HERO HONDA MOTORS LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
Dear Members,
We the Directors of Hero Honda Motors Limited feel elated to present the
27th Annual Report for the financial year 2009-10. The Report is being
presented along with the Audited Statement of Accounts for the financial
year ended March 31, 2010.
FINANCIAL RESULTS (Rupees in crores)
For the year ended March 31, 2010 March 31,2009
Gross Sales 16,780.62 13,543.09
Net Sales and other Income 16,098.79 12,565.21
Profit before Interest and Depreciation 3,002.58 1,930.44
Less: Interest (net) (20.62) (31.68)
Depreciation 191.47 180.66
Profit before tax (PBT) 2,831.73 1,781.46
Less: Provision for taxation
- Current 591.58 475.65
- Deferred 8.32 19.06
Fringe Benefit - 4.99
Profit after tax (PAT) 2,231.83 1,281.76
Add: Balance of profit brought forward 2,707.28 2,021.77
Balance available for appropriation 4,939.11 3,303.53
Appropriations
Dividend
- Interim (Silver Jubilee Special Dividend) 1,597.50 -
- Proposed Final 599.06 399.38
Tax on Dividend 371.00 67.87
Transfer to General Reserve 225.00 129.00
Balance carried to Balance Sheet 2,146.55 2,707.28
Dividend (%) 5500 1000
Basic and Diluted Earnings Per
Share (EPS)(Rs.) 111.77 64.19
BUSINESS PERFORMANCE
During the year under review, your Company, the world's largest two-wheeler
manufacturer for the past nine years in a row recorded its highest-ever
annual revenue, operating income and earnings per share. The Company
reported a consolidated turnover (Net sales and other income) of Rs.
16,098.79 crores, a whopping growth of 28.12 percent over the consolidated
turnover recorded in the previous financial year, i.e. Rs. 12,565.21
crores. For the year under review, the Company has recorded an EBIDTA
margin of 17.45 per cent as compared to 14.13 per cent
in the financial year 2008-09.
The year under review was also a witness to significant milestones in the
history of your Company. During the year, your Company achieved the
significant landmark of recording total cumulative sales of 30 million two-
wheelers, with the milestone surpassed in the month of March, 2010. Also,
the Company recorded a million units sales in each quarter of fiscal '10,
capping the year with the highest-ever quarter sales of 11,86,536 two-
wheelers in the fourth quarter.
Further, during the year, nine new models were launched by your Company
across various segments. It is heartening to note that the sales of Hero
Honda Pleasure (the 100 cc scooter) has surpassed the threshold of 20,000
units per month and further looks promising.
DIVIDEND
Your Directors, celebrating the strength of its operations and the
resulting strong financial position, declared and paid an Interim Silver
Jubilee Special Dividend of 4,000% i.e. Rs. 80 per Equity Share of the face
value of Rs. 2 each, aggregating to Rs. 1,597.5 crores (exclusive of Tax on
Dividend). The dividend, in percentage terms, is the highest pay out by an
Indian company till date.
Further, following the policy laid down by the Company in regard to funds
which, if not re-invested for capital investments, should be optimally
distributed to shareholders, your Directors are pleased to recommend a
final Dividend of 1,500% i.e. Rs. 30 per Equity Share of the face value of
Rs. 2 per share, aggregating to Rs. 599.06 crores (exclusive of Tax on
Dividend), for the financial year ended March 31, 2010 for your approval.
The final dividend, if approved, will be paid to the eligible members well
within the stipulated period.
TRANSFER TO GENERAL RESERVE
Reaffirming the financial strength of the Company, a sum of Rs. 225 crores
has been transferred to the General Reserve of the Company for the
financial year 2009-10.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of the
Company have occurred between April 1, 2010 and the date of this Report.
BOARD OF DIRECTORS
During the period under review, Mr. Arun Nath Maira resigned from the
Directorship of the Company w.e.f. July 23,2009. Mr. Ravi Nath and Dr.
Anand C. Burman were appointed as Additional Directors in the category of
Non-Executive and Independent Directors with effect from October 14, 2009
and January 13, 2010 respectively.
During the current financial year, Mr. Satoshi Matsuzawa, Alternate
Director to Mr. Takashi Nagai, resigned from the Board of Directors with
effect from April 1, 2010. Further Mr. Masahiro Takedagawa also resigned
from the Directorship of the Company w.e.f. April 1, 2010. Also, Mr. O.P.
Munjal has resigned from the Board of Directors of the Company w.e.f. July
29, 2010. The Board appreciated and expressed gratitude for the valuable
contribution made by Mr. Satoshi Matsuzawa, Mr. Masahiro Takedagawa and Mr.
Om Prakash Munjal during their fruitful tenure as Directors of the Company
and wished them all the best for their future endeavours. Subsequently, Mr.
Yuji Shiga has been appointed as a Director w.e.f. April 19, 2010
consequent to the casual vacancy caused due to resignation of Mr. Masahiro
Takedagawa. Also, Mr. Suman Kant Munjal has been appointed as an Additional
Director of the Company w.e.f. July 29, 2010.
The Directors extend their warm welcome to the new members on the Board and
wish them a successful and fruitful tenure with the Company.
In terms of the provisions of the Companies Act, 1956 & the Articles of
Association of the Company, Mr. Analjit Singh, Dr. Pritam Singh, Mr.
Sumihisa Fukuda and Mr. M. Damodaran Directors, will retire by rotation at
the ensuing Annual General Meeting and being eligible, offer themselves for
reappointment. Brief resume/details of the Directors, who are to be
appointed/re-appointed as mentioned herein above has been furnished
alongwith the Explanatory Statement to the Notice of the ensuing Annual
General Meeting.
Your Directors recommend their re-appointment at the ensuing Annual General
Meeting.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information
and explanations obtained by them, your Directors make the following
statement in terms of Section 217(2AA) of the Companies Act, 1956:
1. That in the preparation of the annual accounts for the year ended March
31, 2010, the applicable accounting standards have been followed;
2. That appropriate accounting policies have been selected and applied
consistently and judgments and estimates that are reasonable and prudent
have been made so as to give a true and fair view of the state of affairs
as at March 31, 2010 and of the Profit of the Company for the financial
year ended March 31, 2010;
3. That proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
4. That the annual accounts for the financial year ended March 31, 2010
have been prepared on a going concern basis.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to Clause 49 of the Listing Agreement, a detailed section on
'Management Discussion and Analysis' (MDA), formsan integral part of the
Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
At Hero Honda, Corporate Social Responsibility (CSR) encompasses much more
than social outreach programs and is an integral part of the way the
Company conducts its business. Detailed information on the initiatives of
the Company towards CSR activities is provided in the Corporate Social
Responsibility section of the MDA.
