Your Directors are pleased to present the Thirty Fourth Annual Report together withthe Company's audited financial statements for the financial year ended March 31 2017.
FINANCIAL RESULTS STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
|Particulars ||Standalone ||Consolidated |
| ||Year ended ||Year ended |
| ||March 31 2017 ||March 31 2016 ||March 31 2017 ||March 31 2016 |
|Net Sales and Other Income ||31368.55 ||31123.31 ||31480.14 ||31128.16 |
|Profit before Finance costs and Depreciation ||5157.24 ||4877.40 ||5097.92 ||4810.53 |
|Expenses || || || || |
|Finance cost ||6.05 ||4.89 ||27.28 ||14.61 |
|Depreciation and amortisation expenses ||492.73 ||437.64 ||502.25 ||443.25 |
|Profit from ordinary activities before share of Profit / (Loss) of associates ||4658.46 ||4434.87 ||4568.39 ||4352.67 |
|Profit/ (loss) from associates || || || || |
|Share in net profit / (loss) of associates ||- ||- ||54.92 ||34.33 |
|Gain on dilution of interest in an associate ||- ||- ||262.09 ||- |
|Profit from ordinary activities before tax ||4658.46 ||4434.87 ||4885.40 ||4387.00 |
|Tax expense || || || || |
|Current tax ||1082.08 ||960.88 ||1082.24 ||960.91 |
|Deferred tax ||199.26 ||313.80 ||256.86 ||313.80 |
| ||1281.34 ||1274.68 ||1339.10 ||1274.71 |
|Net Profit from ordinary activities after tax ||3377.12 ||3160.19 ||3546.30 ||3112.29 |
|Other comprehensive income /(expense) (net of tax) ||(14.08) ||(2.37) ||(18.71) ||(3.42) |
|Total comprehensive income for the period ||3363.04 ||3157.82 ||3527.59 ||3108.87 |
|Net Profit / (loss) attributable to || || || || |
|a) Owners of the Company ||3377.12 ||3160.19 ||3584.27 ||3141.98 |
|b) Non controlling interest ||- ||- ||(37.97) ||(29.69) |
|Other comprehensive income attributable to || || || || |
|a) Owners of the Company ||(14.08) ||(2.37) ||(16.71) ||(2.56) |
|b) Non controlling interest ||- ||- ||(2.00) ||(0.86) |
|Total comprehensive income attributable to || || || || |
|a) Owners of the Company ||3363.04 ||3157.82 ||3567.56 ||3139.42 |
|b) Non controlling interest ||- ||- ||(39.97) ||(30.55) |
|Balance of profit brought forward ||6146.52 ||4921.06 ||6118.53 ||4911.26 |
|Dividend || || || || |
|- Interim ||1098.33 ||798.75 ||1098.33 ||798.75 |
|- Proposed Final ||639.00 ||599.06 ||639.00 ||599.06 |
|Corporate Dividend Tax ||353.70 ||284.55 ||353.69 ||284.55 |
|Transfer to General Reserve ||- ||250.00 ||- ||250.00 |
|Transfer to Foreign Currency Translation Reserve ||- ||- ||(14.17) ||(2.35) |
|Balance carried to Balance Sheet ||7418.53 ||6146.52 ||7597.60 ||6118.53 |
|Basic & diluted earning per equity share on Net profit from ordinary activities after tax (face value Rs. 2/- each) (In Rupees) ||169.12 ||158.26 ||179.49 ||157.34 |
During the Financial Year (FY) 2016-17 under review your Company clocked sales of6664240 units over 6632322 units in the previous FY.
During FY 2016-17 revenue from operations was Rs. 30846.12 crores as compared to Rs.30700.88 crores in FY 2015-16 registering an increase of 0.47%.
Profit before tax (PBT) was Rs. 4658.46 crores as compared to Rs. 4434.87crores in FY 2015-16 reflecting an increase of 5.04%. Profit after Tax (PAT) was Rs.3377.12 crores as against Rs. 3160.19 crores in FY 2015-16 an increase of 6.86% over theprevious year.
