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Hero MotoCorp Ltd.

BSE: 500182 Sector: Auto
BSE 11:03 | 30 Jun 2749.65 -2.50






NSE 10:49 | 30 Jun 2755.05 2.65






OPEN 2748.70
52-Week high 2980.00
52-Week low 2148.00
P/E 22.22
Mkt Cap.(Rs cr) 54,938
Buy Price 2749.05
Buy Qty 27.00
Sell Price 2750.60
Sell Qty 29.00
OPEN 2748.70
CLOSE 2752.15
52-Week high 2980.00
52-Week low 2148.00
P/E 22.22
Mkt Cap.(Rs cr) 54,938
Buy Price 2749.05
Buy Qty 27.00
Sell Price 2750.60
Sell Qty 29.00

Hero MotoCorp Ltd. (HEROMOTOCO) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the thirty eighth annual report together withthe Company's audited financial statements for the financial year ended March 31 2021.

Financial Results – Standalone & Consolidated

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

(Rs in crore)

Standalone Year ended

Consolidated Year ended

March 31 2021

March 31 2020

March 31 2021

March 31 2020

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Profit before Finance cost and Depreciation





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Profit from ordinary activities before tax





Tax expense
Current tax





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Net Profit from ordinary activities after tax





Other comprehensive income /(expense) (net of tax)





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Net Profit / (loss) attributable to
a) Owners of the Company





b) Non-controlling interest





Other comprehensive income attributable to
a) Owners of the Company





b) Non-controlling interest





Total comprehensive income attributable to
a) Owners of the Company





b) Non-controlling interest





Balance of profit brought forward





- Interim – 2020-21





- Final – 2019-20





Corporate Dividend Tax





Other comprehensive income arising from re-measurement of





defined benefit obligation (net of income tax)
Balance carried to Balance Sheet





Earnings per equity share on Net Profit from ordinary activities
after tax (face value J 2/- each) (In J)
- Basic





- Diluted





Financial Highlights

During FY 2020-21 your Company clocked sales of 58.00 lakh units over 63.98 lakh unitsin the previous financial year. Revenue from operations was Rs 30800.62 crore as comparedto Rs 28836.09 crore in FY 2019-20 registering an increase of 6.81%.

Profit before tax (PBT) in FY 2020-21 was Rs 3900.38 crore as compared to Rs 4573.69crore in FY 2019-20 reflecting a decrease of 14.72%. Profit after tax (PAT) was Rs2964.20 crore as against Rs 3633.26 crore in FY 2019-20 a decrease of 18.41% over theprevious year.

Earnings before Interest Depreciation and Taxes (EBIDTA) stood at 13.05% in FY2020-21 as compared to 13.73% in FY 2019-20.

Consolidated Financial Statements

In accordance with provisions of the Companies Act 2013 (‘the Act') and IndianAccounting Standards (Ind AS)-110 on Consolidated Financial Statements read with IndAS-28 on Investments in Associates and Joint Ventures the Audited Consolidated FinancialStatements for the year ended March 31 2021 are provided in this annual report.

Update on Covid-19 Pandemic

The financial year 2020-21 was a highly disruptive and challenging year wherein theauto industry and the entire global economy faced unprecedented times owing to theCovid-19 pandemic. Despite the challenges posed by the pandemic the Company adapted tothe changing business needs and continued its growth momentum. The state of preparednessand quick countermeasures taken by the Company led to its growth in sales and othermilestones achieved by it during the year. The Company remains optimistic about growth inthe next financial year as a credible recovery in the Indian economy and a positivemomentum towards personal mobility is likely to further strengthen the demand fortwo-wheelers. The wide range of best-in-class products and consistent alignment of newtechnologies and services will also ensure Company's strong growth impetus.

Changes in Capital Structure

During the year under review 40849 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 2021 was Rs 399560434 divided into 199780217 equity shares of Rs 2/- each.

Further on May 5 2021 9672 equity shares of Rs 2/- each were allotted on exerciseof employee stock options/RSUs by the eligible employees of the Company. Thus the issuedand paid-up share capital of the Company was increased to Rs 399579778 divided into199789889 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.


