Your Directors are pleased to present the Thirty Fourth Annual Report, together with
the Company's audited financial statements for the financial year ended March 31, 2017.
FINANCIAL RESULTS STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company are as follows:
||March 31, 2017
||March 31, 2016
||March 31, 2017
||March 31, 2016
|Net Sales and Other Income
|Profit before Finance costs and Depreciation
|Depreciation and amortisation expenses
|Profit from ordinary activities before share of Profit / (Loss) of associates
|Profit/ (loss) from associates
|Share in net profit / (loss) of associates
|Gain on dilution of interest in an associate
|Profit from ordinary activities before tax
|Net Profit from ordinary activities after tax
|Other comprehensive income /(expense) (net of tax)
|Total comprehensive income for the period
|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
|- Proposed Final
|Corporate Dividend Tax
|Transfer to General Reserve
|Transfer to Foreign Currency Translation Reserve
|Balance carried to Balance Sheet
|Basic & diluted earning per equity share on Net profit from ordinary activities
after tax (face value Rs. 2/- each) (In Rupees)
During the Financial Year (FY) 2016-17 under review, your Company clocked sales of
6,664,240 units over 6,632,322 units in the previous FY.
During FY 2016-17, revenue from operations was Rs. 30,846.12 crores as compared to Rs.
30,700.88 crores in FY 2015-16, registering an increase of 0.47%.
Profit before tax (PBT) was Rs. 4,658.46 crores as compared to Rs. 4,434.87
crores in FY 2015-16, reflecting an increase of 5.04%. Profit after Tax (PAT) was Rs.
3,377.12 crores as against Rs. 3160.19 crores in FY 2015-16, an increase of 6.86% over the
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at 15.03% in FY
2016-17, as compared to 14.51% in FY 2015-16.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Companies Act 2013 (the Act') and Indian
Accounting Standard (AS)-110 on Consolidated Financial Statements, read with IND AS-28
Investments in Associates and Joint Ventures the Audited Consolidated Financial Statement
for the FY ended March 31, 2017 is provided in this Annual Report.
CHANGES IN CAPITAL STRUCTURE
During the financial year under review, 6,750 equity shares of Rs. 2 each were allotted
on exercise of employee stock options by the employees of the Company. Consequently, the
issued and paid up capital of the Company as on March 31, 2017 was Rs. 399,393,676 divided
into 199,696,838 equity shares of Rs. 2 each.
The Company has not issued any equity shares with differential rights, sweat equity
shares or bonus shares. The Company has only one class of equity shares with face value of
Rs. 2 each, ranking pari-passu.
Further improving on the dividend pay-out, your Directors are pleased to recommend for
your approval a final dividend of Rs. 30 per equity share (1500%) of face value of Rs. 2
each, in addition to an interim dividend of Rs. 55 per equity share (2750%) declared in
the month of March 2017, aggregating a total final dividend payout of Rs. 1,697.42 crores
(excluding tax on dividend) during FY ended March 31, 2017. In the previous FY, total
final dividend payout of Rs. 72 per Equity Share of the face value of Rs. 2 each was made.
Final dividend, if approved at the ensuing Annual General Meeting, shall be paid to the
eligible members within the stipulated time period. During FY 2016-17, the Board of
Directors has approved a Dividend Distribution Policy as per the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 (Listing Regulations') which is
available at the following link: http://www.heromotocorp.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of this report and
gives details of the overall industry structure, economic developments, performance and
state of affairs of your Company's business in India and abroad, risk management systems
and other material developments during the financial year under review.
CHANGE IN NATURE OF BUSINESS
During FY 2016-17, there was no change in the nature of Company's business.
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
During FY 2016-17, the fifth plant of your Company at Halol, Gujarat started commercial
production during the 3rd quarter. Your Company signed a sale deed with the
Andhra Pradesh Industrial Infrastructure Corporation Limited for setting up its sixth
manufacturing facility at Sricity in Chittoor District in the state of Andhra Pradesh.
The construction of the second overseas plant of your Company at Jessore in Bangladesh,
with an annual installed capacity of 1.5 lakh units, is in full swing and is slated to be
operational in the first half of FY 2017-18.
