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Hero MotoCorp Ltd.

BSE: 500182 Sector: Auto
BSE 00:00 | 16 Apr 2893.75 30.75






NSE 00:00 | 16 Apr 2894.85 32.30






OPEN 2858.00
VOLUME 32149
52-Week high 3628.55
52-Week low 1753.20
P/E 21.25
Mkt Cap.(Rs cr) 57,817
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2858.00
CLOSE 2863.00
VOLUME 32149
52-Week high 3628.55
52-Week low 1753.20
P/E 21.25
Mkt Cap.(Rs cr) 57,817
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hero MotoCorp Ltd. (HEROMOTOCO) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the thirty seventh annual report together withthe Company's audited financial statements for the financial year ended March 31 2020.


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

(Rs. in crore)




Year ended

Year ended

March 31 2020 March 31 2019 March 31 2020 March 31 2019
Total Income 29614.43 34341.79 29985.88 34658.96
Profit before Finance cost and Depreciation 4736.30 5621.34 4791.48 5705.16
Finance cost 22.02 8.60 46.64 37.18
Depreciation and amortisation expenses 817.96 602.01 845.76 624.44
Profit from ordinary activities before share of Profit/(Loss) of associates 3896.32 5010.73 3899.08 5043.54
Profit/(Loss) of associates
Share in net profit/(loss) of associates - - 34.63 60.76
Exceptional items - NCCD income 737.48 - 737.48 -
Exceptional items - VRS expenses 60.11 - 60.11 -
Profit from ordinary activities before tax 4573.69 5010.73 4611.08 5104.30
Tax expense
Current tax 1084.11 1601.02 1096.79 1608.81
Deferred tax (143.68) 24.84 (145.12) 29.14
Total tax expense 940.43 1625.86 951.67 1637.95
Net Profit from ordinary activities after tax 3633.26 3384.87 3659.41 3466.35
Other comprehensive income/(expense) (net of tax) (31.78) (17.81) (18.29) (14.98)
Total comprehensive income for the year 3601.48 3367.06 3641.12 3451.37
Net Profit/(loss) attributable to
a) Owners of the Company 3633.26 3384.87 3638.11 3444.09
b) Non-controlling interest - - 21.30 22.26
Other comprehensive income attributable to
a) Owners of the Company (31.78) (17.81) (23.61) (16.32)
b) Non-controlling interest - - 5.32 1.34
Total comprehensive income attributable to
a) Owners of the Company 3601.48 3367.06 3614.50 3427.77
b) Non-controlling interest - - 26.62 23.60
Balance of profit brought forward 10147.81 9068.11 10385.31 9247.01
- Interim 1298.31 1098.50 1298.31 1098.50
- Final 639.13 798.85 639.13 798.85
Corporate Dividend Tax 395.03 390.01 401.46 390.01
Other comprehensive income arising from re-measurement of defined benefit obligation (net of income tax) - - (32.46) (18.43)
Balance carried to Balance Sheet 11416.82 10147.81 11652.06 10385.31
Earnings per equity share on Net Profit from ordinary activities after tax (face value Rs.2/- each) (In ')
- Basic 181.91 169.48 182.15 172.45
- Diluted 181.91 169.47 182.15 172.44


During FY 2019-20 your Company clocked sales of 63.98 lakh units over 78.21 lakh unitsin the previous financial year. Revenue from operations was Rs.28836.09 crore as comparedto Rs.33650.54 crore in FY 2018-19 registering a decrease of 14.31%.

Profit before tax (PBT) in FY 2019-20 was Rs.4573.69 crore as compared to Rs.5010.73crore in FY 2018-19 reflecting a decrease of 8.72%. Profit after tax (PAT) wasRs.3633.26 crore as against Rs.3384.87 crore in FY 2018-19 an increase of 7.34% fromthe previous year.

Earnings before Interest Depreciation and Taxes (EBIDTA) stood at 13.73% in FY2019-20 as compared to 14.65% in FY 2018-19.


In accordance with provisions of the Companies Act 2013 ('the Act') and IndianAccounting Standard (Ind AS)-110 on Consolidated Financial Statements read with Ind AS-28on Investments in Associates and Joint Ventures the Audited Consolidated FinancialStatements for the year ended March 31 2020 are provided in this annual report.