Your Directors are pleased to recommend for your approval a final dividend of Rs 35/-per equity share (1750%) of face value of Rs 2/- each (comprising of final dividend @1250% i.e. Rs 25/- per equity share and a special dividend @ 500% i.e. Rs 10/- per equityshare) in addition to an interim dividend of Rs 70/- per equity share (3500%) (comprisingof interim dividend @ 3250% i.e. Rs 65/- per equity share and a special interim dividend @250% i.e. Rs 5/- per equity share) declared in the month of February 2021 aggregating atotal dividend payout of Rs 105/- per equity share (5250%) for FY 2020-21. The specialfinal and interim dividend has been considered and declared to mark the achievement ofhistoric milestone of achieving 100 million cumulative production of two-wheelers. In theprevious year total dividend payout of Rs 90/- per equity share (4500%) of face value ofRs 2/- each was made. Final dividend if approved at the ensuing annual general meetingshall be paid to the eligible members within the stipulated time period. DividendDistribution Policy of the Company as per the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (‘Listing Regulations') is available at the followinglink: pdf and is also provided as Annexure- I.

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 year under review.

Change in Nature of Business

During FY 2020-21 there was no change in the nature of Company's business.

Capacity Expansion New Projects & Strategic Alliances

During FY 2020-21 your Company focused on optimizing investments and ensuring businesscontinuity to enhance market share across platforms. Capacity benchmarking and cross plantresource optimization have been consistently focused in the previous year to ensureimproved efficiencies in overall ecosystem. The overall value chain turnaround postbusiness re-opening of Covid-19 pandemic was phenomenal considering the challengingsituation and facilitated your Company to regain volumes and market share promptly. With astrong recovery post Q2 and overall festive demand coupled with positive marketsentiments your Company enhanced the capacity of Halol (Gujarat) plant by 0.4 million perannum thereby consolidating the overall capacity to 9.3 million for domestic plants.

The overseas plants of your Company in Bangladesh and Colombia have continuouslyaugmented their respective capacities during FY 2020-21 and retained a decentmarket share. As a responsible corporate your Company released its third annualSustainability Report encompassing ESG (Environment Social and Governance) aspects.Long-term strategy has been formulated with the objective of making your Company one ofthe most sustainable organisations.

Investment in Ather Energy – Electric is widely recognized as one of the mostexciting areas in emerging mobility space. In 2016 Hero MotoCorp invested in AtherEnergy a two-wheeler electric vehicle company which went on to launch multiple products.As a follow up Hero MotoCorp participated in other investment rounds. In July 2020 theCompany invested Rs 84 crore in Ather Energy taking up its shareholding in the company to34.58%. Subsequently in November 2020 Hero MotoCorp again invested in Series D round inthe Electric Vehicle startup.

Agreement with Harley-Davidson – As part of its growth strategy Hero MotoCorp isfocused on growing market share in the rapidly expanding Premium motorcycle segment. InOctober 2020 the Company signed a distribution agreement with Harley-Davidson (H-D)under which the Company will sell and service H-D motorcycles and sell parts andaccessories and general merchandise riding gear and apparel in India. The Company hasinducted 11 dealers of Harley-Davidson into its own distribution network. Starting January1 2021 Hero MotoCorp Ltd. has become the distributor for Harley-Davidson in India. HeroMotoCorp Ltd. and Harley-Davidson also signed a Licensing agreement under which theCompany will develop and sell a range of premium motorcycles under the H-D brand name.

Partnership with Gogoro Inc. - Your Company recently entered into a strategicpartnership with Gogoro Inc. to accelerate the shift from fuel based mobility tosustainable electric mobility in India. This partnership would bring together the Companyand Gogoro Inc. the global leader in urban battery swapping and smart mobilityinnovation and this joint venture is aimed to bring Gogoro's industry leading batteryswapping platform to India. The Companies would also collaborate on electric vehicledevelopment to bring Hero branded powered by Gogoro Network vehicles to market.

