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 Ninth Annual Report along with the
Audited Financial Statements of your
Company for the financial year ended March 31, 2021.
FINANCIAL RESULTS
Your Company has earned a net revenue from operations of Rs. 8,619.04 crores during the
financial year 2020-21. The profit before depreciation and interest expense amounted to
Rs. 1,786.51 crores, which is 20.7% of the total revenue. After accounting for other
income of Rs. 452.03 crores, interest expense of Rs. 9.20 crores and depreciation of Rs.
446.03 crores, profit before tax amounted to Rs. 1,783.31 crores.
Profit after tax amounted to Rs. 1,329.70 crores after an income tax provision of Rs.
453.61 crores. Total Comprehensive Income for the year, net of tax amounted to Rs.
1,353.75 crores.
The financial results are summarized below:
|
|
Rs. in Crores |
| Particulars |
For the financial year ended March 31, 2021 |
For the financial year ended March 31, 2020 |
| Net Revenue from operations |
8,619.04 |
9,077.47 |
| Profit before depreciation and interest |
1,786.51 |
2,203.78 |
| Interest |
9.20 |
10.86 |
| Depreciation |
446.03 |
377.92 |
| Profit before other income and tax |
1,331.28 |
1,815.00 |
| Other income |
452.03 |
615.34 |
| Profit before tax |
1,783.31 |
2,430.34 |
| Provision for tax (including Deferred tax) |
453.61 |
526.52 |
| Net profit after tax |
1,329.70 |
1,903.82 |
| Other comprehensive income |
24.05 |
7.02 |
| Total Comprehensive income for the year net of tax |
1,353.75 |
1,910.84 |
| Balance in statement of profit and loss brought forward from previous year |
7,663.16 |
6,576.63 |
| Amount available for appropriation |
8,993.44 |
8,471.89 |
| (Excluding exchange difference in translation of foreign operations) |
|
|
| Dividend for FY 2018-19, paid in FY 2019-20 |
- |
341.11 |
| Interim dividend proposed and paid in FY 2019-20 |
- |
341.32 |
| Dividend proposed for FY 2020-21, to be paid in FY 2021-22 |
464.67 |
- |
| Tax on dividend |
- |
126.30 |
| Earnings per share |
|
|
| - Basic (Rs.)# |
48.68 |
69.75 |
| - Diluted (Rs.)# |
48.61 |
69.72 |
# Previous year earning per share are adjusted due to sub division of each equity share
of face value of Rs.10/- each into 10 equity shares of face value of Re. 1/- each,
pursuant to the approval of the shareholders at the Annual General Meeting of the Company
held on August 10, 2020.
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, 2021 TILL THE DATE OF THIS REPORT
The second wave of the global health pandemic COVID-19 in the month of April and May
2021 in India and the lockdown imposed by the State Governments resulted into closure of
most of the retail outlets of dealers. Company's manufacturing facilities although
continue to operate as per the business requirements and in compliance with the
instructions and guidelines issued by the Government and local bodies.
The Company has considered the possible effects that may result from the COVID-19 on
its operations. Management believes that it has taken into account external and internal
information for assessing the possible impact of COVID-19 on various elements of its
financial statement, including its liquidity position and the recoverability of assets.
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 May 27, 2021, has recommended for
approval of the shareholders, payment of dividend of Rs. 17/- per equity share (@1700%) of
face value of Re. 1/- eachoutoftheprofitsforthe year financial 2020-21 in accordance with
the Dividend Distribution Policy of the Company.
The dividend, if approved by the shareholders in the ensuing Annual General Meeting,
shall be paid 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 August 10,
2021 (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 properly lodged
with the Company on or before the close of business hours on August 10, 2021 (record
date).
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2020-21, no amount was transferred to General Reserve of the
Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANY'S AFFAIRS/ BUSINESS PERFORMANCE
Your Company has sold 6,12,350 motorcycles in the financial year 2020-21, 12.3% lower
when compared to financial year 2019-20 sales of 6,98,216 motorcycles. Out of 6,12,350
motorcycles sold in financial year 2020-21, 38,622 motorcycles were exported, a decline of
1.7% over previous year export volume of 39,296 motorcycles in financial year 2019-20.
Net Revenue from operations for financial year 2020-21 was Rs. 8,619.04 crores, 5.1%
lower when compared with previous financial year of Rs. 9,077.47 crores. Net Sales of
spare parts, gears and services decreased to Rs. 991.44 crores in financial year 2020-21
from Rs. 1,075.18 crores in the previous financial year, registering a decline of 7.8%.
