WORLDWIDe ReaCH

MILLIONs Of DeLIgHteD CustOMeRs

INDustRy-Next INNOvatION

CuttINg-eDge teCHNOLOgy

Dynamism
Hero MotoCorp Ltd. annual Report 2013-14
 Contents

Dynamic HeRo
02 Decoding Dynamism
22 Taking the Centre Stage
04 Dynamism in Numbers
24 Impressive Product Lines
06 Quarter-wise Performance
26 We care for the Planet
08 Message from Chairman
28 10-year Performance
10 Managing Director’s Review 29 Economic Value Added
12 A Little More is Never Little (EVA) Statement
14 Ride our Wanderlust 30 Board of Directors
16 The Next Big Idea is Here 32 Corporate Information
18 Shaping Next-gen Mobility

01
20 Hero Universe at Auto Expo
2014

management DiRectoRs’ coRpoRate

Discussion RepoRt goveRnance

33 58
anD
analysis

RepoRt

Business
Financial statements
64
ResponsiBility
102 Standalone Financial Statements

RepoRt

90
143 Consolidated Fin ancial S tateme nts

1 0 2

Forward-looking statements

In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take
investment decisions. This report and other statements - written and oral – that we periodically make contain forward-looking
statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible
to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words
of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking
statements will be realised, although we believe we have been prudent in assumptions. The achievements of results are subject
to risks, uncertainties, and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should
underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers
should keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of
new information, future events or otherwise.
 Dynamism is often a phenomenon, which
lies at the intersection of cutting-edge
technology
and imagination. At Hero MotoCorp, we bring
these two together, to create an organisation
that
has dynamism at its core. We are doing this to
align ourselves to evolving customer
aspirations in a
highly dynamic socio-economic landscape.

But how does this dynamism reflect in the way we strategise in

the present and shape our future?
We are launching new products and focusing on multiple product
refreshes.
We are focusing on the next big idea to accelerate our pace of innovation.
We are collaborating with best-in-class technology partners to take
our technology leadership to the next level.
That’s not all, we are reinforcing our customer-connect programmes to
understand better their everyday experiences with our products and
services.
The horizon for Hero is truly expanding across continents of Asia, Africa and
South America, where our ideas are setting into motion amazing customer
experiences

EvEryday.
and creating value for all stakeholders.

ThaT’s how we infuse dynamism in all we do.

 2
Dynamic Hero

dEcoding dynamism

Being the world’s largest manufacturer of

two- wheelers is both an honour and a
responsibility.
It means that we have to work harder, innovate faster and cater to a
wider cross-section of customers globally. To sustain and grow our
leadership further.
We do this by investing in higher capacities, advanced technologies and
greater marketing efforts.
Vision 125cc, 150cc, 225cc and scooter category
The story of Hero Honda began
with a simple vision - the vision of
a mobile
and an empowered India, powered
by its two-wheelers. Hero MotoCorp
Ltd., company’s new identity,
reflects its commitment towards
providing world
class mobility solutions with renewed
focus on expanding company’s footprint
in the global arena.

mission
Hero MotoCorp’s mission is to become a
global enterprise fulfilling its customers’
needs and aspirations for mobility,
setting benchmarks in technology,
styling and quality so that it converts
its customers into its brand advocates.
The Company will provide an engaging
environment
for its people to perform to their true
potential. It will continue its focus on
value creation and enduring
relationships with its partners.

30+
Years of corporate existence

20
Product across 100cc,

Hero MotoCorp
Ltd.
sTRaTeGy ct portfolio across categories, explore
H growth opportunities globally,
e continuously improve its
r operational efficiency, aggressively
o expand its reach to customers, continue
to invest in brand building activities
M and ensure customer and shareholder
o delight.
t
o
C
o
US$ 4 bn+
r Turnover
p
’
s
50 mn+
k Sales (cumulative sales
e since inception); world’s
y fastest two-wheeler
company to achieve this
s
t
r
a
t
e
g
i
6,000+
e Pan-India touch points
s – deepening presence
in 1,00,000+ villages
a
r
e

t
o

b
u
i
l
d

r
o
b
u
s
t

p
r
o
d
u
 3

Surpass 100 million units in cumulative

production Annual bike and scooter sales of 12

Vision 2020 million

More than 20 manufacturing and assembly plants globally
Presence in more than 50
countries Turnover of ` 60,000
crores

No.1 41.2% 7 mn units

Two-wheeler globally since
Cumulative installed capacity
2001
of three plants
Market share in the
domestic two-wheeler
market

51.8% 19
Market share in the
Country presence across
domestic motorcycle
three continents
market
 4
Dynamic Hero

dynamism in numbErs

PRoducT sales (Number of units) ToTal neT income (` in crores)

13-14 6,245,960 13-14 25,722

12-13 6,075,583 12-13 24,166
11-12 6,235,205 11-12 23,944
10-11 5,402,444 10-11 19,688
09-10 4,600,130 09-10 16,099
10.9% 5-year CAGR 15.4% 5-year CAGR

PRofiT BefoRe Tax (` in PRofiT afTeR Tax (` in

crores) crores)
13-14 2,867 13-14 2,109
12-13 2,529 12-13 2,118
11-12 2,865 11-12 2,378
10-11 2,405 10-11 1,928
09-10 2,832 09-10 2,232
10.0% 5-year CAGR 10.5% 5-year CAGR

eaRninGs PeR shaRe (`)

ReTuRn on aVeRaGe
caPiTal emPloyed (%)
13-14 105.6 13-14 52.7
12-13 106.1 12-13 47.8
11-12 119.1 11-12 58.9
10-11 96.5 10-11 62.3
09-10 111.8 09-10 76.4

Hero MotoCorp
Ltd.
 3
disTRiBuTion of ReVenue, 2012-1

Particulars ` crores %
Materials 17,397.66 66.76
Operations & 2,265.05 8.69
Other Expenses
Taxes & Duties 2,302.84 8.84
Employees 820.92 3.15
Interest 11.91 0.05
1,141.75 4.38
Depreciation
2,118.16 8.13
Shareholders and
Reserves & Surplus
26,058.29 100
Total

economic Value added (` in 4

disTRiBuTion of ReVenue, 2013-1
crores)
13-14 1,228
12-13 1,334
11-12 1,677
10-11 1,376
09-10 1,723

Particulars ` crores %
Materials 18,229.89 66.05
Operations & Other Expenses 2,575.48 9.33
Taxes & Duties
2,638.52 9.56
Employees
930.04 3.37
Interest
11.82 0.04
Depreciation
1,107.37 4.01
Shareholders and
diVidend PeR shaRe (`) Reserves & Surplus
2,109.08 7.64

Total 27,602.20 100

13-14 65
12-13 60
11-12 45
10-11 105
09-10 110

Graphs not to scale

 quarTEr-wisE pErFormancE

he launch of Brand Hero in these markets

s firm; to buy 49.2% equity at Erik Buell Racing (EBR) for US$ 25 Million Launched India’s first-ever warranty of five years on all its two-wheelers (5 years or 70,000 k

FirsTquarTEr
Launched the retail finance arm, Hero FinCorp, with a phase-wise expansion plan

Q2 (July 2013 – sePTemBeR 2013)

Became the first Indian two-wheeler company to reach the historic milestone of 50 million units production

Introduced an innovative campaign titled ‘Hero Mileage’, capturing Hero’s best-in-class fuel-efficiency across its product range; and

sEcondquar TEr
the tagline – ‘Thoda Extra Kilometre Per Litre’ - has gone on to become part of the youth lingo
Initiated project ‘Leap 20’ to bring very high levels of innovation across our supply chain, and partnering with our suppliers to drive
significant improvements in our cost structure, even as we raise the bar even higher on product quality and reliability

Q4 (JanuaRy 2014 – maRch 2014)

FourTHquarTEr
Showcased an exciting range of products for the future at 2014 Auto Expo
Entered Bangladesh and Turkey with an array of popular Hero motorcycles and scooters
 BeR 2013)
mance Transformation and Head of the newly-created division of Engine Design & Development
Centre of Global Innovation and Research & Design (R&D)’ at Kukas, near Jaipur in Rajasthan, investing ` 450 crores
p with Magneti Marelli to develop next-gen two-wheeler fuelling systems
n features including the all-new Splendor iSmart, Karizma R, ZMR, Xtreme and Pleasure Registered 6.25 lakh sales in October 2013, first-ever manufacturer to cross
chnology, Pleasure with Integrated Braking System, Xtreme with ‘Electronic Immobiliser’ and Karizma & Karizma ZMR
ting platforms, include HF Dawn & HF Deluxe, Splendor Pro, Super Splendor, Passion Pro, HF

THird quarTEr
Deluxe Eco, Glamour and Glamour FI

Annual Report 2013-14

mEssagE From cHairman

Dear Shareholders,

We have just
experienced a
spectacular election, with
an equally remarkable verdict.

Brijmohan Lall Munjal / Chairman

 I am confident that a sustained period of
decisive policymaking, coupled with a gradual
uptick in
the business cycle bodes well for India and
the two-wheeler industry.

This kind of an emphatic verdict was We will continue to play our

Yet this time around, we are also aiming to
first witnessed in 1984 and it proved part in this growth strategy by
replicate our success in other markets and
extremely providential for us. The auto supporting and growing with
segments across the globe.
industry was de-licensed, and your the country’s aspiring classes.
Company got the opportunity to In the last two years, Pawan and his team
announce its presence in India. Today, have used the foundation provided by our
exactly thirty years later, as we get set previous partnership to build a new and more
to announce ourselves on the world dynamic structure for the future.
stage as a global brand, another similar What you see before you is the essence of a
and decisive mandate has come along. strong, independent and forward looking
Company. You are now associated with an
I see another parallel. This Company
organisation that is being re-developed and
became a leader on the plank of an
re-engineered so that it can tap opportunities
aspiration to become best in class. By
at a global level.
providing affordable personal mobility,
we promised a better life for millions of The Company that you have invested in now
Indians entering the middle class. This operates on a much bigger scale, with
government too has risen to power on facilities and joint ventures across continents.
similar hopes and aspirations. The hope Our engineers are encouraged and supported to
of better roads, longer hours of deliver breakthrough innovations and not just
electricity supply and the prospect of incremental improvements.
more jobs.
My dear shareholders, none of this would be
The previous 10 years have seen possible without your continued support, faith
millions of people secure their basic and belief in Hero MotoCorp. You have stood by
rights and become consumers for the us as Hero MotoCorp transitioned into a strong
first time. independent Company during what was a
Moving forward, the need is to create strenuous and unpredictable business cycle.
better livelihood opportunities so that Without your endorsement and continuing
these consumers move up the ownership of this Company’s equity, I know
economic ladder and improve their that I would not be writing this message!
standards of living. I am confident that
a sustained period of decisive So as Chairman of the Board I feel both
policymaking, coupled with a gradual humbled and responsible. Fortunately, we
uptick in the business cycle bodes well have the right teams at Hero across all
for India and the two-wheeler
industry.
levels. I am confident that they will ensure
that this Company measures up to your
expectations continuously and that Hero
becomes a global market leader.

I will end here with the refreshing

thoughts of champion Australian swimmer
Ian Thorpe, who once confessed that when
he goes out to race, he does not try to
beat opponents, he only tries to beat
himself.
We too, must think like Thorpe as we race
against ourselves into the future.

With regards, Brijmohan

Lall Munjal Chairman
 10
Dynamic Hero

managing dirEcTor’s rEviEw

Dear Shareholders,

Within minutes of scripting an

incredible electoral victory, India’s
new leader tweeted about the happy
days that were about to come.
A new hope is surging through India once again. For the first
time in 30 years, there is the real prospect of strong and stable
leadership.

There are early signs of a recovery in p

the business cycle. Switch on your o
television, check your smartphone s
headlines or open your newspaper, and i
the message is clear: India is once again t
open for business! i
v
The enthusiasm is infectious, yet I am e
intensely aware of the considerable
ground that still needs to be covered. s
Nevertheless, it gives me great a
pleasure to see that as Indians, and as l
a Company, we’re already showing e
both: the stomach to fight and the s
heart to win. Indeed, if 2012-13 was
a year during which India plunged g
into the deep river of recession, r
2013-14 would qualify as a year in o
which we mastered how to swim w
against the current. t
h
The current was strong, and your .
Company faced both topline and
bottomline pressures. With eight I
successive quarters of sub-5 per cent n
GDP growth, the
Indian economy continues to struggle. A
Expectedly, two-wheeler industries u
performance reflected consumer unease g
with discretionary purchases. u
s
Even so, Hero MotoCorp posted
t 2013, HMCL crossed cumulative
faster. During October-November,
sales of 50 million. No other auto
Hero MotoCorp also experienced its best
company in the world has reached
festive season.
this remarkable landmark
From a profitability standpoint,
however, it was a demanding year.
R&D and global expansion spends
increased significantly.
The effective tax rate also went up as
incentives expired at one of our
(Haridwar) plants. The impact of these
higher spends were clearly visible on
margins, and may continue to be so in
the next couple of quarters.

Nonetheless, we are mitigating these

challenges decisively, effectively and
strategically, even while we develop a
versatile and energetic organisation for
the future.

An improved business outlook gives

us some comfort. As the economy
recovers on the back of a strong
government and as the global business
cycle upticks,
consumer demand will grow across
India. Hero MotoCorp is well poised to
ride an economic recovery over the
next 12-18 months, with increased
manufacturing capacity and number of
upgrades and new models in the
pipeline.

Pressure on profitability could ease

somewhat during 2014-15. Financial
benefits from the new plant will kick
in.
 11

Leap --our ambitious margin

improvement project is gathering
injection systems. To add more muscle If I were to use an
critical momentum.
and meaningful traction, Hero entered appropriate metaphor to
Equally positive, royalty outgo to our
into equity partnerships with two capture our evolution, I’d
erstwhile joint venture partner will
technology providers during the year: say that 2013-14 was the
significantly reduce during the latter
Eric Buell Racing of the US and Magneti culmination of two years of
part of the year. Other factors
Marelli of Italy. ploughing and sowing. We
remaining consistent, this should created a new identity, built
Working across locations in India, US
strengthen bottomline performance. our brand, developed a
and Europe, these global partners have
technology ecosystem and
joined hands with Hero’s Team R&D to
Fresh capacities have been planned
breathe new life into our existing
injected a work culture
accordingly. As I write this, our fourth
portfolio, besides proto-typing a line of
befitting a global corporation.
facility at Neemrana is ready to start
next generation products. At the Auto
All being well, 2014-15 will
production, and our global parts
Expo in 2014, these products were
be the year in which we are
centre will be functional before the
revealed in all their pomp and glory
able to reap the harvest.
end of the calendar year. We have
for the first time.
also started the land development work
at our Halol plant in Gujarat. Stakeholders in India and around the
world are sitting up and noticing the With regards,
In fact, I am convinced that our
New Hero; they see the power of our Pawan Munjal
most challenging phase is now
continually strong numbers, they notice
behind us. Hero has moved Managing Director and CEO
the steel in our resolve, and they
beyond the legacy of its past, and Hero has
acknowledge our hunger to innovate. moved
is progressing steadily
During the year, Hero MotoCorp beyond
towards its destiny of becoming a
received the ET Award for being the the legacy of
global and independent bike and
scooter powerhouse.
most trusted 2W brand in the country. its past, and is
Hero now features in the Forbes list of progressing steadily
Our footprint now spans South Asia, the World’s 2000 Biggest Public towards its destiny
Africa, Central and Latin America, with Companies. It is also ranked by of
a presence in Europe via Turkey. To Goldman Sachs as one of the 20 best- becoming a global
serve customers in select markets positioned auto companies in the and independent bike
faster, Hero MotoCorp has also sewn up world. and
joint ventures in critical markets and scooter powerhouse.
has kick-started overseas assembly
operations. The first such operation
has come up in Kenya.
Separate equity ventures with local firms
in Bangladesh and Columbia are also in
place. We will build on these exciting
forays.

Hero began developing an R&D

ecosystem from ground up eighteen
months ago.
This has flowered remarkably. Our
relationships transcend the two-
wheeler chain, from designs and
engines to fuel
 12
Dynamic Hero

a liTTlE morE is nEvEr liTTlE

heRo mileaGe
Hero strengthened its inherent Brand
strength, while purchasing a vehicle –
Mileage. The Mileage campaign depicted
how Hero two-wheelers always
delivered ‘Thoda Extra’ (a little extra)
for the Indian rider, because in India
‘Thoda kabhi Thoda nahin hota’ (A
little more is never little).

50 million celeBRaTions
We produced our 50 millionth two-
wheeler during the year. It is a matter
of pride for any single two-wheeler
company in the world. The occasion
was marked by grand celebrations, with
the 50 millionth bike – a Hero Xtreme –
studded with Swarovski crystals.

Passion organised as activation for Hero

A new television commercial was Pleasure. It also associated with a hf deluxe elecTion film
created for Hero Passion – a brand radio programme that voiced
In line with the elections of 2014, Hero
that is packed with oomph and style. real life stories of women and
released a television ad for HF Deluxe,
Passion advertisements have always their achievements.
focusing on responsible voting for the
depicted a elections. The advertisement was about the
stylish, smart solution to situations at ‘ApniTaraf’ (on our side) mindset
hand, and this ad was no exception – of the Indian voter, who looks at candidates’
appealing to the elegant gentleman in affiliations rather than his/her achievements.
every rider who acts with grace.
TalkinG aBouT elecTions
maesTRo
To help raise awareness about the elections in
The Maestro saw a new advertisement 2014, Hero sponsored election related debates
featuring Bollywood heartthrob Ranbir and programmes on major television channels.
Kapoor. A product for cool boys, the ad The debates were hosted by top news anchors,
showed Ranbir as the young fun-loving and featured a number of prominent political
guy, using the Maestro to both tease thinkers and spokespersons, who discussed
and make up with his girlfriend. The film relevant issues, topics and updates. The election
clearly depicted what Maestro stands for: programmes have had a profound impact on the
‘Boys ki Life aur Maestro ki ride, Easy Indian audience. This was
hai!’ (Maestro and boys: Both ride a small attempt to help create a more
easy!) informed voter.

PleasuRe heRo mTV Rock The VoTe

The Hero Pleasure All Women’s Bike The Hero MTV Rock the Vote was organised to
Rally was meant for women across 13 encourage the youth to cast their
cities on the occasion of Women’s votes and respond to a national priority.
Day. It was

Hero MotoCorp
Ltd.
It involved bike rallies across major
educational campuses to get
students together who would then
ride out into the city and urge
people to vote.

sPlendoR famous family conTesT

To sustain the buzz around the
Splendor brand campaign of last
year, the Splendor Famous Family
Campaign was launched. It was a
simple contest, where a family
posed with their Splendor, and the
best snap would feature on the
next Splendor
print ad. It was a hugely successful
contest attracting entries on a very
large scale.

launch of sPlendoR ismaRT

The Splendor iSmart is the latest
offering from Hero MotoCorp, which
was launched in March 2013. It is a
bike with a mind of its own: the
iSmart boasts of i3s technology
(patented by Hero) that intuitively
switches off the engine when idle
and switches it on as soon as the
clutch is pressed. It comes
as a refreshing innovation in the
Indian two-wheeler industry. The
brand has been backed by extensive
marketing efforts
centred around the convenience and
peace of mind it offers its riders.
 13

sponsored the Sunburn music festival in 2013. The festival,

heRo Genuine PaRTs
Hero Genuine Parts saw a lot of activity
this year, with new plans for the Global
Parts Centre being unveiled to the
distributors. The Centre overhauled
packaging designs and refreshed
communication to promote Hero bikes
as the smartest choice for customers.
Spare parts make up for a significant
part of an auto manufacturer’s business,
and Hero is no exception. The
investments made in Hero Genuine
Parts are reinvigorating the brands, and
will have significant impact on their
perception and performance.

auTo exPo
The Auto Expo is a biennial event
occurring in Delhi. It was held in
February 2014, attracting the biggest
names in the Indian automotive
industry and millions of visitors. Hero
MotoCorp set up one of the largest
stalls and one of the widest ranges of
two-wheelers at the show, unveiling
upgraded products, new models and
futuristic concepts. A Company-wide
effort was recognised with two awards –
the Best Pavilion, and the Best Concept
vehicle, among two-wheeler
manufacturers.

sunBuRn
Hero MotoCorp received a lot of
attention from the Indian youth as it
 c extravaganza in Goa, has since seen
w different formats and editions in
h order to reach out to new audiences.
i Thanks to this tie-up, Hero was able to
c grab unprecedented attention in youth
h conversations, and the country too was
able to experience a never-before
b high-octane association between
e biking and electronic dance music.
g
a Visual JockeyinG
n Hero hosted the first major Visual
Jockeying competition in India – an
w activity in line with its association with
i Sunburn.
t Visual Jockeying is the art of playing
h live visuals, along with the mood of the
music to heighten the complete audio
a visual experience. Taking this in the
form of a contest in colleges across
m India – with the grand prize of being
u able to perform at the Sunburn Goa
s Festival – Hero was able to popularise a
i completely new art in India.

Annual Report 2013-14

 14
Dynamic Hero

ridE our wandErlusT

At Hero, pushing our boundaries is a way of life. Our

eyes are firmly set on the future. The aim is to
raise the Hero Flag in as many as 50 countries by
2020. We realised a part of that objective as we
launched our range of two- wheelers globally.

Turkey

India Nepal
Guatemala Honduras Egypt
Bangladesh
El Salvador
Burkina Faso
Uganda
Ivory Coast
Kenya Sri Lanka
Ecuador Congo

Peru Tanzania

Angola

Mozambique

heRo sTReeTs GloBally

south america africa asia

1. Guatemala 6. Kenya 14. India
2. Honduras 7. Burkina Faso 15. Turkey
3. El Salvador 8. Ivory Coast 16. Egypt
4. Peru 9. Tanzania 17. Sri Lanka
5. Ecuador 10. Uganda 18. Nepal
11. Mozambique 19. Bangladesh
12. Democratic
Republic of
Congo
13. Angola

Hero MotoCorp
Ltd.
 15

afRican foRay
We launched operations in Kenya,
Burkina Faso, Ivory Coast, Tanzania
and Uganda. Moreover, we have set up
world-class assembly units at Kenya,
Tanzania and Uganda.

cenTRal ameRican PResence

We entered into a partnership with
the reputed Indy Motos Group of
Guatemala to market our two-
wheelers across Guatemala,
Honduras and El Salvador.

souTh ameRican PRoGRess

We entered into a partnership with
‘MOTOCORP S.A.C’, a part of the reputed EFE
Group of Peru. MOTOCORP S.A.Chas been
appointed as the sole distributor of Hero
range of two-wheelers in Peru. The two-
wheelers will be made available to
customers through a network of 85 outlets
spread across the country, with more new
outlets to be added subsequently in a phased
manner.

asian PRominence
We commenced operations in Bangladesh with
a joint venture (JV) with ‘Nitol Niloy Group’ to
build its first overseas manufacturing plant,
Hero holds a majority stake of 55% in the JV.
We affirm long- term commitment to bring
next-gen cutting-edge technologies and an
investment of US$ 40 million.

We also entered into a partnership with

AsyaMakina (Asya Dis ticaretvemakina san
ltd sti) of Turkey. Under the alliance,
AsyaMakina – a
subsidiary of the reputed Soysal Group – has
been appointed as the distributor of our range
of two- wheelers in Turkey.
Annual Report 2013-14
 16
Dynamic Hero

THE nExT big idEa is HErE

PRoducT RollouTs
During 2013-14, our R&D team
successfully delivered over 12 upgraded
models in a domestic market and 7
variants for global markets, mostly
indigenously designed and developed.

within’.

Ideas shape an industry

and create sustainable
value for society. That’s
why at Hero, we are
always in quest for the
next big idea.
Our research and
development efforts
have stood us in good
stead.
From launches of models
to the creation of
intellectual property to
infrastructure creation or
even knowledge
accretion, R&D has
vindicated the Hero
Slogan ‘Unleash the Hero
Hero MotoCorp
Ltd.
 17

fuel-saVinG TechnoloGy
We have introduced the new i3S
technology (Idle Stop and Start System) for
two-wheelers, which has made its debut
in the all-new Splendor iSmart. i3S is a
green technology that automatically shuts
the engine when idling and turns it on
when needed, thus giving more mileage
in congested cities. The evolution of
Hero- developed i3S technology signifies
the technological excellence achieved by
us.

ensuRinG safe RidinG

Hero scooters are equipped with
Integrated Braking System (IBS) and
Side Stand Indicator system to enhance
safety, beyond the regulatory
obligations.

integrated Braking system: The IBS was

introduced in the all-new Pleasure. IBS
improves the rider’s safety and provides
comfort of one brake handle for both
front and rear wheels.
side stand switch: A two-wheeler rider
often encounters a situation, where he/ she
accidentally forgets to move the side stand
back to its retracted position, while
starting the vehicle. We have developed
the technology to sense the entire unsafe
zone of the side stand position. When the
side stand is in an unsafe position, it flashes
an alert at the instrument panel through

Annual Report 2013-14

a uniquely designed motorcycle symbol; TechnoloGy Tie-uPs foR nexT-Gen MM’s design and R&D expertise
advanced versions even turn off the Two-wheeleR gets marketing-related
ignition in such a scenario. Joint Venture with magneti marelli competitive advantages with
Hero, the world’s largest two-
consisTenT innoVaTion We have partnered with Milan-
wheeler manufacturer
headquartered Magneti Marelli (MM) to
In FY 2013-14, we have filed over 15 having a dominant share of the
bring key engine-related technology. It
patents and also have registered/ filed Indian two-wheeler market
will enable the Company to expand its
77 designs.
global footprint. The immediate focus
will be developing and manufacturing oTheR maJoR alliances
uPcominG sTaTe-of-The-aRT R&d Alliances with the US-based Erik
next generation fuelling systems and
faciliTy Buell Racing (EBR) and Austria-
creating highly fuel-efficient,
We started the construction of our environment-friendly modern engines for based AVL to further enhance the
‘Centre of Global Innovation and R&D’ our customers. HMCL will hold 60% Company’s
in Kukas, near Jaipur and is expected stake in the new entity to be in-house R&D capabilities and engine
commence operations by the first half of called HMC MM Auto Ltd and invest US$ technologies
calendar year 2015. Some of the salient 27 million over the next 10 years. Both Collaboration with the renowned
features of this facility are: Hero and MM will inject equity of US$ Italian two-wheeler design firm
Self-sufficient facilities for New 8.5 million in the ratio of 60:40 over a Engines Engineering for Hero’s next-
Product Design, Prototype three-year period. HMC MM Auto Ltd generation product line-up
manufacturing, Testing and will also develop its own autonomous
Validation Development Centre.
State-of-the-art green building
key takeaways
designed by international Architects
Electronic Fuel Injection (EFI)
& Design consortium, using best of
system enhances performance in
global technologies
Hero
Multiple Test Tracks to
two-wheelers with adaptability to
simulate all Indian and
different working climates, altitudes,
international test conditions
excellent fuel economy and lower
More than 600 engineers and emissions
support staff
Additional functionality such as
Leading-edge studios for immobilisers, traction and slip
concept design (Design of control, multi map, flexi fuel and
Engine, Frame, Electrical and multi fuel management
Chassis Parts)
Meeting new emission norms
Computer Aided Engineering (CAE) / and evolving standards
Finite Element Analysis (FEA)
Equipping all Hero motorcycles
Multiple Labs for design and scooters with advanced
validation and product testing, Powertrain solutions
material & environmental testing,
components
/ system performance & simulation,
vehicle performance & durability,
consisTenT innoVaTion
noise vibration harshness
(NVH) and emission &
In FY 2013-14, we have filed over 15 patents
electromagnetic compatibility
(EMC) and also have registered/ filed 77
designs.
sHaping nExT- gEn mobiliTy

Our vision is to build an enduring

Company and a brand, not just for
today but for generations of riders far
into the future. This commitment is
reflected in our stellar series of
concept bikes.
 heRo simPleciTy: india’s fiRsT available, the 3-liter fuel tank and the
elecTRic moToRcycle range extender of the Leap gives it four
The all-new SimplEcity, the times the range of batteries alone, and
lightweight urban electric motorcycle, the petrol of course can be quickly
reiterates Hero MotoCorp’s commitment refilled.
to efficient, reliable personal
transportation for RnT: The BReakThRouGh diesel
a greener planet. The revolutionary concePT Bike
SimplEcity promises to offer an efficient We unveiled a diesel scooter concept
and reliable intra-city travel experience in India. The Hero RNT gets a
to urban commuters. By keeping revolutionary 150cc liquid-cooled
weight to a minimum of 35 kg and turbo-diesel hybrid engine that makes
designing every 13.5PS of power and 35 Nm torque.
system for optimum performance in
urban conditions, Hero has created a
heRo hasTuR whole new segment of motorcycles for
The 620cc Hastur promises to be an a cleaner and greener planet.
industry-leading product in the
premium end motorcycle segment with leaP: india’s fiRsT elecTRic-seRial-
its lean, nimble and powerful appeal. hyBRid scooTeR
The Hastur makes an aggressive style Leap, the first electric-serial-hybrid
statement with its street fighter looks scooter from India, returns in its pre-
and minimalistic design, showcasing big production form. It has been designed
sticky tyres, performance suspension keeping in mind Hero’s global markets.
and brakes, geodesic tubular chassis Powered by lithium-ion batteries and
and a powerful engine. With all this an 8 KW electric traction motor, the
and much more, this motorcycle is all Leap eliminates the limited range of
set to respond to the most demanding an electric vehicle by incorporating ‘a
athletic rider’s every desire like nothing range extender – anon- board
ever ridden before. generator set’ powered by an
extremely efficient all new 124cc
heRo ion: enViRonmenT-fRiendly engine. Normally, the Leap would be
hydRoGen-fuel cell Vehicle recharged by plugging into a wall
Hero iON gives us an exciting glimpse outlet, but if that isn’t
into the future, and demonstrates Hero’s
beliefs and commitment to the endless
road of motorcycling and personal
transport.
iON has a hydrogen fuel cell in the
centre structure, as well as advanced
batteries and super capacitors to
smooth energy needs of braking and
acceleration. The batteries use an
advanced Li - Air technology that has
extremely high energy density since
they use oxygen from the air instead of
storing in an oxidizer internally.
20
Dynamic Hero

HEro univErsE
aT aExupTo Expo
2014
 21

Hero MotoCorp Ltd.

 21

Annual Report 2013-14

Taking THE cEnTrE sTagE

Global achievements
Hero MotoCorp (Rank: 1,912) is
now part of an elite group that
comprises the
World’s 2,000 Biggest Public Companies
for the year 2013. A list of these
companies has
been featured in the global edition of
Forbes magazine and represents the crème de la
crème of
the corporate sector. The Company ranks even
higher in terms of profits (Rank: 1,431) and market
value (Rank:
1,389) on the list.

A report published in May 2014 by Goldman Sachs ranked

Hero MotoCorp as the number one player in the automotive
sector,
based on its competitive framework, among the 114 largest
auto OEMs and suppliers around the world.

When we are recognised for putting up a good show, we are

both honoured and encouraged to carry on with greater
determination and courage.

coRPoRaTe awaRds
Hero Maestro receives the Best Two-Wheeler
Advertising Award at the CNBC-Override Auto Award
Hero MotoCorp’s Pavilion and Hero Hastur receive the
Best Pavilion (two-wheelers) and the Best Concept Bike
Awards, respectively at the Auto Expo by NDTV CNB
Conferred with the prestigious ‘Diamond Edge Award’ by
Information Week in the category of Enterprise Driving
Growth and Excellence 2013 (using IT)
Conferred with the prestigious ‘Most Trusted
 Brand (2-Wheelers)’ by Brand Equity,
Economic Times

Hero MotoCorp Ltd.

 23

indiVidual awaRds Mr. Anil Dua received the

Shri Brijmohan Lall Munjal was ‘Campaign India A Lister’ Award
conferred with the Lifetime Mr. Vijay Sethi received the
Achievement Award by Forbes Transformer Award 2013 by EMC in
India the category of Transformation
Shri Brijmohan Lall Munjal was Award and India’s Best CIO Awards
conferred with the CNB Visioneer 2013 by CIO Association of India
Award for outstanding and Dell
contribution to the Indian
Automotive Industry by NDTV
Profit Car & Bike Awards 2013
Mr. Pawan Munjal was conferred
with the prestigious ‘Business Leader
of the Year’ award by the Hon’ble
President of India, Shri Pranab
Mukherjee, at the AIMA Managing
India Awards 2013
Mr. Ravi Sud, Sr. Vice President
& CFO, has been conferred with
the
prestigious ‘CFO of the Year’ award
by Stars of the Industry Group and
Asian Confederation of Businesses
Mr. Vijay Sethi, CIO & Vice President
– Information Systems, has
been conferred with the ‘Green
Pioneer Award 2013’ by CIO in
association with Schneider
Electric

Annual Report 2013-14

imprEssivE producT linEs

KARIZMA ZMR XTREME

SPLENDOR PRO GLAMOUR FI

SPLENDOR ISMART

Hero MotoCorp Ltd.

 25

XTREME SPORTS PLEASURE

PASSION PRO TR SPLENDOR PRO CLASSIC

DARE

Annual Report 2013-14

 26
Dynamic Hero

wE carE For THE planET

The risks and impacts of environmental degradation and

climate change on human lives and livelihoods are far too
serious to be ignored.
They need urgent attention by governments, businesses and civil society. At
Hero, we have stepped up investments and focused our energies towards
helping build a cleaner, greener planet. It is our way of saying that we
care.
the air annually, thus ensuring
We have invested in clean processes cleaner air. ensuring energy conservation: Heat recovery
and green infrastructure to ensure a low- from our Incineration Project has
carbon footprint and minimise our Hero MotoCorp Ltd. helped save 1258 tons of CO2 emissions and
environmental impact. Our Gurgaon 16,22,400 units annually. Our Solar
plant has been adjudged the ‘Best Power Project has also helped save 121 tons of
Maintained Garden’ for 2013 by the CO2 emissions and 1,56,000 units annually, apart
Haryana Urban Development Authority. from 37.96 tons of furnace oil. We have also
Besides, our Environmental introduced power saving circuits in all machine
Management Systems have also been panels and installed power correction panels.
certified as per ISO 14001 standards. oil conservation: We have installed Chip Wringer,
which recovers about 56 litres of oil per plant
Green Roof: Spanning 45,000 square
daily. We use online hydraulic oil filtration system
metres, Hero’s green roof conserves
on presses, which has helped save 1200 litres of
energy by moderating the roof
oil annually.
temperature.
Water Conservation: We reduce water
sewage Treatment Plant: Our treatment
consumption at the source and recycle it back
plant is designed to hold sewage for up
to process applications, cooling
to six hours and ensure that it is
towers and irrigation after treatment. We have
biologically treated and recycled into
2,60,000 square metres of catchment area in
soft water. This, in turn, is used in the
plants to potentially recharge about 1,32,600
cooling towers.
cubic metres of rain water annually. Our ETP
Effluent Treatment Plant: We have
Recycling plant recycles approximately 1400 kld of
also invested in an Effluent Treatment
treated effluents daily to be used in the paint
Plant, which treats waste water that
shop or soft water/ DM as required.
contains degreasing chemicals of an
acidic/ alkaline nature, plating waste, Green supply chain: Hero is committed to
heavy metals and waste oil. building a seamless green supply chain that
includes a ‘Green Dealer Development Programme’
waste food Recycling: We ensure at the frontend and a ‘Green Vendor
hygienic disposal of municipal waste Development Programme’ at
through its organic waste converter, the backend. We develop the required
which in turn, generates manure for
competencies, share knowledge and provide
landscaping and greening applications.
technical support to our partners to improve their
Paint conservation: We recycle about green quotient.
120 tons of paint sludge and additives
and turn it into paint primer. Our
Solvent Recovery Machine helps to
prevent 59 Kl of volatile organic
compounds from getting released into
GReen VendoR deVeloPmenT
PRoGRamme (GVdP)
GVDP at Hero encourages
collaboration between the Company
and its suppliers to achieve its overall
corporate environmental goal. GVDP
is based on the six pillars of energy
management, water management,
waste minimisation, prevention of
pollution, substitution of hazardous
chemicals and environmental
compliance management. Partner
vendors are
trained on all six pillars of GVDP. We
also endeavour to provide a
platform to ensure a mutually
beneficial eco-future. The platform
enables vendors to share success
stories about their respective
environment based achievements and
any problems encountered during the
implementation of the green vendor
programme.

GReen iT
We have increasingly focused on a
Green IT intervention strategy. Our
Team members collaborate and
thoughtfully plan areas where IT
can influence the environment.
Our Green IT initiatives
include buying energy certified
equipment and setting up energy-
efficient data centres with power
management features, virtualisation
and server consolidation.
We have promoted the use of thin
film transistor (TFT) technology for
display, video conferencing and e-
learning to reduce travel, printer
usage and paper consumption. Other
IT initiatives include customer loyalty
programme automation,
 27

adoption of electronic fund transfer

route instead of cheques, workflow
automation, adoption of digital
signatures and sending documents
electronically to partners.

Our green initiatives also improve

productivity and result in increased
cost savings from reduced power
consumption. Other aspects like
virtualisation, server consolidation and
reduced printer usage also ensure cost
savings on a daily basis at an
administrative and management level.
 28
Dynamic Hero

10-yEar pErFormancE

4,600,130 6,235,205 6,075,583

5,402,444
sales 3,337,142 3,722,000 6,245,960
3,000,751 3,336,756
(nos.)
2,621,400

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Growth (%) 26.6 14.5 11.2 0.01 11.5 23.6 17.4 15.4 -2.6 2.8
CAGR (%) 18.5 14.7 12.4 11.9 12.5 13.3 12.7 10.9

16,099 23,944 24,166 25,722

19,688
ToTal 10,517 12,565
7,559 8,870 10,090
income (`
crores)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Growth (%) 26.0 17.4 13.7 4.2 19.5 28.1 22.3 21.6 0.9 6.4
CAGR (%) 17.3 15.1 15.9 16.3 17.3 18.9 18.1 15.4

25,125
19,245 23,368 23,583
neT 12,319 15,758
7,422 8,714 9,900 10,332
sales (`
crores)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Growth (%) 27.2 17.4 13.6 4.4 19.2 27.9 22.1 21.4 0.9 6.5
CAGR (%) 17.3 15.2 16.1 16.3 17.2 18.7 17.9 15.3
PRofiT
BefoRe Tax 2,832 2,865 2,867
1,412 1,410 1,781 2,405 2,529
(` crores) 1,217 1,246

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Growth (%) 13.5 16.0 -11.8 13.2 26.3 59.0 -15.1 19.1 -11.7 13.4
CAGR (%) 12.4 9.8 10.7 18.4 11.2 18.1 12.4 10.0
PRofiT 2,232 2,378 2,118 2,109
1,928
afTeR 971 968 1,282
Tax (` 810 858
crores)
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Growth (%) 11.3 19.8 -11.7 12.8 32.4 74.1 -13.6 23.4 -10.9 -0.4
CAGR (%) 13.1 10.8 12.0 22.5 14.7 22.6 17.0 10.5

14.6 16.2
14.6 11.8 12.7
10.8 11.4 10.7
oPeRaTinG
2005-06 2006-07 2007-08 2008-09 2009-10
maRGin
2010-11 2011-12 2012-13 2013-14
(%)

15.7 13.8
oPBdiT 16.0 13.3
maRGin
(%) 2005-06 2006-07 2007-08 2008-09 2009-10
9.0 2010-11 2011-12 2012-13 2013-14

111.8 96.5 119.1

48.6 43.0 64.2 106.1 105.6
40.6 48.5
eaRninG
PeR shaRe 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
(`)

diVidend 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
PeR shaRe 110.0 105.0
(`) 20.0 20.0 17.0 19.0 20.0 45.0 60.0 65.0

5,500 5,250 3,000 3,250

,000 1,000 850 950 1,000 2,250
diVidend
 29
1

(%) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Hero MotoCorp Ltd.