Global Forays

Your Company continues to strengthen its presence in global markets. During FY 2020-21your Company entered into Mexico market and the footprint of your Company reached 41markets outside India. The focus was on increasing the presence in premium segment throughnew product launches in the key markets of Bangladesh Nepal and Latin America. As aresult the premium segment sales grew by 58% in FY 2020-21 over previous year. Despitethe tough Covid year your Company managed to gain market share in 6 out of 9 focusmarkets.

Your Company also relaunched Hero brand in markets like Kenya Honduras and Nicaragua.Plans are afoot to relaunch in Argentina as well.


The three projects which were launched under HeroHatch continue to make significantprogress. The Company-wide Idea Contest was undertaken for the 8th consecutive year in FY2020-21 and for the 2nd time on the new platform. In addition the platform was accessedall-year-round by employees for submitting ideas and facilitated crowd-source solutions onspecific problem statements. It is pleasing to confirm that several of the winning ideasfrom 6th and 7th Idea Contest have already been implemented.

Hero MotoCorp launched its 2nd organization-wide Innovation Survey in FY 2020-21 andsaw a 3% increase in favorability compared to the last survey.

Subsidiary Associate and Joint Venture Companies

The Company has 6 subsidiaries including step down subsidiaries and 2 associatecompanies and regularly monitors the performance of these companies. The annual accountsof subsidiary companies are available on the website of the Company and shall also be kept open for inspection at the registered officeof the Company and respective subsidiary companies. The Company shall also make availablethe annual accounts of these companies to any member of the Company who may be interestedin obtaining the same. The consolidated financial statements presented by the Companyinclude the financial results of its subsidiary companies.

Subsidiary Companies

Hero Tech Center Germany GmbH (‘HTCG')

HTCG is a wholly owned subsidiary of your Company incorporated in Germany to undertakeresearch and development and such other ancillary activities for the manufacture testingvalidating etc. of two-wheelers and components / parts thereof. It also undertakescoordinates and facilitates two-wheeler rally participation and development activities.During FY 2020-21 HTCG has reported unadjusted revenue of Rs 79.90 crore and a net profitof Rs 4.24 crore.

HMCL Netherlands B.V. (‘HNBV')

HNBV is a wholly owned subsidiary of your Company 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 2020-21 it has reported unadjusted revenue of Rs22.47 crore and a net profit of Rs 21.44 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 80000 units per annum. During the year ended March 31 2021 the Company hasreported unadjusted revenue of Rs 230.65 crore and a net loss of Rs 7.26 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. It has a manufacturing facility with a productioncapacity of 150000 units per annum. During FY 2020-21 HNBL reported unadjusted revenueof Rs 502.72 crore and a net profit of Rs 40.76 crore.

HMCL Americas Inc. (‘HMCLA')

HMCLA is a wholly owned subsidiary of your Company 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 2021 HMCLA has reported unadjusted revenue of Rs 0.11 crore and a net loss ofRs 0.03 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 2020-21 HMCMMA has reportedunadjusted revenue of Rs 458.46 crore and a net profit of Rs 4.77 crore.

Associate Companies Hero FinCorp Limited (‘HFCL')

HFCL is an associate of your Company incorporated in the year 1991. Your Company holds41.19% in the equity share capital of HFCL. HFCL is a non-banking finance company engagedin providing financial services including two-wheeler financing and providing credit toCompany's vendors and suppliers. Over the years it has added several new products andcustomers in its portfolio like SME and commercial loans loan against property etc.

During FY 2020-21 HFCL's profit attributable to the Company is Rs 22.90 crore.

Ather Energy Private Limited (‘AEL')

AEL is a private limited company focused on developing designing and selling premiumelectric two-wheelers. The shareholding of your Company in AEL is 38.08% which isequivalent to 34.81% on a fully diluted basis. During FY 2020-21 AEL's loss attributableto the Company is Rs 69.46 crore.