Earnings before Interest Depreciation and Taxes (EBIDTA) stood at 15.03% in FY2016-17 as compared to 14.51% in FY 2015-16.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Companies Act 2013 (the Act') and IndianAccounting Standard (AS)-110 on Consolidated Financial Statements read with IND AS-28Investments in Associates and Joint Ventures the Audited Consolidated Financial Statementfor the FY ended March 31 2017 is provided in this Annual Report.
CHANGES IN CAPITAL STRUCTURE
During the financial year under review 6750 equity shares of Rs. 2 each were allottedon exercise of employee stock options by the employees of the Company. Consequently theissued and paid up capital of the Company as on March 31 2017 was Rs. 399393676 dividedinto 199696838 equity shares of Rs. 2 each.
The Company has not issued any equity shares with differential rights sweat equityshares or bonus shares. The Company has only one class of equity shares with face value ofRs. 2 each ranking pari-passu.
Further improving on the dividend pay-out your Directors are pleased to recommend foryour approval a final dividend of Rs. 30 per equity share (1500%) of face value of Rs. 2each in addition to an interim dividend of Rs. 55 per equity share (2750%) declared inthe month of March 2017 aggregating a total final dividend payout of Rs. 1697.42 crores(excluding tax on dividend) during FY ended March 31 2017. In the previous FY totalfinal dividend payout of Rs. 72 per Equity Share of the face value of Rs. 2 each was made.Final dividend if approved at the ensuing Annual General Meeting shall be paid to theeligible members within the stipulated time period. During FY 2016-17 the Board ofDirectors has approved a Dividend Distribution Policy as per the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (Listing Regulations') which isavailable at the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/dividend-distribution-policy.html
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report andgives details of the overall industry structure economic developments performance andstate of affairs of your Company's business in India and abroad risk management systemsand other material developments during the financial year under review.
CHANGE IN NATURE OF BUSINESS
During FY 2016-17 there was no change in the nature of Company's business.
CAPACITY EXPANSION NEW PROJECTS & STRATEGIC ALLIANCES
During FY 2016-17 the fifth plant of your Company at Halol Gujarat started commercialproduction during the 3rd quarter. Your Company signed a sale deed with theAndhra Pradesh Industrial Infrastructure Corporation Limited for setting up its sixthmanufacturing facility at Sricity in Chittoor District in the state of Andhra Pradesh.
The construction of the second overseas plant of your Company at Jessore in Bangladeshwith an annual installed capacity of 1.5 lakh units is in full swing and is slated to beoperational in the first half of FY 2017-18.
Company's aggressive global expansion plans are in top gear. HMCL added five newmarkets in FY 2017 to take its global presence to 35 countries with a commitment to expandto 50 countries by 2020. The Company has commenced its operations in Argentina the 35thmarket to its rapidly growing global footprint. During FY under review your Companylaunched the brand "Hero" and its range of products in Myanmar Ghana GuineaLiberia and Argentina.
Over the years your Company has set global benchmarks in creating world classmanufacturing and operational facilities to ensure best in class products on designtechnology and quality. In the coming years your Company plans to strengthen itsoperations across South Asia Africa & Middle East and Latin America with theintroduction of new products.
SUBSIDIARIES ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 3 associatecompanies. The Company regularly monitors the performance of these companies.
The Company shall make available the annual accounts of the subsidiary companies to anymember of the Company who may be interested in obtaining the same. The annual accounts ofthe subsidiary companies will also be kept open for inspection at the registered office ofthe Company and respective subsidiary companies. Further the annual accounts of thesubsidiaries are also available on the website of the Company viz. www. heromotocorp.com.The consolidated financial statements presented by the Company include the financialresults of its subsidiary companies.
