Professional Documents
Culture Documents
MEASURE
SUCCESS? Every business strives for success. Success however has many
benchmarks and many interpretations. Some view success on a
purely financial plane, others view it in terms of their market reach
while some argue it as their ability to survive in difficult terrain.
ENTS
People and Environment 42
Social Responsibility 46
Directors’ Report 55
Corporate Governance Report 59
Auditors’ Report 84
Balance Sheet 88
Profit & Loss Account 89
Cash Flow Statement 90
US GAAP 125
IS IT ABOUT THE
STATURE
INTHE HERO HONDA IS
THE LARGEST MANUFACTURER OF
TWO WHEELERS IN THE WORLD….
AND HAS BEEN SO OVER THE
LAST EIGHT YEARS.
INDUSTRY?
CORPORATE PROFILE
A GLORIOUS HISTORY AND AN
EVEN MORE GLORIOUS FUTURE
It all began with a dream… On its part, the Hero Group has taken on the singular
and onerous responsibility of creating world-class
The Hero Honda story began with a simple vision – the
manufacturing facilities with robust processes, building
vision of a mobile and an empowered India, powered by
the supply chain, setting up an extensive distribution
Hero Honda. This vision was driven by Hero Honda's
networks and providing insights into the mind of the
commitment to customer, quality and excellence, and
Indian customer.
while doing so, maintain the highest standards of ethics
and societal responsibilities. Twenty five years and 25 Since both partners continue to focus on their
million two wheelers later, Hero Honda is closer to respective strengths, they have been able to
fulfilling this dream. This vision is the driving force complement each other. In the process, Hero Honda is
behind everything that we do at Hero Honda. recognized today as one of the most successful joint
ventures in the world. It is therefore no surprise that
We understood that the fastest way to turn that dream
there are more Hero Honda bikes on this country's roads
into a reality is by remaining focused on that vision.
than the total population of some European countries
There were many unknowns but we kept faith, and
put together!
today, Hero Honda has been the largest two wheeler
company in the world for eight consecutive years. The company's meteoric growth in the two-wheeler
market in India stems from an intrinsic ability to reach
Our growth has kept compounding. The company
out and come closer to its customers, with every passing
crossed the ten million unit milestone over a 19-year
year. Hero Honda's bikes are sold and serviced through a
span. In the new millennium, Hero Honda has scaled
network of over 3500 customer touch points,
this to 15 million units in just five years!
comprising a mix of dealers, service centres and
In fact, during the year in review, Hero Honda sold more stockists located across rural and urban India.
two wheelers than the second, third and fourth placed
Hero Honda has built two world-class manufacturing
two-wheeler company put together. With Hero Honda,
facilities at Dharuhera and Gurgaon in Haryana, and its
the domestic two wheeler market was able to show
third and most sophisticated plant at Haridwar has just
positive growth during the year in review. Without Hero
completed a full year of operations.
Honda, the domestic market would have actually
shrunk. It is difficult to imagine that all this has happened in the
span of just two and a half decades!
Over the course of two and a half decades, and three
successive joint venture agreements later, both partners The best is yet to come. During the year in review, Hero
have fine-tuned and perfected their roles as joint Honda powered its way in a market that, for all practical
venture partners. purposes, was feeling the full effects of the economic
slowdown in India. With an economic recovery now
What the two partners did was something quite basic.
clearly on the cards, Hero Honda is all set to ride into
They simply stuck to their respective strengths. As one of
another summit.
the world's technology leaders in the automotive sector,
Honda has been able to consistently provide technical As Brijmohan Lall Munjal, the Chairman, Hero Honda
know-how, design specifications and R&D innovations. Motors succinctly puts it, "We pioneered India's two
wheeler industry, we've steered it through difficult
This has led to the development of world class, value-
times; now it is our responsibility to set the pace again.''
for-money motorcycles and scooters for the
Indian market.
06/07
A JOURNEY OF
TWENTY FIVE YEARS
Dr. Brijmohan Lall Munjal,
Hero Honda commences Chairman, Hero Honda Motors
commercial production at Dharuhera Limited, received the Padma Bhushan
Plant, rolls out 1st motorcycle (CD 100) award from the President of India
2000
Hero and Honda sign joint Cumulative production volumes
collaboration agreement reached 10 million mark
1983 2004
1999
Cumulative production volume Hero Honda Karizma launched Hero Honda forays into scooter
reached 5 lac mark –industry's first 223 cc motorcycle segment, launched 100 cc gearless
2002
1994 2008
08/09
DEAR together. Effectively, this helped your company boost its
domestic motorcycle market share by more than four
both urban and rural areas, we have now started adding
more muscle to our rural initiatives; some of our efforts
10/11
BOARD OF ALTERNATE DIRECTOR SENIOR MANAGEMENT TEAM
Anil Dua
OUTGOING DIRECTORS Sr. Vice President-Sales,
Marketing and Customer Care
Yutaka Kudo
Whole-time Director Vikram S. Kasbekar
(upto May 31, 2008) Plants Head-Operations
and Supply Chain
Narinder Nath Vohra
Non-Executive and Independent Dr. Anadi S. Pande
Director Vice President-HRM, Corporate
(upto June 24, 2008) Planning and Strategy
COMMITTEE OF DIRECTORS
Ilam C. Kamboj
SHAREHOLDERS' Sr. G.M. Legal & Company Secretary
GRIEVANCE COMMITTEE
Pradeep Dinodia
Member
Meleveetil Damodaran
TOP ROW LEFT TO RIGHT BOTTOM ROW LEFT TO RIGHT Member
Toshiaki Nakagawa Brijmohan Lall Munjal Ms. Shobhana Bhartia Sumihisa Fukuda Dr. Pritam Singh Meleveetil Damodaran For more information please visit www.herohonda.com
Joint Managing Director Chairman Non-Executive and Technical Director Non-Executive and Non-Executive and
Independent Director (w.e.f. June 01, 2008) Independent Director Independent Director
Om Prakash Munjal Pawan Munjal
(w.e.f. June 16, 2008)
Non-Executive Director Managing Director & CEO Takashi Nagai Pradeep Dinodia Sunil Kant Munjal
Non-Executive Director Non-Executive and Independent Director Non-Executive Director
Masahiro Takedagawa
Non-Executive Director Gen. (Retd.) V.P. Malik Analjit Singh
Non-Executive and Independent Director Non-Executive and
Independent Director
12/13/14
NEW PLANT AT HARIDWAR
THE GATEWAY TO ANOTHER
SUCCESS STORY
Literally translated, Haridwar means Gateway to God. In Hero Honda has made a substantial difference in the
Hindu mythology, Haridwar is considered one of the socio-economic landscape of the Gurgaon-Dharuhera
seven holiest places in India, since the devas are said to belt, and it seeks to make the same qualitative
have left their footprints here. difference in Dev Bhoomi.
Not without reason, therefore, Haridwar was chosen as The Hero Group is committed to invest in social and
the venue for the third Hero Honda plant. tangible infrastructure to promote quality of life of
people of Uttrakhand, and is in the process of building,
The temples of modern India, borrowing Pt. Nehru's
schools, hospitals, theaters, houses and retail
phrase, are the factories that provide economic
infrastructure in the region.
liberation to masses.
These projects will provide jobs, sustenance and
Hero Honda's journey to this modern temple, in
prosperity over the years, and contribute to the all-
Haridwar, has been nothing short of a holy pilgrimage. It
round development of this region.
began in October 2006, when the foundation stone
was laid; it continued when the plant went onstream in Hero Honda is also adopting a local ITI in the region.
April 2008, and gained momentum in March 2009,
This will not only to enhance the skill level of local
when the plant produced 4,000 two wheelers per day.
people, it will also go a long way in ensuring a captive
The journey continues at the time of writing. supply of skilled manpower for Hero Honda and its
suppliers.
The third plant is Hero Honda's finest manufacturing
experience yet, with the essence of Honda and Hero's The Haridwar project is a backward integrated
learnings and contemporary practices enshrined here. manufacturing plant which on realization of full
capacity will engage around 5,000 persons.
The plant has lean manufacturing and practices that
ensure efficiency. The main plant is connected with Currently there are 10 suppliers up and running
vendors units through conveyors so that material avoids operations in the Hero-promoted industrial park next to
multiple handling and is delivered on time. the Haridwar factory. In the coming months an
additional 23 no. of suppliers will start supplying to the
In keeping with Hero Honda's green philosophy,
factory hub.
production processes have been conceived in a way that
effluents are minimized and there is zero discharge on In a vast country like India, what Hero Honda is
liquid effluents. All waste are treated and consumed attempting through this integrated approach is a drop
within the four walls of the factory. in the ocean, but it is an important drop. As Mahatma
Gandhi once said:”Whatever you do may be
An integral part of the long term vision at the Haridwar
insignificant, but it is very important that you do it”.
plant is an ambitious green roof project. The idea is not
just to insulate the shopfloor but also to reduce the run It is said that as the Ganga flows from the Himalayas to
offs, and promote greenery. the Bay of Bengal, it nourishes the soul and sustains
many lives along the way. Hero Honda is convinced that
But then, the Hero Honda story at Haridwar is not just
this plant, this shrine of technology, will do the same.
about this plant.
Wherever it sets up a factory, Hero Honda seeks to be a
model corporate citizen, and co-opts local communities
to participate in its progress.
15/16/17
REACHING THE LENGTH
AND BREADTH OF INDIA
The company has made significant progress in its rural the events organized by the local administration on
marketing initiative called Har Gaon, Har Aangan. This regular basis.
national level program has made strides into thousands
The company believes that the rural mobility is a major
of Indian villages with a population of 5,000 and above.
contributor to GDP growth in an agrarian economy like
In all, more than 125,000 opinion leaders in these
ours. 'Sikhao Baliye' is company's unique initiative in the
villages were met by specially trained 523 rural sales
rural market that aims at driving the mobility of rural
executives. The program itself has added sales of
women. The program aims at promoting company's
25,000 vehicles from these villages in just one year.
light and zippy gearless scooter Pleasure by creating
The program focuses on many activities to align with the awareness amongst its TG which primarily are all rural
in these villages. The program generally covers sales daughter-in-laws, sisters etc., and prospects in
promotions, loan and exchange offers, free service and general.The program covered 40 villages, 266 female
check up camps, along with host value adds like riders received basic riding training, and 35 of them
consultation for obtaining driving license, safe riding could ride the scooter immediately after the training.
educational programs and other services like health
check up and awareness camps. These services are
offered free of charges in the interest of society at large.
Under the HGHA program the company makes all the
efforts to be a part of the villages by conducting such
programs either directly or by partnering or sponsoring
18/19
Economic Environment
Social Responsibility
LINE?
WITH OUR NEAREST COMPETITORS
AND PEERS A LONG DISTANCE OFF
CREATING OPPORTUNITY
IN ADVERSITY
Like any other emerging country, India experienced the to less than 2 per cent, mostly on account of indifferent
knock-on effects of the global crisis during the year in production of cotton and pulses.
review. The effects were felt through the monetary,
On its part, the government came out with three rounds
financial and real channels.
of fiscal measures to revive the economy. Yet the effects
Drying up of global finance impacted from the middle of hadn't begun to show, at least till the financial year
the fiscal impacted domestic capital finance; and had ended.
corporate earnings came off peaks. In April 2009,
While the year in review was disappointing by Indian
Reserve Bank of India predicted that the Indian
standards, India was still an outperformer by global
economy's growth for 2008-09 would slow to 6.6 per
standards. Along with China, India still provided a
cent, breaking an excellent five-year growth sequence.
ECONOMIC ENVIRONMENT
beacon of light to the world.
There were two dimensions to the economic slowdown.
There were in fact, some signs of some sort of recovery
In the first half, inflation ran into double digits as a result
taking shape towards the end of the financial year, and
of the global crude shock and the global food grain
this momentum continued in the first quarter of
shortage. To control inflation, the RBI clamped down on
2009-10 as well.
money supply, and reduced liquidity in the economy. By
the time inflation started coming under control, Cement despatches in April were the highest in five
domestic interest rates started shooting up. Meanwhile, years, thanks to revival in construction activity.
the global crisis erupted, putting further pressure on
The World Steel estimated that India would be the only
liquidity levels.
major country in 2009 with a positive consumption
By October 2008, slowdown was clearly apparent in trend.
export-intensive sectors, both in the manufacturing and
In March, the monthly ABN Amro Purchasing Managers'
service side. By December, the slowdown turned into
Index crossed 50 for the first time since September
de-growth. The cutback in demand from Europe and
2008, indicating some increase in manufacturing
the US was so sharp that even a competitive rupee,
expansion activity.
which devalued by around 12 per cent during the year,
couldn't act as a buffer. The NHAI invested 60 per cent of its funds in the second
quarter of 2008-09 in various road projects.
By December 2008, the growth momentum of the first
six months was lost. Planned investment projects were Such investments, made during the peak of the
shelved; live projects faced a shortage of funds as credit slowdown, could create important multipliers in a
flows dried up. As money became dearer, pay packets slowing economy.
became slimmer and risk aversion grew both from the
It is expected that some of these measures will create
demand and supply side.
new multipliers and generate new sources of growth in
Compulsions of coalition politics at the Centre and the the coming year.
impending Lok Sabha elections didn't help either, and
The overall economy continues to remain a bit volatile,
slowed down reforms and implementation of projects,
and yet a positive feel-good sentiment does seem to
particularly in critical sectors like roads, ports and power.
have returned, especially with the coming of a stable
The worst hit was the manufacturing sector. From the government at the centre.
second half of the financial year, the index of industrial
production contracted on three occasions, remained
close to zero on two occasions, and was mildly positive
only once.
There was moderation across other sectors as well.
Growth in the service sector slipped from double digits
to single digits. Agriculture growth once again slipped
24/25
AN INDUSTRY
THAT IS RIDING AHEAD
In the previous year, the domestic two-wheeler industry The entry segment – made up of basic 100 cc bikes -
entered a period of de-growth. However, this was had started slowing two years ago, and during the year
arrested in 2008-09, largely on the back of Hero in review, sales in this segment were down by more than
Honda's performance. After the blip of last year, the 15 per cent. This could be attributed to the fact that
previous year when the industry had shrunk by The 125-250 cc category-grew at 8.8 per cent. The pace
8 per cent. of growth has fallen from last year's levels. There is no
Motorcycles continue to constitute the largest chunk of doubt that the higher interest rates have brought down
the two-wheeler industry, and during the year in review, growth. Nevertheless, this segment was still able to
accounted for four fifth of sales. Interestingly, for the clock a growth rate in high single digits mainly because
second year in succession, scooters increased their share of the excitement caused by a slew of new models that
in the two-wheeler pie from 14 per cent to 16 per cent. came into this segment during the year.
This is clearly a trend reversal from the last 10 years, The bigger story, of course, is that buyers in small-town
where the share of scooters in the two-wheeler pie had India and rural India, as well as employees of the state
been shrinking. Changing lifestyles among women, and and Central government, were relatively less affected by
the introduction of feature-rich, high-quality scooters the slowdown, and this benefitted the two wheeler
possibly has much to do with the revival in demand. industry.
26/27
HERO HONDA'S PERFORMANCE
SETTING THE BENCHMARK
Hero Honda was the torchbearer for the two-wheeler During the year, the company also turned in a rollicking
industry during the year in review. It sold more two- performance with its scooter portfolio, with a 49 per
wheelers during the year than the combined volumes of cent growth in domestic sales to 156,210 units. This
the second, third and fourth placed competitor. performance allowed Hero Honda to increase its share
in the domestic scooter market by more than three
Overall, the company sold 3.72 million two-wheelers,
percentage points.
up 12 per cent. Motorcycle sales in the domestic
market, which account for more than 95 per cent of Hero Honda's performance in the two-wheeler industry
Hero Honda's sales, were up 11 per cent. was the only standout performance during the year
amongst the large players. Without Hero Honda's
numbers, the two wheeler industry growth would have
been marginal.
28/29
IS IT ABOUT THE
BOTTOM
LINE?
HERO HONDA HAS BEEN CONSISTENT IN
WEALTH CREATION FOR NEARLY TWO
DECADES. AND OUR CURRENT PROFIT AFTER
TAX OF OVER Rs. 1280 CRORES BEARS
TESTIMONY TO OUR BUSINESS ACUMEN.
RESULTS AND
FINANCIAL ANALYSIS
1359
Despite a slowdown in the two-wheeler industry, sales During the year the Company incurred a capital
of the company grew by 11.53 per cent. The company 2007-08 2008-09 expenditure of Rs. 315.08 crores. The funds went into 1400
1212
OPBDIT / IFO*(%) 13.3 14.2
ended the year with a market share of around 57 per OPBT / IFO*(%) 11.8 12.7 expansion of operations.
cent. Hero Honda sold 3,722,000 units in 2008-09 PBIT / IFO*(%) 13.3 14.2
Raw Material costs 1200
compared to 3,337,142 units in 2007-08. In value PBT / IFO*(%) 13.6 14.4
terms total sales (net of excise duty) increased by 19.2 PAT / IFO*(%) 9.3 10.4 Softening metal prices particularly aluminum & nickel in
ROACE (%) 49.0 50.9
936
per cent to Rs.12,319 crores from Rs.10,332 crores in second half of the year combined with better sales 1000
ROAE (%) 35.5 37.8
2007-08. realisation to bring down the share of material costs
*Income from operations considerably. Raw material costs as a proportion of total
747
Profitability 800
costs came down from 71.6 per cent to 71.0 per cent.