 29

Economic
valuE addEd
(Eva) sTaTEmEnT
(` in crores)

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Avg. Cap Employed 2,415 2,877 3,499 3,705 3,989 4,866 5,286 5,444
Avg. Debt/Avg. Capital (%) 1.1 1.1 0.6 0.2 2.2 3.4 1.8 0.4
Avg. Equity/Avg. Capital (%) 98.9 98.9 99.4 99.8 97.8 96.7 98.3 99.6
Cost of Debt (% post-tax ) 0.6 0.9 1.6 1.9 1.4 1.2 1.2 5.5

cosT of eQuiTy
Beta 0.75 0.59 0.59 0.63 0.64 0.66 0.73 0.76
Cost of Risk Free Debt (%) 8.15 7.94 6.99 7.50 7.99 8.53 7.96 8.80
Market Premium (%) 10 10 10 10 10 10 10 10
Cost of Equity (%) 15.65 13.83 12.85 13.80 14.39 15.16 15.22 16.36

economic Value added

Profit after Tax 857.89 967.88 1,281.76 2,231.83 1,927.90 2,378.13 2,118.16 2,109.08
Add: Interest*(1-tax rate) 1.02 1.32 1.67 1.39 10.55 14.39 7.86 7.80
NOPAT=PAT + Interest*(1-t) 859 969 1,283 2,233 1,938 2,393 2,126 2,117
Cost of Capital 374 394 448 510 563 715 792 889
EVA 485 575 835 1,723 1,376 1,677 1,334 1,228
Return on Capital Employed (%) 35.6 33.7 36.7 60.3 48.6 49.2 40.2 38.9
Weighted Average Cost of Capital 15.5 13.7 12.8 13.8 14.1 14.7 15.0 16.3
(%)
EVA/Capital employed (%) 20.1 20.0 23.9 46.5 34.5 34.5 25.2 22.6

enTeRPRise Value
Market Capitalisation 13,753 13,869 21,390 38,827 31,739 41,041 30,792 45,425
Add: Debt 165 132 78 66 1491 995 281 -
Less: Financial Assets 2,010 2,698 3,588 5,833 5,200 4,041 3,805 4,206
Enterprise Value (EV) 11,909 11,303 17,880 33,060 28,030 37,995 27,268 41,219

eV/yR. end caPiTal 4.5 3.6 4.6 9.4 6.3 7.2 5.2 7.4
emPloyed (Times)

Annual Report 2013-14

 30
Dynamic Hero

board oF
dirEcTors

Mr. Brijmohan Lall Munjal

Chairman

Mr. Pradeep Dinodia Gen. (Retd.) V. P. Malik

Non-Executive and Independent Director Non-Executive and Independent Director

Mr. Suman Kant Munjal Mr. Paul Edgerley

Non-Executive Director Non-Executive Director

Dr. Anand C. Burman Mr. Sunil Kant Munjal

Non-Executive and Independent Director Joint Managing Director
 31

Mr. M. Damodaran Dr. Pritam Singh

Non-Executive and Independent Director Non-Executive and Independent Director

Mr. Ravi Nath Mr. Pawan Munjal

Non-Executive and Independent Director Managing Director and CEO

audiT commiTTee
Mr. Pradeep Dinodia Mr. Neeraj Mathur
Mr. Pradeep Dinodia Member Vice President – Strategic Sourcing and
Chairman Supply Chain
Mr. Ravi Nath
Gen. (Retd.) V.P. Malik Member Mr. Vijay Sethi
Member Vice President – Information Systems &
Dr. Pritam Singh coRPoRaTe social Human Resources and Chief Information
Member ResPonsiBiliTy commiTTee Officer
Mr. M. Damodaran Mr. Pawan Munjal Mr. Harjeet Singh
Member Chairman Vice President – R&D
Gen. (Retd.) V.P. Malik Mr. Deepak Mokashi
sTakeholdeRs’ Member Vice President & Head Global Business
RelaTionshiP commiTTee
Mr. Pradeep Dinodia Mr. Sanjay Bhan
Dr. Pritam Singh Member Business Head – Parts Business
Chairman
senioR manaGemenT Team Mr. Rajat Bhargava
Mr. Pradeep Dinodia Head of Strategy &
Member Mr. Ravi Sud
Performance Transformation
Mr. M. Damodaran Sr. Vice President and CFO
Member Mr. Anil Dua* comPliance officeR
Sr. Vice President – Sales, Ilam C. Kamboj
nominaTion and Marketing and Customer Care Asso. V.P. – Legal
RemuneRaTion commiTTee
Mr. Vikram S. Kasbekar and Company
Gen. (Retd.) V.P. Malik Head – Operations and Supply Secretary
Chairman Chain

Annual Report 2013-14

 *Up to
June 24,
2014

Hero MotoCorp
Ltd.
 32
Dynamic Hero

orporaTE inFormaTion

sTaTuToRy audiToRs cosT audiToRs PlanT locaTions

Deloitte Haskins & Sells Ramanath Iyer & Co. Gurgaon Plant
Chartered Accountants, Cost Accountants, 37 K.M. Stone, Delhi-Jaipur
7th Floor, Building No. 10, Tower B, #808, Pearls Business Highway, Sector 33, Gurgaon-122
DLF Cyber City Complex, DLF City Phase- Park, Netaji Subhash 001 Haryana, India.
II, Gurgaon – 122 002, Haryana Place, Delhi – 100 034, Tel: 0124-289 4200, 237 2123
Tel: 0124-679 2000 Fax: 0124-679 2012 India Fax: 0124 237 3141–42
Web: www.deloittee.com/in Tel: 011-4565 5448,
dharuhera Plant
Email: [email protected]
69 K.M. Stone, Delhi-Jaipur
PRinciPal BankeRs Web: www.ramanathiyer.com
Highway, Dharuhera, Distt.
The Royal Bank of Scotland
Rewari-122 100 Haryana, India
N.V. Bank of America N.A. ReGisTeRed and coRPoRaTe office
Tel: 01274 264 000
Citibank N.A. (CIN: L35911DL1984PLC017354)
Fax: 01274 267 018
HDFC Bank Ltd. 34, Community Centre,
The Hongkong and Shanghai Basant Lok, Vasant haridwar Plant
Banking Corporation Ltd. Vihar, New Delhi -110 Plot No. 3, Sector –10,
ICICI Bank Ltd. 057, India I.I.E., SIDCUL, Roshanabad,
Punjab National Bank Tel.: 011-4604 4100, 2614 2451 Haridwar-249 403, Uttarakhand,
Standard Chartered Bank Fax: 011-2614 3321, 2614 3198 India Tel: 01334 238 500, 239 514-
The Bank of Tokyo-Mitsubishi UFJ, www.heromotocorp.com 16
Ltd. Kotak Mahindra Bank Ltd. Fax: 01334 239 512-13
Yes Bank Ltd. ReGisTRaR and shaRe TRansfeR
aGenT
Karvy Computershare Pvt.
Ltd. Plot No. 17-24, Vittal Rao
Nagar, Madhapur, Hyderabad –
500 081
Tel No. : 040 – 23420818
Fax: 040-2342 0814
Email: [email protected]
www.karvycomputershare.com
Toll Free No.: 1-800-3454001
ManageMent
Discussion
anD analysis
Economic Backdrop 34
Industry Synopsis 38
Reinforcing our Leadership 40
Financial Summary 42
A Customer-facing Ecosystem 44
Supply Chain Management 48
Strengthening IT Framework 50
Human Dynamism 52
Evolving a Risk-focused Strategy 54
Brand Visibility 55
34
Management Discussion and Analysis

economic
Backdrop

The world is gradually moving towards a

more broad-based recovery, with
advanced economies providing some of
the impetus.
However, the overall pace of recovery is still
uneven and prone to unpredictable headwinds.

Hero MotoCorp
Ltd.
 According to the World Economic Outlook (WEO) Report published by the
International Monetary Fund (IMF) in April 2014, the global economy grew by 3%
in CY2013, supported by encouraging performance of the US economy. However,
global growth was weighed down by modest growth in the Euro Zone, Japan and
Emerging Market and Developing Economies.

We are now seeing a new pattern in the performance of global economies.

Between 2009 and 2012, the emerging market and developing economies had
been spearheading global recovery as the advanced economies lurched from
one crisis to another. Now the scenario is changing, with the advanced
world, led by the US, contributing around 20% of global economic growth.

China’s growth is expected to be around 7.5% in 2014, as the political

leadership is ensuring a gradual transition to a more sustainable growth path.
Such a situation will pave the way for a period of more balanced global growth.

Besides, with India having resoundingly voted for political stability and better
governance, the country’s around 2-trillion dollar economy is also likely to pick up
pace and contribute significantly towards global recovery.

IndIan economy
A few years ago, India’s impressive growth rates were the envy of the world. As
Asia’s second largest economy moved forward, the country created a perception
of being a citadel of energy and enterprise. However, spillover effects of lacklustre
global growth and continuous policy paralysis in the government has since arrested
India’s economic surge.

Global Growth trend

(%)
Actual Projections
Particulars
2012 2013 2014 2015
world output 3.2 3.0 3.6 3.9
advanced economies 1.4 1.3 2.2 2.3
United States 2.8 1.9 2.8 3.0
Euro Area -0.7 -0.5 1.2 1.5
Japan 1.4 1.5 1.4 1.0
United Kingdom 0.3 1.8 2.9 2.5
Other Advanced Economies 1.9 2.3 3.0 3.2
emerging and developing 5.0 4.7 4.9 5.3
economies
(Source: International Monetary Fund, April, 2014)
Matters came to a head in the middle a
of 2013-14, with indications that the US u
Fed was withdrawing its Quantitative t
Easing programme. This caused o
capital flight and significant rupee m
depreciation. India’s economic growth o
engine lost steam, b
and stubbornly high core inflation made i
matters worse. l
e
The financial prowess of India Inc. s
deteriorated with a dramatic fall in .
infrastructure and corporate
investments, with adverse implications
on asset quality of banks and other
financial institutions.
In such a bleak external environment,
job prospects dimmed and consumer
demand weakened. This influenced the
sales of different categories of
The recovery of the monsoon in the season’s second half in 2012 and a
good monsoon in 2013 provided some
breathing room. It helped the agriculture sector recover with record productions
in rice, wheat, pulses, oilseeds and cotton. However, the demand recovery in
rural India was negated largely by industrial stagnation, a slump in service
sector growth and a decline in government spending.

On the positive side, both current account deficit and foreign trade deficit
narrowed significantly in the second half of 2013-14. In addition, policy
measures to strengthen capital flows in September and October 2013 helped
reduce external vulnerabilities.
 sector-wIse Growth trend
(%)
2009-10 2010-11 2011-12 2012-13 2013-14
Agriculture and 0.8 8.6 5.0 1.4 4.7
allied activities
Industry 9.2 7.6 7.8 0.9 0.3
Services 10.5 9.7 6.6 6.9 6.7
Source: Ministry of Statistics and Programme Implementation

GdP at Factor cost (%)

10
8 8.6 8.9 6.7
6 4.7
4 4.5
2
0 09-10 10-11 11-12 12-13 13-14

Source: Ministry of Statistics and Programme Implementation

The Indian currency has stabilised at

quick execution. Better-directed subsidies
the time of writing, inflation is under
could prune the fiscal deficit. Finally,
better control and exports have
strong leadership at the helm could
shown some recovery.
make the administration more
streamlined and responsive.
outlook
The elections have delivered a clear Hopefully, these steps will quicken the
mandate for decisive governance and pace of capital formation and improve
development. 2014 could be a productivity. Continued reforms and a
momentous year for India, given the stable monetary policy would bolster
new energy and political will to drive the country’s macroeconomic
economic reforms. fundamentals and deliver a powerful
message of societal and economic
The new leadership has shown a dynamism to the world.
resolve to implement radical policies
to bring the economy back on track. If
this resolve
translates into action, three
developments could take place. Stalled
projects could see
38
Management Discussion and Analysis

industry synopsis

two-wheeler Industry
exPorts However, the entry segment which
During FY 2013-14, the two-wheeler accounted for 1.8 million units, declined
Reversing the trend of the previous
industry grew marginally by 7.1%, from by 2.6%. Hero MotoCorp’s sales in the
fiscal, the export sales of the entire
16.9 million units sold compared to entry segment grew by 3.4% to 1.06
two-wheeler industry grew by 6.5% to
15.8 million units in FY 2012-13. In a million units, resulting in a segment
1.9 million units.
similar pattern, the motorcycle share of 56.8%.
volumes—which account for a major
two-wheeler: seGmental revIew The sales in the industry’s premium
industry proportion — grew by 4.3%
from 11.95 million units in FY 2012-13 The two-wheeler industry has three segment increased significantly by 7.1% to
to 12.5 million units in FY 2013-14. distinct segments, based on income 1.6 million units. However, Hero
Continuing its growth path, the scooter and lifestyle classifications. In FY 2013- MotoCorp’s performance was not
category was the star industry 14, the deluxe category accounted for encouraging in this segment.
performer with 22.1% growth in sales, 66% of sales. It was followed by the Nevertheless, the Company’s main
from 3.07 million units in FY 2012-13 to entry segment (18% of sales) and the segment continued with their strong
3.75 million units in FY 2013-14. Like in premium category (16% of sales). showing, and Splendor, Passion Pro and
the previous years, sales of moped de- HF Deluxe continued to feature among
The deluxe segment grew by 5.4%
grew by 7.8% from 0.79 million units in the top six motorcycle brands sold in
with volumes of 6.8 million units.
2012-13 to 0.73 million units in 2013- India.
Hero
14.
MotoCorp continued to have a major The two top-selling brands (Pleasure
share of this segment with sales of 4.2 and Maestro), in the scooter
million units and a segment share of category continued to perform
61%, whereas the nearest competitor strongly. Volumes increased to 2.9
managed a 19.4% segment share. million units from 2.6 million units.
In relative terms, Hero MotoCorp’s
sales grew by 13.6% and accounted for
21.4% of the two-wheeler market.

The two top-selling brands

(Pleasure and Maestro), in
the scooter category continued
to perform strongly. Volumes
increased to 2.9 million units from
2.6 million units.
 40
Management Discussion and Analysis

Reinforcing our leadership

6.2 mn units
Sold in 2013-14
oPeratIonal PerFormance
spare parts worth ` 40.04 crores
In FY 2013-14, Hero MotoCorp sold 6.2 depicting an increase of 4.32% over the
million units compared to 6.07 million previous year.
units in the previous year.
In 2013-14, the Company despatched
In the motorcycle segment, Hero its first ever consignment of ‘Hero’
MotoCorp with sales of 5.5 million units, brand
continued two-wheelers in the International arena
to lead the domestic market with to Central America (El Salvador,
44.4% market share. Guatemala and Honduras), South
America (Peru), East Africa (Kenya) and
Sales in the domestic motorcycle
West Africa (Burkina Faso and Ivory
market remained flat at 10.48 million
Coast) which were well received by
units, compared to 10.08 million units
the customers.
in the previous year. In the Indian
market, Hero MotoCorp captured The Company forayed into Central
51.8% market share, with sales of 5.4 America in May through a partnership
million units vis-a-vis sales of 5.3 with Indy Motos Group of Guatemala,
million units in FY 2012-13. and the Indy Motos relationship is also
Remarkably, the Company sold more responsible for the forays in El Salvador
units than the second, third, fourth and Honduras. The Company inked
and fifth placed motorcycle another relationship in August with the
manufacturers in India taken together EFE Group in Peru to sell a range of
during the year. products in this country.

exPorts In February, the Company made its

debut in Turkey through a partnership
Hero MotoCorp, with sales of over
with Asya Makina (Asya Dis
130,763 units, accounted for 6% of
ticaretvemakina san ltd sti) – a
motorcycle exports from India. This
subsidiary of the Soysal Group.
share is likely to go up significantly in
the coming years. The Company also set up an
International Assembly unit in Nairobi
InternatIonal Focus (Kenya) on July 5, 2013. It is
During 2013-14, the Company exported collaborating with RYCE EAST AFRICA,
130,763 units, compared to 161,043 to bring its two-wheelers to this
units in the previous year, resulting in a country. Under the alliance, Sameer
decrease of 18.80%. The Company also Group, which is a part of RYCE EAST
exported AFRICA, is distributing Hero MotoCorp
products in Kenya.
Financial summary

(%)
Key profitability metrics 2012-13 2013-14

Return On Average Capital Employed 47.85 52.67

Return On Average Equity 45.57 39.77

Profit after Tax / Income from Operations 8.91 8.34
Profit before Tax / Income from Operations 10.64 11.34
Profit before Interest and Tax / Income from Operations 10.69 11.39
Operating Profit before Tax / Income from Operations 9.02 9.62
Operating Profit before Depreciation, 13.82 14.01
Interest and Tax / Income from
Operations

ratIos
2012-13 11.16 2013-14 10.50
INVENTORY PERIOD (IN DAYS)

2012-13 17.77 2013-14 21.01

INVE NTORY AND RECEIVABLE CONVERSION PERIOD (IN )
DAYS
2012-13 (25.35) 2013-14 (20.15)
CASH CYCLE

2012-13 0.73 2013-14 0.77

CURRENT RATIO

2012-13 0.50 2013-14 0.54

ACID TEST RATIO

Notes on Working Capital

The average of inventory, receivables and payables has been taken for calculation of inventory period, operating
and cash cycle.
sales
cash Flows dIvIdend PolIcy
The Company registered total sales of
During the year, the free cash flow Over the years, the Company has
62,45,960 million units during 2013-
from operations stood at ` 2,963 consistently followed a policy of
14, recording a 2.8% increase. In value
crores paying high dividends, keeping in
terms, total sales (net of excise duty)
(previous year ` 1,890 crores). These mind the cash-generating capacities,
increased by 6.5% to ` 25,125 crores
cash flows were deployed in capital the expected capital needs of
from ` 23,583 crores recorded in the
assets, investments and also paid out business and strategic
previous fiscal year.
as dividend during the year. considerations. For FY 2013-14, the
Board recommended a dividend of
ProFItabIlIty 3,250% compared to 3,000% declared
raw materIal cost
The Company’s earnings before in previous year and has maintained a
During the year, metal prices were
interest, depreciation and taxes payout ratio of 72.0% vis-a-vis 66.2% in
volatile, particularly for steel, copper,
(EBITDA) margins increased from the previous year.
aluminium and nickel. However, raw
13.82% in FY 2012-13 to 14.01% in FY
material costs as a proportion of sales
2013-14. Operating margins workInG caPItal manaGement
declined from 73.77% to 72.56%.
increased from 9.02% to 9.62%.
The Company has always sought to
Operating profit (PBT before other
current asset turnover efficiently use the various components
income) also increased from ` 2,143
The Company’s current asset turnover, of working capital cycle. It has also
crores in FY 2012-13 to ` 2,433 crores in
indicating sales as a proportion of effectively controlled the receivables
FY 2013-14.
average current assets (excluding and inventories, enabling it to operate
investments) declined from 13.5 times on a negative working capital.
other Income (IncludInG
to 11.9 times.
other oPeratInG revenue)
This was primarily due to higher
Other income increased by 2.26% from
average inventory, trade receivables
` 584 crores in 2012-13 to ` 597
and loans and advances.
crores in 2013-14.

debt structure
Hero MotoCorp has been debt-free for
the past 13 years and incurs no
borrowing costs. Finance cost includes
interest on account of advances from
dealers and other transactional costs.

` 2,963 cr 3,250%
The free cash flow
The Board recommended a
from operations in
dividend of 3,250% in 2013-
2013-14
14
44
Management Discussion and Analysis

a customer-facing
ecosystem
 The evolving aspirations of of
incr
the customer need to be sing
embedded in our acc
business strategies to ibil
strengthen fac
sustainability and grow atin
profitably. This is the pro
ct
overriding corporate mantra
at Hero MotoCorp.

Customer satisfaction is a continuous

journey, not a destination. In other
words, there is no room for
complacency. Therefore, Hero
MotoCorp is consistently putting in
place strategies to
accommodate the changing
requirements of an aspirational world.
The result is that there has been a
steady decline in the number of
customer complaints over the years.
However, the journey to enchant the
customer through better products and
services continues unabated at Hero
MotoCorp.

The voice of the customer is captured

and amplified constantly through a 360-
degree feedback mechanism that
includes customer satisfaction surveys,
online customer feedback, response from
visiting field executives and market
quality surveys.

The Company’s approach to

customers is based on the principles
upgradability, guaranteeing low cost of ownership and ensuring continuous
customer engagement.

servIce har JaGah (enhancInG accessIbIlIty)

In 2009, the Company focused on enhancing its reach across unrepresented
geographies through a unique programme called Service Har Jagah. Today, on an
average, around 8,500 service camps are being conducted on a monthly basis,
covering more than 7,500 villages. The Company was partnering 560 dealers to push
this initiative into the hinterlands
and 84 new dealers were added under this initiative during the year under review.

sure (FacIlItatInG Product uPGradabIlIty)

Hero MotoCorp has succeeded as a Company, because it is able to meet the
aspirations of different socio-economic groups. To strengthen its appeal among two-
wheeler aspirants, both old and new, Hero MotoCorp has started a refurbishment
and exchange business called Sure.

The programme faced some teething challenges in multiple states, as there were
certain state taxation issues, relating to second-hand sales. These are now gradually
getting resolved, and during the year under review, the Sure business was re-launched
in Kerala, Gujarat, Jharkhand and Tamil Nadu. More than 100 dealers across these
states are offering re-sale and
refurbishment facilities at their showrooms and workshops.
 During the year under
review, more than 10
million
transactions were processed
under the GoodLife programme
and
13% of the vehicle sales in
2013-14 resulted from member
referrals.

partners and comes at no extra

GoodlIFe (customer enGaGement) cost to Hero MotoCorp. GoodLife has not only managed to successfully
The Hero GoodLife Programme (Customer build a consolidated base of
Relationship Programme) was conceived 1.9 crores plus loyal customers, but has also seen
to enhance customer satisfaction and an emergence of a new distribution platform for
initiate higher levels of member the Company.
engagement,
During the year under review, more than 10
by making them brand ambassadors
million transactions were processed under the
to generate referral sales and boost
GoodLife programme and 13% of the vehicle
service visits.
sales in 2013-14 resulted from member
The programme’s objectives comprised referrals.
the following: enhanced revenue
GoodLife has won many accolades and awards
opportunities for dealers; increased
on national and international platforms. The
number of customers as well as volume of
programme won an ‘Order of Merit’ at the PMA
transactions. There are multiple levels
Awards 2011 and 2012 under different
of engagement, including transaction-
categories. It was also the winner of the
based rewards, exclusive event invites,
Colloquy Award
personal accidental insurance, service
in the Loyalty Marketing (international) category
continuity bonus, transaction benefits
and qualified as an ECHO Finalist during the
on special occasions like birthdays,
2011 DMA International ECHO™ Awards.
anniversaries, quarterly newsletters
and interaction through a programme
hero advantaGe (low cost oF
website.
ownershIP)
Online member profiling and real- During the year under review, the Company
time customer feedback module (via rolled out its ambitious warranty programme Hero
select questionnaires) programme Advantage.
dashboard are some of the other
salient features of the platform. The
platform is scalable to the needs of
programme requirements, coalition
This unique programme -
which can be registered
online - is the most
competitively priced in the two-
wheeler industry. It covers the
longest distance (70,000 km),
provides the longest warranty (upto
five years) and encompasses the
largest number of components.

The programme is tailored to help

Dealers/ SSPs retain customers, and
in the process, help them improve
revenue from the sale of spares and
services.

Hero Advantage was launched in

2009, and went national during FY
2012-13. Over 9.5 million policies
have been sold, with over 45% retail
conversions.

hero GoodlIFe lady

rIder ProGramme
Hero MotoCorp GoodLife Lady Rider
Club is an exclusive relationship
programme designed especially for
female customers of Hero MotoCorp.
As members, they get to enjoy a host
of benefits, exciting offers, privileges
and invites to exclusive events. Hero
GoodLife Lady Rider Programme has
seen special focus in creating
engagement and customer delight
for female riders.
vIJeta – GoodlIFe ke sIkander
It’s a unique platform to engage and
retain GoodLife executive, who is the
face of the Programme. Top performers
(felicitated
at Area, Zonal and All India Level) are
rewarded and motivated to perform
better via ongoing programme with
quarterly audits. There is a mechanism
of rewarding points for each successful
transaction/ criteria met.
 48
Management Discussion and Analysis

supply chain Management

Supply Chain
Management represents
the critical arteries for
the growth
and sustainability of Hero.
Despite adversities, the
Company’s supply chain
architecture remained agile
and responsive to market
requirements during the
year.
Inventory turnover trends Green InItIatIves In vendor new Product develoPment
FY 2013-14 posed a challenge in develoPment Our team has been strengthened to
terms of inventory management The seventh phase of focus on new product development and
owing to an increase in product participants was enrolled into the the ability to meet future challenges.
complexity, Green Vendor This would enhance interfacing with
following the introduction of new Development Programme. The new technology partners as well as
models and fluctuations in month-on- Programme has seen the enrolment of facilitate the development of new and
month production plans. Despite this 148 vendors existing suppliers globally.
challenge, the inventory turnover has till date. The yearly review was held
been closely monitored. It has to recognise significant contributions outlook
resulted in a double- digit percentage from participants in the greening of At Hero, we are fully equipped to meet
improvement over the previous the supply chain. This year the last the challenge of providing a wider
financial year. phase will roll out, enrolling 20 more products range with enhanced
suppliers covering cumulatively 99% technology to customers. This will be
enhancInG eFFIcIencIes and spend. enabled through tie-ups with new
robustness oF suPPly chaIn technology partners, while remaining
An HR initiative has been completed Global technIcal cost competitive. We
this year in collaboration with our reGulatIons (Gtr) are focusing on widening the scope
chosen supply-chain partners. Our GTR for reducing braking distance has of achieving cost excellence with
partners have significantly benefited been implemented successfully support from domain experts.
from the project in various aspects. without disrupting production for the
These include the setting up of Splendor Pro, Super Splendor, Passion
people’s processes, de-risking IR Pro, HF Dawn and HF Deluxe models.
issues and enabling them to The material cost performance was
benchmark themselves and be a part managed as planned originally,
of the HMCL growth story. despite an unfavourable currency
situation, and heavy demand- supply
maJor InItIatIves For qualIty, fluctuations of all major inputs.
cost, ProductIvIty and delIvery
ImProvements at the vendors’ vendor develoPment rePort
end Developed locally in collaboration
During the year, Hero initiated more with supply chain partners, the i3S
than 65 quality improvement projects (Idle, Stop & Start System)
with supply chain partners to constantly technology has been introduced for
provide better quality products to its the first time in India. This year, a
customers. We have embarked on a Joint Venture agreement with
journey called LEAP (Leadership in Magneti Marelli (MM) has been
Motion) to nurture in-house capability concluded to facilitate the
and provide better products at the right implementation of the
price for enhanced value proposition. FI strategy. We were able to manage
The long- term aim is to strengthen the our production as planned, despite
supply chain partners in terms of constraints in tyre supply.
quality and delivery, leading to happy
customers and satisfied shareholders.
 50
Management Discussion and Analysis

strengthening it framework

Hero is leveraging
Information Technology
tools and techniques
effectively to improve
efficiency and productivity.
Today, not just our
processes, but Hero’s
network partners (dealers
and vendors) are integrated
with the Company’s IT
systems. At Hero, we are
focusing on relevant and
contemporary technologies,
which can drive better
returns on investments,
accelerate decision-making
and enable the global Team
to collaborate in a better
way.
 starting an
some key InItIatIves undertaken employee referral and processing ideas coming from all
durInG Fy 2013-14 Include the portal and parts of the organisation.
FollowInG: bolstering the use of The analytics paradigm has been
social media.
We created a new state-of-the-art strengthened by providing business
data centre facility to support We deployed a insights to internal users and channel
growth in IT infrastructure and dedicated Idea partners, accelerating well informed
resources. Management portal business decisions.
This not only provided for capturing
The digital landscape has also been
computing power to the strengthened by expanding our presence
organisation, but also reduced on social media platforms, extending to
energy consumption in line with cover customers in global markets,
some of the latest ‘Green where we have started operations.
Technologies’. Moreover, the use
Auto Expo was one of the biggest events
of ‘cloud’ technologies was
this year where our IT capability was
also increased.
visible to the entire world, thanks to real-
Several IT-based solutions, including time RFID based tracking, real-time social
design collaboration, test data media video wall and the launch of India’s
management, schedule manager, first digital showroom.
workflows and analytics were
We enabled GPS (Global Positioning
implemented.
System) based tracking, linked with our
We launched a mobility Dealer Management System, which
initiative, based on Global provided dealers full visibility of their
Positioning System (GPS) and shipments.
other technologies for Rural
A High Performance Computing system
Sales Executives of dealers.
was deployed for the R&D to help our
In addition, nearly all
engineers perform tasks with advanced
workflows and dashboards have
computing needs in relatively less time
been mobile enabled.
spans.
Hero became India’s first Company
to adopt ‘autoDX’, which is a SIAM- At Hero, we ensured that all employees in
ACMA B2B EDI cloud-based the organisation were regularly and
initiative on EDIFACT--- an adequately trained on the systems that were
established procedure to connect being deployed. In addition to employees,
seamlessly with the supplier the IT team was also trained on a regular
community. basis on
We launched an IT enabled
programme for measuring the
performance of our network
partners with a consistent focus on
improving the overall customer
experience.
Along with strengthening
talent acquisition, we initiated
several platforms for process
automation.
This included the setting up
of a dedicated careers portal
on the corporate website,
relevant technologies. From a process
perspective, enhancements were made to
various processes with the objective of
simplifying them and reducing the manual
efforts involved. During FY 2013-14, we
were recognised with the Customer Centre
of Expertise (CCoE) certification by SAP and
were also re-certified with ISO 27001 –
the global standard for Information
Security.

Some of the awards that we received

during the year include EMC Transformers
Award, 2013 by EMC, and Diamond Edge
2013 Award by Information Week. In
addition, Hero was named the best
social media brand in the two-wheeler
category for its focus on social media.
Human dynamism

Hero. We are all set

to leap into the future
with a clear
determination to be a
frontrunner.

Hero MotoCorp is all

about empowered
human dynamism. The
financial year 2013-14
has been a defining With a significant focus on employee
year for the relations and extremely cooperative and
organisation from the forward-looking union bodies, the
HR perspective. The industrial relations scenario at our plants
continued to be cordial. An environment of
year saw the highest harmony and mutual trust prevailed across all our
ever number of people plants. The management-union interaction was
joining the amicable and focused on organisational growth.
organisation. There The year witnessed several new initiatives,
were new including contract labour integration policy,
review of various policies and regular meetings.
appointments at key
positions and significant During the year, we spearheaded major
enhancements in programmes to develop competencies, create
policies, processes leaders of tomorrow, facilitate the induction of
new recruits and improve employee
and HR systems to engagements.
make them
SAKSHAM: Hero Leadership Competency
contemporary. Framework was created to identify and
In addition, a lot of develop future leaders, so as to enhance
employee-engagement our talent pipeline.
initiatives and These leadership competencies are now
extensive automation in being further integrated with our
various HR systems and processes vis-
HR related processes
à-vis Recruitment and Selection,
were also undertaken. Performance
This is the face of
human dynamism at
Management, Career members
Progression, Competency
Development and Talent
Development, among others.
This will help us to create a
One- Hero experience across
the entire professional life
cycle of an employee
Creating Future Leaders:
Assessment Centres and
Development Centres were
formulated as per the
SAKSHAM framework and
implemented for the
Operations team at the senior
level. The aim of this
initiative is to assess the
leadership potential and
create customised individual
development plans, so as to
develop future leaders from
within the organisation
PACE: In line with building a
more dynamic enterprise, the
current Performance
Management System (PMS) has
been revisited and a new
programme called PACE
(Performance Appreciation and
Competency Evaluation) has
been implemented in its place
Buddy Programme: We have
introduced the ‘Buddy’
Programme to facilitate easy
integration for new recruits
and to enable them to
become productive at a
faster pace

My First Impression: ‘My First

Impression’ is aimed to be
utilised as a tool to receive
feedback from new
employees on the 15th and
90th day from their date of
joining. As a part of this
programme, feedback is
received from all new recruits
on his/her
initial experience at HMCL
through a structured
feedback process that
includes filling up of an
online form. This procedure
provides valuable insights to
continuously improve HR
processes and policies to
provide a better working
environment to all Team
 Koffee with Functional Heads culture and enhance overall Engagement and development initiatives
(Mentorship Programme): The employee engagement. these
at plant locations, including Soulmates (a
programme aims at strengthening included:
unique programme involving couples),
the leadership pipeline by
Udaan-kids development programme,
nurturing future leaders. It
safety awareness for all, career
provides our brightest managers a
counselling for employee wards, in-house
platform for holistic development
product training for all lateral hires,
through the process of informal
trust for welfare schemes for the
knowledge sharing. We believe that
employees, mini summer camps, Diwali
this initiative will help us to create
functions, Hero Management Quiz and
sustainable competitive advantage
career counselling initiatives
by preparing leaders with a
With our focus on encouraging
futuristic perspective
specially-abled employees and
Hero Universe: In line with our providing equal opportunities to all,
Auto Expo theme of Hero Universe, 23 specially-abled employees of
a pan- organisational quarterly our Gurgaon Plant participated in 13
newsletter called ‘Hero Universe’ external competitions. They received
was launched prizes in various cultural and sporting
Hero Idea Contest: To boost activities at state and national levels
organisational innovation, a A major area of focus involved learning
Companywide Hero Idea Contest and development, including the
was conducted during the year development of internal trainers for
better utilisation of available talent
Employee Engagement Survey: An
Employee Engagement survey was Various sports events were held at the
conducted in the organisation and organisational and state levels (Kabaddi,
priority areas were identified in Football, Volley Ball, Cricket and Chess)
three different domains: Corporate and the State Labour Welfare Boards
Level, Functional Level and Team ensured participation in various sports
Level. meets that they organised
A structured action plan has Programmes like Defensive Road
been initiated at different Safety, Cross-Culture Effectiveness
levels

we undertook various other

initiatives to further improve the work
 and Ride Safe for employees were
organised
Various policies and processes were
revitalised in order to create a more
engaging and energising work
environment for employees
The following IT solutions were
introduced to help improve user
satisfaction:
Setting up of an Employee
Enterprise Service Desk
Launching a career website
Launching various Employee
Referral Programmes and
systems
Leveraging social media for
recruitment purposes
Introducing a system for
organisational structure charting

As on March 31, 2014, we had 6,782

employees on our rolls. In addition, we
have contractual staff and trainees. The
attrition rate for the year was around 5%,
which is much lower compared to
industry standards.
evolving a Risk- focused strategy

At Hero MotoCorp, a prompting the RBI to pause rate

Interest rates
hikes.
risk-focused strategy is Hero MotoCorp till now has relied mostly on
the result of down payments to drive sales. However, it has
identifying, now set up a retail finance arm, Hero FinCorp,
assessing and evaluating to tap into emerging financing opportunities.
Hence,the movement
risks and taking of interest rates and their impact on
proactive measures to consumers is a new variable that the
address those risks. Company is now tracking more closely.
Uncertainty surrounding the 2014-15
monsoons at the time of writing has been a
source of concern. Drought-like conditions
could force the apex bank to
rIsks and mItIGatIon put off a cut in interest rates for the rest of
currency fluctuation 2014, postponing prospects of a near-term
recovery.
For a brief period, during the year
in review, the rupee plunged to its Global uncertainty
lowest value against the dollar. A Given the Company’s increased global presence
continuously weakening rupee was a across continents, it is now much more susceptible
major concern during the first half to multiple geo-political risks. Crude price shocks
of the financial year, affecting Hero and phasing out of the US quantitative easing
MotoCorp’s cost policy over the next 12-18 months could affect
efficiency. Fortunately, a gradual various countries in different ways. Accordingly,
recovery in the second half—and its sales projections in target markets might need
continuing uptrend in 2014-15 revision.
indicates that sharp depreciation is
The level and intensity of competition has also
now a phenomenon of the past.
shot up across products and segments. It is
Nevertheless, the Company is
expected to intensify in the coming years as the
taking measures to guard against the
Indian economy becomes more attractive for 2W
other extreme—unbridled rupee
players. This would add pressure to both market
appreciation over the next 12 months.
share and margins. The search for new
This could affect competitiveness of the
differentiators and fresh sources of competitive
Company’s nascent global foray.
advantage is expected to intensity.
Inflation
Inflation influences Hero MotoCorp
directly, through second order effects
on interest rates and disposable income.
High inflation, especially on the
consumer side, and ensuing monetary
tightening by the Reserve Bank
comprised a major source of concern
during the year under review. The
problem was especially severe during
the first half, and led by the inflation
in food prices and currency
depreciation. During the second half,
inflation moderated somewhat,
r&d
Through its revamped R&D ecosystem
and new alliances, Hero MotoCorp
has shown it is fully capable of
addressing all product related
challenges in the near term. In the
medium term, the Company is on a
much
stronger footing. A slew of next-
generation products are in the
pipeline, and work
on the new R&D facility in
Rajasthan is progressing at full
speed. However, it may take
some more time to roll out the
full complement of next-
generation
products, and to counter this, the
Company is strengthening its
marketing and distribution networks.
Brand
Visibility
Brand Visibility
Directors‘
Report
 59

DEAR MEMBERS,
The Board of your Company is immensely delighted in presenting its 31st Report. The Report is being
presented along with the Audited Statement of Accounts for the financial year ended March 31, 2014.

FINANCIAL RESULTS – STANDALONE AND CONSOLIDATED

(` in crores)
Standalone Consolidated
Particulars For the year ended
March 31, March 31, March 31,
2014 2013 2014
Gross Sales of Products 27,005.26 25,474.54 27,005.26
Total Revenue 25,721.85 24,166.49 25,719.66
Profit before Finance Costs & Depreciation 3,986.44 3,682.86 3,983.29
Less: Finance Cost 11.82 11.91 11.82
Depreciation 1,107.37 1,141.75 1,107.37
Profit before tax (PBT) 2,867.25 2,529.20 2,864.10
Less: Provision for tax
- Current 828.21 502.61 828.21
- Deferred (238.39) (75.85) (238.39)
- Minimum Alternate Tax Credit 168.35 (15.72) 168.35
Profit after tax (PAT) 2,109.08 2,118.16 2,105.93
Share of profit/(loss) of associates - - (3.62)
Minority interest - - 0.35
Profit for the year 2,102.66
Add: Balance of profit brought forward 3,039.98 2,538.57 3,039.98
Balance available for appropriation 5,149.06 4,656.73 5,142.64
Appropriations
Dividend
- Interim 1.16 - 1.16
- Proposed Final 1,297.97 1,198.13 1,297.97
Corporate Dividend Tax 220.79 203.62 220.59
Transfer to General Reserve 215.00 215.00 215.00
Balance carried to Balance Sheet 3,414.14 3,039.98 3,407.72
Dividend (%) 3,250 3,000 -
Basic and Diluted Earnings Per Share (EPS)(Rs.)
- before exceptional items 105.61 106.07 105.29
- after exceptional items 105.61 106.07 105.29

BUSINESS PERFORMANCE
During the Financial year (FY) your Company clocked the sales of 6,245,960 units depicting an increase of
2.8% over the previous FY 60,75,583 units. The total sales of products (net of excise duty) was increased
by 6.5% to ` 25,125 crores in the FY under review from ` 23,583 crores in previous FY.

Net Revenue from Operations of the Company increased by 6.3%, from ` 23,768 crores in FY 2012-13 to
` 25,275 crores in FY 2013-14.

Profit before Tax (PBT) has shown a increase of 13.37% from ` 2,529 crores in 2012-13 to 2,867 crores in
2013-14. The Company’s Profit After Tax (PAT) decreased by 0.4% from ` 2,118 crores in 2012-13 to 2,109
crores in 2013-14. Earnings before Interest, Depreciation and Taxes (EBIDTA) margins stood at 14.01% in
FY 2013-14 as compared to 13.82% in FY 2012-13. Similarly the operating margins stood at 9.62% in FY
2013-14 as compared to 9.02% in FY 2012-13.

Annual Report 2013-14

 MATERIAL CHANGES AND COMMITMENTS
3,250% No material changes and commitments affecting the financial
position
Your Directors are pleased to recommend for your approval a Dividend of the Company have occurred between April 1,
of 3,250%
2014 and the date of signing of this Report.

AMALGAMATION
As you are aware, that the Company had started the process
of amalgamating Hero Investments Pvt. Ltd. (HIPL), its
Promoter Company holding 43.33% of the equity share capital
During the year under review your Company successfully with the Company in the FY 2012-13. You will be pleased to
launched the upgraded models of HF Dawn, HF Deluxe, HF note that the same was completed during the year under
Dlx Eco, Passion Pro, Splendor Pro, Splendor Pro Long Seat, review with the allotment of shares to the shareholders of
Super Splendor, Glamour, Glamour FI, I smart, Pleasure IBS and HIPL.
Pleasure Upgrade. You will be delighted to note that“Splendor”
continues to be the largest selling brand in FY 2013-14 as well CAPACITY EXPANSION, NEW PROJECTS & STARTEGIC ALLIANCES
with 19.6% market share coming from sales of 1,967,006 The construction of the fourth manufacturing plant with an
units. installed capacity of 7.5 lakhs units per annum and a State-of-
the-art Global Parts Centre (GPC) at Neemrana, Rajasthan
Though the market share declined from 38.4% in the
respectively which was commenced in the FY under review is
previous year to 36.4% in the financial year under review,
likely to be completed in the current FY. These two facilities
the Company has retained its position as the World’s largest
would have a total investment of approx. ` 550 crores. Both
Two-Wheeler manufacturer Company for the 12th year in a
the facilities are coming up over an area of 82 acres and will
row.
provide direct employment to over 1,400 people. As part of
A detailed discussion on the business performance and future your Company’s philosophy to grow sustainably, these facilities
outlook has been given in the chapter on ‘Management are being set up on Green Building Concept.
Discussion and Analysis’ (MDA).
Further the construction of the prestigious “Hero Centre of
Global Innovation and Research & Design (R&D)” spread over
DIVIDEND an area of 250 acres at Kukas, near Jaipur in Rajasthan has
Continuing with its payout policy, your Directors are pleased commenced during the FY 2013-14. This will be the largest two-
to recommend for your approval a Dividend of 3,250% i.e. ` wheeler R&D centre in the country of its class. This facility
65 (3,000% i.e. ` 60 in 2012-13) per Equity Share of the face would have a total investment of approx. ` 450 crores.
value of
` 2 each, aggregating to ` 1,297.97 crores (exclusive of tax Your Company is also creating capacities to ensure long term
on Dividend), for the financial year ended March 31, 2014. growth by setting up its fifth plant at Halol in Gujarat with an
The Dividend, if approved will be paid to the eligible annual installed capacity of 18 lakhs units. The construction of
members well within the stipulated time. this plant is expected to start soon.

Your Directors are happy to announce the formation of a

TRANSFER TO GENERAL RESERVE strategic joint venture agreement with Italian components
In view of the vigorous financial strength of the Company, a giant Magneti Marelli aimed at the production of power train
sum of systems for the two wheeler market. Accordingly a JV
` 215 crores being 10.19% of the Profit After Tax of the year Company HMC MM Auto Limited was incorporated on November
under review has been transferred to the General Reserve of 11, 2013 and was operationalised. This JV is targeting sales of
the Company. around $100 million in the first five years. The construction of
a JV’s production plant has been planned by 2015.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION
FUND (IEPF) The retail finance arm, Hero FinCorp Ltd. of the Company has
been expanding in a phased manner and its services would be
During the year under review, the Company has transferred
available at over 550 dealerships in various parts of the
unpaid / unclaimed dividend for the financial year 2005-06
country by the end of March 2015.
(final) amounting to ` 2.37 crores (approx.) to IEPF.
GLOBAL FORAYS The Board has received declarations from all the
During the FY under review your Company made its first ever Independent Directors of the Company confirming that
investment in equity of Erik Buell Racing (EBR) for an they meet with the
aggregate amount of US$ 25 million. This investment will
acquire a 49.2% holding in the invested Company.

Also the Company expanded its global footprint by launching

brand “Hero” and its range of products in Central America
(Guatemala, Honduras & El Salvador); South America (Peru &
Ecuador); East Africa (Kenya), West Africa (Burkina Faso and
Ivory Coast) and most recently Asia (Turkey & Egypt).

Your Directors are happy to announce the launch of

operations in Turkey through a Distribution Agreement with
Asya Makina, subsidiary of Soysal Group to distribute Hero
MotoCorp two wheelers through its network of 50 outlets
spread across Turkey.

The Company has established its International Assembly units

at Kenya, Tanzania and Uganda in East Africa.

During the current FY, the Company entered into its first
overseas Joint venture in Bangladesh to set up a two-wheeler
manufacturing plant with Nitol Niloy group, in which the
Company will hold majority stake of 55%.

BOARD OF DIRECTORS
In terms of the Articles of Association of the Company and
the applicable provisions of Companies Act, 1956, the office of
Mr. Pradeep Dinodia, Gen. (Retd.) V. P. Malik and Mr. Brijmohan
Lall Munjal, Directors would be liable to determination by
retirement of Directors by rotation at this Annual General
Meeting.

Your Board recommends the re-appointment of Mr. Brijmohan

Lall Munjal, Chairman and Whole-Time Director of the Company
and appointment of Mr. Pradeep Dinodia and Gen. (Retd.) V. P.
Malik as Independent Directors of the Company in terms of
Sections 149 and 152 of the Companies Act, 2013, who in the
opinion of the Board fulfils the conditions specified in the
Act and the rules made thereunder and are Independent of
the management.

Further in terms of the provisions of the Companies Act,

2013, Mr. Ravi Nath, Dr. Anand C. Burman, Dr. Pritam Singh and
Mr. M. Damodaran, Non-Executive and Independent Directors
of the Company whose office are liable to determination by
retirement of Directors by rotation have been appointed as
Independent Directors in term of Sections 149 and 152 of the
Companies Act, 2013 for 5 (five) consecutive years from the
date of the 31st Annual General Meeting for a term upto the
conclusion of the 36th Annual General Meeting of the
Company in the Calendar year 2019.
criteria of independence as prescribed under sub-section (6) of
Section 149 of the Companies Act, 2013 and who in the opinion
of the Board fulfils the conditions specified in the Act and the
rules made thereunder and are Independent of the
management. Thus the Board recommend their appointment as
Independent Directors.

Brief resume/details of the Director, who is/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.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section
217(2AA) of the Companies Act, 1956, 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 year

ended March 31, 2014, 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,
2014 and of the Profit of the Company for the financial
year ended March 31, 2014;

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; and

4. that the annual accounts for the year ended March 31, 2014
have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed chapter on, ‘Management Discussion and Analysis’
(MDA), pursuant to Clause 49 of the Listing Agreement is
annexed and forms part of this Annual Report.

CORPORATE GOVERNANCE
At Hero MotoCorp Ltd., it is our firm belief 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 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.
 RISK MANAGEMENT SYSTEM
ollows a comprehensive system of Risk Management and has adopted a procedureYour Company follows a comprehensive system of Risk
ent and its minimisation. Management and has adopted a procedure for risk
assessment and its minimisation. It ensures that all the Risks
are timely defined and mitigated in accordance with the Risk
Management Process. The Audit Committee and Board
reviews periodically the Risk Management Process.

disclosure of the same is not required in this Report.