HMCL Netherlands B.V. (HNBV')
HNBV a wholly owned subsidiary of your Company was incorporated in Amsterdam as aprivate company with limited liability under the laws of The Netherlands with the primaryobjective of promoting overseas investments. During FY 2016-17 HNBV has invested inoperating companies in Colombia and Bangladesh and has reported a net loss of Rs. 0.83crores.
HMCL Colombia S.A.S. (HMCLC')
HMCLC was incorporated in Colombia as a joint venture between HNMV and Woven HoldingsLLC as a simplified stock corporation company. HNBV currently holds 51% equity in HMCLCand 49% equity shares are held by Woven Holdings LLC. The main business of HMCLC is tomanufacture and sell two wheelers in Colombia and is having a manufacturing facility witha production capacity of 60000 per annum. During the year ended March 31 2017 theCompany has reported a net loss of Rs. 65.30 crores.
HMCL Niloy Bangladesh Limited (HNBL')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy MotorsLimited Bangladesh as a limited liability company. HNBV currently holds 55% equity inHNBL and 45% equity shares are held by Nitol Niloy Group Bangladesh. The main business ofHNBL is to manufacture and sell two-wheelers. HNBL is in the process of setting up amanufacturing facility with a production capacity of 1.50 lakh two-wheelers per annum.During FY 2016-17 HNBL reported a net loss of Rs. 4.83 crores.
HMCL (NA) Inc.
HMCL (NA) Inc. a wholly owned subsidiary of your Company was incorporated as aCorporation pursuant to the General Corporation Law of the State of Delaware UnitedStates of America. HMCL (NA) Inc. has invested in Erik Buell Racing Inc. (EBR') aDelaware corporation by subscribing to 49.2% of its equity share capital. During theperiod ended March 31 2017 HMCL (NA) Inc. has incurred a loss of Rs. 0.01 crores.
HMCL Americas Inc. (HMCLA')
HMCLA a wholly owned subsidiary of your Company was incorporated as a Corporationpursuant to the General Corporation Law of the State of Delaware United States of Americawith the primary objective to pursue various global businesses. During the year endedMarch 31 2017 HMCLA has incurred a loss of Rs. 0.52 crores.
HMC MM Auto Limited (HMCMMA')
Your Company has a joint venture with Magneti Marelli S.p.A Italy namely HMC MM AutoLimited in India set up for the purpose of carrying out manufacturing assembly sale anddistribution of two wheeler fuel injection systems and parts. Your Company holds 60% ofthe equity share capital in HMCMMA. During FY 2016-17 HMCMMA has incurred a loss of Rs.9.49 crores.
Hero FinCorp Ltd. (HFCL')
HFCL an associate of your Company was incorporated in the year 1991. Your Companyholds 41.03% in the equity share capital of HFCL. HFCL is a non-banking finance companyengaged in providing financial services including two wheeler financing and providingcredit to Company's vendors and suppliers. Over the years it has added several newproducts and customers in its portfolio like SME and commercial loans loan againstproperty etc.
During FY 2016-17 HFCL recorded an income from operations of Rs. 1317.14crores and a profit of Rs. 249.39 crores.
Ather Energy Private Ltd. (AEL')
AEL is a private limited company focused on developing designing and selling premiumelectric two wheeler. During the year your company has acquired 30.1% stake in AEL whichreported a loss of Rs. 1.27 crores.
Erik Buell Racing Inc. (EBR')
Your Company through its subsidiary HMCL (NA) Inc. has invested in Erik Buell RacingInc. (EBR') a Delaware corporation by subscribing to 49.2% of its equity sharecapital. EBR has ceased its operations and entered into Assignment for the Benefit ofCreditors under Chapter 128 of the Wisconsin Statutes (Chapter 128 Process').
A statement containing salient features of financial statement of subsidiaries andassociate companies forms part of the financials.