Company's aggressive global expansion plans are in top gear. HMCL added five new
markets in FY 2017 to take its global presence to 35 countries with a commitment to expand
to 50 countries by 2020. The Company has commenced its operations in Argentina, the 35th
market to its rapidly growing global footprint. During FY under review, your Company
launched the brand "Hero" and its range of products in Myanmar, Ghana, Guinea,
Liberia and Argentina.
Over the years, your Company has set global benchmarks in creating world class
manufacturing and operational facilities to ensure best in class products on design,
technology and quality. In the coming years, your Company plans to strengthen its
operations across South Asia, Africa & Middle East and Latin America with the
introduction of new products.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 3 associate
companies. The Company regularly monitors the performance of these companies.
The Company shall make available the annual accounts of the subsidiary companies to any
member of the Company who may be interested in obtaining the same. The annual accounts of
the subsidiary companies will also be kept open for inspection at the registered office of
the Company and respective subsidiary companies. Further, the annual accounts of the
subsidiaries are also available on the website of the Company viz. www. heromotocorp.com.
The consolidated financial statements presented by the Company include the financial
results of its subsidiary companies.
HMCL Netherlands B.V. (HNBV')
HNBV, a wholly owned subsidiary of your Company was incorporated in Amsterdam as a
private company with limited liability under the laws of The Netherlands with the primary
objective of promoting overseas investments. During FY 2016-17, HNBV has invested in
operating companies in Colombia and Bangladesh and has reported a net loss of Rs. 0.83
HMCL Colombia S.A.S. (HMCLC')
HMCLC was incorporated in Colombia as a joint venture between HNMV and Woven Holdings
LLC as a simplified stock corporation company. HNBV currently holds 51% equity in HMCLC
and 49% equity shares are held by Woven Holdings LLC. The main business of HMCLC is to
manufacture and sell two wheelers in Colombia and is having a manufacturing facility with
a production capacity of 60,000 per annum. During the year ended March 31, 2017, the
Company has reported a net loss of Rs. 65.30 crores.
HMCL Niloy Bangladesh Limited (HNBL')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and Niloy Motors
Limited, Bangladesh as a limited liability company. HNBV currently holds 55% equity in
HNBL and 45% equity shares are held by Nitol Niloy Group, Bangladesh. The main business of
HNBL is to manufacture and sell two-wheelers. HNBL is in the process of setting up a
manufacturing facility with a production capacity of 1.50 lakh two-wheelers per annum.
During FY 2016-17, HNBL reported a net loss of Rs. 4.83 crores.
HMCL (NA) Inc.
HMCL (NA) Inc., a wholly owned subsidiary of your Company was incorporated as a
Corporation pursuant to the General Corporation Law of the State of Delaware, United
States of America. HMCL (NA) Inc., has invested in Erik Buell Racing, Inc. (EBR'), a
Delaware corporation by subscribing to 49.2% of its equity share capital. During the
period ended March 31, 2017, HMCL (NA) Inc. has incurred a loss of Rs. 0.01 crores.
HMCL Americas Inc. (HMCLA')
HMCLA a wholly owned subsidiary of your Company was incorporated as a Corporation
pursuant to the General Corporation Law of the State of Delaware, United States of America
with the primary objective to pursue various global businesses. During the year ended
March 31, 2017, HMCLA has incurred a loss of Rs. 0.52 crores.
HMC MM Auto Limited (HMCMMA')
Your Company has a joint venture with Magneti Marelli S.p.A Italy, namely HMC MM Auto
Limited in India, set up for the purpose of carrying out manufacturing, assembly, sale and
distribution of two wheeler fuel injection systems and parts. Your Company holds 60% of
the equity share capital in HMCMMA. During FY 2016-17, HMCMMA has incurred a loss of Rs.
Hero FinCorp Ltd. (HFCL')
HFCL, an associate of your Company was incorporated in the year 1991. Your Company
holds 41.03% in the equity share capital of HFCL. HFCL is a non-banking finance company
engaged in providing financial services, including two wheeler financing and providing
credit to Company's vendors and suppliers. Over the years, it has added several new
products and customers in its portfolio, like SME and commercial loans, loan against
During FY 2016-17, HFCL recorded an income from operations of Rs. 1,317.14
crores and a profit of Rs. 249.39 crores.
