Hero MotoCorp Ltd
Chairman Speech
A Resilient, Compassionate and Caring Hero
The year 2020 will forever be etched in history as the time when the human race changed
forever. No one could have predicted this turn of events that evolved into the coronavirus
pandemic.
Yet, when the going gets tough, the tough get going. In the face of adversity, we at
Hero MotoCorp worked diligently, planned and equipped ourselves to counter the situation
we were in. I am proud to share with you that we honed our competencies to prepare
ourselves for the future and have come out much stronger.
From taking preventive measures, caring for our communities, stakeholders, our
associates in Hero and their families, and keeping a positive outlook to hitting the
ground sprinting on re-opening, we have truly led the charge on every front!
NAVIGATING DYNAMICALLY THROUGH THE COVID-19 CRISIS
At Hero MotoCorp, we were amongst the very first to recognise the oncoming crisis as
early as February 2020 and constitute a Business Continuity Task Force under my direct
supervision. Keeping the safety and well-being of our people as our topmost priority, we
halted operations at all our manufacturing plants, offices and other facilities across the
globe. We instituted the Work-From-Home (WFH) policy on March 22, 2020, two days prior to
the government enforced national lockdown in India.
With the Business Continuity Plan in place, Hero MotoCorp was among the first
automotive companies in India to resume plant operations on May 4, 2020 in a gradual
manner. This decision was based on strict policies and protocols that encompassed every
possible measure to ensure the health and safety of everyone across all our offices,
manufacturing plants and retail customer touch points.
Your Company's strong and debt-free balance sheet enabled us to manage liquidity
effectively and provide support to partners, ensuring financial viability of the entire
ecosystem.
EFFECTIVE & CONSTANT COMMUNICATION
Communication has come to play an even more critical role at a time when almost the
entire world has been working from home. Constant communication and personal engagement
have proven to be the key to business continuity.
We at Hero MotoCorp have been communicating with all our diverse stakeholder groups in
a meaningful and consistent manner, throughout the lockdown period and continue to do as I
write to you. I have personally hosted more than three-dozen digital Town Halls so far -
interacting with Company employees, dealers, supply chain partners, our global
distributors, investors and various other stakeholders across the globe.
Through these Communications outreach, I have kept everyone's morale high and spread
positivity and optimism, which has helped us bounce back strongly as a cohesive unit.
BSVI EXHAUST EMISSION NORMS - LEADING THE WAY TOWARDS A SUSTAINABLE FUTURE
Hero MotoCorp has been at the forefront of driving sustainability and green measures
through its planning, operations and its products. Working in line with this ethos, your
Company became the first two-wheeler manufacturer in India to receive the BSVI
certification as early as June of 2019.
Staying in top gear, it was your Company that launched India's first BSVI motorcycle -
the Splendor iSmart 110.
As planned, we had a smooth transition of the BSIV products to the new BSVI emission
norms.
I am happy to report that the response to our new range of BSVI products from our
customers, dealers as well as enthusiasts has been overwhelming. The retail sales of BSVI
vehicles after the lockdown was lifted, provide an extremely positive outlook. There is
also tremendous excitement and anticipation for the newly launched Xtreme 160R.
FINANCIAL PERFORMANCE & BUSINESS OUTLOOK
Your Company delivered a robust financial performance despite the economic slowdown and
the impact of COVID-19. Our Profit After Tax (PAT) grew by 7.3% in FY20. We continue to
maintain an attractive and leading edge dividend policy by declaring an overall dividend
of ' 90 per share for FY20.
Most importantly, your Company continues to remain debt free and maintains a strong
balance sheet. Its reserves have now reached ' 14,096 crore (US$ 1,988 million).
The financial strength of the Company augurs well and will help the Company to
successfully navigate itself into the future despite these trying times.
Most importantly, your Company continues to remain debt free and maintains a strong
balance sheet.
Its reserves have now reached Rs. 14,096 crore (US$ 1,988 million). The financial
strength of the Company augurs well and will help the Company to successfully navigate
itself into the future despite these trying times.
The short-term business outlook remains uncertain due to the COVID-19 pandemic.
However, the long-term story of India and that of the two-wheeler industry remains intact,
strong and positive. There are ample growth opportunities in India, as well as in the
global markets to grow our business to new heights. The continuous expansion of our
geographic footprint over the past five years to more than 40 countries now creates a
platform to build scale beyond India. Our investments in R&D over the past five years
have been twice that of the other players in the industry. We will continue to invest in
brands and R&D to sustain our growth in the future.
FORGING A PREMIUM CHARISMA
The product portfolio of your Company is well positioned to capitalise on this growth
opportunity. We continue to remain a dominant leader with leading edge products in the
Entry and Executive segment, while aggressively building our portfolio in the premium
segment. Our recent market share improvement in premium scooters (125cc) is heartening and
is a step in the right direction to win considerable market share in the scooter segment
as well.
During FY20, we have further strengthened our premium motorcycle portfolio with the
launch of various new benchmark-setting products. The XPulse 200, launched during the
Diwali festive season won the 'Indian Motorcycle of the Year' Award for 2019. It has also
begun to create a tremendous fan base across our global markets.
With products such as Maestro Edge 125 - India's first scooter with Fuel Injection, the
XPulse 200 range,
Xtreme 200S, the new Glamour, Super Splendor, Pleasure+ and the new generation Passion
Pro, our entire portfolio is now younger, much more attractive and significantly diverse.
With excellent product planning protocols in place and creative design and engineering
capabilities, we are determined to have a strong presence in the premium segment with a
robust portfolio of products over the next three to five years.
HERO WORLD 2020 - A GLIMPSE INTO THE FUTURE OF MOBILITY
In February 2020, we curated a unique event called the Hero World 2020 at our R&D
facility - the Centre of Innovation and Technology (CIT) - in the northern Indian city of
Jaipur. This event - attended by global media, investors, dealers from India, supply chain
partners, our global distributors - unveiled the new Vision of Hero MotoCorp, to be the
Future of Mobility. During this four-day long event, Hero MotoCorp showcased numerous
products, future mobility solutions, new concepts and conducted training and design
workshops, test rides of our new products and concepts during this event. This
first-of-its-kind event reinforced Hero's commitment to lead the way and "To Be
The Future of Mobility."
DIVERSITY & INCLUSION
Enhancing Diversity and Inclusion (D&I) is a key focus area for the organisation. I
am driving this agenda, considering my personal passion and commitment for this cause.
As a result of this concerted effort, the number of women in our workforce crossed an
important milestone of 1,000 in FY20.
In line with our D&I Vision, we have adopted an integrated approach that includes
mentoring programmes to increase and retain workforce diversity within the organisation,
recruitment initiatives, education, training and career development.
To promote a culture of diversity and inclusivity, we hold a number of Gender
Sensitisation Workshops and D&I Talk series for our employees, where external thought
leaders and eminent achievers are invited to speak on global best practices.