Towards the end of financial year 2019-20 the auto industry and the entire globaleconomy has been faced with an unprecedented disruption owing to the COVID-19 pandemic.The COVID-19 has resulted in interrupted supply chains halted production and lock-downleading to no retails. With COVID-19 situation escalating the Company had set-up aBusiness Continuity Task Force and proactively rolled-out a slew of measures to ensurehealth and safety of its employees and business partners including suspending productionat all its manufacturing facilities on March 22 2020. The Company along with other HeroGroup companies has been engaged in a host of social welfare work setting aside a corpusof Rs.100 crore for the relief efforts towards COVID-19 including a contribution of Rs.50crore to the PM-Cares fund.

Ensuring stringent safety protocols for employee and customer wellbeing the Companyreopened in a gradual manner all its manufacturing facilities during the month of May2020. While the COVID-19 pandemic has pushed several timelines the Company hassuccessfully navigated through the unprecedented times. The Company is largely dependenton the retail sales and is confident about gradual resumption of the pre-lockdown salesfigure. The Company is proactively adapting to the changing business needs and will stayprepared dynamically to do course correction if and when required.


During the year under review 12484 equity shares of Rs.2 each were allotted onexercise of employee stock options and Restricted Stock Units (RSUs) by the employees ofthe Company. Consequently the issued and paid-up share capital of the Company as on March31 2020 was Rs.399478736 divided into 199739368 equity shares of Rs.2 each.

Further on June 8 2020 1674 equity shares of Rs.2 each were allotted on exercise ofRSUs by an employee of the Company. Thus the issued and paid-up share capital of theCompany was increased to Rs.399482084 divided into 199741042 equity shares of Rs.2each.

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.


Your Directors are pleased to recommend for your approval a final dividend of Rs.25 perequity share (1250%) of face value of Rs.2 each in addition to an interim dividend ofRs.65 per equity share (3250%) declared in the month of February 2020 aggregating a totaldividend payout of Rs.90 per equity share (4500%) for FY 2019-20. In the previous yeartotal dividend payout of Rs.87 per equity share (4350%) of the face value of Rs.2 each wasmade. Final dividend if approved at the ensuing annual general meeting shall be paid tothe eligible members within the stipulated time period. Dividend Distribution Policy ofthe Company as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 ('Listing Regulations') is available at the followinglink: and is also provided as Annexure - I.


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 year under review.


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


During FY 2019-20 your Company's sixth manufacturing facility in Chittoor District inthe state of Andhra Pradesh was commissioned with Phase I installed capacity of 0.4million units. The total Phase I investment is approximately Rs.700 crore out of totalprojected investment of Rs.1600 crore in setting up the manufacturing facility.

Further the overseas plants of your Company in Bangladesh and Colombia haveconsolidated their respective capacities during FY 2019-20 and attained a decent marketshare.

Transition from BSIV to BSVI emission norms has been successfully accomplished well intime across all platforms in FY 2019-20. Splendor iSmart was the first two-wheeler inIndia to get BSVI certification from International Centre for Automotive Technology (ICAT)in Q1 of FY 2019-20. Comprehensive efforts were demonstrated across your Company tooptimise capacities investments and obsolescence across the value chain.

Your Company is constantly expanding the boundaries on innovation - both internal andexternal. It has been running internal idea generation contests successfully involvingemployees for many years now. As a responsible corporate in accordance with itssustainability journey your Company has released its second annual Sustainability Reportencompassing ESG (Environment Social and Governance) aspects. Your Company has alsoformulated a long-term strategy to address the material issues with the objective ofmaking it one of the most sustainable organisations.


Your Company continues to strengthen its presence in global markets. During FY 2019-20with footprints in 40 markets outside India the focus was to scale-up the innovationefforts especially in the retail financing front. Your Company has been successful inscaling up retail finance in Bangladesh Nepal and Colombia wherein a substantialpercentage of our monthly volumes on financing has now been gained. Despite the toughturf your Company managed to gain market share in focus markets.

Working closely with strong allied business partners has been the key for your Companyto grow in the global markets. Your Company also showed strength in various auto showsheld across the globe including EICMA in Italy Colombia Turkey Nepal Sri LankaBolivia UAE Ethiopia Kenya and Ecuador.


Your Company saw early signs of success with the two projects that were launched underthe newly created incubation center - HeroHatch. These were showcased during Hero World2020 and garnered great interest from the stakeholders. Hero World 2020 afirst-of-its-kind three-day event was organised at the state-of-the-art R&D hub of theCompany the Centre of Innovation & Technology (CIT) in Jaipur. This event wasattended by global media investors dealers from India supply chain partners and globaldistributors from around the world. The Company showcased three new products world-classproduct accessories and displayed its entire global product portfolio followed by severalproduct concepts and business initiatives and provided a glimpse into the universe of HeroMotoCorp including the R&D labs test-tracks and technology.