Your Company's profit before depreciation, interest and tax was Rs. 1,786.51 crores in
financial year 2020-21, lower by 18.9% over Rs. 2,203.78 crores recorded in financial year
2019-20.
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 2020-21.
CHANGES IN SHARE CAPITAL & THE COMPANY'S EMPLOYEE STOCK OPTION PLAN, 2006 AND
RESTRICTED STOCK UNITS PLAN, 2019
The Board of Directors of the Company at its meeting held on June 12, 2020 approved
sub-division of equity shares of the Company and the same was also approved by the members
at their 38th Annual General Meeting held on August 10, 2020 pursuant to which each equity
share of face value of Rs. 10 each of the Company has been sub-divided into 10 equity
shares of face value of Re. 1/- each with effect from August 25, 2020 (record date for
sub-division). Capital clause of the Memorandum of Association has been amended suitably.
Pursuant to the above sub-division and with effect from August 25, 2020 (record date
for sub-division), appropriate adjustments were made in the number of stock options that
have been granted & yet to be exercised such that each such stock options shall stand
converted into Ten (10) stock options of the same category and the respective exercise
price for each such option shall be one tenth (1/10) of the exercise price fixed at the
time of grant of such options.
The paid up Equity Share Capital of the Company as on March 31, 2021, was Rs.
27,33,35,922/-. During the year under review, the Company has issued 2,40,222 Equity
Shares (Face value Re. 1/- each) pursuant to its Employees Stock Option Plan, 2006
("ESOP, 2006") and 50,000 Equity Shares (Face value Re. 1/- each) pursuant to
its Restricted Stock Units Plan, 2019 ("RSU Plan, 2019").
A Statement giving complete details as at March 31, 2021, 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/1626351902_eicher-motors-esop-statement-2020-21.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 on the date of Annual General Meeting.
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. 48 in the
notes to accounts forming part of standalone 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 and Regulation 25(8) of SEBI (LODR)
Regulations, 2015 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, 2021, all Independent Directors of the Company have valid registrations with 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, Mr. Siddhartha Lal, Managing Director, retires by rotation at the ensuing 39th Annual
General Meeting and being eligible offers himself for re-appointment. The Board of
Directors recommends his reappointment.
The Board of Directors of the Company at its meeting held on February 10, 2021,
re-appointed Mr. Siddhartha Lal, as Managing Director of the Company for a period of 5
(five) years with effect from May 1, 2021, 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 and the approval of the Central
Government. In the opinion of the Board, Mr. Siddhartha Lal possess requisite skills &
expertise in the context of business of the Company. For details on
skills/expertise/competencies of Mr. Siddhartha Lal, please refer Corporate Governance
Report forming part of this Annual Report.
During the year under review, Mr. S. Sandilya and Ms. Manvi Sinha were re-appointed as
Independent Directors on the Board of the Company w.e.f. February 13, 2020, with requisite
approvals of the shareholders obtained at the 38th Annual General Meeting held on August
10, 2020. Mr. Vinod Agarwal retired at the 38th Annual General Meeting held on August 10,
2020 and was reappointed by the shareholders.
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 is continuing as the Chief Commercial Officer of the
Company. There has been no other change in the Directors and Key Managerial Personnel of
the Company during the financial year under view.
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 at the Board meeting held on February
10, 2021.
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. Once the
evaluation process is complete, the Nomination & Remuneration Committee reviews the
implementation of the manner specified by it for performance evaluation &
effectiveness of the process.
MEETINGS OF BOARD OF DIRECTORS
Seven (7) 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:
| SI. No. |
Name of Members |
| 1 |
Mr. S Sandilya (Chairman) |
| 2 |
Mr. Siddhartha Lal |
| 3 |
Ms. Manvi Sinha |
| 4 |
Mr. Inder Mohan Singh |
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, apparels and accessories in North America. It sold 3,820 motorcycles
(excluding 324 motorcycles sold to Royal Enfield Canada Limited, 100% subsidiary of RENA)
during the year 2020-21 and achieved revenue of Rs. 141.82 crores (including revenue of
Rs. 11.17 crores by sales to Royal Enfield Canada Limited). As of March 2021, RENA had
contracted with 121 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 2020-21, the company sold 324
motorcycles and achieved revenue of Rs. 11.91 crores. As of March 2021, RECA had
contracted with 13 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 Motocicleta LTDA in 2016. Over 4 years, the
company has grown by an average of 50% year over year. During the year 2020-21, the
company sold 2,718 motorcycles and achieved a revenue of Rs. 46.86 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 15 exclusive
stores, 3 studio stores and 15 authorized sales & service points. In the year 2020-21,
the company received two awards from the Grand Prix group for Meteor being the "Best
Modern Classic" and Himalayan being "Best Lightweight Tourer" motorcycle.