Your Company is committed to benchmarking itself with

global standards for providing good Corporate Governance. It
has put in place an effective Corporate Governance System
which ensures that the provisions of Clause 49 of the Listing
Agreement are duly complied with not only in letter but in
spirit.

The Board has also evolved and adopted a Code of Conduct

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.heromotocorp. com. A Report on Corporate
Governance along with the Auditors’ Certificate on its
compliance is annexed hereto as Annexure - I.

INTERNAL CONTROL SYSTEMS

The Company has a proper and adequate system of internal
controls. This ensures that all assets are safeguarded and
protected against loss from unauthorised use or disposition
and those transactions are authorised, recorded and
reported correctly.

An extensive programme of internal audits and management

reviews 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 to ensure that the financial and other records
are reliable for preparing financial and other statements and for
maintaining accountability of assets.

The Company also has an Audit Committee, comprising of 4

(four) Non-Executive & Independent professionally qualified
Directors, who interact with the Statutory Auditors, Internal
Auditors, Cost Auditors and Auditees in dealing with matters
within its terms of reference. The Committee mainly deals
with accounting matters, financial reporting and internal
controls. During the year under review, the Audit Committee
met 6 (six) times.

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the
Audit Committee which was not accepted by the Board. Hence,
RATINGS
ICRA Limited, has reviewed and reaffirmed [ICRA] AAA
(pronounced ICRA triple A) and [ICRA] A1+ (pronounced A
one plus) rating for its bank facilities. ICRA has also
reaffirmed [ICRA] AAA rating for non convertible
debenture programme of the Company and issuer rating of
IRAAA (pronounced I R triple A). The long-term rating has
been assigned a “Stable” outlook.

CRISIL, during the year under review, has reviewed and

reaffirmed the rating of“CRISIL AAA” in Long term instrument
Category,“CRISIL AAA” for Working Capital,“FAAA” for Fixed
Deposits,“CRISIL A1+” for short term category and “CRISIL
GVC Level 1” for Governance and Value Creation Rating
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. Deloitte Haskins & Sells, 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 re-appointment, if made, would be in accordance with
Sections 139 and 141 of the Companies Act, 2013. The
Board 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 in accordance with Section 148 of the Companies
Act, 2013 for the financial year 2014-15. The Cost Auditors’
Report for the financial year 2013-14 will be forwarded to
the Central Government in pursuance of the provisions of
the Companies Act, 2013 or any enactment thereof.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
COMPANIES ACT, 2013
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the current FY the Companies Act, 1956 has been
Information required under Section 217(1)(e) of the
replaced by Companies Act, 2013 and became applicable for
Companies Act, 1956, read with Companies (Disclosure of
every company from April 1, 2014. Your Company has been
Particulars in the Report of the Board of Directors) Rules,
regular in keeping pace with the fast changes that has
1988 is annexed hereto as Annexure - II and forms an integral
become applicable and initiated necessary actions accordingly.
part of this Report.
Some of the important initiatives are as under:

BUSINESS RESPONSIBILITY REPORT a) Modification in terms of Audit Committee;

The Business Responsibility Report (BRR) required to be b) Modification in terms of Nomination and Remuneration
prepared by top 100 listed entities, based on market Committee;
capitalisation at BSE Limited (BSE) and National Stock
c) Modification in terms of Stakeholders Relationship Committee;
Exchange of India Limited (NSE) has been prepared and forms
part of the Annual Report. The Report has been mandated by d) Appointment of Secretarial Auditors;
SEBI for providing initiatives taken by the companies from e) Setting up of Vigil Mechanism;
Environmental, Social and Governance perspective.
f) ) Constitution of Corporate Social Responsibility Committee;

LISTING g) Identification of Related parties as per new Act.

The shares of your Company are presently listed on BSE and ACKNOWLEDGEMENT
NSE.
It is our strong belief that caring for our business
constituents has ensured our success in the past and will do
PERSONNEL
so in future. Your Directors acknowledge with sincere
As on March 31, 2014, the total numbers of employees on the gratitude the co-operation and assistance extended by the
records of the Company were 6,782. Central Government, State Government(s), Financial
Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary
Your Directors place on record their appreciation for the
Undertakings.
significant contribution made by all employees, who through
their competence, dedication, hard work, co-operation and The Board also takes this opportunity to express its deep
support have enabled the Company to cross new milestones gratitude for the continued co-operation and support
on a continual basis. received from its valued shareholders.

A detailed note is given in the Human Dynamism chapter of

For and on behalf of the Board
Management Discussion and Analysis, which forms part of this
Annual Report.

PARTICULARS OF EMPLOYEES
Information of Particulars of Employees as required under
Section 217(2A) of the Companies Act, 1956 read with The Brijmohan Lall Munjal
Companies (Particulars of Employees) Rules, 1975 forms an New Delhi Chairman
integral part of this Report. As per the provisions of Section June 20, DIN: 00004134
219(1)(b)(iv) of the Companies Act, 1956, the Report and 2014
Accounts are being sent to the members 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 Asso. V.P.- Legal & Company Secretary at the Registered
Office of the Company.
ANNEXURE - I TO DIRECTORS’ REPORT

Corporate
Governance
Report
 65

PHILOSOPHY ON ‘CODE OF CORPORATE GOVERNANCE’

The Company’s philosophy of Corporate Governance stems from a belief that the Company’s business
strategy and plans should be consistent with the welfare of all its stakeholders, including shareholders.
Good Corporate Governance practices enable a Company to attract financial and human capital. In turn,
these resources are leveraged to maximise long-term shareholder value, while preserving the interests
of multiple stakeholders, including the society at large.

Corporate Governance rests upon the four pillars of: transparency, full disclosure, independent monitoring
and fairness to all, especially to minority shareholders. The Company has always strived to promote Good
Governance practices, which ensure that:

A competent management team is at the helm of affairs;

The Board is strong with an optimum combination of Executive and Non-Executive (including
Independent) Directors, who represent the interest of all stakeholders;
The Board is effective in monitoring and controlling the Company’s
affairs; The Board is concerned about the Company’s shareholders;
and
The Management and Employees have a stable environment.

We believe 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 Directors are “Your” fiduciaries and
trustees. Their objective is to take the business forward to maximise “Your” long-term value.

The Securities and Exchange Board of India (SEBI) has specified certain mandatory governance practices,
which are incorporated in Clause 49 of the Listing Agreement of Stock Exchange.

The Company is committed to benchmark itself with the best standards of Corporate Governance, not
only in form but also in spirit. This section, along with the section on ‘Management Discussion and Analysis’
and ‘General Shareholders’ Information’, constitute the Company’s compliance with Clause 49 of the Listing
Agreement, entered into by the Company with the Stock Exchanges.

BOARD OF DIRECTORS (“BOARD”)

Composition of the Board
As on March 31, 2014, the Company’s Board comprised of 11 (eleven) Directors. 3 (three) Directors,
including the Chairman, are Executive Directors, 2 (two) are Non-Executive Directors and 6 (six) are
Non-Executive and Independent Directors. More than 50 % of the Board consists of Independent Directors;
therefore the composition of the Board is in consonance with Clause 49 of the Listing Agreement. Details
of the composition of the Board, number of meetings held during the Financial year 2013-14 and
attended by them etc., are given in Table 1.

Annual Report 2013-14

TABLE 1 : DETAILS ABOUT COMPANY’S BOARD OF DIRECTORS

ATTENDANCE RECORD DURING FINANCIAL YEAR 2013-14 DIRECTORSHIPS/MEMBERSHIPS AS ON MARCH

31, 2014
Name of the Directors Number of Board Attendance Number of Number of Number
Meetings attended at last AGM Committee Committee of
by him Memberships Chairmanships outside
held held Directorships
held
Held Attended (excluding Private Companies, Foreign Companies
& Section 25 Companies)
Executive Directors
Mr. Brijmohan Lall Munjal 5 5 Yes 1 None 8
Mr. Pawan Munjal 5 5 Yes 1 None 5
Mr. Sunil Kant Munjal 5 5 Yes 5 1 12
Non-Executive Directors
Mr. Suman Kant Munjal 5 4 Yes 1 None 7
Mr. Paul Edgerley 5 5 Yes None None None
Non-Executive and Independent Directors
Mr. Pradeep Dinodia 5 5 Yes 4 4 8
Dr. Pritam Singh 5 3 Yes 1 1 2
Gen. (Retd.) V. P. Malik 5 4 Yes 1 None 1
Mr. M. Damodaran 5 3 Yes 7 2 9
Dr. Anand C. Burman 5 2 No None None 6
Mr. Ravi Nath 5 1 No 1 1 3
Note:
1. As required by Clause 49 of the Listing Agreement, the disclosure includes membership/chairmanship of the Audit Committee
and Shareholders’ Grievance Committee in the Indian Public Companies (Listed and Unlisted) have been considered.

Mr. Brijmohan Lall Munjal is father of Mr. Pawan Munjal,

The Board passed 4 (four) matters by passing Resolution by
Mr. Sunil Kant Munjal and Mr. Suman Kant Munjal.
Circulation during the financial year 2013-14.
4 (four) Directors namely Mr. Brijmohan Lall Munjal (Chairman in
Directors’ Attendance Record and Directorships /
the Whole-time employment of the Company), Mr. Pawan Munjal
Committee Memberships
(Managing Director & CEO), Mr. Sunil Kant Munjal (Jt. Managing
Details are given in Table 1.
Director) and Mr. Suman Kant Munjal (Non-Executive
Director) belong to the promoter family of the Hero Group. Pursuant to Clause 49 of the Listing Agreement entered into
Apart from these, the rest of the Board comprises of Non- with the Stock Exchange(s), an Independent Director means a
Executive/ Non-Executive and Independent Directors. Non- Executive Director who:
Board Meetings apart from receiving Director’s remuneration, does not
During 2013-14, the Board met 5 (five) times on Friday, April have any material pecuniary relationships or transactions
26, 2013; Wednesday, July 24, 2013; Wednesday, September 11, with the Company, its promoters, its Directors, its Senior
2013; Management or its holding company, its subsidiaries and
Wednesday, October 23, 2013 and Thursday, January 30, 2014. associates which may affect independence of the
Director;
The period between any two consecutive meetings of the
Board of Directors of the Company was not more than 4 is not related to promoters or persons occupying
(four) months. management positions at the Board level or at one level
below the Board;
 has not been an executive of the Company in the
is not less than 21 (twenty one) years of age.
immediately preceding 3 (three) financial years;
is not a partner or an executive of the statutory audit None of the Directors on the Board hold the office of Director
firm or the internal audit firm that is associated with in more than 15 (fifteen) Public companies nor are they
the Company and has not been a partner or an members in Committees of the Board in more than 10 (ten)
executive of any such firm for the last 3 (three) years and Committees or Chairman of more than 5 (five) Committees.
the legal firm(s) and consulting firm(s) that have a Further, there are no pecuniary relationships or transactions
material association with the entity; between the Independent Directors and the Company, other
than the sitting fees drawn by the Non-executive Directors and
is not a material supplier, service provider or customer
sitting fees and commission drawn by the Non-executive and
or a lessor or lessee of the Company, which may affect
Independent Directors for attending the meetings of the Board
independence of the Director;
and its Committee(s).
is not a substantial shareholder of the Company i.e.
owning 2 (two) percent or more of the block of voting
shares; and

Shareholding of Non-Executive Directors as on March 31, 2014

Name of the Director Category No. of shares held Beneficiary
Mr. Suman Kant Munjal Non-Executive Director 71,250 Self
32,500 On behalf of HUF
1,23,96,840 On behalf of firm
Mr. Pradeep Dinodia Non-Executive and Independent 650 jointly with his wife
Director

Apart from the above, none of the Non-Executive (including Any material defaults in financial obligations to and
Independent) Directors hold any share (as own or on behalf by the Company or substantial non-payments for
of any other person on beneficial basis) in the Company. goods sold by the Company;

INFORMATION SUPPLIED TO THE BOARD

Board members are given agenda papers along with necessary
documents and information in advance of each meeting of the
Board and its Committee(s). However, in case of business
exigencies or urgencies, the resolutions are passed by way of
circulation. In addition to the regular business items, the
following items/ information are regularly placed before the
Board to the extent applicable:

Annual operating plans and budgets, capital budgets and

updates;
Purchase and disposal of major fixed assets;
Quarterly and half yearly results of the
Company;
Minutes of the Audit Committee, Shareholders’
Grievance Committee, Remuneration and Compensation
Committee, Committee of Directors and Committee of
Directors-Capital Issue;
Information on recruitment of Senior Management just
below the Board level including appointment or removal of
the Chief Financial Officer and the Company Secretary;
Fatal or serious accidents, dangerous occurrences, any
material effluent or pollution problems;
Transactions that involve substantial payment towards
goodwill, brand equity or intellectual property;
Materially important show cause, demand, prosecution and
penalty notices;
Details of quarterly foreign exchange exposures and steps
taken by the management to limit the risks of adverse
exchange rate movement;
Sale of material nature, of investments and assets, which are
not in the normal course of business;
Details of Joint Ventures and Collaboration Agreements or
variations thereof;
Quarterly Statutory Compliance Report;
Non-compliance of any regulatory, statutory nature or listing
requirements and shareholder’s service such as non-payment
of dividend, delay in share transfer etc.;
Investment strategy/plan;
Any issue which involves possible public or product liability
claims of substantial nature, including any judgment or
order which may have passed strictures on the conduct of
the Company or taken an adverse view regarding another
enterprise that can have negative implications on the
Company; and
 Significant labour problems and their proposed with the prescribed guidelines. Mr. Pradeep Dinodia, a leading
solutions. Also, any significant development in Human Chartered Accountant, is the Chairman of the Committee. The
Resources/ Industrial Relations front like signing of other members are Dr. Pritam Singh, Gen.(Retd.) V. P. Malik and Mr.
Wage Agreement, implementation of Voluntary M. Damodaran
Retirement Schemes etc.

CODE OF CONDUCT
The Company has laid down a Code of Conduct (“Code”) for all
Board members and Senior Management of the Company. The
Code is available on the website of the Company i.e.
www.heromotocorp. com. The Code has been circulated to all
the members of the Board and Senior Management and they
have affirmed compliance with the Code. A declaration signed
by the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO) to this effect is part of the Annual Report.

RISK MANAGEMENT
The Company has established effective risk assessment and
minimisation procedures, which are reviewed by the Board
periodically. The procedures comprise of an in-house
exercise on Risk Management, carried out periodically by the
Company, including the functioning of a structure to identify
and mitigate various risks faced by the Company from time
to time.

The structure also comprises of risk identification and

assessment by the concerned departments, identification of
controls in place/ mitigation process in place, updation of
Risk registers by various departments if required. These
reports are consolidated and presented by the Asso. V.P –
Legal & Company Secretary before the Board of Directors of
the Company.

BOARD LEVEL COMMITTEES

Audit Committee
The genesis of Hero MotoCorp’s Audit Committee can be
traced back to the Audit Sub-Committee, constituted in 1987.
Since then it has been dealing with matters prescribed by the
Board of Directors on a case to case basis. In general, the
primary role/objective of the Audit Committee is to review
the financial statements of the Company, strengthen internal
controls & look into all transactions that have monetary
implications on the functioning of the Company. The
nomenclature, constitution and terms of reference of the
Committee were revised on January 16, 2001 and an Audit
Committee was set up as per the provisions of the Section
292A of the Companies Act, 1956 and Clause 49 of the Listing
Agreement.

As on March 31, 2014, the Committee comprised of 4 (four)

Non- Executive and Independent Directors in accordance
all learned personalities in their respective fields. The
members of the Committee have adequate knowledge in
the field of finance, accounting, and law. The role and
“terms of reference” of the Audit Committee includes the
following:

Overseeing
the Company’s financial reporting process and
disclosure of its financial information to ensure
that the financial statements are correct,
sufficient and credible.

Recommending
the appointment, re-appointment, replacement
and removal of the statutory auditor, fixation of
audit fees and approving payments for any other
services.

Reviewing
the annual financial statements with the
management with primary focus on matters
required to be included in the Directors’
Responsibility Statement, changes, if any in
accounting policies and practices and reasons
thereof, compliance with accounting standards
and guidelines of stock exchange(s), major
accounting entries & related party transactions;
the quarterly financial statements with the
management before submission to the board for
approval;
the adequacy of internal control systems and the
internal audit function and reviewing the
Company’s financial and risk management
policies;
the findings of any internal investigations by the
internal auditors into matters where there is
suspected fraud or irregularity or a failure of
internal control systems of a material nature
and reporting the matter to the Board;
the reports furnished by the internal auditors,
discussion with internal auditors on any
significant findings and ensuring suitable follow
up thereon;
Directors’ overseas traveling
expenses; and Foreign exchange
exposure.

Complying
with the provisions of listing agreement laid down
by the Stock Exchange(s) and legal requirements
concerning financial statements.

Discussing
with external auditors before the audit
commences, of the nature and scope of audit.
Also post audit discussion to ascertain any area
of concern.
 Looking
The Sr. Vice President & CFO, Internal Auditors, Statutory
into the reasons for substantial defaults in the Auditors and Cost Auditors attend the meetings of the
payments to the shareholders (in the case of non- Committee on the invitation of the Chairman. Mr. Ilam C.
payment of declared dividends) and creditors. Kamboj, Asso. V.P. Legal & Company Secretary acts as the
Secretary of the Committee.
Approving
the appointment of the CFO before finalisation of During the year, 6 (Six) meetings of the Audit Committee
the same by the management. Further while were held on Friday, April 26, 2013; Tuesday, June 11, 2013;
approving the appointment, it shall assess the Wednesday,
qualifications, experience & background etc. of the July 24, 2013; Wednesday, October 23, 2013; Thursday, January
candidate. 30, 2014 and Wednesday, February 19, 2014 in due
compliance with the stipulated provisions. The attendance
record of members of the Audit Committee is given in Table 2.

TABLE 2: DETAILS OF THE AUDIT COMMITTEE

Name of the Committee member Position held No. of meetings held during No. of meetings attended
the Financial Year
2013-14
Mr. Pradeep Dinodia Chairman 6 6
Gen. (Retd.) V.P.Malik Member 6 5
Dr. Pritam Singh Member 6 3
Mr. M. Damodaran Member 6 3

REMUNERATION AND COMPENSATION COMMITTEE

As on March 31, 2014, the Committee had 3 (three) Non-
The Company had set up a Remuneration Committee on Executive and Independent Directors as its members in
January 16, 2001 to review and recommend the payment of accordance with the prescribed guidelines. Gen. (Retd.) V.P.
annual salaries, commission and finalise service agreements and Malik is the Chairman of the Committee and Mr. Pradeep
other employment conditions of Executive Directors. The Dinodia and Mr. Ravi Nath are the members of the Committee.
Committee takes into consideration the best remuneration Mr. Ilam C. Kamboj, Asso. V.P Legal & Company Secretary acts
practices being followed in the industry while fixing as the Secretary of the Committee.
appropriate remuneration packages and to administer and
superintend the ESOP. Accordingly during the financial year During the year, 1 (One) meeting of the Committee was held
ended March 31, 2013, the nomenclature of the said on Friday, April 26, 2013, which was attended by all the
Committee was changed to Remuneration and Compensation members.
Committee.
Mr. Pawan Munjal, Managing Director & CEO of the Company
had attended the Meeting of Remuneration Committee held on
Friday, April 26, 2013 as Special Invitee.

TABLE 3: DETAILS OF THE REMUNERATION AND COMPENSATION COMMITTEE

Name of the Committee member Position held No. of meetings held during No. of meetings attended
the Financial Year
2013-14
Gen. (Retd.) V.P.Malik Chairman 1 1
Mr. Pradeep Dinodia Member 1 1
Mr. Ravi Nath Member 1 1
70
Corporate Governance Report

Remuneration Policy
The term of appointment of Executive Directors is 5 (five)
Remuneration paid to Executive Directors years. Further, no notice period and severance fee is
The remuneration paid to Executive Directors is recommended applicable for the above-mentioned Executive Directors.
by the Remuneration and Compensation Committee and
Remuneration paid to Non-Executive Directors
approved by the Board in the Board Meeting, subject to the
subsequent approval by the shareholders at the General The Non-Executive Directors of the Company are paid sitting
Meeting and such other authorities, as the case may be. fees of ` 20,000 for each meeting of the Board, Audit
Committee, Remuneration and Compensation Committee,
At the Board Meeting, only the Non-Executive and Independent Shareholders’ Grievance Committee and Committee of
Directors participate in approving the remuneration paid to Directors - Capital Issue, attended by them.
the Executive Directors. The remuneration is fixed considering
various factors such as qualification, experience, expertise, In addition to the sitting fees, Non-Executive and
prevailing remuneration in the industry and the financial Independent Directors are entitled to remuneration by way
position of the Company. The remuneration structure of commission aggregating upto 0.10 % of net profit of the
comprises of Basic Salary, Commission, Perquisites and Company.
Allowances, Contribution to Provident Fund and other funds.
Tables 4 and 5 gives detail of remuneration paid to Directors.
Besides these, a fixed commission @ 1 (one)% of the net profit,
During 2013-14, the Company did not advance any loans to
computed in accordance with Section 198 of the Companies
any of its Directors.
Act, 1956, is paid as per the terms of appointment.

TABLE 4: REMUNERATION TO EXECUTIVE DIRECTORS

(Amount `)
Name of the Director Basic Salary Perquisites Contribution Commission Total
and to PF and (Fixed)
Allowances other
funds
Mr. Brijmohan Lall Munjal 38,448,000 28,770,685 4,613,760 298,000,000 369,832,445
Mr. Pawan Munjal 34,560,000 36,954,152 9,331,200 298,000,000 378,845,352
Mr. Sunil Kant Munjal 28,748,129 25,178,238 7,761,994 298,000,000 359,688,361

TABLE 5: REMUNERATION TO NON-EXECUTIVE DIRECTORS

(Amount `)
Name of the Director Sitting fees Commission Total
Mr. Suman Kant Munjal 200,000 - 2,00,000
Mr. Paul Edgerley 20,000 - 20,000
Mr. Pradeep Dinodia* 320,000 2,468,750 2,788,750
Gen.(Retd.) V.P. Malik 200,000 1,418,750 1,618,750
Dr. Pritam Singh 240,000 1,512,500 1,752,500
Mr. M. Damodaran 160,000 937,500 1,097,500
Mr. Ravi Nath 40,000 218,750 258,750
Dr. Anand C. Burman 40,000 250,000 290,000
*
` 125,000 commission relating to 2012-13 paid in 2013-14
SHAREHOLDERS’ GRIEVANCE COMMITTEE
investors as and when necessary. The Company Secretary being
This Committee, constituted on January 16, 2001, specifically the Compliance Officer carefully looks into each issue and
looks into shareholders’ and investors’ grievances arising out reports the same to the Shareholders’ Grievance Committee. In
of issues regarding share transfers, dividends, dematerialisation the meetings of the Committee the status of all shareholders’
and related matters and takes requisite action(s) to redress complaints, requests, queries etc. along with letters received
the same. from all statutory authorities were reviewed.

As on March 31, 2014, the Committee had 3 (three) Non- During the year, 3 (Three) meetings of the Shareholders’
Executive and Independent Directors as its members in Grievance Committee were held on Friday, April 26, 2013;
accordance with the prescribed guidelines. Dr. Pritam Singh Wednesday, July 24, 2013 and Thursday, January 30, 2014.
is the Chairman of the Committee. The other members of the
Committee are Mr. Pradeep Dinodia and Mr. M. Damodaran. Mr. Details of shareholders complaints and their status are given in
Ilam C. Kamboj, Asso. V.P Legal & Company Secretary acts as the section on “General Shareholders’ Information”. The
the Secretary of the Committee. attendance record of members of the Shareholders’
Grievance Committee is given in Table 6.
The Company has an efficient system of dealing with
investors’ grievances. The Chairman and the Managing
Director & CEO of the Company take personal interest in all
matters of concern for

TABLE 6: DETAILS OF SHAREHOLDERS’ GRIEVANCE COMMITTEE

Name of the Committee member Position held No. of meetings held during No. of meetings attended
the Financial year
2013-14
Dr. Pritam Singh Chairman 3 2
Mr. Pradeep Dinodia Member 3 3
Mr. M. Damodaran Member 3 2

COMMITTEE OF DIRECTORS
Constituted in 1985, the Committee deals with matters
The Company has a Committee of Directors comprising of delegated by the Board from time to time.
Mr. Brijmohan Lall Munjal, Chairman; Mr. Pawan Munjal,
Managing Director & CEO; Mr. Sunil Kant Munjal, Jt. Managing The meeting of the Committee is convened as and when
Director; Mr. Ravi Sud, Sr. Vice President & CFO and Mr. Ilam C. need arises. During the year under review 9 (Nine) meetings
Kamboj, Asso. of the Committee were held. The attendance record of
V.P. Legal & Company Secretary as its members. Mr. Brijmohan members of the Committee of Directors is given in Table 7.
Lall Munjal is the Chairman of the Committee.

TABLE 7: DETAILS OF COMMITTEE OF DIRECTORS

Name of the Committee member Position held No. of meetings held during No. of meetings attended
the Financial year
2013-14
Mr. Brijmohan Lall Munjal Chairman 9 9
Mr. Pawan Munjal Member 9 9
Mr. Sunil Kant Munjal Member 9 1
Mr. Ravi Sud Member 9 9
Mr. Ilam C. Kamboj Member 9 9
COMMITTEE OF DIRECTORS – CAPITAL ISSUE
The Committee comprises of Mr. Pawan Munjal, Managing
Apart from the aforesaid Committees, the Company also has Director & CEO as Chairman; Mr. Suman Kant Munjal and Dr.
a Committee of Directors – Capital Issue, which was Pritam Singh as its members.
constituted on September 11, 2013 to deal with matters
inter-alia relating to During the year under review, 6 (six) meetings of the
committee were held. The attendance record of members of
a) issue and allotment of shares pursuant to amalgamation; the Committee of Directors – Capital Issue is given in Table 8.
and
b) issue of share certificates pursuant to consolidation,
splitting, re-materialisation, replacement and
loss/misplacement.

TABLE 8: DETAILS OF COMMITTEE OF DIRECTORS – CAPITAL ISSUE

Name of the Committee member Position held No. of meetings held during No. of meetings attended
the Financial year
2013-14
Mr. Pawan Munjal Chairman 6 6
Mr. Suman Kant Munjal Member 6 6
Dr. Pritam Singh Member 6 4

SHARE TRANSFER COMMITTEE their relatives etc. that may have potential conflict with the
This Committee was constituted on January 31, 2007 as a interest of the Company at large.
measure of Good Corporate Governance practice and to
streamline the work related to share transfer etc. which was
earlier approved by the Committee of Directors. Mr. Ravi Sud,
Sr. Vice President & CFO and Mr. Ilam C. Kamboj, Asso. V.P Legal
& Company Secretary are its members.

The meeting of the committee is convened as and when need

arises. During the year under review 12 (twelve) meetings of
the Committee were held.

DISCLOSURES
Related Party Transactions
The Company follows the following policy in regard to disclosure
of the related party transactions to the Audit Committee:

a) A Statement in the summary form of transactions with

related parties in the ordinary course of business is placed
periodically before the Audit Committee.

b) There are no material individual transactions with

related parties, which are not in the normal course of
business and material individual transactions with related
parties or others which are not on an arm’s length basis.

Disclosures on materially significant related party transactions

that may have potential conflict with the interest of the company
at large
There are no materially significant transactions made by the
Company with its Promoters, Directors or Management or
Accounting Treatment in preparation of Financial
Statements
The guidelines/Accounting Standards laid down by the
Institute of Chartered Accountants of India (ICAI) and
notified by the Companies (Accounting Standards) Rules,
2006 have been followed in preparation of the financial
statements of the Company.

Compliances by the Company

There has neither been any non-compliance of any legal
provision of applicable law, nor any penalty, stricture
imposed by the stock exchanges or SEBI or any other
authority, on any matters related to capital market during
the last 3 (three) years.

Insider Trading
In compliance with the SEBI regulation on prevention of
insider trading, the Company has instituted a
comprehensive Code of Insider Trading (“CIT”) for its
management, staff and relevant business associates. The
CIT lays down guidelines, which advises them on
procedures to be followed and disclosures to be made,
while dealing with shares of the Company and cautioning
them on consequences of non-compliances.

CEO & CFO CERTIFICATION

Certificate from Mr. Pawan Munjal, Managing Director & CEO
and Mr. Ravi Sud, Sr. Vice President & CFO, pursuant to
provisions of Clause 49 (V) of the Listing Agreement, for
the year under review was placed before the Board of
Directors of the Company at its meeting held on
Wednesday, May 28, 2014. A copy of the certificate on the
financial statements for the financial year ended March 31,
2014 and on the Code of Conduct is annexed along with
this Report.
APPOINTMENT/ RE-APPOINTMENT OF DIRECTORS
Further in terms of the provisions of the Companies Act,
Mr. Pradeep Dinodia, Gen. (Retd.) V. P. Malik and Mr. Brijmohan 2013, Mr. Ravi Nath, Dr. Anand C. Burman, Dr. Pritam Singh and
Lall Munjal, Directors of the Company shall retire by rotation at Mr. M. Damodaran, Non-Executive and Independent Directors
this Annual General Meeting. Mr. Brijomahan Lall Munjal being of the Company whose office are liable to determination by
eligible would be re-appointed. Further Mr. Pradeep Dinodia retirement of Directors by rotation have been appointed as
and Gen. (Retd.) V. P. Malik, in terms of the provisions of Independent Directors in term of Sections 149 and 152 of the
Sections 149 and 152 of the Companies Act, 2013, who in the Companies Act, 2013 for 5 (five) consecutive years from the
opinion of the Board fulfils the conditions specified in the date of 31st Annual General Meeting for a term upto the
Act and the rules made thereunder and are Independent of conclusion of the 36th Annual General Meeting of the
the management being eligible would be appointed as Company in the Calendar year 2019 from the date of the
Independent Directors for 5 (five) consecutive years from the Annual General Meeting.
date of 31st Annual General Meeting for a term upto the
conclusion of the 36th Annual General Meeting of the
Company in the Calendar year 2019 from the date of the
Annual General Meeting.

MEANS OF COMMUNICATION

Financial Results Pursuant to Clause 41(I)(f) of the Listing Agreement, the Company has regularly furnished, both by
way of post as well as by fax (within 15 minutes of closure of the Board meeting) the quarterly
un-audited as well as annual audited results to both the Stock exchanges i.e. BSE & NSE.

Quarterly and Annual financial results are also published in English, Hindi and other regional
newspapers,
i.e. The Economic Times, Financial Times, Business Standard, Dainik Bhaskar, Deccan Chronicle,
Financial Chronicle, Financial Express, Jansatta, Hindustan, The Hindu, Business Line, Hindustan
Times, Mint and The Times of India.
Website Pursuant to Clause 54 of the Listing Agreement the Company’s website www.heromotocorp.com contains
a dedicated functional segment called ‘INVESTORS’ where all the information needed by shareholders
is available including Press Releases, Shareholding Pattern and Annual Reports.
Annual Report Annual Report is circulated to members and other concerned including Auditors, Equity Analyst etc.
Further, the Management Discussion and Analysis (MDA) Report, highlighting operations, business
performance, financial and other important aspects of the Company’s functioning, forms an integral
part of the Annual Report.
NSE Electronic The Company files its shareholding pattern as per clause 35 and Corporate Governance report as per
Apllication processing clause 49 online on the website developed and as per the advice of National Stock Exchange and
System (NEAPS) and Bombay Stock Exchange on the link https://www.connect2nse.com/LISTING and http://listing.bseindia.com.
BSE listing centre. The Asso. V.P. Legal and Company Secretary being the Compliance Officer ensures the correctness and
authenticity of the information filed with the said website.
Green Initiatives As per the MCA Circular nos. 17/2011 dated April 21, 2011 & 18/2011 dated April 29, 2011,
Company has issued letters to its shareholders and uploaded the information on its website for
registering email IDs of Investors so that Annual Reports and other information may be sent to
them in electronic forms to save papers.
E-mail IDs for Investors Following designated e-mail IDs of the Compliance Officer exclusively given on the website,
various materials including notices for creating investor awareness and to redress their
grievances/queries:

Mr. Ilam C. Kamboj, Asso. V.P. Legal & Company Secretary & Compliance
Officer: E-mail: [email protected] or
Karvy Computershare Pvt. Limited, Registrar & Transfer
Agent: E-mail: [email protected] or
Mr. Ravi Sud, Sr. Vice President & CFO:
E-mail: [email protected]
GENERAL BODY MEETINGS
Details of Extra Ordinary General Meeting (EGM)/Annual General Meeting (AGM)
Location, date and time of general meetings held during the last 3 (three) years and Ordinary and Special resolutions passed thereat
are given in Table 9.

POSTAL BALLOT
During the financial year March 31, 2014, no resolution has been passed through Postal Ballot.

TABLE 9: DETAILS OF EXTRA ORDINARY GENERAL MEETING (EGM)/ANNUAL GENERAL MEETING (AGM)
Details of EGM held:
Year Time, Day, Date & Location Summary of Resolutions Passed in regard to Special Business
2010-11 12:30 P.M. Special Resolutions
Friday, Change of name of the Company
June 17, 2011
Plot No. 3, Sector – 10, I.I.E. SIDCUL, Amendment to Articles of Association of the Company
Roshanabad,
Haridwar, Uttarakhand – 249 403

Details of AGMs held:

Year Time, Day, Date and Location Summary of Resolutions Passed
2012-13 10:30 A.M. Special Resolution
Wednesday, September 11, 2013 Renewal of Remuneration by way of commission to Non-
Air Force Auditorium Executive and Independent Directors
Subroto Park,
New Delhi 110 010
2011-12 10:30 A.M. None
Monday,
September 10,
2012, Air Force
Auditorium Subroto
Park,
New Delhi 110 010
2010-11 4:30 P.M. Ordinary Resolutions
Wednesday, Appointment of Mr. Paul Edgerley as Director of the Company
September 28, 2011,
Reappointment of Mr. Toshiaki Nakagawa as Jt. Managing
Sri Sathya Sai
Director of the Company
International Centre,
Pragati Vihar, Re-appointment of Mr. Pawan Munjal as Managing Director &
Lodhi Road, CEO of the Company
New Delhi 110003 Appointment of Mr. Sunil Kant Munjal as the Jt. Managing
Director of the Company
Special Resolution
Re-appointment of Mr. Brijmohan Lall Munjal as Chairman
and Director in the whole-time employment of the
Company
General Shareholder’s Information DIVIDEND PAYMENT
The Board of Directors has recommended a Dividend @ 3,250 % i.e.
ANNUAL GENERAL MEETING
` 65 per equity share for the financial year 2013-14. The
Date : August 5, 2014 dividend, if approved by shareholders at the ensuing AGM
Day : Tuesday shall be paid to those shareholders whose names appear on
Time : 10.00 A.M. the Register of Members as on Wednesday, July 9, 2014. In
respect of shares held in electronic form, the dividend will be
Venue : Air Force Auditorium Subroto Park
payable to the beneficial owners of the shares as on the
FINANCIAL CALENDAR: Financial year: April 1 to closing hours of business on Friday, July 4, 2014 as per details
March 31 furnished by the Depositories for this purpose.

For the financial year Results were announced on

LISTING ON STOCK EXCHANGE
2013 – 14
As on March 31, 2014, the securities of the Company are listed on the
First quarter ended Wednesday, July 24, 2013
following exchanges:
June 30, 2013
Second quarter and half year Wednesday, October 23, 2013 1. BSE Limited (BSE) based at Phiroze Jeejeebhoy Towers,
ended September 30, 2013 Dalal Street, Mumbai 400 001; &
Third quarter and nine Thursday, January 30, 2014
2. National Stock Exchange of India Limited (NSE) based at
months ended
Exchange Plaza, Plot No. C/1, G Block, Bandra Kurla
December 31, 2013
Complex, Bandra (East), Mumbai 400 051.
Fourth quarter and year Wednesday, May 28, 2014
ended March 31, 2014 LISTING FEES
Listing fees for the year 2014-15 has been paid to the stock exchanges,
For the financial year Results are likely to wherein the equity shares of the Company are listed (i.e. BSE & NSE)
2014-15 be announced on within the stipulated time.
(Tentative and subject
to change) STOCK CODES
First quarter ending June July, 2014 (3rd Week)
The Company’s stock codes at the primary exchanges are:
30, 2014
Second quarter and half year October, 2014 (3rd Week) Scrip Code Reuters Code Bloomberg
ending September 30, 2014 BSE 500182 HROM.BO HMCL:IN
Third quarter and nine January, 2015 (3rd Week) NSE HEROMOTOCO HROM.NS HMCL:IN
months ending December
31, 2014 STOCK MARKET DATA
Fourth quarter and year April, 2015 (3rd Week) The Company’s market capitalisation is included in the
ending March 31, 2015 computation of the BSE Sensex, BSE -100, BSE- 200, BSE- 500,
BSE Sectoral Indices, BSE TASIS Shariah 50, S&P CNX Nifty, S&P
BOOK CLOSURE CNX 500 and CNX 100. Monthly high and low quotations as
well as the volume of shares traded at the National Stock
The dates of book closure shall be from Saturday, July 5,
Exchange of India Limited (NSE) and Bombay Stock Exchange
2014 to Wednesday, July 9, 2014 (both days inclusive).
Limited (BSE) are given in Table 10.
 TABLE 10: SHARE PRICE DATA FOR 2013-14 (IN `) (SHARES OF ` 2 PAID UP VALUE)
National Stock Exchange of India Limited, Mumbai (NSE)

Month Total Volume High (`) Date Volume on Low (`) Date Volume on
(No. of Sh.) that date that date
Apr ‘13 8,600,809 1,683.85 29- Apr-13 805,566 1,435.00 15-Apr-13 224,062
May ‘13 6,630,111 1,795.60 29-May-13 571,987 1,587.15 03-May-13 203,386
Jun ‘13 5,006,578 1,739.90 03-Jun-13 214,534 1,563.60 25-Jun-13 253,854
Jul ‘13 9,081,530 1,899.80 29-Jul- 13 413,969 1,638.00 07-Jul-13 125,259
Aug‘13 11,194,207 2,075.00 30-Aug-13 2,202,945 1,780.05 02-Aug-13 251,833
Sep ‘13 7,410,665 2,130.00 11-Sep-13 365,589 1,880.00 03-Sept-13 278,259
Oct ‘13 6,311,854 2,130.00 24-Oct-13 457,575 1,980.15 01-Oct-13 415,029
Nov ‘13 6,340,525 2,150.00 01-Nov-13 565,276 1,967.00 22-Nov-13 551,204
Dec ‘13 6,482,880 2,209.95 11-Dec-13 391,058 2,022.00 04-Dec-13 182,977
Jan ‘14 6,423,278 2,119.00 03-Jan-14 310,195 1,953.25 31-Jan-14 763,748
Feb ‘14 4,599,605 2,019.90 10-Feb-14 58,916 1,907.10 21-Feb-14 238,617
Mar ‘14 7,605,262 2,300.00 31-Mar-14 225,297 1,939.00 04-Mar-14 193,844

HERO MOTOCORP’S SHARE PRICE MOVEMENT VIS-A-VIS NIFTY

6,700
2,300

6,500 2,200

6,300 2,100

2,000
6,100

1,900
5,900
1,800

5,700
1,700

5,500
1,600
May-13

Aug-13

Nov-13

Dec-13
Sep-13

Feb-14
Apr-13

Oct-13
Jun-13

Jan-14
Jul-13

Mar-14

HMCL NIFTY

Note: The above chart depicts comparison of monthly high of HMCL and Nifty share price.
BSE Limited, Mumbai (BSE)

Month Total Volume High (`) Date Volume on Low (`) Date Volume on
(No. of Sh.) that date that date
Apr ‘13 1,019,242 1,684.00 29-Apr- 13 80,428 1,434.05 15-Apr-13 15,590
May ‘13 504,094 1,793.90 29-May-13 56,399 1,589.00 03-May-13 27,648
Jun ‘13 435,862 1,738.90 03-Jun-13 22,860 1,565.95 25-Jun-13 18,436
Jul ‘13 475,305 1,898.70 29-Jul-13 21,180 1,636.00 05-Jul-13 10,304
Aug‘13 677,079 2,059.00 30-Aug-13 51,792 1,777.80 02-Aug-13 12,358
Sep ‘13 665,584 2,127.70 11-Sept-13 47,274 1,879.00 03-Sep-13 29,675
Oct ‘13 583,005 2,125.00 24-Oct-13 48,486 1,983.50 01-Oct-13 33,268
Nov ‘13 332,073 2,149.65 01-Nov-13 79,455 1,969.90 22-Nov-13 17,899
Dec ‘13 532,995 2,214.70 10-Dec-13 42,866 1,996.00 04-Dec-13 16,331
Jan ‘14 414,424 2,115.00 03-Jan-14 15,265 1,955.00 31-Jan-14 44,055
Feb ‘14 287,351 2,020.15 10-Feb-14 6,732 1,907.00 21-Feb-14 20,580
Mar ‘14 361,169 2,298.00 31-Mar-14 14,752 1940.70 04-Mar-14 11,808

HERO MOTOCORP’S SHARE PRICE MOVEMENT VIS-A-VIS SENSEX

22,500.00 2,400.00

2,300.00
22,000.00
2,200.00

21,500.00 2,100.00

2,000.00
21,000.00
1,900.00

20,500.00 1,800.00

1,700.00
20,000.00
1,600.00

19,500.00 1500.00
May-13

Aug-13

Nov-13

Dec-13

Mar-14
Sep-13

Feb-14
Apr-13

Jun-13

Oct-13

Jan-14
Jul-13

HMCL SENSEX

Note: The above chart depicts comparison of monthly high of HMCL and Sensex share price.
DISTRIBUTION OF SHAREHOLDING BY SIzE
Table 11 lists the distribution of shareholding by number of shares held and Shareholding Pattern in percentage (pursuant to
Clause 35 of the Listing Agreement) as on March 31, 2014.