GLOBAL OUTREACH
Despite the sluggish economic activity around the world during the year, we continued
to collaborate with our partners to keep growing our global footprint. With the
appointment of a new distributor in Peru, we have now expanded our global footprint to
more than 40 countries in FY20, up from just four countries in FY12.
We have been following a market-specific strategy to further enhance our presence in
markets in specific geographies.
For example, we plan to build on the momentum we have already gained in the Asian and
Latin American markets by launching new models in the 150-160cc category.
Having grown in double digit in Africa during FY20, we are sharpening our focus among
the 'Boda-Boda' (local two-wheeler taxi) riders.
In Bangladesh and Nepal, we are deepening our financing network across markets and
strengthening the momentum. Increasing 'digitalisation' is also helping us drive sales in
several of our global markets across the globe, including Bangladesh, Nepal, Colombia, and
the Central American and Caribbean (CAC) countries.
ENHANCING DIGITALISATION
The Digital Ecosystem of the Company is an important area that we continue to focus on.
Hero Connect - our CRM initiative - was extended to Authorised Representatives of Dealers
(ARDs), thereby ensuring that our entire channel is now using the same platform for all
their processes. This has resulted in consistent business experience across channel
partners. We also set up a 'Plant Utility Cockpit to give a 'Bird's eye view' of all
utilities operations. During the year, we created a dedicated team to work on Industry 4.0
with an objective of making our manufacturing faster, much more efficient and
customer-centric.
CARING, COMPASSIONATE & RESPONSIBLE
As a caring organisation, your Company has always gone beyond the immediate call of
business to contribute towards making our planet a better place.
At Hero MotoCorp, we continue to play a critical role in achieving the Sustainable
Development Goals (SDGs) through appropriate business practices and focused investments.
Our Corporate Social Responsibility (CSR) framework is designed to make the maximum
measurable impact through multiple social interventions.
Our continuous commitment towards CSR is evident from our CSR spends in the past five
years (2015-2020), which is much more than the specified amount of 2% of Net Profit.
We at Hero MotoCorp - along with the other Hero Group companies - have committed a
corpus of Rs. 100 crore (US$ 14 million) towards COVID-19 relief efforts in India.
In addition, we have rolled out an extensive relief effort and exercise that includes
providing lakh of nutritious meals to the needy and the manufacture and distribution of
sanitisers and protective face masks to the public. Through the ingenuity of our
engineers, we have also developed a first-responder mobile ambulance that will be in
service in the rural areas.
CREATE, COLLABORATE, INSPIRE!
Our world is going through a period that will define the lives of future generations.
Human endeavour and resolve are being tested as we begin to overcome the ongoing pandemic.
Together, we will emerge much wiser, stronger and better prepared for any challenges that
we will be faced with in the future.
At Hero MotoCorp we are laying the foundation of our journey into the future.
We are on the cusp of creating yet another world record, a historic milestone of 100
million motorcycles and scooters in cumulative sales in FY21. The milestone of 100 million
is not just a number - it also demonstrates the faith and trust that our customers around
the world have placed in Hero!
However, we are not resting on our laurels. In keeping with our Vision and Mission, we
are also stepping-up our efforts towards developing mobility solutions for the future
through a collaborative approach. Our teams are constantly working on new business models,
new vehicle concepts and alternative mobility solutions, keeping Hero MotoCorp ahead of
the curve.
I seek your support and best wishes for our journey ahead and the upcoming
milestones...
Stay safe. Stay upbeat.
Best regards,
Pawan Munjal
Chairman.
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Hero MotoCorp Ltd
Directors Reports
Dear Members,
Your Directors are pleased to present the thirty seventh annual report, together with
the Company's audited financial statements for the financial year ended March 31, 2020.
FINANCIAL RESULTS - STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
|
|
|
|
(Rs. in crore) |
|
Standalone |
Consolidated |
| Particulars |
Year ended |
Year ended |
|
March 31, 2020 |
March 31, 2019 |
March 31, 2020 |
March 31, 2019 |
| Total Income |
29,614.43 |
34,341.79 |
29,985.88 |
34,658.96 |
| Profit before Finance cost and Depreciation |
4,736.30 |
5,621.34 |
4,791.48 |
5,705.16 |
| Expenses |
|
|
|
|
| Finance cost |
22.02 |
8.60 |
46.64 |
37.18 |
| Depreciation and amortisation expenses |
817.96 |
602.01 |
845.76 |
624.44 |
| Profit from ordinary activities before share of Profit/(Loss) of associates |
3896.32 |
5,010.73 |
3,899.08 |
5,043.54 |
| Profit/(Loss) of associates |
|
|
|
|
| Share in net profit/(loss) of associates |
- |
- |
34.63 |
60.76 |
| Exceptional items - NCCD income |
737.48 |
- |
737.48 |
- |
| Exceptional items - VRS expenses |
60.11 |
- |
60.11 |
- |
| Profit from ordinary activities before tax |
4,573.69 |
5,010.73 |
4,611.08 |
5,104.30 |
| Tax expense |
|
|
|
|
| Current tax |
1,084.11 |
1,601.02 |
1,096.79 |
1,608.81 |
| Deferred tax |
(143.68) |
24.84 |
(145.12) |
29.14 |
| Total tax expense |
940.43 |
1,625.86 |
951.67 |
1,637.95 |
| Net Profit from ordinary activities after tax |
3,633.26 |
3,384.87 |
3,659.41 |
3,466.35 |
| Other comprehensive income/(expense) (net of tax) |
(31.78) |
(17.81) |
(18.29) |
(14.98) |
| Total comprehensive income for the year |
3,601.48 |
3,367.06 |
3,641.12 |
3,451.37 |
| Net Profit/(loss) attributable to |
|
|
|
|
| a) Owners of the Company |
3,633.26 |
3,384.87 |
3,638.11 |
3,444.09 |
| b) Non-controlling interest |
- |
- |
21.30 |
22.26 |
| Other comprehensive income attributable to |
|
|
|
|
| a) Owners of the Company |
(31.78) |
(17.81) |
(23.61) |
(16.32) |
| b) Non-controlling interest |
- |
- |
5.32 |
1.34 |
| Total comprehensive income attributable to |
|
|
|
|
| a) Owners of the Company |
3,601.48 |
3,367.06 |
3,614.50 |
3,427.77 |
| b) Non-controlling interest |
- |
- |
26.62 |
23.60 |
| Balance of profit brought forward |
10,147.81 |
9,068.11 |
10,385.31 |
9,247.01 |
| Dividend |
|
|
|
|
| - Interim |
1,298.31 |
1,098.50 |
1,298.31 |
1,098.50 |
| - Final |
639.13 |
798.85 |
639.13 |
798.85 |
| Corporate Dividend Tax |
395.03 |
390.01 |
401.46 |
390.01 |
| Other comprehensive income arising from re-measurement of defined benefit obligation
(net of income tax) |
- |
- |
(32.46) |
(18.43) |
| Balance carried to Balance Sheet |
11,416.82 |
10,147.81 |
11,652.06 |
10,385.31 |
| Earnings per equity share on Net Profit from ordinary activities after tax (face
value Rs.2/- each) (In ') |
|
|
|
|
| - Basic |
181.91 |
169.48 |
182.15 |
172.45 |
| - Diluted |
181.91 |
169.47 |
182.15 |
172.44 |
FINANCIAL HIGHLIGHTS
During FY 2019-20, your Company clocked sales of 63.98 lakh units over 78.21 lakh units
in the previous financial year. Revenue from operations was Rs.28,836.09 crore as compared
to Rs.33,650.54 crore in FY 2018-19, registering a decrease of 14.31%.