During the year 2020-21, the company sold 2,373 motorcycles and achieved revenue of Rs.
98.75 crores.
Royal Enfield (UK) Limited (REUK)
Royal Enfield UK Ltd, was incorporated in August, 2019 and commenced sales operations
from June 2020. The company's footprints have grown to 8 exclusive stores and 52
Authorized Sales & Service Points. In the year 2020-21, the company received 2 awards
from the Motorcycle News for Interceptor being the "Best Retro of the year for 2019
and 2020". During the year 2020-21, the company sold 1,740 motorcycles and achieved
revenue of Rs. 42.74 crores.
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
No Company has become or ceased to be the Company's subsidiary, joint venture or
associate company during the financial year 2020-21.
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 and 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 Local Area Development,
Social Mission (Responsible Travel) and Road safety, as themes which will be given
preference while formulating Annual Actions Plans. 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
4. Ms. Manvi Sinha
During the year under review, the Board at its Meeting held on March 31, 2021,
appointed Ms. Manvi Sinha, Non-Executive Independent Director as Member of the Corporate
Social Responsibility Committee.
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 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. 1,381.24 crores for the
financial year 2020-21 as compared to Rs. 1,838.62 crores for the previous financial year
2019-20.
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, 2021 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. The Statutory Auditors
had not reported any fraud under Section 143(12) of the Companies Act, 2013.
(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, 2021. 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.
One of the observations made by the Secretarial Auditor in its report is not conducting
the Risk Management Committee meeting by the Company during the financial year 2020-21.
Response on the above observation is as follows:
The process of risk prioritisation and mitigation has been presented, discussed and
reviewed at the Board level regularly at meetings attended by the Committee members.
Various measures have been adopted as outcome of such discussions, a comprehensive risk
inventory drawn, mitigation framework being designed, Centre of Excellence Internal
Controls set up etc. While a separate meeting exclusively of the members of the Risk
Management Committee has not been held in the relevant period during the financial year
ended March 31, 2021, its members have been actively involved in fulfilling the terms of
reference. Furthermore, given the fact that review of industrial operations is considered
key, holding a meeting / review of such operations has been a challenge in the wake of
Covid crisis and travel restrictions (and risks associated with it).
Further, pursuant to provisions of Regulation 24A of the SEBI (LODR) Regulations, 2015,
VE Commercial Vehicles Limited (VECV) is a material subsidiary of the Company in terms of
Regulation 16(1)(c) of the SEBI (LODR) Regulations, 2015. The Secretarial Audit Report
submitted by the Secretarial Auditors of VECV is also annexed as Annexure-5to
this Report.
(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.
M/s. Jyothi Satish & Co, a qualified Cost Accountant Firm (Firm registration No.
101197), has been appointed as the cost auditor to carry out audit of the cost records of
the Company for the financial year 2020-21 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.
INTEGRATED REPORT
The Company voluntarily has prepared an Integrated Report this year 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 report is available on the website of the Company at
www.eichermotors.com.
ANNUAL RETURN
The Annual Return as required under Section 92 and Section 134 of the Companies Act,
2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is
available on the website of the Company and the weblink for the same is
https://www.eicher.in/uploads/1626338501_form_ mgt-7-2020-21.pdf
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, 2021, 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, 2021 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 2020-21 over FY 2019-20 |
| 1. |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
11.1 |
10.51 |
| 2. |
Mr. Siddhartha Lal |
Managing Director |
340.3 |
9.97 |
| 3. |
Mr. Vinod K. Dasari |
Whole-time Director and CEO-Royal Enfield |
404.2 |
1.88 |
| 4. |
Mr. Inder Mohan Singh |
Non-Executive Independent Director |
2.8 |
12.03 |
| 5. |
Ms. Manvi Sinha |
Non-Executive Independent Director |
2.8 |
6.74 |
| 6. |
Mr. Kaleeswaran |
Chief Financial Officer |
- |
NA* |
|
Arunachalam |
|
|
|
| 7. |
Mr. Manhar Kapoor |
General Counsel and Company Secretary |
- |
7.55 |
*Percentage increase in remuneration for FY 2020-21 over FY 2019-20 not applicable
since Mr. Kaleeswaran Arunachalam was appointed as Chief Financial Officer 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 increase in the median remuneration of the employees in the financial
year: 1%
3) Number of permanent employees on the rolls of Company as at March 31, 2021: 5,005
employees.
4) The average increase in median remuneration of the employees other than managerial
personnel was
1% as compared to the increase in the managerial remuneration by 2%.
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 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: May 27, 2021 |
|
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