CORPORATE GOVERNANCE
Hero Honda believes that the essence of Corporate Governance lies in the
phrase 'Your Company'. It is 'Your' Company because it belongs to 'You' -
the shareholders. The Chairman and the Directors are 'Your' fiduciaries and
trustees. Their objective is to take the business forward in such a way
that it maximises 'Your' long-term value.
Your Company is committed to benchmark itself with global standards for
practicing good Corporate Governance and has put in place an effective
Corporate Governance System which ensures that the provisions of Clause 49
of the Listing Agreementareduly complied with.
The Board has also evolved and adopted a Code of Conduct (Code) based on
the principles of Good Corporate Governance and best management practices
being followed globally. The Code is available on the website of the
Company - www.herohonda.com. A Report on Corporate Governance, along with
the Auditors' Certificate on its compliance is annexed hereto as Annexure-
1.
The Ministry of Corporate Affairs has issued Corporate Governance Voluntary
Guidelines 2009 ('Guidelines') for voluntary adoption of the same by the
Companies, which are in addition to the mandatory requirements of Clause 49
of the Listing Agreement.
The Guidelines broadly outline a framework for corporate sector on
important parameters like appointment of Directors (including Independent
Directors), guiding principles to remunerate Directors, responsibilities of
the Board, risk management, the enhanced role of Audit Committee, rotation
of audit partners and firms and conduct of secretarial audit.
The Board of Directors of the Company discussed and reviewed the same at
its meeting held on April 19,2010. Your Company while already complying
with a major part of these various requirements has already initiated
appropriate action for compliance.
INTERNAL CONTROL SYSTEMS
Hero Honda has a proper, efficient & adequate system of internal control.
This ensures that all assets are safeguarded and protected against loss
from unauthorised use or disposition and the transactions are authorised,
recorded and reported correctly.
An extensive programme of internal audit and management review supplements
the process of internal control. Properly documented policies, guidelines
and procedures are laid down for this purpose. The internal control system
has been designed so as to ensure that the financial and other records
of the Company are reliable for preparing the financial and other
statements and for maintaining accountability of assets of the Company.
The Company has also appointed an Audit Committee, comprising of four
Independent, Non-Executive and professionally qualified Directors, who
regularly interact with the Statutory Auditors, Internal Auditors, Cost
Auditors and Auditees in dealing with matters specified within its terms of
reference. The Committee mainly deals with accounting matters, financial
reporting and internal controls. During the year under review, the
Committee met seven times. A detailed synopsis of the functioning and role
of the Audit Committee, its composition and the details of attendance of
its members at various meetings of the Committee held during the year has
been substantiated in the Report on Corporate Governance annexed alongwith
this Report as Annexure-1.
AUDIT COMMITTEE RECOMMENDATION
During the year under review there was no such recommendation of the Audit
Committee which was not accepted by the Board. Hence, there is no need for
disclosure of the same in this Report.
RISK MANAGEMENT SYSTEM
Your Company follows a comprehensive & effective system of Risk Management.
The Company has adopted a procedure for risk assessment and its
minimization. It ensures that all the Risks are timely identified and
mitigated in accordance with the well structured Risk Management Process.
The Board of Directors & the Audit Committee periodically review the Risk
Management System.
RATINGS
ICRA Limited, a leading rating agency has reviewed and reaffirmed the
rating assigned to the Company for its Non-Convertible Debenture Programme
and Fund Based Limits from Bankas 'LAAA' [pronounced 'L triple A']
indicating the highest credit quality and 'A1 +' [pronounced 'A one Plus']
for its Non-fund based facilities and 'LAAA' [pronounced 'L triple A with']
to Fund based facilities indicating the highest creditquality rating
carrying lowest credit risk.
During the year under review, rating agency CRISIL assigned the bank loan
ratings of 'AAA/Stable' and 'P1 +' to the Cash Credit Limit & Letter of
Credit Limit Facility respectively to your Company.
FIXED DEPOSITS
During the year under review, the Company has not accepted any deposit
under Sections 58A and 58AA of the Companies Act, 1956 read with the
Companies (Acceptance of Deposits) Rules, 1975.
AUDITORS
M/s. A.F. Ferguson & Co., Chartered Accountants, New Delhi, Auditors of the
Company will retire at the conclusion of the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. The Company has
received a certificate from the auditors to the effect that their
reappointment, if made, at the ensuing Annual General Meeting would be in
accordance with Section 224(1 B) of the Companies Act, 1956. Further, the
Auditors have represented that they hold a valid Peer Review Certificate
issued by the 'Peer Review Board' of ICAI.
The Board accordingly recommends their re-appointment.
AUDITORS' REPORT
The observations of Auditors in their report, read with the relevant notes
to accounts are self explanatory and therefore do not require further
explanation.
COST AUDITORS
The Board has re-appointed M/s. Ramanath Iyer & Co., Cost Accountants, New
Delhi, as the Cost Auditors of the Company under Section 233B of the
Companies Act, 1956 for the financial year 2010-11 and the necessary
approval in regard to appointment of M/s. Ramanath Iyer & Co. as the Cost
Auditors, has been granted by the Central Government vide its letter dated
May 26,2010. The Cost Auditors' Report for 2009-10 will be forwarded to the
Central Government in pursuance of the provisions of the Companies Act,
1956.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO
Information required under Section 217(1)(e) of the Companies Act, 1956,
read with Companies (Disclosure of Particulars in the Report of the Board
of Directors) Rules, 1988 is given as per Annexure - II and forms an
integral part of this Report.
LISTING
The shares of your Company are listed on the Bombay Stock Exchange Limited
(BSE) and the National Stock Exchange of India Limited (NSE). The delisting
application filed with the Calcutta Stock Exchange Association Limited
(CSE) was approved by the Committee of the exchange vide its letter dated
December 7, 2009.
PERSONNEL
As on March 31,2010 the total number of employees on the records of the
Company was4,751.
Your Directors place on record their appreciation for the significant
contribution made by all employees, who through their competence,
dedication, hard work, cooperation and support have enabled the Company to
cross new milestones on a continual basis.
A detailed note is given in the chapter 'Human Resource Management' of
Management Discussion & Analysis, which forms a part of this Annual Report.
PARTICULARS OF EMPLOYEES
Particulars of Employees as required under Section 217(2A) of the Companies
Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975
forms an integral part of this Report. In terms of the proviso to Section
219(1) of the Companies Act, 1956 the Report and Accounts are being sent to
the shareholders of the Company excluding the statement of particulars of
employees under Section 217(2A) of the Companies Act, 1956. Any member
interested in obtaining a copy of such statement may write to the Sr. G.M.