The company's earnings before interest depreciation
625
Current Asset turnover
and taxes (EBITDA) margins increased from 13.33 per
cent in 2007-08 to 14.16 per cent in 2008-09 and the This ratio, which shows sales as a proportion of average 600
Cash Flows
operating profit (PBT before other income) increased by current assets, increased from 11.2 to 12.7 times, on
28.4 per cent from Rs.1,221.79 crores in 2007-08 to Growth in sales turnover and better efficiencies in account of higher average inventory & bank balance.
working capital management improved the cash flow 400
Rs.1,568.86 crores in 2008-09. The margin
improvements came from better sales realizations, cost from operations from Rs. 1,211.78 crores to Rs. Debt structure
rationlisation and optimization measures. These 1,359.03 crores. Cash flows before working changes Hero Honda has been a debt free company for the last 8 200
included better control over material cost, marketing also improved from Rs. 1,392.56 crores to Rs. 1,762.16 years. The unsecured loan of Rs.78.49 crores from the
cost and overheads, besides a sharp focus on crores on account of better EBITDA margins. state government of Haryana on account of sales tax
operational efficiencies. The Company spent Rs. 861.19 crores in investing deferment, is interest free and has no holding costs. Net 0
06-07 07-08 08-09
04-05 05-06
activities. Investments in production capacities lead to interest payment by the company has been negative
Other income,
an outflow of Rs. 315.08 crores. The balance was during the last few years. Working capital management
including non-operating income
deployed in financial assets. Financing activities Dividend policy
Other income increased by 19.0 per cent from Rs. 185 accounted for an outflow of Rs. 499.93 crores Hero Honda has always sought to efficiently use the
crores in 2007-08 to Rs. 221 crores in 2008-09. attributable to dividend outflows. Over the years, the company has consistently followed various components of the working capital cycle.
a policy of paying high dividends, keeping in mind the Despite the adverse conditions in the two-wheeler
PROFITS cash-generating capacities, the expected capital needs industry, the Company has been able to effectively
(Rs. in crores) of the business and strategic considerations. For 2008- control the receivable and inventories enabling it to
1561
09, the board has recommended a dividend of 1000 per continue to operate on negative working capital.
cent, which is higher than the 950 per cent declared in Notes on working capital
1500
the previous year. However, the payout ratio has come
1282
1253
1225
down to 36.5 per cent vis-a-vis 45.9 per cent in the The average of inventory, receivables and payables has
previous year. been taken for calculations of inventory period,
1076
1056
1200
operating and cash cycle.
968
971
858
32/33
MANAGING RISK IS
HALF THE BATTLE WON
34/35
IS IT ABOUT
38/39
Gramin Banks, License Camps and Riding Schools. The For example, bar-coding systems are now extensively
idea is not just to increase awareness about the two used and these are fully integrated with SAP R/3. There
wheeler industry but also to increase buy-in for Hero are also SMS based alerts to employees and dealers.
Honda products. Workflows have been designed to improve internal
productivity. Dashboards and other reporting tools have
During the year, more than 23,000 villages with a 5000- been introduced to enhance decision-making abilities.
plus population were covered by rural executives under
the Har Gaon, Har Aangan initiative. In addition, the CRM (Customer Relationship
Management) software being used was upgraded.
Information Technology: IT at Hero Honda is an integral CRM Software is currently being used by dealers for
part of the business. The organisation has a mix of ordering spares parts. By using a special feature called
packaged and in-house applications to support business web shop, dealers can directly shop for spare parts
transactions, integration with partners, reporting, through online catalogues. The system also allows the
productivity and compliance. The applications range Dealers to view the status of dispatch or payments. Also
from simple workflows to enterprise applications. as part of the CRM initiative, Hero Honda's flagship
Similarly, at the infrastructure end, the organisation has CRM program—the passport program—was made
a robust and scalable world-class IT infrastructure. more technology enabled.
The organisation continued to invest significantly in IT Working with Supply chain
during the year. Two large initiatives – Product Lifecycle
Management (PLM) and Dealer Management System Hero Honda continues to build and maintain
(DMS) were initiated. sustainable relationships with its supply chain
particularly in relation to long-term strategic direction of
Most of the processes and operations in the the business. Vendor management is critical to Hero
organisation are fully integrated with IT. During the year, Honda, as nearly 73 per cent of the production is
the organisation tried to leverage the capabilities of currently made up of material cost. A national network
basic software by integrating with other applications. of 256 vendors - including 36 ancillaries - forms the
backbone of its plant operations.
Softening metal prices, particularly of aluminum &
nickel in second half of the year, combined with better
sales realization worked together to bring down the
share of material costs considerably. Raw material costs
as a proportion of total costs scaled down from 72.5 per
cent to 69.5 per cent. Simultaneously, a more
streamlined sourcing policy also helped in
lowering costs.
During the year, the inbound logistic system at the
Haridwar plant was revamped; Hero Honda switched
from the individual logistic model to a specialized third
party logistic service provider for all Haridwar-based
suppliers. This switch helped the company reduce
logistics cost and improve the operational efficiency of
the value chain. During the year, the company also paid
considerable attention to developing a multi-modal
transport system, in order to derive cost economies.
Also at the Haridwar plant, Hero Honda switched from
individual purchase of basic materials by supply chain
partners to consolidated settlements by the company
itself. The resulting economies of scale have resulted in
greater leverage with suppliers and have helped bring
down material costs.
The online vendor connectivity program has made rapid
progress. Three years ago, the company had only 46
vendors connected online to the company's factories.
By the end of 2008-09, it is estimated 72 per cent of the
vendors and their supplies were connected online.
During the year, Hero Honda also worked with vendors
to develop and produce alloy wheels within Haridwar.
This considerably reduced dependence on
costly imports.
40/41
THE POWER OF
HUMAN CAPITAL
The Human Touch opportunity not only to augment their professional skills
and knowledge, but also to improve their life skills.
Dedicated to investing in our people…
Celebrating and sharing the passion: Hero Parivaar
We believe it is the passion of our employees that
enables the company to deliver exceptional Hero Honda held an annual day for the workers and a
performance and growth even in an adverse family day for employees across the organisation. The
market environment. full-day gala event was held in a festive atmosphere and
was attended by the entire management and Hero
Rewarding this passion:
Honda employees, along with their families. Events
42/43
Green technology The company has implemented the various
recommendations of an extensive study that was done
Constant adoption of innovative green practices at Hero
to assess the scope of Ground Water Recharge in the
Honda has resulted in the introduction of a special
Acrylic Cathodic Electro Deposition (ACED) painting factory premises through Rooftop Harvesting, Storm
process for the frame body. This new process results in water Harvesting & Open area Harvesting.
99 per cent paint transfer efficiency and minimizes Green Roof
effluents. The water soluble paint used is environment
friendly and delivers better quality and productivity. The green roof at the Haridwar plant was one of the
major environment friendly initiatives during the year.
At another level, the fluidized bed system, a thermal Besides restoring ecological and aesthetic value, it helps
cleaning process for paint hangers, is more environment in substantial amount of energy saving by moderating
friendly than any other conventional cleaning method. temperature of roof and surrounding areas. It also helps
The incinerator used for sludge burning, along with a in reducing storm water runoff volume and peak flow
pollution monitoring and control system, provides rate, and increases the service life of water proofing
proper treatment of flue gases before releasing it to the membrane.
atmosphere.
The Green Supply Chain
Last year, the company successfully developed primer
Hero Honda believes the process of sustainable
from waste paint sludge which had passed all quality
development is incomplete without involving the
parameters and was at par with the virgin primer. This
ecologically friendly and cost effective re-cycling process company's supply chain.
is now an integral part of the manufacturing operations. With this in mind, the company has put together a
“Green Vendor Development Program” for the front
Safe manufacturing
end and a “Green Dealer Development Program” for
Over the last few years, the company has progressively the back end of the supply chain. In each of these
eliminated the use of a large number of harmful programs, the partners' are expected to manage their
substances. Today, every raw material and chemical is environment involving material resources, industrial
thoroughly evaluated for its environmental impact wastes, energy resource, pollution and other effluents
before it is introduced in a production process. based on a number of pre-determined parameters.
The company has been successful in eliminating toxic Hero Honda plans to support all its partners in the Green
substances. For example, lead-based balancers used for Supply Chain venture by developing required
cast wheels have been changed to zinc. Hexavalent competencies, sharing knowledge, and by providing
chrome has been replaced by trivalent chrome in all
technical support. 31 vendors enrolled under this
plated parts and asbestos has been completely
program in 2007-08 underwent requisite training and
eliminated from all product parts and manufacturing
were certified as green vendors during 2008-09. A fresh
operations.
lot of 40 vendors were inducted during the year for
Conserving energy the program.
In the area of energy conservation, the heat recovery Green Awards
unit installed in the incinerator exhaust is used for pre-
heating the boiler feed water and furnace oil. This For its diverse environment initiatives, the company has
resulted in a cost saving of Rs. 60 lakh per year. received the following certifications:
The boiler systems have also been reengineered and - Environmental Management Systems as per ISO
optimised to save fuel, energy and steam losses which 14001
have helped prune energy costs considerably. Dedicated - Occupational Health and Safety Management
power supply to respective shop floors, forced draft Systems as per OHSAS18001
ventilation system and use of CFLs also helped bring
down energy costs. - Quality Management Systems as per ISO 9001
Hero Honda also ensures complete reuse of treated The Company has also been awarded the Three Green
water in cooling towers. This saves up to 300 kilo litres Leaves Award for its overall environmental performance
of water in a day. by the Centre for Science & Environment (CSE). It has
also received “Environmental Excellence” Award, given
Rain Water Harvesting by The Energy Resource Institute.
Over the years, Hero Honda has been involved in Hero Honda has been awarded TERI Corporate Awards
rainwater harvesting projects to protect, preserve and for Environmental Excellence 2008.
enhance the environment.
44/45
CREATING SUSTAINABLE BUSINESSES,
MAKING A DIFFERENCE TO THE LIVES
OF STAKEHOLDERS
Behaving responsibly and contributing to the health checkup camps, and one camp each for skin care
communities in which we operate is an essential part of and the physically challenged. Around 1000 people
our heritage. Hero Honda takes considerable pride in its from the catchment area benefitted from these camps
community relationships, especially the ones at during the year.
grassroots level that have evolved over time. The
company has played a pivotal role in bringing an Education:
economically and socially backward region in In February 2007, the Foundation had set up a
Dharuhera, Haryana, into the national economic computer training & learning centre in partnership with
mainstream through direct interventions in education, Microsoft. A total of 9 batches (boys and girls) are run
healthcare, vocational training, creation of social and simultaneously, consisting of 18-20 students per batch.
physical infrastructure, and environment management. Till date, a sizeable number of students have been
SOCIAL RESPONSIBILITY
Most of the group's social activities are planned and trained at the centre. To enhance the value of rural
executed by the Raman Kant Munjal Foundation, which youth in the job market, a spoken English course was
was set up in memory of Hero Honda's founder started recently. Currently, the course is being run in
managing director. three batches during the day.
We have identified three priority areas for our The Raman Kant Munjal Foundation also runs ASHA, an
community development initiatives where we focus our educational programme for village children who are first
efforts and help make a difference: generation learners and attend Govt. Schools. The
Sustainable Enterprise/Vocational Training, Healthcare objective is to provide these children with additional
and Education support to improve their educational standard and to
achieve their overall development.
Sustainable Enterprise/Vocational Training:
The ASHA program was started three years ago and
As part of its outreach and capacity building initiative, currently, 10 centres are being managed across 8
the company organised a number of workshops in villages, and more than 385 children have enrolled.
different areas. There were six fruit preservation
workshops, four tie and dye workshops, a handicraft To ensure that there is overall personality development
workshop, a training workshop for teachers, and four of ASHA children, the Foundation organises
HIV awareness workshops. The workshops were recreational activities and soft skills trainings. Regular
attended by more than 600 villagers, teachers and get togethers are also organised with Raman Munjal
schoolchildren in the Hero Honda catchment area. Vidya Mandir children from time to time.
To help local people, especially women, the Raman Kant The Foundation also runs an Adult Literacy program, a
Munjal Foundation has, in the last decade, set up a marriage facilitation service for underprivileged girls,
vocational training centre which runs diploma courses besides doorstep healthcare programs and with medical
in Tailoring, Embroidery and carpet weaving etc. Last camps for the local population.
year, the Centre was upgraded, and it is now possible to In every CSR Project undertaken, the Foundation always
train 50 girls per batch. Till date, more than 700 girls involves either a local NGO preferably the village itself or
have completed their courses at the centre. While most panchayat members not only during execution but also
of the trainees have been placed in the garment for sustaining them in the future.
industry, a number of girls are also self-employed in their
respective village and neighboring towns. On an In Projects like Hygiene, Sanitation, Safe Drinking Water,
average, their earnings range from Rs. 6000-7000 per Local Government Representatives such as Block
month. Development Officers are also involved for Govt.
funding & Technical knowhow of the projects.
Healthcare:
A number of tree planting initiatives were also carried
Healthcare outreach is an important cog in out in government schools located in surrounding
Hero Honda's social outreach matrix, and during the villages, along with maintenance activities like repairing
year, the company organised three cataract surgery roofs and boundary walls.
camps, three heart check up camps, eleven mental
46/47
SO WHAT REALLY IS THE TRUE
MEASURE?
OF OUR
SUCCESS?
OUR
RELATIONSHIPS
50/51
A N N U A L R E P O R T 0 8 - 0 9
Principal Bankers Registrar & Share Transfer Agents Market capitalisation 10,943 17,781 13,753 13,869 21,390
ABN Amro Bank N.V. Karvy Computershare Pvt. Ltd. EVA 564 641 485 575 835
Bank of America NT & SA Plot No. 17-24, Vithalrao Nagar,
Canara Bank Madhapur, Hyderabad 500 081
Citibank N.A. Tel.: 040-2342 0815-820 Key Ratios
HDFC Bank Limited Fax : 040-2342 0814
HSBC Limited Email: mailmanager@karvy.com
ICICI Bank Limited Particulars 2004-05 2005-06 2006-07 2007-08 2008-09
Dharuhera Plant
Punjab National Bank Long term debt/Equity Nil Nil Nil Nil Nil
69 KM Stone,
Standard Chartered Bank
Delhi-Jaipur Highway, OPBDIT*/Income from operations-% 16.0 16.0 12.2 13.3 14.2
The Bank of Tokyo-Mitsubishi UFJ Limited
Dharuhera, Distt. Rewari, OPBT**/Income from operations-% 14.8 14.6 10.8 11.8 12.7
Cost Auditors Haryana 122 100, India
Ramanath Iyer & Co. Tel.: 01274-264 012-15 Profit after tax/ Income from operations-% 10.9 11.1 8.6 9.3 10.4
Cost Accountants, Fax : 01274-267 024 Return on average equity- % 61.6 55.5 38.3 35.5 37.8
BL-4 (Paschmi), Shalimar Bagh
Gurgaon Plant Return on average capital employed- % 80.9 72.3 51.6 49.0 50.9
Delhi 110 088
37 KM Stone, EVA/Capital employed-% 37.5 32.9 20.1 20.0 23.9
Tel. : 011-2748 1904, 4702 8048
Delhi-Jaipur Highway,
Email: arrricon@gmail.com Dividend per share (Rs.) 20.0 20.0 17.0 19.0 20.0
Sector 33, Gurgaon,
Technical & Financial Collaborator Haryana 122 001, India Dividend Payout- % 56.3 46.9 46.3 45.9 36.5
Honda Motor Co., Ltd., Tel.: 0124-2372 123-134
Earning per share (Rs.) 40.6 48.6 43.0 48.5 64.2
1-1, 2 - Chome, Fax : 0124-2373 141-142
Minami - Aoyama Market value/book value (times) 7.3 8.8 5.6 4.6 5.6
Haridwar Plant
Minato-ku,
Plot No. 3 Sector-10,
Tokyo 107-8556, Japan
I.I.E. SIDCUL, Notes:
www.world.honda.com
Roshanabad, Haridwar 248 001
* OPBDIT: Operating Profit before Depreciation, Interest and Tax
Uttrakhand
Tel.: 01334-239 513 ** OPBT: PBT before Other income
Fax : 01334-239 512
52/53
A N N U A L R E P O R T 0 8 - 0 9
54/55
A N N U A L R E P O R T 0 8 - 0 9
BUSINESS PERFORMANCE MATERIAL CHANGES AND COMMITMENTS ended March 31, 2009, the applicable accounting standards Certificate on its compliance is annexed hereto as Annexure - I.
have been followed;
During the year under review your Company, despite a No material changes and commitments affecting the financial INTERNAL CONTROL SYSTEMS
slowdown in the two wheeler industry, achieved the 11.53 per position of the Company have occurred between April 1, 2009 2. that appropriate accounting policies have been selected and
Hero Honda has a proper and adequate system of internal
cent growth in annual sales by clocking the sales volume of and the date on which this Report has been signed. applied consistently and judgments and estimates that are
controls. This ensures that all assets are safeguarded and
3,722,000 units compared to 3,337,142 units in 2007-08. In reasonable and prudent have been made so as to give a true
BOARD OF DIRECTORS protected against loss from unauthorised use or disposition and
value terms total sales (net of excise duty) increased by 19.2 per and fair view of the State of Affairs as at March 31, 2009 and
those transactions are authorised, recorded and reported
cent to Rs.12,319 crores from Rs.10,332 crores in 2007-08. Your During the period under review, Mr. Satoshi Matsuzawa was of the Profit of the Company for the financial year ended
correctly.