One of the projects introduced is a concept vehicle which is the world's first classchanging vehicle and can be used as a two-wheeler (2W) and three-wheeler (3W). The secondproject is around digitising the used 2W with data-driven technology. A third projectunder HeroHatch was launched in FY 2019-20. The new format of Idea Contest introduced lastyear led to more effective implementation of ideas. The Company-wide Idea Contest wasundertaken for the 7th year on a new platform in FY 2019-20 driving more collaborationamong employees and increasing transparency.


The Company has 6 subsidiaries including step down subsidiaries and 2 associatecompanies and regularly monitors the performance of these companies. During the year underreview the Company's wholly-owned subsidiary HMCL (NA) Inc. which had invested in ErikBuell Racing Inc. was dissolved and thus Erik Buell Racing Inc. also ceased to be theassociate of your Company.

The annual accounts of subsidiary companies are available on the website of the Companyviz. and shall also be kept open for inspection at the registeredoffice of the Company and respective subsidiary companies. The Company shall also makeavailable the annual accounts of these companies to any member of the Company who may beinterested in obtaining the same. The consolidated financial statements presented by theCompany include the financial results of its subsidiary companies


Hero Tech Center Germany GmbH (‘HTCG')

HTCG a wholly-owned subsidiary of your Company was incorporated in Germany toundertake research and development and such other ancillary activities for themanufacture testing validating etc. of two-wheelers and components/parts thereof. Italso undertakes coordinates and facilitates two-wheeler rally participation anddevelopment activities. During FY 2019-20 HTCG has reported unadjusted revenue ofRs.70.52 crore and a net profit of Rs.4.39 crore.

HMCL Netherlands B.V. (‘HNBV')

HNBV a wholly-owned subsidiary of your Company was incorporated in Amsterdam as aprivate company with limited liability under the laws of The Netherlands with the primaryobjective of promoting overseas investments. HNBV has invested in operating companies inColombia and Bangladesh and during FY 2019-20 it has reported unadjusted revenue ofRs.20.19 crore and a net profit of Rs.19.03 crore.

HMCL Colombia S.A.S. (‘HMCLC')

HMCLC was incorporated in Colombia as a joint venture between HNBV and Woven HoldingsLLC as a simplified stock corporation company. HNBV currently holds 68% equity in HMCLCand 32% equity is held by Woven Holdings LLC. The main business of HMCLC is to manufactureand sell two-wheelers in Colombia. It has a manufacturing facility with a productioncapacity of 60000 per annum. During the year ended March 31 2020 the Company hasreported unadjusted revenue of Rs.198.36 crore and a net loss of Rs.41.30 crore.

HMCL Niloy Bangladesh Limited (‘HNBL')

HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy MotorsLimited Bangladesh as a limited liability company. HNBV currently holds 55% equity inHNBL and 45% equity is held by Nitol Niloy Group Bangladesh. The main business of HNBL isto manufacture and sell two-wheelers. During FY 2019-20 HNBL reported unadjusted revenueof Rs.798.57 crore and a net profit of Rs.87.28 crore.

HMCL Americas Inc. (‘HMCLA')

HMCLA a wholly-owned subsidiary of your Company was incorporated as a 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 2020 HMCLA has reported unadjusted revenue of Rs.0.43 crore and a net profit ofRs.0.30 crore.

HMC MM Auto Limited (‘HMCMMA')

Your Company has a joint venture with Marelli Europe S.p.A. Italy namely HMC MM AutoLimited in India which is set up for the purpose of carrying out manufacturing assemblysale and distribution of two-wheeler fuel injection systems and parts. Your Company holds60% of the equity share capital in HMCMMA. During FY 2019-20 HMCMMA has reportedunadjusted revenue of Rs.67.40 crore and a net loss of Rs.11.91 crore.

HMCL (NA) Inc.

HMCL (NA) Inc. a wholly-owned subsidiary of your Company was incorporated as aCorporation pursuant to the General Corporation Law of the State of Delaware UnitedStates of America. The Company was dissolved effective November 6 2019 pursuant to orderof the State of Delaware. HMCL (NA) Inc. had invested in Erik Buell Racing Inc. ('EBR')a Delaware Corporation by subscribing to 49.20% of its equity share capital. Since HMCL(NA) Inc. has been dissolved Erik Buell Racing Inc. is no longer an associate of yourCompany.

Associate Companies Hero FinCorp Limited (‘HFCL')

HFCL an associate of your Company was incorporated in the year 1991. Your Companyholds 41.19% 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 2019-20 HFCL's profit attributable to the Company is Rs.111.74 crore.