Ather Energy Private Ltd. (AEL')
AEL is a private limited company, focused on developing designing and selling premium
electric two wheeler. During the year, your company has acquired 30.1% stake in AEL, which
reported a loss of Rs. 1.27 crores.
Erik Buell Racing, Inc. (EBR')
Your Company through its subsidiary, HMCL (NA) Inc., has invested in Erik Buell Racing,
Inc. (EBR'), a Delaware corporation by subscribing to 49.2% of its equity share
capital. EBR has ceased its operations and entered into Assignment for the Benefit of
Creditors under Chapter 128 of the Wisconsin Statutes (Chapter 128 Process').
A statement containing salient features of financial statement of subsidiaries and
associate companies forms part of the financials.
The Board of Directors of your Company (the Board') has approved a policy for
determining Material Subsidiaries. At present, your Company does not have a Material
Subsidiary. The Policy on Material Subsidiaries can be viewed on the Company's website,
www. heromotocorp.com at the following link: http://www.heromotocorp.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During FY 2016-17, Mr. Sunil Kant Munjal, stepped down from the Board of Directors on
completion of his tenure as Joint Managing Director on August 16, 2016. The Board is
grateful for his contributions during his tenure and wishes him success in all his future
At the previous Annual General Meeting of the Company, the shareholders had approved
the appointments of Mr. Pawan Munjal as Chairman, Managing Director & CEO for a period
of 5 years and Mr. Vikram S. Kasbekar as Whole-time Director for a period of 3 years. Mr.
Paul Bradford Edgerley was also appointed as Non-Executive & Independent Director for
In terms of the applicable provisions of the Act and the Articles of Association of the
Company, Mr. Vikram S. Kasbekar, Director of the Company retires by rotation at the
ensuing Annual General Meeting and, being eligible, has offered himself for
re-appointment. Brief resume and other details of Mr. Vikram S. Kasbekar, who is proposed
to be re-appointed as a Director of your Company have been furnished, along with the
Explanatory Statement to the Notice of the ensuing Annual General Meeting.
Declarations from Independent Directors
Your Company has received declarations from all the Independent Directors confirming
that they meet the criteria of independence as prescribed in the Act and the Listing
In the opinion of the Board, Independent Directors fulfil the conditions specified in
the Act, Rules made thereunder and Listing Regulations and are independent of the
Key Managerial Personnel (KMP)
Mr. Pawan Munjal, Chairman, Managing Director & CEO, Mr. Niranjan Gupta, Chief
Financial Officer and Ms. Neerja Sharma,
Company Secretary are the KMPs of your Company in accordance with the provisions of
Section 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014.
On March 31, 2017, Mr. Ravi Sud superannuated and ceased to be the Chief Financial
Officer of the Company. W.e.f. April 1, 2017, Mr. Niranjan Gupta was appointed as
the Chief Financial Officer of the Company. He has a rich and international experience of
over two decades in finance leadership roles.
During FY 2016-17, five meetings of the Board of Directors were held. For details of
these Board meetings, please refer to the Corporate Governance section of this Annual
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it's Committees, the Chairman and
the individual Directors was carried out for FY 2016-17. Led by the Nomination &
Remuneration Committee (NRC'), the evaluation was carried out using individual
questionnaires covering amongst others composition of Board, conduct as per company values
& beliefs, contribution towards development of the strategy & business plan, risk
management, receipt of regular inputs and information, codes & policies for
strengthening governance, functioning, performance & structure of Board Committees,
skill set, knowledge & expertise of Directors, preparation & contribution at Board
meetings, leadership etc.