Company consolidated its leadership position in domestic motor appointed as an alternate Director to Mr. Takashi Nagai w.e.f. March 31, 2009;
cycle market with 57 percent market share. The Company April 24, 2008. Mr. Yutaka Kudo, Whole-time Director of the An extensive programme of internal audits and management
3. that proper and sufficient care has been taken for the
successfully launched eight new models including variants Company resigned from both the offices i.e. Director & Whole- reviews supplement the process of internal control. Properly
maintenance of adequate accounting records in accordance
during the year under review. time Director w.e.f. May 31, 2008. Mr Sumihisa Fukuda was documented policies, guidelines and procedures are laid down
with the provisions of the Companies Act, 1956 for
appointed as an Additional and Technical Director in the Whole- for this purpose. The internal control system has been designed
On the financial front, total income of the Company grew by safeguarding the assets of the Company and for preventing
time employment of the Company in his stead on June 1, 2008. to ensure that the financial and other records are reliable for
19.2 per cent from Rs. 10,517 crores in previous year to and detecting fraud and other irregularities;
Mr. Meleveetil Damodaran was appointed as an Additional preparing financial and other statements and for maintaining
Rs. 12,540 crores during 2008-09. The Company posted a Profit
Director in the Non-Executive and Independent Category w.e.f. 4. that the annual accounts for the year ended March 31, 2009 accountability of assets.
after tax (PAT) of Rs. 1,282 crores, compared to Rs. 968 crores in
June 16, 2008 and Mr. N.N.Vohra resigned from the Board w.e.f. have been prepared on a going concern basis.
the previous fiscal, a growth of 32 per cent. The Company's The Company also has an Audit Committee, comprising three
June 24, 2008 on his being appointed as Governor of the state of
earnings before interest depreciation and taxes (EBITDA) margins MANAGEMENT DISCUSSION & ANALYSIS Independent, Non-Executive and professionally qualified
Jammu & Kashmir. Mr. Arun Nath Maira was appointed as an
increased from 13.33 per cent in 2007-08 to 14.16 per cent in Directors, who interact with the Statutory Auditors, Internal
Additional Director w.e.f. December 20, 2008. Since he has been A detailed chapter on, 'Management Discussion and Analysis'
2008-09. The improvements on the margins was accomplished Auditors, Cost Auditors and Auditees in dealing with matters
appointed as member of Planning Commission, he resigned (MDA), pursuant to Clause 49 of the Listing Agreement is
through better sales realizations, effective cost rationalisation within its terms of reference. The Committee mainly deals with
from the Board of the Directors on July 23, 2009. The members annexed and forms part of this Report.
measures which included better control over material cost, accounting matters, financial reporting and internal controls.
while congratulating Mr. Maira, has accepted his resignation in
marketing cost and overheads, apart from sharp focus on CORPORATE SOCIAL RESPONSIBILITY During the year under review, the Committee met seven times.
the Meeting of Board of Directors held on July 29, 2009.
operational efficiencies.
Mr. Sunil Bharti Mittal resigned from the Directorship on April 21, At Hero Honda, Corporate Social Responsibility (CSR) AUDIT COMMITTEE RECOMMENDATION
During the year, Hero Honda also retained for the eighth year in a 2009. encompasses much more than social outreach programs and is
During the year there was no such recommendation of the Audit
row, its position as the World's Number One Two Wheeler an integral part of the way the Company conducts its business.
The Board places on record its sincere appreciation and gratitude Committee which was not accepted by the Board. Hence, there
Company. Detailed information on the initiatives of the Company towards
for the guidance and work put in by the out going members, and is no need for the disclosure of the same in this Report.
CSR activities is provided in the Social Responsibility section of
A detailed discussion on the business performance and future wishes them a rewarding and satisfying career ahead. The
the MDA. RISK MANAGEMENT SYSTEM
outlook has been given in the chapter on Management Directors also welcome the new members on the Board and
Discussion & Analysis. wishes them a successful and fruitful tenure with the Company. CORPORATE GOVERNANCE Your Company follows a comprehensive system of Risk
Management. Your Company has adopted a procedure for risk
DIVIDEND At the ensuing Annual General Meeting, Gen. (Retd.) V.P. Malik, At Hero Honda, it is our firm belief that the essence of Corporate
assessment and its minimization. It ensures that all the Risks are
Mr. Brijmohan Lall Munjal, Mr. Sunil Kant Munjal and Mr. Takashi Governance lies in the phrase 'Your Company'. It is 'Your'
Very few manufacturing companies in the Indian corporate timely defined and mitigated in accordance with the well
Nagai will retire by rotation and being eligible, offer themselves Company because it belongs to you – the shareholders. The
sector have a better dividend payout record than Hero Honda. structured Risk Management Process. The Audit Committee and
for re-appointment in terms of provisions of Articles of Chairman and Directors are 'Your' fiduciaries and trustees. Their
We are pleased to recommend a Dividend of 1000 per cent i.e. Board reviews periodically the Risk Management Process.
Association of the Company. The brief resume/details of the objective is to take the business forward in such a way that it
Rs. 20 per equity share of Rs. 2 aggregating to Rs. 399.38 crores
Directors, who are to be re-appointed has been furnished after maximises 'Your' long-term value. RATINGS
(exclusive of corporate dividend tax) for your approval for the
the notes to the Notice of the ensuing Annual General Meeting.
financial year ended March 31, 2009. The dividend, if approved, Your Company is committed to benchmark itself with global The rating agency ICRA Limited, has reviewed and reaffirmed the
will be paid to the eligible members well within the stipulated Your Directors recommend their re-appointment at the ensuing standards for providing good Corporate Governance and has rating assigned to the Company for its Non-convertible
period. Annual General Meeting. put in place an effective Corporate Governance System which Debenture Programme as LAAA [pronounced “L triple A”]
ensures that the provisions of Clause 49 of the Listing Agreement indicating the highest credit quality and A1+ [pronounced “A
Our dividend policy is in line with our strong and consistent belief DIRECTORS' RESPONSIBILITY STATEMENT
are duly complied with. one Plus”] for its Non-fund based facilities and LAAA
that if funds are not re-invested for capital investments, they
To the best of their knowledge and belief and according to the [pronounced “L triple A”] to Fund based facilities indicating the
should be optimally distributed to shareholders. The Board has also evolved and adopted a Code of Conduct
information and explanations obtained by them, your Directors highest credit quality rating carrying lowest credit risk.
based on the principles of Good Corporate Governance and best
TRANSFER TO GENERAL RESERVE make the following statement in terms of Section 217(2AA) of
management practices being followed globally. The Code is The rating agency CRISIL, during the year under review assigned
the Companies Act, 1956:
A sum of Rs. 129 crores have been transferred to the General available on the website of the Company www.herohonda.com. the bank loan ratings of “AAA/Stable” and P1+ to the Cash Credit
Reserve of the Company. This reaffirms the inherent financial 1. that in the preparation of the annual accounts for the year A report on Corporate Governance along with the Auditors' Limit & Letter of Credit Limit facility respectively to your Company.
strength of the Company.
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A N N U A L R E P O R T 0 8 - 0 9
FIXED DEPOSITS Your Directors place on record their appreciation for the ANNEXURE - I TO DIRECTORS' REPORT We believe that the essence of Corporate Governance lies in the
significant contribution made by all employees, who through phrase “Your Company”. It is “Your” Company because it
During the year under review, the Company has not accepted CORPORATE GOVERNANCE REPORT
their competence, dedication, hard work, co-operation and belongs to you – the shareholders. The Chairman and Directors
any deposit under Section 58A and 58AA of the Companies Act,
support have enabled the Company to cross new milestones on a Philosophy on 'Code of Corporate Governance' are “Your” fiduciaries and trustees. Their objective is to take the
1956 read with the Companies (Acceptance of Deposits) Rules,
continual basis. business forward to maximise “Your” long-term value.
1975. Hero Honda's philosophy of Corporate Governance stems from
A detailed note is given in the chapter “People and a belief that the Company's business strategy and plans should The Securities and Exchange Board of India (SEBI) has specified
AUDITORS
Environment” of MDA, which forms part of this Annual Report. be consistent with the welfare of all its stakeholders, including certain mandatory governance practices, which are incorporated
M/s. A. F. Ferguson & Co., Chartered Accountants, New Delhi, shareholders. Good Corporate Governance practices enable a in Clause 49 of the Listing Agreement of Stock Exchanges.
PARTICULARS OF EMPLOYEES
Auditors of the Company will retire at the conclusion of the Company to attract financial and human capital. In turn, these Hero Honda is committed to benchmarking itself with the best
ensuing Annual General Meeting and being eligible, offer Information of Particulars of Employees as required under resources are leveraged to maximize long-term shareholder standards of Corporate Governance, not only in form but also in
themselves for re-appointment. The Company has received a Section 217(2A) of the Companies Act, 1956 read with the value, while preserving the interests of multiple stakeholders, spirit. This section, along with the section on 'Management
certificate from the auditors to the effect that their Companies (Particulars of Employees) Rules, 1975 forms an including society at large. Discussion & Analysis' and 'General Shareholder's Information'
re-appointment, if made, would be in accordance with Section integral part of this Report. As per the provisions of Section
Corporate Governance rests upon the four pillars of: constitute Hero Honda's compliance with the Clause 49 of the
224(1B) of the Companies Act, 1956. 219(1) (b) (iv) of the Companies Act, 1956, the Report and
transparency, full disclosure, independent monitoring and Listing Agreement of Stock Exchanges.
Accounts are being sent to the shareholders of the Company
The Board recommends their re-appointment. fairness to all, especially to minority shareholders. Hero Honda
excluding the statement of particulars of employees under BOARD OF DIRECTORS
AUDITORS' REPORT Section 217(2A) of the Companies Act, 1956. Any shareholder has always strived to promote Good Governance practices,
which ensure that: Composition of the Board
interested in obtaining a copy of such statement may write to the
The observations of Auditors in their Report, read with the
Sr. G.M. Legal & Company Secretary at the Registered Office of • A competent management team is at the helm of affairs; As on March 31, 2009, the Company's Board of Directors
relevant notes to accounts are self explanatory and therefore do
the Company. comprised of Sixteen Directors. Four Directors, including the
not require further explanation. • The Board is strong with an optimum combination of Chairman, are Executive; four are Non-Executive and eight are
ACKNOWLEDGEMENT Executive and Non-Executive (including Independent)
COST AUDITORS Non-Executive and Independent. Fifty per cent of the Board
It is our strong belief that caring for our business constituents has Directors, who represent the interest of all stakeholders; consists of Independent Directors, therefore the composition of
The Board has re-appointed M/s. Ramanath Iyer & Co., Cost
ensured our success in the past and will do so in future. Your • The Board is effective in monitoring and controlling the the Board is in consonance with the Clause 49. Details of the
Accountants, New Delhi, as the Cost Auditors of the Company
Directors acknowledge with sincere gratitude the co-operation Company's affairs; composition of the Board, number of meetings held during their
under Section 233B of the Companies Act, 1956 for the financial
and assistance extended by the Central Government, State tenure and attended by them etc., are given in Table 1.
year 2009-10 and necessary application for obtaining the • The Board is concerned about the Company's shareholders; and
Government(s), Financial Institution(s), Bank(s), Customers,
requisite approval has been filed with the Government. The Cost
Dealers, Vendors and Ancillary Undertakings. The Directors also • The Management and Employees have a stable environment.
Auditors' Report for 2008-09 will be forwarded to the Central
place on record their appreciation for the valuable assistance and
Government in pursuance of the provisions of the Companies
guidance extended to the Company by Hero Cycles Ltd. and
Act, 1956.
Honda Motor Co., Ltd., Japan and for the encouragement and
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, assurance, which our collaborator has given for the growth and
FOREIGN EXCHANGE EARNINGS AND OUTGO development of the Company.
Information required under Section 217(1)(e) of the Companies The Board, also takes this opportunity to express its deep
Act, 1956, read with Companies (Disclosure of Particulars in the gratitude for the continued co-operation and support received
Report of the Board of Directors) Rules, 1988 is given as per from its valued shareholders.
Annexure - II and forms an integral part of this Report.
For and on behalf of the Board
LISTING
The shares of your Company are presently listed on Bombay
Stock Exchange Limited (BSE) and National Stock Exchange of
India Limited (NSE). The delisting application, was in-principle Brijmohan Lall
approved by the Committee of the Calcutta Stock Exchange Chairman
Association Limited, the formal approval is awaited and is
New Delhi
expected to be received in due course of time.
July 29, 2009
PERSONNEL
As on March 31, 2009 the total number of employees on the
records of the Company was 4513.
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A N N U A L R E P O R T 0 8 - 0 9
TABLE 1: DETAILS ABOUT COMPANY'S BOARD OF DIRECTORS / ATTENDANCE RECORD DURING FINANCIAL YEAR 2008-09 The longest gap between any two Board Meetings was for a Apart from the above, none of the Non-Executive (including
period of 3 months and 4 days. Independent) Directors hold any shares (as own or on behalf of
Number of Board Attendance at Number of Committee Number of Committee Number of outside
Meetings held during last AGM Memberships Chairmanships held Directorships held other person on beneficial basis) in the Company.
Directors' Attendance Record and Directorships /
his/her tenure and (including Chairman Committee Memberships Information Supplied to the Board
Name of Director attended by him/her ships) held
Held Attended (excluding Private Companies, Foreign Companies and Details are given in Table 1. Board members are given agenda papers along with necessary
Section 25 Companies) documents and information in advance of each meeting of the
As per Clause 49 of the Listing Agreement entered into with the
Executive Directors Board and Committee(s). However, in case of business exigencies
Stock Exchange(s), an Independent Director means a Non-
or urgencies, the resolutions are passed by way of circulation. In
Mr. Brijmohan Lall Munjal 4 4 Yes None None 9 Executive Director who;
addition to the regular business items, the following items /
Mr. Pawan Munjal 4 4 Yes None None 2 • apart from receiving director's remuneration, does not have
Mr. Toshiaki Nakagawa 4 4 Yes None None 1 information are regularly placed before the Board to the extent
any material pecuniary relationships or transactions with the applicable:
Mr. Yutaka Kudo2 1 1 N.A. None None 1
Mr. Sumihisa Fukuda3 3 3 Yes None None 1 Company, its promoters, its directors, its senior management,
its holding Company, its subsidiaries or associates which may • Annual operating plans and Budgets, Capital budgets and
affect independence of the director; updates;
Non-Executive Directors
Mr. Om Prakash Munjal 4 Nil No None None 10 • is not related to promoters or persons occupying management • Purchase and disposal of major fixed assets;
Mr. Sunil Kant Munjal 4 4 Yes None None 14
positions at the board level or at one level below the board;
Mr. Masahiro Takedagawa 4 Nil No 1 None 2 • Quarterly and half yearly results of the Company;
Mr. Satoshi Matsuzawa1 4 4 No None None None • has not been an executive of the company in the immediately
• Minutes of the Audit Committee, Shareholders' Grievance
preceding three financial years;
Non-Executive and Committee, Remuneration Committee and Committee of
• is not a partner or an executive of the statutory audit firm or Director's meetings;
Independent Directors
Mr. Narinder Nath Vohra4 1 1 N.A. 2 1 1 the internal audit firm that is associated with the company and
has not been a partner or an executive of any such firm for the • Information on recruitment and remuneration of senior
Mr. Pradeep Dinodia 4 4 Yes 8 4 8
Gen. (Retd.) V.P. Malik 4 4 Yes 4 None 3 last three years and the legal firm(s) and consulting firm(s) that management just below the Board level including
Mr. Analjit Singh 4 2 No None None 13 have a material association with the entity; appointment or removal of CFO and Company Secretary;
Dr. Pritam Singh 4 4 No 3 None 5
• is not a material supplier, service provider or customer or a • Any material defaults in financial obligations to and by the
Ms. Shobhana Bhartia 4 1 No 2 2 14
Mr. Sunil Bharti Mittal 4 1 No 2 2 7 lessor or lessee of the company, which may affect Company, or substantial non-payments for goods sold by the
Mr. Meleveetil Damodaran5 3 2 No None None 3 independence of the Director; Company;
Mr. Arun Nath Maira6 1 1 N.A. 1 1 5 • is not a substantial shareholder of the Company i.e. owning • Fatal or serious accidents, dangerous occurrences, any
Notes: two percent or more of the block of voting shares; material effluent or pollution problems;
1. Mr. Satoshi Matsuzawa was appointed as an Alternate Director to Mr. Takashi Nagai w.e.f. April 24, 2008. • is not less than 21 years of age.