Ather Energy Private Limited (‘AEL')

AEL is a private limited company focussed on developing designing and selling premiumelectric two-wheelers. The shareholding of your Company in AEL is 35.10% which isequivalent to 31.27% on a fully diluted basis. During FY 2019-20 AEL's loss attributableto the Company is Rs.77.41 crore.

A statement containing salient features of financial statements of subsidiaries andassociate companies forms part of the financials.

Material Subsidiaries

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 at the following link: policy/20191126105356-code-policy-400.pdf.


In terms of applicable provisions of the Act and the Articles of Association of theCompany Mr. Suman Kant Munjal Director of the Company retires by rotation at the ensuingannual general meeting and being eligible has offered himself for re-appointment. Briefresume and other details of Mr. Suman Kant Munjal who is proposed to be re-appointed as aDirector of your Company have been furnished in the explanatory statement to the noticeof the ensuing annual general meeting.

During the year under review your Company has appointed Ms. Tina Trikha as anAdditional Director of the Company in the category of Non-Executive and IndependentDirectors effective October 23 2019. The Board recommends her appointment as anIndependent Director of the Company. The Company has received a notice in writing underSection 160 of the Act from a member proposing the candidature of Ms. Trikha.

The appointment of new directors is recommended by the Nomination and RemunerationCommittee ('NRC') on the basis of requisite skills proficiency experience andcompetencies as identified and finalized by the Board considering the industry and sectorin which the Company operates. The Board on the recommendation of the NRC independentlyevaluates and if found suitable confirms an appointment to the Board. The appointmentsare based on the merits of the candidate and due regard is given to diversity includingfactors like gender age cultural educational & geographical background ethnicityetc.

In the opinion of the Board the Independent Directors appointed/re-appointed duringthe year under review are persons of high repute integrity and possess the relevantexpertise and experience in their respective fields.

The Company has a robust succession planning process which is overseen by theNomination and Remuneration Committee.

During the year Ms. Shobana Kamineni ceased to be a Director of the Company effectiveMarch 26 2020 due to completion of her term of 5 years as an Independent Director. TheBoard places on record its appreciation for the guidance and support provided by Ms.Kamineni during her tenure with the Company.

Key Managerial Personnel

Dr. Pawan Munjal Chairman Managing Director & CEO Mr. Niranjan Gupta ChiefFinancial Officer and Ms. Neerja Sharma Company Secretary and Chief Compliance Officerare the Key Managerial Personnel of your Company in accordance with the provisions ofSection 2(51) and 203 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

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.


During FY 2019-20 five meetings of the Board of Directors were held. For details ofthese Board meetings please refer to the section on Corporate Governance of this annualreport.


A formal evaluation of the performance of the Board it's Committees the Chairman andthe individual Directors was carried out for FY 2019-20. Led by the Nomination &Remuneration Committee the evaluation was carried out using individual questionnairescovering 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.

Further the Committees were evaluated in terms of receipt of appropriate material foragenda topics in advance with right information and insights to enable them to performtheir duties effectively review of committee charter updation to the Board on keydevelopments major recommendations & action plans stakeholder engagement devotingsufficient time & attention on its key focus areas with open impartial &meaningful participation and adequate deliberations before approving importanttransactions & decisions.

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.

The actions emerging from the Board evaluation process were collated and presentedbefore the Nomination were Remuneration Committee as well as the Board.Suggestions/feedback concerning strategic governance and operational matters are actionedupon by the team.


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 2020 the applicable accounting standards were followed along with proper explanationrelating to material departures;

2. that appropriate accounting policies were selected and applied consistently andjudgments and estimates that are reasonable and prudent were made so as to give a true andfair view of the state of affairs as at March 31 2020 and of the profit and loss of yourCompany for the financial year ended March 31 2020;

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 2020 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 Nomination and Remuneration Committee ('NRC') ofyour Board has formulated a Remuneration Policy for the appointment and determination ofremuneration of the Directors Key Managerial Personnel senior management and otheremployees of your Company. The NRC has also developed the criteria for determining thequalifications positive attributes and independence of Directors and for making paymentsto Executive and Non-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 year under review are provided asAnnexure - II.

The Remuneration Policy of the Company was changed during the year to include thePolicy on Board Diversity and to define the performance framework for senior managementpersonnel. Further the commission of the Executive Directors was modified to such limitsas prescribed under Sections 197 and 198 of the Act. The Remuneration and Board DiversityPolicy of your Company can be viewed at the following link: policy/20191126105210-code-policy-421.pdf.

The salient features of the updated Remuneration and Board Diversity Policy are asunder:

1. To determine remuneration of Directors KMP other senior management personnel andother employees keeping in view all relevant factors including industry trends andpractices.