The Board of Directors of your Company (the Board') has approved a policy fordetermining Material Subsidiaries. At present your Company does not have a MaterialSubsidiary. The Policy on Material Subsidiaries can be viewed on the Company's websitewww. heromotocorp.com at the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/policy-on-material.html
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During FY 2016-17 Mr. Sunil Kant Munjal stepped down from the Board of Directors oncompletion of his tenure as Joint Managing Director on August 16 2016. The Board isgrateful for his contributions during his tenure and wishes him success in all his futureendeavours.
At the previous Annual General Meeting of the Company the shareholders had approvedthe appointments of Mr. Pawan Munjal as Chairman Managing Director & CEO for a periodof 5 years and Mr. Vikram S. Kasbekar as Whole-time Director for a period of 3 years. Mr.Paul Bradford Edgerley was also appointed as Non-Executive & Independent Director for5 years.
In terms of the applicable provisions of the Act and the Articles of Association of theCompany Mr. Vikram S. Kasbekar Director of the Company retires by rotation at theensuing Annual General Meeting and being eligible has offered himself forre-appointment. Brief resume and other details of Mr. Vikram S. Kasbekar who is proposedto be re-appointed as a Director of your Company have been furnished along with theExplanatory Statement to the Notice of the ensuing Annual General Meeting.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed in the Act and the ListingRegulations.
In the opinion of the Board Independent Directors fulfil the conditions specified inthe Act Rules made thereunder and Listing Regulations and are independent of themanagement.
Key Managerial Personnel (KMP)
Mr. Pawan Munjal Chairman Managing Director & CEO Mr. Niranjan Gupta ChiefFinancial Officer and Ms. Neerja Sharma
Company Secretary are the KMPs of your Company in accordance with the provisions ofSection 2(51) 203 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
On March 31 2017 Mr. Ravi Sud superannuated and ceased to be the Chief FinancialOfficer of the Company. W.e.f. April 1 2017 Mr. Niranjan Gupta was appointed asthe Chief Financial Officer of the Company. He has a rich and international experience ofover two decades in finance leadership roles.
During FY 2016-17 five meetings of the Board of Directors were held. For details ofthese Board meetings please refer to the Corporate Governance section of this AnnualReport.
ANNUAL EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board it's Committees the Chairman andthe individual Directors was carried out for FY 2016-17. Led by the Nomination &Remuneration Committee (NRC') the evaluation was carried out using individualquestionnaires covering amongst others composition of Board conduct as per company values& beliefs contribution towards development of the strategy & business plan riskmanagement receipt of regular inputs and information codes & policies forstrengthening governance functioning performance & structure of Board Committeesskill set knowledge & expertise of Directors preparation & contribution at Boardmeetings leadership etc.
As part of the evaluation process the performance of non-independent Directors theChairman and the Board was conducted by the independent Directors. The performanceevaluation of the respective Committees and that of independent and non-independentDirectors was done by the Board excluding the Director being evaluated.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 of the Act whichis to the best of their knowledge and belief and according to the information andexplanations obtained by them:
1. that in the preparation of the annual accounts for the financial year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures;
2. that appropriate accounting policies have been selected and applied consistently andjudgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs as at March 31 2017 and of the profit and lossof your Company for the financial year ended March 31 2017;
3. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of your Company and for preventing and detecting fraud and otherirregularities;
4. that the annual accounts for the financial year ended March 31 2017 have beenprepared on a going concern basis;
5. that the directors have laid down Internal Financial Controls which were followed bythe Company and that such Internal Financial Controls are adequate and were operatingeffectively; and
6. that the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
Pursuant to provisions of the Act the NR Committee of your Board has formulated aRemuneration Policy for the appointment and determination of remuneration of theDirectors Key Managerial Personnel Senior Management and other employees of yourCompany. The NRC has also developed the criteria for determining the qualificationspositive attributes and independence of Directors and for making payments to Executive andNon-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry whilefixing appropriate remuneration packages and for administering the long-term incentiveplans such as ESOPs RSUs etc. Further the compensation package of the Directors KeyManagerial Personnel Senior Management and other employees is designed based on the setof principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors Key ManagerialPersonnel Senior Management and other employees is as per the Remuneration Policy of yourCompany.