• Transactions that involve substantial payment towards
2. Mr. Yutaka Kudo resigned from the Directorship and Whole-time Directorship on May 31, 2008. None of the Director on the Board holds the office of Director in goodwill, brand equity or intellectual property;
more than 15 companies nor are they members in Committees
3. Mr. Sumihisa Fukuda was appointed as an Additional Director and Technical Director in the Whole-time employment of the Company • Materially important show cause, demand, prosecution and
w.e.f. June 1, 2008. of the Board in more than 10 Committees or Chairman of more
penalty notices;
than 5 Committees. Further, there are no pecuniary relationships
4. Mr. Narinder Nath Vohra resigned from the Directorship on June 24, 2008. or transactions between the Independent Directors and the • Details of quarterly foreign exchange exposures and steps
5. Mr. Meleveetil Damodaran was appointed as an Additional Director on the Board w.e.f. June 16, 2008. Company, except for the sitting fees drawn by the Non-executive taken by the management to limit the risks of adverse
Directors and sitting fees and commission drawn by the exchange rate movement;
6. Mr. Arun Nath Maira was appointed as an Additional Director on the Board w.e.f. December 20, 2008.
Non-executive and Independent Directors for attending the • Sale of material nature, of investments and assets, which are
meeting of the Board and its Committee(s) thereof. not in the normal course of business;
Four Directors namely Mr. Brijmohan Lall Munjal (Executive (Non-Executive Director) and Mr. Takashi Nagai (Non-Executive
Chairman in the Whole-time employment of the Company), Director) are nominees of Honda Motor Co., Ltd., Japan, which Shareholding of Non-Executive Directors • Details of Joint Ventures and Agreements or variations
Mr. Pawan Munjal (Managing Director & CEO), Mr. Om Prakash too, owns 26 per cent equity in the Company. Apart from these,
Name of the Director Category No. of thereof;
Munjal (Non-Executive Director) and Mr. Sunil Kant Munjal (Non- the rest of the Board comprises of Non-Executive and
Executive Director) belong to the promoter family of the Hero Independent Directors. shares held • Quarterly Statutory Compliance Report;
Group, which owns 26 per cent equity in the Company. Four Mr. Om Prakash Munjal Non-Executive Director 25,000 • Non-compliance of any regulatory, statutory nature or listing
Board Meetings
Directors namely Mr. Toshiaki Nakagawa (Joint Managing requirements and shareholder's service such as
Mr. Sunil Kant Munjal Non-Executive Director 32,500
Director), Mr. Sumihisa Fukuda (Technical Director in the Whole- During 2008-09, the Board of Directors met 4 (four) times on April non-payment of dividend, delay in share transfer etc.;
time employment of the Company), Mr. Masahiro Takedagawa 24, 2008; July 29, 2008; October 21, 2008 and January 20, 2009.
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• Investments strategy / plan; the Committee have adequate knowledge in the field of finance, • Looking TABLE 3: DETAILS OF THE REMUNERATION COMMITTEE
accounting, and law. The role and "terms of reference" of the
• Any issue which involves possible public or product liability - into the reasons for substantial defaults in the payments to Name of Committee Position No. of No. of
Audit Committee includes the following:
claims of substantial nature, including any judgment or order the Shareholders (in the case of non-payment of declared member held meetings meetings
which may have passed strictures on the conduct of the • Overseeing dividends) and creditors. held during attended
Company or taken an adverse view regarding another - the Company's financial reporting process and disclosure of his tenure
The Sr. Vice President & CFO, Internal Auditors, Statutory
enterprise that can have negative implications on the its financial information to ensure that the financial Auditors and Cost Auditors attend the meetings of the Gen. (Retd.) V.P.Malik Chairman 2 2
Company; and statements are correct, sufficient and credible. Committee on the invitation of the Chairman. Mr. Ilam
• Significant labour problems and their proposed solutions. Mr. Pradeep Dinodia Member 2 2
• Recommending C. Kamboj, Sr. G.M. Legal & Company Secretary acts as the
Also, any significant development in Human Resources / Secretary of the Committee. Mr. N.N.Vohra1 Member 1 1
Industrial Relations front like signing of Wage Agreement, - the appointment, re-appointment, replacement and
removal of the statutory auditor, fixation of audit fees and During the year, 7 (Seven) meetings of the Audit Committee 1. Mr. Narinder Nath Vohra has resigned from the Directorship
implementation of Voluntary Retirement Schemes etc.
approving payments for any other services. were held on April 07, 2008; April 24, 2008; June 02, 2008; July on June 24, 2008.
Code of Conduct 29, 2008; October 21, 2008; January 08, 2009 and January 20,
• Reviewing Remuneration Policy
We at Hero Honda have laid down a code of conduct for all Board 2009 in due compliance with the stipulated provisions. The
members and senior management of the Company. The code of - the annual financial statements with the management with attendance record of members of the Audit Committee is given Remuneration paid to Executive Director
conduct is available on the website of the Company i.e. primary focus on matters required to be included in the in Table 2. The remuneration paid to Executive Directors is recommended
www.herohonda.com. The code has been circulated to all the Directors' Responsibility Statement, changes, if any in by the Remuneration Committee and approved by the Board of
TABLE 2: DETAILS OF THE AUDIT COMMITTEE
members of the Board and senior management and they have accounting policies and practices and reasons thereof, Directors, in the Board meeting, subject to the subsequent
affirmed compliance with the code of conduct. A declaration compliance with accounting standards and guidelines of Name of Committee Position No. of No. of approval by the shareholders at the general meeting and such
signed by the Chief Executive Officer (CEO) and Chief Financial stock exchange(s), major accounting entries, qualifications member held meetings meetings other authorities, as the case may be.
Officer (CFO) to this effect is attached to the Annual Report. in draft audit reports, related party transactions & the going held during attended
concern assumption. At the Board meeting, only the Non-Executive and Independent
his tenure
Risk Management Directors participate in approving the remuneration paid to the
- the quarterly financial statements with the management Mr. Pradeep Dinodia Chairman 7 7 Executive Directors. The remuneration is fixed considering
We at Hero Honda have established effective risk assessment and before submission to the board for approval. various factors such as qualification, experience, expertise,
minimization procedures, which are reviewed by the Board Gen. (Retd.) V.P.Malik Member 7 7
- the adequacy of internal control systems and the internal prevailing remuneration in the corporate world and the financial
periodically. There is a structure in place to identify and mitigate
audit function and reviewing the Company's financial and Dr. Pritam Singh Member 7 5 position of the Company. The remuneration structure comprises
various risks faced by the Company from time to time.
risk management policies. of Basic Salary, Commission, Perquisites and allowances,
Mr. N.N.Vohra1 Member 3 2
BOARD LEVEL COMMITTEES Contribution to provident fund and other funds. Besides these, a
- the findings of any internal investigations by the internal
fixed commission @ 1 per cent of net profit computed in
AUDIT COMMITTEE auditors into matters where there is suspected fraud or 1. Mr. Narinder Nath Vohra has resigned from the Directorship
accordance with Section 198 of the Companies Act, 1956, is
irregularity or a failure of internal control systems of a on June 24, 2008.
The genesis of Hero Honda's Audit Committee can be traced paid as per the terms of appointment.
back to the Audit Sub-Committee, constituted in 1987. Since material nature and reporting the matter to the Board.
REMUNERATION COMMITTEE
As of now, the Company does not have any Employee Stock
then it has been dealing with matters prescribed by the Board of - the reports furnished by the internal auditors, discussion
The Company had set up a Remuneration Committee on Options Plans (ESOPs). Term of appointment of Executive
Directors on a case to case basis. In general, the primary with internal auditors on any significant findings and
January 16, 2001 to review and recommend the payment of Directors is 5 (five) years. Further, no notice period and severance
role/objective of the Audit Committee is to review the financial ensuring suitable follow up thereon.
annual salaries, commission and finalise service agreements and fee is applicable for the above-mentioned Executive Directors.
statements of the Company, strengthen internal controls & look
- Directors' overseas traveling expenses; and other employment conditions of Executive Directors. The Remuneration paid to Non-Executive Directors
into all transactions that have monetary implications on the
- Foreign exchange exposure. Committee takes into consideration the best remuneration
functioning of the Company. The nomenclature, constitution The Non-Executive Directors of the Company are paid sitting fees
practices being followed in the industry while fixing appropriate
and terms of reference of the Committee were revised on • Complying of Rs.16,500 for each meeting of the Board, Audit Committee,
remuneration packages.
January 16, 2001 and an Audit Committee was set up as per the Remuneration Committee and Shareholders' Grievance
- with the provisions of listing agreement laid down by the
provisions of the Section 292A of the Companies Act, 1956 and As on March 31, 2009, the Committee had two Non-Executive Committee attended by them.
Stock Exchange(s) and legal requirements concerning
clause 49 of the Listing Agreement of the Stock Exchange(s). and Independent Directors as its members in accordance with
financial statements. However, in addition to the sitting fees, Non-Executive and
the prescribed guidelines. Gen. (Retd.) V.P. Malik, is the
As on March 31, 2009, the Committee had three Non-Executive Independent Directors shall be entitled to remuneration by way
• Discussing Chairman of the Committee and Mr. Pradeep Dinodia is the
and Independent Directors in accordance with the prescribed of commission upto 0.10 per cent of profits of the Company.
member of the Committee. Mr Ilam C. Kamboj, Sr. G.M. Legal &
guidelines. Mr. Pradeep Dinodia, a leading Chartered - with external auditors before the audit commences, of the Tables 4 and 5 gives details of remuneration paid to Directors.
Company Secretary acts as the Secretary of the Committee.
Accountant, is the Chairman of the Committee. The other nature and scope of audit. Also post audit discussion to During 2008-09, the Company did not advance any loans to any
members are Dr. Pritam Singh and Gen.(Retd.) V.P. Malik, all ascertain any area of concern. During the year, 2 (two) meetings of the Remuneration of its Directors.
learned personalities in their respective fields. The members of Committee were held on May 12, 2008 and December 2, 2008.
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A N N U A L R E P O R T 0 8 - 0 9
TABLE 4: REMUNERATION TO EXECUTIVE DIRECTORS SHAREHOLDERS' GRIEVANCE COMMITTEE comprised of Mr. Brijmohan Lall Munjal, Chairman; Mr. Pawan
Munjal, Managing Director & CEO; Mr. Toshiaki Nakagawa, Joint
Executive Directors Salary* (Rs.) Commission (Fixed) ** (Rs.) Total (Rs.) This Committee, constituted on January 16, 2001, specifically
Managing Director; Mr. Sumihisa Fukuda, Technical Director in
looks to redress shareholders' and investors' grievances arising
Mr. Brijmohan Lall Munjal 11,828,384.00 186,100,000.00 197,928,384.00 the whole-time employment of the Company; Mr. Ravi Sud, Sr.
out of issues regarding share transfers, dividends,
Vice President & CFO and Mr. Ilam C. Kamboj, Sr. G.M. Legal &
Mr. Pawan Munjal 10,767,535.95 186,100,000.00 196,867,535.95 dematerialisation and related matters.
Company Secretary as its members.
Mr. Toshiaki Nakagawa 4,721,406.00 186,100,000.00 190,821,406.00 As on March 31, 2009, the Committee had two Non-Executive
Constituted in 1985, the Committee deals with matters
1 and Independent Directors as its members in accordance with
Mr. Yutaka Kudo 919,221.00 30,591,780.00 31,511,001.00 delegated by the Board from time to time.
the prescribed guidelines. Dr. Pritam Singh is the Chairman of the
Mr. Sumihisa Fukuda2 3,143,210.00 154,998,356.00 158,141,566.00 Committee. The other member of the Committee is Mr. Pradeep This Committee meets whenever required. During the year
Dinodia. Mr Ilam C. Kamboj, Sr. G.M. Legal & Company under review 2 (two) meetings of the Committee were held.
Notes:
Secretary, acts as the Secretary of the Committee.
SHARE TRANSFER COMMITTEE
1. Mr. Yutaka Kudo resigned from the Directorship and Whole-time Directorship on May 31, 2008.
The Company has an efficient system of dealing with investors'
2. Mr. Sumihisa Fukuda was appointed as an Additional Director and Technical Director in the whole-time employment of the Company This Committee was constituted on January 31, 2007 as a
grievances. The Chairman and the Managing Director & CEO of
w.e.f. June 1, 2008. measure of Good Corporate Governance practice and to
the Company take personal interest in all matters of concern for
streamline the work related to share transfer etc. which was
* Salary includes Basic Salary, Perquisites and allowances, Contribution to provident and other funds. investors as and when necessary. The Company Secretary being
earlier approved by the Committee of Directors. Mr. Ravi Sud,
the Compliance Officer carefully looks into each issue and
** Total Commission is calculated @ 1% of the net profit calculated in accordance with Section 198 of the Companies Act, 1956. Sr. Vice President & CFO and Mr. Ilam C. Kamboj , Sr. G.M. Legal
reports the same to the Shareholders' Grievance Committee. In
& Company Secretary are its members.
the meetings of the Committee the status of all shareholders'
TABLE 5: REMUNERATION TO NON-EXECUTIVE DIRECTORS complaints, requests, queries etc. along with letters received This Committee usually meets whenever required. During the
Non-Executive Directors Sitting fees (Rs.) Commission (Rs.) Total (Rs.) from all statutory authorities were reviewed. year under review 15 (fifteen) meetings of the Committee were
held.
Mr. Sunil Kant Munjal 66,000 N.A. 66,000 During the year, 4 (four) meetings of the Shareholders' Grievance
Committee were held on April 24, 2008; July 29, 2008; October DISCLOSURES
Mr. Pradeep Dinodia 2,80,500 10,25,000 13,05,500 21, 2008 and January 20, 2009.
Related Party Transactions
Mr. Satoshi Matsuzawa1 Nil# N.A. Nil Details of shareholders complaints and their status are given in
The Company follows the following policy in disclosing the
Mr. Meleveetil Damodaran2 33,000 1,00,000 1,33,000 the section on "General Shareholder's Information". The
related party transactions to the Audit Committee:
attendance record of members of the Shareholders' Grievance
Mr. Narinder Nath Vohra3 82,500 3,25,000 4,07,500 Committee is given in Table 6. a) A Statement in the Summary form of transactions with
Gen.(Retd.) V.P. Malik 2,14,500 7,25,000 9,39,500 related parties in the ordinary course of business is placed
TABLE 6: DETAILS OF SHAREHOLDERS' GRIEVANCE COMMITTEE
periodically before the Audit Committee.
Dr. Pritam Singh 2,14,500 7,00,000 9,14,500 Name of Committee Position No. of No. of
b) There are no material individual transactions with related
Mr. Analjit Singh 33,000 1,00,000 1,33,000 member held meetings meetings
parties, which are not in the normal course of business and
held during attended
Mr. Arun Nath Maira4 16,500 50,000 66,500 which are not on an arm's length basis.
his tenure
Ms. Shobhana Bhartia 16,500 1,00,000 1,16,500 Disclosures on materially significant related party
Mr. N.N. Vohra1 Chairman 1 1
transactions that may have potential conflict with the
Mr. Sunil Bharti Mittal Nil# N.A. Nil interest of the company at large.
Dr. Pritam Singh2 Chairman 4 4
#
Mr. Masahiro Takedagawa Nil N.A. Nil Mr. Pradeep Dinodia Member 4 4 There are no materially significant transactions made by the
No sitting fee was paid to Mr. Om Prakash Munjal as he did not attend any of the meetings of the Board held during the financial Company with its promoters, Directors or Management or
1. Mr. Narinder Nath Vohra has resigned from the Directorship
year 2008-09. relatives etc. that may have potential conflict with the interest of
on June 24, 2008.
the Company at large.
# Mr. Sunil Bharti Mittal, Mr. Masahiro Takedagawa and Mr. Satoshi Matsuzawa (Alternate Director to Mr. Takashi Nagai), have
2. Dr. Pritam Singh was appointed as Chairman w.e.f. July 29,
opted not to receive sitting fees which were accrued to them on account of attending the meetings of the Board. Accounting Treatment in preparation of Financial
2008.
1. Mr. Satoshi Matsuzawa has been appointed as an Alternate Director to Mr. Takashi Nagai w.e.f. April 24, 2008. Statements
COMMITTEE OF DIRECTORS
2. Mr. Meleveetil Damodaran was appointed as an Additional Director on the Board w.e.f. June 16, 2008. The guidelines/accounting standards laid down by the Institute
Apart from these Committees, the Company also has a of Chartered Accountants of India (ICAI) have been followed in
3. Mr. Narinder Nath Vohra has resigned from the Directorship on June 24, 2008.
Committee of Directors. As on March 31, 2009, the Committee preparation of the financial statements of the Company.
4. Mr. Arun Nath Maira was appointed as an Additional Director on the Board w.e.f. December 20, 2008.
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A N N U A L R E P O R T 0 8 - 0 9
Compliances by the Company The Company's half yearly results (period ended September 30, GENERAL BODY MEETINGS
2008) and annual results (year ended March 31, 2009) have been
There has neither been any non-compliance of any legal Details of Annual General Meeting (AGM)
published in English, Hindi and other Regional newspapers (viz.
provision of applicable law nor any penalty, stricture imposed by
The Times of India, The Economic Times, Hindustan Times, Location, date and time of general meetings held during the last three years and Ordinary and Special resolutions passed thereat are
the stock exchanges or SEBI or any other authorities, on any
Financial Express, The Mint, Navbharat Times, Mumbai Mirror given in Table 7.
matters related to capital market during the last three years.
and Financial Times etc).