2. At the Board meeting only the Non-Executive and Independent Directors shallparticipate in approving the remuneration paid to the Executive Directors.

3. The remuneration structure for the Executive Directors would include basic salarycommission perquisites & allowances contribution to Provident Fund and other funds.If the Company has no profits or its profits are inadequate they shall be entitled tominimum remuneration as prescribed under the Act.

4. The Non-Executive and/or Independent Directors will also be entitled to remunerationby way of commission aggregating upto 1% of net profits of the Company pursuant to theprovisions of Sections 197 and 198 of the Act in addition to sitting fees.

5. The compensation for Key Managerial Personnel senior management and other employeesis based on the external competitiveness and internal parity through periodic benchmarkingsurveys. It includes basic salary allowances perquisites loans and/or advances as perrelevant HR policies retirement benefits performance linked pay out benefits underwelfare schemes etc. besides long-term incentives/ESOPs/RSUs/Performance shares or suchother means as may be decided by the NRC.

6. Performance goals of senior management personnel shall be quantifiable andassessment of individual performance to be done accordingly. A significant part of seniormanagement compensation will be variable and based upon Company performance.

7. To ensure adequate diversity at Board level all appointments to be made on thebasis of merit and due regard shall be given to other diversity attributes also. The NRCshall recommend the appointment or continuation of members to achieve optimum combinationat the Board and periodically assess the specific requirements in relation to Boarddiversity.


In terms of the SEBI (Share Based Employee Benefits) Regulations 2014 as amended fromtime to time ('SEBI Regulations') the NRC of your Board inter a/iaadministersand monitors the Employees' Incentive Scheme 2014 of your Company and the Employees'Stock Option plans framed thereunder.

Further the NRC has at its meeting held on October 22 2019 approved grant of 98750Stock Options at an exercise price of Rs.1745/- per option under ESOP Plan 2019 and5210 Restricted Stock Units (RSUs) at face value of Rs.2/- per unit under RSU Plan 2019to certain eligible employees of the Company.

Applicable disclosures as stipulated under the SEBI Regulations with regard to theEmployees' Stock Option Scheme are provided as Annexure - III to this report and areavailable on the Company's website and can be viewed at thefollowing link:

Your Company has received a certificate from M/s. BSR & Co. LLP Statutory Auditors(Firm Registration No. 101248W/W-100022) that the Employees' Incentive Scheme 2014 forgrant of stock options has been implemented in accordance with the SEBI Regulations andthe resolution passed by the members in their general meeting. The certificate would beplaced/available at the ensuing annual general meeting for inspection by the members.


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 and can be viewed at thefollowing link:


In terms of Listing Regulations a report on Corporate Governance along with thecertificate from M/s. Sanjay Grover & Associates Company Secretaries (FirmRegistration No. P2001DE052900) confirming compliance of the conditions of CorporateGovernance is annexed hereto and forms part of this annual report as Annexure - IV andAnnexure - V respectively.


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


During the year under review your Company has transferred unpaid/unclaimed dividendamounting to Rs.5.27 crore for FY 2011-12 and 25264 shares to the Investor Education andProtection Fund (IEPF) Authority of the Central Government of India. Further dividendpertaining to the shares transferred to demat account of the IEPF Authority amounting toRs.9.72 crore was also transferred to the IEPF Authority.


No material change and/or commitment affecting the financial position of your Companyhas occurred between April 1 2020 and the date of signing of this report. However inview of the ongoing Covid-19 pandemic your Company carried out a comprehensive assessmentof possible impact on its business operations financial assets contractual obligationsand its overall liquidity position based on the internal and external sources ofinformation and application of reasonable estimates. Your Company did not foresee anysignificant incremental risk to the recoverability of its assets or in meeting itsfinancial obligations over the foreseeable future given early and required steps taken tocontain protect and mitigate the exposure.


During FY 2019-20 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:

('in crore)
Principal Amount (Shares) Principal Amount (Bonds/ Debentures) Total
Opening 1573.41 350.75 1924.16
Addition* 409.88 74.36 484.24
Reduction** (0.34) (150.12) (150.46)
Closing Balance 1982.95 274.99 2257.94

* HMC MM Auto Limited - Rs.12.00 crore HMCL Netherlands BV - Rs.19.51 crore HeroFinCorp Limited - Rs.248.37 crore Ather Energy Private Limited - Rs.130 crore (consequentto conversion of compulsorily convertible debentures into compulsorily convertiblepreference shares)

** Maturity of bonds and amortisation


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


During FY 2019-20 all contracts/arrangements/ transactions entered into by yourCompany with related parties under Section 188(1) of the Act were in the ordinary courseof business and on an arm's length basis. During FY 2019-20 your Company has not enteredinto any contract/arrangement/transaction with related parties which could be considered‘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 2019-20 there were no materially significant related partytransactions entered into by your Company with the Promoters Directors Key ManagerialPersonnel or other designated persons which might have potential conflict with theinterest of the Company at large.