The Remuneration details of the Directors Chief Financial Officer and CompanySecretary along with details of ratio of remuneration of each Director to the medianremuneration of employees of the Company for the FY under review are provided as AnnexureI.
The Remuneration Policy of your Company can be viewed on the following link-http://www.heromotocorp.com/en-in/about-us/key-policies/remuneration-policy.html and isalso provided as
EMPLOYEES' INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations 2014 as amended fromtime to time (SEBI Regulations') the NRC of your Board inter aliaadministers and monitors the Employees' Incentive Scheme 2014 of your Company and theEmployees' Stock Option plans framed thereunder.
Further the NRC has at its meeting held on August 22 2016 granted 49950 stockoptions under ESOP Plan 2016 to the eligible employees at an exercise option price of Rs.2469/- per option. In addition the NRC also approved grant of 11194 Restricted StockUnits under RSU Plan 2016 to the eligible employees at the face value of Rs. 2/- perunit.
Applicable disclosures as stipulated under the SEBI Regulations with regard to theEmployees' Stock Option Scheme are provided as Annexure III to this Report and isavailable on the Company's website www.heromotocorp.com and can be viewed on thefollowing link: http://www.heromotocorp.com/en-in/esop.php
Your Company has received a certificate from M/s Deloitte Haskins & Sells GurgaonHaryana Statutory Auditors (Firm Registration No. 015125N) that the Employees' IncentiveScheme 2014 for grant of stock options has been implemented in accordance with the SEBIRegulations and the resolution passed by the members in their general meeting. Thecertificate would be placed at the ensuing Annual General Meeting for inspection by themembers.
Your Company is committed to benchmarking itself with global standards of CorporateGovernance. It has put in place an effective Corporate Governance system which ensuresthat provisions of the Act and Listing Regulations are duly complied with not only inform but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles ofgood Corporate Governance and best management practices that are followed globally. TheCode is available on your Company's website www.heromotocorp.com and can be viewed on thefollowing link: http://www.heromotocorp. com/en-in/about-us/code-of-conduct.html
In terms of Listing Regulations a report on Corporate Governance along with thecertificate from Mr. Sanjay Grover Managing Partner (CP No. 3850) M/s Sanjay Grover& Associates Company Secretaries New Delhi confirming compliance of the conditionsof corporate governance is annexed hereto and forms part of this Annual Report as AnnexureIV.
TRANSFER TO GENERAL RESERVE
During the FY under review no amount has been transferred to the General Reserve ofthe Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review your Company has transferred unpaid/ unclaimed dividendamounting to Rs. 2.37 crores for FY 2008-09 to the Investor Education and Protection Fund(IEPF) of the Central Government of India.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Companyhave occurred between April 1 2017 and the date of signing of this Report.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
During FY 2016-17 your Company has not given any loan or guarantee pursuant toprovisions of Section 186 of the Act. Details of investments made in terms of Section 186of the Act are as under:
| ||Principal Amount (Shares) ||Principal Amount (Bonds/Debentures) ||Total |
|Opening ||593.70 ||362.40 ||956.10 |
|Addition * ||274.31 ||0.69 ||275.00 |
|Reduction ** ||- ||78.54 ||78.54 |
|Closing Balance ||868.01 ||284.55 ||1152.56 |
* HMCL MM Auto Limited Rs. 6.60 crores HMCL(NA) Rs. Nil HMCL Netherlands BV Rs. 50.79crores HMCL Americas Inc. Rs. Nil Hero FinCorp Limited Rs. 36.40 crores Ather EnergyPrivate Limited Rs. 180.52 crores including mark to market adjustment of Bonds Rs. 0.69crores.