As part of the evaluation process, the performance of non-independent Directors, the
Chairman and the Board was conducted by the independent Directors. The performance
evaluation of the respective Committees and that of independent and non-independent
Directors was done by the Board excluding the Director being evaluated.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 of the Act, which
is to the best of their knowledge and belief and according to the information and
explanations obtained by them:
1. that in the preparation of the annual accounts for the financial year ended March
31, 2017, the applicable accounting standards have been followed, along with proper
explanation relating to material departures;
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, 2017 and of the profit and loss
of your Company for the financial year ended March 31, 2017;
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, 2013 for
safeguarding the assets of your Company and for preventing and detecting fraud and other
4. that the annual accounts for the financial year ended March 31, 2017 have been
prepared on a going concern basis;
5. that the directors have laid down Internal Financial Controls which were followed by
the Company and that such Internal Financial Controls are adequate and were operating
6. that the directors have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
Pursuant to provisions of the Act, the NR Committee of your Board has formulated a
Remuneration Policy for the appointment and determination of remuneration of the
Directors, Key Managerial Personnel, Senior Management and other employees of your
Company. The NRC has also developed the criteria for determining the qualifications,
positive attributes and independence of Directors and for making payments to Executive and
Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the industry while
fixing appropriate remuneration packages and for administering the long-term incentive
plans, such as ESOPs, RSUs etc. Further, the compensation package of the Directors, Key
Managerial Personnel, Senior Management and other employees is designed based on the set
of principles enumerated in the said policy.
Your Directors affirm that the remuneration paid to the Directors, Key Managerial
Personnel, Senior Management and other employees is as per the Remuneration Policy of your
The Remuneration details of the Directors, Chief Financial Officer and Company
Secretary, along with details of ratio of remuneration of each Director to the median
remuneration of employees of the Company for the FY under review are provided as Annexure
The Remuneration Policy of your Company can be viewed on the following link-
http://www.heromotocorp.com/en-in/about-us/key-policies/remuneration-policy.html and is
also provided as
EMPLOYEES' INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from
time to time (SEBI Regulations'), the NRC of your Board, inter alia,
administers and monitors the Employees' Incentive Scheme, 2014 of your Company and the
Employees' Stock Option plans framed thereunder.
Further, the NRC has, at its meeting held on August 22, 2016 granted 49,950 stock
options under ESOP Plan 2016 to the eligible employees at an exercise option price of Rs.
2,469/- per option. In addition, the NRC also approved grant of 11,194 Restricted Stock
Units under RSU Plan, 2016 to the eligible employees at the face value of Rs. 2/- per
Applicable disclosures as stipulated under the SEBI Regulations with regard to the
Employees' Stock Option Scheme are provided as Annexure III to this Report and is
available on the Company's website, www.heromotocorp.com and can be viewed on the
following link: http://www.heromotocorp.com/en-in/esop.php
Your Company has received a certificate from M/s Deloitte Haskins & Sells, Gurgaon,
Haryana, Statutory Auditors (Firm Registration No. 015125N) that the Employees' Incentive
Scheme, 2014 for grant of stock options has been implemented in accordance with the SEBI
Regulations and the resolution passed by the members in their general meeting. The
certificate would be placed at the ensuing Annual General Meeting for inspection by the
Your Company is committed to benchmarking itself with global standards of Corporate
Governance. It has put in place an effective Corporate Governance system which ensures
that provisions of the Act and Listing Regulations are duly complied with, not only in
form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the principles of
good Corporate Governance and best management practices that are followed globally. The
Code is available on your Company's website, www.heromotocorp.com and can be viewed on the
following link: http://www.heromotocorp. com/en-in/about-us/code-of-conduct.html
In terms of Listing Regulations, a report on Corporate Governance, along with the
certificate from Mr. Sanjay Grover, Managing Partner (CP No. 3850), M/s Sanjay Grover
& Associates, Company Secretaries, New Delhi, confirming compliance of the conditions
of corporate governance is annexed hereto and forms part of this Annual Report as Annexure
TRANSFER TO GENERAL RESERVE
During the FY under review, no amount has been transferred to the General Reserve of
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review, your Company has transferred unpaid/ unclaimed dividend,
amounting to Rs. 2.37 crores for FY 2008-09 to the Investor Education and Protection Fund
(IEPF) of the Central Government of India.