All related party transactions are placed before the Audit Committee for its approval.There was no related party transaction requiring approval of the Board. During the yearunder review the Audit Committee approved transactions through the omnibus mode inaccordance with the provisions of the Act and Listing Regulations. Related partytransactions were disclosed to the Board on regular basis as per Ind AS-24. Details ofrelated party transactions as per Ind AS-24 may be referred to in Note 36 of theStandalone Financial Statements.

The policy on related party transactions is available on the Company' and can beviewed at the following link: policy/20191126104550-code-policy-434.pdf.


The Company has in place a risk management policy. The primary objectives of the policyindude identification and categorization of potential risks their assessment andmitigation. The Board has entrusted the Risk Management Committee (RMC) with overseeingthe processes of identification evaluation and mitigation of risks. The RMC periodicallyreviews the organisational risks that are spread across operational financialtechnological and environmental spheres and provides guidance to the management team.

The management team besides continuous monitoring of existing risks ensures that eachhigh impact risk is moved up from a functional level to the organisation level riskregister and each risk that is elevated to the organisational level risk register ismonitored and reviewed centrally.

Through an extensive process in place your Company in FY 2019-20 identified multiplenew risks. These became the basis for specific risk descriptions that were added to theorganisational risk register. Your Company developed a detailed mitigation plan for eachexisting and new risk and through a well-defined and institutionalised process ensuredthat the plan is executed in an efficient and result oriented manner. Transitioning toBSVI technology was one of the bigger challenges for the automotive industry

in FY 2019-20. In addition to the multiple other efforts the processes of continuousmonitoring and reviewing worked very well in managing this overall transition. YourCompany displayed its commitment to environmental leadership by not just successfullytransitioning to the BSVI technology and mitigating the risk associated with it but byactually coming up with the technology much ahead of the deadline.

Going forward your Company is committed to protect the interests of its customersstakeholders investors shareholders employees and each person or entity with whom it isassociated. Towards this goal your Company will further strengthen the internal processesand evaluate even more innovative ways to blunt the risk impact.

The details of the RMC along with its charter are set out in the Corporate GovernanceReport forming part of this report.


Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors has formulated Vigil Mechanism/Whistle BlowerPolicy which provides a robust framework for dealing with genuine concerns and grievances.Your Company has an ethics hotline managed by a third party which can be used byemployees 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 the year an Ethics Campaign was rolled out across the organization under theguidance of the Ethics Committee. The objectives of the Campaign were to reinforce theprinciples of the Code of Conduct amongst the employees motivate them to follow Hero corevalues and instill pride in being an 'Ethical Hero'. The Ethics campaign was augmentedwith Ethics workshops. The objectives of the workshops were to provide details of thevigil mechanism policy and reporting channels to understand key sections of the Code ofConduct and how to respond in ethical dilemma situations. An open house was conducted atthe end of each session where Ethics Committee members interacted with the participantsand answered their queries. To engage employees quizzes were conducted based on theprinciples of the Code of Conduct. The initiatives received an overwhelming response andthe campaign recorded encouraging feedback.

During the year under review 19 complaints were received through various reportingchannels and 3 complaints were carried forward from previous year. Out of these 14complaints have been investigated and acted upon 4 complaints were reviewed and handedover to HR for closure and remaining 4 are under investigation.

During FY 2019-20 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 and can be viewed at the following link: policy/20191126104803-code-policy-359.pdf.


Your Company has constituted a Corporate Social Responsibility (CSR) Committee whichfunctions under direct supervision of Dr. Pawan Munjal Chairman Managing Director &CEO of your Company who is also the Chairman of the CSR Committee. Other members of theCommittee are Mr. Pradeep Dinodia and Prof. Jagmohan Singh Raju who are the Non-ExecutiveDirector and Independent Director of your Company respectively.

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 and can beviewed on the following link: There has been no change in the CSR Policy ofthe Company.

