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The two-wheeler industry registered a 5.2% growth in FY 2016-17, compared to the previous
year. The overall industry (domestic and export) increased from 18.94 million units in FY
2015-16 to 19.92 million units in FY 2016-17. The performance of Indias two-wheeler
industry in FY 2016-17 can be divided into two parts: pre- and post-demonetisation.
In February-March, 2017 the industry partially recovered, although it was hampered by the
industrys migration from BSIII to BSIV emission norms.
Risk Assessment
The landscape of the framework includes strategic, external, financial, regulatory and
operational risks to achieve key business objectives. Key strategic initiatives are identified to
mitigate specific risks. Hero MotoCorp seeks to minimise the adverse impact of these risks;
thereby enabling us to leverage market opportunities effectively and enhance its long-term
competitive advantage.
COMPETITIVE LANDSCAPE
The two-wheeler market is driven by the motorcycle segment and the market leader is one who
maintains the lead in that segment. However, the complexion of Indias two-wheeler industry
is changing due to two main reasons:
Change in segment contribution to the overall market - scooters continued to have a larger
share of the overall industry. Also, the revival of mopeds and growth in premium
motorcycle segment.
Competition intensification with new, global players entering and/or raising their
competitive intensity.
Moreover, domestic and global players alike have expanded their product portfolio in not just
the above-mentioned segments; but also in entry and deluxe segments of the market.
Except for the 2nd half of the calendar, FY 2016-17 witnessed a significant traction in each of
the segments including:
MACRO TRENDS
Hero MotoCorp has worked towards diversifying its products and expanding into new markets
to neutralise the impact of unforeseen trends in specific markets.
The Companys IT systems along with its third-party service providers and vendors
systems are vulnerable to the continually evolving cyber security risks. A Cyber
Security breach may adversely affect the Companys reputation, revenue and
earnings. We continue to strengthen our Information technology controls to prevent
ourselves from emerging cyber security threats
A decline in the market share in domestic markets or failure in growth in exports could have
an adverse impact on a Companys growth plans. These could be due to capacity
constraints, competitive pressures or other factors.
We aim to maintain competitive economies of scale and grow market share in domestic and
export markets.
Company follows a comprehensive system of Risk Management. It has adopted a policy and
procedure for rapid identification, definition of risk mitigation plans and execution. Actions
include adjustments in prices, dispatch plan for specific durations across models, inventory
build-up, aligning product line-up as per regulatory mandates and active participation in
regulatory mechanisms. Many of these risks can be foreseen through systematic tracking.
Company has constituted a Risk Management Committee to oversee the risk management
efforts under the Chairmanship of Mr. M. Damodaran, Independent Director. The details of
the Committee along with its charter are set out in the Corporate Governance Report, forming
part of this report. The Board periodically reviews the Risk Management framework of the
Company.