TABLE 11
No. of shares held (` 2/- paid up) Folios Shares of ` 2 paid up
Numbers % Numbers %
Upto 500 55,233 86.74 3,925,415 1.97
501 - 1000 6,018 9.45 4,526,308 2.26
1001 - 5000 1,723 2.71 3,446,319 1.73
5001 - 10000 205 0.32 1,463,731 0.73
10001 - w50000 268 0.42 6,306,728 3.16
50001 & Above 228 0.36 180,018,999 90.15
Total 63,675 100.00 199,687,500 100.00

Shareholding Pattern as on March 31, 2014

Category No. of No. of Shares % total to No. of % of Share
Holders Held No. Shares Dematerialised
of Dematerialised
Shares
Indian Promoter group 20 79,712,482 39.92 79,712,482 39.92
Mutual Funds / UTI 200 5,295,850 2.65 5,232,380 2.63
Financial Institutions / Banks 42 540,811 0.27 522,106 0.26
Insurance Companies 32 10,187,517 5.10 10,187,517 5.10
Foreign Institutional Investors 501 61,522,822 30.81 61,484,622 30.79
Bodies Corporate 1,100 3,311,160 1.66 3,282,444 1.64
Indian Public 60,075 12,771,475 6.40 9,374,759 4.69
Trusts 39 1,003,018 0.50 1,003,018 0.50
Clearing Members 381 562,329 0.28 562,329 0.28
Non Resident Indians 1,283 233,028 0.12 232,957 0.12
Foreign Bodies 2 24,547,008 12.29 24,547,008 12.29
Total 63,675 199,687,500 100.00 196,141,622 98.22
SHAREHOLDING PATTERN AS ON MARCH 31, 2014

PROMOTERS
Indian 39.92
Foreign -
PUBLIC SHAREHOLDING
Mutual Funds / UTI 2.65
Financial Institutions / Banks 0.27
Insurance Companies 5.10
Foreign Institutional Investors 30.81
Bodies Corporate 1.66
Indian Public 6.40
Trusts 0.50
Clearing Members 0.28
Non Resident Indians 0.12
Foreign Bodies 12.29
Grand Total 100

Category of Shareholding as on March 31, 2014

Category No. of Holders % to Total Holders Total Equity
% to Equity
Shares
Shares
Physical 7,037 11.05 3,545,878 1.78
NSDL 40,708 63.93 194,062,456 97.18
CDSL 15,930 25.02 2,079,166 1.04
Total 63,675 100.00 1,99,687,500 100.00

CATEGORY OF SHAREHOLDING AS ON MARCH 31, 2014

Category % to Equity
NSDL 97.18
CDSL 1.04
Physical 1.78
Total 100.00
80
Corporate Governance Report

DEMATERIALISATION OF SHARES AND LIqUIDITY

Karvy Computershare Private
The shares of the Company are traded in compulsory demat Ltd. (Unit: Hero MotoCorp
segment. As on March 31, 2014, 98.22 % of the total share Ltd.)
capital is held in dematerialised form with National 305, New Delhi House,
Securities Depository Limited (NSDL) and Central Depository 27, Barakhamba Road,
Services (India) Limited (CDSL). During the year under review, New Delhi – 110 001
share certificates involving 208,339 shares of ` 2 each, were Tel : 011-4368 1700
dematerialised by the shareholders, however share Fax : 011-4368 1710
certificates involving 3 shares of ` 2 each, were www.karvycomputershare.com
rematerialised. During the year under review, the net
dematerialisation represents 98.22 % of the total share SHARE TRANSFER SYSTEM
capital of the Company.
The total numbers of shares transferred during the financial
year 2013-14 were 19,937 (No. of cases 56), deletion of
OUTSTANDING GDR’S/ADR’S/WARRANTS OR ANY CONVERTIBLE
name 8,600 (No. of cases 6), transmission of shares 13,380 (No.
INSTRUMENTS CONVERSION DATE AND LIKELY IMPACT ON
of cases 10) and Transposition of Shares 890 (No. of cases 2)
EqUITY
which were completed in the prescribed period. Shares under
Not applicable. objection were returned within two weeks time.
Confirmations in respect of the requests for
DETAILS OF PUBLIC FUNDING OBTAINED IN THE LAST dematerialisation of shares are being sent to the respective
THREE YEARS depositories i.e. NSDL & CDSL expeditiously.
The Company has not obtained any public funding in the last
3 (three) years. INVESTORS’ SERVICES
The Company has Board Level Committees dealing with
Registrar & Share Transfer Agent
investor issues, which have been discussed in detail earlier.
All work related to Share Registry, both in physical form and Table 12 lists the complaints/requests/queries received and
electronic form, is handled by the Company’s Registrar and redressed during 2013-
Share Transfer Agent, M/s. Karvy Computershare Private 14. During the financial year, the Company has attended to most
Limited. The communication address of the Registrar and Share of the investors’ grievances/correspondence within a period of
Transfer Agent is given hereunder. 10-15 days from the date of receipt of the same.
Karvy Computershare Private
Ltd. (Unit: Hero MotoCorp
Ltd.)
Plot No. 17-24, Vittal Rao
Nagar, Madhapur, Hyderabad-
500 081,
Tel No: 040-2342 0818
Fax: 040-2342 0814
Toll Free No: 1-800-3454-001
E-mail: [email protected]
Website: www.karvycomputershare.com
TABLE 12: COMPLAINTS/REqUESTS RECEIVED AND REDRESSED DURING 2013-14

Sl. Nature of Complaints/ Requests Opening Received Resolved Closing

No
1. Non receipt of shares 1 47 48 -
2. Request for issue of duplicate shares 7 240 247 -
3. Non receipt of dividend warrants - 219 219 -
4. Change of address - 206 205 1
5. Mandate cases/bank description - 3 3 -
6. Miscellaneous (Shares) - 1 1 -

COMPANY’S REGISTERED ADDRESS

Investors’ Correspondence may be qUERIES/COMPLAINTS RELATING TO
34, Community Centre, addressed to: PRODUCTS, SERVICES OR DEALERS
Basant Lok, Vasant Vihar, ETC. ONLY BE ADDRESSED TO:
Mr. Ilam C. Kamboj
New Delhi - 110 057
Asso. V.P. Legal & Company Customer Care
Tel: 011-4604 4100, 2614 2451
Secretary & Compliance Officer, Hero MotoCorp Ltd.
Fax: 011-2614 3321, 2614 3198
34, Community Centre, 34, Community Centre,
Website: www.heromotocorp.com
Basant Lok, Vasant Basant Lok, Vasant
Vihar, New Delhi - 110 Vihar,
PLANT LOCATIONS 057 New Delhi – 110 057 or to the
Gurgaon Plant E-mail: [email protected] e-mail: [email protected]
37 K.M. Stone, Delhi-Jaipur
Or
Highway, Sector 33, Gurgaon-122
001 Haryana, India. Karvy Computershare Private Limited For and on behalf of the Board
Tel: 0124-289 4200, 237 2123 (Unit: Hero MotoCorp Ltd.)
Fax: 0124 237 3141–42 Plot No. 17-24, Vittal Rao
Nagar, Madhapur, Hyderabad-
500081 Tel No.040-2342 0818 Brijmohan Lall Munjal
Dharuhera Plant Remuneration and Fax: 040- D TO:
69 K.M. Stone, Delhi-Jaipur Compensation Committee. 2342 0814
Mr. Ravi Sud,
Highway, Dharuhera, Distt. Toll Free No:
1-800-3454- Sr. Vice
Rewari-122 100 Haryana, India 001 President &
Tel: 01274 264 000 CFO, 34,
E-mail :
Fax: 01274 267 018 einward.ris@k Community
arvy.com Centre,
Haridwar Plant Website: Basant Lok,
Plot No. 3, Sector – 10, www.karvyco Vasant
I.I.E., SIDCUL, Roshanabad, mputershare.
Vihar,
com
Haridwar-249 403, Uttarakhand, New Delhi - 110 057
India Tel: 01334 238 500, 239 514- e.m ail:
16 qUERIES [email protected]
Fax: 01334 239 512-13 RELATING om
TO THE
FINANCIAL
NON-MANDATORY REqUIREMENTS
STATEMENT
The Company has not adopted the non- S OF THE
mandatory requirements as specified in COMPANY
Annexure – ID of the Listing Agreement MAY BE
except clause (2) relating to ADDRESSE
New Delhi June 20, 2014 Chairman DIN:
00004134
CERTIFICATE
AUDITORS’CERTIFICATE ONTHE COMPLIANCE OF
CONDITIONS OF CORPORATE GOVERNANCE UNDER
CLAUSE 49 OF THE LISTING AGREEMENT

TO THE MEMBERS OF Hero MotoCorp Ltd.

We have examined the compliance of conditions of Corporate

We further state that such compliance is neither an
Governance by Hero MotoCorp Ltd. for the year ended March
assurance as to the future viability of the Company nor the
31, 2014, as stipulated in Clause 49 of the Listing Agreement of
efficiency or effectiveness with which the management has
the said Company with stock exchanges.
conducted the affairs of the Company.
The compliances of conditions of Corporate Governance is
the responsibility of the management. For DELOITTE HASKINS & SELLS
Our examination was limited to procedures and Chartered
implementation thereof, adopted by the Company for Accountants (Registration
ensuring the compliances of the conditions of Corporate No. 015125N)
Governance. It is neither an audit nor an expression of opinion
on the financial statements of the Company.

In our opinion and to the best of our information and Vijay Agarwal
according
to the explanations given to us, we certify that the Company New Delhi Partner
has complied with the conditions of Corporate Governance as June 20, (Membership No.094468)
stipulated in the above mentioned Listing Agreement. 2014
CERTIFICATE OF CEO & CFO
CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER OF THE COMPANY

We, Pawan Munjal, Managing Director & Chief Executive Officer 5. We have disclosed, based on our most recent
(CEO) and Ravi Sud, Sr. Vice President & Chief Financial Officer evaluation, wherever applicable, to the company’s
(CFO) of Hero MotoCorp Ltd., to the best of our knowledge auditors and through them to the Audit Committee of the
and belief certify that: Company’s Board of Directors:
1. We have reviewed the Financial Statements of the a. Significant changes in internal control during the year;
Company for the year ended March 31, 2014.
b. Any fraud, which we have become aware of and
2. To the best of our knowledge and information: that involves Management or other employees who
a. these statements do not contain any materially have a significant role in the Company’s internal
untrue statement or omit to state a material fact control systems;
or figures or contains statement that might be c. Significant changes in accounting policies during
misleading; the year.
b. these statements together present a true and fair 6. We further declare that all board members and senior
view of the Company’s affairs and are in compliance management have affirmed compliance with the code of
with existing accounting standards, applicable laws conduct for the year 2014-15.
and regulations.
3. We also certify, that based on our knowledge and the
For Hero MotoCorp Ltd. For Hero MotoCorp Ltd.
information provided to us, there are no transactions
entered into by the Company, which are fraudulent, illegal
or violate the company’s code of conduct.
4. We are responsible for establishing and maintaining
internal controls and procedures for the Company, and
we have
evaluated the effectiveness of the Company’s internal New Delhi Pawan Munjal Ravi Sud
controls and procedures. May 28, Managing Director & Sr. Vice President & CFO
2014 CEO
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, 2014;

I. CONSERVATION OF ENERGY
A) Techno-economic viability of few energy saving proposals are being carried out and few proposals have been
already implemented
Energy conservation measures taken during the year and their impact
Green Initiatives –
Installed
a. Light pipe, occupancy sensor in all plants.
b. Solar Energy Panels of 80KWP to save 10MWH during the year.

Replaced
a. Conventional Task lights & Street lights with LED lights.
b. Air Supply unit heating system conversion from Steam to LNG.

Resource Conservation –
a. Auto Operation of Plant Forced Draft Ventilation (FDV’s).
b. KWH reduction on Natural Wind Discharge (NWD’s).
c. Automation of dust collector panels.
d. Auto light conservation of utility & in-plant.
e. Enhancing Sewage Treatment Plant (STP) to recycle water by installing intermediate Tank from 100KL/day to 180
KL/day.
f. Installing Effluent Treatment Plant to Recycle waste water 150KL per day.
g. Installing Mechanical Evaporator to attain Zero Liquid Discharge to evaporate 30KL per day.

Energy efficiency measures-

a. Reduction in power consumption in SM paint shop pumps by installation of Variable Frequency Drive (VFD).
b. Extra tube lights removal from Frame Assembly Direct On Line area.
c. VFD provision in 1500 CFM Compressor.
d. Moved over to NG in place of propane in paint shops which is less stressed fuel than propane and available
at cheaper price.
e. Using Heat Recovery Boiler to avoid running LNG fired Boiler.
f. Installed 450 sets of 21W LED lighting in Machine Shop.
g. Installation of 6 Nos of VFD in paintshop Blowers.
h. Focussed efforts to avoid wastages in paint shop during off-days and public holidays.
i. Thyristorised Controller in Heaters of Furnaces.
j. Installed Small compressor in Heat Treatment plant to avoid running Main compressor on Off day.
k. Installed IE3 motors and Enenrgy Efficient pumps.
l. Replaced old and inefficient 651CFM centrifugal compressors by Energy efficient Oil free compressors.
 B) Additional investments and proposals being implemented for reduction of consumption of energy
Investments for reduction of consumption of energy in the below proposed area:
Green Initiatives –
a. Solar Power plant of 1MW.
b. Solar heating for canteen cooking.
c. Installation of Vapour Absorption machines on Gas Engines.
d. Installation of PhotoVoltaic Solar power plant of 500KWP.
e. Replacement of 3,000 Conventional Tube Rods with LED Rods.

Resource Conservation –
a. VFD Installation in FDV blowers.
b. VFD installation in exhaust blowers of paint shop.
c. Re-routing of storm water for recycling purpose in the ETP Recycle plant to achieve 150 KL per day.
d. Conversion of Diesel Generator set to Dual fuel in HSD & LNG.

Energy efficiency measures-

a. Restoration and Installation of Capacitor panels for improving Power factor at load.
b. Installation of 25VFDs for Blower application in FDV, Washing machines, cooling towers and Paint shop Blowers.
c. Replacing old & rewound motors with Energy Efficient IE3 motors.
d. Replacing more than 10 year old and worn out pumps with Energy Efficient pumps.
e. Replacing more than 10 year old Air Conditioners with Bureau of Energy Efficiency star rated A/Cs.

C) Impact of measures at a) and b) for reduction of energy consumption and consequent impact on the
cost of production of goods.
For FY 2013-14: Approx. Annual Savings on Vehicles Produced - ` 9.94 million.
For FY 2014-15: Expected Approx Annual Saving on Vehicles to be Produced - ` 17 million.
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)
Specific areas in which R&D carried out by the Company
a. New Model Technology Absorption.
b. Indigenisation of CKD Parts.
c. Multi Source Approval.
d. Meeting Legislative Norms.
e. Active Participation in deciding the needs of future Automobile Regulations in India.

Benefits derived as a result of the above R&D Activities

a. Launched following models :
- Domestic Launches - 17
- Global Business Launches - 7
 b. Multi source Components - 506
c. 108 new sources added for existing models
d. Compliance to Regulations
EMC.
Tell Tails, Symbols & Controls (AIS
071). Spray Suppression Systems
(AIS 107). Brake Hose (As per
IS:7079).
Regulation compliance for Turkey, Peru, Colombia.

Future Plan of Action

a. New Model Launch
b. Participation at different Forums for formation of 2-Wheelers Regulations in India & GTRs.
c. Compliance Plan for Future
Regulations GTR-3 (Brakes).
BS-IV Emission Regualtion.
Evaporative Emission Norms.
F.E Norms.
Lighting Installation (Revised Regulation).
d. Expansion in Global market.

Expenditure on R & D
For the year ended
Particulars
March 31, 2014 March 31, 2013
Capital 37.78 26.45
Recurring 89.16 59.76
Total R&D expenditure as a percentage of 0.49 0.36
total revenue (as per statement of Profit &
Loss)(%)

(B) Technology absorption, adaption and innovation

1. Efforts in brief, made in technology absorption, adaption and innovation
More parts development Approval in India
13 patents applied however, major ones are as
follows Idle Start Stop Switch (i3S).
Side Stand Indicator.
Integrated Braking System (Brake
Actuator). Fuel Lid.
Gas Liquid Separation Apparatus.
Vehicle Operational Status Monitoring System.
Designes registered / filed - 77
88
Corporate Governance Report

2. Benefits derived as a result of the above efforts e.g. product improvement , cost reduction , product
development , import substitution
New Model Development to increase market share.
Supply capacities and quality of bought out parts (BOP) increased with Multi Source Development to
support the increasing production.
Indigenisation - To meet Cost
Challenge. Compliance to Latest
Regulations.

3. In case of imported technology imported during last 5 years reckoned from the beginning of the financial
year.
Low Friction High F.E Engine
Technology. Emission Devices - Low Cost
Cat.Converter. Engine Balancer.
Combined Braking System.
‘’O” Ring Chain.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Export Activities/Initiatives to Increase Exports/Development of New Export Markets/Export Plans
Export Initiatives 2013-14
During the year under review, the Company:
a) Exported 130,763 two-wheelers and Spare Parts worth ` 40.04 crores during the FY 2013-14.
b) Following activities helped us achieve this figure:
Laying Foundation for Global Business and Tram Ramp up for focus on each
country. Focus on strengthening Hero’s presence in existing markets like Nepal
and Sri Lanka.
Entry into 16 New Markets - Guatemala, El Salvador, Honduras, Peru , Ecuador, Kenya, Burkina Faso, Ivory Coast,
Angola, DRC, Mozambique, Tanzania, Uganda, Egypt , Turkey & Bangladesh.
Creation of 4 Completely Knocked Down (CKD) & 14 Semi Knocked Down (SKD) Assembly Plants through Distributors.
Creation of Sales & Service Network – 675 touch points.
Creation of State of the Art Signature Set ups for Hero.
Registration of Trade Mark and product registration in the international
markets. Creation of Customised products –
Taxi for the African Markets in 100cc, 125cc and 150cc Africa Centric
model. 3 models for Turkey meeting the Euro 3 norms.

Export Plan For 2014-15

To further strengthen the Global Business, your Company will have more focus on the Exports Markets. The planned
activities are:
a) Achievement of 250k units.
b) Launch “Hero” Brand in New Markets namely Nigeria, Ethiopia & Nicaragua.
c) Consolidation in Existing Markets.
d) Commencement of work for setting up manufacturing plants in Bangladesh & Colombia.
B. Earnings and outgo
Foreign exchange earnings during the period under report were ` 470.09 crores, compared to ` 624.46 crores in the previous year.

On account of Royalty, Technical Guidance Fee, Model Fee, Travel and other accounts and Advertisement and Publicity, the
foreign exchange outgo was ` 350.77 crores, compared to ` 203.09 crores in the previous year.

Outgo for import of components, spare parts, raw materials and capital goods was ` 1,320.00 crores compared to ` 1,153.95
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.

Gurgaon Plant Dharuhera Plant Haridwar Plant

Particulars Current Year Previous Current Year Previous Current Year Previous
Year Year Year
A Power and Fuel
consumption per unit of
Production
Product Unit
(Two Wheeler in nos.) 1,795,996 1,820,360 1,899,432 1,969,617 2,541,859 2,271,636
1. Electricity
(A) Purchased Units (KWH) Nil Nil 14,571,933 7,272,760 35,317,206 29,614,905
Total Amount (`) Nil Nil 109,425,597 48.393,576 165,391,888 135,626,599
Rate/unit (`) Nil Nil 7.51 6.65 4.68 4.58
(B) Own generation
(i) Through Diesel
Generator- High Speed
Diesel Oil
Units 2,306,479 25,223,261 13,782,767 19,672,479 2,155,509 6,079,806
Units per ltr. of Diesel Oil 3.56 3.69 3.74 3.64 3.59 3.63
Cost / Unit 14.13 10.99 14.67 11.18 15.16 10.52
(ii) Through Steam Turbine
/ Generator
Units Nil Nil Nil Nil Nil Nil
Units per ltr. of Fuel Oil Nil Nil Nil Nil Nil Nil
/ Gas
Cost / Unit Nil Nil Nil Nil Nil Nil
(iii) Through Furnace Oil
Generator
Units 23.699,514 Nil Nil Nil Nil Nil
Units per kg. of Furnace Oil 4.02 Nil Nil Nil Nil Nil
Cost / Unit 10.72 Nil Nil Nil Nil Nil
(iv) Through Natural Gas
Generator
Units 29,653,000 32,850,319 23,739,840 28,126,125 Nil Nil
Units per SCM of Natural Gas 3.81 3.86 3.80 3.87 Nil Nil
 89

Gurgaon Plant Dharuhera Plant Haridwar Plant

Particulars Current Year Previous Current Year Previous Current Year Previous
Year Year Year
Cost / Unit 9.28 7.02 9.33 7.10 Nil Nil
Total Own Generation
Units 55,658,993 58,073,580 37,522,607 47,798,604 2,155,509 6,079,806
Units per Fuel Unit 3.88 3.78 3.78 3.77 3.59 3.63
Cost / Unit 9.82 8.74 11.29 8.78 14.87 10.52
2 Coal (specify quality and
where used)
Quantity (tonnes) Nil Nil Nil Nil Nil Nil
Total Cost Nil Nil Nil Nil Nil Nil
Average Rate Nil Nil Nil Nil Nil Nil
3 LVFO
Quantity (K. Ltrs.) Nil Nil Nil Nil Nil Nil
Total Amount Nil Nil Nil Nil Nil Nil
Average Rate Nil Nil Nil Nil Nil Nil
4 Diesel for steam generation
and others
Quantity - Ltrs. 92,285 1,09,783 1,47,556 4,31,179 9,84,765 1,109,937
Total Cost 4,978,698 4,482,790 8,116,774 17,548,985 54,197,349 43,509,530
Rate / Unit 53.95 40.83 55.01 40.70 54.41 39.20
5 Natural / Propane Gas for
steam generation + heating
*
Quantity – SCM 93,484 1,47,790 6,96,993 1,575,249 98,341 NIL
Total cost 3,445,982 4,025,884 25,075,922 43,319,348 6,250,741 NIL
Rate / unit 36.86 27.24 35.98 27.50 63.56 NIL
B. Consumption per unit of
Production
Products (with details) 1,796,225 1,820,360 1,899,432 1,969,617 2,541,859 2,271,636
unit- Production Qty
Electricity (Kwh. / Veh.) 30.99 31.82 27.43 27.96 14.74 15.71
LVFO (Ltrs. / Veh.) Nil Nil Nil Nil Nil Nil
Diesel (Ltrs. / Veh.)** 0.05 4.71 1.94 2.75 0.24 0.74
Natural Gas (SCM / Veh.)** 0.05 3.40 3.29 3.69 Nil Nil

1. *In reference to point no.5, Natural Gas is used at Dharuhera and Gurgaon plant and Propane Gas is for Haridwar plant.
2. **Diesel (Ltrs/Veh) and Natural Gas (SCM/Veh) are shown only w.r.t. Items No.A-1 [B (i to iv)].
Business
Responsibility
Report

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1. Corporate Identity Number (CIN) of the Company
L35911DL1984PLC017354

2. Name of the Company

Hero MotoCorp Ltd.

3. Registered Address
34, Community Centre, Basant Lok, Vasant Vihar, New Delhi - 110 057, India

4. Website
www.heromotocorp.com

5. E-mail Id
[email protected]

6. Financial Year reported

2013-14

7. Sector(s) that the Company is engaged in (industrial activity code-wise)

*Group Class Sub-Class Description

309 3091 30911 Manufacture of
motorcycle, scooters, and
their engine#.

*As per classification under National Industrial Classification, Central

Statistical Organisation, Ministry of Statistics and Programme Implementation,
Government of India, New Delhi.
#It may be noted that Company manufactures the parts of motorcycles and
scooters also.

8. List three key products/services that the Company manufactures/ provides

(as in balance sheet).
Motorcycles, Scooters and parts thereof

9. Total number of locations where business activity is undertaken by

the Company
9.1.Number of International Locations (Provide details of major 5)
Nil.

9.2.Number of National Locations

We have manufacturing plants in 3 locations across the country

State/Union Territory Location

Haryana Dharuhera
Haryana Gurgaon
Uttarakhand Haridwar
10. Markets served by the Company - Local/State/National/International
We have a global footprint that serves both in“ National and International
markets. International markets are served through exports.

SECTION B: FINANCIAL DETAILS OF THE COMPANY

1. Paid up Capital (`)
` 39.94 crores

2. Total Turnover (`)

` 25,275.47 crores

3. Total profit after taxes (`)

` 2,109.08 crores

4. Total Spending on Corporate Social Responsibility (CSR) as percentage of

profit after tax (%)
Our total spending on CSR is ` 13,810,312 which is 0.06% of PAT.

5. List of activities in which expenditure in 4 above has been incurred.

i. Education
ii. Medical
iii. Armed Force Welfare

SECTION C: OTHER DETAILS

1. Does the Company have any Subsidiary Company/ Companies?
Yes

2. Do the Subsidiary Company/Companies participate in the BR Initiatives of the

parent company? If yes, then indicate the number of such subsidiary
company(s)
As the Subsidiary Companies have been recently incorporated, they have not
started participating in the BR initiatives.

3. Do any other entity/entities (e.g. suppliers, distributors etc.) that the

Company does business with, participate in the BR initiatives of the
Company? If yes, then indicate the percentage of such entity/entities? [ Less
than 30%, 30-60%, More than 60%]
Hero actively engages with its suppliers throughits BR initiatives. Currently,
percentage of suppliers under the Green Vendor Development Program (GVDP)
is more than 60% of total supplier universe.

SECTION D: BR INFORMATION
1. Details of Director/Directors responsible for BR
1.1 Details of the Director/Directors responsible for implementation of the
BR policy/policies
DIN Number : 00004223
Name : Mr. Pawan Munjal
Designation : Managing Director & CEO

1.2 Details of the BR head: Mr. Pawan Munjal

 in customer value management.
2. Principle-wise (as per National Voluntary
Guidelines (“NVG”)) BR Policy/policies:- 2.2 Has the policy been developed in consultation
with relevant stakeholders?
2.1 Do you have policy/policies for:
Principle 1 : Ethics, transparency &
accountability
Yes. Our policies under this principle include (a) Code
of Conduct (b) Insider Trading Code and (c) Policy on
Sexual Harassment.

Principle 2 : Sustainability in life-cycle of

product
Currently we don’t have any laid down policy on
Product Life Cycle Sustainability. In this aspect, we
are guided by our policies concerning Quality,
Environment and Service. In addition, we have
specific certifications that govern our management
systems such as ISO 9001, ISO 14001 and OHSAS
18001.

Principle 3 : Employee well-being

Yes. Our policies under this principle include
several policies such as (a) Superannuation /
National Pension Scheme (b) Employee Mutual
Medical Benefit Scheme (c) Policy on Sexual
Harassment (d) Post Retirement Medical Insurance
Fund Scheme and (e) Our overarching Code of
Conduct. Annual Executive health checkup
program, also we have medi-claim policy for the
employees and his /her dependents.

Principle 4 : Stakeholder engagement

Yes. Our policy under this principle includes our
Code of Conduct which guides the manner in which
we deal with our stakeholders.

Principle 5 : Promotion of human rights

Yes. All our policies are reflective and cognizant of
promotion of human rights.

Principle 6 : Environmental protection

Yes. We are guided by our policies concerning
Green IT and Environment. In addition, we have
specific certifications that govern our management
systems such as ISO 9001, ISO 14001 and OHSAS
18001.

Principle 7 : Responsible public policy advocacy

No.

Principle 8 : Inclusive growth

We are currently in the process of setting up a formal
CSR policy.

Principle 9 : Customer value

Yes. We have specific policies concerning Service,
Warranty and Quality that govern respective aspects
Principle 1 : Ethics, transparency & accountability
No formal consultation was undertaken in development
of relevant policies. Our policies have been designed
keeping in consideration our organisation
requirements, current trends and best practices in
the two-wheeler industry.

Principle 2 : Sustainability in life-cycle of product

Quality & Environment Policy was developed in
consultation with relevant key employees and top
management. Service policy is informed by needs
and expectations of customers as communicated by
our field staff.

Principle 3 : Employee well-being

No formal consultation was undertaken in development
of relevant policies. Our policies have been designed
keeping in consideration our organisation
requirements, current trends and best practices in
the two-wheeler industry.

Principle 4 : Stakeholder engagement

No formal consultation was undertaken in development
of relevant policies. Our policies have been designed
keeping in consideration our organisation
requirements, current trends and best practices in
the two-wheeler industry.

Principle 5 : Promotion of human rights

No formal consultation was undertaken in development
of relevant policies. Our policies have been designed
keeping in consideration our organisation
requirements, current trends and best practices in
the two-wheeler industry.

Principle 6 : Environmental protection

Environment Policy was developed in consultation with
relevant key employees and top management. Green
IT Policy has also been developed in consultation
with relevant key employees and top management.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

Service Policy is informed by needs and expectations
of customers as communicated by our field staff.
The warranty policy has been developed post taking
inputs from the field and the plant. Quality Policy
was developed in consultation with relevant key
employees and top management.
2.3 Does the policy conform to any national emblematic of comprehensive and global best
/international standards? If yes, specify. practices in letter and spirit, though it does not
Principle 1 : Ethics, transparency & conform to any national or international
accountability standards per se. The Code of Conduct conforms
to the CODEX as researched and published by
The Code of Conduct is premised upon eight key
Harvard Business School Publishing (HBSP).
principles and is unique. As such, our Code is
emblematic of comprehensive and global best
practices in letter and spirit, though it does not
conform to any national or international standards
per se. The Code of Conduct conforms to the
CODEX as researched and published by Harvard
Business School Publishing (HBSP). The Policy on
Sexual Harassment and Insider Trading Code has
not been made based on any national /
international standards. The Policy on Insider
Trading Code has been made based on SEBI
Regulation and the policy on Sexual Harassment
has been made based on Sexual Harassment at the
Workplace Act & Rules, 2013.

Principle 2 : Sustainability in life-cycle of

product
Our Environment policy is informed by our
management systems such as ISO 9001, ISO 14001
and OHSAS 18001, which are governed by global best
practices and are also externally audited.

Principle 3 : Employee well-being

The Code of Conduct is premised upon eight key
principles and is unique. As such, our Code is
emblematic of comprehensive and global best
practices in letter and spirit, though it does not
conform to any national or international standards
per se. The Code of Conduct conforms to the
CODEX as researched and published by Harvard
Business School Publishing (HBSP). The National
Pension Scheme is run by Government of India and
is being used on an as-is basis. The Policy on Sexual
Harassment, Post Retirement Medical Insurance Fund
Scheme and Employee Mutual Medical Benefit
Scheme has not been made based on any national
/ international standards.

Principle 4 : Stakeholder engagement

The Code of Conduct is premised upon eight key
principles and is unique. As such, our Code is
emblematic of comprehensive and global best
practices in letter and spirit, though it does not
conform to any national or international standards
per se. The Code of Conduct conforms to the
CODEX as researched and published by Harvard
Business School Publishing (HBSP).

Principle 5 : Promotion of human rights

The Code of Conduct is premised upon eight key
principles and is unique. As such, our Code is
 Principle 6 : Environmental protection
Our Environment policy is informed by our management
systems such as ISO 9001, ISO 14001 and OHSAS 18001,
which are governed by global best practices and are also
externally audited. Our Green IT policy does not conform
to any national/ international standards.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

The Service policy is driven by our internal service
standards for ensuring customer satisfaction. It has not
been prepared to conform to any national or
international standards. Our quality policy is informed by
ISO 9001 systems on Quality Management, which are
governed by global best practices and are also externally
audited.

2.4 Has the policy being approved by the Board? If yes,

has it been signed by MD/owner/CEO/appropriate
Board Director?
Principle 1 : Ethics, transparency & accountability
The Code of Conduct is approved by the Chairman and
MD & CEO of the Company. The Insider Trading Code
has been approved by the Board. The Policy on Sexual
Harassment is a HR Policy.

Principle 2 : Sustainability in life-cycle of product

The policies are signed off by the MD & CEO of the Company.

Principle 3 : Employee well-being

The Code of Conduct is approved by the Chairman and
MD & CEO of the Company.

Principle 4 : Stakeholder engagement

The Code of Conduct is approved by the Chairman and
MD & CEO of the Company.

Principle 5 : Promotion of human rights

The Code of Conduct is approved by the Chairman and
MD & CEO of the Company.

Principle 6 : Environmental protection

The policy on Environment is signed off by the
Chairman and MD & CEO of the Company.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.
 2.6 Web-link for the policy?
Principle 9 : Customer value Principle 1 : Ethics, transparency & accountability
The policy on Quality has been signed off by the MD (a) The Code of Conduct can be viewed over the
& CEO of the Company. internet at http://www.heromotocorp.com/en-
2.5 Does the company have a specified committee of
the Board/ Director/Official to oversee the
implementation of the policy?
Principle 1 : Ethics, transparency &
accountability
There is a committee for Code of Conduct and
Policy on Sexual Harassment. The Insider Trading
Code is supervised and monitored by the Board of
Directors.

Principle 2 : Sustainability in life-cycle of

product
There is a Management Review Committee that leads
the implementation and review of Quality and
Environment. Internal teams are responsible for
Service Policy.

Principle 3 : Employee well-being

Yes. Our policies under this principle include
several policies such as (a) Superannuation /
National Pension Scheme (b) Employee Mutual
Medical Benefit Scheme
(c) Policy on Sexual Harassment (d) Post
Retirement Medical Insurance Fund Scheme and (e)
Our overarching Code of Conduct.

Principle 4 : Stakeholder engagement

There is a committee for Code of Conduct.

Principle 5 : Promotion of human rights

There is a committee for Code of Conduct.

Principle 6 : Environmental protection

There is a Management Review Committee that
leads the implementation and review of Environment
policy. The oversight of Green IT policy rests with
the CIO of the Company.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

An internal team of Sales, Marketing and Customer
Care is responsible for Service Policy. There is a
dedicated Warranty Management Team to oversee
the implementation of Warranty Policy guidelines.
There is a Management Review Committee that
leads the implementation and review of Quality
policy.
 in/about-us/code-of-conduct.html and also
be viewed over the intranet. (b) The Code
on Insider Trading is available over the internet
at http://www. heromotocorp.com/en-
in/investors/corporate- governance.html as
well as intranet (c) The Policy on Sexual
Harassment has been circulated through
email communication to all employees.

Principle 2 : Sustainability in life-cycle of product

The Quality and Environment policies (in brief)
can be viewed over the internet at
http://www.heromotocorp. com/en-
in/aboutus/keypolicies.

Principle 3 : Employee well-being

(a) The Code of Conduct can be viewed over the
internet at
http://www.heromotocorp.com/en-
in/about-us/code-of-conduct.html and also
be viewed over the intranet. (b) The
Employee Mutual Medical Benefit Scheme
can be viewed over the Company intranet.
Occupational Health Services Manual has
been made available to all employee
through the Company intranet.

Principle 4 : Stakeholder engagement

The Code of Conduct can be viewed over the
internet at http://www.heromotocorp.com/en-
in/about-us/code- of-conduct.html and also be
viewed over the intranet.

Principle 5 : Promotion of human rights

The Code of Conduct can be viewed over the
internet at http://www.heromotocorp.com/en-
in/about-us/code- of-conduct.html and also be
viewed over the intranet.

Principle 6 : Environmental protection

The Environment policy (in brief) can be viewed
over the internet at
http://www.heromotocorp.com/en-in/
aboutus/keypolicies. The Green IT Policy is
available on the intranet.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

The Warranty Policy and Service Maintenance
schedule can be viewed over the internet at
http://www. heromotocorp.com/en-in/rider-
zone/bike-warranty- details-and-policy.html. The
warranty policy is also available on
heromotocorp.biz and can be accessed by our
field teams and channel partners. The Quality
policy (in brief) can be viewed over the internet at
http://www. heromotocorp.com/en-
in/aboutus/keypolicies.
2.7 Has the policy been communicated to the Principle 5 : Promotion of human rights
relevant internal and external stakeholders? With regard to Code of Conduct, all our
Principle 1 : Ethics, transparency & accountability executive employees have been imparted
With regard to Code of Conduct, all our executive mandatory training and
employees have been imparted mandatory training
and acceptance to adherence have been obtained.
Regular training programs are conducted across
locations to explain and reiterate the importance
of adherence to the Code. The Code of Conduct is
informed to all stakeholders via our website and
annual reports. The Code on Insider Trading has
been communicated to all employees by means of
the intranet and relevant posters at major notice
boards. The Policy on Sexual Harassment has been
communicated to all employees via email.

Principle 2 : Sustainability in life-cycle of

product
The Quality and Environment Policy is informed to
all stakeholders via our website and intranet. HMCL
Quality and Environment Policy has been
communicated to all relevant internal stakeholders
& communicated to all suppliers through supplier
quality manual available on supplier portal. The
service policy is communicated to all our Field
team & Dealers through uploading on FTP Server.

Principle 3 : Employee well-being

With regard to Code of Conduct, all our executive
employees have been imparted mandatory training
and acceptance to adherence have been obtained.
Regular training programs are conducted across
locations to explain and reiterate the importance
of adherence to the Code. The Code of Conduct is
informed to all stakeholders via our website and
annual reports. The policies on Employee Mutual
Medical Benefit Scheme have been communicated
to all employees by means of the intranet. The
Policy on Sexual Harassment has been
communicated to all employees via email. The
(a) Superannuation / National Pension Scheme and
(b) Post Retirement Medical Insurance Fund Scheme
are communicated to all employees via email.

Principle 4 : Stakeholder engagement

With regard to Code of Conduct, all our executive
employees have been imparted mandatory training
and acceptance to adherence have been obtained.
Regular training programs are conducted across
locations to explain and reiterate the importance
of adherence to the Code. The Code of Conduct is
informed to all stakeholders via our website and
annual reports. In addition, we train stakeholders
such as suppliers on quality and environmental
aspects.
 acceptance to adherence have been obtained. Regular
training programs are conducted across locations to
explain and reiterate the importance of adherence to
the Code. The Code of Conduct is informed to all
stakeholders via our website and annual reports.

Principle 6 : Environmental protection

The Environment Policy is informed to all stakeholders
via our website and intranet. HMCL Environment Policy
has been communicated to all relevant internal
stakeholders & communicated to all suppliers through
supplier quality manual available on supplier portal.
The Green IT policy is informed to all stakeholders via
intranet.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

Yes, the service policy is communicated to all our
Field team & Dealers through uploading on FTP Server.
The Quality Policy is informed to all stakeholders via
our website and intranet. HMCL Quality Policy has
been communicated to all relevant internal
stakeholders & communicated to all suppliers through
supplier quality manual available on supplier portal.

2.8 Does the company have an in-house structure to

implement the policy?
Principle 1 : Ethics, transparency & accountability
Yes. The Committees ensure smooth implementation
of Code of Conduct, Policy on Sexual Harassment. The
Compliance Officer ensures implementation on Insider
Trading Code.

Principle 2 : Sustainability in life-cycle of product

The centralised IMS Cell ensures implementation of
Quality and Environment Policy. The Service team
ensures implementation of service guidelines at all
dealerships in field.

Principle 3 : Employee well-being

Yes. The Committees ensure smooth implementation
of Employee Mutual Medical Benefit Scheme, Policy on
Sexual Harassment, Post Retirement Medical Insurance
Fund Scheme and Code of Conduct.

Principle 4 : Stakeholder engagement

Yes. A Committee ensures smooth implementation of
Code of Conduct.
 and leadership teams if any of the entitlements are
Principle 5 : Promotion of human rights not being provided as per processes. Further, if our
Yes. A Committee ensures smooth implementation employees are uncomfortable about raising concerns in-
of Code of Conduct. person, they can drop a complaint at any of the drop-
boxes or the e-mail id designated
Principle 6 : Environmental protection ([email protected]) for the same purpose.
The centralised IMS Cell takes care of
implementation of Environment Policy. The
implementation of Green IT policy is overseen by the
IT Department.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

The Service team on the field ensures the
implementation of service guidelines. The Service
team in field and members in warranty section
ensure proper implementation of the warranty
policy. The centralised IMS Cell takes care of
implementation of Quality Policy.

2.9 Does the Company have a grievance

redressal mechanism related to the
policy/policies to address stakeholders grievances
related to the policy/policies?
Principle 1 : Ethics, transparency &
accountability
We have a grievance redressal process in place. We
strongly encourage employees to raise concerns
regarding any violation of the Code and to report
these immediately. Further, if our employees are
uncomfortable about raising concerns in-person,
they can drop a complaint at any of the drop-boxes
or the e-mail id designated
([email protected]) for the same purpose.

Principle 2 : Sustainability in life-cycle of

product
The Company allows for any Quality and
Environment related grievances to be resolved
through IMS Cell. The Management Review
Committee oversees the same. We have a grievance
redressal process in place. Customers can raise
complaints related to conditions of service, sales
and other issues through area offices & zonal offices
located across the country.

Principle 3 : Employee well-being

We have an organisation wide grievance redressal
process in place. We strongly encourage employees
to raise concerns regarding any violation of the
Code and to report these immediately. Our
employees are free to approach our management
 Principle 4 : Stakeholder engagement
We have a grievance redressal process in place.
We strongly encourage employees to raise
concerns regarding any violation of the Code and
to report these immediately. Further, if our
employees are uncomfortable about raising
concerns in-person, they can drop a complaint
at any of the drop-boxes or the e-mail id
designated ([email protected]) for the
same purpose.

Principle 5 : Promotion of human rights

We have a grievance redressal process in place.
We strongly encourage employees to raise
concerns regarding any violation of the Code and
to report these immediately. Further, if our
employees are uncomfortable about raising
concerns in-person, they can drop a complaint
at any of the drop-boxes or the e-mail id
designated ([email protected]) for the
same purpose.

Principle 6 : Environmental protection

The Company allows for any Quality and
Environment related grievances to be resolved
through IMS Cell. The Management Review
Committee oversees the same. The grievances
regarding Green IT Policy are addressed by
Enterprise Employee Service Desk (IT).

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

We have a grievance redressal process in place.
Customers can raise complaints in case any party
violates any conditions on service, sales and
other issues. The relevant stakeholder can
approach our Zonal / Regional / Area office or our
Warranty Sections at Gurgaon plant for redressal
of any warranty related issues. The Company
allows for any Quality related grievances to be
resolved through IMS Cell. The Management
Review Committee oversees the same.

2.10 Has the company carried out

independent audit/ evaluation of the working
of this policy by an internal or external
agency?
Principle 1 : Ethics, transparency & accountability
No.

Principle 2 : Sustainability in life-cycle of product

Our management certifications (such as ISO
9001, ISO 14001 and OHSAS 18001) are
independently verified by external agencies as
per due protocol. This is mandatory for us to retain
the certification on qualification of these
international standards. Internal and External
audits are
 done periodically to monitor processes meant to policy-makers as members in various industry
deliver on the Service Policy. associations.

Principle 3 : Employee well-being

No.

Principle 4 : Stakeholder engagement

No.

Principle 5 : Promotion of human rights

No.

Principle 6 : Environmental protection

Our management certifications (such as ISO 9001,
ISO 14001 and OHSAS 18001) are independently
verified by external agencies as per due protocol.

Principle 7 : Responsible public policy advocacy

Not applicable.

Principle 8 : Inclusive growth

Not applicable.

Principle 9 : Customer value

Internal and External audits are done periodically
to monitor processes meant to deliver on the Service
Policy. Operations meant to deliver Warranty Policy
are subject to audit from our finance department.
Our management certifications are independently
verified by external audit agency as per due
protocol. This is Mandatory for us to retain the
certification on qualification of these international
standards.

2A. If answer to S. No. 1 against any principle, is “No”,

please explain why:
Principle 1 : Ethics, transparency & accountability
Not applicable.

Principle 2 : Sustainability in life-cycle of product

Not applicable.

Principle 3 : Employee well-being

Not applicable.

Principle 4 : Stakeholder engagement

Not applicable.

Principle 5 : Promotion of human rights

Not applicable.

Principle 6 : Environmental protection

Not applicable.

Principle 7 : Responsible public policy advocacy

We have a leadership position in initiating dialogue with
 However, no need for a formal company policy has been
felt for undertaking policy advocacy activities.

Principle 8 : Inclusive growth

The CSR activities have been undertaken by the
organisation on an informal basis. The need to set up a
formal CSR policy was not felt earlier. However, we are
currently in the process of setting up a formal CSR Policy in
accordance with Section 135, Companies Act, 2013.

Principle 9 : Customer value

Not applicable.

3. Governance related to BR
Indicate the frequency with which the Board of
Directors, Committee of the Board or CEO to assess
the BR performance of the Company.
The BR performance of the Company will be assessed
annually at the end of financial year.

Does the Company publish a BR or a Sustainability

Report? What is the hyperlink for viewing this report?
How frequently it is published?
This is the second Business Responsibility Report and
would be published annually. This report can be
accessed at http://www.heromotocorp.com/en-in/
investors/financials.

SECTION E: PRINCIPLE WISE PERFORMANCE

Principle 1
1. Does the policy relating to ethics, bribery and corruption
cover only the company? Yes/ No. Does it extend to
the Group/ Joint Ventures/ Suppliers/ Contractors/ NGOs
Others?
Currently, the Code of Conduct is applicable to only our
employees. The Insider Trading Code is applicable to
designated employees and the Board of Directors of the
Company.

2. How many stakeholder complaints have been received in

the past financial year and what percentage was
satisfactorily resolved by the management?
We have not received any complaints with regard to violation
of the Code of Conduct, Insider Trading Code, and Policy on
Sexual Harassment in 2013-14.