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position of your Company
have occurred between April 1, 2017 and the date of signing of this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2016-17, your Company has not given any loan or guarantee pursuant to
provisions of Section 186 of the Act. Details of investments made in terms of Section 186
of the Act are as under:
||Principal Amount (Shares)
||Principal Amount (Bonds/Debentures)
* HMCL MM Auto Limited Rs. 6.60 crores, HMCL(NA) Rs. Nil, HMCL Netherlands BV Rs. 50.79
crores, HMCL Americas Inc. Rs. Nil, Hero FinCorp Limited Rs. 36.40 crores, Ather Energy
Private Limited Rs. 180.52 crores including mark to market adjustment of Bonds Rs. 0.69
** Maturity of bonds and amortisation
Your Company has neither accepted nor renewed any deposits during FY 2016-17 in terms
of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2016-17, all contracts/arrangements/transactions entered into by your Company
with related parties under Section 188(1) of the Act were in the ordinary course of
business and on an arm's length basis. During FY 2016-17, your Company has not entered
into any contracts/arrangements/transactions with related parties which could be
considered material' in accordance with its Policy on Materiality of Related Party
Transactions. Thus, there are no transactions required to be reported in form AOC-2.
Further, during FY 2016-17, there were no materially significant related party
transactions made by your Company with the
Promoters, Directors, Key Managerial Personnel or other designated persons, which might
have potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for its approval.
There was no matter requiring approval of the Board. During FY under review, the Audit
Committee has approved transactions through the Omnibus mode in accordance with the
provisions of the Act and Listing Regulations. Related party transactions were disclosed
to the Board on regular basis as per IND AS 24. Details of related party transactions as
per IND AS 24 may be referred to in Note 36 of the Standalone Financial Statements.
The policy on related party transactions is available on the Company's website,
www.heromotocorp.com and can be viewed on the following link:
RISK MANAGEMENT FRAMEWORK
Your Company follows a comprehensive system of Risk Management. It has adopted a policy
and procedure for rapid identification, definition of risk mitigation plans and execution.
Actions include adjustments in prices, dispatch plan for specific durations across models,
inventory build-up, aligning product line-up as per regulatory mandates and active
participation in regulatory mechanisms. Many of these risks can be foreseen through
systematic tracking. Major risks can be categorised across following:
1. Changes in regulations
2. Market contraction due to macro-economic factors
3. Socio-economic-political disruptions
Your Company has constituted a Risk Management Committee to oversee the risk management
efforts under the Chairmanship of Mr. M. Damodaran, Independent Director. The details of
the Committee alongwith its charter are set out in the Corporate Governance Report,
forming part of this report. The Board periodically reviews the Risk Management framework
of the Company.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical, moral and legal business
conduct. Accordingly, the Board of Directors have formulated Vigil Mechanism/Whistle
Blower Policy which provides a robust framework for dealing with genuine concerns &
grievances. Your Company has an ethics hotline managed by a third party which can be used
by employees, Directors, vendors, suppliers, dealers etc. to report any violations to the
Code of Conduct. Specifically, employees can raise concerns regarding any discrimination,
harassment, victimisation, any other unfair practice being adopted against them or any
instances of fraud by or against your Company. During FY under review, three complaints
were received and processed. Out of these, two complaints have been investigated &
acted upon and remaining one is under investigation.
During FY 2016-17, no individual was denied access to the Audit Committee for reporting
concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available on the Company's
website, www.heromotocorp.com and can be viewed on the following link:
CORPORATE SOCIAL RESPONSIBILITY
Your Company has constituted a Corporate Social Responsibility (CSR) Committee which
functions under direct supervision of Mr. Pawan Munjal, Chairman, Managing Director &
CEO of your Company, who is also the Chairman of the CSR Committee. Other members of the
Committee are Gen. (Retd.) V. P. Malik and Mr. Pradeep Dinodia, who are
Non-Executive and Independent Directors of your Company.