The CSR Policy of your Company as adopted by the Board broadly covers the followingfocus areas:

a) To direct the Company's CSR Programmes inter alia towards achieving one ormore of the following - enhancing environmental and natural capital; supporting ruraldevelopment; promoting education including skill development; providing preventivehealthcare providing sanitation and drinking water; creating livelihoods for peopleespecially those from disadvantaged sections of society in rural and urban India andpreserving and promoting sports;

b) To develop the required capability and self-reliance of beneficiaries at the grassroots in the belief that these are pre-requisites for social and economic development;

c) To engage in affirmative action/interventions such as skill building and 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 socio-economic 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 CII PHDFICCI etc. in order to have a multiplier impact.

During the year under review your Company spent Rs.130.61 crore on its CSR activitieswhich is more than 2% of the average net profits of previous three financial years. TheCSR initiatives undertaken by your Company along with other details form part of theannual report on CSR activities for FY 2019-20 which is annexed as Annexure - VIII. Theoverview of CSR activities carried out in FY 2019-20 is provided in a separate section inthis annual report.


The Audit Committee of your Company comprises of the following Non-Executive andIndependent Directors:

1. Mr. M. Damodaran - Chairman
2. Mr. Pradeep Dinodia - Member
3. Mr. Paul B. Edgerley - Member
4. Ms. Tina Trikha - Member

Ms. Tina Trikha has been inducted in the Audit Committee in the Board meeting held onOctober 23 2019. Further details on the Audit Committee and its terms of reference etc.have been furnished in Corporate Governance Report which forms part of this report asAnnexure - IV.

During the year under review all recommendations of the Audit Committee were acceptedby the Board of Directors of the Company.


Statutory Auditors

M/s. BSR & Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022)were appointed in 2017 as the Statutory Auditors of the Company until the conclusion ofthe 39th annual general meeting of the Company.

M/s. BSR & Co. LLP is one of the leading & recognised audit firms affiliatedto a renowned global brand. Its experience as an audit firm is commensurate with therequirements as regards the size and competencies necessary for rendering auditingservices to the Company. The firm performs its obligations in adherence to recognisedauditing standards and periodically certifies its independence from the management.

They have audited the financial statements of the Company for the year under review.The observations of Statutory Auditors in their Report read with relevant Notes toAccounts are self-explanatory and therefore do not require further explanation. TheAuditors' Report does not contain any qualification reservation or adverse remark.Further there were no frauds reported by the Statutory Auditors to the Audit Committee orthe Board under Section 143(12) of the Act.

Cost Auditors

The Board on the recommendation of Audit Committee has approved the appointment ofM/s. Ramanath Iyer & Co. Cost Accountants as Cost Auditors for the financial yearending

March 31 2021. The Cost Auditors will submit their report for the FY 2019-20 on orbefore the due date.

In accordance with the provisions of Section 148 of the Act read with Companies (Audit& Auditors) Rules 2014 your Company is required to maintain cost records andaccordingly such accounts and records are maintained by the Company. Further since theremuneration payable to the Cost Auditors is required to be ratified by the shareholdersthe Board recommends the same for approval by members at the ensuing annual generalmeeting.

Secretarial Auditors

M/s. Sanjay Grover & Associates Company Secretaries (Firm Registration No.P2001DE052900) were appointed to conduct Secretarial Audit of your Company during FY2019-20.

The Secretarial Audit Report for the said year is annexed herewith and forms part ofthis report as Annexure - IX. The Report does not contain any qualification reservationor adverse remark.


Your Company has a robust and well embedded system of internal controls. Comprehensivepolicies guidelines and procedures are laid down for all business processes. The internalcontrol system has been designed to ensure that financial and other records are reliablefor preparing financial and other statements and for maintaining accountability of assets.

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 dynamic and aligned to the business objectives of the Company andis reviewed by the Audit Committee each quarter. Further the Audit Committee alsomonitors the status of management actions emanating from internal audit reviews.

During the year such controls were assessed and no reportable material weaknesses inthe design or operation were observed.


In compliance with the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015 ('the PIT Regulations') on prevention of insider trading yourCompany has revised its Code of Conduct for regulating monitoring and reporting oftrading by Designated Persons in line with the recent amendments brought by SEBI in thePIT Regulations. The said Code lays down guidelines which advise Designated Persons onthe procedures to be followed and disclosures to be made in dealing with the shares of theCompany and cautions them on consequences of non-compliances.

Your Company also has a Code of practices and procedures of fair disclosures ofunpublished price sensitive information including a policy for determination of legitimatepurposes along with the Institutional Mechanism for prevention of insider trading andPolicy and procedures for inquiry in case of leak of unpublished price sensitiveinformation or suspected leak of unpublished price sensitive information. Further yourCompany has put in place adequate and effective system of internal controls and standardprocesses have been set to ensure compliance with the requirements given in theseregulations to prevent insider trading.