Insider Trading Pursuant to the provisions of Section 192A of the Companies Act, 1956, there was no matter as required to be dealt by the Company to be
Results for the quarter ended June 30, 2008 and December 31, passed through postal ballot.
In compliance with the SEBI regulation on prevention of insider 2008 have been published in English, Hindi and other Regional
trading, the Company has instituted a comprehensive code of newspapers (viz. The Economic Times, The Times of India, The TABLE 7: DETAILS OF AGM'S
conduct for its management, staff and relevant business Hindustan Times, Financial Times, Mumbai Mirror, Bangalore
associates. The code lays down guidelines, which advises them Mirror, Ahmedabad Mirror, Financial Express and Jansatta etc). Year Time, Day, Date & Location Summary of Resolutions Passed
on procedures to be followed and disclosures to be made, while Further, the Company's quarterly, half yearly results have also Ordinary Resolutions
2007-08 11:00 A.M.
dealing with shares of the Company and cautioning them on been sent to the individual shareholders of the Company. Results Thursday, • Appointment of Mr. Sumihisa Fukuda Director & as Technical Director in the
consequences of non-compliances. for each quarter, half year and annual results for the year ended September 25, 2008 Whole-time employment of the Company.
March 31, 2009 have been displayed on the Company's website Airforce Auditorium, • Appointment of Mr. Meleveetil Damodaran as Director.
CEO & CFO CERTIFICATION Subroto Park,
www.herohonda.com. The website also displays official news
Dhaula Kuan,
Certificate from Mr. Pawan Munjal, Managing Director & CEO releases and distribution schedule, as required by Clause 35 of New Delhi 110010
and Mr. Ravi Sud, Sr. Vice President & CFO in terms of Clause the Listing Agreement.
49(V) of the Listing Agreement for the year under review was
Moreover, pursuant to Clause 51 of the Listing Agreement, 2006-07 10:30 A.M. Ordinary Resolutions
placed before the Board of Directors of the Company in their
financial information like annual and quarterly financial Tuesday, • Appointment of Mr. Yutaka Kudo as Director and Whole-time Director.
meeting held on April 21, 2009. A copy of the same certificate on
statements and shareholding pattern etc. are available on the July 24, 2007, • Appointment of Mr. Takashi Nagai as Director.
the financial statements for the financial year ended March 31, Airforce Auditorium,
web-site www.corpfiling.com. The Company Secretary being
2009 and the Code of Conduct is given along with this Report. Subroto Park, Special Resolution
the Compliance Officer ensures the correctness and authenticity
Dhaula Kuan, • Payment of commission to Non-Executive Independent Director(s).
APPOINTMENT AND RE-APPOINTMENT OF DIRECTORS of the information filed in the said website. New Delhi 110010
Gen. (Retd.) V.P. Malik, Mr. Brijmohan Lall Munjal, Mr. Sunil Kant During the year ended March 31, 2009, various presentations
Munjal and Mr. Takashi Nagai, Directors of the Company, retire were made to analysts and Institutional investors. Further, the 2005-06 04:30 P.M. Ordinary Resolutions
by rotation at the ensuing Annual General Meeting (AGM) and Management Discussion & Analysis (MDA) Report, Thursday, • Appointment of Mr. Sunil Bharti Mittal as Director.
being eligible, offer themselves for re-appointment. throwing light on the operations, business performance, September 14, 2006, • Appointment of Mr. Toshiaki Nakagawa as Director and Joint Managing
financial and other important aspects of the Company's Airforce Auditorium, Director.
The brief resume of the said Directors proposed to be Subroto Park, • Appointment of Mr. Masahiro Takedagawa as Director.
functioning forms part of this Annual Report. Dhaula Kuan, • Re-appointment of Mr. Pawan Munjal as Managing Director.
re-appointed is being provided along with the Notice of the
AGM which is being sent along with the Annual Report. New Delhi 110010
Special Resolutions
MEANS OF COMMUNICATION • Re-appointment of Mr. Brijmohan Lall Munjal as Chairman and Director in the
Whole-time employment of the Company.
The Company has regularly sent, both by post as well as by fax • Keeping of Registers / Returns / Documents at the Registered Office.
(within 15 minutes of closure of the Board meeting) the annual
audited as well as quarterly un-audited results to both the Stock
exchanges, BSE & NSE, after they are taken on record by the
Board of Directors.
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A N N U A L R E P O R T 0 8 - 0 9
The Company's stock codes at the primary exchanges are: The Company's market capitalisation is included in the
Annual General Meeting
computation of the BSE -100, BSE- 200, BSE- 500, BSE Sectoral
Date: September 22, 2009 Stock Code Reuters Code Bloomberg Indices, S&P CNX Nifty, S&P CNX 500 and CNX 100. Monthly
high and low quotations as well as the volume of shares traded at
Day: Tuesday BSE 500182 HROH.BO HH IN the NSE & BSE is given in Table 8.
Time: 04:30 P.M.
NSE HEROHONDA HROH.NS NHH IN
Venue: Sri Satya Sai International Centre,
Pragati Vihar, Lodhi Road, New Delhi 110 003
TABLE 8: SHARE PRICE DATA FOR 2008-09 (IN RS.) (SHARES OF RS. 2 PAID UP VALUE)
Financial Calendar National Stock Exchange of India Limited, Mumbai (NSE)
Financial year: April 1 to March 31
Month Total High Date Volume on Low Date Volume on
Volume that date that date
For the year ended March 31, 2009 results were announced on:
First quarter ended June 30, 2008 July 29, 2008 Quantity (In Rs.) Quantity (In Rs.) Quantity
Second quarter and half year ended September 30, 2008 October 21, 2008 April'08 4655726 867.70 29-Apr-08 558930 694.00 01-Apr-08 269683
Third quarter ended December 31, 2008 January 20, 2009 May'08 4933922 865.00 02-May-08 342126 732.35 30-May-08 258499
Fourth quarter and year ended March 31, 2009 April 21, 2009 June'08 3963125 835.00 11-Jun-08 178037 663.00 25-Jun-08 218902
July'08 5792164 808.90 31-Jul-08 619127 632.50 16-Jul-08 183679
For the year ending March 31, 2010, results will be announced on: (Tentative and subject to change) August'08 5810646 848.00 05-Aug-08 642626 770.25 01-Aug-08 244947
First quarter ending June 30, 2009 July, 2009 (3rd week) September'08 10533296 890.00 04-Sep-08 618649 740.00 12-Sep-08 306664
Second quarter and half year ending September 30, 2009 October, 2009 (3rd week) October'08 12005090 898.00 03-Oct-08 751098 661.10 27-Oct-08 427550
Third quarter ending December 31, 2009 January, 2010 (3rd week) November'08 10086006 823.70 28-Nov-08 845901 691.25 21-Nov-08 685629
Fourth quarter and year ending March 31, 2010 April, 2010 (3rd week) December'08 9203005 842.80 19-Dec-08 550335 720.05 02-Dec-08 533848
January'09 8965518 890.00 29-Jan-09 601241 751.25 09-Jan-09 462178
February'09 8047182 999.60 10-Feb-09 431505 861.25 02-Feb-09 271465
Book closure 1. Bombay Stock Exchange Limited, (BSE) based at Phiroz
March'09 12605701 1103.85 27-Mar-09 934713 896.00 3-Mar-09 315750
Jeejeebhoy Towers, 25th Floor, Dalal Street, Mumbai
The dates of book closure are from Tuesday, September 1, 2009
400 001; &
to Friday, September 4, 2009 (both days inclusive). HERO HONDA'S SHARE PRICE MOVEMENT VIS A VIS NIFTY
2. National Stock Exchange of India Limited, (NSE) based at HHML VS NSE NIFTY (Monthly High)
Dividend payment
Exchange Plaza, Plot No. C/1, G Block, Bandra Kurla
The Board of Directors has recommended 1000 per cent Complex, Bandra East, Mumbai 400 051. HHML NIFTY
Nifty
4250.00
beneficial owners of the shares as on the closing hours of 4000.00
in-principal approval has been received after the grant of 950.00
business on Monday, August 31, 2009 as per details furnished by 3750.00
approval by the De-listing Committee of the CSE.
the Depositories for this purpose. 3500.00
850.00
Listing Fees 3250.00
Listing on Stock Exchange
3000.00
Listing fees for the year 2009-10 has been paid to the stock 750.00 2750.00
As on March 31, 2009, the securities of the Company are listed
exchanges, wherein the equity shares of the Company are listed Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
on the following exchanges:
(i.e. BSE & NSE) within the stipulated time. 2008-2009
68/69
A N N U A L R E P O R T 0 8 - 0 9
Month Total High Date Volume on Low Date Volume on Table 9 lists the distribution of Shareholding by number of shares held, Shareholding Pattern (pursuant to Clause 35 of the Listing
Agreement) and consolidated shareholding pattern in percentage as on March 31, 2009.
Volume that date that date
TABLE 9
Quantity (In Rs.) Quantity (In Rs.) Quantity
April'08 639777 864.90 30-Apr-08 113310 694.00 1-Apr- 08 60292 No. of shares held (Rs.2 paid up) Folios Shares of Rs. 2 paid up
May'08 334551 865.00 02-May-08 115328 725.00 26-May-08 21998 Numbers % Numbers %
June'08 224745 829.00 11-Jun-08 37777 665.00 25-Jun-08 70725 Upto 500 34092 77.93 3483765 1.74
July'08 862112 809.80 31-Jul-08 325055 630.15 16-Jul-08 44219 501 - 1000 7146 16.33 5413633 2.71
August'08 491203 880.00 25-Aug-08 22605 760.00 4-Aug-08 47831 1001-5000 1778 4.06 3532117 1.77
September'08 2589650 888.00 08-Sep-08 75124 786.05 18-Sep-08 79027 5001-10000 188 0.43 1352834 0.68
October'08 441782 894.80 03-Oct-08 58267 663.00 27-Oct-08 34734 10001-50000 275 0.63 6862665 3.44
November'08 533828 813.75 28-Nov-08 40467 690.00 21-Nov-08 82221 50001 and above 268 0.61 179042486 89.66
December'08 1081591 840.00 19-Dec-08 265638 725.00 02-Dec-08 80932 TOTAL 43747 100.00 199687500 100.00
Sensex
70/71
A N N U A L R E P O R T 0 8 - 0 9
Dematerialisation of Shares and Liquidity Karvy Computershare Private Limited. COMPANY'S REGISTERED ADDRESS NON-MANDATORY REQUIREMENTS
(Unit: Hero Honda Motors Limited) 34, Community Centre, The Company has not adopted the non-mandatory
The shares of the Company are traded in compulsory demat
Plot No. 17-24, Vithalrao Nagar, Basant Lok, Vasant Vihar, requirements as specified in Annexure – IA of the Listing
segment. As on March 31, 2009, 68.54 per cent of the total
Madhapur, Hyderabad-500 081, New Delhi 110 057 Agreement except clause (b) relating to Remuneration
share capital is held in dematerialised form with National
Tel No : 040-2342 0815-820, Fax : 040-2342 0814 Tel:011-2614 2451, 2614 4121 Committee.
Securities Depository Limited (NSDL) and Central Depository
E-mail: mailmanager@karvy.com Fax: 011-2615 3913
Services (India) Limited (CDSL). During the year under review, Investors' Correspondence may be addressed to
Website: www.herohonda.com
share certificates involving 2,73,646 shares of Rs. 2 each, were Share Transfer System Mr. Ilam C. Kamboj
dematerialised by the shareholders. These represent 0.14 PLANT LOCATIONS Sr. G.M. Legal & Company Secretary & Compliance Officer,
The Share Transfers (pertaining to shares in physical mode) are
percent of the total share capital of the Company. Gurgaon Plant e-mail: ickamboj@herohonda.com or
approved by the Share Transfer Committee which meets
37 K.M. Stone, Delhi-Jaipur Highway, to the Registrar & Transfer Agents i.e
Outstanding GDR's/ADR's/Warrants or any Convertible regularly whenever required. The total number of shares
Sector 33, Karvy Computershare Pvt. Limited
Instruments Conversion Date and likely impact on equity transferred during the financial year 2008-09 were 39,960
Gurgaon 122 001 e-mail: mailmanager@karvy.com
which were completed in the prescribed period. Shares under
Not Applicable Haryana
objection were returned within two weeks time. Queries relating to the Financial Statements of the
Tel: 0124-2372 123–134
Details of Public Funding Obtained in the last three years Company may be addressed to
Confirmations in respect of the requests for dematerialisation of Fax: 0124-2373 141–142
Mr. Ravi Sud
The Company has not obtained any public funding in the last shares are being sent to the respective depositories i.e. NSDL &
Dharuhera Plant Sr. Vice President & CFO,
three years. CDSL expeditiously.
69 K.M. Stone, Delhi-Jaipur Highway, e-mail: ravisud@herohonda.com
Registrar & Transfer Agents Investors' Services Dharuhera, Distt. Rewari 122 100
For and on behalf of the Board
All work related to Share Registry, both in physical form and The Company has Board Level Committees dealing with investor Haryana
electronic form, is handled by the Company's Registrar and issues, which have been discussed in detail earlier. Table 10 lists Tel: 01274-264 012-15
Transfer Agents, M/s. Karvy Computershare Private Limited. The the complaints/requests/queries received and redressed during Fax: 01274-267 024
communication address of the Registrar and Transfer Agents is as 2008-09. During the financial year, the Company has attended Haridwar Plant
BRIJMOHAN LALL
follow: to most of the investors' grievances/correspondence within a Plot No. 3, Sector – 10,
Chairman
period of 10-15 days from the date of receipt of the same. I.I.E., SIDCUL,
Roshanabad, Haridwar 248 001 June 10, 2009
Uttrakhand New Delhi
Tel: 01334-239513
TABLE 10: COMPLAINTS/REQUESTS RECEIVED AND REDRESSED DURING 2008-09 Fax: 01334-239512
SL. NO NATURE OF COMPLAINTS/ REQUESTS OPENING RECEIVED CLEARED PENDING
1. Non receipt of shares 1 188 189 0
2. Request for issue of duplicate shares 0 56 56 0
3. Non receipt of dividend warrant 0 692 692 0
4. Change of address 0 287 287 0
5. Mandate cases/bank description 0 82 82 0
6. Miscellaneous 0 1997 1997 0
72/73
A N N U A L R E P O R T 0 8 - 0 9
We have examined the compliance of conditions of Corporate Governance by Hero Honda Motors We, Pawan Munjal, Managing Director & Chief Executive Officer (CEO) and Ravi Sud, Sr. Vice President &
Limited for the year ended March 31, 2009, as stipulated in clause 49 of the Listing Agreement of Chief Financial Officer (CFO) of Hero Honda Motors Limited, to the best of our knowledge and belief certify
that:
the said Company with stock exchanges.
1. We have reviewed the Balance Sheet and Profit and Loss Account of the Company for the year ended
The compliance of conditions of Corporate Governance is the responsibility of the management. March 31, 2009 and all its schedule and notes on accounts, as well as the Cash Flow Statement.
Our examination was limited to procedures and implementation thereof, adopted by the
Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an 2. To the best of our knowledge and information:
audit nor an expression of opinion on the financial statements of the Company.
a. these statements do not contain any materially untrue statement or omit to state a material fact or
In our opinion and to the best of our information and according to the explanations given to us, figures or contains statement that might be misleading;
we certify that the Company has complied with the conditions of Corporate Governance as b. these statements together present a true and fair view of the Company's affairs and are in
stipulated in the abovementioned Listing Agreement. compliance with existing accounting standards, applicable laws and regulations.
We state that such compliance is neither an assurance as to the future viability of the Company nor 3. We also certify, that based on our knowledge and the information provided to us, there are no
the efficiency or effectiveness with which the management has conducted the affairs of the transactions entered into by the Company, which are fraudulent, illegal or violate the company's code
Company. of conduct.
4. We are responsible for establishing and maintaining internal controls and procedures for the
For A .F. Ferguson & Co.
Company, and we have evaluated the effectiveness of the Company's internal controls and
Chartered Accountants procedures.
5. We have disclosed, based on our most recent evaluation, wherever applicable, to the company's
auditors and through them to the audit committee of the Company's Board of Directors:
We further declare that all board members and senior management have affirmed compliance with the code
Place: New Delhi of conduct for the year 2008-09.
Date : June 10, 2009
For Hero Honda Motors Ltd. For Hero Honda Motors Ltd.
74/75
A N N U A L R E P O R T 0 8 - 0 9
ANNEXURE - II TO DIRECTORS' REPORT Note: The additional investment cannot be precisely ascertained, - T.A. & COP for Safety Critical Components - Phase-II & III III. FOREIGN EXCHANGE EARNINGS AND OUTGO
and is part of the Repairs and Maintainence; consumables
- EMC A) Export Activities / Initiatives To Increase Exports /
Information Under Section 217(1)(e) of the Companies Act, expenditure and investments in fixed assets.