Profit before tax (PBT) in FY 2019-20 was Rs.4,573.69 crore as compared to Rs.5,010.73
crore in FY 2018-19, reflecting a decrease of 8.72%. Profit after tax (PAT) was
Rs.3,633.26 crore as against Rs.3,384.87 crore in FY 2018-19, an increase of 7.34% from
the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 13.73% in FY
2019-20, as compared to 14.65% in FY 2018-19.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with provisions of the Companies Act, 2013 ('the Act') and Indian
Accounting Standard (Ind AS)-110 on Consolidated Financial Statements, read with Ind AS-28
on Investments in Associates and Joint Ventures, the Audited Consolidated Financial
Statements for the year ended March 31, 2020 are provided in this annual report.
UPDATE ON COVID-19 PANDEMIC
Towards the end of financial year 2019-20, the auto industry and the entire global
economy has been faced with an unprecedented disruption, owing to the COVID-19 pandemic.
The COVID-19 has resulted in interrupted supply chains, halted production and lock-down,
leading to no retails. With COVID-19 situation escalating, the Company had set-up a
Business Continuity Task Force and proactively rolled-out a slew of measures to ensure
health and safety of its employees and business partners, including suspending production
at all its manufacturing facilities on March 22, 2020. The Company along with other Hero
Group companies has been engaged in a host of social welfare work, setting aside a corpus
of Rs.100 crore for the relief efforts towards COVID-19, including a contribution of Rs.50
crore to the PM-Cares fund.
Ensuring stringent safety protocols for employee and customer wellbeing, the Company
reopened, in a gradual manner, all its manufacturing facilities during the month of May
2020. While the COVID-19 pandemic has pushed several timelines, the Company has
successfully navigated through the unprecedented times. The Company is largely dependent
on the retail sales and is confident about gradual resumption of the pre-lockdown sales
figure. The Company is proactively adapting to the changing business needs and will stay
prepared dynamically to do course correction if and when required.
CHANGES IN CAPITAL STRUCTURE
During the year under review, 12,484 equity shares of Rs.2 each were allotted on
exercise of employee stock options and Restricted Stock Units (RSUs) by the employees of
the Company. Consequently, the issued and paid-up share capital of the Company as on March
31, 2020 was Rs.399,478,736 divided into 199,739,368 equity shares of Rs.2 each.
Further, on June 8, 2020, 1,674 equity shares of Rs.2 each were allotted on exercise of
RSUs by an employee of the Company. Thus, the issued and paid-up share capital of the
Company was increased to Rs.399,482,084 divided into 199,741,042 equity shares of Rs.2
each.
The Company has not issued any equity shares with differential rights, sweat equity
shares or bonus shares. The Company has only one class of equity shares with face value of
Rs.2 each, ranking pari passu.
DIVIDEND
Your Directors are pleased to recommend for your approval a final dividend of Rs.25 per
equity share (1250%) of face value of Rs.2 each, in addition to an interim dividend of
Rs.65 per equity share (3250%) declared in the month of February 2020, aggregating a total
dividend payout of Rs.90 per equity share (4500%) for FY 2019-20. In the previous year,
total dividend payout of Rs.87 per equity share (4350%) of the face value of Rs.2 each was
made. Final dividend, if approved at the ensuing annual general meeting, shall be paid to
the eligible members within the stipulated time period. Dividend Distribution Policy of
the Company as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 ('Listing Regulations') is available at the following
link:https://www.heromotocorp.com/en-in/uploads/code
policy/20191126105519-code-policy-149.pdf and is also provided as Annexure - I.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and
gives details of the overall industry structure, economic developments, performance and
state of affairs of your Company's business in India and abroad, risk management systems
and other material developments during the year under review.
CHANGE IN NATURE OF BUSINESS
During FY 2019-20, there was no change in the nature of Company's business.
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
During FY 2019-20, your Company's sixth manufacturing facility in Chittoor District in
the state of Andhra Pradesh was commissioned with Phase I installed capacity of 0.4
million units. The total Phase I investment is approximately Rs.700 crore out of total
projected investment of Rs.1,600 crore in setting up the manufacturing facility.
Further, the overseas plants of your Company in Bangladesh and Colombia have
consolidated their respective capacities during FY 2019-20 and attained a decent market
share.
Transition from BSIV to BSVI emission norms has been successfully accomplished well in
time across all platforms in FY 2019-20. Splendor iSmart was the first two-wheeler in
India to get BSVI certification from International Centre for Automotive Technology (ICAT)
in Q1 of FY 2019-20. Comprehensive efforts were demonstrated across your Company to
optimise capacities, investments and obsolescence across the value chain.
Your Company is constantly expanding the boundaries on innovation - both internal and
external. It has been running internal idea generation contests successfully involving
employees for many years now. As a responsible corporate, in accordance with its
sustainability journey, your Company has released its second annual Sustainability Report
encompassing ESG (Environment, Social and Governance) aspects. Your Company has also
formulated a long-term strategy to address the material issues with the objective of
making it one of the most sustainable organisations.
GLOBAL FORAYS
Your Company continues to strengthen its presence in global markets. During FY 2019-20,
with footprints in 40 markets outside India, the focus was to scale-up the innovation
efforts especially in the retail financing front. Your Company has been successful in
scaling up retail finance in Bangladesh, Nepal and Colombia wherein a substantial
percentage of our monthly volumes on financing has now been gained. Despite the tough
turf, your Company managed to gain market share in focus markets.
Working closely with strong allied business partners has been the key for your Company
to grow in the global markets. Your Company also showed strength in various auto shows
held across the globe including EICMA in Italy, Colombia, Turkey, Nepal, Sri Lanka,
Bolivia, UAE, Ethiopia, Kenya and Ecuador.