A statement containing salient features of financial statements of subsidiary 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:

Directors and Key Managerial Personnel

Dr. Pawan Munjal was appointed as the Chairman Managing Director and CEO of theCompany for a term of five (5) years with effect from October 1 2016. Now the Board atits meeting held on May 6 2021 has recommended the re-appointment of Dr. Pawan Munjal asWhole-time Director designated as the Chairman and CEO of the Company for another term offive (5) years effective October 1 2021. The details of re-appointment have beenfurnished in the explanatory statement to the notice of the ensuing annual generalmeeting. In terms of applicable provisions of the Act and the Articles of Association ofthe Company Mr. Pradeep Dinodia Director of the Company retires by rotation at theensuing annual general meeting and being eligible has offered himself for re-appointment.Brief resume and other details of Mr. Pradeep Dinodia who is proposed to be re-appointedas a Director of your Company have been furnished in the explanatory statement to thenotice of the ensuing annual general meeting. During the year under review your Companyhas appointed Air Chief Marshal B. S. Dhanoa (Retd.) as an Additional Director of theCompany as Non-Executive and Independent Director effective October 1 2020. The Boardrecommends his appointment as an Independent Director of the Company. The Company hasreceived a notice in writing under Section 160 of the Act from a member proposing thecandidature of Air Chief Marshal B. S. Dhanoa (Retd.). The appointment of new directors isrecommended by the Nomination and Remuneration Committee (‘NRC') on the basis ofrequisite skills proficiency experience and competencies as identified and finalized bythe Board considering the industry and sector in which the Company operates. The Board onthe recommendation of the NRC independently evaluates and if found suitable confirms anappointment to the Board. The appointments are based on the merits of the candidate anddue regard is given to diversity including factors like gender age cultural educational& geographical background ethnicity etc.

In the opinion of the Board the Independent Director appointed during the year underreview is a person of high repute integrity and possesses the relevant expertise andexperience in the respective fields.

The Company has a robust succession planning process for Directors as well as seniormanagement personnel which is overseen by the Nomination and Remuneration Committee. Mr.Paul B. Edgerley ceased to be a Director of the Company effective May 4 2021 due tocompletion of his term of five (5) years as an Independent Director. The Board places onrecord its appreciation for the guidance and support provided by Mr. Edgerley during histenure 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.

Board Meetings

During FY 2020-21 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.

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 2020-21. Led by the Nomination andRemuneration Committee the evaluation was carried out using individual questionnairescovering amongst others composition of Board conduct as per company values and beliefscontribution towards development of the strategy & business plan risk managementreceipt of regular inputs and information codes & policies for strengtheninggovernance functioning performance & structure of Board Committees skill setknowledge & expertise of Directors preparation & contribution at Board meetingsleadership etc. Further the Committees were evaluated in terms of receipt of appropriatematerial for agenda topics in advance with right information and insights to enable themto perform their duties effectively review of committee charter updation to the Board onkey developments major recommendations & action plans stakeholder engagementdevoting sufficient 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 ofNon-Independent Directors the Chairman and the Board was conducted by the IndependentDirectors. The performance evaluation of the respective Committees and that of Independentand Non-Independent Directors was done by the Board excluding the Director beingevaluated.

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

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 thefinancial year ended March 31 2021 the applicable accounting standards were followedalong with proper explanation relating to material departures; 2. that appropriateaccounting policies were selected and applied consistently and judgments and estimatesthat are reasonable and prudent were made so as to give a true and fair view of the stateof affairs as at March 31 2021 and of the profit and loss of your Company for thefinancial year ended March 31 2021; 3. that proper and sufficient care has been taken forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of your Company and for preventing anddetecting fraud and other irregularities; 4. that the annual accounts for the financialyear ended March 31 2021 have been prepared on a going concern basis; 5. that theDirectors have laid down Internal Financial Controls which were followed by the Companyand that such Internal Financial Controls are adequate and were operating effectively; and6. that the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

Remuneration and Board Diversity Policy

Pursuant to provisions of the Act the Nomination and Remuneration Committee of yourBoard has formulated a Remuneration and Board Diversity Policy for the appointment anddetermination of remuneration of the Directors Key Managerial Personnel (‘KMP')senior management and other employees of your Company and to ensure diversity at the Boardlevel. 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 and BoardDiversity Policy of your Company.

