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DRIVEN BY PASSION A N N U A L R E P O R T 0 80 7
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PLEASURE GLAMOUR KARIZMA SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ
GLAMOUR FI SPLENDOR SUPER SPLENDOR
Hero Honda Motors Limited
34, Community Centre, Basant Lok,
Vasant Vihar, New Delhi-110 057, India
PH. 91-11-2614 2451, 2614 4121
PLEASURE GLAMOUR KARIZMA SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ X-TREME PLEASURE GLAMOUR GLAMOUR FI KARIZMA SPLENDOR SUPER SPLENDOR SPLENDOR PLUS SPLENDOR NXG ACHIEVER HUNK PASSION PASSION PLUS CD DELUXE CBZ
GLAMOUR FI SPLENDOR SUPER SPLENDOR www.herohonda.com
India and Bharat co-exist today. India comprises of fast-
growing cities and towns; Bharat is made up of villages
thentering the economic mainstream. As we enter our 25
year, we seek to walk and march with both India and Bharat.
0203
HCONTENT
Corporate Profile
Chairman’s Message
Board of Directors
Management Discussion & Analysis
Social Responsibility
Directors’ Report
Corporate Governance Report
FAQ’s
Auditors’ Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
US GAAP
04
10
14
16
18
24
28
32
36
43
47
71
74
78
79
80
115
Industry and Segment Dynamics
Results and Financial Analysis
Operation, Reach & Supply Chain
People And Environment
In some ways, Hero and Honda are like
two volumes of a single book. What has
made the book a bestseller is the fact
that right from the outset, the co-authors
knew the script they had to write in order
to be successful in the Indian market.
Over the course of two and a half
decades, both partners have fine-
tuned and perfected their roles. As the
largest motorcycle producer in the
world, Honda has been able to
consistently provide technical know-
how, design specifications and R&D
innovations to its most prolific affiliate in
the world, Hero Honda. This has led to
the development of world class, value-
for-money motorcycles and scooters
for the Indian market.
On its part, the Hero Group has taken on
the singular and onerous responsibility
of developing the supply chain,
ramping up production facilities, setting
up distribution networks and creating
customers.
Since both partners are completely
focused on their respective skills, they
have been able not just to complement
each other, but also draw from each
others strengths. In the process, Hero
Honda has gone on to create history, by
becoming one of the most successful
joint ventures in the world.
Today, every second motorcycle sold in
the country is a Hero Honda. There are
more than 22 million Hero Hondas on
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”
CORPORATE PROFILE
Indian roads today. There are more
Hero Honda bikes on this country's
roads than the total population of some
European countries put together!
The company's growth in the two-
wheeler market in India is the result of an
intrinsic ability to increase reach in new
geographies and growth markets. Hero
Honda's motorcycles and scooters are
sold and serviced through a network of
over 3500 customer touch points.
These outlets comprise of a mix of
dealers, service centres and stockists
located across rural and urban India,
and with every passing year, the
network is augmented.
Hero Honda has built two world-class
manufacturing facilities at Dharuhera
and Gurgaon in Haryana. These two
units now churn out over 3 million bikes
per year. The company's third, and its
largest and most sophisticated plant at
Haridwar has also gone on-stream.
All this has happened in the span of just
two and a half decades!
Leaders create pathways where none
exist. In the 1980’s – much before
“green” became a fashionable word,
Hero Honda became the first company
in India to prove that it was possible to
drive a vehicle without polluting the
roads. The company introduced new
generation motorcycles that set
industry benchmarks for fuel thrift and
low emission.
0405
A legendary ‘Fill it - Shut it - Forget it'
campaign captured the imagination of
commuters across India and Hero
Honda sold millions of bikes purely on
the commitment of increased mileage.
Today, as Hero Honda enters its silver
jubilee year, a riveting ‘Dhak Dhak Go’
sets the tone for India's Gen Next, its
emerging classes and its aspiring
classes.