Principle 2
1. List up to 3 of your products or services whose design has
incorporated social or environmental concerns, risks and/
or opportunities.
(i) I3S (Idle Start Stop Switch) - Implemented in “Splendor
i Smart” is the first model and only 2W model in India
to have i3S feature. Idle Stop Start system (i3S) helps
in saving the fuel by stopping the engine when it is not
intended to run at idling (for example when the
 vehicle is standing at an intersection or a traffic 4. Has the company taken any steps to procure
signal). The engine is stopped by “Idle Stop Start goods and services from local & small producers,
system” can be restarted by simply actuating the including communities surrounding their place of
clutch lever. Such systems are popularly known as work? If yes, what steps have been taken to improve
Micro Hybrid and fall in Green Technology their capacity and capability of local and small
category. vendors?
(ii) Side Stand Indicator - Already implemented in all Yes. We are procuring goods and services from local &
100cc category models, Pleasure, Super Splendor & small producers. Among the total suppliers around 80%
Xtreme (as safety is of utmost importance to 2W of our are locally based, in and around our factories in
riders, addition safety gadget beyond the regulatory Haryana and Uttarakhand.
obligation provided). In addition we have
introduced Engine immobilizer with ignition kill 5. Does the company have a mechanism to recycle
when side stand is down in New Xtreme which means products and waste? If yes what is the percentage of
engine will not operate if Side stand is “ON” to recycling of products and waste (separately as 10%)
further enhance safety of rider. Yes, the company has a mechanism for recycling of its
(iii) Integrated Braking System (IBS) - implemented in waste. During the year 2013-14 the company focused on
Scooters to enhance braking safety/feeling. recycling of its waste water by installations of Zero
Liquid discharge plant comprising of ultra-filtration units,
2. For each such product, provide the following details reverse osmosis and Multi-effect evaporator. We have
in respect of resource use (energy, water, raw material managed to recycle 90% of our waste water back to the
etc.) per unit of product (optional). process. Balance 10% is being reused for horticulture
Not applicable. activities. The Multi-effect evaporator is being run on
waste heat recovered from chimneys of power
3. Does the company have procedures in place for
generators.
sustainable sourcing (including transportation)? If yes,
what percentage of your inputs was sourced Principle 3
sustainably?
1. Please indicate the Total number of employees.
Our Green Vendor Development Programme (GVDP) is a
2. Please indicate the Total number of employees hired on
landmark initiative that encourages our suppliers and
temporary/contractual/casual basis.
vendors to adopt green practices and Environment
Management systems. The program presents a 3. Please indicate the Number of permanent women employees.
significant opportunity to improve the overall 4. Please indicate the Number of permanent employees
environmental performance and offers an opportunity to with disabilities.
reduce cost within our dedicated supply chain. The 5. Do you have an employee association that is recognised
program is being run for last 7 years and we have by management?
enrolled 135 supplier out of 153 category A & B
6. What percentage of your permanent employees is
suppliers, remaining 18 suppliers will be completed in
members of this recognised employee association?
the coming year. The management has planned to carry
forward this initiative with a special focus on energy 7. Please indicate the Number of complaints relating to
management. child labour, forced labour, involuntary labour, sexual
harassment in the last financial year and pending, as on
However, it is difficult to ascertain the percentage of the end of the financial year.
inputs sourced from these suppliers accounting towards
total inputs due to many different kinds of materials
being used by us. We are also in the process of
incorporating human rights issues within the supply
chain.

8. What percentage of your under mentioned employees were given safety & skill up-gradation training in the last year?

1. Total number of employees 6,782

2. Total number of employees hired on temporary/ contractual/ casual basis 13,231
3. Total number of permanent women employees 76
4. Total number of permanent employees with disabilities 37
5. Employee Associations Hero MotoCorp Workers Union,
Gurgaon Plant
Hero MotoCorp Workers Union,
 Dharuhera Plant
Hero MotoCorp Workers Union,
6. Percentage Membership of Workers Union (as a percentage of total Gurgaon Plant (18.5 %)
permanent employees) Hero MotoCorp Workers Union,
Dharuhera Plant (26.4%)
 7. Number of complaints relating to child labour, forced labour, involuntary None received in any of the
labour, category
sexual harassment in 2013-14 and pending, as of end 2013-14. and none pending
8. Percentage of employees who underwent safety and skill up-gradation training (as
a percentage of respective total of each category) (2013-14)
Permanent employees 80.6%
Permanent women employees 73.7%
Temporary/contractual/casual 88.2%
Employees with disabilities 73.0%

Principle 4 women. A mobile female driver be it on a two-

1. Has the company mapped its internal and wheeler or a four wheeled vehicle, has the
external stakeholders? Yes/No independence and flexibility to move
Yes. We have mapped and identified external
stakeholders, including disadvantaged, vulnerable and
marginalised stakeholders. Our stakeholders include –
employees, customers, NGOs and communities, dealers,
suppliers, investors, media, government and regulators
and peers and industry ecosystem.

2. Out of the above, has the company identified the

disadvantaged, vulnerable & marginalised
stakeholders?
Our disadvantaged and vulnerable stakeholders include
differently-abled employees, women and rural
communities in and around our plants.

3. Are there any special initiatives taken by the

company to engage with the disadvantaged,
vulnerable and marginalised stakeholders?
Differently abled employees: We endeavour to make
Hero a workplace which is conducive to differently abled
employees and employees with special needs. We aim to
make these employees self confident through an array of
events, forums and trainings specifically crafted for their
benefit. The number of differently abled employees is
37, majority of them being operators at our Gurgaon
plant. A bespoke training plan is being designed for the
differently abled with a special focus on personality
development.

Around 28 employees were given the training on TPM,

Safety Awareness and First AID.

A dedicated team is now formed for development and

involvement initiatives for these employees. The activities
include special in-house newsletter, classroom training,
sports and cultural events at plant and at external
forums. This is now embedded in the annual planning of
the human resource team at Hero. This year 23 specially-
abled employees of Gurgaon Plant participated in 13
external competitions and were awarded prizes in various
cultural and sports activities at state and national level.

Women customers: Hero has maintained that mobility has

the potential to be a major driver for emancipation of
 around at her convenience. To this end, there have been a
slew of initiatives. 45 exclusive dealerships for women
customers exist called “Just for Her”. The marketing
campaign of our “Pleasure” scooters is devoted entirely to
the female driver and her independence. We ask“Why should
boys have all the fun?”. Similarly, Hero GoodLife Lady Rider
Club was conceptualised with the prime objective of
creating a unique community with strong emphasis on
women empowerment. It is a one- of-its-kind relationship
program with over 6 lakhs Lady riders valid club members
with 4 lakhs active members. Lady Rider Club, aims at
extending loyalty benefits to female customers of the
Company by providing tangible and intangible benefits
exclusive to ladies.

Rural Communities: These are covered under Principle 8.

Principle 5
1. Does the policy of the company on human rights cover
only the company or extend to the Group/ Joint Ventures/
Suppliers/ Contractors/ NGOs/ Others?
Currently, the Code of Conduct is applicable to only our
employees, though we expect our stakeholders to adhere and
uphold the standards contained therein.

2. How many stakeholder complaints have been received

in the past financial year and what % was satisfactorily
resolved by the management?
We have not received any complaints with regard to violation
of the Code of Conduct in 2013-14.

Principle 6
1. Does the policy related to Principle 6 cover only the
company or extends to the Group/Joint Ventures/ Suppliers/
Contractors/ NGOs/ others
Our policy on environment extends to our suppliers through
our Green Vendor Development Programme and Green
Charter.

2. Does the company have strategies/ initiatives to address

global environmental issues such as climate change, global
warming, etc?
We dohave strategies in place toaddress these issues including
energy conservation, energy efficiency, water management,
waste management, CO2 Emission house gases reduction. We
have achieved a reduction of 5.6% in CO2 emission from the
previous reporting year.
100
Business Responsibility Report

3. Does the company identify and assess As a world leader in the 2-wheeler segment, Hero
potential environmental risks? Y/N MotoCorp Ltd. has taken up the initiative to inculcate a
Yes. The company has a periodic systematic mechanism sense of road safety and good riding habits to its
for environmental impact assessment through its Aspect/ customers and public at large. We strongly champion the
Impact assessment (AIA) activity and Hazard Identification cause of road safety through several initiatives. We
and Risk Assessment (HIRA) technique as a part of our steadily work with a cross-section of stakeholders that
Environmental management System certifications of ISO include enforcement agencies, commuters, corporates,
14001, and Occupational Health and safety management schools / colleges and special groups on aspects germane
system certification of OHSAS 18001. to safety. As a pioneer in the safety riding activities, Hero
MotoCorp is committed to drive home the message of
4. Does the company have any project related to road safety and healthy environment.
Clean Development Mechanism? If Yes, whether any
environmental compliance report is filed? Our safety initiatives are underpinned by our firm belief
that a culture of safety requires three fundamental
As of now we do not have any CDM project.
things:
5. Has the company undertaken any other initiatives on - Knowledge of road rules and
clean technology, energy efficiency, renewable energy, etc. regulations Skill of riding
Y/N. If yes, please give hyperlink for web page etc.
Right behaviour and attitude
Yes, we have several environment protection related
initiatives, broadly classified as: We are knowledge partners to programs run by traffic
i. Green initiatives & Resource conservation and general police in several cities in India. We routinely
collaborate and partner with traffic police and
ii. Energy efficiency measures
enforcement agencies on special initiatives. Our
iii. Green supply chain dealerships inform customers right at the point of sale
about safety aspects, and it is ingrained into the
A more detailed list of such initiatives is available at
motorcycle delivery process. In fact, we pride ourselves
http:// www.heromotocorp.com/en-
on the “4S Concept” (Sales, Service, Spares, Safety) at
in/wecare/greenmanufacturing.
our dealerships which among firsts for the automobile
6. Are the Emissions/Waste generated by the company within industry in India. There is a safety corner at our
the permissible limits given by CPCB/SPCB for the showrooms. All our vehicles are sold with “Road Safety”
financial year being reported? leaflet, and we have created bespoke safety education
videos for our customers.
Yes.
Ourtrafficparkin Gurgaontestifiestooureffortstodisseminate
7. Number of show cause/ legal notices received from
safety and good-ridership practices. The park routinely
CPCB/ SPCB which are pending (i.e. not resolved to
trains members of the general public, senior secondary
satisfaction) as on end of Financial Year.
school students and women riders. We have initiated
No such notices were received in the FY 2012-13. training programs for corporates. The training module is
structure to impart training on riding posture, braking,
Principle 7
slalom riding, balancing and bumpy roads. We can say
1. Is your company a member of any trade and with pride that there are over 700 trained instructors at
chamber or association? If Yes, Name only those major Hero who impart these training modules, among which 76
ones that your business deals with. are advanced trainers who are eligible to “train the
Major associations we deal with are as trainers”.
follows: Confederation of Indian
Principle 8
Industry
1. Does the company have specified programmes/initiatives/
Gurgaon Chamber of Commerce & Industries projects in pursuit of the policy related to Principle 8? If
PHD Chamber of Commerce yes details thereof.
Society of Indian Automobile Manufacturers Yes. True wealth of our communities is built by
progressive endogenous development of assets such as
2. Have you advocated/lobbied through above associations cultural heritage, human resources and long lasting
for the advancement or improvement of public good? physical infrastructure. We
Yes/ No; if yes specify the broad areas (drop box: helpcommunitiescreatesuchassets.
Governance and Administration, Economic Reforms, Weundertakepurposeful activities with the goal to
Inclusive Development Policies, Energy security, Water, maintain and improve the state of environmental
Food Security, Sustainable Business Principles, Others)
 101

resources affected by human activities. Our

environment management aims toward ensuring that
the ecosystem services in areas where we operate are
protected and maintained for equitable use by future
generations.
 We organise a number of projects on literacy and health loyalty program Goodlife. The Company received
education in collaboration with government and local 1794 more customer complaints during FY 2013-14.
agencies. We work with the objective of providing Out of these cases, the Company successfully
village children with additional support to improve their resolved 1782 complaints. Thus, 406 (19%)
educational standard and to achieve their overall complaints were pending at the end of FY 2013-2014.
development. Healthcare outreach is an important cog in
our social matrix and we organise several community
health camps across the year. With a view to increasing
income generation opportunities leading to social and
economic development, especially those of women
members of the community, we set up a vocational
training schedule. We also facilitate dissemination of
training programmes leading to enhancement of the
value of rural youth in the job market.

2. Are the programmes/projects undertaken through

in- house team/own foundation/external
NGO/government structures/any other organisation?
The programmes are undertaken through our Foundation
- Raman Kant Munjal Foundation.

3. Have you done any impact assessment of your

initiative?
As of now no impact assessment of our initiatives has
been undertaken.

4. What is your company’s direct contribution to

community development projects - Amount in INR and
the details of the projects undertaken?
Project Amount (`) for FY 2013-14
4,139,448
Education
2,685,213
Medical
535,000
Armed Force Welfare
6,450,651
Miscellaneous

5. Have you taken steps to ensure that this community

development initiative is successfully adopted by the
community?
We make attempts toensure that projects continue and
sustain within communities beyond our interactions. For
example, with a view to increasing income generation
opportunities leading to social and economic
development, we set up a vocational training schedule.
We also facilitate dissemination of training programmes
leading to enhancement of the value of rural youth in the
job market.

Principle 9
1. What percentage of customer complaints/consumer
cases are pending as on the end of financial year.
At the end of financial year (“FY”) 2012-13, 394
consumer complaints were pending on our customer
 The Company received 4785 complaints in FY 2013-14 and
resolved a total of 4683 complaints. Thus, only 102 complaints
(2.1%) are carried forward to FY 2014-15. From FY’15 ICMS
would handle all customer complaints including of sales.

2. Does the company display product information on the

product label, over and above what is mandated as per
local laws? Yes/No/N.A. /Remarks (additional information)
Yes. We provide information as required by the Standards
of Weights and Measures Act, 1956. We voluntarily and
actively inform all our dealers on any changes in product
packaging through notices. We have also been running
educative campaigns informing customers to operate vehicles
in a more fuel efficient manner and to read the operating
manual and the Road Safety leaflet. The leaflet enumerates
good to emulate riding practices, fuel saving tips etc. in a
reader-friendly and easy to understand manner. Our spare
part products come with a dedicated consumer cell phone
number, address and email ID, where consumers can reach
our executives with feedback, grievances and even queries
regarding our products. Besides, consumers can also log in to
the corporate website and send in their feedback or
complaints.

3. Is there any case filed by any stakeholder against the

company regarding unfair trade practices, irresponsible
advertising and/or anti-competitive behaviour during the
last five years and pending as on end of financial year?
We had received no case pending with the Advertising
Standards Council of India in the last financial year.

4. Did your company carry out any consumer survey/ consumer

satisfaction trends?
In pursuit of customer delight we have undertaken mystery
shopping exercise across our dealerships to gauge customer
experience. We have covered 729 dealers last financial year as
part of this exercise. This exercise covered all dealers who
have completed minimum one year of operations. We also
undertake customised surveys on customer satisfaction for
the new products launched last year through a third party
agency. We are currently in the middle of largest customer
survey in India called as U&A to understand the consumer
better.
102
Standalone Financial Statements

Independent AudItors’ report

To the Members of We believe that the audit evidence we have obtained is

Hero MotoCorp Limited sufficient and appropriate to provide a basis for our audit
opinion.
RepoRt on tHe FinanCiaL StateMentS
We have audited the accompanying financial statements of
HERO MOTOCORP LIMITED (“the Company”), which comprise the
Balance Sheet as at 31st March, 2014, the Statement of Profit
and Loss and the Cash Flow Statement for the year then
ended, and a summary of the significant accounting policies
and other explanatory information.

ManageMent’S ReSponSibiLity FoR tHe FinanCiaL

StateMentS
The Company’s Management is responsible for the
preparation of these financial statements that give a true
and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the
Accounting Standards notified under the Companies Act,
1956 (“the Act”) (which continue to be applicable in respect
of Section 133 of the Companies Act, 2013 in terms of
General Circular 15/2013 dated 13th September, 2013 of the
Ministry of Corporate Affairs) and in accordance with the
accounting principles generally accepted in India. This
responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and
fair view and are free from material misstatement, whether
due to fraud or error.

auditoRS’ ReSponSibiLity
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India. Those Standards
require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and the disclosures in the financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers
internal control relevant to the Company’s preparation and
fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of the
accounting policies used and the reasonableness of the
accounting estimates made by the Management, as well as
evaluating the overall presentation of the financial
statements.
 103

opinion
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
financial statements give the information required by the
Act in the manner so required and give a true and fair
view in conformity with the accounting principles
generally accepted in India:
(a) in the case of the Balance Sheet, of the state of
affairs of the Company as at 31st March, 2014;
(b) in the case of the Statement of Profit and Loss, of
the profit of the Company for the year ended on that
date; and
(c) in the case of the Cash Flow Statement, of the cash
flows of the Company for the year ended on that
date.

RepoRt on otHeR LegaL and ReguLatoRy

RequiReMentS
1. As required by the Companies (Auditor’s Report) Order,
2003 (“the Order”) issued by the Central Government
in terms of Section 227(4A) of the Act, we give in the
Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and

explanations which to the best of our knowledge
and belief were necessary for the purposes of
our audit.
(b) In our opinion, proper books of account as
required by law have been kept by the Company
so far as it appears from our examination of
those books.
(c) The Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement dealt with by
this Report are in agreement with the books of
account.
(d) In our opinion, the Balance Sheet, the Statement
of Profit and Loss, and the Cash Flow Statement
comply with the Accounting Standards notified
under the Act (which continue to be applicable
in respect of Section 133 of the Companies Act,
2013 in terms of General Circular 15/2013 dated
13th September, 2013 of the Ministry of
Corporate Affairs).
(e) On the basis of the written representations received
from the directors as on 31st March, 2014 taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2014
from being appointed as a director in terms of
Section 274(1)(g) of the Act.

For deLoitte HaSKinS & SeLLS

Chartered
Accountants (Firm
Registration No. 015125N)

Vijay agarwal
New Delhi Partner
May 28, 2014 (Membership No. 094468)
Annexure to the Independent AudItors’ report
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even
date)

the Register maintained under Section 301 of the

Having regard to the nature of the Company’s Companies Act 1956, according to the information and
business/activities/ result, clause 4(xiii) of Companies (Auditor’s explanations given to us:
Report) Order, 2003 (hereinafter referred to as the Order / (a) The Company has granted loans aggregating `
CARO) are not applicable. 605 crores to a party during the year. At the
(i) In respect of its fixed assets: year-end, the outstanding balances of such
loans granted aggregated
(a) The Company has maintained proper records
showing full particulars, including quantitative
details and situation of fixed assets.
(b) The Company has a programme of verification of
fixed assets to cover all the items in a phased
manner over a period of three years which, in our
opinion, is reasonable having regard to the size of
the Company and the nature of its assets. Pursuant
to the programme, certain fixed assets were
physically verified by the Management during the
year other than for assets lying with third parties,
for which confirmations have been obtained by the
Company. According to the information and
explanations given to us discrepancies noticed on
such verification were not material and have been
properly dealt in the books of account.
(c) The fixed assets disposed off during the year, in our
opinion, do not constitute a substantial part of the
fixed assets of the Company and such disposal has,
in our opinion, not affected the going concern
status of the Company.

(ii) In respect of its inventories:

(a) Asexplainedtous,
theinventorieswerephysicallyverified during the year
by the Management at reasonable intervals other
than for inventories lying with third parties at the
end of the year for which confirmations have been
obtained in most of the cases.
(b) In our opinion and according to the information and
explanations given to us, the procedures of physical
verification of inventories followed by the
Management were reasonable and adequate in
relation to the size of the Company and the nature
of its business.
(c) In our opinion and according to the information and
explanations given to us, the Company has
maintained proper records of its inventories and
discrepancies noticed on such verification were not
material and have been properly dealt in the books
of account.

(iii) In respect of loans, secured or unsecured, granted by the

Company to companies, firms or other parties covered in
 ` 220 crores and the maximum amount involved during
the year was ` 240 crores.
(b) The rate of interest and other terms and conditions of
such loans are, in our opinion, prima facie not prejudicial
to the interest of the Company.
(c) The receipts of principal amounts and interest have been
regular.
(d) There are no overdue amounts in respect of the loans
granted as referred to in paragraph (iii)(a) above and
interest thereon.

The Company has, during the year, not taken any loans,
secured or unsecured from companies, firms and other parties
covered in the register maintained under Section 301 of the
Companies Act, 1956. Accordingly, paragraph 4(iii) (f ) and (g)
of CARO are not applicable

(iv) In our opinion and according to the information and

explanations given to us, having regard to the explanations
that some of the items purchased are of special nature and
suitable alternative sources are not readily available for
obtaining comparable quotations, there is an adequate
internal control system commensurate with the size of the
Company and the nature of its business with regard to
purchases of inventory, fixed assets and the sale of goods
and services. During the course of our audit, we have not
observed any major weakness in such internal control
system.

(v) In respect of contracts or arrangements entered in the Register

maintained in pursuance of Section 301 of the Companies Act,
1956, to the best of our knowledge and belief and according
to the information and explanations given to us:
(a) The particulars of contracts or arrangements referred to
in Section 301 that needed to be entered in the
Register maintained under the said Section have been so
entered.
(b) Where each of such transaction (excluding loans
reported under paragraph (iii) above) is in excess of
` 5 lakhs in respect of any party, having regard to our
comments in paragraph (iv) above the transactions have
been made at prices which are prima facie reasonable
having regard to the prevailing market prices at the
relevant time, other than certain purchases which are
of a special nature for which comparable quotations are
not available.

(vi) According to the information and explanations given to us,

the Company has not accepted any deposits from the public
during the period within the meaning of section 58A and
58AA of the Companies Act, 1956 and the rules framed
thereunder. Accordingly, paragraph 4(vi) of the Order is not
applicable.
(vii) In our opinion, the internal audit functions carried out
Insurance, Income-tax, Sales Tax, Wealth Tax, Service
during the year by firms of Chartered Accountants
Tax, Customs Duty, Excise Duty, Cess and other
appointed by the Management have been commensurate
material statutory dues applicable to it with the
with the size of the Company and the nature of its
appropriate authorities.
business.
(b) There were no undisputed amounts payable in
(viii) We have broadly reviewed the cost records maintained respect of Provident Fund, Investor Education and
by the Company pursuant to the Companies (Cost Protection Fund, Employees’ State Insurance, Income-
Accounting Records) Rules, 2011 prescribed by the Central tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,
Government under Section 209(1) (d) of the Companies Excise Duty, Cess and other material statutory dues,
Act, 1956 and are of the opinion that, prima facie, the in arrears as at March 31, 2014 for a period of more
prescribed cost records have been made and than six months from the date they became
maintained. We have, however, not made a detailed payable.
examination of the cost records with a view to (c) According to the information and explanations
determine whether they are accurate or complete. given to us and the records of the Company examined
by us, there are no disputed dues in respect of
(ix) According to the information and explanations given to
wealth tax, customs duty and cess which have not
us, in respect of statutory dues:
been deposited. The following are the particulars of
(a) The Company has been regular in depositing excise duty, service tax, sales tax and income tax
undisputed statutory dues, including Provident dues not deposited/deposited under protest by the
Fund, Investor Education and Protection Fund, Company on account of disputes:
Employees’ State

name of the Statute nature of the dues amount* amount paid period to which Forum where
(` in crores) under protest the amount dispute is
(` in crores) relates pending
Central Excise Laws Excise Duty 603.17 177.06 2000-01 and 2002 – 2013 CESTAT
0.05 - 2006-2013 Commissioner
(Appeals)
Service Tax 0.89 0.45 2004-05 to 2005-06 Supreme Court
254.42 22.04 **
2004-05 to 2011-12 CESTAT
Sales Tax Sales Tax 1.90 1.90 1998-99 to 2000-2001 Haryana Tax
Tribunal
Income tax Act, 1961 Income tax 1,878.54 50.00*** 2007-08 Income Tax
Appellate Tribunal
81.60 29.90 2004-05
2005-06 Commissioner
1.11 -
(Appeals)
3.77 - 2006-07
*
Amount as per demand orders including interest and penalty wherever indicated in the order and excludes disputed fully paid.
**
Appeal along with stay application has been filed.
***
Balance of unpaid amount has been stayed as the said cases have been decided in favour of the Company in previous
assessment years on the similar matters.
The following matters have been decided in favour of the Company but the department has preferred appeals at higher levels:

name of the Statute nature of amount period to which Forum where

the dues (` in the amount dispute is pending
crores) relates
Central Excise Laws Excise duty 2.57 1986-87 to 1990-91 Supreme Court
16.66 2005-06 to 2010-11 CESTAT
Service Tax 0.17 2005 High Court
Income-tax Act, 1961 Income-Tax 1,224.84 1987-88, 1989-90, High Court
1992-93, 1993-94,
1995-96, 1996-97,
1997-98, 1998-99,
1999-00, 2000-01,
2001-02, 2005-06
2006-07
11.85 1999-00, 2002-03 Income Tax
Appellate
2007-08 Tribunal

(x) The Company does not have accumulated losses at the

(xvi) In our opinion and according to the information and
end of the financial year and the Company has not
explanations given to us, and on an overall examination of
incurred cash losses during the financial year covered by
the Balance Sheet of the Company, we report that funds
our audit and in the immediately preceding financial
raised on short-term basis have, prima facie, not been
year.
used during the year for long-term investment.
(xi) In our opinion and according to information and
(xvii) During the year the Company has not made any
explanations given to us, the Company has not defaulted
preferential allotment of shares to the parties and
in repayment of dues to banks during the year. The
companies covered in the Register maintained under
Company has not taken any loans from financial
Section 301 of the Companies Act, 1956.
institutions and has not issued debentures during the
year. (xviii) The Company has not issued any debentures during the year.

(xii) In our opinion and according to the information and (xix) The Company has not raised any money by way of public
explanations given to us, the Company has not granted issue during the year.
any loans and advances during the year on the basis of
security by way of pledge of shares, debentures and (xx) To the best of our knowledge and according to the
other securities. information and explanations given to us, no fraud by
the Company and no material fraud on the Company has
(xiii) In our opinion and according to the information and been noticed or reported during the year.
explanations given to us, the Company is not dealing or
trading in shares, securities, debentures and other For deLoitte HaSKinS & SeLLS
investments. Chartered
Accountants (Firm Registration
(xiv) According to the information and explanations given to
No. 015125N)
us, the Company has not given any guarantees during
the year for loans taken by others from banks or financial
institutions. Vijay agarwal
New Delhi Partner
(xv) In our opinion and according to the information and May 28, 2014 (Membership No. 094468)
explanations given to us, the Company has not taken any
term loans during the year.
BAlAnce sheet
as at March 31, 2014

` crores
as at As
Particulars Note No.
March 31, 2014 at March 31,
2013
i equity and LiabiLitieS
1 Shareholders’ funds
(a) Share capital 3 39.94 39.94
(b) Reserves and surplus 5,559.93 4,966.30
2 non - current liabilities 4
(a) Long term liabilities 5 24.45 302.16
(b) Deferred tax liabilities (Net) - 132.41
(c) Long - term provisions 6 49.98 30.16
3 Current liabilities
7
(a) Trade payables 8 2,290.59 1,873.34
(b) Other current liabilities 588.08 887.64
(c) Short - term provisions 9 1,544.33 1,409.70
total 10,097.30 9,641.65
ii aSSetS 10

1 non - current assets

(a) Fixed assets 11
(i) Tangible assets 1,897.27 1,891.76
(ii) Intangible assets 345.98 1,179.22
(iii) Capital work-in-progress 854.11 62.09
(b) Non- current investments 812.88 614.47
(c) Deferred tax assets (Net) 105.98 -
(d) Long - term loans and advances 477.39 780.06
(e) Other non- current assets 47.81 36.44
2 Current assets
12

13

14
(a) Current investments 12 3,275.89 3,009.36
(b) Inventories 669.55 636.76
(c) Trade receivables 15 920.58 665.00
(d) Cash and cash equivalents 117.50 181.04
(e) Short - term loans and advances 16 550.31 553.55
(f ) Other current assets 22.05 31.90
total 17 10,097.30 9,641.65

18

19
Accompanying notes forming part of the financial statements 1&2

In terms of our report attached For and on behalf of the Board of

Directors For deLoitte HaSKinS & SeLLS
Chartered Accountants brijmohan Lall Munjal
Chairman
DIN No.: 00004134

Vijay agarwal pawan Munjal pradeep dinodia

Partner Managing Director & Chairman-Audit Committee
CEO DIN No.: 00004223 DIN No.: 00027995

New Delhi Ravi Sud iiam C. Kamboj

May 28, 2014 Sr. Vice President & CFO Asso. V. P. Legal & Company
Secretary
stAtement of profIt And loss
for the year ended March 31, 2014

` crores
For the year For the year
Particulars Note No.
ended March ended March
31, 2014 31, 2013
i Revenue from operations 20
(a) Gross sales of products 27,005.26 25,474.54
Less: Excise duty 1,880.35 1,891.80
25,124.91 23,582.74
(b) Other operating revenue 150.56 185.37
Net revenue from operations 25,275.47 23,768.11
ii other income 21 446.38 398.38
iii total Revenue (i + ii) 25,721.85 24,166.49
iV expenses:
(a) Cost of materials consumed 22 18,221.53 17,364.86
(b) Changes in inventories of finished goods and work-in- 23 8.36 32.80
progress
(c) Employee benefits expenses 24 930.04 820.92
(d) Finance costs 25 11.82 11.91
(e) Depreciation and amortization expenses 11 1,107.37 1,141.75
(f ) Other expenses 26 2,575.48 2,265.05
total expenses 22,854.60 21,637.29
V profit before tax (iii - iV) 2,867.25 2,529.20
Vi tax expenses:
(a) Current tax 828.21 502.61
(b) Minimum alternate tax - (15.72)
(c) Minimum alternate tax relating to earlier years (28.02) -
(d) Minimum alternate tax credit utilised 196.37 -
Net current tax 996.56 486.89
(e) Deferred tax (238.39) (75.85)
758.17 411.04
Vii profit for the year (V-Vi) 2,109.08 2,118.16
Viii basic and diluted earnings per equity share (of ` 2 27 105.61 106.07
each):
Accompanying notes forming part of the financial statements 1&2

In terms of our report attached For and on behalf of the Board of

Directors For deLoitte HaSKinS & SeLLS
Chartered Accountants brijmohan Lall Munjal
Chairman
DIN No.: 00004134

Vijay agarwal pawan Munjal pradeep dinodia

Partner Managing Director & Chairman-Audit Committee
CEO DIN No.: 00004223 DIN No.: 00027995

New Delhi Ravi Sud iiam C. Kamboj

May 28, 2014 Sr. Vice President & CFO Asso. V. P. Legal & Company
Secretary
cAsh flow stAtement
for the year ended March 31, 2014

` crores
year ended March 31, 2014 Year ended March 31, 2013

a. CaSH FLoW FRoM opeRating aCtiVitieS

net profit before tax 2,867.25 2,529.20
Adjustments for:
Add: Depreciation and amortisation 1,107.37 1,141.75
Loss on fixed assets sold/discarded 13.98 7.07
Loss on sale of non-trade current investments 1.26 0.35
Provision for diminution in value of investment:
Long term non trade investment 0.45 0.59
Finance cost 11.82 11.91
Provision for doubtful debts 0.85 0.28
1,135.73 1,161.95
Less: Interest on long term and current non-trade 53.10 60.17
investments
Interest on loans, deposits etc. 90.27 46.14
Profit on sale of fixed assets 0.68 1.13
Exchange differences (3.02) 1.43
Dividend income:
On current Investments - Non-Trade 0.69 0.13
On long-term investments-Trade and Non trade 2.25 2.80
Profit on sale of non-trade current investments 300.65 288.36
444.62 400.16
operating profit before working capital changes 3,558.36 3,290.99
Changes in working capital:
Adjustment for (increase)/decrease in operating
assets:
Add: Inventories (32.79) 38.81
Trade receivables (259.46) (391.55)
Short-term loans and advances (16.76) 42.05
Long-term loans and advances (131.92) (19.86)
(440.93) (330.55)
Adjustment for increase/(decrease) in operating
liabilities:
Less: Trade payables 417.25 (419.83)
Other current liabilities 52.74 (33.70)
Other long-term liabilities 3.47 4.43
Short-term provisions 2.15 0.25
Long-term provisions 19.82 (7.84)
495.43 (456.69)
Cash generated from operations 3,612.86 2,503.75
Less: Direct taxes paid 649.45 613.32
net cash from operating activities 2,963.41 1,890.43
 ` crores
year ended March 31, 2014 Year ended March 31, 2013
b. CaSH FLoW FRoM inVeSting aCtiVitieS
Proceeds from sale of fixed assets 4.05 7.25
Sale / (Purchase) of investments (net) (8.66) 680.70
Investment in Associates (0.16) (52.85)
Investment in Subsidiaries (157.18) -
Intercorporate deposits received back 625.00 265.00
Intercorporate deposits paid (605.00) (385.00)
Interest received on long term and current non-trade 51.58 58.20
investments
Interest received on loans, deposits etc. 90.27 46.14
Dividend income
On current Investments - Non Trade 0.69 0.13
On long-term investments - Trade and Non Trade 2.25 2.80
Capital expenditure on fixed assets, including capital (936.80) (607.64)
advances
Payment of deferred credits (685.36) (747.67)
net cash (used) in investing activities (1,619.32) (732.94)
C. CaSH FLoW FRoM FinanCing aCtiVitieS
Interest paid (11.82) (11.91)
Dividends paid (1,199.29) (898.59)
Tax on dividend (203.82) (145.77)
net cash (used) in financing activities (1,414.93) (1,056.27)
d. inCReaSe/(deCReaSe) in CaSH and CaSH equiVaLentS (70.84) 101.22
(a+b+C)
Cash and cash equivalents at the beginning of the year 134.95 33.73
Add: on account of amalgamation (refer note 36) 2.30
Cash and cash equivalents at the end of the year
Cash and bank balances 66.41 134.95
66.41 134.95
Reconciliation
Cash and Bank balances as per Balance Sheet 117.50 181.04
Less: Unpaid dividend current account with Banks 51.09 46.09
net Cash and cash equivalents at the end of the year 66.41 134.95

Accompanying notes forming part of the financial statements

In terms of our report attached For and on behalf of the Board of

Directors For deLoitte HaSKinS & SeLLS
Chartered Accountants brijmohan Lall Munjal
Chairman
DIN No.: 00004134

Vijay agarwal pawan Munjal pradeep dinodia

Partner Managing Director & Chairman-Audit Committee
CEO DIN No.: 00004223 DIN No.: 00027995

New Delhi Ravi Sud iiam C. Kamboj

May 28, 2014 Sr. Vice President & CFO Asso. V. P. Legal & Company
Secretary
110
Standalone Financial Statements

notes to the fInAncIAl stAtements

for the year ended March 31, 2014

note no. 1 - CoRpoRate inFoRMation

Depreciation is charged on a pro-rata basis at the straight
Hero MotoCorp Limited (the Company) is a public company line method rates prescribed in Schedule XIV to the
domiciled in India and incorporated under the provisions of Companies Act, 1956. Assets covered under employee
the Companies Act, 1956 on January 19, 1984. The name of the benefit schemes are amortised over a period of five
Company has been changed from Hero Honda Motors Limited years. Assets costing upto
to Hero MotoCorp Limited on July 29, 2011. The shares of the ` 5,000 each are fully depreciated in the year of purchase.
Company are listed on two stock exchanges in India i.e.
National Stock Exchange (NSE) and Bombay Stock Exchange Intangible assets, comprising of expenditure on model
(BSE). The Company is engaged in the manufacturing and fee etc, incurred are amortised on a straight line
selling of motorised two-wheelers, spare parts and related method over a period of five years. Licenses for Technical
services. The Company is a leading two wheeler know-how / export licenses have been amortised on a
manufacturer and has a dominant presence in domestic straight line basis upto June 30, 2014 i.e forty two
market. months (refer note 11).

The carrying values of assets / cash generating units at

note no. 2 - SigniFiCant aCCounting
each Balance Sheet date are reviewed for impairment.
poLiCieS i ) accounting convention
The financial statements of the Company have been Leasehold land has been amortised over the period of lease.
prepared in accordance with the Generally Accepted
v) preoperative expenses pending allocation
Accounting Principles in India (Indian GAAP) to comply
with the Accounting Standards notified under Section Expenses directly related to construction activity or
211(3C) of the Companies Act, 1956 (“the 1956 Act”) ( incidental thereto, are allocated to fixed assets at the
which continue to be applicable in respect of Section time of completion of the project.
133 of the Companies Act, 2013 (“the 2013 Act”) in
vi) investments
terms of General Circular 15/2013 dated 13 September,
2013 of the Ministry of Corporate Affairs) and relevant Current investments are stated at lower of cost and fair
provisions of the 1956 Act/ 2013 Act, as applicable. The value computed categorywise. Long term investments
financial statements have been prepared on accrual basis are stated at cost less provision for diminution other
under the historical cost convention. than temporary, if any. Premium paid on purchase of debt
securities is amortised over the period of maturity.
ii) use of estimates
vii) inventories
The preparation of the financial statements in conformity
with Indian GAAP requires the Management to make Raw materials and components, stores and spares, loose
estimates and assumptions considered in the reported tools, finished goods and work in progress are valued at
amounts of assets and liabilities (including contingent cost or net realisable value, whichever is lower.
liabilities) and the reported income and expenses during
The basis of determining cost for various categories of
the year. The Management believes that the estimates
inventories are as follows:-
used in preparation of the financial statements are prudent
and reasonable. Future results could differ due to these
estimates and the differences between the
actual results and the estimates are recognised in the Stores and spares, - Weighted average cost
loose
periods in which the results are known / materialise.
tools, raw materials
and components
iii) operating Materials in transit - Actual cost
Cycle
Based on the nature of products / activities of the
Work in progress and - Material cost plus appropriate
Company and the normal time between acquisition of finished goods share of labour,
assets and their realisation in cash or cash equivalents, manufacturing overheads and
the Company has determined its operating cycle as 12 excise duty
months for the purpose of classification of its assets and viii) employee benefits
liabilities as current and non-
current. duties, taxes and other incidental expenses. Exchange
differences arising on restatement / settlement of long-
iv) Fixed / intangible assets and depreciation / term foreign currency borrowings relating to acquisition of
amortisation depreciable fixed assets are adjusted to the cost of the
Fixed assets are stated at cost less accumulated respective assets and depreciated over the remaining
depreciation. Cost of acquisition is inclusive of freight, useful life of such assets.
 111

a) Defined contribution plan

Provident fund, Superannuation fund and
Employee’ State Insurance Corporation (ESIC)
are the defined contribution schemes offered by
the Company. The contributions to these
schemes are charged to the statement of profit
and loss of the year in which contribution to
such schemes becomes due.

b) Defined benefit plan and Long term Employee

benefits
Gratuity liability and long term employee benefits, are
 available with the Management duly taking into
provided on the basis of an actuarial valuation account the current and past technical estimates.
made at the end of each financial year as per
projected unit credit method. Actuarial gains or
loss arising from such valuation are charged to
revenue in the year in which they arise.

ix) Foreign currency transactions

Exchange differences are dealt with as follows:-
Transactions in foreign currency are recorded at the
exchange rate prevailing at the time of the transaction.
All loss or gain on translation is charged torevenue in the
year in which it is incurred.

Monetary assets and liabilities denominated in foreign

currency are restated at the rate prevailing at the year
end and resultant gain or loss is recognised.

The exchange differences arising on restatement /

settlement of long-term foreign currency monetary items
are capitalised as part of the depreciable fixed assets to
which the monetary item relates and depreciated over
the remaining useful life of such assets or amortised on
settlement / over the maturity period of such items in
line with Notification No. GSR 378(E) dated May 11,
2011 issued by The Ministry of Corporate Affairs,
Government of India.

In respect of forward contracts, the forward premium or

discount is recognised as income or expense over the
life of contract in the statement of profit and loss and
the exchange difference between the exchange rate
prevailing at the year end and the date of the inception
of the forward exchange contract is recognised as income
or expense in the statement of profit and loss.

x) Sales
Sale of goods is recognised on transfer of significant risk
and reward of ownership to the buyer, which generally
coincides with point of despatch of finished goods to the
customers. Gross sales are inclusive of applicable excise
duty and freight but are exclusive of sales tax. Services
income is recognized when the services are rendered.

- Scrap is accounted for on sale basis.

xi) Warranty claims

The estimated liability for product warranties is
recorded when products are sold. These estimates are
established using historical information on the nature,
frequency and average cost of warranty claims and
management estimates regarding possible future
incidence based on corrective actions on product
failures. The timing of outflows will vary as and when
warranty claim will arise - being typically two to five
years.

The Company accounts for the post-contract support /

provision for warranty on the basis of the information
xii) Leases
Lease arrangements where the risks and rewards incidental
to ownership of an asset substantially vest with the lessor
are recognised as operating leases. Lease rentals under
operating leases are recognised in the Statement of Profit
and Loss.

xiii) Research and development expenses

Research and development expenditure of a revenue nature is
expensed out under the respective heads of account in the
year in which it is incurred.

Fixed assets utilised for research and development are

capitalised and depreciated in accordance with the policies
stated for Tangible Fixed Assets and Intangible Assets.

xiv)earnings per share

Earnings per share are computed by dividing the profit / (loss)
after tax by the weighted average number of equity shares
outstanding during the year.

xv) taxation
The provision for taxation is ascertained on the basis of
assessable profits computed in accordance with the provisions
of the Income-tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the

tax laws, which gives future economic benefits in the form
of adjustment to future income tax liability, is considered as
an asset if there is convincing evidence that the Company
will pay normal income tax. Accordingly, MAT is recognised
as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the
Company.