- Mass Emission Norms (BS-IV) Development Of New Export Markets / Export Plans
1956 read with Companies (Disclosure of Particulars in the c) Impact of measures at a) and b) for reduction of energy
Report of Board of Directors) Rules, 1988 and forming part of the - Safety Related Standards EXPORT INTIATIVES 2008-09
consumption and consequent impact on the cost of
Directors' Report for the year ended March 31, 2009;
production of goods. - E-10 Compliance (on-going) During the year under review, your Company exported 81,194
I. CONSERVATION OF ENERGY two-wheelers, a decline of 10 per cent. There was no significant
It is difficult to quantify the impact of individual projects on - Spray Suppression growth in exports as per projection and no new markets were
a) Techno-economic viability of few energy saving proposals production as no. of equipments are being added during
4. Expenditure on R & D added. The proposal for Development of new markets is being
are being carried out and few proposals have been already the year.
discussed with Honda Motors Co., Ltd., Japan.
implemented (Rupees in Crores)
d) Total energy consumption and energy consumption per
The Company however was successful in launching Splendor
Energy conservation measures taken and their impact unit of production as per Form - A is given in Table - A. Particulars Year Ended Year Ended NXG Self start; Passion Pro and New CBZ in Srilanka &
- Power consumption has been reduced with the following March 31, 2009 March 31, 2008 Bangladesh markets which helped it to improve its share in the
measures taken during the year under review markets. For the first time, Glamour with fuel injection
II. PARTICULARS AS PER FORM B i) Capital 8.59 19.42
technology was launched in Sri Lanka. Further, Splendor NXG
• Replacement of CT Fan Blades FRP Blades ii) Recurring 23.71 18.78 was launched in Columbia resulting in improved market share of
(A) RESEARCH & DEVELOPMENT(R&D)
• Reduction in usage of Cooling Towers from 2 to 1 thereby the Company in Columbia's market. The Pleasure scooter was
1 Specific areas in which R & D carried out by the iii) Total R & D expenditure 0.26 0. 37
reducing the Pumps required to run the Cooling towers introduced to the Bangladesh market for the first time during the
Company as a percentage of sale
from 6 to 4 previous financial year.
(as per P & L A/c) (%)
• Replacement of tube lights with CFL Bulbs in ignored • New Model Technology Absorption The Company successfully organised a Customer meet with
areas of the plant with effective reflector, maintaining • Indigenisation of CKD Parts Brand Ambassadors in Sri Lanka in a promotional campaign
B) Technology Absorption, Adaptation and Innovation during the Cricket test matches. The Company also initiated the
same lux level.
• Multi Source Approval process of Training the technical and sales staff for the Export
1 Efforts in brief, made towards technology absorption,
• Erection and Commissioning of RO Plant Markets. The Company is focusing on improved after sales
• Meeting Legislative Norms adaptation and innovation
• Installation of Automatic Power Factor Control Panel for service, through automation of workshops and process
• Active Participation in deciding the needs of future More parts development Approval in India improvements in each market.
controlling and regulating the Load on Generators
Automobile Regulations in India
• Automation of Boilers 2. Benefits derived as a result of the above efforts e.g. EXPORT PLAN FOR 2009-10
2 Benefits derived as a result of the above R & D activities product improvement, cost reduction, product
• Automatic Blowdown development, import substitution • Concentrate on existing market for business growth.
• Launched Passion Pro (100 cc - 4 Stroke), CBZ-Extreme
• Oxygen Trimming (150cc - 4 Stroke), Pleasure New Aesthetics, Splendor NXG • New Model Development to increase market share; • Maintain leadership in Bangladesh and to achieve No. 1
(Self Start), CD Deluxe (Self Start), Glamour FI, Glamour position in other markets also.
• Lighting Automation • Supply capacities and quality of bought out parts (BOP)
(Carb.), HUNK Special Edition; • Promotional activities through campaigns, contests etc.
- Power generation cost has been reduced with Waste Heat increased with Multi Source Development to support the
Recovery System installation done to utilize the waste heat • 198 Multi source Components and 6 new sources added increasing production; • Strengthening of after sale service back up.
from the MAN DG sets for existing models;
• Indigenisation - To meet Cost Challenge; • Focus on training process.
- Fuel consumption has been reduced with use of Effimax • Indigenisation of 10 items was done during the year;
• Compliance to Latest Regulations. B) EARNINGS & OUTGO
System • Compliance to the Regulations
Further, in last five years the Company's ancillaries have Foreign exchange earnings during the period under report was
b) Additional Investments and Proposals being • T.A. & COP for Safety Critical Components - Phase-I (AIS- imported technologies regarding Emission Devices - Cat. Rs. 248.11 crores, compared to Rs. 243.64 crores in the previous
implemented for reduction of consumption of energy 037 : Tyres, Brake Hose, Horns) Converter, Digital Speedometer, Gear Primary Driven (Forging), year.
- For the reduction in power consumption the following Cast Wheel, CV Carb., Drive Chain (Solid Bush type), Fuel
• E-10 Compliance (on-going) On account of Royalty, Technical Guidance Fee, Model Fee,
measures has been envisaged and planned for Injection, RTMI (Real Time Mileage Indicator), Non-Asbestos
• BS-III Compliance ground work. Brake Shoe & Gaskets, Migration from Hexachrome to Export Commission, Travel and other accounts, Advertisement
• Study scope of vapour Absorption System Trichrome, Low Friction High F.E Engine Technology, LED Lighting and Publicity, the foreign exchange outgo was Rs. 377.80 crores,
3 Future plan of action compared to Rs. 332.49 crores in the previous year, a growth of
• Waste Heat Recovery Boiler Device, Self Sealing - Puncture Resistance Wheel Tube, Rear
• New Model Launch Cushion with Reservoir Tank and Emission Devices - Low Cost 13.63 per cent.
• Installation of Waste Heat Recovery Unit at HHD as well Cat. Converter etc.
• Indigenisation plan, 8 more items to be localised The outgo on account of Dividend was Rs. 98.65 crores
- For the reduction in power generation cost, installation of compared to Rs.88.26 crores in the previous year.
more and more HPS DG Sets has been envisaged. • Participation at different Forums for formation of two
wheeler Regulations in India & GTRs. Outgo for import of components, spare parts, raw materials and
- For effective resource utilization it has been decided to capital goods outgo was Rs. 476.05 crores compared to Rs.
Study of transmission and distribution losses to reduce the • Compliance Plan for Future Regulations :- 574.06 crores in the previous year.
same and installation of vapor absorption chiller machine
for air conditioning.
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Rate/unit (Rs.) Nil Nil 4.36 4.32 4.08 NA Mr. Pawan Munjal MD & CEO Hero Honda Finlease Limited NIL NIL
Hero Honda Motors Limited
(b) Own generation Through
Hero Investment (P) Limited
Diesel Generator Units
Self (KWH) 55883492 56115270 40998530 41664025 414700 NA Mr. Toshiaki Nakagawa JMD Hero Honda Finlease Limited NIL NIL
Hero Honda Motors Limited
Hired (KWH) Nil Nil Nil Nil Nil NA
Unit per ltr. of Diesel Oil Cost/Unit Mr. Sumihisa Fukuda TD Hero Honda Finlease Limited NIL NIL
Hero Honda Motors Limited
Self (KWH / Ltr.) 4.02 4.08 4.19 4.12 3.66 NA
Mr. Om Prakash Munjal NED Easy Bill Limited NIL NIL
Hired (KWH / Ltr.) Nil Nil Nil Nil Nil NA Hero Cycles Limited
2. Furnace Oil, HSD etc. ** * ** Hero Financial Services Limited
Hero Global Design Limited
Quantity (K.ltrs) 109.956 159.201 1,765.062 2,067.888 171.485 NA Hero Honda Finlease Limited
Hero Honda Motors Limited
Total Amount (Rs.) 2,758,011 4,398,916 43,450,167 41,704,620 5,108,834 NA
Hero Motors Limited
Average Rate/ Ltrs. (Rs.) 25.08 27.63 24.62 20.17 29.79 NA Highway Industries Limited
Majestic Auto Limited
Munjal Auto Industries Limited
B Consumption per unit of Production Shivam Autotech Limited
Munjal Bros (P) Limited
1. Electricity (KWH / Veh.) 35.85 33.79 31.12 28.15 24.63 NA Roma Cycle Manufacuturing Co. (P) Limited
2. Furnace Oil, HSD etc.(Ltr./ Veh.) 0.07 0.10 1.15 1.24 0.27 NA Mr. Sunil Kant Munjal NED Abhyuday Manufacturing & Automotive Limited NIL NIL
Arrow Infrastructure Limited
* fuels (Furnace Oil/HSD) used in direct production (Boiler) of two wheeler only DCM Shriram Consolidated Limited
** fuels (Furnace Oil/HSD) used in direct production (Hot Water Generator) of two wheeler only Easy Bill Limited
Hero Corporate Services Limited
Hero Cycles Limited
Hero Honda Motors Limited
Hero Life Insurance Company Limited
Hero Management Service Limited
Hero Mindmine Institute Limited
Hero Motors Limited
Satyam Auto Components Limited
Shivam Autotech Limited
Weave Engineering and Design Limited
Bahadurchand Investments (P) Limited
BML Investments (P) Limited
Thakurdevi Hydro (P) Limited
Thakurdevi Investments (P) Limited
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Name of Director Status Directorship held Committee Committee Name of Director Status Directorship held Committee Committee
Membership Chairmanship Membership Chairmanship
Mr. Masahiro Takedagawa NED Hero Honda Motors Limited Delhi Guest Houses Private Limited
Honda Siel Cars India Limited Doon Holiday Resorts Private Limited
Honda Siel Power Products Limited Audit Committee Dynavest India Private Limited
Honda Motor India Private Limited Leo Retaling and Health Services Private Limited
Honda Motorcycle & Scooters India (P) Limited Mohair Investments and Trading Co. (P) Limited
MV Healthcare Services Private Limited
Mr. Takashi Nagai NED Hero Honda Motors Limited Nurture Health Services Private Limited
Honda Motorcycle & Scooters India (P) Ltd. Scorpios Beverages Private Limited
Terra Planet Estates Private Limited
Gen. (Retd.) V.P. Malik NEID BSES Rajdhani Power Limited Audit Committee Trophy Estates Private Limited
BSES Yamuna Power Limited Audit Committee Trophy Holdings Private Limited
Hero Honda Motors Limited Audit Committee Urban Space Consultants Private Limited
Reliance Infrastructure Limited Audit Committee Veer Health Services Private Limited
Vitasta Estates Private Limited
Mr. Pradeep Dinodia NEID DCM Shriram Consolidated Limited Audit Committee Shareholders'
Grievance Ms.Shobhana Bhartia NEID Air Travel Bureau Limited
Committee Britex (India) Limited
DFM Foods Limited Audit Committee Firefly e-Ventures Limited
Hero Corporate Services Limited Audit Committee Goldmerry Investment & Trading Co. Limited
Hero Honda Motors Limited Shareholders' Audit Committee Hero Honda Motors Limited
Grievance HT Media Limited Audit Committee
Committee HT Music and Entertainment Co. Limited
JK Lakshmi Cement Limited HTL Investment & Trading Co. Limited
Micromatic Grinding Technologies Limited Nilgiri Plantation Limited
Shriram Pistons & Rings Limited Audit Committee Ronson Traders Limited
Shareholders' Shradhanjali Investment & Trading Co. Limited
Grievance The Hindustan Times Limited Audit Committee
Committee Udit (India) Limited
SPR International Auto Exports Limited Usha Flowell Limited
Ultima Finvest Limited Yashovardhan Investment & Trading Co. Limited
Earthstone Holding Private Limited
Dr. Pritam Singh NEID Delhi Stock Exchange Limited Earthstone Holding (one) Private Limited
Dena Bank Limited Earthstone Holding (two) Private Limited
Dish TV India Limited Audit Committee Earthstone Holding (three) Private Limited
Godrej Properties Limited
Hero Honda Motors Limited Audit Committee Shareholders' Mr. Meleveetil Damodaran NEID Hero Honda Motors Limited Shareholders'
Grievance Grievance
Committee Committee
Parsvnath Developers Limited Tech Mahindra Limited
SREI Sahaj e-Village Limited
Mr. Analjit Singh NEID Dabur India Limited NIL NIL ING Vysya Bank Limited
Grow Talent Company Limited ING Investment Management (India) Private Limited
Hero Honda Motors Limited
IDBI Limited
Notes:
Malsi Estates Limited
Malsi Holdings Limited EC : Executive Director
Max Bupa Health Insurance Limited MD : Managing Director
Max Healthcare Institute Limited JMD : Joint Managing Director
Max India Limited TD : Technical Director
Max Neeman Medical International Limited NED : Non-Executive Director
Max New York Life Insurance Company Limited NEID: Non-Executive & Independent Director
Tata Tea Limited
Vodfafone Essar Limited
BAS Enterprises Private Limited Details of Directorships is as on July 29, 2009
Boom Investments Private Limited
Capricon Health Services Private Limited
Capricon Retailing and Services Private Limited
80/81
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FINANCIAL
RESULTS
2008-2009
82/83
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AUDITORS’ REPORT ANNEXURE REFERRED TO IN PARAGRAPH '3' OF THE AUDITORS’ REPORT TO THE MEMBERS
OF HERO HONDA MOTORS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2009.
TO THE MEMBERS OF HERO HONDA MOTORS LIMITED
1. We have audited the attached balance sheet of Hero Honda iv) in our opinion, the Balance Sheet, Profit and Loss (i) (a) The Company is maintaining proper records showing full Company, as referred to in paragraph 4(iii) (a) of the
Motors Limited as at March 31, 2009 and also the profit and Account and Cash Flow Statement, dealt with by this particulars, including quantitative details and situation of Companies (Auditor's Report) Order, 2003 (hereinafter
loss account and the cash flow statement for the year ended report, comply with the accounting standards fixed assets. referred to as the Order) above, are, prima-facie, not
on that date, annexed thereto. These financial statements referred to in sub-section (3C) of section 211 of the prejudicial to the interest of the Company.
are the responsibility of the Company's management. Our Companies Act, 1956; (b) As explained to us, the Company has a programme of
physically verifying all of its fixed assets over a period of (c) According to the information and explanations given to
responsibility is to express an opinion on these financial
v) on the basis of written representations received from three years and in accordance therewith, physical us, the party, to whom the loans have been granted by
statements based on our audit. the Company, as referred to in paragraph 4(iii)(a) above,
verification of certain fixed assets of the Company was
the Directors and taken on record by the Board of
carried out during the year. In our opinion, the frequency has been regular in repayment of principal amount as
2. We conducted our audit in accordance with auditing Directors, we report that none of the Directors is stipulated and has been regular in payment of interest.
of physical verification is reasonable having regard to the
standards generally accepted in India. Those standards disqualified as on March 31, 2009 from being size of the Company and the nature of its fixed assets. The
require that we plan and perform the audit to obtain appointed as a Director in terms of clause (g) of sub- discrepancies noticed on such verification were not (d) According to the information and explanations given to
reasonable assurance about whether the financial section (1) of section 274 of the Companies Act, 1956; material and have been properly dealt with in the books us, there are no overdue amounts in respect of the loans
statements are free of material misstatement. An audit of account. granted as referred to in paragraph 4(iii)(a) above and
includes examining, on a test basis, evidence supporting the vi) In our opinion and to the best of our information and interest thereon.
amounts and disclosures in the financial statements. An according to the explanations given to us, the said (c) In our opinion and according to the information and
audit also includes assessing the accounting principles used accounts give the information required by the explanations given to us, a substantial part of the fixed (e) According to the information and explanations given to
and significant estimates made by management, as well as Companies Act, 1956, in the manner so required and assets has not been disposed off by the Company during us, the Company has, during the year, not taken any
give a true and fair view in conformity with the the year. loans, secured or unsecured, from companies, firms and
evaluating the overall financial statement presentation. We
accounting principles generally accepted in India: other parties covered in the register maintained under
believe that our audit provides a reasonable basis for our Section 301 of the Companies Act, 1956. Accordingly,
(ii) (a) During the year, the inventories have been physically
opinion. verified by the management. In our opinion, the paragraph 4(iii) (f) and (g) of the Order are not applicable.
a) in the case of the Balance Sheet, of the state of
frequency of the verification is reasonable.