The true test of champions comes
when the going gets tough. Champions
show the way by doing the basic things
right. In a particularly difficult year, when
the rest of the motorcycle industry
shrunk by 14 per cent, Hero Honda has
protected its turf and has actually grown
its market share, by re-establishing a
lead of more than one million bikes over
its nearest rival.
Not one to rest on its laurels, the
company believes the best is yet to
come. Today, Hero Honda is powering
its way through a market that —despite
the short term hiccup—hasn't still
unleashed its true potential, since
barely 2 per cent of the population has
been penetrated so far.
Not surprisingly, the company is in no
mood to take its hand off the throttle. As
Brijmohan Lall Munjal, the Chairman,
Hero Honda Motors succinctly puts it,
"We pioneered India's motorcycle
industry, and it's our responsibility now
to take the industry to the next level. We'll
do all it takes to reach there.'’
WE CELEBRATE EVENTS AND WE CELEBRATE TIME.
BUT OUR MOST IMPORTANT CELEBRATIONS, ARE OF ACHIEVEMENTS.
CHAIRMAN’S MESSAGE
1011
Dear Shareholders,
As I sat on the stage during the
inauguration of our third plant in April this
year, a fleeting thought crossed my thmind: have we really entered our 25
year?
I remembered vividly how we started a
quarter of a century ago: our first plant
came up in the wilderness. We used dirt
tracks to reach our factory. Yet here I
was, sitting in front of India's first
automobile factory that connects
vendors through conveyor belts!
Friedrich Nietzsche once famously
remarked: “For a tree to become tall, it
must grow tough roots along the
rocks''. As we enter our silver jubilee
year, we have shown how.
As interest rates climbed during the
year, the industry went into de-growth,
aga ins t a l l e xpec ta t i ons and
projections. Domestic motorcycle
sales shrunk by 12 per cent and for the
first time in more than a decade,
motorcycle's share of the overall two-
wheeler pie actually came down by
around 2 per cent.
For most of the two-wheeler industry
therefore, managing 2007-08 was like
trying to grow on rocky terrain. The sub-
soil was far from nourishing and the
business climate was harsh. Yet, strong
companies, like strong trees, learn to
adapt and adjust. They grow tough
roots along the rocks.
Marching with India and walking with Bharat—this, I believe, should be our leitmotif in our silver jubilee year.
We chose to see 2007-08 like a glass of half-full water; and we were able to make the most of adversity. Yet I would like to stress that the road ahead won't be entirely smooth.
Throughout the year in review, customers in the entry and executive segments began to postpone buying decisions. By the middle of the fiscal, effective interest rates for the two-wheeler industry hovered around 20 per cent.
Being motorcycle-centric, we were also affected. The high rates led to large-scale delinquencies and defaults in a number of regions. This in turn forced financiers to withdraw loan facilities in a number of dealerships.
High interest rates continue as I write this, but these are beyond our control. Nevertheless, the management is convinced it can, to an extent, control rampant delinquencies by partnering NBFC lenders with regional strengths and strong grassroot connections, instead of depending entirely on national level banks.
Though much smaller in size, regional non-banking financial companies are able to leverage their excellent domain knowledge on local borrowers. This ensures extremely low levels of non-performing assets. These NBFC’s could be our ideal finance partners, especially in smaller towns and rural areas, where national-level banks have poor distribution networks. We tied up with a regional financier during the year and hope to sew up more regional tie-ups in the months to come.
Inflation is another concern. While it is true that double-digit inflation of 11-12 per cent would certainly upset household budgets and postpone certain purchases, the rise in auto fuel prices might actually turn out to be a blessing in disguise for the two-wheeler industry. It is my belief that cost-effective and fuel-efficient modes of transport will become more popular. In fact, I will not rule out the possibility of a number of car-owning homes actually buying an additional two-wheeler to
reduce the impact of the monthly fuel bill on the household budget.
Since fuel prices are not expected to soften in the near term, fuel-efficient industries such as ours could be beneficiaries.