Deferred tax is recognised, subject to the consideration of

prudence, on timing differences, being the difference
between taxable income and accounting income that
originate in one period and are capable of reversal in one
or more subsequent periods.

xvi)provisions and contingent liabilities

A provision is recognised when the Company has a present
obligation as a result of past events and it is probable that
an outflow of resources will be required to settle the
obligation in respect of which a reliable estimate can be
made. Provisions are not discounted to their present value and
are determined based on the best estimate required to
settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to reflect
the current best estimates. Contingent liabilities are
disclosed in the Notes.

xvii) derivatives
Foreign currency derivatives are used to hedge risk associated
with foreign currency transactions. All open positions as at
the close of the year are valued by marking them to the
market and provision is made for losses, if any.
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 3 - SHaRe CapitaL

as at 31, 2014 As at March 31, 2013
Particulars March Number ` crores
Number ` crores
authorised
Equity shares of ` 2 each with voting rights 250,000,000 50.00 250,000,000 50.00
Cumulative convertible preference shares of ` 100 each 400,000 4.00 400,000 4.00
Cumulative redeemable preference shares of ` 100 each 400,000 4.00 400,000 4.00
250,800,000 58.00 250,800,000 58.00
issued, Subscribed and fully paid up
Equity Shares of ` 2 each with voting rights
(Refer (i), (ii) and (iii) below) 199,687,500 39.94 199,687,500 39.94
total 199,687,500 39.94 199,687,500 39.94

(i) There is no movement in share capital during the year, previous year and immediately preceding previous year

(ii) Shareholder holding more than 5 percent shares:

equity Shares Equity Shares

as at 31, 2014 As at March 31, 2013
Particulars March
No. of % of No. of % of
Shares held Holding Shares held Holding
Mr. Brijmohan Lall Munjal * 12,396,842 6.21 - -
Ms. Renu Munjal* 12,396,840 6.21 - -
Mr. Suman Munjal *
12,396,840 6.21 - -
Mr. Pawan Munjal *
12,396,840 6.21 - -
Mr. Sunil Kant Munjal *
12,396,840 6.21 - -
M/S Hero Investments (P) Ltd - - 86,531,210 43.33
M/S Bahadur Chand Investments (P) Ltd 17,306,250 8.67 17,306,250 8.67
M/S BC India Private Investors 17,141,028 8.58 - -
*
Hold shares on behalf of Brijmohan Lall Om Prakash (partnership firm)

(iii) Rights, preference and restriction attached to

shares: Equity shares of ` 2 each:
a. In respect of equity shares , voting right shall be in same proportion as the capital paid upon such equity share.
b. The dividend proposed by the Board of Directors which is subject to the approval of the shareholders in the Annual
General Meeting shall be in the same proportion as the capital paid upon such equity share.
c. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in
proportion to capital paid upon such equity share.
 113

note no. 4 - ReSeRVeS and SuRpLuS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) Capital Reserves
On shares forfeited (# ` 4,250) # #
Share premium account on forfeited ## ##
shares reissued (## ` 25,500)
(b) general Reserve
Opening balance 1,926.32 1,711.32
Add: Transferred on account of amalgamation (refer note 36) 4.47 -
Add: Transferred from Statement of profit and loss 215.00 215.00
Closing balance 2,145.79 1,926.32
(c) Surplus - in Statement of profit and loss
Opening balance 3,039.98 2,538.57
Add: Profit for the year 2,109.08 2,118.16
Less: Dividend proposed to be distributed to equity share holders (` 1,297.97 1,198.13
65
per share, (previous year ` 60 per share))
Interim dividend - (refer note below) 1.16 -
Tax on dividend 220.59 203.62
Tax on dividend (refer note below) 0.20 -
Transfer to General Reserve 215.00 215.00
Closing balance 3,414.14 3,039.98
total 5,559.93 4,966.30

Note: As per the scheme of amalgamation, the Transferor Company i.e. Hero Investment Private Limited was entitled to utilise its
income/ available cash for declaration of payment of dividend to its shareholders until the effective date i.e. May 16, 2013 but
after the appointed date i.e. January 1, 2013. Accordingly, the company declared and paid interim dividend to its shareholders in
accordance with the scheme.

note no. 5 - Long teRM LiabiLitieS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) Deferred payment credits (Refer note (i) below) - 281.18
(b) Others 24.45 20.98
total 24.45 302.16

(i) For current maturities of deferred payment credits, refer item (a) in Note 9, Other current liabilities.

note no. 6 - deFeRRed tax (aSSetS)/ LiabiLitieS (net) ` crores

Particulars as at March 31, 2014 As at March 31, 2013
deferred tax liabilities
Accumulated depreciation - 136.23
Others 4.80 3.51
4.80 139.74
deferred tax assets
Accumulated depreciation 102.54 -
Accrued expenses deductible on payment 3.90 3.28
Others 4.34 4.05
110.78 7.33
Deferred tax (assets)/ liabilities (net) (105.98) 132.41
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 7 - Long teRM pRoViSionS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) Employees benefits - accumulated leaves 8.62 7.36
(b) Warranties 41.36 22.80
total 49.98 30.16

note no. 8 - tRade payabLeS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
Trade payables 2,290.59 1,873.34
total 2,290.59 1,873.34

(i) According to the records available with the Company, dues payable to entities that are classified as Micro and Small Enterprises
under the Micro, Small and Medium Enterprises Development Act, 2006 during the year is ` 0.01 crores (previous year ` Nil).
Further no interest has been paid or was payable to such parties under the said Act during the year.

Dues to Micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of
information collected by the Company. This has been relied upon by the auditors.

note no. 9 - otHeR CuRRent LiabiLitieS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) Current maturities of deferred payment credits (unsecured) 284.26 641.58
(Refer Note (i) below)
(b) other payables
Statutory dues 81.50 55.59
Security deposits dealers and others 47.79 38.67
Advances from dealers 110.16 92.42
Unclaimed dividend 51.09 46.10
Other liabilities 13.28 13.28
total 588.08 887.64

(i) In year 2010-11, the Company has entered into a Memorandum of Understanding (MOU) with Honda Motor Company
Limited Japan (Honda) for right and license to manufacture, assemble, sell and distribute certain products/parts and export
license for certain products and their service parts under the intellectual property rights. Liability payable upto June 30, 2014
has been included under other current liabilities above.

note no. 10 - SHoRt teRM pRoViSionS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) employees benefits - accumulated leaves 2.85 2.29
(b) provisions -others
Proposed equity dividend 1,297.97 1,198.13
Tax on proposed dividend 220.59 203.62
Taxation (net of payments as at March 31, 2014 ` 1,104.11 crores) 15.67 -
Warranties 7.25 5.66
total 1,544.33 1,409.70
An note no. 11 - Fixed aSSetS ` crores
nu gross block accumulated depreciation/amortisation net block
al Opening Additions Deletions/ Closing Opening Depreciation/ On upto as As 11
Re Particulars balance as adjustments balance as balance amortisation disposals March 31, at March at March 5
po at April 1, at March as at charge for 2014 31, 31,
rt 2013 31, 2014 April 1, the 2014 2013
20 2013 year**
13 (a) tangible assets
-
Land
- Freehold 82.80 - - 82.80 - - - - 82.80 82.80
- Leasehold# 184.17 15.84 - 200.01 9.46 1.92 - 11.38 188.63 174.71
Building 485.56 12.71 1.08 497.19 101.10 15.38 0.25 116.23 380.96 384.46
Plant and equipment 2,313.38 185.27 61.35 2,437.30 1,162.23 178.26 46.60 1,293.89 1,143.41 1,151.15
Furniture and 21.65 3.71 2.88 22.48 8.98 1.37 2.62 7.73 14.75 12.67
fixtures
Vehicles 39.60 4.40 5.53 38.47 18.42 5.14 4.22 19.34 19.13 21.18
Office equipment 18.78 4.00 0.01 22.77 4.65 0.99 - 5.64 17.13 14.13
Data Processing 102.13 14.86 2.47 114.52 51.47 14.87 2.28 64.06 50.46 50.66
equipment
total 3,248.07 240.79 73.32 3,415.54 1,356.31 217.93 55.97 1,518.27 1,897.27 1,891.76
(b) intangible assets
Model fee 535.81 - - 535.81 353.96 68.07 - 422.03 113.78 181.85
Technical know-how/ 2,845.73 46.86 - 2,892.59 1,881.56 813.10 - 2,694.66 197.93 964.17
export licenses*
Software 55.46 9.54 - 65.00 22.26 8.47 - 30.73 34.27 33.20
total 3,437.00 56.40 - 3,493.40 2,257.78 889.64 - 3,147.42 345.98 1,179.22
total (a+b) 6,685.07 297.19 73.32 6,908.94 3,614.09 1,107.57 55.97 4,665.69 2,243.25
3,070.98
(c) Capital work in 854.11 62.09
progress @
- Including intangible assets under development ` 288.71
crores
(previous year ` Nil)
3,097.36 3,133.07

Note :
#
Includes land of ` 15.84 crores at Halol (Gujrat) and ` 78.36 crores at Jaipur pending for registration in the name of the Company.
*
Includes net increase of ` 46.86 crores (previous year net decrease of ` 43.86 crores) due to fluctuation in exchange rates.
**
Includes ` 0.20 crore (Previous year ` Nil crores) transferred to Pre- operative expenditure (pending allocation)
@
Including pre operative expenses ` 7.97 crore (previous year ` 0.23 crore) relating to salaries, wages and other related project expenses of Neemrana plant {refer note
38}
In line with Notification No. G.S.R. 378 (E) dated May 11, 2011 issued by The Ministry of Corporate Affairs, Government of India, the exchange differences arising after April 1, 2007 on
reporting of long term foreign currency monetary items at rates at the end of year compared to those at which they were initially recorded, or reported in previous financial statements,
in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and is depreciated over the balance
useful life of the asset.
Continued to next page
He note no. 11 - Fixed aSSetS (Continued) ` crores not 116
Standa
ro
Mo Opening
gross block
Additions Deletions/ Closing
accumulated depreciation/amortisation
Opening Depreciation/ On Upto
net block
As at March
es lone
Financi
to
Co
Particulars balance as
at April 1,
adjustments balance as
at March
balance
as at
amortisation
charge for
disposals March
31, 2013
31, 2013
to al
Statem
rp
the
31, 2013 April 1, the
2012 ents
Lt 2012 year@
d.
fIn
(d) tangible assets

Anc
Land
- Freehold 82.80 - - 82.80 - - - - 82.80

IAl
- Leasehold 122.67 61.50 - 184.17 5.10 4.36 - 9.46 174.71
Building 450.35 35.21 - 485.56 86.79 14.31 - 101.10 384.46
Plant and equipment
Furniture and fixtures
2,111.92
18.27
250.31
3.78
48.85
0.40
2,313.38
21.65
1,029.77
7.56
170.94
1.63
38.48
0.21
1,162.23
8.98
1,151.15
12.67 stA
Vehicles
Office equipment
43.57
15.83
4.54
3.15
8.51
0.20
39.60
18.78
18.96
3.89
5.90
0.84
6.44
0.08
18.42
4.65
21.18
14.13 tem
Data Processing equipment
total
92.91
2,938.32
14.86
373.35
5.64
63.60
102.13
3,248.07
43.11
1,195.18
13.56
211.54
5.20
50.41
51.47
1,356.31
50.66
1,891.76 ent
s
(e) intangible assets
Model fee 442.16 93.65 - 535.81 289.71 64.25 - 353.96 181.85
Technical know-how/ export licenses* 2,889.59 - 43.86 2,845.73 1,021.28 860.28 - 1,881.56 964.17 for the
Software 38.19 17.27 - 55.46 16.58 5.68 - 22.26 33.20 year
total 3,369.94 110.92 43.86 3,437.00 1,327.57 930.21 - 2,257.78 1,179.22 ended
total (a+b) 6,308.26 484.27 107.46 6,685.07 2,522.75 1,141.75 50.41 3,614.09 3,070.98 March
(f) Capital work in progress @ 62.09 31,
3,133.07
Note :
#
Includes land of ` 48.46 crores at Haridwar and ` 61.31 crores at Jaipur pending for registration in the name of the Company.
*
Includes net decrease of ` 43.86 crores due to fluctuation in exchange rates.
@
Including pre operative expenses ` 0.23 crores relating to salaries, wages and other related project expenses of Neemrana plant {refer note 38}
In line with Notification No. G.S.R. 378 (E) dated May 11, 2011 issued by The Ministry of Corporate Affairs, Government of India, the exchange differences arising after April 1, 2007 on
reporting of long term foreign currency monetary items at rates at the end of year compared to those at which they were initially recorded, or reported in previous financial statements,
in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and is depreciated over the balance
useful life of the asset.
 117

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
Long term investments
Non Trade
In Debentures / Bonds
Quoted
Face Value of ` 1,000 each
12.25% Muthoot Finance Limited- 500,000 500,000 - 49.79 - 49.79
Maturity-14.09.2016
12.15% Religare Finvest Limited- 250,000 250,000 25.00 - - 25.00
Maturity-23.09.2014
7.34% HUDCO -Maturity-16.02.2023 250,000 250,000 - 25.00 - 25.00
7.18% IRFC -Maturity-19.02.2023 250,000 250,000 - 25.00 - 25.00
Face Value of ` 100,000 each
6.70% IRFC Bonds -Maturity- 1,500 1,500 - 15.23 - 15.23
08.03.2020 6.85% India Infrastructure - 10,000 - - 100.90 -
Finance Company Limited 2014 Tax
Free
Bonds-Maturity 22.01.2014
Face Value of ` 500,000 each
10.70% Tata Motors Finance Limited- 138 138 - 7.18 - 7.18
Maturity-28.04.2020
10.70% Tata Motors Finance Limited- 400 400 - 20.82 - 20.82
Maturity-10.04.2020
Face Value of ` 1,000,000 each
8.45% Rural Electrification Corporation 200 200 20.07 - - 20.07
-Maturity-19.02.2015
13% Religare Finvest Limited- 100 100 - 10.00 - 10.00
Maturity-30.05.2017
Zero Coupon bonds
Rural Engineering Corporation Ltd 37,000 37,000 - 50.24 - 50.24
Bonds @ 13,578 maturity ` 30,000
per
bond
45.07 203.26 100.90 248.33
Less: Provision for dimunition/ (0.74) (0.45)
amortisation (0.06) (0.51)
Market value Current ` 45.19 45.01 202.75 100.16 247.88
crores and non Current ` 207.73
crores (previous year Current `
98.80 crores and non Current `
254.48 crores)
Listed -quoted but not traded
Face Value of ` 1,000 each
8.18% NHPC Tax Free Bonds- 161,050 - - 16.11 - -
Maturity-02.11.2023
8.18% PFC Tax Free Bonds- 323,890 - - 32.39 - -
Maturity-16.11.2023
8.51% HUDCO Tax Free Bonds- 250,000 - - 25.00 - -
Maturity-13.01.2024
Face Value of ` 100,000 each

Annual Report 2013-14

notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, Current Non Current
2013
12.00% Shriram Transport NCD 1,300 1,300 13.85 - - 13.85
-Maturity-18.07.2014
Face Value of ` 1,000,000 each
8.91% L&T Finance Limited- 150 150 - 15.00 - 15.00
Maturity-15.04.2016
13.85 88.50 - 28.85
Less: Provision for dimunition/ - - (0.62)
(0.80)
amortisation
Maturity Value Current ` 13.00 13.05 88.50 - 28.23
crores and non Current `
88.50 crores (previous year
Current ` nil and non Current `
28.00 crores)
Zero Coupon bonds
National Bank For Agriculture and
Rural Development
Bhavishya Nirman Bonds @ 8,182
each
A 10 Year Zero Coupon Bond of 50,200 50,200 - 41.07 - 41.07
NABARD- maturity ` 20,000 per bond
Maturity Value non Current ` 100.40 - 41.07 - 41.07
crores (previous year non Current
` 100.40 crores)
total investment in bonds/ 58.06 332.32 100.16 317.18
debentures
in Mutual fund units:
Listed -quoted but not traded
debt fund
(units of the face value of ` 10
each)
iCiCi prudential Mutual Fund
FMP Series 63-378 Days Plan I - 25,325,762 - - 25.32 -
Cumulative
FMP Series 63-1 Year Plan E - 10,057,705 - - 10.06 -
Cumulative
Interval Fund Annual Interval Plan IV 10,294,508 12.00 - 12.00 -
10,294,508
Institutional Cumulative
FMP Series 59-1 Year Plan A - - - - - -
Cumulative
FMP Series 64-367 Days Plan D - - - 30.00 -
30,000,000
Cumulative
FMP Series 64-3 Years Plan I 10,000,000 10,000,000 - 10.00 - 10.00
Cumulative
FMP Series 65-367 Days Plan B - - - 25.00 -
25,000,000
Cumulative
FMP Series 65-502 Days Plan C 10,000,000 10,000,000 10.00 - - 10.00
Cumulative
FMP Series 65-367 Days Plan H - 15,000,000 - - 15.00 -
Cumulative
FMP Series 65-366 Days Plan I - 20,000,000 - - 20.00 -
Regular
Plan Cumulative
FMP Series 66-420 Days Plan A Direct 25,000,000 25,000,000 25.00 - - 25.00
Plan Cumulative
note no. 12 - inVeStMentS ` crores
Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
Interval Fund Annual Interval Plan 1 21,168,142 21,168,142 25.00 - 25.00 -
Institutional Cumulative
FMP Series 71-366 Days Plan C Direct 20,000,000 - 20.00 - - -
Plan Cumulative
FMP Series 72-366 Days Plan I Direct 15,000,000 - 15.00 - - -
Plan Cumulative
FMP Series 73-391 Days Plan G Direct 16,000,000 - - 16.00 - -
Plan Cumulative
birla Sunlife Mutual Fund
Fixed Term Pan Series EY Growth - 25,000,000 - - 25.00 -
Fixed Term Pan Series FM Growth - 30,421,453 - - 30.42 -
Fixed Term Pan Series FU Growth - 20,000,000 - - 20.00 -
Fixed Term Plan-Series GM (367 - 25,000,000 - - 25.00 -
Days)
-Gr.-Direct
Interval Income Fund-Annual Plan - 15,000,000 - - 15.00 -
2-Gr.-Direct
Fixed Term Plan-Series GT (366 27,784,500 - 27.78 - - -
Days)
-Gr.-Direct
Interval Income Fund-Annual Plan 20,000,000 - 20.00 - - -
VIII-
Gr.-Direct
Fixed Term Plan-Series IL(368 days)- 20,000,000 - 20.00 - - -
Gr.-
Direct
Fixed Term Plan-Series IO(368 days)- 20,000,000 - 20.00 - - -
Gr.-Direct
Fixed Term Plan-Series JE (368 21,725,000 - 21.73 - - -
days)-
Gr.-Direct
Fixed Term Plan-Series JY (367 15,000,000 - 15.00 - - -
days)-
Gr.-Direct
Fixed Term Plan-Series KD (367 16,400,550 - 16.40 - - -
days)-
Gr.-Direct
Fixed Term Plan-Series KO (399 25,000,000 - 25.00 - -
days)-
Gr.-Direct
HdFC Mutual Fund
FMP 390D March 2012 (1)-Growth- - 25,000,000 - - 25.00 -
Series XXI
FMP 371D Nov 2012 (2)-Growth- - 20,000,000 - - 20.00 -
Series
XXIII
idFC Mutual Fund
FMP-2 Year Series-1-Growth - 20,000,000 - - 20.00 -
Fixed Maturity Plan -Thirteen Months - 25,000,000 - - 25.00 -
Series 8-Growth
Fixed Maturity Plan -Yearly Series - 10,000,000 - - 10.00 -
65-Growth
Fixed Term Plan Regular Plan-Series - 15,000,000 - - 15.00 -
7-Growth
Yearly Series Interval Fund Regular 25,000,000 25,000,000 25.00 - 25.00 -
Plan-Series I-Growth
120
Standalone Financial Statements

notes to the fInAncIAl stAtements

for the year ended March 31, 2014

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
Yearly Series Interval Fund Direct 25,000,000 25,000,000 25.00 - 25.00 -
Plan-
Series II-Growth
Fixed Term Plan Series 9 Direct Plan- 25,000,000 25,000,000 25.00 - - 25.00
Growth
Fixed Term Plan Series 65 Direct 15,000,000 - 15.00 - - -
Plan-
Growth
Fixed Term Plan Series 86 Direct 20,000,000 - - 20.00 - -
Plan-
Growth
Reliance Mutual Fund
Dual Advantage Fixed Tenure Fund- - 40,000,000 - - 40.00 -
Plan A -Growth Plan
Dual Advantage Fixed Tenure Fund- - 20,031,895 - - 20.03 -
Plan B -Growth Plan
Fixed Horizon Fund -XXI-Series - 30,000,000 - - 30.00 -
11-Growth Plan
Fixed Horizon Fund -XXII-Series - 20,000,000 - - 20.00 -
14-Growth Plan
Fixed Horizon Fund -XXII-Series - 20,000,000 - - 20.00 -
15-Growth Plan
Fixed Horizon Fund -XXII-Series 20,000,000 20,000,000 20.00 - - 20.00
21-Growth Plan
Fixed Horizon Fund -XXII-Series - 25,000,000 - - 25.00 -
31-Growth Plan
Annual Interval Fund -Series 40,825,730 40,825,730 44.97 - 44.97 -
I-Institutional Plan Growth
Fixed Horizon Fund -XXII-Series 5,000,000 5,000,000 - 5.00 - 5.00
34-Growth Plan
Fixed Horizon Fund -XXIII-Series 15,000,000 15,000,000 15.00 - - 15.00
5-Direct Plan-Growth Plan
Fixed Horizon Fund -XXIV-Series 20,000,000 - 20.00 - - -
1-Direct Growth Plan
Interval Fund II-Series 3-Direct Plan 20,000,000 - 20.00 - - -
Growth Plan
Interval Fund II-Series 4-Direct Plan 20,000,000 - 20.00 - - -
Growth Plan
Fixed Horizon Fund -XXIV-Series 28,750,000 - 28.75 - - -
25-Direct Plan-Growth Plan
Fixed Horizon Fund -XXV-Series 20,000,000 - 20.00 - - -
2-Direct Plan-Growth Plan
Fixed Horizon Fund -XXV-Series 40,000,000 - - 40.00 - -
15-Direct Plan Growth Plan
Fixed Horizon Fund -XXV-Series 20,000,000 - - 20.00 - -
20-Direct Plan Growth Plan
Fixed Horizon Fund -XXV-Series 25,000,000 - - 25.00 - -
30-Direct Plan Growth Plan
note no. 12 - inVeStMentS ` crores
Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, March 31, Current Non Current
2014 2013
bnp paribas Mutual Fund
Fixed Term Fund Ser 24 A Direct 20,000,000 20,000,000 20.00 - - 20.00
Growth
Religare Mutual Fund
FMP Series XIII Plan F-Growth Plan - 35,000,000 - - 35.00 -
Fixed Maturity Plan Series XVII-Plan 15,000,000 15,000,000 15.00 - - 15.00
D
(399 Days)-Direct Plan
dSp blackRock Mutual Fund
FMP- Series 81-12 M -Growth - 15,000,000 - - 15.00 -
FMP- Series 84-12 M -Dir-Growth - 15,000,000 - - 15.00 -
uti Mutual Fund
Fixed Income Interval Fund Annual - 14,164,105 - - 20.00 -
Interval Plan III-INST Growth Plan
Fixed Term Income Fund Series - 25,000,000 - - 25.00 -
XIV-I(366 Days)-Direct Growth Plan
Fixed Term Income Fund Series XVII- 27,283,000 - 27.28 - - -
XIII(369 Days)-Direct Growth Plan
taurus Mutual Fund
Fixed Maturity Plan 374 Days Series - 10,000,000 - - 10.00 -
S-Growth Plan
Fixed Maturity Plan 369 Days Series - 10,000,000 - - 10.00 -
U-Growth Plan
Fixed Maturity Plan 369 Days Series - 20,504,409 - - 20.50 -
X-Direct Plan
Fixed Maturity Plan 369 Days Series - 5,017,448 - - 5.02 -
Y-Direct Plan
Fixed Maturity Plan 377 Days Series 5,036,817 5,036,817 5.04 - - 5.04
Z-Direct Plan Growth
L&t Mutual Fund
FMP-V (March 395 D A)-Growth - 5,000,000 - - 5.00 -
FMP-VII (February 419 D A) Direct 15,000,000 15,000,000 15.00 - - 15.00
Plan
Growth
FMP-VII (March 13 M A) Direct Plan 15,000,000 15,000,000 15.00 - - 15.00
Growth
FMP 8- Plan A- Direct Growth 15,000,000 - 15.00 - - -
FMP-VII (March 381 D A) Direct Plan 10,000,000 10,000,000 10.00 - - 10.00
Growth
FMP 8- Plan G- Direct Growth 10,291,784 - 10.29 - - -
FMP Series 9- Plan D- Direct Growth 25,000,000 - 25.00 - - -
FMP Series 9- Plan G- Direct Growth 20,000,000 - 20.00 - - -
FMP Series 10- Plan A- Direct Growth 6,000,000 - 6.00 - - -
FMP Series 10- Plan D- Direct Growth 10,000,000 - 10.00 - - -
FMP Series 10- Plan H- Direct Growth 10,000,000 - - 10.00 - -
FMP Series 10- Plan M- Direct Growth 10,000,000 - - 10.00 - -
FMP Series 10- Plan Q- Direct Growth 25,000,000 - - 25.00 - -
J p Morgan Mutual Fund
Fixed Maturtiy Plan Series 302 10,000,000 10,000,000 - 10.00 - 10.00
Growth
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
deutsche Mutual Fund
Fixed Maturity Plan -Series 23-Direct 25,000,000 25,000,000 25.00 - - 25.00
Plan-Growth
Fixed Maturity Plan -Series 27-Direct - 5,000,000 - - 5.00 -
Plan-Growth
Fixed Maturity Plan -Series 43-Direct 25,000,000 - 25.00 - - -
Plan-Growth
Fixed Maturity Plan -Series 42-Direct 25,000,000 - 25.00 - - -
Plan-Growth
Fixed Maturity Plan Series 46-Direct 15,000,000 - 15.00 - - -
Plan-Growth
Fixed Maturity Plan Series 48-Direct 10,000,000 - 10.00 - - -
Plan-Growth
Fixed Maturity Plan Series 51-Direct 10,000,000 - 10.00 - - -
Plan-Growth
Fixed Maturity Plan Series 54-Direct 10,000,000 - - 10.00 - -
Plan-Growth
Fixed Maturity Plan Series 57-Direct 20,000,000 - - 20.00 - -
Plan-Growth
(units of the face value of `
1,000
each)
pramerica Mutual Fund
Fixed Duration Fund series 5-Direct 100,000 100,000 10.00 - - 10.00
Plan-Growth option
Fixed Duration Fund series 13-Direct 50,000 - 5.00 - - -
Plan-Growth option
total investment in Mutual Funds 845.24 246.00 808.32 235.04
Repurchase price Current ` 906.56
crores and non Current ` 251.62
crores (previous year Current
` 868.66 crores and non Current
` 239.36 crores)
trade
In Equity Shares
Unquoted
of Subsidiaries
HMC MM Auto Limited (face value 1,799,993 - - 1.80 - -
` 10 each)
HMCL(N A),Inc. (No par Value) - - - 155.38 - -
of associates
Hero FinCorp Limited (face value ` 7,310,300 7,296,900 - 56.47 - 56.31
10
each)
non trade
of other entities
Bombay Stock Exchange Limited 140,400 140,400 - 5.94 - 5.94
(face
value of Re. 1 each)
 123

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
in equity preferential Shares
Tata Capital Limited (face value of 100,000 - - 10.00 - -
` 1,000 each)
total investment in equity Shares - 15.94 - 5.94
total Long term investments 903.30 807.91 908.48 614.47
other than Long term investments
non-trade
in Mutual fund units:
Listed -quoted but not traded
debt fund
(units of the face value of ` 10
each)
idFC Mutual Fund
Interval Fund Direct Plan -Series IV- 5,000,000 - 5.00 - - -
Growth
Reliance Mutual Fund
Interval Fund I-Half Yearly Interval 4,767,263 - 5.00 - - -
Fund-Series 2-Direct Plan Growth
Plan
Repurchase price Current ` 10.00 - - -
10.08
crores (previous year ` nil)
Unquoted
debt fund
(units of the face value of ` 10
each)
iCiCi prudential Mutual Fund
Short Term Plan Inst. Growth 11,770,847 11,770,847 25.01 - 25.01 -
Blended Plan B-Direct Plan-Growth 39,120,303 - 70.50 - - -
Option-I
Banking and PSU Debt Fund-Direct 62,782,668 - 84.96 - - -
Plan-Growth
Long Term Plan Premium Plus- - 83,887,311 - - 100.00 -
Cumulative
Gilt Treasury Plan Growth - 7,077,165 - - 20.00 -
birla Sunlife Mutual Fund
Dynamic Bond Fund- Retail- Growth 90,522,800 90,522,800 164.32 - 164.32 -
Short Term Fund -Growth-Direct Plan 11,321,095 - 50.00 - - -
idFC Mutual Fund
Money Manager Fund -Investment - 15,203,322 - - 25.03 -
Plan -Inst Plan B-Growth
SSIF-Short Term -Plan C-Growth 43,198,719 43,198,719 50.45 - 50.45 -
SSIF Medium Term -Plan B -Growth 16,729,050 16,729,050 20.04 - 20.04 -
SSIF-Investment Plan-Growth-(Direct 8,621,462 - 25.00 - - -
Plan)
Dynamic Bond Fund-Growth-(Direct 34,410,485 - 50.00 - - -
Plan)
Ultra Short Term Fund-Growth- - 31,783,566 - - 50.00 -
(Regular Plan)
124
Standalone Financial Statements
Dynamic Bond Fund-Growth-(Regular 18,776,803 18,776,803 25.00 - 25.00 -
Plan)
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
Ultra Short Term Fund-Growth-(Direct - 10,483,731 - - 17.00 -
Plan)
Banking Debt Fund-Direct plan- 19,980,419 19,980,419 20.00 - 20.00 -
Growth
Arbitrage Fund -Dividend-(Direct Plan) 24,379,222 - 30.75 - - -
Reliance Mutual Fund
Short Term Fund Growth Plan 14,056,349 14,056,349 29.00 - 29.00 -
Short Term Fund-Direct Growth Plan 11,254,265 25.00 - - -
Growth Option -
Dynamic Bond Fund-Direct Plan- 28,884,863 - 48.00 - - -
Growth Plan
Floating Rate Fund Short Term Plan- 27,897,922 27,897,922 50.28 - 50.28 -
Growth
Floating Rate-Short Term Plan 63,838,312 - 123.84 - - -
-Direct
Growth Plan
uti Mutual Fund
Short Term Income Fund Institutional 15,314,052 15,314,052 20.00 - 20.00 -
Growth Option
L&t Mutual Fund
MIP- Wealth Builder Fund Growth - 9,217,609 - - 10.00 -
Short Term Opportunities Fund- - - - 15.00 -
Growth 13,816,734
Floating Rate Fund Direct Plan-Growth 14,422,938 - 16.67 - - -
Ultra Short Term Fund Direct Plan- 89,916,686 179.15 - - -
Growth -
Income Opportinities Fund Direct Plan- 15,046,871 - 20.00 - - -
Growth
Triple Ace Bond Fund-Bonus-Original 5,363,713 - 6.67 - - -
escorts Mutual Fund
Short Term Debt Fund-Growth - 861,553 - - 1.30 -
Religare Mutual Fund
Credit Opportunities Fund-Growth - 19,517,831 - - 25.00 -
Active Income Fund Growth - - - 25.00 -
Jp Morgan Mutual Fund 18,483,878
India Active Bond Fund Retail- 3,981,937 3,981,937 5.00 - 5.00 -
Growth Short Term Income Fund 19,155,767 25.00 - - -
-Direct Plan- -
Growth
bnp paribas Mutual Fund
Short Term Income Fund-Growth - 26,700,674 - - 35.02 -
MediumTerm Income Fund Direct 25,000,000 25.00 - - -
Plan -
Growth
deutsche Mutual Fund
Banking and PSU Debt Fund-Direct 34,685,620 15,000,000 35.00 - 15.00 -
Plan-Growth
Treasury Fund-Investment-Direct Plan 9,238,367 - 9.19 - - -
Bonus
note no. 12 - inVeStMentS ` crores
Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
Short Maturity Fund Direct Plan- 4,614,440 - 6.67 - - -
Annual Bonus
Ultra Short Term Fund-Direct Plan- 8,868,007 - 8.83 - - -
Annual Bonus
Cash Opportunities Fund-Direct Plan- 10,389,886 - 10.17 - - -
Annual Bonus
(units of the face value of ` 100
each)
iCiCi prudential Mutual Fund
Flexible Income-Regular Plan-Growth 1,626,944 8,413,334 27.86 - 144.08 -
Flexible Income-Direct Plan -Growth 2,133,884 - 49.38 - - -
birla Sunlife Mutual Fund
Floating Rate Fund-Long Term- - 1,225,641 - - 17.00 -
Growth-
Direct Plan
(units of the face value of `
1,000
each)
Reliance Mutual Fund
Money Manager Fund-Growth Plan- 1,310,126 2,021,295 162.41 - 250.57 -
Growth Option
pramerica Mutual Fund
Short Term Income Fund-Growth - 58,723 - - 6.00 -
Option
Treasury Advantage Fund-Growth - 48,903 - - 5.00 -
Option
Credit Opportunities Fund -Growth 70,000 70,000 7.00 - 7.00 -
Dynamic Bond Fund-Growth Plan 50,000 50,000 5.00 - 5.00 -
Ultra Short Term Bond Fund Direct 394,855 - 50.00 - - -
Plan
Growth Option
Religare Mutual Fund
Bank Debt Fund-Growth 100,000 100,000 10.00 - 10.00 -
Ultra Short Term Fund-Direct Plan - 93,039 - - 15.00 -
Growth
Active Income Fund Growth 184,838 - 25.00 - - -
dSp blackRock Mutual Fund
Strategic Bond Fund -Institutional 190,666 190,666 24.20 - 24.20 -
Plan-Growth
Strategic Bond Fund -Direct Plan- 176,115 - 25.00 - - -
Growth
indiabulls Mutual Fund
Ultra Short Term Fund -Growth Plan - 200,000 - - 20.00 -
Repurchase price Current ` 1,842.15 1,645.35 - 1,251.30 -
crores (previous year Current
` 1,423.55 crores)
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVeStMentS ` crores

Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, Current Non Current
2013
in equity fund units:
(units of the face value of ` 10
each)
escorts Mutual Fund
Opportunities Fund -Dividend - 8,376,943 - - 8.56 -
Repurchase price ` nil (previous year - - 8.56 -
Current ` 9.19 crores)
in Liquid fund units:
(units of the face value of ` 10
each)
escorts Mutual Fund
Liquid Plan-Growth - 28,969,842 - - 50.49 -
Liquid Direct Plan-Growth 29,106,997 54.51 - - -
HdFC Mutual Fund -
Liquid Fund-Direct Plan-Growth - 17,310,696 - - 40.00 -
Option
(units of the face value of ` 100
each)
iCiCi prudential Mutual Fund
Liquid Direct plan-Growth 2,636,293 2,885,170 50.00 - 50.00 -
birla Sunlife Mutual Fund
Cash Plus-Growth-Direct Plan 2,433,114 13,464,953 50.00 - 252.65 -
(units of the face value of `
1,000 each)
Reliance Mutual Fund
Liquidity Fund- Direct Growth Plan 1,146,882 254,933 221.40 - 45.00 -
Growth Option
taurus Mutual Fund
Liquid Fund-Direct Plan-Super - 367,557 - - 46.06 -
Institutional Growth
idFC Mutual Fund
Cash Fund -Growth-(Direct Plan) 1,513,918 280,758 235.70 - 40.00 -
L&t Mutual Fund
Liquid Fund Direct Plan-Growth - 386,639 - - 61.62 -
axis Mutual Fund
Liquid Fund-Direct Plan-Growth 662,821 307,984 94.15 - 40.00 -
pramerica Mutual Fund
Liquid Fund-Direct plan-Growth - 1,385,633 - - 171.87 -
Option
Repurchase price Current ` 710.28 705.76 - 797.69 -
crores (previous year Current
` 802.96 crores)
investment in Mutual Funds 2,361.11 - 2,057.55 -
note no. 12 - inVeStMentS ` crores
Units as at Units as at as at March 31, As at March 31,2013
2014 Current Non Current
March 31, 2014 March 31, 2013 Current Non Current
non trade
in debentures / bonds
Quoted
Face Value of ` 1,000 each
12.15% Religare Finvest Ltd 50,000 - 5.01 - - -
12.15NCD
23SEP14
Face Value of ` 1,000,000 each
9.20% Bank Of Baroda RR Perpetual 50 - - 5.15 - -
BD
09.10.2019
8.60% Sardar Sarovar Narmada 260 - 6.61 - - -
Nigam
Limited 09MR 15
11.62 5.15 - -
Less: Provision for dimunition/ - -
amortisation (0.14) (0.18)
Market value Current ` 11.48 11.48 4.97 - -
crores and non Current 4.97 crores
(previous year ` nil)
investments under portfolio
Management Services #
Listed - quoted but not traded
debentures / bonds
Face Value of ` 1,000,000 each
Tata Housing Development Co. ZCB - 200 - 20.03 -
DOM 15.10.2013
9.20% Bank Of Baroda RR Perpetual - 50 - 5.15 -
BD 8.60% Sardar Sarovar Narmada - 75 - 7.62 -
Nigam
Limited 09MR 15
8.60% Sardar Sarovar Narmada - 5 - 0.51 -
Nigam
Limited 09MR 15
8.60% Sardar Sarovar Narmada - 50 - 5.09 -
Nigam
Limited 09MR 15
Face Value of ` 1,000 each
12.15% Religare Finvest Ltd - 50,000 - 5.01 -
12.15NCD
23SEP14
- - 43.41 -
Less: Provision for dimunition/ (0.08) -
amortisation - -
Maturity Value ` nil (previous year - - 43.33 -
Current ` 43.00 crores)
investment under portfolio - - 43.33 -
Management Services
total other than Long term 2,372.59 4.97 2,100.88 -
investments
3,275.89 812.88 3,009.36 614.47
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVeStMentS

as at March 31, 2014 As at March 31, 2013
aggregate value of Book value Market value Book value Market value
Quoted investments -Non Current(Repurchase 583.98 653.22 553.29 622.24
Price/ Market Value)
Quoted investments-Current(Repurchase Price/Market 925.78 986.31 952.63 1,010.46
Value)
Unquoted investments-Non Current (Repurchase 229.59 229.59 62.25 62.25
Price/ Maturity Value/Cost)
Unquoted investments-Current (Repurchase 2,351.11 2,552.43 2,057.55 2,235.70
Price/ Maturity Value/Cost)
Dimunition/amortisation-Non Current (0.69) - (1.07) -
Dimunition/amortisation-Current (1.00) - (0.82) -
4,088.77 4,421.55 3,623.83 3,930.65
#
The Company has entered into Discretionary Portfolio Management Agreements, administered through Escorts Securities
Limited, Reliance Capital Asset Management Ltd collectively called Portfolio Managers. In terms of the said agreements, the
Portfolio Managers have dealt in mutual funds, debentures, bonds, government securities, equity shares, equity stock futures,
equity stock options, equity index options and such other securities, made on behalf of the Company. However, there are no
outstanding derivative contracts as at March 31, 2014

note no. 13 - Long-teRM LoanS and adVanCeS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
unsecured, considered good
(a) Security deposits 9.32 8.49
(b) balance with government authorities
Excise duty 45.03 3.63
VAT/ sales tax 247.64 156.14
(c) other loans and advances
Capital advances 149.89 255.24
Loans to employees 24.90 22.51
Prepaid expenses 0.61 2.61
Advance income tax (net of provisions as at March 31, 2013 ` - 163.09
1,072.31
crores)
MAT credit entitlement - 168.35
total 477.39 780.06

note no. 14 - otHeR non-CuRRent aSSetS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
unsecured, considered good
Accruals
Interest accrued on investments 47.81 36.44
total 47.81 36.44
note no. 15 - inVentoRieS* ` crores
Particulars as at March 31, 2014 As at March 31, 2013
Raw materials and components 371.49 368.68
Goods in transit of raw materials and components 74.37 42.59
Stores and spares 62.37 55.51
Loose tools 14.22 14.25
Finished goods
Two wheelers 68.26 99.36
Spare parts 42.65 25.86
Work in progress (Two wheelers) 36.19 30.51
total 669.55 636.76

* Lower of cost and net realisable value

note no. 16 - tRade ReCeiVabLeS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) outstanding for a period exceeding six months from the date
they
were due for payment
Secured, considered good 1.25 0.82
Unsecured, considered good 4.70 1.73
Unsecured considered doubtful 10.40 9.54
16.35 12.09
Less: Provision for doubtful trade receivables 10.40 9.54
5.95 2.55
(b) others
Secured, considered good 20.96 15.62
Unsecured, considered good 893.67 646.83
total 920.58 665.00

note no. 17 - CaSH and CaSH equiVaLentS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
(a) Cash on hand 0.29 0.21
(b) balances with banks
In current accounts 15.28 13.97
In deposit accounts (Refer (i) below) 50.84 120.77
In dividend current accounts (Earmarked accounts) 51.09 46.09
total 117.50 181.04

(i) Balance with banks include deposits amounting to ` 50.84 crores (previous year ` 120.77 crores) which have an original
maturity of more than 12 months and now maturing during the year.
130
Standalone Financial Statements

notes to the fInAncIAl stAtements

for the year ended March 31, 2014

note no. 18 - SHoRt - teRM LoanS and adVanCeS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
unsecured, considered good
(a) Loans and advances to related party
Intercorporate deposits 220.00 240.00
(b) balance with government authorities
CENVAT/ Service tax credit 94.33 103.68
VAT/ sales tax 50.72 118.70
Excise duty -current account 0.66 0.66
Export incentive receivables 16.98 13.74
(c) others
Advance to vendors 108.91 26.68
Loans and advances to employees 18.36 17.38
Security deposits 1.07 0.50
Prepaid expenses 34.23 28.73
Others 5.05 3.48
total 550.31 553.55

note no. 19 - otHeR CuRRent aSSetS ` crores

Particulars as at March 31, 2014 As at March 31, 2013
unsecured, considered good
(a) accruals
Interest accrued on investments 17.41 26.01
Other accruals 4.64 5.89
total 22.05 31.90

note no. 20 - ReVenue FRoM opeRationS ` crores

For the year For the year
Particulars
ended March ended March
31, 2014 31, 2013
(a) Sale of products
Two wheelers (62,45,960 Nos. (previous year 60,75,583 Nos.)) 25,041.15 23,759.73
Spare parts 1,964.11 1,714.81
27,005.26 25,474.54
Less: Excise duty 1,880.35 1,891.80
25,124.91 23,582.74
(b) other operating revenue
Income from services
Dealers support services 25.72 36.94
Goodlife program for customers 60.85 64.88
Services - others 34.38 50.59
120.95 152.41
Duty drawback and other incentives 21.69 28.96
Miscellaneous income 7.92 4.00
29.61 32.96
150.56 185.37
total 25,275.47 23,768.11
note no. 21 - otHeR inCoMe ` crores
For the year For the year
Particulars
ended March ended March
31, 2014 31, 2013
(a) interest income
Intercorporate deposits 7.16 2.95
Long term - Non trade investments 49.51 47.82
Current - Non trade investments 3.59 12.35
Others 83.11 43.19
(b) dividend income
Current investments - Non trade 0.69 0.13
Long term investments - Trade 2.19 2.72
Long term investments - Non trade 0.06 0.08
(c) net gain on sale of non trade *

Current investments 221.70 232.86

Long term investments 77.69 55.15
(d) other non operating income
Profit on sale of fixed assets 0.68 1.13
total 446.38 398.38
*
After adjusting loss on sale of current investments aggregating ` 1.26 crores (previous year ` 0.35 crores)

note no. 22 - CoSt oF MateRiaLS ConSuMed ` crores

Particulars For the year For the year
ended March ended March
31, 2014 31, 2013
(a) Raw materials and components consumed:
Opening stock 411.27 425.21
Add: Purchase of raw materials and components 18,363.25 17,629.50
18,774.52 18,054.71
Less: Closing stock 445.85 411.27
18,328.67 17,643.44
Less: Sale of components to ancillaries
on cost to cost basis 14.29 185.13
18,314.38 17,458.31
Less: Cash discount 69.43 72.53
Consumption of raw materials and components 18,244.95 17,385.78
Less: Scrap sales 23.42 20.92
net consumption 18,221.53 17,364.86
Materials consumed comprises:
Steel sheets 44.33 57.17
Components 18,270.05 17,401.14
total 18,314.38 17,458.31
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 23 - CHangeS in inVentoRy oF FiniSHed goodS and WoRK-in-pRogReSS ` crores

For the year For the year
Particulars
ended March ended March
31, 2014 31, 2013
(a) opening stock
Two wheelers 99.36 136.38
Spare parts 25.86 22.32
Work in progress 30.51 34.48
155.73 193.18
Less: Excise duty on opening stock 14.55 19.20
Net opening stock 141.18 173.98
(b) Closing stock
Two wheelers 68.26 99.36
Spare parts 42.65 25.86
Work in progress 36.19 30.51
147.10 155.73
Less: Excise duty on closing stock 14.28 14.55
Net closing stock 132.82 141.18
net (increase)/ decrease 8.36 32.80

note no. 24 - eMpLoyee beneFitS expenSeS ` crores

For the year For the year
Particulars
ended March ended March
31, 2014 31, 2013
employee benefits expenses (Refer (i) & (ii) below)
(i) Salaries and wages 818.55 723.45
(ii) Contribution to provident and other funds 51.65 56.24
(iii) Staff welfare expenses 59.84 41.23
total 930.04 820.92

2013-14 2012-13
(i) defined contribution and other plans
Employer’s contribution to provident fund 30.56 26.22
Employer’s contribution to superannuation fund 12.91 13.93
Employer’s contribution to Gratuity fund 6.24 14.15
Employer’s contribution to ESIC 1.94 1.94
total 51.65 56.24

(ii) defined benefit plans

In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as defined benefit plan. The
gratuity plan provides for a lumpsum payment to the employees at the time of separation from the service on
completion of vested year of employment i.e. five years. The liability of gratuity plan is provided based on actuarial
valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Life
Insurance Corporation of India by whom the plan assets are maintained.
 133

` crores
For the year For the year
i. Change in benefit obligation
ended March ended March
31, 2014 31, 2013
Present value of obligation at the beginning of the year 109.55 89.95
Current Service Cost 7.35 6.34
Interest Expenses 8.57 7.48
Actuarial (Gain) / Loss (0.22) 7.68
Benefits Paid (4.71) (1.90)
Present value of obligation at the end of the year 120.54 109.55

` crores
For the year For the year
ii. Fair value of Plan Assets
ended March ended March
31, 2014 31, 2013
Fair value of plan assets at the beginning of the year 109.55 89.95
Expected return on scheme assets 10.35 9.01
Contributions by the Company 5.87 13.78
Benefits Paid (4.71) (1.90)
Actuarial Gain / (Loss) (0.52) (1.29)
Fair value of plan assets at the end of the year 120.54 109.55

` crores
For the year For the year
iii. Return on Plan Assets
ended March ended March
31, 2014 31, 2013
Expected return on plan assets 10.35 9.01
Actuarial Gain / (Loss) (0.52) 8.98
Actual return on plan assets 9.83 17.99

` crores
For the year For the year
iv. Amount recognised in the Balance Sheet
ended March ended March
31, 2014 31, 2013
Present value of defined benefit obligation 120.54 109.55
Fair value of Plan Assets 120.54 109.55
Net liability/(asset) recognised in the balance sheet - -

` crores
For the year For the year
v. Expenses recognised in the statement of profit and loss
ended March ended March
31, 2014 31, 2013
Current service costs 7.35 6.33
Interest expense 8.57 7.48
Expected return on plan assets (10.35) (9.01)
134
Standalone Financial Statements
Net actuarial (gain)/loss recognized during the year 0.30 8.98
Expenditure recognized in statement of Profit and Loss 5.87 13.78
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

` crores
For the year For the year
vi. Balance Sheet reconciliation
ended March ended March
31, 2014 31, 2013
Net liability/(asset) at the beginning of the year - -
Expenses as above 5.87 13.78
Contribution paid (5.87) (13.78)

The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions,
which if changed, would affect the defined benefit commitment’s size, funding requirements and expense.