** Maturity of bonds and amortisation
Your Company has neither accepted nor renewed any deposits during FY 2016-17 in termsof Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2016-17 all contracts/arrangements/transactions entered into by your Companywith related parties under Section 188(1) of the Act were in the ordinary course ofbusiness and on an arm's length basis. During FY 2016-17 your Company has not enteredinto any contracts/arrangements/transactions with related parties which could beconsidered material' in accordance with its Policy on Materiality of Related PartyTransactions. Thus there are no transactions required to be reported in form AOC-2.
Further during FY 2016-17 there were no materially significant related partytransactions made by your Company with the
Promoters Directors Key Managerial Personnel or other designated persons which mighthave potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval.There was no matter requiring approval of the Board. During FY under review the AuditCommittee has approved transactions through the Omnibus mode in accordance with theprovisions of the Act and Listing Regulations. Related party transactions were disclosedto the Board on regular basis as per IND AS 24. Details of related party transactions asper IND AS 24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company's websitewww.heromotocorp.com and can be viewed on the following link:http://www.heromotocorp.com/en-in/about-us/key-policies/related-party-transactions.html
RISK MANAGEMENT FRAMEWORK
Your Company follows a comprehensive system of Risk Management. It has adopted a policyand procedure for rapid identification definition of risk mitigation plans and execution.Actions include adjustments in prices dispatch plan for specific durations across modelsinventory build-up aligning product line-up as per regulatory mandates and activeparticipation in regulatory mechanisms. Many of these risks can be foreseen throughsystematic tracking. Major risks can be categorised across following:
1. Changes in regulations
2. Market contraction due to macro-economic factors
3. Socio-economic-political disruptions
Your Company has constituted a Risk Management Committee to oversee the risk managementefforts under the Chairmanship of Mr. M. Damodaran Independent Director. The details ofthe Committee alongwith its charter are set out in the Corporate Governance Reportforming part of this report. The Board periodically reviews the Risk Management frameworkof the Company.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated Vigil Mechanism/WhistleBlower Policy which provides a robust framework for dealing with genuine concerns &grievances. Your Company has an ethics hotline managed by a third party which can be usedby employees Directors vendors suppliers dealers etc. to report any violations to theCode of Conduct. Specifically employees can raise concerns regarding any discriminationharassment victimisation any other unfair practice being adopted against them or anyinstances of fraud by or against your Company. During FY under review three complaintswere received and processed. Out of these two complaints have been investigated &acted upon and remaining one is under investigation.
During FY 2016-17 no individual was denied access to the Audit Committee for reportingconcerns if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company'swebsite www.heromotocorp.com and can be viewed on the following link:http://www.heromotocorp. com/en-in/about-us/key-policies/vigil-mechanism-policy.html
CORPORATE SOCIAL RESPONSIBILITY
Your Company has constituted a Corporate Social Responsibility (CSR) Committee whichfunctions under direct supervision of Mr. Pawan Munjal Chairman Managing Director &CEO of your Company who is also the Chairman of the CSR Committee. Other members of theCommittee are Gen. (Retd.) V. P. Malik and Mr. Pradeep Dinodia who areNon-Executive and Independent Directors of your Company.