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 as Annexure- II. There has been no change in the Remuneration and Board Diversity Policy of theCompany during the year. The Remuneration and Board Diversity Policy of your Company canbe viewed at the following link: The salient features of the Remunerationand Board Diversity Policy are as under:

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.

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 alia administers andmonitors the Employees' Incentive Scheme 2014 of your Company and the Employees' StockOption plans framed thereunder.

Further the NRC has at its meeting held on October 27 2020 approved grant of101375 Stock Options at an exercise price of Rs 2085/- per option under ESOP Plan 2020and 1560 Restricted Stock Units (RSUs) at face value of Rs 2/- per unit under RSU Plan2020 to 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 andare available on the Company's website and can be viewed at thefollowing link: annual-reports.html.

Your Company has received a certificate from M/s BSR & Co. LLP Statutory Auditors(Firm Registration No. 101248W/W-100022) that the Employees' Incentive Scheme 2014 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.

Corporate Governance

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 atthe following link: https://www. Interms of Listing Regulations a report on Corporate Governance along with the certificatefrom M/s Sanjay Grover & Associates Company Secretaries (Firm Registration No.P2001DE052900) confirming compliance of the conditions of Corporate Governance is annexedhereto and forms part of this annual report as

Annexure - IV and Annexure - V respectively.

Transfer to General Reserve

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

Transfer to Investor Education and Protection Fund

During the year under review your Company has transferred unpaid/ unclaimed dividendamounting to Rs 6.97 crore for FY 2012-13 and 18760 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 7.65 crore (after deduction of tax) was also transferred to the IEPF Authority.

Material Changes and Commitments

No material change and/or commitment affecting the financial position of your Companyhas occurred between April 1 2021 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.

Particulars of Loans Guarantees and Investments

During FY 2020-21 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)














Closing Balance




* HMC MM Auto Limited - Nil HMCL Netherlands BV - Rs 14.21 crore HMCL Americas Inc. -Nil Hero Tech Center Germany GmbH - Nil Hero FinCorp Limited

- Rs 194.37 crore Ather Energy Private Limited – Rs 174 crore (consequent toconversion of compulsorily convertible debentures into compulsorily convertible preferenceshares) ** Maturity of bonds and amortization


Your Company has neither accepted nor renewed any deposits during FY 2020-21 in termsof Chapter V of the Act.

Contracts and Arrangements with Related Parties

During FY 2020-21 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 2020-21 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 2020-21 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's and can be viewed at the following link:

Risk Management Framework

The Board entrusted Risk Management Committee (‘RMC') continued to guide themanagement team of RMC towards a comprehensive risk management process in yourorganization. Last year the lockdown imposed significant hardships on the entire humanrace and tested their survival. Many businesses were forced to adopt varied cost cuttingmeasures. However your Company ensured that not just there were no salary cuts orlayoffs there were in effect even more investments on employee well-being measures.

Your Company's response to Covid-19 was prepared well in advance and therefore HeroMotoCorp Ltd. was amongst the first ones to restart operations when the Government orderallowed. Your Company also refreshed the Risk Register and raised the profile of some ofthe risks that were traditionally low profile risks. This was done taking cognizance ofthe new threats posed by Covid-19. Your Company came up with a comprehensive riskmitigation plan and a dedicated team to manage Covid-19 risk.

Some of the risk mitigation steps were:

1. frequent interactions with dealers suppliers investors so that the ecosystemremained motivated; 2. proactive announcement of Work from Home policy Corona FAQ'sChatbots travel bans and an increased hygiene level at the workplace; 3. stronger demandforecasting conducted for an even more accurate planning; 4. manufacturing at all theplants was proactively suspended however with preparedness to restart at a short notice;5. support offered to dealers and supply chain partners to ensure sustainability; interventions introduced at dealerships to obviate showroom visits therebyensuring customer safety; 7. multiple communications sent to employees on end userawareness due to increased risk of cyber-attacks. Your Company also used ArtificialIntelligence to identify attacks strengthened firewalls and actively monitored the darkweb to fight the threats.