Legal & Company Secretary at the Registered Office of the Company.
ACKNOWLEDGEMENT
It is our strong belief that caring for our business constituents has
ensured our success in the past and will do so in future. The Directors
acknowledge with sincere gratitude the co-operation and assistance extended
by the Central Government, State Government(s), Financial Institution(s),
Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings. The
Directors also place on record their appreciation for the valuable
assistance and guidance extended to the Company by Hero Cycles Ltd. and
Honda Motor Co., Ltd., Japan and for the encouragement and assurance, which
our collaborator has given for the growth and development of the Company.
The Board also takes this opportunity to express its deep gratitude for the
continued co-operation and support received from its valued shareholders.
For and on behalf of the Board
Brijmohan Lall Munjal
Chairman
Place: New Delhi
Date : July 29, 2010
ANNEXURE - II TO DIRECTORS' REPORT
Information Under Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988 and forming part of the Directors' Report for the year ended
March 31, 2010;
I. CONSERVATION OF ENERGY
a) Techno-economic viability of few energy saving proposals is being
carried out and few proposals have been already implemented.
Energy conservation measures taken and their impact:
* Installation of heat recovery unit from incinerator for hot water, saving
around 48,000 KG fuel per annum;
* FA DOL and dispatch area lighting connected with lighting transformer for
power, saving around 24,000 KWH power perannum;
* Standardization of Air conditioning temperature by 25 degree centigrade
throughout the plant, saving approximately 12,000 KWH power perannum;
* Power saving in air compressor by optimizing air pressure to plant,
saving approximately 1,20,000 KWH perannum;
* Improvementin Lighting circuits & control;
* Installation of additional power saving circuits; &
* Controlling of idle running of machines and equipments.
b) Additional Investments and Proposals being implemented for reduction of
consumption of energy
The company is exploring more projects to minimize the energy consumption
and technical details in regard to the sameare being evaluated. The same
are enumerated below:
* BIO MASS Gasified Power generating set;
* Vaporabsorption machine for chillers;
* Heat Recovery from Incinerator;
* Heat Recovery from DG sets;&
* Alternate power i.e. wheeling power from Electrical grid.
c) Impact of measures at (a) and (b) for reduction of energy consumption
and consequent impact on the cost of production of goods.
It is difficult to quantify the impact of individual projects on production
as no. of equipments are being added duringtheyear.
d) Total energy consumption and energy consumption per unit of production
as per Form - A is given in Table-A.
II. PARTICULARS AS PER FORM B
(A) RESEARCH & DEVELOPMENT (R&D)
(a) Specific areas in which R&D carried out by the Company
* New Model Technology;
* Indigenisation of CKD Parts;
* Multi Source Approval to support Production level;
* Meeting Legislative Norms (BS - III most stringent emission norms); &
* Active Participation in deciding the needs of future Automobile
Regulations in India.
(b) Benefits derived as a result of the above R&D activities
* Launched Karizma ZMR - Fl (233cc - 4 stroke), HUNK - New Aesthetics,
Splendor+ Special Edition, Splendor NXG (BS-III Compliance), Passion Pro
(Digital Meter + MF Batt + BS-III compliance), Glamour (New Aesthetics +
MF Battery+BS-III Compliance), CD-DLX/ Dawn, Pleasure-New Aesthetics and
Splendor+(BS-III Compliance) Special Edition;
* 299 Multi source Components and 2 new sources added for existing models;
* Indigenisation of 8 items was done during the year; &
* Compliance to the following Regulations:
- T.A & COP for Safety Critical Components - Phase-II (AIS-037: Rear view
mirrors, bulbs) and Phase III (AIS-037: Lighting and signaling division.
Reflex reflector,fuel tank);
- E-10 Compliance (on-going);
- BS-III Compliance; &
- EMC Compliance.
c) Future plan of action
* New Model Launch;
* Indigenisation plan, 9 more items to be localized;
* Participation at different Forums forformation of two wheeler Regulations
in India >Rs;&
* Compliance Plan for the following future regulations:
- Mass Emission Norms (BS-IV);
- EMC;
- Tell tales, symbols & controls;
- Safety Related Standards;
- E-10 Compliance (on-going);
- Spray Suppression;
- Brake GTR;&
- Noise.
4. Expenditure on R&D
(Rupees in crores)
Year Ended Year Ended
March 31, 2010 March 31, 2009
i) Capital 3.15 8.59
ii) Recurring 27.16 23.71
iii) Total R&D
expenditure as
a percentage of
sale (as per
P & L A/c) (%) 0.19 0.26
B) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
(a) Efforts, in brief, made towards technology absorption, adaptation and
innovation
More parts development approval in India
(b) Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
- New Model Developmentto increase market share;
- Supply capacities and quality of bought out parts (BOP) increased with
Multi Source Development to supportthe increasing production;
- Indigenisation-to meet Cost Challenged
- Compliance to Latest Regulations.
Further, in last five years the Company, its ancillaries and Vendors have
imported technologies regarding Digital Speedometer, Gear Primary Driven
(Forging), Cast Wheel, CV Carburetor, Fuel Injection, RTMI (Real Time
Mileage Indicator), Non-Asbestos Brake Shoe & Gaskets, Migration from
Hexachrome to Trichrome, Low Friction High F.E Engine Technology, LED
Lighting Device, Self Sealing -Puncture Resistance Wheel Tube, Rear Cushion
with Reservoir Tank, Emission Devices - Low Cost Catalytic Converter, Rear
Disk Brake, Oil Temp. Sensor / 02 Sensor, Honda Intelligent Ignition
System, MF Battery and Bank Angle Sensor.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
(A) EXPORT ACTIVITIES / INITIATIVES TO INCREASE EXPORTS/ DEVELOPMENT OF NEW
EXPORT MARKETS/ EXPORTPLANS EXPORT INITIATIVES DURING 2009-10
During the year under review, your Company exported 97,699 Two Wheelers
(20% growth over the previous year) and Spare Parts worth Rs. 17.60 crores
(23% growth). Further launched successfully New Models in Srilanka,
Bangladesh & Columbia, which led to overall growth in the export Business.
Exhaustive Training on Sales and Technology was imparted to the Overseas
Training Managers. The Company has established training centres in all
export markets. CD Deluxe model has been supplied to SriLankan Army. The
after sale service concepts have been strengthened in Bangladesh-with
automated workshops.