We will continue to be confident and aggressive about the future, we will also be patient. I read somewhere that patience is waiting. Not passively waiting - that is laziness; but to keep going when the going is hard and slow - that is real patience.
Yours sincerely,
Brijmohan LallChairman
Luckily, we weathered the storm -- and actually surpassed our tally of the previous year marginally. More significantly, your company boosted its share in the domestic motorcycle market to more than 54 per cent—the highest share in recent memory. As the year ended, your company led its nearest competitor in the domestic two-wheeler market by more than 1 million units.
I think it would be safe to summarise 2007-08 as the year in which we migrated from schemes to themes. Despite difficult market conditions, we resisted the temptation to bump up sales artificially through comprehensive festival-related discounts. Instead, we invested in new models and upgrades.
Our performance in the domestic premium segment gives me special satisfaction, since our share increased from 15 per cent to nearly 24 per cent. In my last message, I talked about our plans to consolidate our presence in this part of the market; we are clearly on track.
In my last message, I had said that we were taking measures to ensure that are profitability gets back on track.
Near-stagnant topline performance forced us to look inwards: at process efficiencies, at our supply chain and at our sales frontline. We tweaked, changed and rationalised where possible and managed to increase our operating margins from 11.9 per cent to 13.1 per cent.
Going forward, I expect our supply chain to become even leaner as ongoing online projects go live. I am happy to report that our online vendor connectivity program – which seeks to links our plant with vendor premises on a real-time basis-- has made rapid progress, with more than 70 per cent of vendors seamlessly integrated. Likewise, dealer management system software is also rolling out on a national basis very shortly.
In my last message, I had also said that the slowdown would be temporary. This year, when conditions are even more trying, I continue to hold this view. This company has coped with high interest
rates before. This company has coped with double-digit inflation before. So what we are seeing today is nothing extraordinary.
Of course, good times do not last forever—perhaps years of 30 per cent growth will become rare in the future. But just as good times don't last forever, nor do bad times. The current de-growth in the industry is also an aberration caused by external factors outside the control of the auto industry. It is not driven by fundamentals. Indeed, the ground conditions that drove this country and this company have not changed.
Two Indias exist today. Both excite me equally. By the end of this decade, India is expected to have an urban population of 173 million. This is significant, since urbanisation rises with GDP per capita in a “hockey stick” fashion.
I am equally excited about rural India. Government development schemes are finally showing signs of working at the grassroots—landless farmers from Uttar Pradesh and Bihar who traditionally migrated to Punjab to work are now demanding higher wages to come, since there is work available at home, for the first time. In 1990, for every Rs. 4300 earned by an Indian villager, an urbanite made Rs. 3526 more. Today, the difference has dropped to Rs. 2408. This is a clear sign of progress.
Increasingly, the rural economy is a microcosm of the national economy. Today, India's 700 million villagers now account for the majority of consumer spending in the country, more than Rs. 4300 billion a year. Millions step into consumerism each year, graduating from the economics of necessity to the economics of gratification, buying themselves products we make.
We in Hero Honda are actively seeking to be part of this miracle. In December 2007, we launched a unique national level rural connect program called Haar Gaon, Haar Aangan (every village, every house). It is my belief that this program, as it gains critical momentum in the years to come, it will sustain this company well into the next decade.