When the economy opened up there were risks that emerged because of shortage of partsbecause of certain restrictions in the global supply chain. With a multi-sourcing strategyplan for every part your Company was able to successfully manage this risk. The BSVItransition was another major event of FY 2020-21. Your Company was well prepared to managethe risk both from a technology as well as a market operations standpoint. Your Companysuccessfully transitioned to BSVI technology across the range of its products. YourCompany remains committed to protect the interests of its customers stakeholdersinvestors shareholders employees and each person or entity with whom it is associated.

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

Vigil Mechanism/ Whistle Blower Policy

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 victimization any other unfair practice being adopted against them or anyinstances of fraud by or against your Company. During the year your Company's Code ofConduct was refreshed and aligned with the new mission and vision statement of theCompany. The revised Code of Conduct retained the essence of all governing principles andits applicability was unified to include employees directors and internal/externalstakeholders. The other modifications included amendments related to the clauses onanti-bribery and anti-corruption mandatory disclosure of all personal relationships foremployees strengthening of ‘conflict of interest' section and emphasis on being anequal opportunity employer while embracing diverse and inclusive culture. Also theinduction module of new joiners at the Company was updated to include the updated Code ofConduct and case studies associated with the governing principles of the Code of Conduct.The incident reporting channels of the vigil management framework were made simpler toencourage reporting culture and instill confidence in the users. The new facilitiesinclude 24*7 IVR service an email address and a dedicated web based reporting page.

During the year under review 48 complaints were received through various reportingchannels and 4 complaints were carried forward from previous year. Out of these 34complaints have been investigated and acted upon 6 and 4 complaints were reviewed andhanded over for closure to Sales and After Sales and HR respectively and remaining 8 areunder investigation.

During FY 2020-21 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:https://www.heromotocorp. com/en-in/uploads/code_policy/20200903060455-code-policy-95.pdf.

Corporate Social Responsibility

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 Non-Executive Director Prof. Jagmohan Singh Raju andMs. Tina Trikha who are the Independent Directors of your Company. Ms. Tina Trikha hasbeen inducted in the CSR Committee on October 28 2020.

The Company has also been doing a lot of work around sustainability in order to makethe operations business and the Company as a whole a sustainable organization. TheCompany's sustainability strategy rests on the following five pillars:

1. Inclusive Growth

2. Eco-efficiency

3. People

4. Responsible Value Chain

5. Product Stewardship

In today's ever-evolving world it is difficult to separate a corporate'sresponsibility towards society from the obligation of having a sustainable business andboth the concepts are intertwined. From a strong governance perspective it is imperativethat both be run from a common strategic view point and direction to have maximum longterm impact. Accordingly the ambit of the

CSR Committee was expanded to include the terms of reference with respect toSustainability and thus the CSR Committee was renamed as Sustainability and CorporateSocial Responsibility Committee. The CSR policy of the Company was changed during the yeardue to the recent amendments brought by the Ministry of Corporate Affairs in the Companies(Corporate Social Responsibility Policy) Rules 2014 and as a part of standard review. TheCSR Policy of your Company can be viewed at the following link: policy/20191126104858-code-policy-35.pdf.The salient features of the updated CSR Policy are as under:

1. The philosophy of the Company provides that a company's performance must be measuredby its triple (+one) bottom line contribution to building economic social andenvironmental capital thereby enhancing societal sustainability along with governance.

2. It believes that in the strategic context of business enterprises possess beyondmere financial resources the transformational capacity to create game-changingdevelopment models by unleashing their power of entrepreneurial vitality innovation andcreativity. In line with this belief the Company will continue to craft unique models togenerate livelihoods and create a better society.