EXPORT PLAN FOR 2010-11
* Launch new models in all Export markets successfully for growth;
* Enhance Brand building efforts through more ground level activities;
* Strengthen position in premium segment with ZMR;
* Training on Spare Parts Management and Safety for overseas Managers; &
* Focus on After Sale Service.
(B) EARNINGS & OUTGO
Foreign exchange earnings during the period under report was Rs. 337.59
crores, compared to Rs. 248.11 crores in the previous year, a growth of
36.06%.
On account of Royalty, Technical Guidance Fee, Model Fee, Export
Commission, Travel and other accounts, Advertisement and Publicity, the
foreign exchange outgo was Rs. 485.46 crores, compared to Rs. 377.80 crores
in the previous year,an increase of 28.50%.
The foreign exchange outgo on account of Dividend was Rs. 103.84 crores
compared to Rs. 98.65 crores in the previous year.
Foreign exchange outgo for import of components, spare parts, raw materials
and capital goods was Rs. 624.73 crores compared to Rs. 476.05 crores in
the previous year.
TABLE A
TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION AS
PER FORM A FOR GURGAON, DHARUHERA AND HARIDWAR PLANT(S) OF THE COMPANY.
Particulars Gurgaon Plant Dharuhera Plant
Current Previous Current Previous
Year Year Year Year
A. Power and Fuel
consumption per
unit of Production
Product Unit
(Two Wheeler) 15,92,463 15,58,928 15,99,454 15,33,141
1. Electricity
(a) Purchased
Units (KWH) Nil Nil 50,65,988 67,10,089
Total Amount (Rs.) Nil Nil 2,22,64,222 2,92,33,697
Rate/unit (Rs.) Nil Nil 4.39 4.36
(b) Own generation
Through Diesel
Generator Units
Self (KWH) 5,88,76,342 5,58,83,492 4,62,55,864 4,09,98,530
Hired (KWH) Nil Nil Nil Nil
Unit per Itr. of
Diesel Oil Cost/Unit
Self (KWH/Ltr.) 3.96 4.02 4.20 4.19
Hired (KWH/Ltr.) Nil Nil Nil Nil
2. Furnace Oil,
HSD etc. ** *
Quantity (K.ltrs) 210.15 109.95 1,608.18 1,765.06
Total Amount (Rs) 71,49,406 27,58,011 3,62,32,460 4,34,50,167
Average Rate/
Ltrs. (Rs.) 34.02 25.08 22.53 24.62
B. Consumption per
unit of Production.
Electricity
(KWH/Veh.) 36.97 35.85 32.09 31.12
Furnance Oil,
HSD etc.(Ltr./Veh.) 0.13 0.07 1.01 1.15
Particulars Haridwar Plant
Current Previous
Year Year
A. Power and Fuel
consumption per
unit of Production
Product Unit
(Two Wheeler) 14,04,327 6,29,775
1. Electricity
(a) Purchased
Units (KWH) 2,06,03,625 150,93,925
Total Amount (Rs.) 8,09,67,950 6,15,43,296
Rate/unit (Rs.) 3.93 4.08
(b) Own generation
Through Diesel
Generator Units
Self (KWH) 37,00,260 4,14,700
Hired (KWH) Nil Nil
Unit per Itr. of
Diesel Oil Cost/Unit
Self (KWH/Ltr.) 3.60 3.66
Hired (KWH/Ltr.) Nil Nil
2. Furnace Oil,
HSD etc. **
Quantity (K.ltrs) 585.09 171.48
Total Amount (Rs) 1,69,22,602 51,08,834
Average Rate/
Ltrs. (Rs.) 28.92 29.79
B. Consumption per
unit of Production.
Electricity
(KWH/Veh.) 17.31 24.63
Furnance Oil,
HSD etc.(Ltr./Veh.) 0.42 0.27
* Fuels (Furnace Oil/HSD) used in Boiler for direct production of two
wheeler only
** Fuels (Furnace Oil/HSD) used in Hot Water Generator for direct
production of two wheeler only
MANAGEMENT DISCUSSION AND ANALYSIS
ECONOMIC ENVIRONMENT
As 2009-10 progressed, India nonchalantly brushed aside the side effects of
the global economic crisis and veered back towards the path of growth. The
global economy, especially the crucial US economy, started showing early
signs of recovery towards the end of 2009. However, India's path to
recovery started much earlier.
Significantly, India finished the year with a strong kick; the economy
notched its fastest growth in the March 2010 quarter at 8.75 percent,
taking overall growth to nearly 7.5 percent. Importantly, this growth came
against a backdrop of poor monsoons and negative agricultural performance.
India's growth was powered by a robust performance by the manufacturing
sector and an improved performance by the infrastructure sector.
The manufacturing sector clocked consistent, double-digit growth from
October 2009, with the consumer durables and capital goods sectors leading
the way. The government's thrust on infrastructure development had a
positive impact and nation-building sectors such as electricity and mining
clocked consistent growth, Some of the growth, of course, could be
attributed to the government's fiscal stimulus package -especially excise
cuts that were in force. However, as the fiscal ended, it became apparent
that the growth momentum could be sustained even after excise duties were
re-balanced during the Union Budget in February 2009.
Interest rates remained reasonable during the year, thanks mostly due to an
accommodative monetary policy, The flow of resources to the commercial
sector distinctly improved from both bank as well as non-bank sources
during the second half, after credit growth dropped to a 12-year low in
October 2009.
Despite the strong growth momentum, there were some concerns, particularly
on the inflation front.
Food inflation in March 2009 was hovering dangerously over 17 percent. What
was worse, there were clear signs that by the end of the fiscal, inflation
wasn't restricted to food alone. Crude prices were inching up and further
increases are expected as the global economy recovers, Manufacturing
inflation started building In the last quarter of 2009-10 on the back of
higher input costs and higher capacity utilisation. There is no doubt, that
Inflation is the single biggest factor threatening growth of the Indian
economy and industry in 2010.
The possibility of rising interest rates, thanks to the improved off-take
of credit, is the second concern. Higher credit growth could prompt further
RB! action on policy rates, in addition to inflation-induced hikes.
On the plus side, borrowings are under control. Along with improvements in
revenue collections and windfalls from government auctions, this could
provide succor to an inflationary economy.
Going forward, GDP is predicted to grow at between 8 and 9 percent in the
new fiscal year, making India's performance one of the best in the world.
INDUSTRY AND SEGMENT ANALYSIS
After growing tepidly at 5 percent in 2008-09 the two wheeler industry was
back on track in 2009-10. Sales grew by 24 percent and crossed 10 million
units for the first time ever. Exports contributed 11 percent to overall
sales compared to 12 percent in the previous fiscal.
