
Rules, 2014:
1) Ratio of the remuneration of each director to the median remuneration of the
employees of the Company and the percentage increase in remuneration of Directors &
KMPs in the Financial Year:
| Sl. No. Name of the Director/KMP |
Designation |
Ratio of Remuneration of each Director to median remuneration of
employees |
Percentage Increase in Remuneration for FY 2019-20 over FY 2018-19 |
| 1 Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
10.1 |
0.97 |
| 2 Mr. Siddhartha Lal |
Managing Director |
311.1 |
51.29 |
| 3 Mr. Vinod K. Dasari |
Whole-time Director and CEO-Royal Enfield |
398.8 |
NA* |
| 4 Mr. Inder Mohan Singh |
Non-Executive Independent Director |
2.6 |
9.35“ |
| 5 Ms. Manvi Sinha |
Non-Executive Independent Director |
2.6 |
14.01 |
| 6 Mr. Lalit Malik |
Chief Financial Officer" |
- |
(21.08)' |
| 7 Mr. Manhar Kapoor |
General Counsel and Company Secretary |
- |
(35.31)' |
*Percentage increase in remuneration for FY 2019-20 over FY 2018-19 is not applicable
since Mr. Vinod K Dasari was appointed by the Board as Whole-time Director and CEO- Royal
Enfield, w.e.f April 1, 2019.
“Mr. Inder Mohan Singh, Non-Executive Independent Director, joined the Board w.e.f
November 12, 2018, hence, to compute percentage increase in his remuneration for FY
2019-20 over FY 2018-19, remuneration for FY 2018-19 has been annualized.
'Percentage decrease in remuneration for FY 2019-20 over FY 2018-19 is mainly due to
perquisite on exercising shares under the Company's Employee Stock Options Plan, 2006
(ESOP, 2006), during the financial year 2018-19. It shall be 12.37% and 15.17% for Mr.
Lalit Malik and Mr. Manhar Kapoor, respectively, without considering perquisite on
exercising shares under ESOP, 2006 for both the financial years.
“Mr. Lalit Malik, Chief Commercial Officer, had also been the Chief Financial
Officer of the Company till May 6, 2020.
Note: Mr. Vinod K. Aggarwal, Non-Executive Director, is not entitled for any
remuneration by way of sitting fees or commission or otherwise, in the Company.
2) Percentage decrease in the median remuneration of the employees in the financial
year: 5%@
@decrease of median remuneration by 5% is due to employee additions who are below the
median remuneration
3) Number of permanent employees on the rolls of the Company as at March 31, 2020:
4,899 employees.
4) The average decrease in median remuneration of the employees other than managerial
personnel was 5% as compared to the increase in the managerial remuneration by 25%.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy
of the Company.
Further, a statement containing particulars of top ten employees in terms of the
remuneration drawn and employees drawing remuneration in excess of the limits set out in
Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, as amended, are provided as part of the Directors' Report.
However, in terms of provisions of Section 136 of the said Act, the Annual Report is being
sent to all the members of the Company and others entitled thereto, excluding the said
statement. Any member interested in obtaining such particulars may write to the Company
Secretary at investors@eichermotors.com
RISK MANAGEMENT
Requisite information is provided under Management Discussion and Analysis Report which
forms part of the Annual Report.
COMPLIANCE OF SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with applicable
Secretarial Standards specified by the Institute of Company Secretaries of India pursuant
to Section 118 of the Companies Act, 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT,
2013
Requisite information is provided under Corporate Governance Report which forms part of
the Annual Report.
ACKNOWLEDGEMENT
We thank our customers, business associates and bankers for their continued support
during the financial year.
We wish to convey our deep appreciation to the dealers of the Company for their
achievements in the area of sales and service, and to suppliers/ vendors for their
valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of
the Company's employees for the growth of the Company and look forward to their continued
involvement and support.
|
For Eicher Motors Limited |
| Siddhartha Lal |
S. Sandilya |
| Managing Director |
Chairman |
| DIN: 00037645 |
DIN:00037542 |
| Place: London, UK |
Place: Chennai, Tamil Nadu |
| Date: June 12, 2020 |
|
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