INNOVATION
Your Company saw early signs of success with the two projects that were launched under
the newly created incubation center - HeroHatch. These were showcased during Hero World
2020 and garnered great interest from the stakeholders. Hero World 2020, a
first-of-its-kind three-day event was organised at the state-of-the-art R&D hub of the
Company, the Centre of Innovation & Technology (CIT) in Jaipur. This event was
attended by global media, investors, dealers from India, supply chain partners and global
distributors from around the world. The Company showcased three new products, world-class
product accessories and displayed its entire global product portfolio followed by several
product concepts and business initiatives and provided a glimpse into the universe of Hero
MotoCorp including the R&D labs, test-tracks and technology.
One of the projects introduced is a concept vehicle, which is the world's first class
changing vehicle and can be used as a two-wheeler (2W) and three-wheeler (3W). The second
project is around digitising the used 2W, with data-driven technology. A third project
under HeroHatch was launched in FY 2019-20. The new format of Idea Contest introduced last
year led to more effective implementation of ideas. The Company-wide Idea Contest was
undertaken for the 7th year on a new platform in FY 2019-20, driving more collaboration
among employees and increasing transparency.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 2 associate
companies and regularly monitors the performance of these companies. During the year under
review, the Company's wholly-owned subsidiary, HMCL (NA) Inc. which had invested in Erik
Buell Racing, Inc. was dissolved and thus, Erik Buell Racing, Inc. also ceased to be the
associate of your Company.
The annual accounts of subsidiary companies are available on the website of the Company
viz. www.heromotocorp.com and shall also be kept open for inspection at the registered
office of the Company and respective subsidiary companies. The Company shall also make
available the annual accounts of these companies to any member of the Company who may be
interested in obtaining the same. The consolidated financial statements presented by the
Company include the financial results of its subsidiary companies
Subsidiaries
Hero Tech Center Germany GmbH (‘HTCG')
HTCG, a wholly-owned subsidiary of your Company was incorporated in Germany to
undertake research and development and such other ancillary activities for the
manufacture, testing, validating etc. of two-wheelers and components/parts thereof. It
also undertakes, coordinates and facilitates two-wheeler rally participation and
development activities. During FY 2019-20, HTCG has reported unadjusted revenue of
Rs.70.52 crore and a net profit of Rs.4.39 crore.
HMCL Netherlands B.V. (‘HNBV')
HNBV, a wholly-owned subsidiary of your Company was incorporated in Amsterdam as a
private company with limited liability under the laws of The Netherlands with the primary
objective of promoting overseas investments. HNBV has invested in operating companies in
Colombia and Bangladesh and during FY 2019-20, it has reported unadjusted revenue of
Rs.20.19 crore and a net profit of Rs.19.03 crore.
HMCL Colombia S.A.S. (‘HMCLC')
HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven Holdings
LLC as a simplified stock corporation company. HNBV currently holds 68% equity in HMCLC
and 32% equity is held by Woven Holdings LLC. The main business of HMCLC is to manufacture
and sell two-wheelers in Colombia. It has a manufacturing facility with a production
capacity of 60,000 per annum. During the year ended March 31, 2020, the Company has
reported unadjusted revenue of Rs.198.36 crore and a net loss of Rs.41.30 crore.
HMCL Niloy Bangladesh Limited (‘HNBL')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors
Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in
HNBL and 45% equity is held by Nitol Niloy Group, Bangladesh. The main business of HNBL is
to manufacture and sell two-wheelers. During FY 2019-20, HNBL reported unadjusted revenue
of Rs.798.57 crore and a net profit of Rs.87.28 crore.
HMCL Americas Inc. (‘HMCLA')
HMCLA, a wholly-owned subsidiary of your Company, was incorporated as a Corporation
pursuant to the General Corporation Law of the State of Delaware, United States of America
with the primary objective to pursue various global businesses. During the year ended
March 31, 2020, HMCLA has reported unadjusted revenue of Rs.0.43 crore and a net profit of
Rs.0.30 crore.
HMC MM Auto Limited (‘HMCMMA')
Your Company has a joint venture with Marelli Europe S.p.A., Italy, namely HMC MM Auto
Limited in India, which is set up for the purpose of carrying out manufacturing, assembly,
sale and distribution of two-wheeler fuel injection systems and parts. Your Company holds
60% of the equity share capital in HMCMMA. During FY 2019-20, HMCMMA has reported
unadjusted revenue of Rs.67.40 crore and a net loss of Rs.11.91 crore.
HMCL (NA) Inc.
HMCL (NA) Inc., a wholly-owned subsidiary of your Company was incorporated as a
Corporation pursuant to the General Corporation Law of the State of Delaware, United
States of America. The Company was dissolved effective November 6, 2019 pursuant to order
of the State of Delaware. HMCL (NA) Inc., had invested in Erik Buell Racing, Inc. ('EBR'),
a Delaware Corporation by subscribing to 49.20% of its equity share capital. Since HMCL
(NA) Inc. has been dissolved, Erik Buell Racing, Inc. is no longer an associate of your
Company.
Associate Companies Hero FinCorp Limited (‘HFCL')
HFCL, an associate of your Company, was incorporated in the year 1991. Your Company
holds 41.19% in the equity share capital of HFCL. HFCL is a non-banking finance company
engaged in providing financial services, including two-wheeler financing and providing
credit to Company's vendors and suppliers. Over the years, it has added several new
products and customers in its portfolio, like SME and commercial loans, loan against
property etc.
During FY 2019-20, HFCL's profit attributable to the Company is Rs.111.74 crore.
Ather Energy Private Limited (‘AEL')
AEL is a private limited company, focussed on developing, designing and selling premium
electric two-wheelers. The shareholding of your Company in AEL is 35.10% which is
equivalent to 31.27% on a fully diluted basis. During FY 2019-20, AEL's loss attributable
to the Company is Rs.77.41 crore.
A statement containing salient features of financial statements of subsidiaries and
associate companies forms part of the financials.
Material Subsidiaries
The Board of Directors of your Company ('the Board') has approved a policy for
determining material subsidiaries. At present, your Company does not have a material
subsidiary. The Policy on material subsidiaries can be viewed on the Company's website,
www.heromotocorp.com at the following link:
https://www.heromotocorp.com/en-in/uploads/code policy/20191126105356-code-policy-400.pdf.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of applicable provisions of the Act and the Articles of Association of the
Company, Mr. Suman Kant Munjal, Director of the Company retires by rotation at the ensuing
annual general meeting and being eligible, has offered himself for re-appointment. Brief
resume and other details of Mr. Suman Kant Munjal, who is proposed to be re-appointed as a
Director of your Company, have been furnished in the explanatory statement to the notice
of the ensuing annual general meeting.
During the year under review, your Company has appointed Ms. Tina Trikha as an
Additional Director of the Company in the category of Non-Executive and Independent
Directors effective October 23, 2019. The Board recommends her appointment as an
Independent Director of the Company. The Company has received a notice, in writing, under
Section 160 of the Act from a member proposing the candidature of Ms. Trikha.