3. As required by the Companies (Auditor's Report) Order, affairs of the Company as at March 31, 2009;
(iv) According to the information and explanations given to
2003 issued by the Central Government of India in terms of (b) In our opinion and according to the information and us, there is an adequate internal control system
sub-section (4A) of section 227 of the Companies Act, 1956, b) in the case of the Profit and Loss Account, of the
explanations given to us, the procedures of physical commensurate with the size of the Company and the
we enclose in the Annexure a statement on the matters profit for the year ended on that date; and verification of inventories followed by the management nature of its business with regard to purchase of
specified in paragraphs 4 and 5 of the said Order. are reasonable and adequate in relation to the size of the inventories, fixed assets and with regard to sale of goods.
c) in the case of the Cash Flow Statement, of the cash Company and the nature of its business. There are no sales of services during the year. Further, on
4. Further to our comments in the Annexure referred to in flows for the year ended on that date. the basis of our examination and according to the
paragraph 3 above, we report that; (c) On the basis of our examination of the records of information and explanations given to us, we have
inventories, we are of the opinion that, the Company is neither come across nor have been informed of any
FOR A.F. FERGUSON & CO. maintaining proper records of inventories. The instance of major weaknesses in the aforesaid internal
i) we have obtained all the information and explanations,
Chartered Accountants discrepancies noticed on physical verification of control system.
which to the best of our knowledge and belief were
necessary for the purposes of our audit; inventories as compared to book records were not
material and have been properly dealt with in the books (v) (a) According to the information and explanations given to
Manjula Banerji of account. us, we are of the opinion that during the year the
ii) in our opinion, proper books of account as required by Partner particulars of the contracts or arrangements referred to in
law have been kept by the Company so far as appears (Membership number: 86423) (iii) (a) According to the information and explanations given to Section 301 of the Companies Act, 1956, have been
from our examination of those books; entered in the register required to be maintained under
us, the Company has, during the year, not granted any
loan, secured or unsecured to companies, firms and other that section.
iii) the Balance Sheet, Profit and Loss Account and Cash Place: New Delhi parties covered in the register maintained under Section
Flow Statement dealt with by this report are in Date: April 21, 2009 301 of the Companies Act, 1956, other than unsecured (b) According to the information and explanations given to
agreement with the books of account; loans aggregating Rs. 545.50 crores granted to a us, the transactions made in pursuance of contracts or
company covered in the register maintained under arrangements entered in the register maintained under
Section 301 of the Companies Act, 1956. The maximum Section 301 of the Companies Act, 1956, and exceeding
amount due during the year was Rs. 210 crores and there the value of Rs.5 lacs in respect of any party during the
is no amount outstanding at the year end. year, having regard to the explanation that some of
services/ items purchased are of a specialized nature for
(b) In our opinion and according to the information and which there are no alternate sources of supply to enable
explanations given to us, the rate of interest and other comparison of the prices, these have been made at prices
terms and conditions of the loans granted by the which are reasonable to prevailing market prices at the
relevant time.
84/85
A N N U A L R E P O R T 0 8 - 0 9
(vi) The Company has not accepted any deposits from the Company has been regular in depositing undisputed (x) The Company does not have accumulated losses at the (xvii) According to the information and explanations given to us
public. statutory dues including provident fund, investor end of the financial year March 31, 2009. Further, the and on an overall examination of the balance sheet of the
education and protection fund, employees' state Company has not incurred any cash losses during the Company, we report that short term funds have not been
(vii) According to the information and explanations given to insurance, income-tax, sales tax, wealth tax, customs financial year ended March 31, 2009 and in the used to finance long term investments.
us, the Company has an adequate internal audit system duty, excise duty, cess, value added tax, Haryana local immediately preceding financial year ended March 31,
commensurate with its size and nature of its business. area development tax and other material statutory dues 2008. (xviii) The Company has not made any preferential allotment of
applicable to it with the appropriate authorities. We are shares during the year.
(viii) We have broadly reviewed the books of account informed that there are no undisputed statutory dues as (xi) According to the records of the Company examined by us
maintained by the Company pursuant to the Rules made at the year end outstanding for a period of more than six and on the basis of information and explanations given to (xix) The Company has not issued any debentures during the
by the Central Government for the maintenance of cost months from the date they became payable. us, the Company has not defaulted in repayment of dues year.
records under section 209 (1) (d) of the Companies Act, to banks during the year. The Company has not taken any
1956 and are of the opinion that, prima-facie, the (b) According to the information and explanations given to loans from financial institutions and has not issued (xx) The Company has not raised any money by way of public
prescribed accounts and records have been made and us and the records of the Company examined by us, there debentures during the year. issue during the year.
maintained. We have not, however, made a detailed are no disputed dues in respect of wealth tax, sales tax,
examination of the records with a view to determining customs duty, and cess, which have not been deposited. (xii) In our opinion and according to the information and (xxi) During the course of our examination of the books of
whether they are accurate or complete. The following are the particulars of excise duty, service tax explanations given to us, the Company has not granted account and records of the Company, carried out in
and income-tax dues not deposited/ deposited under any loans and advances during the year on the basis of accordance with the generally accepted auditing practices
(ix) (a) According to the information and explanations given to protest by the Company on account of disputes as at security by way of pledge of shares, debentures and other in India and according to the information and explanations
us and the records of the Company examined by us, the March 31, 2009:- securities. given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during
(xiii) According to the information and explanations given to the year ended March 31, 2009 nor have we been
Name of the Statute Nature of dues Amount* Amount paid Period to which Forum where us, the provisions of any special statute as specified under informed of such case by the management.
(Rs. in crores) under protest the amount relates dispute is pending paragraph 4(xiii) of the Order are not applicable to the
(Rs. in crores) Company.
Central Excise Laws Excise Duty 9.03 0.09 2000,2002-03 to CESTAT (xiv) In our opinion and according to the information and For A.F. FERGUSON & CO.
2004-05 explanations given to us, the Company is not dealing or Chartered Accountants
trading in shares, securities, debentures and other
0.14 - 2005-06 Commissioner investments.
(Appeals) Manjula Banerji
(xv) According to the information and explanations given to Partner
Service Tax 1.90 0.45 2004-05 to 2005-06 CESTAT us, the Company has not given any guarantees during the (Membership No.: 86423)
year for loans taken by others from banks or financial
Income Tax Act Income Tax 9.61 9.61 2000-01 to 2001-02 Income Tax institutions.
Appellate Tribunal Place : New Delhi
(xvi) In our opinion and according to the information and Date : April 21, 2009
128.61 52.90** 2001-02 to 2004-05 Commissioner explanations given to us, the term loans have been applied
(Appeals) for the purposes for which they were obtained.
* Amount as per demand orders including interest and penalty wherever quantified in the order.
** Balance of unpaid demand has been stayed.
The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:
Name of the Statute Nature of the dues Amount Period to which Forum where dispute
(Rs. in crores) amount relates is pending
Central Excise Laws Excise Duty 2.57 1986-87 to 1990-91 Supreme Court
Income Tax Act Income Tax 8.18 1987-88, 1989-90, 1992-93 High Court
1993-94, 1995-96, 1996-97
1998-99, 2000-01
86/87
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88/89
A N N U A L R E P O R T 0 8 - 0 9
90/91
A N N U A L R E P O R T 0 8 - 0 9
Previous year 2,430.12 523.99 7.81* 2,946.30 Capital work in progress {including capital advances Rs. 37.21 crores (Previous year Rs. 73.39 crores)} 120.54 392.44
1,694.25 1,548.70
* Adjustment of employee benefit schemes as per revised accounting standard AS 15, net of deferred tax assets of Rs Nil
(Previous Year Rs. 4.03 crores) Note :
# Include land at Haridwar pending registration in the name of the Company.
@ Includes Rs. Nil (Previous year Rs. 1.16 crores) transferred to Pre- operative expenditure (pending allocation)
92/93
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94/95
A N N U A L R E P O R T 0 8 - 0 9
Nil (previous year 15000000) units in Fixed Income Portfolio Fund Nil (previous year 5000000) units in Fixed Horizon Fund- Institutional Plan
Scheme A2 Institutional -Growth - 15.00 C -Series I-Institutional Growth Plan - 5.00
Nil (previous year 15000000) units in Fixed Income Portfolio Fund Nil (previous year 25000000) units in Fixed Horizon Fund III- Annual Plan
Scheme B2 Institutional -Growth - 15.00 Series IV-Institutional Growth Plan - 25.00
Nil (previous year 24740431) units in Floating Rate Fund Long Term-Growth - 30.00 23553564 (previous year 10000000) units in Annual Interval Fund
19173646 (previous year Nil) units in Fixed Investment Plan -2 -Series1-Institutional Growth Plan 25.00 10.00
Scheme-A-Institutional Plan -Growth 19.17 - 25000150 (previous year 25000000) units in Fixed Horizon
Fund IV -Series 6-Institutional Growth Plan 28.09 25.00
Kotak Mutual Fund 29999911 (previous year 30000000) units in Fixed Horizon Fund IV
Nil (previous year 15000000) units in FMP 15 M Series 2 -Growth - 15.00 -Series 7-Institutional Growth Plan 33.51 30.00
Nil (previous year 20000000) units in FMP 12 M Series 4 Institutional-Growth - 20.00 Nil (previous year 46542367) units in Monthly Interval Fund
Nil (previous year 51056254) units in FMP 3 M Series 26-Growth - 51.05 -Series II-Institutional Growth Plan - 50.00
Nil (previous year 7124384) units in Bond (Short Term)-Growth - 10.00 Nil (previous year 5000000) units in Fixed Horizon Fund -VI
15000000 (previous year Nil) units in FMP 13 M Series 5-Growth 15.00 - -Series 2-Institutional Growth Plan - 5.00
94909187 (previous year Nil) units in Floater Long Term -Growth 130.54 - 12500000 (previous year 12500000) units in Fixed Horizon Fund -IX
-Series 1-Institutional Growth Plan 12.50 12.50
Frankilin Templeton Investments 19999989 (previous year 20000000) units in Fixed Horizon Fund VII
20000000 (previous year 20000000) units in Fixed Horizon Fund -Series 5-Institutional Growth Plan 22.05 20.00
Series VII -Plan D -Institutional -Growth 20.00 20.00 40030230 (previous year Nil) units in Fixed Horizon Fund XII -Series 3
20000000 (previous year Nil) units in Fixed Horizon Fund Series IX -Plan B -Growth 20.00 - -Super Institutional Plan-Growth 40.03 -
60045345 (previous year Nil) units in Fixed Horizon Fund XII
-Series 4-Super Institutional Plan-Growth 60.05 -
HSBC Mutual Fund
17904653 (previous year Nil) units in Income Fund -Retail Plan
60820129 (previous year Nil) units in Floating Rate Fund
-Growth Plan -Growth Option 52.04 -
-Long Term Plan-Institutional Option -Growth 83.02 -
96/97
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98/99
A N N U A L R E P O R T 0 8 - 0 9
(Units of the face value of Rs. 1000 each) Fortis Mutual Fund
DSP BlackRock Mutual Fund 27154982 (previous year Nil) units in Flexi Debt Fund Regular Daily Div 26.28 -
Nil (previous year 292149) units in Liquidity Fund Instt. - Growth - 33.02 6076810 (previous year Nil) units in Money Plus Fund IP Growth 8.00 -
Repurchase price Rs. 36.33 crores (previous year Rs. 95.67 crores) 36.15 94.11
Reliance Mutual Fund
Nil (previous year 914761) units in Liquid Plus Fund- Institutional Option-Growth Option - 100.00 Liquid Fund
(Units of the face value of Rs.10 each)
AIG Global Investment Group Mutual Fund
Nil (previous year 481912) units in Liquid Fund- Super Institutional Growth - 50.20 ICICI Prudential Mutual Fund
Nil (previous year 8448391) units in liquid Plan Super institutional Growth Option - 10.04
Mirae Asset Mutual Fund
Nil (previous year 500000) units in Liquid Plus Fund- Super Inst Growth Option - 50.00 Escorts Mutual Fund
718478 (previous year 2825896 ) units in Liquid Plan Growth 0.88 3.31
Tata Mutual Fund
962567 (previous year Nil) units in Liquid Super High Inv. Fund- Appreciation 155.82 - HDFC Mutual Fund
Repurchase Price Rs. 1013.20 crores (previous year Rs. 747.04 crores) 1,010.06 746.03 220928 (previous year 7646722) units in Cash Management Fund Savings Plan 0.40 12.73
100/101
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Asset Linked Portfolio -Accelerator-Series 2 -5000 (previous year Nil) LONG TERM INVESTMENTS
Debentures of Citi Financial Consumer Finance India Limited. 50.00 - Non-trade
Asset Linked Portfolio -Accelerator-Series 5 -1500 (previous year Nil) Debentures of In Equity Shares:
Barclays Investment & Loans India Ltd INR Equity Linked Principal Protected Debentures 15.00 - Quoted*
312.87 29.90
Less: Provision for diminution in value (0.05) - 70331(previous year*) equity shares of Rs. 10 each fully paid up of
Repuchase price Rs. 312.82 crores (previous year Rs. 29.90 crores) 312.82 29.90 Bharat Heavy Electricals Limited. 8.98 -
172904 (previous year*) equity shares of Rs.2 each fully paid up of Siemens Ltd. 16.42 -
Commerical Paper 367200 (previous year Nil ) equity shares of Rs. 2 each fully paid up of
500000 (previous year Nil) of Tata Capital Ltd. 4.54 - Larsen & Tubro Limited. 50.02 -
500000 (previous year Nil) of Reliance Communications Ltd. 4.50 - 75.42 -
500000 (previous year Nil) of Birla Global Finance Co. Ltd. 4.47 - Less: Provision on reclassification of current investment (12.42)
Repuchase price Rs. 14.54 crores (previous year Nil) 13.51 - Market value Rs. 39.94 crores (previous year Nil) 63.00 -
* During the year the company has reclassified current investment into
Bonds long term investment and has provided for loss on reclassifiaction.
50 (previous year Nil) 11% PFC 2018 5.91 -
5000000 (previous Year Nil) 6.05% GOI 2019 48.43 - Unquoted
54.34 - 75000 (previous year Nil) equity shares of Rs. 10 each fully paid up of
Less: Provision for diminution in value (1.39) - National Stock Exchange 26.26 -
Market price Rs. 52.95 crores (previous year Rs. 151.91 crores) 52.95 - 140400 (previous year 10800) equity shares of Rs.1each fully paid up of
491.97 150.09 Bombay Stock Exchange. 5.94 5.94
# Investments have been made under the Discretionary Portfolio Management 32.20 5.94
Agreement entered into between the Company and ICICI Prudential Asset In Bonds
Management Company Limited-PMS, IIM-Optimix Portfolios -Capital Enhancer, Quoted
Escorts Securities Ltd, Reliance Capital Asset Management Ltd (Portfolio Management UNIT TRUST OF INDIA
Services), Fortis Investment Mangement and Birla Sunlife Asset Management Company Nil (previous year 15918732) 6.75% Tax free US64 bonds of Rs.100 each - 165.47
Private Limited are being held in the name of the Portfolio Manager as envisaged 60903 (previous year 60903) 6.60% Tax free ARS bonds of Rs.100 each 0.63
in the aforesaid Agreement. 0.63 0.63
0.63 166.10
Non-trade Less: Provision for diminution in value (0.02) (6.10)
In Equity Shares: Market value Rs.0.61 crores (previous year Rs.154.32 crores) 0.61 160.00
Quoted Maturity value Rs 0.61 crores (previous year Rs 159.80 crores)
Nil (previous year 52238) equity shares of Rs.10 each fully paid up of ICICI Bank Ltd. - 5.11 Non-trade
Nil (previous year 6430) equity shares of Rs10 each fully paid up of Mundra Port & Unquoted
Special Economic Zone Ltd. - 0.28 National Bank For Agriculture and Rural Development
Nil (previous year 109489) equity shares of Rs10 each fully paid up of 50200 (previous year 42700) Bhavishya Nirman Bonds @ 8182 each
Rural Electrification Corporation Ltd. - 1.15 A 10 Year Zero Coupon Bond of NABARD- maturity Rs 20000.00 per bond 41.07 35.01
41.07 35.01
Nil (previous year 125523) equity shares of Rs. 10 each fully paid up of Trade
Bharat Heavy Electricals Limited.* - 16.04 Unquoted
Nil (previous year 276654) equity shares of Rs.2 each fully paid up of Siemens Ltd.* - 26.29 In Equity Shares:
- 48.87 2715000 (previous year 2715000) equity shares of Rs. 10 each fully paid up of
Less: Provision for diminution in value - (0.42) Hero Honda Finlease Limited. 3.46 3.46
Market value Nil (previous year 48.45 crores) - 48.45 3,368.75 2,566.82
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Commercial Papers
Tata Capital Ltd. 100 4.55 - -
Reliance Communication Ltd. 100 4.50 - -
Birla Global Finance Co. Ltd. 100 4.47 - -
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7) CURRENT ASSETS, LOANS AND ADVANCES 7) CURRENT ASSETS, LOANS AND ADVANCES
(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008
CURRENT ASSETS Income-tax deducted at source 11.16 3.50
INVENTORIES # Deposits with excise authorities on
Stores and spares (at cost or under) 27.19 22.27 current account 0.17 2.13
Loose tools (at cost or under) 14.51 13.46 311.26 185.46
Raw materials and components * 201.44 219.77
Finished goods *
Two wheelers 28.52 30.92 8) CURRENT LIABILITIES AND PROVISIONS
Spare parts 32.49 14.08 (Rupees in crores)
Work in progress * 22.68 16.60
As at March As at March
326.83 317.10 31, 2009 31, 2008
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Stores and spares, loose tools, raw materials and components - Weighted average cost Provision involving substantial degree of estimation in measurement are recognized when there is a permanent obligation as
a result of past events and it is probable that there will be an out flow of resources. Contingent liabilities are not recognized but
Materials in transit - Actual cost
are disclosed in the notes.
Work in progress and finished goods - Material cost plus appropriate share of
xiii) Derivatives
labour, manufacturing overheads and excise duty.
Foreign currency derivatives are used to hedge risk associated with foreign currency transactions. All open positions as at the
vi) Employee benefits
close of the year are valued by marking them to the market and provision is made for losses if any.
a) Defined contribution plan
2. CONTINGENT LIABILITIES :
Provident fund, Superannuation fund and Employee' State Insurance Corporation (ESIC) are the defined contribution
(Rupees in crores)
schemes offered by the Company. The contributions to these schemes are charged to the profit and loss account of the year in
which contribution to such schemes becomes due. This year Previous year
b) Defined benefit plan and Long term Employee benefits i) In respect of excise matters 8.17 -
Gratuity liability and long term employee benefits, are provided on the basis of an actuarial valuation made at the end of each The above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately
concluded will not, in the opinion of management, have a material effect on the results of operations or the financial position of
financial year as per unit credit method. Actuarial gains or losses arising from such valuation are charged to revenue in the year the Company.
in which they arise.