Your Company has implemented the CSR Policy, duly formulated and recommended by the CSR
Committee to the Board. The CSR policy lays down CSR activities to be undertaken by your
Company. The CSR activities undertaken by your Company are based on the approved CSR
policy, which is available on the Company's website, www.heromotocorp.com and can be
viewed on the following link: http://www.heromotocorp.com/en-in/about-us/key-policies/
The CSR Policy of your Company, as adopted by the Board, broadly covers the following
a) To direct HMCL's CSR Programmes, inter alia,towards achieving one or more of the
following - enhancing environmental and natural capital; supporting rural development;
promoting education including skill development; providing preventive healthcare,
providing sanitation and drinking water; creating livelihoods for people, especially those
from disadvantaged sections of society, in rural and urban India and preserving and
b) To develop the required capability and self-reliance of beneficiaries at the grass
roots, in the belief that these are prerequisites for social and economic development;
c) To engage in affirmative action/interventions such as skill building and vocational
training, to enhance employability and generate livelihoods for persons including from
disadvantaged sections of society;
d) To pursue CSR Programmes primarily in areas that fall within the economic vicinity
of the Company's operations to enable close supervision and ensure maximum development
e) To carry out CSR Programmes in relevant local areas to fulfil commitments arising
from requests by government/regulatory authorities and to earmark amounts of monies and to
spend such monies through such administrative bodies of the government and/or directly by
way of developmental works in the local areas around which the Company operates;
f) To carry out activities at the time of natural calamity or engage in Disaster
g) To contribute to the Prime Minister's National Relief Fund or any other fund set up
by the Central Government for socioeconomic development and relief and welfare of the
Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women;
h) To contribute or provide funds to technology incubators located within academic
institutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s)
including Chief Minister's Relief Fund, which may be recognised as CSR activity;
j) To promote sustainability in partnership with industry associations, like the
Confederation of Indian Industry (CII), PHD, FICCI, etc. in order to have a multiplier
During the FY under review, your Company spent Rs. 85.14 crores on its CSR
activities, which amounts to 2.41% of the average net profits of previous three financial
years. CSR initiatives undertaken by your Company, along with other details form part of
the Annual Report on CSR activities for FY 2016-17, which is annexed and forms part of
this Report as Annexure V.
The Audit Committee of your Company comprises the following Non-Executive and
|1. Mr. Pradeep Dinodia
|2. Mr. M. Damodaran
|3. Gen. (Retd.) V. P. Malik
|4. Dr. Pritam Singh
Further details on the Audit Committee and its terms of reference etc. have been
furnished in Corporate Governance Report which forms part of this Report as Annexure
During the FY under review, all recommendations of the Audit Committee were accepted by
the Board of Directors of the Company.
AUDITORS AND AUDITORS' REPORT Statutory Auditors
M/s Deloitte Haskins & Sells, Chartered Accountants, Gurgaon, (FR No. 015125N),
Statutory Auditors of the Company were appointed until the conclusion of the 34th
Annual General Meeting of the Company in calendar year 2017. They have audited the
financial statements of the Company for the FY under review. The observations of Statutory
Auditors in their Report, read with relevant Notes to Accounts are self-explanatory and,
therefore, do not require further explanation. The Auditors' Report does not contain any
qualification, reservation or adverse remark. Further, there were no frauds reported by
the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the
The Board of Directors in its meeting held on May 10, 2017 have approved the
appointment of M/s BSR & Co. LLP (FR No. 101248W/ W-100022) as the Statutory Auditors
of the Company for a period of 5 years. Your Company has received an eligibility letter
from the Auditors for their appointment in accordance with Sections 139 and 141 of the
Act. Their appointment is being placed before the shareholders for approval in the ensuing
Annual General Meeting of the Company.
M/s Ramanath Iyer & Co., Cost Accountants, New Delhi (FR No. 000019) were appointed
as the Cost Auditors of the Company for FY 2016-17 to audit the cost accounts of the
Company. They have been re-appointed as Cost Auditors for FY 2017-18.
Mr. Arvind Kohli, Proprietor (CP No. 2818), M/s Arvind Kohli & Associates, Company
Secretaries, Gurgaon, Haryana, was appointed to conduct Secretarial Audit of your Company
during FY 2016-17.