3. The broad guiding principles for selection of CSR activities include needsassessment if required programmes identified/adopted should be adaptive and flexible tomeet the changing dynamics with focus on long-term sustained impact rather than one-timeimpact or requiring continuous intervention.

4. The implementation of the identified CSR activities shall be carried out eitherdirectly by the Company and/or through an implementing agency. The Company shall clearlydefine the objectives along with the desired timelines to effectively implement theactivities within the given time frame and work towards active engagement of all employeesto achieve maximum benefits. The modalities of execution shall be defined with everyidentified project.

5. There shall be a robust monitoring system to ensure that the identified CSRactivities are carried out to reap optimal benefits for the beneficiaries. There shall bea periodic review by the Committee for the projects undertaken. The Committee may suggestmodifications in the planned activities considering the existing scenario/circumstances.

6. The Committee will place for the Board's approval an annual action plan delineatingthe CSR Programmes to be carried out during the financial year and the succeeding years inthe case of Ongoing Projects along with the specified budgets thereof.

During the year under review your Company spent Rs 99.73 crore on its CSR activities(including the amount of Rs 31.38 crore to be set-off) which is more than 2% of theaverage net profits of previous three financial years. The contribution of Rs 31.38 crorewas made to PM-CARES Fund on March 31 2020 in pursuance of the appeal to contribute toPM-CARES Fund by the Secretary

Ministry of Corporate Affairs. The CSR initiatives undertaken by your Company alongwith other details form part of the annual report on CSR activities for FY 2020-21 whichis annexed as Annexure - VIII. The overview of CSR activities carried out in FY2020-21 is provided in a separate section in this annual report.

Audit Committee

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

1. Mr. M. Damodaran


2. Mr. Pradeep Dinodia


3. Ms. Tina Trikha


4. Air Chief Marshal B. S. Dhanoa (Retd.)


Mr. Paul B. Edgerley ceased to be member of the Audit Committee due to completion ofhis term of five (5) years as an Independent Director. Air Chief Marshal B. S. Dhanoa(Retd.) has been inducted in the Audit Committee on October 28 2020. Further details onthe Audit Committee and its terms of reference etc. have been furnished in CorporateGovernance Report which forms part of this report as

Annexure - IV.

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

Auditors and Auditors' Report

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 theleading & recognized audit firms affiliated to a renowned global brand. Itsexperience as an audit firm is commensurate with the requirements as regards the size andcompetencies necessary for rendering auditing services to the Company. The Company aspart of rotation of statutory auditors appointed M/s BSR & Co. LLP having evaluatedits competencies on various parameters including experience of the firm partner and teamin relevant industry use of latest technology and auditing tools peer review process forensuring quality of audit and documentation. The firm performs its obligations inadherence to recognised auditing standards and periodically certifies its independencefrom 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 R J Goel & Co. Cost Accountants as Cost Auditors for the financial year endingMarch 31 2022. The erstwhile Cost Auditors M/s Ramanath Iyer & Co. will submit theirreport for the FY 2020-21 on or before the due date.

In accordance with the provisions of Section 148 of the Act read with Companies (Audit& Auditors) Rules 2014 your Company is required to maintain cost records 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 FY2020-21.

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 qualificationreservation or adverse remark.

Internal Financial Controls and their Adequacy

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. Suchactions are now being tracked through an automated tool. During the year such controlswere assessed and no reportable material weaknesses in the design or operation wereobserved.

Prevention of 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 has in place a Code of Conduct for regulating monitoring and reporting oftrading by Designated Persons. The said Code lays down guidelines which advise DesignatedPersons 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. Your Companyalso has a Code of practices and procedures of fair disclosures of unpublished pricesensitive information including a policy for determination of legitimate purposes alongwith the Institutional Mechanism for prevention of insider trading and

Policy 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 insidertrading in the organization and to help the Designated Persons to identify and fulfilltheir obligations a comprehensive campaign was run at all locations of Hero MotoCorp Ltd.This included display of relevant and useful content by way of posters on the noticeboards & other strategic locations placement of standees at common areas keymessaging through desktop wallpapers and screensavers placement of permanent wallposters orientation sessions as part of regular employee induction conductingCompany-wide workshop for all Designated Persons by a subject matter expert sending textmessages for closure of trading window and submission of periodic disclosures etc. Inaddition to the above an e-learning module was also developed and rolled out with anin-built assessment for all the designated employees to educate and promote awareness.