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3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 92.37 crores (previous year Transactions with related parties during the year
Rs. 56.37 crores).
a) Parties in respect of which the Company is a joint venture and associate of the Company.
4. Commercial production commenced at Haridwar plant on April 7, 2008. Expenditure incurred on the project upto April 6, 2008
(Rupees in crores)
has been included in Schedule 5 under the head ' Pre-operative Expenditure (pending allocation)'. Pre-operative expenditure
other than those which are directly allocable has been allocated pro-rata to fixed assets and capital work in progress. This year Previous year
5. The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease Honda Motor Co. Limited, Japan
arrangements are cancellable in nature and range between two to four years. The aggregate lease rentals under these
arrangements amounting to Rs. 10.51 crores (previous year Rs. 11.47 crores) have been charged under "Lease rentals " in Dividend paid 98.65 88.26
Schedule 11. Royalty 324.01 276.70
6. As the Company's business activity falls within a single primary business segment viz. "Two wheelers and its parts" and is a single Export commission 11.67 11.60
geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", specified in the
Companies (Accounting Standards) Rules, 2006 are not applicable. Model fees 32.54 31.32
7. Two wheeler sales are covered by a warranty period of two/three years. The details of provision for warranties are as under: Technical guidance fee 0.38 0.87
(Rupees in crores) Purchase of raw materials, components and spares 15.36 16.39
Provision at the beginning of the year 43.68 36.23 Dividend paid 32.88 29.42
Additional provision made during the year 27.37 33.35 Purchase of raw materials, components and spares 72.90 63.59
Amount used during the year 26.12 25.90 Hero Investments Private Limited
Provision at the end of the year 44.93 43.68 Dividend paid 32.88 29.42
Bhadurchand Investments Private Limited
8. Related party disclosures under Accounting Standard 18 Dividend paid 32.88 29.42
a) i) Parties in respect of which the Company is a Joint venture: Hero Honda Finlease Limited
Honda Motor Co. Limited, Japan Lease rental expenses 10.51 11.47
Hero Cycles Limited Dividend received 2.72 2.72
Bhadurchand Investments Private Limited Intercorporate deposits given 495.50 190.00
Hero Investments Private Limited Intercorporate deposits repaid 545.50 190.00
Interest received on Inter corporate deposits 3.63 1.51
ii) Associate of the Company: Balance outstanding at the year end
Hero Honda Finlease Limited -Receivables - 50.00
-Payables 8.82 3.84
b) Key management personnel
Mr. Brijmohan Lall Munjal Chairman b) Key management personnel
Mr. Pawan Munjal Managing Director & CEO (Rupees in crores)
Mr. Toshiaki Nakagawa Joint Managing Director This year Previous year
Mr. Yutaka Kudo Whole time director (w.e.f. April 1, 2007 to May 30,2008) Managerial Remuneration
Mr. Sumihisa Fukuda Whole time director (w.e.f .June 1, 2008) Mr. Brijmohan Lall Munjal 19.79 15.76
Mr. Pawan Munjal 19.69 15.74
c) Enterprises over which key management personnel and their relatives are able to exercise significant influence:- Mr. Toshiaki Nakagawa 19.08 15.20
Brijmohan Lall Associates, A.G. Industries Private Limited, Hero Corporate Services Limited, Highway Industries Limited, Mr. Yutaka Kudo (w.e.f April 1, 2007 to May 30,2008) 3.15 15.13
Majestic Auto Limited, Munjal Auto Industries Limited, Munjal Showa Limited, Rockman Industries Limited, Sunbeam
Mr. Sumihisa Fukuda (w.e.f June 1, 2008) 15.81 -
Auto Limited, Satyam Auto Components Limited, Hero Motors Limited, Shivam Autotech Limited, Cosmic Kitchen Private
Limited, Easy Bill Limited, Hero Mindmine Institute Limited, Indian School of Business and Raman Kant Munjal
Foundation.
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c) Enterprises over which key management personnel and their relatives are able to exercise significant influence Weighted average number of equity shares outstanding 19,96,87,500 19,96,87,500
(Rupees in crores) Basic and diluted earnings per share in rupees (face value -Rs.2 per share) 64.19 48.47
Name of the Statute Nature of dues Amount* Amount paid under Period to which Forum where dispute
Significant related party transactions included in the above are as under :-
(Rs in crores) protest (Rs in crores) the amount relates is pending
(Rupees in crores)
Central Excise Laws Excise Duty 9.03 0.09 2000,2002-03 To CESTAT
This year Previous year 2004-05
Purchase of raw materials and components 0.14 - 2005-06 Commissioner (Appeals)
A .G. Industries 278.51 188.54 Services Tax 1.90 0.45 2004-05 to 2005-06 CESTAT
Munjal Showa Limited 676.80 556.06 Income Tax Act Income Tax 9.61 9.61 2000-01 to 2001-02 Income Tax
Appellate Tribunal
Sunbeam Auto Limited 437.72 379.23
128.61 52.90** 2001-02 to 2004-05 Commissioner (Appeals)
Rockman Cycle Industries Limited 324.91 167.44
Satyam Auto Components Limited 267.35 147.07 * Amount as per demand orders including interest and penalty wherever quantified in the order.
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12. The Company's borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way
This year Previous year
of hypothecation of inventories, receivables, movable assets and other current assets. (Rupees in crores) (Rupees in crores)
13. The Company has identified parties covered under the "The Micro, Small, and Medium Enterprises Development Act, 2006' on Changes in the present value of the plan asset is as follows
the basis of the confirmations received. There is no outstanding balance payable as at the close of the financial year to such parties.
Fair value of plan asset at the beginning of the year 32.23 17.44
Further, no interest has been paid or payable to such parties under the said Act.
Return on plan asset 3.02 1.62
14. The unhedged foreign currency exposures are as under:
Contributions 6.67 14.12
benefits paid (1.14) (0.95)
Purpose As at March 31, 2009 As at March 31, 2008
Actuarial (gain)/ loss on obligation - -
Amount in Foreign Amount in Amount in Foreign Amount in
currency in crores Rs. in crores currency in crores Rs. in crores Fair value of plan asset at the end of the year 40.78 32.23
Receivables USD 0.64 32.74 USD 1.10 44.43
Payables JPY 13.81 7.08 JPY 38.71 15.28 Reconciliation of the present value of defined benefit obligation
and the fair value of the plan assets
USD 0.41 20.99 - -
Present value of defined benefit obligation at the end of the year 40.78 32.23
- - EURO 0.02 1.21
Fair value of plan asset at the end of the year 40.78 32.23
Net asset/(liability) as at the close of the year - -
15. Employee Benefits
Defined contribution plans
Expenses recognised in the profit and loss account
This Year Previous Year
(Rupees in crores) (Rupees in crores) Current service cost 2.77 2.15
Employer's Contribution to Provident Fund 11.67 9.77 Interest cost 2.26 2.03
Employer's Contribution to Superannuation Fund 5.17 4.27 Return on plan assets (3.02) (1.62)
Employer's Contribution to ESIC 0.49 0.30 Net actuarial (gain) / loss 4.66 3.59
Expenses recognised in the profit and loss account 6.67 6.15
Defined benefit plans
In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as a defined benefit plan. The gratuity Discount rate 7.00% 8.00%
plan provides for a lumsum payment to the employees at the time of separation from the service on completion of vested Expected Rate of return on plan assets 9.40% 9.10%
period of employment i.e five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each
financial year based on which the Company contributes the ascertained liability to a Group Gratuity Scheme of Life Insurance
Corporation of India.
Note:- The estimates of future salary increases considered in the actuarial valuation take into account inflation, seniority promotion
and other relevant factors such as supply and demand in the employment market.
This year Previous year
(Rupees in crores) (Rupees in crores)
Changes in the present value of the defined benefit 16. Additional Information
obligation is as follows
a) Details of capacity and production:
Present value of defined benefit obligation at the beginning of the year 32.23 25.41
Interest cost 2.26 2.03 Class of goods Units Licensed capacity* Installed capacity** Actual Production***
Current service cost 2.77 2.15 This year Previous year This year Previous year This year Previous year
Benefits paid (1.14) (0.95) Motorised two wheelers upto
Actuarial (gain)/ loss on obligation 4.66 3.59 350CC engine capacity Nos. 200000 200000 5200000 3400000 3721844 3333460
Present value of defined benefit obligation at the end of the year 40.78 32.23
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*The Company's products are exempt from Licensing requirements under New Industrial Policy in terms of Notification no. d) CIF Value of imports:
S.O.477(E) dated 25th July,1991.
**On triple shift basis, as certified by the management and relied on by the auditors being a technical matter. Class of goods This year Previous year
(Rs. in crores) (Rs. in crores)
***Includes 220 (Previous year 175) two wheelers produced and capitalised during the year.
Capital goods 48.51 66.14
Raw materials* 31.54 103.92
b) Particulars in respect of opening stock, purchases, sales and closing stock for each class of goods dealt with by the
Company: Components, spare parts and others * 396.00 404.00
Class of goods Units Opening stock Purchases * Includes items sold to ancillaries on cost to cost basis for assembling of components.
This year Previous year This year Previous year e) Value of imported and indigenous raw materials, components and spares consumed and percentage of each to the
Quantity Value Quantity Value Quantity Value Quantity Value total consumption:
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs.in crores)
Class of goods This year Previous year
Two wheelers Nos. 10955 30.92 14812 44.31 - - - -
Value Percentage Value Percentage
Spares - * 14.08 * 13.46 - - - - (Rs. in crores) % (Rs. in crores) %
45.00 57.77 - - Raw materials
-Imported ** 0.79 0.01 0.24 0.00
Class of goods Units Gross Sales Closing stock -Indigenous 25.41 0.30 27.70 0.38
This year Previous year This year Previous year Components
Quantity Value Quantity Value Quantity Value Quantity Value
-Imported ** 69.28 0.79 49.99 0.67
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs.in crores)
-Indigenous 8,720.99 98.90 7,363.12 98.95
Two wheelers Nos. 3722000+ 12,719.77 3337142+ 11,353.48 10579 28.52 10955 30.92
8,816.47 * 100.00 7,441.05 * 100.00
Spares - * 823.32 * 684.73 * 32.49 * 14.08
Spares consumed (charged to
Miscellaneous * - * 0.32
Components repairs and maintenance)
13,543.09 12,038.53 61.01 45.00 -Imported 6.47 30.38 5.96 34.08
* It is not practicable to furnish quantitative information in view of the considerable number of items diverse in size and nature. -Indigenous 14.83 69.62 11.53 65.92
These items in value individually account for less than 10% of the total value of the purchases, stocks and turnover of the aforesaid 21.30 100.00 17.49 100.00
spares and miscellaneous components.
*Excludes Rs. 0.55 crore (Previous year Rs 0.44 crore) for two wheelers produced and capitalised during the year.
+ Excluding 220 (Previous year 175) two wheelers capitalised. ** Excludes items sold and purchased as indigenous components.
c) Raw materials and components consumed:
Class of goods Units This year Previous year f) Expenditure in foreign currency (on accrual basis) :
Quantity Value Quantity Value This year Previous year
(Rs. in crores) (Rs. in crores)
(Rs. in crores) (Rs. in crores)
Steel sheets MT 5369.46 26.20 6130.02 27.94
Royalty 324.01 276.70
Components * 8,790.27 * 7,413.11
Technical guidance fee 3.33 2.62
8,816.47** 7,441.05 **
Model fee 30.78 29.87
* It is not practicable to furnish quantitative information of components consumed in view of the considerable number of items Export commission 11.67 11.60
diverse in size and nature. These items in value individually account for less than 10% of the total value of components
Travel and other accounts 3.78 5.45
consumed.
Advertisement and Publicity 4.23 6.25
** Excludes Rs.0.55 crore (Previous year Rs.0.44 crore) for two wheelers produced and capitalised during the year.
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g) Earnings in foreign currency (on accrual basis) : i) Provision and/or payment in respect of Auditors' Remuneration :
This year Previous year This year Previous year
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs. in crores)
FOB value of exports 247.04 242.79
a) As auditors (Audit fee) 0.38 0.28
Freight and insurance 1.07 0.85
b) In other capacity
- limited review of unaudited financial results 0.24 0.20
h) Managerial remuneration: - corporate governance and other certification 0.02 0.01
This year Previous year
(Rs. in crores) (Rs. in crores) c) Out of pocket expenses # #
Whole time Directors
# This year Rs 40143 (Previous year Rs 80329 )
Remuneration* 3.14 2.70
Commission** 74.39 59.13
j) Amount remitted in foreign currencies towards dividends during the year:
77.53 61.83
Non-Executive Independent Directors This year Previous year
Commission 0.31 0.35 No. of No. of equity Dividend No. of No of equity Dividend
77.84 62.18 Non-Resident shares held remitted Non-Resident shares held remitted
Directors' sitting fee 0.10 0.11 shareholders (Rs. in crores) shareholders (Rs. in crores)
*Excludes incremental contribution for gratuity, as the contributions are determined for the Company as a whole. 2007-2008 - Final 1 51918750 98.65 -
** Mr.Yutaka Kudo, whole time director was in employment with the Company up to May 30, 2008. Mr. Sumihisa Fukuda 98.65 88.26
joined the Company in place of Mr. Yutaka Kudo with effect from June 01, 2008. Accordingly, commission on profit has been
apportioned on a pro-rata basis to these whole-time directors and to the other three whole-time directors on a full year basis.
17. Previous year's figures have been recast/regrouped wherever necessary.
Computation of net profit in accordance with section 198 of the Companies Act,1956.
This year Previous year
(Rs. in crores) (Rs. in crores)
Profit before taxation as per profit and loss account 1,781.46 1,410.28
Add:-
Managerial remuneration 77.94 62.29
Provision for doubtful debts - 4.59
Provision for diminution in value of investment long term 0.20 1.28
Loss on sale of long term non-trade investments 2.04 -
For and on behalf of the Board of Directors
Net profit as per section 349 of the Companies Act,1956 1,861.64 1,478.44
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
Maximum managerial remuneration to four whole time
PRADEEP DINODIA Director
directors( including commission) at 10% of net profit 186.16 147.84
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PART IV OF SCHEDULE VI Reconciliation of Net Income as per US GAAP Accounts and Audited Accounts as per Indian Companies Act 1956
TO THE COMPANIES ACT, 1956
(Rupees in Millions)
Balance Sheet Abstract and Company's General Business Profile
2009 2008 2007 2006 2005
I. Registration Details
Net Profit after tax for the year as per audited accounts 12,817.60 9,678.80 8,578.90 9,713.40 8,104.70
Registration No. 17354
State Code 55 Add / (Less) : Profit / (Loss) of
Balance Sheet Date 31.03.2009 - Income from investments ( unrealised gain/loss )
- affiliated company 2.62 12.16 10.67 30.60 57.19
II. Capital Raised during the year (Rupees in crores) - held to maturity securities - - - 22.90 (11.77)
Public Issue Nil Rights Issue Nil - Exchange fluctuations - - 11.30 (8.40) (3.90)
Bonus Issue Nil Private Placement Nil - Depreciation effect of exchange fluctuations 0.68 0.68 5.37 18.26 21.75
- Depreciation on leased assets - - (76.60) (93.18)
III. Position of Mobilisation and Deployment of Funds (Rupees in crores)
- Lease rentals paid - - 135.58 117.83
Total Liabilities 3879.24 Total Assets 3879.24
- Interest portion of lease rentals - - (9.90) (15.51)
Sources of Funds Application of Funds
Paid-Up Capital 39.94 Net Fixed Assets 1694.25 - Provision for deferred tax (151.18) 180.33 (167.24) (103.56) (2.11)
Reserves & Surplus 3760.81 Investments 3368.75 - Deferred revenue expenditure - - - - -
Secured Loans Nil Net Current Assets* (1183.76) Net Income as per US GAAP 12,669.72 9,871.97 8,439.00 9,722.28 8,175.00
Unsecured Loans 78.49 Misc. Expenditure Nil
*Includes Deferred Tax Liability (Net) Rs. 144.43 crores
For and on behalf of the Board of Directors Total current assets 10,134.92 9,367.83 9,132.72 8,212.42 5,545.32
BRIJMOHAN LALL MUNJAL Chairman Investment (held to maturity securities) 416.79 1,599.99 1,612.79 1,595.18 1,596.07
PAWAN MUNJAL Managing Director & CEO Investment in mutual funds 33,637.31 24,617.11 18,522.31 19,680.81 18,973.12
PRADEEP DINODIA Director Investment in affiliate, at equity 267.20 264.58 252.42 241.75 211.14
RAVI SUD Sr. Vice President & CFO Property, plant and equipment 16,790.44 15,494.75 13,401.08 9,765.51 7,049.94
New Delhi
Total assets 61,246.66 51,344.26 42,921.32 39,495.67 33,375.59
April 21, 2009 ILAM C. KAMBOJ Sr. G.M. Legal & Company Secretary
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Total liabilities and stockholder’s equity 61,246.66 51,344.26 42,921.32 39,495.67 33,375.59
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