To increase awareness on the prevention of insider trading in the organization and tohelp the Designated Persons to identify and fulfill their obligations a comprehensivecampaign was run at all locations of Hero MotoCorp Ltd. This included display of relevantand useful content by way of posters on the notice boards and other strategic locationsplacement of standees at common areas key messaging through desktop wallpapers andscreensavers orientation sessions as part of regular employee induction conductingCompany-wide workshops for all Designated Persons by a subject matter expert sending textmessages for closure of trading window and submission of periodic disclosures etc.


As stipulated under the Listing Regulations the Business Responsibility Report ('BRR')has been prepared and forms part of the annual report as Annexure - X. The Report providesa detailed overview of initiatives taken by your Company from environmental social andgovernance perspectives.


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


As on March 31 2020 total number of employees on the records of your Company were8599 as against 8551 in the previous year.

During March 2020 an employee survey was conducted to ascertain the organization'sability to align around a common vision execute against that vision effectively and renewitself through innovation and creative thinking by an independent agency. Relevantemployees participated in the survey to identify the priority areas that are being workedupon.

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.


The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014('Rules') is appended as Annexure - II to the report. The information as per Rule 5(2) ofthe Rules forms part of this report. However as per first proviso to Section 136(1) ofthe Act and second proviso of Rule 5(2) of the Rules the report and Financial Statementsare being sent to the members of the Company excluding the statement of particulars ofemployees under Rule 5(2) of the Rules. Any member interested in obtaining a copy of thesaid statement may write to the Company Secretary at the registered office of the Company.


In terms of Sections 92(3) and 134(3)(a) of the Act and rules made thereunder extractof the Annual Return in Form No. MGT-9 is annexed to this report as Annexure - XI and isalso available under the 'Investors' section of the Company's


The Company is fully compliant with the applicable Secretarial Standards (SS) viz. SS-1& SS-2 on Meetings of the Board of Directors and General Meetings respectively.


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


Your Directors state that there being no transactions with respect to following itemsduring the year under review no disclosure or reporting is required in respect of thesame:

1. Deposits from the public falling within the ambit of Section 73 of the CompaniesAct 2013 and the Companies (Acceptance of Deposits) Rules 2014.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of your Company 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 or under section 67(3).


Your Company has in place a policy on Prevention of Sexual Harassment at workplace.This policy is in line with the requirements of The Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. All employees whetherpermanent contractual temporary and trainees are covered under this Policy. The Companyaims at providing a workplace that enables employees to work without gender bias andsexual harassment. To achieve this objective the Company regularly organises awarenesssessions at all locations to sensitise the employees and conduct themselves in aprofessional manner. During FY 2019-20 over 200 POSH sessions were organised at 6locations which were attended by more than 5000 employees including workmen. Also POSHtraining was imparted through an online learning module which was completed by more than1000 employees.

In addition to the above over 200 gender sensitization sessions were conducted at 7locations which were attended by more than 5500 employees including workmen.

As per the said Policy an Internal Committee is also in place to redress complaintsreceived regarding sexual harassment. Following is the summary of complaints received anddisposed off during the year under review:

No. of complaints received: 4

No. of complaints disposed off: 4*

No. of complaints withdrawn: 0

No. of complaints pending: 1

* One of the complaints pending as on April 26 2019 was disposed off on June 7 2019and the other complaint was disposed off on April 1 2020.


The Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Preventionand Control) Act 2017 has been notified by the Central Government on September 10 2018.During the year under review no complaints were received by the Complaints Officer.


During the year under review the Company received multiple awards and recognition.Some of them are listed below:

1. XPulse 200 awarded Indian Motorcycle of the Year 2020 by media houses and alsoawarded Tourer Bike (upto 250cc) of the Year 2020 by Flywheel Auto Awards.

2. XPulse 200 was also awarded Bike of the Year (upto 200cc) and two-wheeler of theyear by Car and Bike India.

3. Maestro Edge 125 FI was chosen as Scooter of the Year 2020 by Autocar and by Car andBike India.

4. National Award for Excellent Energy Efficient Unit by CII to Gurgaon Plant.

5. Platinum ranking for environment friendly building and work environment by CII toCIT Jaipur.


The Board of Directors would like to express their sincere thanks to the shareholdersand investors of the Company for the trust reposed in the Company over the past severalyears. 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. The Board would like to reiterate itscommitment to continue to build the organization into a truly world-class enterprise inall aspects.

For and on behalf of the Board
Pawan Munjal
Date: June 9 2020 Chairman
Place: New Delhi DIN:00004223