Business Responsibility Report

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


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


As on March 31 2021 total number of employees on the records of your Company were8793 as against 8599 in the previous year. Your Directors place on record theirappreciation for the significant contribution made by all employees who through theircompetence dedication hard work co-operation and support have enabled the Company tocross new milestones on a continual basis.

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 - II to the report. The information as perRule 5(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.

Annual Return

In terms of Sections 92(3) and 134(3)(a) of the Act annual return is available underthe ‘Investors' section of the Company's website and can beviewed at the following link:

Compliance with Secretarial Standards

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.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

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

Statutory Disclosures

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).

7. No application was made or any proceeding is pending under the Insolvency andBankruptcy Code 2016.

8. No settlements have been done with banks or financial institutions.

Disclosure under the Sexual Harassment of Women at the Workplace (PreventionProhibition & 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 the

Workplace (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 organizes awarenesssessions at all locations to sensitise the employees and conduct themselves in aprofessional manner. During FY 2020-21 over 120 POSH sessions were organized which wereattended by more than 6400 employees including workmen. In addition to the above over 20gender sensitization sessions along with approximately 15 webinars on unconscious biaswere conducted which were attended by more than 800 and 300 employees respectively.

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: 2 No. of complaintsdisposed off: 2 No. of complaints withdrawn: 0 No. of complaints pending: 0

Note: One of the complaints pending from the previous year was also disposed off.

Disclosure under the Human Immunodeficiency Virus and Acquired Immune DeficiencySyndrome (Prevention and Control) Act 2017

During the year under review no complaints were received by the Complaints Officerunder the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Preventionand Control) Act 2017.

Awards and Recognition

During the year the Company received multiple awards and recognition. Some of them arelisted below:

1. Significant Achievement Award in Corporate Excellence in Sustainability by CII

2. CII-Environmental Best Practice Award 2020 for Zero Waste to Landfill – MostInnovative Environmental Project for Neemrana Plant

3. CII National Award for Excellence in Water Management 2020 to Gurgaon Plant under‘Within the Fence' category

4. CII National Award for Excellence in Water Management 2020 to Neemrana Plant as‘Noteworthy Project' under ‘Beyond the Fence' category

5. GreenCo Star Performer Award 2020 by CII to Neemrana Plant for sustaining andcontinuously improving the environmental performance

6. National Award for Water Management 2020 by CII to Global Parts Center (GPC) andNeemrana Plant for an innovative community led water management program

7. Premium Commuter Motorcycle of the year to Xtreme 160R by Car & Bike

8. CNB viewer's choice motorcycle of the year to Xtreme 160R by Car & Bike

9. Commuter Motorcycle of the year to Passion Pro by Car & Bike 10. Bike of theyear upto 160cc to Xtreme 160R by Bike India 11. Best of 2020 to Xtreme 160R by Auto X

12. Commuter Motorcycle of the year to Passion Pro by Motoring World 13. PremiumCommuter Motorcycle of the year to Xtreme 160R by Motoring World 14. Two-WheelerManufacturer of the year by Bike India In addition to the above the Company surpassed themonumental 100 million cumulative production milestone on January 21 2021 and became theonly Indian automotive manufacturer to achieve the incredible landmark. The 100 millionthmotorcycle the Xtreme

160R was rolled-out of the Company's manufacturing facility in Haridwar in thenorthern Indian hill state of Uttarakhand. To mark the occasion your Company alsointroduced six celebration edition models. These included four motorcycles - Splendor+Xtreme 160R Passion Pro and Glamour and two scooters - Destini 125 & Maestro Edge110.


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: May 6 2021 Chairman
Place: New Delhi DIN: 00004223