Motorcycle sales grew by 24 percent and clocked more than 8.4 million
units. The strong revival in the scooter market continued during 2009-10
and sales grew by 25 percent from 1.2 million units to 1.5 million.
Overall, scooters accounted for 16 percent of the two wheeler market.
Interestingly, mopeds, whose share in the two wheeler space has been
declining steadily over the years, bucked the trend during the year in
review. Mopeds notched the & highest growth in amongst the three product
categories in two-wheelers, with sales going up by 28 percent, from 4,46
lakh units to 5.71 lakh units. The surprising uptrend in the moped category
points to the fact that government schemes at the lower end of the socio-
economic pyramid have started having some impact
COMPANY PERFORMANCE
During 2008-09 Hero Honda was the only two wheeler Company that emerged
strongly and successfully during the economic slowdown in India. During
2009-10, as economic environment in India improved, Hero Honda strengthened
and consolidated its hold over the two wheeler market.
Hero Honda, despite having the highest base of 3.72 million units in the
two wheeler industry, could manage a remarkable growth of 23.6 percent and
ended the year with sales of 4.6 million. The Company continues to lead
both in the domestic two wheeler industry and motorcycle segment, with the
shares of nearly 48 percent and 59 percent respectively.
Performance Across Key Segments During the year under review, the
motorcycle entry segment grew by only 5percent with volumes of 13.49 lacs.
As a result of this modest growth, this segment accounted for just 18
percent of the motorcycle industry compared to 22 percent in the previous
year.
Hero Honda consolidated its position further on the back of its strong
rural reach. The Company clocked the sales of 6.13 lacs units in the entry
segment growing by 20 percent and garnering 45 percent share of the
segment.
The motorcycle deluxe segment, which accounted for 66 percent of sales in
the domestic motorcycle market, grew by over 29 percent over last year.
Hero Honda dominated the segment cornering 71 percent of sales.
The motorcycle premium segment grew at a remarkable pace and contributed
11.23 lacs sales compared to 7.75 lacs last year. This segment now makes up
15 percent of the domestic motorcycle market, up from 13 percent in the
previous year.
Hero Honda's performance in the premium segment was mixed. Although sales
grew at a healthy 29 percent, the Company's share came down from 24 percent
to 21 percent.
In the scooter segment, Hero Honda's Pleasure has been very well accepted.
Sales were pegged at 2.08 lacs units, a growth of 36 percent over last
year. This resulted in a 13.9percent market share.
In the Hero Honda family. Splendor continued to be the largest-selling two
wheeler brand with sales of close to 2 million, followed by Passion with
sales of over 1.2 million, and CD Deluxe with sales of 5.7 lac units. These
three products accounted for a large chunk of Hero Honda's overall sales.
Exports Performance
During the year in review, Hero Honda exported close to 100,000 two
wheelers, a growth of 20 percent compared to the previous year. The Company
also grew its international spare parts business by around 23 percent.
The strong performance came on the back of successful new model launches in
Sri Lanka and Bangladesh and Columbia.
To create a larger impact of its products overseas, Hero Honda introduced a
20 day sales cum technical training module for all overseas training
managers at the Hero Honda National Learning Centre in Gurgaon. The
overseas training managers, in turn, are expected to replicate their
learnings in their country-specific locations. Training Centres for this
have also been established in all export markets.
Service networks were also strengthened in specific countries. In
Bangladesh, for instance, automated workshops are now in place.
Performance and durability of the Company's products have created brand
equity in international markets. Testimony to the ruggedness of certain
models, even the Sri Lankan Army recently decided to place faith the
Company's products.
FINANCIAL PERFORMANCE
Sales
The annual sales of the Company grew at 23.59 percent Hero Honda clocked
sales volume of 4,600,130 units in 2009-10 compared to 3,722,000 units in
2008-09. In value terms total sales (net of excise duty) increased by 27.9
percent to Rs.15,758 crores from Rs.12,319 crores in 2008-09.
Profitability
The Company's earnings before interest depreciation and taxes (EBITDA)
margins increased from 14.13 percent in 2008-09 to 17.45 percent in 2009-10
and the Operating profit (PBT before other income) increased by 64.16
percent from Rs.1,568.86 crores in 2008-09 to Rs. 2,575.48 crores in 2009-
10. The margin improvements came from better sales realisations, cost
rationlisation and optimisation measures. These included better control
over material cost, marketing cost and overheads, besides a sharp focus on
operational efficiencies.
Other Income, including non-operating income
Other income increased by 38.4 percent from Rs. 246 crores in 2008-09 to
Rs. 341 crores in 2009-10.
Cash Flows
Growth in sales turnover, better efficiencies in the working capital
management improved the cash flow from Operations from Rs 1,359.03 crores
to Rs. 2,686.64 crores. Cash flows before working changes have also
improved from Rs. 1,762.16 crores to Rs. 2,777.10 crores on account of
better EBITDA margins.
The Company spent Rs. 527.63 crores in investing activities. Investments in
production capacities lead to an outflow of Rs. 212.57 crores. The balance
was deployed in financial assets. Financing activities accounted for an
outflow of Rs. 2,109.31 crores attributable to dividend outflows.
Capital Expenditure
During the year the Company incurred a capital expenditure of Rs.211.57
crores. The funds went into expansion of operations.
Raw Material Costs
Softening metal prices particularly aluminum and nickel in second half of
the year combined with better sales realisation to bring down the share of
material costs considerably. Raw material costs as a proportion of total
cost came down from 71.0 percent to 68.10 percent.
Current Asset Turnover
This ratio, which shows sales as a proportion of average current assets,
increased from 14.2 to 17.2 times, on account of lower relative average
inventory and bank balance (excluding dividend bank account).
Debt Structure
Hero Honda has been a debt free Company for the last 9 years. The unsecured
loan of Rs. 66.03 crore from the state government of Haryana on account of
sales tax deferment is interest free and has no holding costs. Net interest
payment by the Company has been negative during the last few years.
Dividend Policy
Over the years, the Company has consistently followed a policy of paying
high dividends, keeping in mind the cash-generating capacities, the
expected capital needs of the business and strategic considerations. For
2009-10, the board has recommended a dividend of 1,500 percent higher than
1,000 percent declared in previous year and has maintained a payout ratio
of 31.3 percent vis-a-vis 36.5 percent in the previous year. Further, board
has also declared 4,000 percent interim dividend on the occasion of 25th
year.
Working Capital management
Hero Honda has always sought to efficiently use the various components of
working capital cycle. The Company has been able to effectively control the
receivable and inventories enabling it to continue to operate on negative
working capital.