The appointment of new directors is recommended by the Nomination and Remuneration
Committee ('NRC') on the basis of requisite skills, proficiency, experience and
competencies as identified and finalized by the Board considering the industry and sector
in which the Company operates. The Board, on the recommendation of the NRC, independently
evaluates and if found suitable, confirms an appointment to the Board. The appointments
are based on the merits of the candidate and due regard is given to diversity including
factors like gender, age, cultural, educational & geographical background, ethnicity,
etc.
In the opinion of the Board, the Independent Directors appointed/re-appointed during
the year under review are persons of high repute, integrity and possess the relevant
expertise and experience in their respective fields.
The Company has a robust succession planning process which is overseen by the
Nomination and Remuneration Committee.
During the year, Ms. Shobana Kamineni ceased to be a Director of the Company effective
March 26, 2020, due to completion of her term of 5 years as an Independent Director. The
Board places on record its appreciation for the guidance and support provided by Ms.
Kamineni during her tenure with the Company.
Key Managerial Personnel
Dr. Pawan Munjal, Chairman, Managing Director & CEO, Mr. Niranjan Gupta, Chief
Financial Officer and Ms. Neerja Sharma, Company Secretary and Chief Compliance Officer
are the Key Managerial Personnel of your Company in accordance with the provisions of
Section 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming
that they meet the criteria of independence as prescribed in the Act and the Listing
Regulations.
In the opinion of the Board, Independent Directors fulfil the conditions specified in
the Act, Rules made thereunder and Listing Regulations and are independent of the
management.
BOARD MEETINGS
During FY 2019-20, five meetings of the Board of Directors were held. For details of
these Board meetings, please refer to the section on Corporate Governance of this annual
report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it's Committees, the Chairman and
the individual Directors was carried out for FY 2019-20. Led by the Nomination &
Remuneration Committee, the evaluation was carried out using individual questionnaires
covering, amongst others, composition of Board, conduct as per company values &
beliefs, contribution towards development of the strategy & business plan, risk
management, receipt of regular inputs and information, codes & policies for
strengthening governance, functioning, performance & structure of Board Committees,
skill set, knowledge & expertise of Directors, preparation & contribution at Board
meetings, leadership etc.
Further, the Committees were evaluated in terms of receipt of appropriate material for
agenda topics in advance with right information and insights to enable them to perform
their duties effectively, review of committee charter, updation to the Board on key
developments, major recommendations & action plans, stakeholder engagement, devoting
sufficient time & attention on its key focus areas with open, impartial &
meaningful participation and adequate deliberations before approving important
transactions & decisions.
As part of the evaluation process, the performance of Non-Independent Directors, the
Chairman and the Board was conducted by the Independent Directors. The performance
evaluation of the respective Committees and that of Independent and Non-Independent
Directors was done by the Board excluding the Director being evaluated.
The actions emerging from the Board evaluation process were collated and presented
before the Nomination were Remuneration Committee as well as the Board.
Suggestions/feedback concerning strategic, governance and operational matters are actioned
upon by the team.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 of the Act, which
is to the best of their knowledge and belief and according to the information and
explanations obtained by them:
1. that in the preparation of the annual accounts for the financial year ended March
31, 2020, the applicable accounting standards were followed, along with proper explanation
relating to material departures;
2. that appropriate accounting policies were selected and applied consistently and
judgments and estimates that are reasonable and prudent were made so as to give a true and
fair view of the state of affairs as at March 31, 2020 and of the profit and loss of your
Company for the financial year ended March 31, 2020;
3. that proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of your Company and for preventing and detecting fraud and other
irregularities;
4. that the annual accounts for the financial year ended March 31, 2020 have been
prepared on a going concern basis;
5. that the Directors have laid down Internal Financial Controls which were followed by
the Company and that such Internal Financial Controls are adequate and were operating
effectively; and
6. that the Directors have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
effectively.
REMUNERATION POLICY
Pursuant to provisions of the Act, the Nomination and Remuneration Committee ('NRC') of
your Board has formulated a Remuneration Policy for the appointment and determination of
remuneration of the Directors, Key Managerial Personnel, senior management and other
employees of your Company. The NRC has also developed the criteria for determining the
qualifications, positive attributes and independence of Directors and for making payments
to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while
fixing appropriate remuneration packages and for administering the long-term incentive
plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key
Managerial Personnel, senior management and other employees is designed based on the set
of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial
Personnel, senior management and other employees is as per the Remuneration Policy of your
Company.
The remuneration details of the Directors, Chief Financial Officer and Company
Secretary, along with details of ratio of remuneration of each Director to the median
remuneration of employees of the Company for the year under review are provided as
Annexure - II.
The Remuneration Policy of the Company was changed during the year to include the
Policy on Board Diversity and to define the performance framework for senior management
personnel. Further, the commission of the Executive Directors was modified to such limits
as prescribed under Sections 197 and 198 of the Act. The Remuneration and Board Diversity
Policy of your Company can be viewed at the following link:
https://www.heromotocorp.com/en-in/uploads/code policy/20191126105210-code-policy-421.pdf.
The salient features of the updated Remuneration and Board Diversity Policy are as
under:
1. To determine remuneration of Directors, KMP, other senior management personnel and
other employees, keeping in view all relevant factors including industry trends and
practices.
2. At the Board meeting, only the Non-Executive and Independent Directors shall
participate in approving the remuneration paid to the Executive Directors.
3. The remuneration structure for the Executive Directors would include basic salary,
commission, perquisites & allowances, contribution to Provident Fund and other funds.
If the Company has no profits or its profits are inadequate, they shall be entitled to
minimum remuneration as prescribed under the Act.
4. The Non-Executive and/or Independent Directors will also be entitled to remuneration
by way of commission aggregating upto 1% of net profits of the Company pursuant to the
provisions of Sections 197 and 198 of the Act, in addition to sitting fees.
5. The compensation for Key Managerial Personnel, senior management and other employees
is based on the external competitiveness and internal parity through periodic benchmarking
surveys. It includes basic salary, allowances, perquisites, loans and/or advances as per
relevant HR policies, retirement benefits, performance linked pay out, benefits under
welfare schemes, etc. besides long-term incentives/ESOPs/RSUs/Performance shares or such
other means as may be decided by the NRC.
6. Performance goals of senior management personnel shall be quantifiable and
assessment of individual performance to be done accordingly. A significant part of senior
management compensation will be variable and based upon Company performance.
7. To ensure adequate diversity at Board level, all appointments to be made on the
basis of merit and due regard shall be given to other diversity attributes also. The NRC
shall recommend the appointment or continuation of members to achieve optimum combination
at the Board and periodically assess the specific requirements in relation to Board
diversity.
EMPLOYEES' INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from
time to time ('SEBI Regulations'), the NRC of your Board, inter a/ia,administers
and monitors the Employees' Incentive Scheme, 2014 of your Company and the Employees'
Stock Option plans framed thereunder.