Your Company has implemented the CSR Policy duly formulated and recommended by the CSRCommittee to the Board. The CSR policy lays down CSR activities to be undertaken by yourCompany. The CSR activities undertaken by your Company are based on the approved CSRpolicy which is available on the Company's website www.heromotocorp.com and can beviewed on the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/corporate-social-responsibility.html
The CSR Policy of your Company as adopted by the Board broadly covers the followingfocus areas:
a) To direct HMCL's CSR Programmes inter aliatowards achieving one or more of thefollowing - enhancing environmental and natural capital; supporting rural development;promoting education including skill development; providing preventive healthcareproviding sanitation and drinking water; creating livelihoods for people especially thosefrom disadvantaged sections of society in rural and urban India and preserving andpromoting sports.;
b) To develop the required capability and self-reliance of beneficiaries at the grassroots in the belief that these are prerequisites for social and economic development;
c) To engage in affirmative action/interventions such as skill building and vocationaltraining to enhance employability and generate livelihoods for persons including fromdisadvantaged sections of society;
d) To pursue CSR Programmes primarily in areas that fall within the economic vicinityof the Company's operations to enable close supervision and ensure maximum developmentimpact;
e) To carry out CSR Programmes in relevant local areas to fulfil commitments arisingfrom requests by government/regulatory authorities and to earmark amounts of monies and tospend such monies through such administrative bodies of the government and/or directly byway of developmental works in the local areas around which the Company operates;
f) To carry out activities at the time of natural calamity or engage in DisasterManagement system;
g) To contribute to the Prime Minister's National Relief Fund or any other fund set upby the Central Government for socioeconomic development and relief and welfare of theScheduled Caste the Scheduled Tribes other backward classes minorities and women;
h) To contribute or provide funds to technology incubators located within academicinstitutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s)including Chief Minister's Relief Fund which may be recognised as CSR activity;
j) To promote sustainability in partnership with industry associations like theConfederation of Indian Industry (CII) PHD FICCI etc. in order to have a multiplierimpact.
During the FY under review your Company spent Rs. 85.14 crores on its CSRactivities which amounts to 2.41% of the average net profits of previous three financialyears. CSR initiatives undertaken by your Company along with other details form part ofthe Annual Report on CSR activities for FY 2016-17 which is annexed and forms part ofthis Report as Annexure V.
The Audit Committee of your Company comprises the following Non-Executive andIndependent Directors:
|1. Mr. Pradeep Dinodia ||- Chairman |
|2. Mr. M. Damodaran ||- Member |
|3. Gen. (Retd.) V. P. Malik ||- Member |
|4. Dr. Pritam Singh ||- Member |
Further details on the Audit Committee and its terms of reference etc. have beenfurnished in Corporate Governance Report which forms part of this Report as AnnexureIV.
During the FY under review all recommendations of the Audit Committee were accepted bythe Board of Directors of the Company.
AUDITORS AND AUDITORS' REPORT Statutory Auditors
M/s Deloitte Haskins & Sells Chartered Accountants Gurgaon (FR No. 015125N)Statutory Auditors of the Company were appointed until the conclusion of the 34thAnnual General Meeting of the Company in calendar year 2017. They have audited thefinancial statements of the Company for the FY under review. The observations of StatutoryAuditors in their Report read with relevant Notes to Accounts are self-explanatory andtherefore do not require further explanation. The Auditors' Report does not contain anyqualification reservation or adverse remark. Further there were no frauds reported bythe Statutory Auditors to the Audit Committee or the Board under Section 143(12) of theAct.
The Board of Directors in its meeting held on May 10 2017 have approved theappointment of M/s BSR & Co. LLP (FR No. 101248W/ W-100022) as the Statutory Auditorsof the Company for a period of 5 years. Your Company has received an eligibility letterfrom the Auditors for their appointment in accordance with Sections 139 and 141 of theAct. Their appointment is being placed before the shareholders for approval in the ensuingAnnual General Meeting of the Company.
M/s Ramanath Iyer & Co. Cost Accountants New Delhi (FR No. 000019) were appointedas the Cost Auditors of the Company for FY 2016-17 to audit the cost accounts of theCompany. They have been re-appointed as Cost Auditors for FY 2017-18.
Mr. Arvind Kohli Proprietor (CP No. 2818) M/s Arvind Kohli & Associates CompanySecretaries Gurgaon Haryana was appointed to conduct Secretarial Audit of your Companyduring FY 2016-17.
The Secretarial Audit Report for the said FY is annexed herewith and forms part of thisReport as Annexure VI. The Report does not contain any qualification reservationor adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. This ensuresthat all assets are safeguarded and protected against loss from unauthorised use ordisposition and all financial transactions are authorised recorded and reportedcorrectly.