Table 1: Key Indicators Of Profitability
2009-10 2008-09
Inventory Period 10.6 11.0
Operating Cycle 13.3 16.9
Cash Cycle -17.0 -13.1
Current Ratio 0.45 0.51
Acid Test Ratio 0.26 0.30
Notes On Working Capital
The average of inventory, receivables and payables has been taken for
calculations of inventory period, operating and cash cycle.
RISKS AND OUTLOOK
Global uncertainty: While India's growth path remains clear and secure,
there could some ripples on liquidity in India. The debt-related troubles
within the Eurozone could slow down the pace of globale conomic recovery.
Commodity prices: Even though the surge in commodity prices has lessened in
recent months, the medium to long-term trend remains volatile.
Monsoons: Even though the country as a whole may receive normal rainfall,
wide variances between regions could impact agricultural production during
the kharif season.
Inflation: Inflation is spreading to non-food categories such as
manufacturing and fuels. A rising rupee and strong overseas capital flows
could also addtothe environment of volatility.
Interest rates: Credit growth started picking up towards the end of 2009-10
after dropping to a 12-year low in October 2009. Demand-driven growth could
push credit growth to 20 percent and beyond. This could push up interest
rates.
Increasing competition: Increasing competition across all key segments,
including the bread and butter deluxe segment will put some pressure on
market share.
Capacity constraints: In a growth market, capacity constraints are always a
concern and the Company will continue to explore various opportunities of
capacity enhancement.
Labour unrest: The Dharuhera-Gurgaon industrial belt remains restive and
prone to external influences. IR disruptions, especially during peak
season, are a source of concern.
Outlook
The Indian economy is back strongly on track and is expected to grow in the
range of 8-8.5 percent, perhaps even higher. The prospects of normal
monsoons auger well for the agricultural sector and will soften prices. At
another level, the imminent introduction of GST and the Direct Tax Code are
seen as epochal policy reforms. GST is aimed at reducing the impact of
cascading taxes, lowering transaction costs and propelling economic
performance. The actual impact, however, will be seen once the final
policy is rolled out.
In a nutshell, the business environment is expected to be growth-oriented,
but volatile as well. Of course, it is possible that lower borrowings could
lead to a lowering of fiscal deficit and hence reduce volatility.
A revival in agricultural performance could positively impact Hero Honda
because of its rural-centric focus. The Company's reliance on cash-down
sales could act as a buffer,incase interest ratesgoupand sales are impacted
at the higherend of the two wheelers pectrum.
The Company is likely to maintain a steady top line performance while
maintaining the bottom-line margins on the back of various cost
optimisation measures.
MANUFACTURING
Hero Honda's manufacturing capacity remained under pressure for the entire
year for several reasons. Most importantly, better than expected
performance of the Indian economy pushed up the demand for two wheelers, In
addition, the introduction of several new features and variants during the
year and a surge in demand for the Company's scooter Pleasure also caused
the manufacturing capacities to be tested.
The variability of the product mix, the production upgrades and the
unexpected surge in demand provided the Company an opportunity to optimise
capacities, space and manpower across each of the three plants. Flexible
production techniques implemented across the plants helped reduce
changeover time. In turn this helped the Company increase its overall
efficiency level.
In line with Hero Hondas core philosophy of ensuring customer delight, care
was taken to ensure the highest quality standards despite of increase in
production.
Despite the pressure on the assembly line, rejection cost per vehicle has
been on a reducing trend In recent years, thanks to a slew of cost control
and process improvement projects. These measures, in turn, helped Hero
Honda bring down overall variable manufacturing costs per vehicle during
the year.
The highlight of the year was a doubling of Hero Honda's capacities at its
Haridwar plant In fact, the Iramp up from 2008-09 levels was one of the
fastest ever recorded in India's two wheeler history. At the end of the
year in review, the Company had a total installed capacity of 5.2 million
units.
A capacity of this magnitude and robust domestic demand growth in excess of
20 percent helped Hero Honda retain its position as the world's largest
two-wheeler manufacturer for yet another year, for the ninth time In a row.
The online vendor connectivity program has made rapid progress, four years
ago, the Company had only 46 vendors connected online to the Company's
factories. At the end of 2009-10, all component suppliers were connected
online with the factories through business portal.
Hero Honda is also in the process of rationalising its domestic vendor
network, as part of a larger strategy of making its supply chain more
robust and efficient. Securing supplies from Asian automotive suppliers and
making better use of India's free trade agreements are now an integral part
of Hero Honda's sourcing plan.
To streamline its supply chain, especially at the front end. Hero Honda
introduced a finished goods dispatch automation (FNGD) system. This system
has enabled real-time inventory management with the use of barcodes to
identify and track motorcycles and scooters. This level of minute tracking
is expected to facilitate cost effective and scientific dispatch and
encourage lean production.
RURAL MARKETING
During the year, Hero Honda's ambitious rural connect program Har Gaon, Har
Aangan program rolled out across most states of the country, It was also a
year in which Hero Honda cascaded its unique rural connect program Service
Har Jagan. After successfully testing this grassroots rural connect program
in some states, Hero Honda went national in October 2009.
At the moment, there is a network of more than 2,000 rural sales channef
partners working on the rural vertical through the Har Gaon Har Aangan and
its extensions such as Service Har Jagah program.
There Is a plan to substantially boost this number in the coming years by
spreading to villages that have a population of even less than 5,000.
Apart from meeting opinion leaders, the rural sales executives are also
tasked with organising free checkup bike camps, loan melas, test ride
camps, conducting Ride Safe Programs to educate customers on 'Safety' and
'Maintenance' and conducting other awareness camps on various value added
features such as Genuine Spare Parts, Good Life Program, Hero Honda
Advantage and other services offered by the Company.
The idea is not just to increase awareness about the two wheeler industry
but also to increase buy-in for Hero Honda products.
To improve its rural presence, Hero Honda is relying heavily on information
technology and during the year, the Company made specific efforts to
capture details of sales in the rural market it gave the marketing team a
much better idea of the customer mix and demand forecast and
simultaneously, enhanced coordination between the channel partners and Hero
Honda.
The Company has placed brand displays in various DCM Hariyali Kisaan Bazaar
Centres, spanning across many states namely Uttar Pradesh, Uttaranchal,
Madhya Pradesh, Haryana and Punjab. These premises were also used for
conducting free check up camps and education camps on Safety Riding skills.
Such camps were also held in association with Monsanto, Godrej Aadhar,
EFFCO and various other fertilizer and seed companies in many parts of the
country.
CUSTOMER RELATIONSHIP
Good Life Program
The customer has always been at the heart of Hero Honda's success.