Further, the NRC has, at its meeting held on October 22, 2019 approved grant of 98,750
Stock Options at an exercise price of Rs.1,745/- per option under ESOP Plan, 2019 and
5,210 Restricted Stock Units (RSUs) at face value of Rs.2/- per unit under RSU Plan, 2019
to certain eligible employees of the Company.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the
Employees' Stock Option Scheme are provided as Annexure - III to this report and are
available on the Company's website, www.heromotocorp.com and can be viewed at the
following link: https://www.heromotocorp.com/en-in/investors/annual-reports.html.
Your Company has received a certificate from M/s. BSR & Co. LLP, Statutory Auditors
(Firm Registration No. 101248W/W-100022) that the Employees' Incentive Scheme, 2014 for
grant of stock options has been implemented in accordance with the SEBI Regulations and
the resolution passed by the members in their general meeting. The certificate would be
placed/available at the ensuing annual general meeting for inspection by the members.
CORPORATE GOVERNANCE
Your Company is committed to benchmarking itself with global standards of Corporate
Governance. It has put in place an effective Corporate Governance system which ensures
that provisions of the Act and Listing Regulations are duly complied with, not only in
form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of
good Corporate Governance and best management practices that are followed globally. The
Code is available on your Company's website, www.heromotocorp.com and can be viewed at the
following link: https://www.heromotocorp.com
/en-in/about-us/code-of-conduct.html.
In terms of Listing Regulations, a report on Corporate Governance along with the
certificate from M/s. Sanjay Grover & Associates, Company Secretaries (Firm
Registration No. P2001DE052900) confirming compliance of the conditions of Corporate
Governance is annexed hereto and forms part of this annual report as Annexure - IV and
Annexure - V respectively.
TRANSFER TO GENERAL RESERVE
During the year under review, no amount has been transferred to General Reserve of the
Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, your Company has transferred unpaid/unclaimed dividend,
amounting to Rs.5.27 crore for FY 2011-12 and 25,264 shares to the Investor Education and
Protection Fund (IEPF) Authority of the Central Government of India. Further, dividend
pertaining to the shares transferred to demat account of the IEPF Authority amounting to
Rs.9.72 crore was also transferred to the IEPF Authority.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Company
has occurred between April 1, 2020 and the date of signing of this report. However, in
view of the ongoing Covid-19 pandemic, your Company carried out a comprehensive assessment
of possible impact on its business operations, financial assets, contractual obligations
and its overall liquidity position, based on the internal and external sources of
information and application of reasonable estimates. Your Company did not foresee any
significant incremental risk to the recoverability of its assets or in meeting its
financial obligations over the foreseeable future, given early and required steps taken to
contain, protect and mitigate the exposure.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2019-20, your Company has not given any loan or guarantee pursuant to
provisions of Section 186 of the Act. Details of investments made in terms of Section 186
of the Act are as under:
|
|
|
('in crore) |
|
Principal Amount (Shares) |
Principal Amount (Bonds/ Debentures) |
Total |
| Opening |
1,573.41 |
350.75 |
1,924.16 |
| Addition* |
409.88 |
74.36 |
484.24 |
| Reduction** |
(0.34) |
(150.12) |
(150.46) |
| Closing Balance |
1,982.95 |
274.99 |
2,257.94 |
* HMC MM Auto Limited - Rs.12.00 crore, HMCL Netherlands BV - Rs.19.51 crore, Hero
FinCorp Limited - Rs.248.37 crore, Ather Energy Private Limited - Rs.130 crore (consequent
to conversion of compulsorily convertible debentures into compulsorily convertible
preference shares)
** Maturity of bonds and amortisation
DEPOSITS
Your Company has neither accepted nor renewed any deposits during FY 2019-20 in terms
of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2019-20, all contracts/arrangements/ transactions entered into by your
Company with related parties under Section 188(1) of the Act were in the ordinary course
of business and on an arm's length basis. During FY 2019-20, your Company has not entered
into any contract/arrangement/transaction with related parties which could be considered
‘material' in accordance with its Policy on Materiality of Related Party
Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2019-20, there were no materially significant related party
transactions entered into by your Company with the Promoters, Directors, Key Managerial
Personnel or other designated persons, which might have potential conflict with the
interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval.
There was no related party transaction requiring approval of the Board. During the year
under review, the Audit Committee approved transactions through the omnibus mode in
accordance with the provisions of the Act and Listing Regulations. Related party
transactions were disclosed to the Board on regular basis as per Ind AS-24. Details of
related party transactions as per Ind AS-24 may be referred to in Note 36 of the
Standalone Financial Statements.
The policy on related party transactions is available on the Company's
website.www.heromotocorp.com and can beviewed at the following link:
https://www.heromotocorp.com/en-in/uploads/code policy/20191126104550-code-policy-
434.pdf.
RISK MANAGEMENT POLICY / FRAMEWORK
The Company has in place a risk management policy. The primary objectives of the policy
indude identification and categorization of potential risks, their assessment and
mitigation. The Board has entrusted the Risk Management Committee (RMC) with overseeing
the processes of identification, evaluation and mitigation of risks. The RMC periodically
reviews the organisational risks that are spread across operational, financial,
technological and environmental spheres and provides guidance to the management team.
The management team, besides continuous monitoring of existing risks, ensures that each
high impact risk is moved up from a functional level to the organisation level risk
register and each risk that is elevated to the organisational level risk register is
monitored and reviewed centrally.
Through an extensive process in place, your Company in FY 2019-20 identified multiple
new risks. These became the basis for specific risk descriptions that were added to the
organisational risk register. Your Company developed a detailed mitigation plan for each
existing and new risk and through a well-defined and institutionalised process, ensured
that the plan is executed in an efficient and result oriented manner. Transitioning to
BSVI technology was one of the bigger challenges for the automotive industry
in FY 2019-20. In addition to the multiple other efforts, the processes of continuous
monitoring and reviewing worked very well in managing this overall transition. Your
Company displayed its commitment to environmental leadership by not just successfully
transitioning to the BSVI technology and mitigating the risk associated with it but by
actually coming up with the technology much ahead of the deadline.
Going forward, your Company is committed to protect the interests of its customers,
stakeholders, investors, shareholders, employees and each person or entity with whom it is
associated. Towards this goal, your Company will further strengthen the internal processes
and evaluate even more innovative ways to blunt the risk impact.
The details of the RMC along with its charter are set out in the Corporate Governance
Report, forming part of this report.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical, moral and legal business
conduct. Accordingly, the Board of Directors has formulated Vigil Mechanism/Whistle Blower
Policy which provides a robust framework for dealing with genuine concerns and grievances.
Your Company has an ethics hotline managed by a third party which can be used by
employees, Directors, vendors, suppliers, dealers etc. to report any violations to the
Code of Conduct. Specifically, employees can raise concerns regarding any discrimination,
harassment, victimisation, any other unfair practice being adopted against them or any
instances of fraud by or against your Company.