1213
BOARD OF DIRECTORS
For more information please visit www.herohonda.com
COMMITTEE OF DIRECTORS
Audit Committee
Pradeep DinodiaChairman
Gen. (Retd.) Ved Prakash MalikMember
Dr. Pritam SinghMember
SHAREHOLDERS'
GRIEVANCE COMMITTEE
Dr. Pritam SinghChairman
Pradeep DinodiaMember
REMUNERATION
COMMITTEE
Gen. (Retd.) Ved Prakash MalikChairman
Pradeep DinodiaMember
COMPLIANCE OFFICER
Ilam C. Kamboj G.M. Legal & Company Secretary
SENIOR MANAGEMENT TEAM
Ravi SudSr. Vice President & CFO
Anil DuaSr. Vice President-Sales,
Marketing and Customer Care
Vikram S. KasbekarPlants Head-Operations
and Supply Chain
Dr. Anadi S. PandeVice President-HRM, Corporate
Planning and Strategy
Vijay SethiVice President-Information Systems
1415
Brijmohan Lall MunjalChairman
Pawan MunjalManaging Director & CEO
Toshiaki NakagawaJoint Managing Director
Sumihisa FukudaTechnical Director (w.e.f. June 01, 2008)
Pradeep DinodiaNon-Executive and Independent Director
Gen. (Retd.) Ved Prakash MalikNon-Executive and Independent Director
Dr. Pritam SinghNon-Executive and Independent Director
Analjit Singh Non-Executive and Independent Director
Om Prakash MunjalNon-Executive Director
Masahiro TakedagawaNon-Executive Director
Sunil Kant MunjalNon-Executive Director
Takashi NagaiNon-Executive Director(w.e.f. May 11, 2007)
Ms. Shobhana BhartiaNon-Executive and Independent Director
Sunil Bharti MittalNon-Executive and Independent Director
Meleveetil DamodaranNon-Executive and Independent Director(w.e.f. June 16, 2008)
ALTERNATE DIRECTOR
Satoshi Matsuzawa(Alternate Director to Mr. Takashi Nagai)
OUTGOING DIRECTORS
Tatsuhiro OyamaNon-Executive Director
(upto May 11, 2007)
Dr. Vijay Laxman KelkarNon-Executive and Independent Director
(upto December 31, 2007)
Yutaka KudoWhole-time Director
(upto May 31, 2008)
Narinder Nath VohraNon-Executive and Independent Director
(upto June 24, 2008)
MANAGEMENT DISCUSSION & ANALYSIS
Industry And Segment DynamicsPerformance Across Segments
Results And Financial Analysis
Operations, Reach & Supply ChainManufacturing
Vendor Mangement
Distribution Network
Rural Network
People And EnvironmentThe Human Touch
Information Systems
Environment
Cautionary statement Statements in this management discussion and analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the company's operations include significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations and interest costs.
1617
In the previous year, there were early
signs that growth in the two wheeler
industry was slowing. Within the space
of a year, the pace of the fall has been
quite dramatic, and perhaps for the first
time since economic reforms started in
1991, India's domestic two wheeler
market entered a period of de-growth.
The industry clocked total volumes of
8.03 million during the year in review, a
fall of nearly 5 per cent compared to the
previous year. The picture was bleaker
in the domestic market, where the
industry clocked sales of 7.19 million, a
decline of 8 per cent.
While the motorcycle industry continues
to dominate the structure of the two
wheeler industry, this category's
contribution to the domestic two
wheeler industry actually declined
during the year from 83 per cent to a little
over 79 per cent—a clear symptom of
the ongoing slowdown. In fact, this is
the first time since the early nineties
since motorcycles’ share of the two
wheeler market has actually declined;
reversing a consistently growing trend
from the previous year.
In contrast, there was another trend
reversal during the year. After appearing
to go into decline since the early 1990s,
the scooter market clocked a revival of
sorts during the year. After suffering at
the hands of motorcycles for many
years, scooter sales in the domestic
market as a percentage of motorcycle
sales actually increased from 12.4 per
cent to 14.8 per cent.
As in previous years, the three price
points in the motorcycle segment
continued to grow at different paces.
Dark clouds had started gathering in the
entry segment during the previous year,
with sales of entry level bikes growing at
just 5 per cent. During the year in review,
the entry segment in the domestic
market shrunk visibly from over 36 per
cent of total motorcycle sales to around
30 per cent. In just two years, the entry
segment's share in the total motorcycle
mix has declined by 10 percent.