Eight years ago. Hero Honda pioneered one of India's largest customer
loyalty programs, the Passport Program. Over the years customers and
channel partners have shown immense faith in the program which has gone
from strength to strength. Currently, more than five million plus customers
are enrolled in the program.
During the year in review, Hero Honda sought to upgrade this unique program
and turn into a world class and contemporary CRM property the Hero Honda
Good Life.
The new real-time program is magnetic card-based and customers can connect
to the program from anywhere in India. It offers incremental points to
members on workshop and showroom spends. It provides additional avenues to
earn bonus points and make easy redemptions. It also has special member
privileges and will incorporate many value offers from associate partners
in the months to come.
For channel partners, end-to-end processes have been provided. There is an
exclusive interactive website in which the channel partners and members are
give individual id's The website provides all the information and analytics
for reviewing the performance of the program from time to time. With all
authorised outlets now fully upgraded and operational on the Good Life
interface software, the membership is expected to grow at a much faster
pace.
Front end Experience
Hero Honda's visual identity program aims to give a consistent,
contemporary and youthful brand experience to its customers across all its
touch points.
While, the new visual identity concept has been designed keeping in view
the evolving customer needs and changing retail landscape, it symbolises
the Company's brand values, technology leadership and customer centric
focus. The new age design offers modularity to cater to different space
requirement.
The new visual identity programme not only gives a fresh new look to
customer touch points, it also enhances and enriches their overall
experience with Hero Honda.
Learning and Innovation
To enhance the customer experience at all touch points Hero Honda has
intensified focus on sensitising its customer facing teams.
Customised training programs for dealers and their staff are being
developed and deployed. The results have started paying off.
Over 20 new and customised programs were developed and shared with the
dealers and their staff during the year.
CONNECTING THROUGH SPORTS
Hero Honda has been actively promoting various disciplines of sports such
as hockey, cricket and golf. In addition to promoting sports and
sportspersons at the highest level, the Company has also been committed to
the promotion of sports at the grass root level.
During the year, Hero Honda was the title sponsor of the Hero Honda FIH
Hockey World Cup being played in Delhi in the months of February and March
2010.
The Company is also the Presenting Partner of the Queen's Baton Relay and a
partner of the Commonwealth Games Delhi 2010.
Hero Honda, which has more than two decades of association with cricket, is
one of the Partners of the path-breaking DLF Indian Premier League (IPL)
Twenty20. Additionally, the Company is also the Team Sponsor of Delhi
Daredevils,
The Company had been one of the Main Global Partners of the International
Cricket Council (ICC) for flagship ODI championships including the World
Cup cricket and the Champions Trophy and more recently the T20 World Cup in
England.
Iconic cricketers such as Virender Sehwag, Suresh Raina, Irfan Pa than,
Gautam Gambhir, Ishant Sharma and Manqj Tiwary are brand ambassadors of the
Company.
The Company is also committed to the promotion of golf in the country,
hosting the annual Hero Honda Indian Open Golf tournament with
participation from international marquee players.
Hero Honda also traditionally supports new talent. As part of this
philosophy, the Company recently signed up three promising young Indian
golfers Anirban Lahiri, Gaganjeet Bhullar and Shiv Kapur as brand
ambassadors.
Ace shooter and Athens Olympic silver medalist Col. Rajyavardhan Singh
Rathore is also one of the brand ambassadors of the Company,
INFORMATION SYSTEMS
Connecting people, products and processes, seamlessly with speed, IT at
Hero Honda works very closely with business to ensure organisation remains
prepared for the future.
During the year, the Company took up a number of IT initiatives in order to
increase the agility in the organisation, some of which are as follows:
The organisation upgraded its primary transaction system SAP R/3 to the
latest version Business Suite 7 that helped in improving operational
efficiency.
To assist the organisation take faster decisions and plan better, the
organisation enhanced its business intelligence (Bl) capabilities. One
major feature that got deployed was rural footprint and retail capturing
software to capture details of sales at dealer end which would help the
organisation better understand the customer mix.
A product lifecycle management solution was deployed during the year to
manage complexity arising out of the rapid growth in the product portfolio.
This was also one of the fastest PLM implementation in the country.
The Company also progressed significantly in the development of dealer
management system (DMS) and successfully conducted pilots for the system.
During the year, considerable emphasis was placed on risk mitigation and
information security processes based on ISO 27001 controls. In addition, a
number of steps were taken to promote Green IT.
Hero Honda's consistent efforts at becoming a technology-enabled
organisation won it several accolades during the year in review, including
CIO Green Edge Award, Top 10 Green IT Enterprise Award, CIO 100 Award and
The India's Best ClOs 2010 Award.
HUMAN RELATIONS
During the year in review, selective education and talent development
courses and e-learning modules were introduced in line with the
organisational needs to support the Company's mandate of being a world
class manufacturer.
'On-the-job' learning program through implementation, review and 'Gemba-
consuiting' was highly effective in creating continuous shop floor
improvements. The program is being conducted under the guidance of an
international TPM sensei.
The entry-level Induction for workers has been strengthened with the help
of numerous technical training modules in each of the three plants. A new
program was introduced for plant employees with an emphasis on inculcating
a spiritual mindset and reinforcing Indian values.
Training programs for Junior and mid-level management emphasised on
function-wise proficiency modules. Some of them were specifically targeted
on leadership, strategic thinking, people development, interface management
and positive attitude across levels and locations.
For the leadership team, the emphasis s was on 'emotional intelligence.'
The merits and benefits of 'Predictive Index', a key recruitment tool, was
outlined to members of the senior team through a 'hands-on' training
program.
During the year in review, the leadership team also experienced a spiritual
journey through a tailored program: 'Leadership through Indian Identity'.
Employee relations at Hero Honda continued to be cordial even amidst
turbulence in the entire Gurgaon industrial belt. During the year in
review, the union election at the Gurgaon plant was conducted harmoniously.
ENVIRONMENT MANAGEMENT
Hero Honda has always remained committed to clean environment, though its
environment friendly products and use of clean manufacturing processes. The
green aspect of the business has been kept active with its energy managers
continuously focusing on identifying new green initiatives.
During the year, Hero Honda enabled some of its key energy management
processes. The Company has introduced an Energy Management System (EMS)
which captures data from the machines for monitoring energy consumption and
the data links to SAP. The system helps in strategising to adapt to new-age
energy norms and improves speed and accuracy of processes.
The Company has also deployed a modern and efficient way of managing
hazardous and non hazardous solid waste with the introduction of
incinerators at all the three plants. These incinerators each have a waste-
disposal capacity of 250 kg/ hour and play a key role in preventing toxic
emissions and controlling land pollution.