During the year, an Ethics Campaign was rolled out across the organization under the
guidance of the Ethics Committee. The objectives of the Campaign were to reinforce the
principles of the Code of Conduct amongst the employees, motivate them to follow Hero core
values and instill pride in being an 'Ethical Hero'. The Ethics campaign was augmented
with Ethics workshops. The objectives of the workshops were to provide details of the
vigil mechanism policy and reporting channels, to understand key sections of the Code of
Conduct and how to respond in ethical dilemma situations. An open house was conducted at
the end of each session where Ethics Committee members interacted with the participants
and answered their queries. To engage employees, quizzes were conducted based on the
principles of the Code of Conduct. The initiatives received an overwhelming response and
the campaign recorded encouraging feedback.
During the year under review, 19 complaints were received through various reporting
channels and 3 complaints were carried forward from previous year. Out of these, 14
complaints have been investigated and acted upon, 4 complaints were reviewed and handed
over to HR for closure and remaining 4 are under investigation.
During FY 2019-20, no individual was denied access to the Audit Committee for reporting
concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company's
website, www.heromotocorp.com and can be viewed at the following link:
https://www.heromotocorp.com/en-in/uploads/code policy/20191126104803-code-policy-359.pdf.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has constituted a Corporate Social Responsibility (CSR) Committee which
functions under direct supervision of Dr. Pawan Munjal, Chairman, Managing Director &
CEO of your Company, who is also the Chairman of the CSR Committee. Other members of the
Committee are Mr. Pradeep Dinodia and Prof. Jagmohan Singh Raju, who are the Non-Executive
Director and Independent Director of your Company, respectively.
Your Company has implemented the CSR Policy, duly formulated and recommended by the CSR
Committee to the Board. The CSR Policy lays down CSR activities to be undertaken by your
Company. The CSR activities undertaken by your Company are based on the approved CSR
policy, which is available on the Company's website, www.heromotocorp.com and can be
viewed on the following link: https://www.heromotocorp.com/en-in/uploads/code
policy/20191126104858-code-policy-35.pdf. There has been no change in the CSR Policy of
the Company.
The CSR Policy of your Company, as adopted by the Board, broadly covers the following
focus areas:
a) To direct the Company's CSR Programmes, inter alia, towards achieving one or
more of the following - enhancing environmental and natural capital; supporting rural
development; promoting education including skill development; providing preventive
healthcare, providing sanitation and drinking water; creating livelihoods for people,
especially those from disadvantaged sections of society, in rural and urban India and
preserving and promoting sports;
b) To develop the required capability and self-reliance of beneficiaries at the grass
roots, in the belief that these are pre-requisites for social and economic development;
c) To engage in affirmative action/interventions such as skill building and vocational
training, to enhance employability and generate livelihoods for persons including from
disadvantaged sections of society;
d) To pursue CSR Programmes primarily in areas that fall within the economic vicinity
of the Company's operations, to enable close supervision and ensure maximum development
impact;
e) To carry out CSR Programmes in relevant local areas to fulfil commitments arising
from requests by government/regulatory authorities and to earmark amounts of monies and to
spend such monies through such administrative bodies of the government and/or directly by
way of developmental works in the local areas around which the Company operates;
f) To carry out activities at the time of natural calamity or engage in Disaster
Management System;
g) To contribute to the Prime Minister's National Relief Fund or any other fund set up
by the Central Government for socio-economic development and relief and welfare of the
Scheduled Caste, the Scheduled Tribes, Other Backward Classes, minorities and women;
h) To contribute or provide funds to technology incubators located within academic
institutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s)
including Chief Minister's Relief Fund, which may be recognised as CSR activity;
j) To promote sustainability in partnership with industry associations, like CII, PHD,
FICCI, etc. in order to have a multiplier impact.
During the year under review, your Company spent Rs.130.61 crore on its CSR activities,
which is more than 2% of the average net profits of previous three financial years. The
CSR initiatives undertaken by your Company, along with other details form part of the
annual report on CSR activities for FY 2019-20, which is annexed as Annexure - VIII. The
overview of CSR activities carried out in FY 2019-20 is provided in a separate section in
this annual report.
AUDIT COMMITTEE
The Audit Committee of your Company comprises of the following Non-Executive and
Independent Directors:
| 1. |
Mr. M. Damodaran |
- Chairman |
| 2. |
Mr. Pradeep Dinodia |
- Member |
| 3. |
Mr. Paul B. Edgerley |
- Member |
| 4. |
Ms. Tina Trikha |
- Member |
Ms. Tina Trikha has been inducted in the Audit Committee in the Board meeting held on
October 23, 2019. Further details on the Audit Committee and its terms of reference etc.
have been furnished in Corporate Governance Report which forms part of this report as
Annexure - IV.
During the year under review, all recommendations of the Audit Committee were accepted
by the Board of Directors of the Company.
AUDITORS AND AUDITORS' REPORT
Statutory Auditors
M/s. BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022)
were appointed in 2017 as the Statutory Auditors of the Company until the conclusion of
the 39th annual general meeting of the Company.
M/s. BSR & Co. LLP is one of the leading & recognised audit firms, affiliated
to a renowned global brand. Its experience as an audit firm is commensurate with the
requirements as regards the size and competencies necessary for rendering auditing
services to the Company. The firm performs its obligations in adherence to recognised
auditing standards and periodically certifies its independence from the management.
They have audited the financial statements of the Company for the year under review.
The observations of Statutory Auditors in their Report read with relevant Notes to
Accounts are self-explanatory and therefore, do not require further explanation. The
Auditors' Report does not contain any qualification, reservation or adverse remark.
Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or
the Board under Section 143(12) of the Act.
Cost Auditors
The Board, on the recommendation of Audit Committee, has approved the appointment of
M/s. Ramanath Iyer & Co., Cost Accountants, as Cost Auditors for the financial year
ending
March 31, 2021. The Cost Auditors will submit their report for the FY 2019-20 on or
before the due date.
In accordance with the provisions of Section 148 of the Act read with Companies (Audit
& Auditors) Rules, 2014, your Company is required to maintain cost records and
accordingly, such accounts and records are maintained by the Company. Further, since the
remuneration payable to the Cost Auditors is required to be ratified by the shareholders,
the Board recommends the same for approval by members at the ensuing annual general
meeting.
Secretarial Auditors
M/s. Sanjay Grover & Associates, Company Secretaries (Firm Registration No.
P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY
2019-20.
The Secretarial Audit Report for the said year is annexed herewith and forms part of
this report as Annexure - IX. The Report does not contain any qualification, reservation
or adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. Comprehensive
policies, guidelines and procedures are laid down for all business processes. The internal
control system has been designed to ensure that financial and other records are reliable
for preparing financial and other statements and for maintaining accountability of assets.