An extensive risk based programme of internal audits and management reviews providesassurance to the Board regarding the adequacy and efficacy of internal controls. Theinternal audit plan is also aligned to the business objectives of the Company.Comprehensive policies guidelines and procedures are laid down for all businessprocesses. The internal control system has been designed to ensure that financial andother records are reliable for preparing financial and other statements and formaintaining accountability of assets.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015 (the PIT Regulations') on prevention of insider tradingyour Company had instituted a comprehensive Code of Conduct for regulating monitoring andreporting of trading by Insiders. The said Code lays down guidelines which adviseinsiders on the procedures to be followed and disclosures to be made in dealing with theshares of the Company and cautions them on consequences of non-compliances. During FY2016-17 your Company has strengthened the Code to ensure its effective implementation andmeaningful application of the Listing Regulations.
Your Company has further put in place a Code of practices and procedures of fairdisclosures of unpublished price sensitive information. Both the aforesaid Codes are inline with the PIT Regulations.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report (BRR') has been prepared and forms part of theAnnual Report as Annexure VII. The Report provides a detailed overview ofinitiatives taken by your Company from environmental social and governance perspectives.
The equity shares of your Company are presently listed on the BSE Limited and theNational Stock Exchange of India Limited (NSE).
As on March 31 2017 total number of employees on the records of your Company were8069 as against 7592 in the previous financial year.
Your Directors place on record their appreciation for the significant contribution madeby all employees who through their competence dedication hard work co-operation andsupport have enabled the Company to cross new milestones on a continual basis.
A detailed note on People at Hero' forms part of Management Discussion andAnalysis.
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014("Rules") is appended as Annexure I to the Report. The information as per Rule5(2) of the Rules forms part of this Report. However as per first proviso to Section136(1) of the Act and second proviso of Rule 5(2) of the Rules the Report and FinancialStatements are being sent to the Members of the Company excluding the statement ofparticulars of employees under Rule 5(2) of the Rules. Any Member interested in obtaininga copy of the said statement may write to the Company Secretary at the Registered Officeof the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(2) and 134(3)(a) of the Act and rules made thereunder extractsof Annual Return in Form MGT 9 is annexed to this report as Annexure VIII.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with rules madethereunder is annexed to this report as Annexure IX.
Your Directors state that there being no transactions with respect to following itemsduring FY under review no disclosure or reporting is required in respect of the same:
1. Deposit from the public falling within the ambit of Section 73 of the Companies Act2013 and The Companies (Acceptance of Deposits) Rules 2014.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of your Company underany scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Director of your Company receiveany remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
6. Buy back of shares.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace.This policy is in line with the requirements of The Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. All employees whetherpermanent contractual temporary and trainees are covered under this Policy.
As per the said Policy an Internal Complaints Committee is also in place to redresscomplaints received regarding sexual harassment. Following is the summary of complaintsreceived and disposed of during FY under review:
No. of complaints received: Nil No. of complaints disposed of: NA
AWARDS AND RECOGNITION
During the FY under review we have received multiple awards and recognition. Some ofthem are listed below:
1. Your Company has been adjudged as "Indian MNC of the year" by the AllIndia Management Association (AIMA)
2. NDTV Manufacturer of the year
3. International Fire and Security Exhibition and Conference (IFSEC) Award forExcellence in Manufacturing Security.
4. Golden Peacock Award for HR Excellence in Automobile Sector organised by Instituteof Directors.
The Board of Directors would like to express their sincere thanks to the Shareholders& Investors of the Company for the trust reposed on us over the past several years.Your Directors would also like to thank the Central Government State GovernmentsFinancial Institutions Banks Customers Employees Dealers Vendors and AncillaryUndertakings for their co-operation and assistance. We would like to reiterate ourcommitment to continue to build our organisation into a truly world class enterprise inall respects.
| ||For and on behalf of the Board |
| ||Pawan Munjal |
|Date: May 10 2017 ||Chairman |
|Place: New Delhi ||DIN: 00004223 |