A well planned and secured land fill site at the Gurgaon plant ensures safe
disposal of hazardous waste.
Organic waste convenors at each plant converts organic waste from kitchen,
green leaves and grass cuttings into useful compost which is used for
horticulture.
The paint shops have a new hanger cleaning system with fluidised
technology. This prevents uncontrolled combustion of hangers, which in turn
leads to air pollution. In addition, Hero Honda's unique initiative of
recycling primer from the waste paint sludge is recognised by TERI
corporate award for environmental excellence.
The Company has switched from a solvent painting system to a corrosion-
resistant, water-based painting system. This prevents the generation of
volatile organic compounds in the process which considerably reduces
wastage of paints. Moreover, this technology is safe and fire resistant.
Waste heat recovery units are installed to recover heat from exhaust of DG
sets. The recovered heat is used for heating water in the generator system.
Effluent treatment plants across all the locations use sophisticated
technology that treats the waste water, recycles the treated effluent and
finally reuses the water.
These plants have lead to a drastic reduction in the water consumption for
the manufacturing purpose over the years, from 1.07 kilolitre per vehicle
in 2000-01 to just 280 grams per vehicle in 2008-09.
Over the years Hero Honda has been actively involved in rainwater
harvesting projects to protect, preserve and enhance the environment.
Access to water is one of the most challenging issues facing the world
today and the Company is doing its bit to mitigate the crisis in Haryana,
which is one of the driest states of India.
Through a multi-layered ground water recharge program at the factories,
Hero Honda has met with considerable success. For example, at the Dharuhera
plant, the ground water has been recharged by more 25,000 cubic metres,
despite the fact that Dharuhera receives an average rainfall of just 726mm
per year. Similar recharge projects have been executed at the other plants
as well.
The Hero Honda Haridwar plant has a 'green roof covering an area of approx.
45,000s. The Green Roof conserves energy by moderating the roof temperature
and the temperature in the surrounding areas. It has also led to a dramatic
reduction in the storm water runoff. Equally important, the green roof has
provided an additional buffer for the conventional roofing system, by
doubling the service life of the underlying waterproofing membrane.
OUTREACH PROGRAM
Hero Honda Motors takes considerable pride in its community relationships,
especially ones at the grassroots that have evolved over time. The Company
has played a pivotal role in bringing an economically and socially backward
region in Dharuhera, Haryana, into the national economic mainstream through
direct interventions in education, healthcare, vocational training,
creation of social and physical infrastructure and environment management.
Many of these programs are the brainchild of the Raman Kant Munjal
Foundation, a trust set up in memory of Hero Honda's first managing
director.
Hero Honda is now taking its outreach and capacity building program to
newer pastures. At Haridwar, for example, Hero Honda has adopted an
Industrial Training Institute at Barkot.
In addition to the existing curriculum, the Company is introducing courses
for fitters, for motor mechanics and for electricians. To begin with, there
will be seven training shifts. ITI teachers will be brought to the Hero
Honda Haridwar plant for training on HHH induction training modules, so
that the imparted skills are contemporary and relevant. The students opting
for these courses will also be provided apprenticeship training at the
Haridwar plant.
The six-acre learning centre is being renovated, including the classrooms.
Horticulture projects are under implementation to beautify the campus. The
Company also plans to establish a library; commence smart classes and
upgrade its computer laboratory. Meanwhile, ongoing outreach and capacity
building initiatives continue to be supported in the Gurgaon Haryana belt.
During the year, the Company organised a number of workshops on fruits and
vegetable preservation, detergent-making and tie and dye-making. Workshops
for motor mechanics were also held in collaboration with the Indira Gandhi
National Open University.
There were also a number of projects on literacy and health education
implemented, which were organised in collaboration with government and
local agencies.
Around 900 villagers, including children benefitted directly from these
programs. Furthermore, during the year, various physical infrastructures,
water and environment projects were implemented in the Dharuhera belt,
benefitting several villages.
A number of tree planting initiatives were also carried out in government
schools located in surrounding villages, along with maintenance activities
such as repairing roofs and boundary walls.
Healthcare outreach is also an important cog in Hero Honda's social matrix
and during the year, the Company organised several cancer detection camps,
cataract surgery camps, heart check up camps, mental health checkup camps
and camps for physically challenged.
In addition to these programs, a number of ongoing projects were executed
by the Raman Kant Munjal Foundation as part of its long term social mandate
in the region.
Over the last decade, the Foundation had established a vocational training
centre to impart training on Tailoring, Embroidery and Carpet Weaving to
local women. The Centre was recently upgraded and expanded to allow the
training of upto 50 girls per batch. Till date, nearly 1000 girls have
completed their courses at the centre. While most of the trainees have been
placed in the garment industry, a number of girls are also self-employed in
their respective villages and neighboring towns. On an average, they have
enhanced their income earning capacity by earning Rs. 3000-10,000 per
month.
In 2007, the Foundation set up a computer training and learning centre in
collaboration with Microsoft and Udyan Care, a Delhi based N.G.O. to make
rural youth computer literate and to get into the BPO industry. Till date,
a total of 458 trainees have been trained and awarded Microsoft's diploma
certificates.
'HAMARI ASHA - A Group of Rural Friends', a new initiative by RKMF, was
introduced during the year in review. As part of a pilot project, a group
of 35 rural women are being trained in financial empowerment with the
objective of providing them the ability to sustain a livelihood with local
recourses. The group is also being sensitised towards social development
issues such as dowry, female foeticide, girl child education and mother and
child health care.
During the year, the women were trained to work on Diwali dia designing,
decoration, packaging and marketing work for a month in the village
of Gujjar Ghatal. RKMF plans to cascade this project across different
villages in the coming months and years.
The Foundation also runs Asha, an educational programme for village
children who are first generation learners and attend to Government
Schools. The objective is to provide these children with additional support
to improve their educational standard and to achieve their overall
development.
The Asha program started five years ago and currently, 11 centres are being
managed across 8 villages and more than 385 children have enrolled.
To ensure that there is overall personality development of ASHA children,
the Foundation organises recreational activities and soft skills training.
Regular get together are also organised with Raman Munjal Vidya Mandir
children from time to time.
The Foundation also runs an Adult Literacy program, a marriage facilitation
service for underprivileged girls, besides doorstep healthcare programs and
with medical camps for the local population.
In every CSR project undertaken, the Foundation takes care to involve
either a local NGO or the local panchayat members themselves to ensure good
execution and future sustainability of a given project. In Projects such as
Hygiene, Sanitation, Safe Drinking Water, Local Government Representatives
such as Block Development Officers are also involved for Government funding
and Technical knowhow of the projects.
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