This sharp decline shows the clear
impact of interest rates on two wheeler
buyers at the entry level. Interest rates
started firming up in early 2007, and
have shown no signs of letting up ever
since; the slump in the entry segment
has coincided with this rise. This is an
indication that the entry segment is very
interest elastic, and buyers in this
segment (SEC B and C) react to higher
interest rates perhaps by either
postponing or cancel l ing their
purchase decisions.
Rising interest rates impacted the
deluxe segment of the motorcycle
industry as well, albeit to a lesser extent.
It was a matter of some irony that even
where all the major players in the
executive segment clocked an overall
decline in numbers, the executive
segment's share of the domestic
motorcycle market actually increased
by 4.4 per cent. The executive segment
now makes up nearly 57 per cent of the
motorcycle segment, compared to
52.5 per cent in the previous year. Quite
obviously, the decline of the entry
segment has been so sharp, that the
absolute reduction in executive
segment sales has translated into a
relative increase in the executive
segment's overall share in the
motorcycle mix.
The premium segment was the only
category of motorcycles that managed
to actually increase absolute sales in a
sharply declining market. Sales in the
domestic market for this segment
actual ly increased by 2.2 per
cent—while the premium segment's
overall share of the motorcycle market
increased from 11.1 per cent to 13 per
cent. This shows that of the three
segments the interest effect has
affected premium buyers the least. This
isn't surprising, considering that buyers
in the premium segment mostly fall in
the SEC A category, who are the least
likely to postpone purchase decisions
on account of an increase in the EMI.
At a broader level, there is no real cause
for alarm in the executive segment or
the premium segment, despite the
current decline and slowdown.
According to the National Council of
Applied Economic Research (NCAER)
in 2001-02, there were 61 million
Indians belonging to families that
“A leader leads by example, whether he intends to or not.”
INDUSTRY AND
SEGMENT DYNAMICS
1819
earned more than Rs. 2 lacs a year; by
2005-06, that number had crossed 100
million. In 2009-10, this number is
projected to increase to 173 million. It is
safe to assume that the bulk of the
buyers from these segments will opt for
either entry or deluxe segment
motorcycle offerings. On the other
hand, it has now been established
beyond doubt that a large chunk of
entry segment buyers will continue to
react when there is a spike in interest
rates. In other words, two wheeler
makers have few options but to ride out
the difficult times.
Performance Across Segments
Hero Honda's sales in the entry
segment declined by over 6 per cent;
the same as the rest of the motorcycle
industry. However, even in a declining
market Hero Honda's share of entry
segment went up from 28.7 per cent to
36.6 per cent—a clear indication that
sales of manufacturers in the entry
segment shrank substantially. In
contrast, Hero Honda was able to limit
the damage and in the process
increased its market share. Hero Honda
now finds itself in a situation to turn a
position of relative weakness into a
position of strength.
Hero Honda's story in the executive
segment was similar. Compared to the
previous year, sales of executive
segment bikes in the domestic market
were down 1.18 per cent. However, the
company still maintained its iron-grip in
this—the largest segment of the two
wheeler market -- by increasing its
share from 68.9 per cent to 71.5 per
cent.
Hero Honda turned in its best
performance in the domestic market's
premium segment, where its sales went
up by a whopping 69 per cent
compared to the previous year. In 2006-
07, Hero Honda had grown 25 per cent
in this segment.
In the course of a single year, the
company increased its share of the
overall premium motorcycle segment
by more than 8 percent; the company's
premium bikes now account for 23.5
per cent of the total premium pie. Given
the pace of growth of this segment
against the backdrop of a young and
affluent middle class. There is no doubt
that this segment will drive Hero
Honda's growth in the future.
2021
FOR US, EVERY CELEBRATION IS ENJOYABLE BECAUSE IT IS DIFFERENT.
WHAT MAKES THEM MEMORABLE, ARE THE PEOPLE WE CELEBRATE WITH.
• Sales :
Despite a slow down in the two
wheeler industry, the annual sales
of the Company grew at 0.01 per
cent. Hero Honda clocked sales
volume of 3,337,142 units in 2007-
08 compared to 3,336,756 units in
2006-07. In value terms total sales
(net of excise duty) increased by
4.4 per cent to Rs.10332 crores
from 9900 crores in 2006-07.