An extensive risk based programme of internal audits and management reviews provides
assurance to the Board regarding the adequacy and efficacy of internal controls. The
internal audit plan is dynamic and aligned to the business objectives of the Company and
is reviewed by the Audit Committee each quarter. Further, the Audit Committee also
monitors the status of management actions emanating from internal audit reviews.
During the year, such controls were assessed and no reportable material weaknesses in
the design or operation were observed.
PREVENTION OF INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015 ('the PIT Regulations') on prevention of insider trading, your
Company has revised its Code of Conduct for regulating, monitoring and reporting of
trading by Designated Persons in line with the recent amendments brought by SEBI in the
PIT Regulations. The said Code lays down guidelines, which advise Designated Persons on
the procedures to be followed and disclosures to be made in dealing with the shares of the
Company and cautions them on consequences of non-compliances.
Your Company also has a Code of practices and procedures of fair disclosures of
unpublished price sensitive information including a policy for determination of legitimate
purposes along with the Institutional Mechanism for prevention of insider trading and
Policy and procedures for inquiry in case of leak of unpublished price sensitive
information or suspected leak of unpublished price sensitive information. Further, your
Company has put in place adequate and effective system of internal controls and standard
processes have been set to ensure compliance with the requirements given in these
regulations to prevent insider trading.
To increase awareness on the prevention of insider trading in the organization and to
help the Designated Persons to identify and fulfill their obligations, a comprehensive
campaign was run at all locations of Hero MotoCorp Ltd. This included display of relevant
and useful content by way of posters on the notice boards and other strategic locations,
placement of standees at common areas, key messaging through desktop wallpapers and
screensavers, orientation sessions as part of regular employee induction, conducting
Company-wide workshops for all Designated Persons by a subject matter expert, sending text
messages for closure of trading window and submission of periodic disclosures, etc.
BUSINESS RESPONSIBILITY REPORT
As stipulated under the Listing Regulations, the Business Responsibility Report ('BRR')
has been prepared and forms part of the annual report as Annexure - X. The Report provides
a detailed overview of initiatives taken by your Company from environmental, social and
governance perspectives.
LISTING
The equity shares of your Company are presently listed on the BSE Limited (‘BSE')
and the National Stock Exchange of India Limited ('NSE').
PERSONNEL
As on March 31, 2020, total number of employees on the records of your Company were
8,599 as against 8,551 in the previous year.
During March 2020, an employee survey was conducted to ascertain the organization's
ability to align around a common vision, execute against that vision effectively and renew
itself through innovation and creative thinking by an independent agency. Relevant
employees participated in the survey to identify the priority areas that are being worked
upon.
Your Directors place on record their appreciation for the significant contribution made
by all employees, who through their competence, dedication, hard work, co-operation and
support have enabled the Company to cross new milestones on a continual basis.
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
('Rules'), is appended as Annexure - II to the report. The information as per Rule 5(2) of
the Rules forms part of this report. However, as per first proviso to Section 136(1) of
the Act and second proviso of Rule 5(2) of the Rules, the report and Financial Statements
are being sent to the members of the Company excluding the statement of particulars of
employees under Rule 5(2) of the Rules. Any member interested in obtaining a copy of the
said statement may write to the Company Secretary at the registered office of the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(3) and 134(3)(a) of the Act and rules made thereunder, extract
of the Annual Return in Form No. MGT-9 is annexed to this report as Annexure - XI and is
also available under the 'Investors' section of the Company's website,
www.heromotocorp.com.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is fully compliant with the applicable Secretarial Standards (SS) viz. SS-1
& SS-2 on Meetings of the Board of Directors and General Meetings respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rules made thereunder
is annexed to this report as Annexure - XII.
STATUTORY DISCLOSURES
Your Directors state that there being no transactions with respect to following items
during the year under review, no disclosure or reporting is required in respect of the
same:
1. Deposits from the public falling within the ambit of Section 73 of the Companies
Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of your Company under
any scheme, save and except ESOS referred to in this report.
4. Neither the Managing Director nor the Whole-time Director of your Company receive
any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or
Tribunals which impact the going concern status and Company's operations in future.
6. Buy-back of shares or under section 67(3).
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION,
PROHIBITION & REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace.
This policy is in line with the requirements of The Sexual Harassment of Women at the
Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees, whether
permanent, contractual, temporary and trainees are covered under this Policy. The Company
aims at providing a workplace that enables employees to work without gender bias and
sexual harassment. To achieve this objective, the Company regularly organises awareness
sessions at all locations to sensitise the employees and conduct themselves in a
professional manner. During FY 2019-20, over 200 POSH sessions were organised at 6
locations which were attended by more than 5,000 employees including workmen. Also, POSH
training was imparted through an online learning module which was completed by more than
1,000 employees.
In addition to the above, over 200 gender sensitization sessions were conducted at 7
locations which were attended by more than 5,500 employees including workmen.
As per the said Policy, an Internal Committee is also in place to redress complaints
received regarding sexual harassment. Following is the summary of complaints received and
disposed off during the year under review:
No. of complaints received: 4
No. of complaints disposed off: 4*
No. of complaints withdrawn: 0
No. of complaints pending: 1
* One of the complaints pending as on April 26, 2019 was disposed off on June 7, 2019
and the other complaint was disposed off on April 1, 2020.
DISCLOSURE UNDER THE HUMAN IMMUNODEFICIENCY VIRUS AND ACQUIRED IMMUNE DEFICIENCY
SYNDROME (PREVENTION AND CONTROL) ACT, 2017
The Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention
and Control) Act, 2017 has been notified by the Central Government on September 10, 2018.
During the year under review, no complaints were received by the Complaints Officer.
AWARDS AND RECOGNITION
During the year under review, the Company received multiple awards and recognition.
Some of them are listed below:
1. XPulse 200 awarded Indian Motorcycle of the Year 2020 by media houses and also
awarded Tourer Bike (upto 250cc) of the Year 2020 by Flywheel Auto Awards.
2. XPulse 200 was also awarded Bike of the Year (upto 200cc) and two-wheeler of the
year by Car and Bike India.
3. Maestro Edge 125 FI was chosen as Scooter of the Year 2020 by Autocar and by Car and
Bike India.
4. National Award for Excellent Energy Efficient Unit by CII to Gurgaon Plant.
5. Platinum ranking for environment friendly building and work environment by CII to
CIT Jaipur.
ACKNOWLEDGEMENTS
The Board of Directors would like to express their sincere thanks to the shareholders
and investors of the Company for the trust reposed in the Company over the past several
years. Your Directors would also like to thank the central government, state governments,
financial institutions, banks, customers, employees, dealers, vendors and ancillary
undertakings for their co-operation and assistance. The Board would like to reiterate its
commitment to continue to build the organization into a truly world-class enterprise in
all aspects.
|
For and on behalf of the Board |
|
Pawan Munjal |
| Date: June 9, 2020 |
Chairman |
| Place: New Delhi |
DIN:00004223 |
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