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Director's Report
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Hero MotoCorp LtdIndustry : Automobiles - Motorcycles / Mopeds
BSE Code:500182
ISIN Demat:INE158A01026
Book Value(Rs):732.96
Div & Yield %:2.81
Market Cap (Rs Cr.):64025.52
Face Value(Rs):2
  Change Company 

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.


The standalone and consolidated financial highlights of your Company are as follows:

(Rs. in crore)




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
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
- 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


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.


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.


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.


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.


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.


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.


During FY 2019-20, there was no change in the nature of Company's business.


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.


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.


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.


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


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.


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.


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.


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.


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.


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.


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.


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


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.


During the year under review, no amount has been transferred to General Reserve of the Company.


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.


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.


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


Your Company has neither accepted nor renewed any deposits during FY 2019-20 in terms of Chapter V of the Act.


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.


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.


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.


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.


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.


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.


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.


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.


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.


The equity shares of your Company are presently listed on the BSE Limited (‘BSE') and the National Stock Exchange of India Limited ('NSE').


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.


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.


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.


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.


Information required under Section 134(3)(m) of the Act read with Rules made thereunder is annexed to this report as Annexure - XII.


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).


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.


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.


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.


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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