For the year For the year

vii. Principal Actuarial assumptions for Gratuity and leave benefits
ended March ended March
31, 2014 31, 2013
Rate for discounting liabilities 8.00% p.a. 8.40% p.a.
Expected salary increase rate 6.00% p.a. 6.00% p.a.
Expected return on scheme assets 9.40% p.a. 9.40% p.a.
Withdrawal Rate Upto 30 years: Upto 30 years:
3% 3%
From 31 to 44 From 31 to 44
years:2% years:2%
After 44 years: 1% After 44 years: 1%
Mortality table used India assured Lives LIC (1994-96) Mortality
Mortality (2006-08) Table (ultimate)
(modified) Ult.

experience adjustments 2013-14 2012-13 2011-12 2010-11 2009-10

Gratuity
Present value of Defined benefit plan 120.53 109.55 89.95 68.75 51.28
Fair value of plan assets 120.53 109.55 89.95 68.75 51.28
Funded status [Surplus / (Deficit)] - - - - -
Experience gain / (loss) adjustments on plan 7.51 4.08 15.28 8.63 5.10
liabilities
Experience gain / (loss) adjustments on plan assets 0.52 1.30 0.10 0.03 -

The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and
other relevant factors such as supply and demand in the employment market.

The Company makes annual contribution to Life Insurance Corporation (LIC). As LIC does not disclose the composition of its
portfolio investments, accordingly break-down of plan assets by investment type has not been disclosed.

note no. 25 - FinanCe CoStS ` crores

Particulars For the year For the year
ended March ended March
31, 2014 31, 2013
(a) interest expenses
On dealers security deposits 1.78 1.69
On others 10.04 10.22
total 11.82 11.91
note no. 26 - otHeR expenSeS ` crores
For the year For the year
Particulars
ended March ended March
31, 2014 31, 2013
(a) other expenses
Stores and tools consumed 98.93 105.87
Power and fuel 137.46 129.18
Rent 13.22 10.49
Insurance charges 44.98 35.36
Repairs and maintenance
- Plant and machinery 67.87 54.58
- Buildings 15.29 10.17
- Others 50.52 43.34
Rates and taxes 170.93 154.31
Exchange fluctuation 0.09 2.54
Packing, forwarding, freight etc. 729.39 653.28
Royalty 116.67 50.02
Advertisement and publicity 493.47 468.71
Donations# 11.71 10.54
Auditors’ remuneration 1.44 1.26
Lease rent 21.75 18.69
Provision for doutful debts 0.85 0.28
Provision for diminution/amortization in value of investments
- Long term non trade investment 0.45 0.59
Loss on fixed assets sold/discarded 13.98 7.07
Miscellaneous expenses 586.48 508.77
total 2,575.48 2,265.05
#
Donation included ` 11 crores (previous year ` Nil) contributed to Satya Electoral Trust

note no. 27 - eaRningS peR equity SHaRe

For the year For the year
Particulars Unit
ended March ended March
31, 2014 31, 2013
(a) earnings per equity share (epS):
Net profit after tax Rupees crores 2,109.08 2,118.16
Weightedaveragenumberofequityshares outstanding Numbers 199,687,500 199,687,500
during the year
Nominal Value of Equity Shares Rupees 2.00 2.00
Basic and diluted EPS Rupees 105.61 106.07
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 28 - Contingent LiabiLitieS and CoMMitMentS (to tHe extent not pRoVided FoR) ` crores
Particulars as at March 31, 2014 As at March 31, 2013
(a) Contingent liabilities
(i) In respect of excise matters 29.24 47.09
The above matters are subject to legal proceedings in the
ordinary course of business. The legal proceedings when
ultimately concluded will not, in the opinion of the management,
have a material effect on the result of operations or the
financial position of the Company.
(b) Commitments
Estimated amount of contracts remaining to be executed on capital 458.39 454.91
account and not provided for (Net of advances paid amounting to `
438.61 crores (previous year ` 255.24 crores))
Other commitments (Refer note below)
total 487.63 502.00

The Company has other commitments for purchase /sales orders which are issued after considering requirements per operating
cycle for purchase /sale of goods and services, employees benefits including union agreement in normal course of business.
The Company does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which
have a material impact on the financial statements.

note no. 29 - As the Company’s business activity falls within a single primary business segment viz. “Two wheelers, its parts and
ancillary services” and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17)“Segment
Reporting”, notified in the Companies (Accounting Standards) Rules, 2006 are not applicable.

note no. 30 - ReLated paRty diSCLoSuReS undeR aCCounting StandaRd 18

a) parties over which the Company has control-Subsidiary companies
HMCL (NA) Inc (w.e.f May 29, 2013)
HMC MM Auto Limited (w.e.f November 11, 2013)

b) parties in respect of which the Company is an associate. { refer note no 36}

Hero Investment Private Limited (upto May 16,
2013) Brijmohan Lall Om Prakash (Firm; from May
17, 2013)

c) associate of the Company

Hero FinCorp Limited

d) Key management personnel and their relative

Mr. Brijmohan Lall Munjal - Chairman
Mr. Pawan Munjal - Managing Director
Mr. Sunil Kant Munjal - Joint Managing Director
Mr. Suman Kant Munjal - Director

e) enterprises over which key management personnel and their relatives are able to exercise significant influence
Brijmohan Lall & Associates, A.G. Industries Private Limited, Highway Industries Limited (upto previous year), Rockman
Industries Limited, Cosmic Kitchen Private Limited, Hero Management Services Limited, Hero Cycles Limited, Hero Corporate
Services Limited, Hero Mindmine Institute Limited, Easy Bill Limited(upto previous year), Abhyuday Manufacturing and
Automotive Limited and Raman Kant Munjal Foundation.
Transactions with related parties during the year
a) Parties over which Company has control
` in crores
this year Previous year
equity investment
HMCL (NA) Inc * 151.44 -
HMC MM Auto Limited 1.80 -
Recovery of expenses
HMC MM Auto Limited 0.34 -
*
Excluding costs incidental to investments

b) Parties in respect of which the Company is an associate.

` in crores
this year Previous year
dividend*
Brijmohan Lall Om Prakash 371.91 -
Hero Investments Private Limited {refer note 36} - 389.39
*
Exclude proposed final dividend

c) Associate of the Company

` in crores
this year Previous year
Hero FinCorp Limited
Lease rental expenses 20.26 17.93
Dividend received 2.19 2.72
Intercorporate deposits given 605.00 385.00
Intercorporate deposits repaid 625.00 265.00
Interest on Intercorporate deposits 7.16 2.95
Investment in equity shares 0.16 52.85
Purchases of Fixed Assets - 0.99
balance outstanding at the year end
- Receivable 220.00 240.00
- Payable 8.67 -

d) Key management personnel and their relative.

` in crores
this year Previous year
Managerial Remuneration/Sitting fees
Mr. Brijmohan Lall Munjal 36.98 32.73
Mr. Pawan Munjal 37.88 32.80
Mr. Sunil Kant Munjal 35.97 31.51
Mr. Suman Kant Munjal 0.02 0.01
balance outstanding at the year end
- Payables (including commission) 89.40 79.55
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

e) Enterprises over which key management personnel and their relatives are able to exercise significant influence.
` in crores
this year Previous year
purchase of raw materials and components etc. 2,005.38 2,010.09
Purchase of Assets 24.31 16.88
Sale of components etc. 12.80 -
Payment towards other services etc. 12.01 5.36
Donation 0.30 0.85
balance outstanding as at the year end
- Payables 194.10 172.02

Significant related party transactions included in the above are as under :-

` in crores
this year Previous year
purchase of raw materials and components etc.
A .G. Industries Private Limited 680.00 572.26
Rockman Industries Limited 1,237.00 1,119.70
Highway Industries Limited - 215.57
purchase of assets
Rockman Industries Limited 21.47 16.88
A.G. Industries Private Limited 2.84 -
Sale of components etc.
Rockman Industries Limited 12.80 -
payment for services etc.
Hero Corporate Services Limited 3.75 3.35
Hero Mindmine Institute Limited 1.98 1.83
Abhyuday Manufacturing and Automotive Limited 6.05 -
donation
Raman Kant Munjal Foundation 0.30 0.85

note no. 31 - The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines.
These lease arrangements are cancellable in nature and range between two to four years. The aggregate lease rentals under these
arrangements amounting to ` 21.75 crores (previous year ` 18.69 crores) have been charged under “Lease rentals” in Note 26.
note no. - 32 - Information pursuant to clause 4 (ix) (b) of the Companies (Auditor’s Report) Order, 2003 in respect of disputed
dues, not deposited as at March 31, 2014, pending with various authorities:

Name of the Statute Nature of Amount* Amount paid Period to which Forum where dispute is
the Dues (` in under protest the amount pending
crores) (` in crores) relates
Central Excise Laws Excise Duty 603.17 177.06 2000-01 and 2002 – CESTAT
2013
0.05 - 2006-2013 Commissioner (Appeals)
Service Tax 0.89 0.45 2004-05 to 2005-06 Supreme Court
254.42 22.04** 2004-05 to 2011-12 CESTAT
Sales Tax Sales Tax 1.90 1.90 1998-99 to 2000-2001 Haryana Tax Tribunal
Income tax Act, 1961 Income tax 1,878.54 50.00*** 2007-08 Income Tax Appellate
Tribunal
81.60 29.90 2004-05 Commissioner (Appeals)
1.11 - 2005-06
3.77 - 2006-07
*
Amount as per demand orders including interest and penalty wherever indicated in the order and excludes disputed fully paid.
**
Appeal along with stay application has been filed
***
Balance of unpaid amount has been stayed as the said cases have been decided in the favour of Company in the previous
assessment years in similar matters.

The following matters have been decided in favour of the Company, although the department has preferred appeals at higher
levels:

Name of the Statute Nature of the Dues Amount Period to which the Forum where dispute is pending
(` in crores) amount relates
Central Excise Laws Excise duty 2.57 1986-87 to 1990-91 Supreme Court
16.66 2005-06 to 2010-11 CESTAT
Service Tax 0.17 2005 High Court
Income-tax Act, 1961 Income-Tax 1,224.84 1987-88, 1989-90, 1992-93, High Court
1993-94, 1995-96 to 2001-02,
2005-06, 2006-07
11.85 1999-00, 2002-03, 2007-08 Income Tax Appellate Tribunal

note no. 33 - The Company’s borrowing facilities, comprising fund based and non fund based limits from various bankers, are
secured by way of hypothecation of inventories, receivables, movable assets and other current assets.
140
Standalone Financial Statements

notes to the fInAncIAl stAtements

for the year ended March 31, 2014

note no. 34 - tHe CategoRy WiSe deRiVatiVe inStRuMentS outStanding aS at MaRCH 31 aRe aS undeR:
this year Previous Year
Purpose Currency bought Currency sold Currency bought Currency sold
(in million) (in million) (in million ) (in million)
Foreign currency forward contracts
Hedging JPY 2500 USD 13.50 JPY 1,000.00 USD 13.00
USD 24.40 USD 10.87
options contracts
Hedging
JPY-Call 1,000 1,000 2,000 2,000
JPY-Put - 1,000 - 2,000
USD- Call - 9.15 - 19.70
USD- Put 9.57 10.05 21.83 23.12

The unhedged foreign currency exposures are as under:

as at March 31, 2014 As at March 31, 2013

Amount of foreign Amount in Amount of foreign Amount in
currency in million Rupees crores currency in million Rupees crores
Payables JPY 5,492.46 321.44 JPY 13,987.05 809.29
USD 22.66 136.15 USD 22.80 124.04
EUR 2.15 17.81 EUR 0. 75 5.22

note no. 35 - Two wheeler sales are covered by a warranty period of two to five years. The details of provision for warranties
are as under:
` in crores
this year Previous year
Provision at the beginning of the year 28.46 37.32
Additional provision made during the year 56.60 20.35
Amount utilised during the year 36.45 29.21
Provision as at the end of the year 48.61 28.46

note no. 36 - Pursuant to Scheme of Arrangement (the Scheme) for amalgamation of Hero Investments Private Limited (HIPL)
which is engaged in the business of holding securities other than trading, approved by the Hon’ble High Court of Delhi, which
became effective from May 16, 2013 (for which appointed date was January 01, 2013) upon filing of the copy with the
Registrar of Companies, NCT of Delhi & Haryana, all the properties and assets, present or future or contingent or of
whatsoever nature, be transferred and/or deemed to be transferred to and vested with Hero MotoCorp Limited (HMCL) so as
to become the properties of HMCL on the same terms and conditions as were applicable to HIPL.
The amalgamation with HIPL has been accounted for under the “Pooling of interests” method as prescribed by Accounting Standard-
14. Accordingly, the amalgamation has resulted in transfer of assets, liabilities and reserves in accordance with the terms of the
scheme at the following summarized values as on April 1, 2013:

Particulars Amount (` in crores)

Non – Current Investments 3,844.60
Long term loans and advances 2.19
Cash and cash equivalents 2.30
Other current liabilities (0.02)
net assets taken over on amalgamation 3,849.07
Cancellation of Investment on account of Amalgamation (3,844.60)
balance for adjustment in Reserves and Surplus 4.47

In terms of scheme, HMCL allotted equity shares to the members of HIPL an aggregate of 86,531,210 fully paid equity shares
of ` 2 each of HMCL on June 4, 2012 in proportion of their holdings in HIPL.
Operations and other transactions during the period January 1, 2013 to March 31, 2013 are as under which HIPL managed in

trust: Particulars Amount (` in

Balance in Reserves and Surplus as on January 1, 2013 (Being appointed date) 23.94
crores)
Loss during January 1, 2013 to March 31, 2013 (0.19)
total (a) 23.75
Less: First Interim dividend (16.59)
Less: Tax on dividend (2.69)
total (b) 19.28
balance for adjustment in Reserves and Surplus as on april 1, 2013 (a-b) 4.47
Second Interim dividend of ` 1.16 crores along with tax on dividend of ` 0.20 crores have also be appropriated out of
Reserves and Surplus in the financial statements (Refer Note 4). Further, result of operations from April 1, 2013 till May 16, 2013
has been incorporated in HMCL financial statements.

note no. 37 - ReSeaRCH and deVeLopMent expenSeS CHaRged to ReVenue aCCount ` crores
this year Previous year
Employee’s benefit expenses 48.25 36.53
Depreciation and amortization expenses 9.82 7.80
Other expenses 31.09 15.43
total 89.16 59.76

note no. 38 - pRe opeRatiVe expenSeS ` crores

this year Previous year
employee benefit expenses
Salaries and wages 3.54 0.03
0.19 -
Contribution to provident and other funds 0.03 -

Staff welfare expenses

other expenses
Stores and tools consumed 0.04 -
0.21 -
Rent
0.20 -
Depreciation and amortisation
3.76 0.20
Miscellaneous expenses
7.97 0.23

note no. 39 - additionaL inFoRMation ` crores

this year Previous year
a) CIF Value of imports:
Class of goods
Capital goods 226.67 106.09
Raw materials * 36.70
24.45
Components, spare parts and others *
1,011.16
1,068.88
*
Includes items sold to ancillaries on cost to cost basis for assembling of components.
notes to the fInAncIAl stAtements
for the year ended March 31, 2014

note no. 39 - additionaL inFoRMation

Value ` in crores
this year Previous year
Value Percentage Value Percentage
b) Value of imported and indigenous raw materials,
components and spares consumed and percentage of
each to the total consumption:
Class of goods
Raw materials
- Imported ** 24.72 0.13 32.39 0.19
- Indigenous 19.61 0.11 24.78 0.14
Components
- Imported ** 1,148.86 6.27 978.66 5.61
- Indigenous 17,121.19 93.49 16,422.48 94.06
18,314.38 * 100.00 17,458.31 * 100.00
Spares consumed (charged to repairs and maintenance)
- Imported 8.74 20.03 7.48 21.79
- Indigenous 34.89 79.97 26.84 78.21
43.63 100.00 34.32 100.00
*
Includes ` 1.62 crore (previous year ` 1.89 crore) for two wheelers produced and capitalised during the year.
**
Excludes items sold and purchased as indigenous components.
` crores
this year Previous year
c) Expenditure in foreign currency (on accrual basis) :
Royalty 116.67 50.02
Technical guidance fee 12.74 1.22
Model fee - 22.09
Travel and other accounts 186.37 103.54
Advertisement and Publicity 34.99 26.22

` crores
this Previous
year year
d ) Earnings in foreign currency (on accrual basis):
FOB value of exports 465.54 620.24
Freight and insurance 4.55 4.22

` crores
this year Previous year
e) Provision and/or payment in respect of Auditors’ Remuneration :
a ) As Statutory Auditors
- Audit fee 0.72 0.64
- Limited Review of unaudited financial results 0.48 0.36
- Corporate Governance and other certification 0.17 0.20
b) Tax audit fees 0.05 0.04
c) In other capacity - -
d) Out of pocket expenses # #

#
This year ` 150,000 (previous year ` 150,000 )

note no. 40 - Previous Year figures have been regrouped/ reclassified wherever necessary to correspond with the current
year classifications / disclosures. Current year figures have been arrived at after giving effect to the scheme and include figures of
operations of HIPL and thus are not comparable with the figures for the previous year.
 143
Consolidated Financial Statements

Independent AudItors’ report

To the Board of Directors of reasonableness of the accounting

Hero MotoCorp Limited

RepoRt ontHe ConsoLidated FinanCiaL stateMents

We have audited the accompanying consolidated financial
statements of HERO MOTOCORP LIMITED (the “Company”)
and its subsidiaries (the Company and its subsidiaries
constitute “the Group”), which comprise the Consolidated
Balance Sheet as at March 31, 2014, the Consolidated
Statement of Profit and Loss and the Consolidated Cash Flow
Statement for the year then ended, and a summary of the
significant accounting policies and other explanatory
information.

ManageMent’s ResponsibiLity FoR tHe

ConsoLidated FinanCiaL stateMents
The Company’s Management is responsible for the
preparation of these consolidated financial statements that
give a true and fair view of the consolidated financial
position, consolidated financial performance and consolidated
cash flows of the Group in accordance with the accounting
principles generally accepted in India. This responsibility
includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation
of the consolidated financial statements that give a true and
fair view and are free from material misstatement, whether due
to fraud or error.

auditoRs’ ResponsibiLity
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We
conducted our audit in accordance with the Standards on
Auditing issued by the Institute of Chartered Accountants of
India. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and the disclosures in the
consolidated financial statements. The procedures selected
depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the Company’s preparation and presentation of the
consolidated financial statements that give a true and fair
view in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of
expressinganopinionontheeffectivenessofthe
Company’sinternal control. An audit also includes evaluating the
appropriateness of the accounting policies used and the
144
estimates made by the Management, as well as evaluating the
Consolidated Financial
overall presentation Statements
of the consolidated financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit
opinion.

opinion
In our opinion and to the best of our information and
according to the explanations given to us, and based on the
consideration of the reports of the other auditors on the
financial statements / financial information of the subsidiaries
and associates referred to below in the Other Matter
paragraph, the aforesaid consolidated financial statements
give a true and fair view in conformity with the accounting
principles generally accepted in India:
(a) in the case of the Consolidated Balance Sheet, of the
state of affairs of the Group as at March 31, 2014;
(b) in the case of the Consolidated Statement of Profit and
Loss, of the profit of the Group for the year ended on
that date; and
(c) in the case of the Consolidated Cash Flow Statement, of
the cash flows of the Group for the year ended on that
date.

otHeR MatteR
We did not audit the financial statements of HMCL (NA) Inc.,
a subsidiary, whose financial statements reflect total assets
(net) of
` 0.37 crores as at March 31, 2014, total revenues of ` Nil
and net cash flows amounting to ` 0.37 crores for the year
ended on that date, as considered in the consolidated financial
statements. The consolidated financial statements also
include the Group’s share of net loss of ` 9.30 crores for the
year ended March 31, 2014, as considered in the consolidated
financial statements, in respect of Erik Buell Racing, Inc., an
associate of a wholly owned subsidiary company, whose
financial statements have not been audited by us. These
financial statements have been audited by other auditors whose
reports have been furnished to us by the Management and
our opinion, in so far as it relates to the amounts and
disclosures included in respect of these subsidiary and
associate, is based solely on the reports of the other auditors.

Our opinion is not qualified in respect of this matter.

For deLoitte HasKins & seLLs

Chartered
Accountants (Firm Registration
No. 015125N)

Vijay agarwal
New Delhi Partner
May 28, 2014 (Membership No. 94468)
ConsolIdAted BAlAnCe sheet
as at March 31, 2014

` crores
as at
Particulars Note No.
March 31, 2014
i eQuity and LiabiLities
1 shareholders’ funds
(a) Share capital 3 39.94
(b) Reserves and surplus 4 5,582.70
2 Minority interest 0.85
3 non - current liabilities
(a) Long - term liabilities 5 24.45
(b) Long - term provisions 7 50.02
4 Current liabilities
(a) Trade payables 8 2,291.01
(b) Other current liabilities 9 588.19
(c) Short - term provisions 10 1,544.42
total 10,121.58
ii assets
1 non - current assets
(a) Fixed assets 11
(i) Tangible assets 1,897.37
(ii) Intangible assets 349.92
(iii) Capital work-in-progress 854.74
(b) Non- current investments 12 830.05
(c) Deferred tax assets (Net) 6 105.98
(d) Long - term loans and advances 13 477.43
(e) Other non - current assets 14 47.81
2 Current assets
(a) Current investments 12 3,275.89
(b) Inventories 15 669.55
(c) Trade receivables 16 920.58
(d) Cash and cash equivalents 17 119.83
(e) Short - term loans and advances 18 550.38
(f ) Other current assets 19 22.05
total 10,121.58
Accompanying notes forming part of the financial statements 1&2

In terms of our report attached For and on behalf of the Board of

Directors For deLoitte HasKins & seLLs
Chartered Accountants brijmohan Lall Munjal
Chairman
DIN No.: 00004134

Vijay agarwal pawan Munjal pradeep dinodia

Partner Managing Director & Chairman-Audit Committee
CEO DIN No.: 00004223 DIN No.: 00027995

New Delhi Ravi sud iiam C. Kamboj

May 28, 2014 Sr. Vice President & CFO Asso. V. P. Legal & Company
Secretary
 145

ConsolIdAted stAtement of profIt And loss

for the year ended March 31, 2014

` crores
For the year
Particulars Note No.
ended March
31, 2014
i Revenue from operations 20
(a) Gross sales of products 27,005.26
Less: Excise duty 1,880.35
25,124.91
(b) Other operating revenue 150.56
Net revenue from operations 25,275.47
ii other income 21 444.19
iii total Revenue (i + ii) 25,719.66
iV expenses:
(a) Cost of materials consumed 22 18,221.53
(b) Changes in inventories of finished goods and work-in-progress 23 8.36
(c) Employee benefits expenses 24 930.35
(d) Finance costs 25 11.82
(e) Depreciation and amortization expenses 11 1,107.37
(f ) Other expenses 26 2,576.13
total expenses 22,855.56
V profit before tax (iii - iV) 2,864.10
Vi tax expenses:
(a) Current tax 828.21
(b) Minimum alternate tax relating to earlier years (28.02)
(c) Minimum alternate tax credit utilised 196.37
Net current tax 996.56
(d) Deferred tax (238.39)
758.17
Vii Profit for the year before share of profit/(loss) of associates and minority interest (V- 2,105.93
VI)
Viii Share of profit/(loss) of associates (3.62)
iX Minority interest 0.35
X Profit for the year (VII+VIII+IX) 2,102.66
Xi Basic and diluted earnings per equity share (of ` 2 each) : 27 105.29
Accompanying notes forming part of the financial statements 1&2

In terms of our report attached For and on behalf of the Board of

Directors For deLoitte HasKins & seLLs
Chartered Accountants brijmohan Lall Munjal
Chairman
DIN No.: 00004134

Vijay agarwal pawan Munjal pradeep dinodia

Partner Managing Director & Chairman-Audit Committee
CEO DIN No.: 00004223 DIN No.: 00027995

New Delhi Ravi sud iiam C. Kamboj

May 28, 2014 Sr. Vice President & CFO Asso. V. P. Legal & Company
Secretary
ConsolIdAted CAsh flow stAtement
for the year ended March 31, 2014

` crores
year ended March 31, 2014

a. CasH FLoW FRoM opeRating aCtiVities

net profit before tax 2,864.10
Adjustments for:
Add: Depreciation and amortisation 1,107.37
Loss on fixed assets sold/discarded 13.98
Loss on sale of non-trade current investments 1.26
Provision for diminution in value of investment:
Long term non trade investment 0.45
Finance cost 11.82
Provision for doubtful debts 0.85
1,135.73
Less: Interest on long term and current non-trade investments 53.10
Interest on loans, deposits etc. 90.27
Profit on sale of fixed assets 0.68
Exchange differences (3.02)
Dividend income:
On current Investments - Non Trade 0.69
On long-term investments - Non Trade 0.06
Profit on sale of non-trade current investments 300.65
442.43
operating profit before working capital changes 3,557.40
Changes in working capital:
adjustment for (increase)/decrease in operating assets:
Add: Inventories (32.79)
Trade receivables (259.46)
Short-term loans and advances (16.83)
Long-term loans and advances (131.96)
(441.04)
adjustment for increase/(decrease) in operating liabilities:
Less: Trade payables 417.93
Other current liabilities 52.74
Other long-term liabilities 3.47
Short-term provisions 2.15
Long-term provisions 19.82
496.11
Cash generated from operations 3,612.47
Less: Direct taxes paid 649.45
net cash from operating activities 2,963.02
 ` crores
year ended March 31, 2014
b. CasH FLoW FRoM inVesting aCtiVities
Proceeds from sale of fixed assets 4.05
Sale / (Purchase) of investments (net) (8.66)
Investment in Associates (148.96)
Intercorporate deposits received back 625.00
Intercorporate deposits paid (605.00)
Interest received on long term and current non-trade investments 51.58
Interest received on loans, deposits etc. 90.27
Dividend income
On current Investments - Non Trade 0.69
On long-term investments - Trade and Non Trade 0.06
Capital expenditure on fixed assets, including capital advances (941.47)
Payment of deferred credits (685.36)
net cash (used) in investing activities (1,617.80)
C. CasH FLoW FRoM FinanCing aCtiVities
Interest paid (11.82)
Dividends paid (1,199.29)
Tax on dividend (203.82)
Proceeds from issue of equity share capital 1.20
net cash (used) in financing activities (1,413.73)
d. inCRease/(deCRease) in CasH and CasH eQuiVaLents (a+b+C) (68.51)
Cash and cash equivalents at the beginning of the year 134.95
Add: on account of amalgamation (refer note 34) 2.30
Cash and cash equivalents at the end of the year
Cash and bank balances 68.74
68.74
Reconciliation
Cash and Bank balances as per Balance Sheet 119.83
Less: Unpaid dividend current account with Banks 51.09
net Cash and cash equivalents at the end of the year 68.74

Accompanying notes forming part of the financial statements

In terms of our report attached For and on behalf of the Board of

Directors For deLoitte HasKins & seLLs
Chartered Accountants brijmohan Lall Munjal
Chairman
DIN No.: 00004134

Vijay agarwal pawan Munjal pradeep dinodia

Partner Managing Director & Chairman-Audit Committee
CEO DIN No.: 00004223 DIN No.: 00027995

New Delhi Ravi sud iiam C. Kamboj

May 28, 2014 Sr. Vice President & CFO Asso. V. P. Legal & Company
Secretary
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 1 - CoRpoRate inFoRMation

c) The consolidated financial statements include the
Hero MotoCorp Limited (the Company), its subsidiaries and share of profit / loss of the associate companies
associates (collectively called as “Group”) are engaged in the which have been accounted for using equity
manufacturing and selling of motorised two-wheelers, spare method as per AS 23 Accounting for Investments in
parts, components and related services along with providing Associates in Consolidated Financial Statements.
non banking financial services. The Group is a leading two Accordingly, the share of profit/ loss of each of the
wheeler manufacturer and has a dominant presence in associate companies (the loss being restricted to the
domestic market. cost of investment) has been added to / deducted
from the cost of investments.
note no. 2 - basis oF ConsoLidation and
signiFiCant aCCounting poLiCies d) The excess of cost to the Group of its investments
in the subsidiary companies over its share of equity
i) accounting convention
of the subsidiary companies, at the dates on which
The consolidated financial statements of the Group
the investments in the subsidiary companies were
have been prepared in accordance with the Generally
made, is recognised as ‘Goodwill’ being an asset in
Accepted Accounting Principles in India (Indian GAAP) to
the consolidated financial statements and is tested
comply with the Accounting Standards notified under
for impairment on annual basis. Alternatively,
Section 211(3C) of the Companies Act, 1956 (“the 1956
where the share of equity in the subsidiary
Act”) ( which continue to be applicable in respect of
companies as on the date of investment is in excess
Section 133 of the Companies Act, 2013 (“the 2013
of cost of investments of the Group, it is recognised
Act”) in terms of General Circular 15/2013 dated
as‘Capital Reserve’ and shown under the head
September 13, 2013 of the Ministry of Corporate Affairs)
‘Reserves & Surplus’, in the consolidated financial
and relevant provisions of the 1956 Act/ 2013 Act, as
statements. Goodwill arising on the acquisition of a
applicable. The financial statements have been prepared
foreign entity is translated at the closing rate in case
on accrual basis under the historical cost convention.
of non-integral operations and by using the
ii) principles of Consolidation exchange rate at the date of the investment in
case of integral operations. Capital reserve is
The consolidated financial statements relate to Hero
translated at the exchange rate on the date of
MotoCorp Limited (the ‘Company’), its subsidiary
investment
companies, and the Group’s share of profit / loss in its
associates. The consolidated financial statements have e) Minority Interest in the net assets of the
been prepared on the following basis: consolidated subsidiaries consist of the amount of
equity attributable to the minority shareholders at
a) The financial statements of the subsidiary the date on which investments in the subsidiary
companies, and associates used in the companies were made and further movements in
consolidation are drawn upto the same reporting their share in the equity, subsequent to the dates of
date as that of the Company i.e., March 31, 2014, investments. Net profit / loss for the year of the
except for an associate as mentioned in subsidiaries attributable to minority interest is
(j) below for which financial statements as on identified and adjusted against the profit after tax
reporting date are not available. These have been of the Group in order to arrive at the income
consolidated based on latest available financial attributable to shareholders of the Company.
statements.
f) ) The difference between the cost of investment in
b) The financial statements of the Company and its the associate and the share of net assets at the
subsidiary companies have been combined on a time of acquisition of shares in the associate is
line- by-line basis by adding together like items of identified in the consolidated financial statements
assets, liabilities, income and expenses, after as Goodwill or Capital reserve as the case may be.
eliminating intra- group balances, intra-group
transactions and resulting unrealised profits or g) Goodwill arising on consolidation is not amortised
losses, unless cost cannot be recovered. but tested for impairment.
 h) Following subsidiary companies and associates have been considered in the preparation of the consolidated
financial statements:

Name of entity Relationship Country of

Incorporation Ownership % of Holding and voting power either
held by directly or indirectly through subsidiary as
at
March 31, 2014
HMCL (NA) Inc Subsidiary United States of Company 100%
America
HMC MM Auto Limited Subsidiary India Company 60%
Hero FinCorp Limited Associate India Company 40.39%
Erik Buell Racing Inc Associate United States of HMCL (NA) Equity holding 49.2% Voting rights 43.9%
America Inc

i) The consolidated financial statements have been prepared using uniform accounting policies for like transactions and
other events in similar circumstances and are presented to the extent possible, for all significant matters in the same
manner as the Company’s separate financial statements.

j) The financial statements of the following associate, used in the consolidation, are drawn upto a date which is different
from the reporting date of the Company.

Name of entity Relationship Reporting date of the financial

statements used in
consolidation
March 31, 2014
Erik Buell Racing Inc Associate December 31, 2013

iii) use of estimates amortisation

The preparation of the financial statements in conformity Fixed assets are stated at cost less accumulated
with Indian GAAP requires the Management to make depreciation. Cost of acquisition is inclusive of freight,
estimates and assumptions considered in the reported duties, taxes and other incidental expenses. Exchange
amounts of assets and liabilities (including contingent differences arising on restatement / settlement of long-
liabilities) and the reported income and expenses during term foreign currency
the year. The Management believes that the estimates
used in preparation of the financial statements are prudent
and reasonable. Future results could differ due to these
estimates and the differences between the actual results
and the estimates are recognised in the periods in which
the results are known / materialise.

iv) operating Cycle

Based on the nature of products / activities of the Group
and the normal time between acquisition of assets and
their realisation in cash or cash equivalents, the Group
has determined its operating cycle as 12 months for the
purpose of classification of its assets and liabilities as
current and non-current.

v) Fixed / intangible assets and depreciation /

 borrowings relating to acquisition of depreciable fixed
assets are adjusted to the cost of the respective assets
and depreciated over the remaining useful life of such
assets.

Depreciation is charged on a pro-rata basis at the straight

line method rates prescribed in Schedule XIV to the
Companies Act, 1956. Assets covered under employee
benefit schemes are amortised over a period of five
years. Assets costing upto
` 5,000 each are fully depreciated in the year of
purchase.

Intangible assets, comprising of expenditure on model

fee etc, incurred are amortised on a straight line
method over a period of five years. Licenses for Technical
know-how / export licenses have been amortised on a
straight line basis upto June 30, 2014 i.e forty two
months (refer note 11).

The carrying values of assets / cash generating units at

each Balance Sheet date are reviewed for impairment.

Leasehold land has been amortised over the period of

lease.

vi) preoperative expenses pending allocation

Expenses directly related to construction activity or
incidental thereto, are allocated to fixed assets at the time
of completion of the project.
150
Consolidated Financial Statements

notes to the ConsolIdAted fInAnCIAl stAtements

for the year ended March 31, 2014

vii) investments
The exchange differences arising on restatement /
Current investments are stated at lower of cost and fair settlement of long-term foreign currency monetary items
value computed category-wise. Long term investments are are capitalised as part of the depreciable fixed assets to
stated at cost less provision for diminution other than which the monetary item relates and depreciated over
temporary, if any. Premium paid on purchase of debt the remaining useful life of such assets or amortised on
securities is amortised over the period of maturity. settlement / over the maturity period of such items in
line with Notification No. GSR 378(E) dated May 11,
viii) inventories
2011 issued by The Ministry of Corporate Affairs,
Raw materials and components, stores and spares, loose Government of India.
tools, finished goods and work in progress are valued at
cost or net realisable value, whichever is lower. In respect of forward contracts, the forward premium or
discount is recognised as income or expense over the
The basis of determining cost for various categories of life of contract in the statement of profit and loss and
inventories are as follows:- the exchange difference between the exchange rate
prevailing at the year end and the date of the inception
of the forward exchange
Stores and spares, loose tools, contract is recognised as income or expense in the statement
- Weighted average cost
raw materials and components of profit and loss.
Materials in transit - Actual cost Initial recognition
Work in progress and finished - Material cost plus Net investment in non-integral foreign operations: Net
goods appropriate share of investment in non-integral foreign operations is accounted
labour, manufacturing at the exchange rates prevailing on the date of the
overheads and excise transaction or at rates that closely approximate the rate
duty at the date of the transaction.
ix) employee benefits Non-integral foreign operations: Transactions of non-
a) Defined contribution plan integral foreign operations are translated at the
exchange rates
Provident fund, Superannuation fund and Monetary assets and liabilities denominated in foreign
Employee’ State Insurance Corporation (ESIC) are currency are restated at the rate prevailing at the year end and
the defined contribution schemes offered by the resultant gain or loss is recognised.
entites in the Group. The contributions to these
schemes are charged to the statement of profit and
loss of the year in which contribution to such
schemes becomes due.

b) Defined benefit plan and Long term Employee

benefits
Gratuity liability and long term employee benefits,
are provided on the basis of an actuarial valuation
made at the end of each financial year as per
projected unit credit method. Actuarial gains or
loss arising from such valuation are charged to
revenue in the year in which they arise.

x) Foreign currency transactions

Exchange differences are dealt with as follows:-
Transactions in foreign currency are recorded at the
exchange rate prevailing at the time of the transaction.
All loss or gain on translation is charged torevenue in the
year in which it is incurred.
 151

prevailing on the date of the transaction or at rates

that closely approximate the rate at the date of the
transaction.

Measurement at the Balance Sheet date

Net investment in non-integral foreign operations:
Foreign currency monetary items (other than
derivative contracts) of the Company’s net
investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at
the year-end rates.

Non-integral foreign operations: All assets and

liabilities of non- integral foreign operations are
translated at the year-end rates.

xi) sales
Sale of goods is recognised on transfer of significant
risk and reward of ownership to the buyer, which
generally coincides with point of despatch of
finished goods to the customers. Gross sales are
inclusive of applicable excise duty and freight but are
exclusive of sales tax. Services income is recognized
when the services are rendered.