The Secretarial Audit Report for the said FY is annexed herewith and forms part of this
Report as Annexure VI. The Report does not contain any qualification, reservation
or adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal controls. This ensures
that all assets are safeguarded and protected against loss from unauthorised use or
disposition and all financial transactions are authorised, recorded and reported
An extensive risk based programme of internal audits and management reviews provides
assurance to the Board regarding the adequacy and efficacy of internal controls. The
internal audit plan is also aligned to the business objectives of the Company.
Comprehensive policies, guidelines and procedures are laid down for all business
processes. The internal control system has been designed to ensure that financial and
other records are reliable for preparing financial and other statements and for
maintaining accountability of assets.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015 (the PIT Regulations') on prevention of insider trading,
your Company had instituted a comprehensive Code of Conduct for regulating, monitoring and
reporting of trading by Insiders. The said Code lays down guidelines, which advise
insiders on the procedures to be followed and disclosures to be made in dealing with the
shares of the Company and cautions them on consequences of non-compliances. During FY
2016-17, your Company has strengthened the Code to ensure its effective implementation and
meaningful application of the Listing Regulations.
Your Company has further put in place a Code of practices and procedures of fair
disclosures of unpublished price sensitive information. Both the aforesaid Codes are in
line with the PIT Regulations.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report (BRR') has been prepared and forms part of the
Annual Report as Annexure VII. The Report provides a detailed overview of
initiatives taken by your Company from environmental, social and governance perspectives.
The equity shares of your Company are presently listed on the BSE Limited and the
National Stock Exchange of India Limited (NSE).
As on March 31 2017, total number of employees on the records of your Company were
8,069 as against 7,592 in the previous financial year.
Your Directors place on record their appreciation for the significant contribution made
by all employees, who through their competence, dedication, hard work, co-operation and
support have enabled the Company to cross new milestones on a continual basis.
A detailed note on People at Hero' forms part of Management Discussion and
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
("Rules"), is appended as Annexure I to the Report. The information as per Rule
5(2) of the Rules, forms part of this Report. However, as per first proviso to Section
136(1) of the Act and second proviso of Rule 5(2) of the Rules, the Report and Financial
Statements are being sent to the Members of the Company excluding the statement of
particulars of employees under Rule 5(2) of the Rules. Any Member interested in obtaining
a copy of the said statement may write to the Company Secretary at the Registered Office
of the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(2) and 134(3)(a) of the Act and rules made thereunder, extracts
of Annual Return in Form MGT 9 is annexed to this report as Annexure VIII.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act, read with rules made
thereunder is annexed to this report as Annexure IX.
Your Directors state that there being no transactions with respect to following items
during FY under review, no disclosure or reporting is required in respect of the same:
1. Deposit from the public falling within the ambit of Section 73 of the Companies Act,
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 under
any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Director of your Company receive
any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or
Tribunals which impact the going concern status and Company's operations in future.
6. Buy back of shares.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION
& REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace.
This policy is in line with the requirements of The Sexual Harassment of Women at the
Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees, whether
permanent, contractual, temporary and trainees are covered under this Policy.
As per the said Policy, an Internal Complaints Committee is also in place to redress
complaints received regarding sexual harassment. Following is the summary of complaints
received and disposed of during FY under review:
No. of complaints received: Nil No. of complaints disposed of: NA
AWARDS AND RECOGNITION
During the FY under review, we have received multiple awards and recognition. Some of
them are listed below:
1. Your Company has been adjudged as "Indian MNC of the year" by the All
India Management Association (AIMA)
2. NDTV Manufacturer of the year
3. International Fire and Security Exhibition and Conference (IFSEC) Award for
Excellence in Manufacturing Security.
4. Golden Peacock Award for HR Excellence in Automobile Sector, organised by Institute
The Board of Directors would like to express their sincere thanks to the Shareholders
& Investors of the Company for the trust reposed on us over the past several years.
Your Directors would also like to thank the Central Government, State Governments,
Financial Institutions, Banks, Customers, Employees, Dealers, Vendors and Ancillary
Undertakings for their co-operation and assistance. We would like to reiterate our
commitment to continue to build our organisation into a truly world class enterprise in
||For and on behalf of the Board
|Date: May 10, 2017
|Place: New Delhi