- Scrap is accounted for on sale basis.

xii) Warranty claims

The estimated liability for product warranties is
recorded when products are sold. These estimates are
established using
 historical information on the nature, frequency and Minimum Alternate Tax (MAT) paid in accordance with
average cost of warranty claims and management the tax laws, which gives future economic benefits in
estimates regarding possible future incidence based on the form of adjustment to future income tax liability, is
corrective actions on product failures. The timing of considered as an asset if there is convincing evidence
outflows will vary as and when warranty claim will arise - that the Company will pay normal income tax.
being typically two to five years. Accordingly, MAT is recognised as an asset in the
Consolidated Balance Sheet when it is probable that
The Group accounts for the post-contract support / future economic benefit associated with it will flow to the
provision for warranty on the basis of the information Company.
available with the Management duly taking into account
the current and past technical estimates. Deferred tax is recognised, subject to the consideration
of prudence, on timing differences, being the difference
xiii) Leases between taxable income and accounting income that
Lease arrangements where the risks and rewards originate in one period and are capable of reversal in
incidental to ownership of an asset substantially vest one or more subsequent periods.
with the lessor are recognised as operating leases. Lease
rentals under operating leases are recognised in the The Group offsets deferred tax assets and deferred tax
Statement of Profit and Loss. liabilities, and advance income tax and provision for
tax, if it has a legally enforceable right and these relate
xiv)Research and development expenses to taxes in income levies by the same governing taxation
Research and development expenditure of a revenue laws.
nature is expensed out under the respective heads of
xvii) provisions and contingent liabilities
account in the year in which it is incurred.
A provision is recognised when the Group has a present
Fixed assets utilised for research and development are obligation as a result of past events and it is probable
capitalised and depreciated in accordance with the policies that an outflow of resources will be required to settle
stated for Tangible Fixed Assets and Intangible Assets. the obligation in respect of which a reliable estimate can
be made. Provisions are not discounted to their present
xv) earnings per share value and are determined based on the best estimate
Earnings per share are computed by dividing the profit / required to settle the obligation at the Balance Sheet
(loss) after tax by the weighted average number of date. These are reviewed at each Balance Sheet date and
equity shares outstanding during the year. adjusted to reflect the current best estimates. Contingent
liabilities are disclosed in the Notes.
xvi)taxation
Current tax is determined on the basis of taxable xviii)derivatives
income and tax credits computed for each of the Foreign currency derivatives are used to hedge risk
entities in the Group in accordance with the provisions associated with foreign currency transactions. All open
of applicable tax laws of the respective jurisdictions positions as at the close of the year are valued by
where the entities are located. marking them to the market and provision is made for
losses, if any.

note no. 3 - sHaRe CapitaL

as at March 31, 2014
Particulars
Number ` crores
authorised
Equity shares of ` 2 each with voting rights 250,000,000 50.00
Cumulative convertible preference shares of ` 100 each 400,000 4.00
Cumulative redeemable preference shares of ` 100 each 400,000 4.00
250,800,000 58.00
issued, subscribed and fully paid up
Equity Shares of ` 2 each with voting rights
(Refer (i), (ii) and (iii) below) 199,687,500 39.94
total 199,687,500 39.94
(i) There is no movement in share capital during the year.
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

(ii) Shareholder holding more than 5 percent shares:

equity shares
Particulars as at 31, 2014
March
No. of Shares held % of Holding
Mr. Brijmohan Lall Munjal *
12,396,842 6.21%
Ms. Renu Munjal * 12,396,840 6.21%
Mr. Suman Munjal * 12,396,840 6.21%
Mr. Pawan Munjal * 12,396,840 6.21%
Mr. Sunil Kant Munjal * 12,396,840 6.21%
M/S Bahadur Chand Investments (P) Ltd 17,306,250 8.67%
M/S BC India Private Investors 17,141,028 8.58%
*
Hold shares on behalf of Brijmohan Lall Om Prakash (partnership firm)

(iii) Rights, preference and

restriction: Equity shares of ` 2
each:
a. In respect of equity shares , voting right shall be in same proportion as the capital paid upon such equity share.
b. The dividend proposed by the Board of Directors which is subject to the approval of the shareholders in the Annual
General Meeting shall be in the same proportion as the capital paid upon such equity share.
c. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in
proportion to capital paid upon such equity share.

note no. 4 - ReseRVes and suRpLus ` crores

Particulars as at March 31,
2014
(a) Capital Reserves
On shares forfeited (#` 4,250) #

Share premium account on forfeited shares reissued( ##` 25,500) ##

(b) general Reserve

Opening balance 1,926.32
Add: Transferred on account of amalgamation( refer note 34) 4.47
Add: Adjustment on consolidation of associate 30.07
Add: Transferred from Statement of profit and loss 215.00
Closing balance 2,175.86
(c) surplus - in statement of profit and loss
Opening balance 3,039.98
Add: Profit for the year 2,102.66
Less: Dividend proposed to be distributed to equity share holders (` 65 per share ) 1,297.97
Interim dividend - (refer note below) 1.16
Tax on dividend 220.59
Tax on dividend (refer note below) 0.20
Transfer to General Reserve 215.00
Closing balance 3,407.72
(d) Foreign Currency translation Reserve (0.88)
total 5,582.70
Note: As per the scheme of amalgamation, the Transferor Company i.e. Hero Investment Private Limited was entitled to utilise its
income/ available cash for declaration of payment of dividend to its shareholders until the effective date i.e. May 16, 2013 but after the
appointed date i.e. January 1, 2013. Accordingly, the company declared and paid interim dividend to its shareholders in
accordance with the scheme.
 153

note no. 5 - Long teRM LiabiLities ` crores

Particulars as at March 31, 2014
Others 24.45
total 24.45

note no. 6 - deFeRRed taX (assets)/ LiabiLities (net) ` crores

Particulars as at March 31, 2014
deferred tax liabilities
Others 4.80
4.80
deferred tax assets
Accumulated depreciation 102.54
Accrued expenses deductible on payment 3.90
Others 4.34
110.78
Deferred tax (assets)/ liabilities (net) (105.98)

note no. 7 - Long teRM pRoVisions ` crores

Particulars as at March 31, 2014
(a) Employees benefits - accumulated leaves 8.66
(b) Warranties 41.36
total 50.02

note no. 8 - tRade payabLes ` crores

Particulars as at March 31, 2014
Trade payables 2,291.01
total 2,291.01
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 9 - otHeR CuRRent LiabiLities ` crores

Particulars as at March 31, 2014
(a) Current maturities of deferred payment credits(unsecured) 284.26
(Refer Note (i) below)
(b) other payables
Statutory dues 81.61
Security deposits dealers and others 47.79
Advances from dealers 110.16
Unclaimed dividend 51.09
Other liabilities 13.28
total 588.19

(i) In year 2010-11, the Company has entered into a Memorandum of Understanding (MOU) with Honda Motor Company
Limited Japan (Honda) for right and license to manufacture, assemble, sell and distribute certain products/parts and export
license for certain products and their service parts under the intellectual property rights. Liability payable upto June 30, 2014
has been included under other current liabilities above.

note no. 10 - sHoRt teRM pRoVisions ` crores

Particulars as at March 31, 2014
(a) employees benefits - accumulated leaves 2.85
- gratuity 0.09
(b) provisions -others
Proposed equity dividend 1,297.97
Tax on proposed dividend 220.59
Taxation (net of payments as at March 31, 2014 ` 1,104.11 crores) 15.67
Warranties 7.25
total 1,544.42
An note no. 11 - FiXed assets ` crores
nu gross block accumulated depreciation/amortisation net block
al 15
Opening Additions Deletions/ Closing Opening Depreciation/ On upto March as at March
Re Particulars
balance as at adjustments balance as at balance as at amortisation charge disposals 31, 2014 31, 2014 5
po April 1, 2013 March 31, 2014 April 1, 2013 for the year**
rt
(a) tangible assets
20
13 Land
- - Freehold 82.80 - - 82.80 - - - - 82.80
- Leasehold# 15.84 - 200.01 9.46 1.92 - 11.38 188.63
Building 184.17 12.71 1.08 497.19 101.10 15.38 0.25 116.23 380.96
Plant and equipment 185.27 61.35 2,437.30 1,162.23 178.26 46.60 1,293.89 1,143.41
Furniture and fixtures 485.56 3.71 2.88 22.48 8.98 1.37 2.62 7.73 14.75
Vehicles 4.40 5.53 38.47 18.42 5.14 4.22 19.34 19.13
Office equipment 2,313.38 4.05 0.01 22.82 4.65 0.99 - 5.64 17.18
Data Processing
14.91 2.47 114.57 51.47 14.87 2.28 64.06 50.51
equipment 21.65

39.60

18.78

102.13
total 3,248.07 240.89 73.32 3,415.64 1,356.31 217.93 55.97 1,518.27 1,897.37
(b) intangible assets
- 3.94 - 3.94 - - - - 3.94
Goodwill on
consolidation
Model fee 535.81 - - 535.81 353.96 68.07 - 422.03 113.78
Technical know- 46.86 - 2,892.59 1,881.56 813.10 - 2,694.66 197.93
how/ export 2,845.73
licenses*
Software 55.46 9.54 - 65.00 22.26 8.47 - 30.73 34.27
total 3,437.00 60.34 - 3,497.34 2,257.78 889.64 - 3,147.42 349.92
total (a+b) 6,685.07 301.23 73.32 6,912.98 3,614.09 1,107.57 55.97 4,665.69 2,247.29
(c) Capital work 854.74
in progress @
- Including intangible assets under development ` 288.71 crores 3,102.03

Note :
#
Includes land of ` 15.84 crores at Halol (Gujrat) and ` 78.36 crores at Jaipur pending for registration in the name of the Company.
*
Includes net increase of ` 46.86 crores due to fluctuation in exchange rates.
**
Includes ` 0.20 crores transferred to Pre-operative expenditure (pending allocation).
@
Including pre operative expenses ` 8.59 crores relating to salaries, wages and other related project expenses of Neemrana plant. {refer note no 36}
In line with Notification No. G.S.R. 378 (E) dated May 11, 2011 issued by The Ministry of Corporate Affairs, Government of India, the exchange differences arising after
April 1, 2007 on reporting of long term foreign currency monetary items at rates at the end of year compared to those at which they were initially recorded, or reported in previous
financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and is depreciated over the
balance useful life of the asset.
156
Consolidated Financial Statements

notes to the ConsolIdAted fInAnCIAl stAtements

for the year ended March 31, 2014

note no. 12 - inVestMents ` crores

Units as at as at March 31, 2014
March 31, 2014 Current Non Current
Long term investments
Non Trade
In Debentures / Bonds
Quoted
Face Value of ` 1,000 each
12.25% Muthoot Finance Limited-Maturity-14.09.2016 500,000 - 49.79
12.15% Religare Finvest Limited-Maturity-23.09.2014 250,000 25.00 -
7.34% HUDCO -Maturity-16.02.2023 250,000 - 25.00
7.18% IRFC -Maturity-19.02.2023 250,000 - 25.00
Face Value of ` 100,000 each
6.70% IRFC Bonds -Maturity-08.03.2020 1,500 - 15.23
Face Value of ` 500,000 each
10.70% Tata Motors Finance Limited-Maturity-28.04.2020 138 - 7.18
10.70% Tata Motors Finance Limited-Maturity-10.04.2020 400 - 20.82
Face Value of ` 1,000,000 each
8.45% Rural Electrification Corporation -Maturity-19.02.2015 200 20.07 -
13% Religare Finvest Limited-Maturity-30.05.2017 100 - 10.00
Zero Coupon bonds
Rural Engineering Corporation Ltd Bonds @ 13,578 maturity ` 30,000 per bond 37,000 - 50.24
45.07 203.26
Less: Provision for dimunition/amortisation (0.06) (0.51)
Market value Current ` 45.19 crores and non Current ` 207.73 crores 45.01 202.75
Listed -Quoted but not traded
Face Value of ` 1,000 each
8.18% NHPC Tax Free Bonds-Maturity-02.11.2023 161,050 - 16.11
8.18% PFC Tax Free Bonds-Maturity-16.11.2023 323,890 - 32.39
8.51% HUDCO Tax Free Bonds-Maturity-13.01.2024 250,000 - 25.00
Face Value of ` 100,000 each
12.00% Shriram Transport NCD -Maturity-18.07.2014 1,300 13.85 -
Face Value of ` 1,000,000 each
8.91% L&T Finance Limited-Maturity-April 15, 2016 150 - 15.00
13.85 88.50
Less: Provision for dimunition/amortisation (0.80) -
Maturity Value Current ` 13.00 crores and non Current ` 88.50 crores 13.05 88.50
Zero Coupon bonds
National Bank For Agriculture and Rural Development
Bhavishya Nirman Bonds @ 8,182 each A 10 Year Zero Coupon Bond of 50,200 - 41.07
NABARD- maturity ` 20,000 per bond

Hero MotoCorp
Ltd.
note no. 12 - inVestMents ` crores
Units as at as at March 31, 2014
March 31, 2014 Current Non Current
Maturity Value non Current ` 100.40 crores - 41.07
total investment in bonds/debentures 58.06 332.32
in Mutual fund units:
Listed -Quoted but not traded
debt fund
(units of the face value of ` 10 each)
iCiCi prudential Mutual Fund
Interval Fund Annual Interval Plan IV Institutional Cumulative 10,294,508 12.00 -
FMP Series 64-3 Years Plan I Cumulative 10,000,000 - 10.00
FMP Series 65-502 Days Plan C Cumulative 10,000,000 10.00 -
FMP Series 66-420 Days Plan A Direct Plan Cumulative 25,000,000 25.00 -
Interval Fund Annual Interval Plan 1 Institutional Cumulative 21,168,142 25.00 -
FMP Series 71-366 Days Plan C Direct Plan Cumulative 20,000,000 20.00 -
FMP Series 72-366 Days Plan I Direct Plan Cumulative 15,000,000 15.00 -
FMP Series 73-391 Days Plan G Direct Plan Cumulative 16,000,000 - 16.00
birla sunlife Mutual Fund
Fixed Term Plan-Series GT (366 Days) -Gr.-Direct 27,784,500 27.78 -
Interval Income Fund-Annual Plan VIII-Gr.-Direct 20,000,000 20.00 -
Fixed Term Plan-Series IL(368 days)-Gr.-Direct 20,000,000 20.00 -
Fixed Term Plan-Series IO(368 days)-Gr.-Direct 20,000,000 20.00 -
Fixed Term Plan-Series JE (368 days)-Gr.-Direct 21,725,000 21.73 -
Fixed Term Plan-Series JY (367 days)-Gr.-Direct 15,000,000 15.00 -
Fixed Term Plan-Series KD (367 days)-Gr.-Direct 16,400,550 16.40 -
Fixed Term Plan-Series KO (399 days)-Gr.-Direct 25,000,000 - 25.00
idFC Mutual Fund
Yearly Series Interval Fund Regular Plan-Series I-Growth 25,000,000 25.00 -
Yearly Series Interval Fund Direct Plan-Series II-Growth 25,000,000 25.00 -
Fixed Term Plan Series 9 Direct Plan-Growth 25,000,000 25.00 -
Fixed Term Plan Series 65 Direct Plan-Growth 15,000,000 15.00 -
Fixed Term Plan Series 86 Direct Plan-Growth 20,000,000 - 20.00
Reliance Mutual Fund
Fixed Horizon Fund -XXII-Series 21-Growth Plan 20,000,000 20.00 -
Annual Interval Fund -Series I-Institutional Plan Growth 40,825,730 44.97 -
Fixed Horizon Fund -XXII-Series 34-Growth Plan 5,000,000 - 5.00
Fixed Horizon Fund -XXIII-Series 5-Direct Plan-Growth Plan 15,000,000 15.00 -
Fixed Horizon Fund -XXIV-Series 1-Direct Growth Plan 20,000,000 20.00 -
Interval Fund II-Series 3-Direct Plan Growth Plan 20,000,000 20.00 -
Interval Fund II-Series 4-Direct Plan Growth Plan 20,000,000 20.00 -
Fixed Horizon Fund -XXIV-Series 25-Direct Plan-Growth Plan 28,750,000 28.75 -
Fixed Horizon Fund -XXV-Series 2-Direct Plan-Growth Plan 20,000,000 20.00 -
Fixed Horizon Fund -XXV-Series 15-Direct Plan Growth Plan 40,000,000 - 40.00
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVestMents ` crores

Units as at as at March 31, 2014
March 31, 2014 Current Non Current
Fixed Horizon Fund -XXV-Series 20-Direct Plan Growth Plan 20,000,000 - 20.00
Fixed Horizon Fund -XXV-Series 30-Direct Plan Growth Plan 25,000,000 - 25.00
bnp paribas Mutual Fund
Fixed Term Fund Ser 24 A Direct Growth 20,000,000 20.00 -
Religare Mutual Fund
Fixed Maturity Plan Series XVII-Plan D (399 Days)-Direct Plan 15,000,000 15.00 -
uti Mutual Fund
Fixed Term Income Fund Series XVII-XIII(369 Days)-Direct Growth Plan 27,283,000 27.28 -
taurus Mutual Fund
Fixed Maturity Plan 377 Days Series Z-Direct Plan Growth 5,036,817 5.04 -
L&t Mutual Fund
FMP-VII (February 419 D A) Direct Plan Growth 15,000,000 15.00 -
FMP-VII (March 13 M A) Direct Plan Growth 15,000,000 15.00 -
FMP 8- Plan A- Direct Growth 15,000,000 15.00 -
FMP-VII (March 381 D A) Direct Plan Growth 10,000,000 10.00 -
FMP 8- Plan G- Direct Growth 10,291,784 10.29 -
FMP Series 9- Plan D- Direct Growth 25,000,000 25.00 -
FMP Series 9- Plan G- Direct Growth 20,000,000 20.00 -
FMP Series 10- Plan A- Direct Growth 6,000,000 6.00 -
FMP Series 10- Plan D- Direct Growth 10,000,000 10.00 -
FMP Series 10- Plan H- Direct Growth 10,000,000 - 10.00
FMP Series 10- Plan M- Direct Growth 10,000,000 - 10.00
FMP Series 10- Plan Q- Direct Growth 25,000,000 - 25.00
J p Morgan Mutual Fund
Fixed Maturtiy Plan Series 302 Growth 10,000,000 - 10.00
deutsche Mutual Fund
Fixed Maturity Plan -Series 23-Direct Plan-Growth 25,000,000 25.00 -
Fixed Maturity Plan -Series 43-Direct Plan-Growth 25,000,000 25.00 -
Fixed Maturity Plan -Series 42-Direct Plan-Growth 25,000,000 25.00 -
Fixed Maturity Plan Series 46-Direct Plan-Growth 15,000,000 15.00 -
Fixed Maturity Plan Series 48-Direct Plan-Growth 10,000,000 10.00 -
Fixed Maturity Plan Series 51-Direct Plan-Growth 10,000,000 10.00 -
Fixed Maturity Plan Series 54-Direct Plan-Growth 10,000,000 - 10.00
Fixed Maturity Plan Series 57-Direct Plan-Growth 20,000,000 - 20.00
(units of the face value of ` 1,000 each)
pramerica Mutual Fund
Fixed Duration Fund series 5-Direct Plan-Growth option 100,000 10.00 -
Fixed Duration Fund series 13-Direct Plan-Growth option 50,000 5.00 -
note no. 12 - inVestMents ` crores
Units as at as at March 31, 2014
March 31, 2014 Current Non Current
total investment in Mutual Funds 845.24 246.00
Repurchase price Current ` 906.56 crores and non Current ` 251.62
crores
trade
In Equity Shares
Unquoted
of associates
Hero FinCorp Limited (Equity shares of ` 10 each) 7,310,300
Cost of acquisition (net of Capital reserve of ` 1.19 crores) - 56.47
Add/ (Less): Group’s share of profits/(losses) upto March 31, 2014 - 33.56
- 90.03
Erik Buell Racing Inc.
Convertible Preferred Stock series A Equity Shares of USD 0.01 each 9,686
Cost of acquisition (including Goodwill of ` 119.65 crores) - 150.09
Add/ (Less): Group’s share of profits/(losses) upto March 31, 2014 - (9.30)
- 140.79
non trade
of other entities
Bombay Stock Exchange Limited (face value of Re. 1 each) 140,400 - 5.94
in equity preferential shares
Tata Capital Limited (face value of ` 1,000 each) 100,000 - 10.00
total investment in equity shares - 15.94
total Long term investments 903.30 825.08
other than Long term investments
non-trade
in Mutual fund units:
Listed -Quoted but not traded
debt fund
(units of the face value of ` 10 each)
idFC Mutual Fund
Interval Fund Direct Plan -Series IV-Growth 5,000,000 5.00 -
Reliance Mutual Fund
Interval Fund I-Half Yearly Interval Fund-Series 2-Direct Plan Growth Plan 4,767,263 5.00 -
Repurchase price Current ` 10.08 crores 10.00 -
Unquoted
debt fund
(units of the face value of ` 10 each)
iCiCi prudential Mutual Fund
Short Term Plan Inst. Growth 11,770,847 25.01 -
Blended Plan B-Direct Plan-Growth Option-I 39,120,303 70.50 -
Banking and PSU Debt Fund-Direct Plan-Growth 62,782,668 84.96 -
birla sunlife Mutual Fund
160
Consolidated Financial Statements

notes to the ConsolIdAted fInAnCIAl stAtements

for the year ended March 31, 2014

note no. 12 - inVestMents ` crores

Units as at as at March 31, 2014
March 31, 2014 Current Non Current
Dynamic Bond Fund- Retail- Growth 90,522,800 164.32 -
Short Term Fund -Growth-Direct Plan 11,321,095 50.00 -
idFC Mutual Fund
SSIF-Short Term -Plan C-Growth 43,198,719 50.45 -
SSIF Medium Term -Plan B -Growth 16,729,050 20.04 -
SSIF-Investment Plan-Growth-(Direct Plan) 8,621,462 25.00 -
Dynamic Bond Fund-Growth-(Direct Plan) 34,410,485 50.00 -
Dynamic Bond Fund-Growth-(Regular Plan) 18,776,803 25.00 -
Banking Debt Fund-Direct plan-Growth 19,980,419 20.00 -
Arbitrage Fund -Dividend-(Direct Plan) 24,379,222 30.75 -
Reliance Mutual Fund
Short Term Fund Growth Plan 14,056,349 29.00 -
Short Term Fund-Direct Growth Plan Growth Option 11,254,265 25.00 -
Dynamic Bond Fund-Direct Plan-Growth Plan 28,884,863 48.00 -
Floating Rate Fund Short Term Plan-Growth 27,897,922 50.28 -
Floating Rate-Short Term Plan -Direct Growth Plan 63,838,312 123.84 -
uti Mutual Fund
Short Term Income Fund Institutional Growth Option 15,314,052 20.00 -
L&t Mutual Fund
Floating Rate Fund Direct Plan-Growth 14,422,938 16.67 -
Ultra Short Term Fund Direct Plan-Growth 89,916,686 179.15 -
Income Opportinities Fund Direct Plan-Growth 15,046,871 20.00 -
Triple Ace Bond Fund-Bonus-Original 5,363,713 6.67 -
Jp Morgan Mutual Fund
India Active Bond Fund Retail-Growth 3,981,937 5.00 -
Short Term Income Fund -Direct Plan-Growth 19,155,767 25.00 -
bnp paribas Mutual Fund
MediumTerm Income Fund Direct Plan Growth 25,000,000 25.00 -
deutsche Mutual Fund
Banking and PSU Debt Fund-Direct Plan-Growth 34,685,620 35.00 -
Treasury Fund-Investment-Direct Plan Bonus 9,238,367 9.19 -
Short Maturity Fund Direct Plan-Annual Bonus 4,614,440 6.67 -
Ultra Short Term Fund-Direct Plan-Annual Bonus 8,868,007 8.83 -
Cash Opportunities Fund-Direct Plan-Annual Bonus 10,389,886 10.17 -
(units of the face value of ` 100 each)
iCiCi prudential Mutual Fund
Flexible Income-Regular Plan-Growth 1,626,944 27.86 -
Flexible Income-Direct Plan -Growth 2,133,884 49.38 -
(units of the face value of ` 1,000 each)
Reliance Mutual Fund
Money Manager Fund-Growth Plan-Growth Option 1,310,126 162.41 -
pramerica Mutual Fund
note no. 12 - inVestMents ` crores
Units as at as at March 31, 2014
March 31, 2014 Current Non Current
Credit Opportunities Fund -Growth 70,000 7.00 -
Dynamic Bond Fund-Growth Plan 50,000 5.00 -
Ultra Short Term Bond Fund Direct Plan Growth Option 394,855 50.00 -
Religare Mutual Fund
Bank Debt Fund-Growth 100,000 10.00 -
Active Income Fund Growth 184,838 25.00 -
dsp blackRock Mutual Fund
Strategic Bond Fund -Institutional Plan-Growth 190,666 24.20 -
Strategic Bond Fund -Direct Plan-Growth 176,115 25.00 -
Repurchase price Current ` 1,842.15 crores 1,645.35 -
in Liquid fund units:
escorts Mutual Fund
Liquid Direct Plan-Growth 29,106,997 54.51 -
(units of the face value of ` 100 each)
iCiCi prudential Mutual Fund
Liquid Direct plan-Growth 2,636,293 50.00 -
birla sunlife Mutual Fund
Cash Plus-Growth-Direct Plan 2,433,114 50.00 -
(units of the face value of ` 1,000 each)
Reliance Mutual Fund
Liquidity Fund- Direct Growth Plan Growth Option 1,146,882 221.40 -
idFC Mutual Fund
Cash Fund -Growth-(Direct Plan) 1,513,918 235.70 -
axis Mutual Fund
Liquid Fund-Direct Plan-Growth 662,821 94.15 -
Repurchase price Current ` 710.28 crores 705.76 -
investment in Mutual Funds 2,361.11 -
non trade
in debentures / bonds
Quoted
Face Value of ` 1,000 each
12.15% Religare Finvest Ltd 12.15NCD 23SEP14 50,000 5.01 -
Face Value of ` 1,000,000 each
9.20% Bank of Baroda RR Perpetual BD 09.10.2019 50 - 5.15
8.60% Sardar Sarovar Narmada Nigam Limited 09MR 15 260 6.61 -
11.62 5.15
Less: Provision for dimunition/amortisation (0.14) (0.18)
Market value Current ` 11.48 crores and non Current ` 4.97 crores 11.48 4.97
(previous
year ` nil)
total other than Long term investments 2,372.59 4.97
3,275.89 830.05
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 12 - inVestMents

as at March 31, 2014
aggregate value of Book value Market value
Quoted investments -Non Current(Repurchase Price/Market Value) 583.98 653.22
Quoted investments-Current(Repurchase Price/Market Value) 925.78 986.31
Unquoted investments-Non Current (Repurchase Price/Maturity Value/Cost) 246.76 246.76
Unquoted investments-Current (Repurchase Price/Maturity Value/Cost) 2,351.11 2,552.43
Dimunition/amortisation-Non Current (0.69) -
Dimunition/amortisation-Current (1.00) -
4,105.94 4,438.72

note no. 13 - Long-teRM Loans and adVanCes ` crores

Particulars as at March 31,
2014
unsecured, considered good
(a) security deposits 9.36
(b) balance with government authorities
Excise duty 45.03
VAT/ sales tax 247.64
(c) other loans and advances
Capital advances 149.89
Loans to employees 24.90
Prepaid expenses 0.61
total 477.43

note no. 14 - otHeR non -CuRRent assets ` crores

Particulars as at March 31, 2014
unsecured, considered good
Accruals
Interest accrued on investments 47.81
total 47.81

note no. 15 - inVentoRies* ` crores

Particulars as at March 31, 2014
Raw materials and components 371.49
Goods in transit of raw materials and components 74.37
Stores and spares 62.37
Loose tools 14.22
Finished goods
Two wheelers 68.26
Spare parts 42.65
Work in progress (Two wheelers) 36.19
total 669.55
*
Lower of cost and net realisable value
 163

note no. 16 - tRade ReCeiVabLes ` crores

Particulars as at March 31, 2014
(a) outstanding for a period exceeding six months from the date they were due for
payment
Secured, considered good 1.25
Unsecured, considered good 4.70
Unsecured considered doubtful 10.40
16.35
Less: Provision for doubtful trade receivables 10.40
5.95
(b) others
Secured, considered good 20.96
Unsecured, considered good 893.67
total 920.58

note no. 17 - CasH and CasH eQuiVaLents ` crores

Particulars as at March 31, 2014
(a) Cash on hand 0.29
(b) balances with banks
In current accounts 17.61
In deposit accounts (Refer (i) below) 50.84
In dividend current accounts (Earmarked accounts) 51.09
total 119.83

(i) Balance with banks include deposits amounting to ` 50.84 crores, which have an original maturity of more than 12
months and now maturing during the year.

note no. 18 - sHoRt - teRM Loans and adVanCes ` crores

Particulars as at March 31,
2014
unsecured, considered good
(a) Loans and advances to related party
Intercorporate deposits 220.00
(b) balance with government authorities
CENVAT/ Service tax credit 94.34
VAT/ sales tax 50.72
Excise duty -current account 0.66
Export incentive receivables 16.98
(c) others
Advance to vendors 108.91
Loans and advances to employees 18.42
Security deposits 1.07
Prepaid expenses 34.23
Others 5.05
total 550.38
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 19 - otHeR CuRRent assets ` crores

Particulars as at March 31, 2014
unsecured, considered good
(a) accruals
Interest accrued on investments 17.41
Other accruals 4.64
total 22.05

note no. 20 - ReVenue FRoM opeRations ` crores

For the year
Particulars
ended March
31, 2014
(a) sale of products
Two wheelers (6,245,960 Nos.) 25,041.15
Spare parts 1,964.11
27,005.26
Less: Excise duty 1,880.35
25,124.91
(b) other operating revenue
Income from services
Dealers support services 25.72
Goodlife program for customers 60.85
Services - others 34.38
120.95
Duty drawback and other incentives 21.69
Miscellaneous income 7.92
29.61
150.56
total 25,275.47
note no. 21 - otHeR inCoMe ` crores
For the year
Particulars
ended March
31, 2014
(a) interest income
Intercorporate deposits 7.16
Long term - Non trade investments 49.51
Current - Non trade investments 3.59
Others 83.11
(b) dividend income
Current investments - Non trade 0.69
Long term investments - Non trade 0.06
(c) net gain on sale of non trade:*
Current investments 221.70
Long term investments 77.69
(d) other non operating income
Profit on sale of fixed assets 0.68
total 444.19
*
After adjusting loss on sale of current investments aggregating ` 1.26 crores.

note no. 22 - Cost oF MateRiaLs ConsuMed ` crores

For the year
Particulars
ended March
31, 2014
(a) Raw materials and components consumed:
Opening stock 411.27
Add: Purchase of raw materials and components 18,363.25
18,774.52
Less: Closing stock 445.85
18,328.67
Less: Sale of components to ancillaries on cost to cost basis 14.29
18,314.38
Less: Cash discount 69.43
Consumption of raw materials and components 18,244.95
Less: Scrap sales 23.42
net consumption 18,221.53
Materials consumed comprises:
Steel sheets 44.33
Components 18,270.05
total 18,314.38
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 23 - CHanges in inVentoRy oF FinisHed goods and WoRK-in-pRogRess ` crores

For the year
Particulars
ended March
31, 2014
(a) opening stock
Two wheelers 99.36
Spare parts 25.86
Work in progress 30.51
155.73
Less: Excise duty on opening stock 14.55
Net opening stock 141.18
(b) Closing stock
Two wheelers 68.26
Spare parts 42.65
Work in progress 36.19
147.10
Less: Excise duty on closing stock 14.28
Net closing stock 132.82
net (increase)/ decrease 8.36

note no. 24 - eMpLoyee beneFits eXpenses ` crores

For the year
Particulars
ended March
31, 2014
employee benefits expenses (Refer (i) and (ii) below)
(i) Salaries and wages 818.73
(ii) Contribution to provident and other funds 51.77
(iii) Staff welfare expenses 59.85
total 930.35
(i) defined contribution and other plans
Employer's contribution to provident fund 30.56
Employer's contribution to superannuation fund 12.91
Employer's contribution towards Gratuity 6.36
Employer's contribution to ESIC 1.94
total 51.77

(ii) defined benefit plans

In accordance with the Payment of Gratuity Act 1972, Group provides for gratuity, as defined benefit plan. The gratuity plan
provides for a lumpsum payment to the employees at the time of separation from the service on completion of vested
year of employment
i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year. Based
on the valuation the Company, other than its subsidiary, contributes the ascertained liability to Life Insurance Corporation of
India by whom the plan assets are maintained.
 ` crores
Funded Unfunded
For the year ended March 31, 2014
Present value of obligation at the beginning of the year 109.55 -
Current Service Cost 7.35 0.13
Interest Expenses 8.57 -
Actuarial (Gain) / Loss (0.22) -
Benefits Paid (4.71) -
Present value of obligation at the end of the year 120.54 0.13

` crores
Funded Unfunded
For the year ended March 31, 2014
Fair value of plan assets at the beginning of the year 109.55 -
Expected return on scheme assets 10.35 -
Contributions by the Company 5.87 -
Benefits Paid (4.71) -
Actuarial Gain / (Loss) (0.52) -
Fair value of plan assets at the end of the year 120.54 -

` crores
Funded Unfunded
iii. Return on Plan Assets
For the year ended March 31, 2014
Expected return on plan assets 10.35 -
Actuarial Gain / (Loss) (0.52) -
Actual return on plan assets 9.83 -

` crores
Funded Unfunded
For the year ended March 31, 2014
Present value of defined benefit obligation 120.54 0.13
Fair value of Plan Assets 120.54 -
Net liability/(asset) recognised in the balance sheet - 0.13

` crores
Funded Unfunded
v. Expenses recognised in the statement of profit and loss
For the year ended March 31, 2014
Current service costs 7.35 0.13
Interest expense 8.57 -
Expected return on plan assets (10.35) -
Net actuarial (gain)/loss recognized during the year 0.30 -
Expenditure recognized in statement of Profit and Loss 5.87 0.13
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

` crores
Funded Unfunded
For the year ended March 31, 2014
Net liability/(asset) at the beginning of the year - -
Expenses as above 5.87 0.13
Contribution paid (5.87) -

The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions,
which if changed, would affect the defined benefit commitment’s size, funding requirements and expense.

Funded Unfunded
For the year ended March 31, 2014
Rate for discounting liabilities 8.00% p.a. 8.50% p.a.
Expected salary increase rate 6.00% p.a. 6.00% p.a.
Expected return on scheme assets 9.40% p.a. -
Withdrawal Rate Upto 30 years: 3% Upto 30 years:
From 31 to 44 3%
years:2% From 31 to 44
After 44 years: 1% years:2%
After 44 years: 1%
Mortality table used India assured Lives India assured Lives
Mortality (2006-08) Mortality (2006-08)
(modified) Ult. (modified) Ult.

experience adjustments 2013-14 2012-13 2011-12 2010-11 2009-10

Gratuity
Present value of Defined benefit plan 120.53 109.55 89.95 68.75 51.28
Fair value of plan assets 120.53 109.55 89.95 68.75 51.28
Funded status [Surplus / (Deficit)] - - - - -
Experience gain / (loss) adjustments on plan 7.51 4.08 15.28 8.63 5.10
liabilities
Experience gain / (loss) adjustments on plan assets 0.52 1.30 0.10 0.03 -

The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and
other relevant factors such as supply and demand in the employment market.

The Company makes annual contribution to Life Insurance Corporation (LIC). As LIC does not disclose the composition of its
portfolio investments, accordingly break-down of plan assets by investment type has not been disclosed.
 169

note no. 25 - FinanCe Costs ` crores

Particulars For the year
ended March
31, 2014
(a) interest expenses
On dealers security deposits 1.78
On others 10.04
total 11.82

note no. 26 - otHeR eXpenses ` crores

For the year
Particulars
ended March
31, 2014
(a) other expenses
Stores and tools consumed 98.93
Power and fuel 137.46
Rent 13.22
Insurance charges 44.99
Repairs and maintenance
- Plant and machinery 67.87
- Buildings 15.29
- Others 50.52
Rates and taxes 171.27
Exchange fluctuation 0.09
Packing, forwarding, freight etc. 729.39
Royalty 116.67
Advertisement and publicity 493.47
Donations# 11.71
Auditors' remuneration 1.49
Lease rent 21.79
Provision for doutful debts 0.85
Provision for diminution/amortization in value of investments
- Long term non trade investment 0.45
Loss on fixed assets sold/discarded 13.98
Miscellaneous expenses 586.69
total 2,576.13
#
Donation included ` 11 crores contributed to Satya Electoral Trust

note no. 27 - eaRnings peR eQuity sHaRe

For the year
Particulars Unit
ended March
31, 2014
(a) earnings per equity share (eps):
Net profit after tax Rupees crores 2,102.66
Weighted average number of equity shares outstanding during the year Numbers 199,687,500
Nominal Value of Equity Shares Rupees 2.00
Basic and diluted EPS Rupees 105.29
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 28 - Contingent LiabiLities and CoMMitMents (to tHe eXtent not pRoVided FoR) ` crores
Particulars as at March 31, 2014
(a) Contingent liabilities
(i) In respect of excise matters 29.24
The above matters are subject to legal proceedings in the ordinary course of business.
The legal proceedings when ultimately concluded will not, in the opinion of the
management, have a
material effect on the result of operations or the financial position of the Group.
(b) Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided 458.39
for (Net
of advances paid amounting to ` 438.61 crores)
Other commitments (Refer note below)
total 487.63

During the period, one of the subsidiary (“subsidiary company”) has entered into a license and technical assistance agreement
(LTAA) dated December 9, 2013 with Magneti Marelli S.p.A (MM) and in accordance therewith MM has granted to the subsidiary
company the license for manufacturing, assembling, selling and distributing the fuel injection systems and its components and
providing technical assistance, training etc. The subsidiary company has commitment to pay lump sum amount equivalent of `
14.84 crores in various tranches for the same to MM.

Management has identified various stages/activities for technology transfer by MM and accordingly as and when transfer of
technology reaches to a reasonable stage of identification, accrual for such liability will be recorded with corresponding
assets, if any.

The Group has other commitments for purchase /sales orders which are issued after considering requirements per operating
cycle for purchase /sale of goods and services, employees benefits including union agreement in normal course of business.
The Group does not have any long term commitments or material non-cancellable contractual commitments/ contracts, which
have a material impact on the financial statements.

note no. 29 - As the Group’s business activity falls within a single primary business segment viz. “Two wheelers, its parts and
ancillary services” and is a single geographical segment, the disclosure requirements of Accounting Standard (AS-17)“Segment
Reporting”, notified in the Companies (Accounting Standards) Rules, 2006 are not applicable.

note no. 30 - ReLated paRty disCLosuRes undeR aCCounting standaRd 18

a) parties in respect of which the Company is an associate.
Hero Investment Private Limited (upto May 16, 2013) { refer note no 34}
Brijmohan Lall Om Prakash (Firm; from May 17, 2013) {refer footnote (ii) of Note 3 Share Capital}

b) associates of the Company

Hero FinCorp Limited
Erik Buell Racing Inc (from June 28, 2013)

c) Key management personnel and their relative

Mr. Brijmohan Lall Munjal - Chairman
Mr. Pawan Munjal - Managing Director
Mr. Sunil Kant Munjal - Joint Managing Director
Mr. Suman Kant Munjal - Director

d) enterprises over which key management personnel and their relatives are able to exercise significant
influence:-
Brijmohan Lall & Associates, A.G. Industries Private Limited, Highway Industries Limited (upto previous year), Rockman Industries
Limited, Cosmic Kitchen Private Limited, Hero Management Services Limited, Hero Cycles Limited, Hero Corporate Services
Limited, Hero Mindmine Institute Limited, Easy Bill Limited(upto previous year), Abhyuday Manufacturing and Automotive
Limited and Raman Kant Munjal Foundation.
172
Consolidated Financial Statements

Transactions with related parties during the year

a) Parties in respect of which the Group is an associate.
` crores
this year
dividend*
Brijmohan Lall Om Prakash 371.91
*
Exclude proposed final dividend

b) Associates of the Group

` crores
this year
Hero FinCorp Limited
Lease rental expenses 20.26
2.19
Dividend received
605.00
Intercorporate deposits given
625.00
Intercorporate deposits repaid
7.16
Interest on Intercorporate deposits
0.16
Investment in equity shares

erik buell Racing inc

Subscription to Convertible preferred stock Series A 150.98
126.31
Technical Consultancy and Sponsorship

balance outstanding at the year end

- Receivable 220.00
19.40
- Payable

c) Key management personnel and their relative.

` crores
this year
Managerial Remuneration/sitting fees
Mr. Brijmohan Lall Munjal 36.98
Mr. Pawan Munjal 37.88
Mr. Sunil Kant Munjal 35.97
Mr. Suman Kant Munjal 0.02
Balance outstanding at the year end - Payables (including commission) 89.40

d) Enterprises over which key management personnel and their relatives are able to exercise significant influence.
` crores
this year
Purchase of raw materials and components etc. 2,005.38
Purchase of Assets 24.31
Sale of components etc. 12.80
Payment towards other services etc. 12.01
 171

Donation 0.30
Balance outstanding as at the year end - Payables 194.10
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

Significant related party transactions included in the above are as under :-

` crores
this year
purchase of raw materials and components etc.
A .G. Industries Private Limited 680.00
Rockman Industries Limited 1,237.00
purchase of assets
Rockman Industries Limited 21.47
A.G. Industries Private Limited 2.84
sale of components etc.
Rockman Industries Limited 12.80
payment for services etc.
Hero Corporate Services Limited 3.75
Hero Mindmine Institute Limited 1.98
Abhyuday Manufacturing and Automotive Limited 6.05
donation
Raman Kant Munjal Foundation 0.30

note no. 31 - The Group has entered into operating lease agreements for leased premises motor vehicles, dies and data
processing machines. These lease arrangements are cancellable in nature and range between two to four years. The aggregate
lease rentals under these arrangements amounting to ` 21.79 crores have been charged under “Lease rentals” in Note 26. The lease
arrangement for leased premises is non cancellable in nature.

Future lease payments under operating leases are as follows:

` crores
Particulars this year
Payable not later than one year 0.15
Payable later than one year and not later than five years 0.15
total 0.30

note no. - 32 - The Group’s borrowing facilities, comprising fund based and non fund based limits from various bankers, are
secured by way of hypothecation of inventories, receivables, movable assets and other current assets.

note no. 33 - Two wheeler sales are covered by a warranty period of two to five years. The details of provision for warranties
are as under:
` crores
Particulars this year
Provision at the beginning of the year 28.46
Additional provision made during the year 56.60
Amount utilised during the year 36.45
Provision as at the end of the year 48.61

note no. 34 - Pursuant to Scheme of Arrangement (the Scheme) for amalgamation of Hero Investments Private Limited (HIPL)
which is engaged in the business of holding securities other than trading, approved by the Hon’ble High Court of Delhi, which
became effective from May 16, 2013 (for which appointed date was January 1, 2013) upon filing of the copy with the
Registrar of Companies, NCT of Delhi & Haryana, all the properties and assets, present or future or contingent or of
whatsoever nature, be transferred and/or deemed to be transferred to and vested with Hero MotoCorp Limited (HMCL) so as
to become the properties of HMCL on the same terms and conditions as were applicable to HIPL.
 173

The amalgamation with HIPL has been accounted for under the “Pooling of interests” method as prescribed by Accounting Standard-
14. Accordingly, the amalgamation has resulted in transfer of assets, liabilities and reserves in accordance with the terms of the
scheme at the following summarized values as on April 1, 2013:

Particulars Amount (` in crores)

Non – Current Investments 3,844.60
Long term loans and advances 2.19
Cash and cash equivalents 2.30
Other current liabilities (0.02)
net assets taken over on amalgamation 3,849.07
Cancellation of Investment on account of Amalgamation (3,844.60)
balance for adjustment in Reserves and surplus 4.47
In terms of scheme, HMCL allotted equity shares to the members of HIPL an aggregate of 86,531,210 fully paid equity shares
of ` 2 each of HMCL on June 4, 2012 in proportion of their holdings in HIPL.

Operations and other transactions during the period January 1, 2013 to March 31, 2013 are as under which HIPL managed in

trust: Particulars Amount (` in

Balance in Reserves and Surplus as on January 1, 2013 (Being appointed date) 23.94
crores)
Loss during January 1, 2013 to March 31, 2013 (0.19)
total (a) 23.75
Less: First Interim dividend (16.59)
Less: Tax on dividend (2.69)
total (b) 19.28
balance for adjustment in Reserves and surplus as on april 1, 2013 (a-b) 4.47

Second Interim dividend of ` 1.16 crores along with tax on dividend of ` 0.20 crores have also be appropriated out of
Reserves and Surplus in the financial statements (Refer Note 4). Further, result of operations from April 1, 2013 till May 16, 2013
has been incorporated in HMCL financial statements.

note no. 35 - ReseaRCH and deVeLopMent eXpenses CHaRged to ReVenue aCCount ` in crores
Particulars this year
Employee’s benefit expenses 48.25
Depreciation and amortization expenses 9.82
Other expenses 31.09
total 89.16

note no. 36 - pRe opeRatiVe eXpenses ` in crores

Particulars this year
employee benefit expenses
Salaries and wages 4.01
Contribution to provident and other funds 0.19
Staff welfare expenses 0.03
other expenses
Stores and tools consumed 0.04
Rent 0.21
Depreciation and amortisation 0.20
Miscellaneous expenses 3.91
total 8.59
notes to the ConsolIdAted fInAnCIAl stAtements
for the year ended March 31, 2014

note no. 37 - pRoVision and/oR payMent in RespeCt oF auditoRs’ ReMuneRation ` in crores

Particulars this year
a) As Statutory Auditors
- Audit fee 0.77
- Limited Review of unaudited financial results 0.48
- Corporate Governance and other certification 0.17
b) Tax audit fees 0.05
c) In other capacity -
d) Out of pocket expenses #

#
This year ` 150,000

note no. 38 - Current year figures have been arrived at after giving effect to the scheme and include figures of operations of HIPL.
This being the first year of preparation of consolidated financial statements, there are no comparative figures for the previous
year.
stAtement pursuAnt to seCtIon 212(8)
of the Companies Act, 1956 relating to subsidiary companies for the year ended March 31, 2014

s. no 1 2
name of the subsidiary HMC MM auto Limited HMCL na inc
%age holding 60% 100%
Country of Registration India USA
Reporting Currency INR Crore INR Crore USD MN
Exchange Rate 1.00 60.04 1.00
Share Capital 3.00 150.55 25.08
Reserve (0.88) (0.08) (0.01)
Total Assets 2.80 150.47 25.06
Total Liabilites2 2.80 150.47 25.06
Investment other than investment in subsidiary - 150.10 25.00
Turnover - - -
Profit/(Loss) Before Taxation (0.88) (0.08) (0.01)
Provision for Taxation - - -
Profit/(Loss) after Taxation (0.88) (0.08) (0.01)
Proposed Dividend - - -

Note
1. Financial information has been extracted from the standalone audited financial statement for the year/period ending
March 31, 2014
2. Total liabilites are inclusive of share capital and reserves
notes
Hero MotoCorp Ltd.
Registered Office
(CIN: L35911DL1984PLC017354)
34, Community Centre,
Basant Lok, Vasant Vihar,
New Delhi - 110 057,
India
Tel.: 011-4604 4100, 2614 2451
Fax: 011-2614 3321, 2614 3198
www.heromotocorp.com