• Profitability :
The Company's earnings before
interest depreciation and taxes
(EBITDA) margins increased from
11.9 per cent in 2006-07 to 13.1 per
cent in 2007-08 and the Operating
profit (PBT before other income)
increased by 16.0 per cent from
Rs.1056 crores in 2006-07 to
Rs.1225 crores in 2007-08. The
improvements on the margins was
accomplished through better sales
realisations and effective cost
rationalisation measures which
included better control over
Material cost, Marketing cost,
Overheads apart from sharp focus
on operational efficiencies.
• Other Income :
Other income marginally declined
by 2.3 per cent from Rs. 190 crores
in 2006-07 to Rs.185 crores in
2007-08.
• Cash Flows :
Despite the nominal growth in sales
turnover, better efficiencies in the
working capital management has
improved the cash flow from
operations from Rs 625.05 crores
to 1211.78 crores. Cash flows
before working changes have also
improved from Rs 1227.60 crores
to Rs 1392.56 crores on account of
better EBITDA margins.
The Company spent a total of
Rs.781 crores in investing activities,
which included capacity expansion
and investment in financial assests.
There was also an outflow of
Rs. 432 crores on account of liberal
dividend outflows.
• Capital Expenditure :
During the year the Company
incurred a capital expenditure of
Rs.375 crores. The funds were
used towards setting up of new
plant at Haridwar in Uttrakhand. The
aggregate capital outlay for the new
production facility is estimated at
Rs.460 crores which has been
funded over the last two financial
years.
• Raw Material Costs:
Due to softening metal prices
particularly Aluminum & Nickel in
s e c o n d h a l f o f t h e y e a r
accompanied with better sales
realisation in comparison to the
previous year the share of material
costs has reduced the overall cost
structure. Raw material costs as a
percentage of total sales declined
from 72.5 per cent in 2006-07 to
71.6 per cent in 2007-08.
• Current Asset Turnover:
This ratio, which shows sales as a
proportion of average current
assets, marginally decreased from
11.4 to 11.2, on account of higher
average inventory & bank balance.
DEBT STRUCTURE
Hero Honda has been a debt free
company for the last 7 years. The
unsecured loan of Rs.132 crore from
the state government of Haryana on
account of sales tax deferment, is
interest free and has no holding costs.
Net interest payment by the company
has been negative during the last few
years.
2425
OPBT - PBT before other income PBT - Profit before tax PAT - Profit after tax
PATOPBT
RESULTS
AND
FINANCIAL
ANALYSIS
DIVIDEND POLICY
Over the years, the Company has
consistently followed a policy of paying
high dividends, keeping in mind the
cash-generating capacities, the
expected capital needs of the business
and strategic considerations. For 2007-
08, the board has recommended a
dividend of 950 per cent which is higher
than 850 per cent declared in the
previous year. The payout ratio has for
the year been pegged at 45.9 per cent
vis-a-vis 46.3 per cent in the previous
year.
WORKING CAPITAL MANAGEMENT
Hero Honda has always endeavored to
efficiently use the various components
of working capital cycle. Despite the
adverse conditions in the two wheeler
industry, the Company has been able
to effectively control the receivable and
inventories enabling it to continue to
operate on negative working capital.
As a part of its cost rationalization drive,
the Company aggressively availed
cash discounts from vendors by
making payments before due dates.
This not only helped us improve
operating profit margins but also
allowed the Company to deploy the
surplus funds in the core business.
NOTES ON WORKING CAPITAL :
The average of inventory, receivables and payables have been taken for the calculations of inventory period , operating and cash cycle.
Table 1: WORKING CAPITAL MANAGEMENT & LIQUIDITY RATIOS
2005-06 2006-07 2007-08
Operating Cycle (Days) 14.9 17.9 21.2
Current Ratio 0.74 0.84 0.68
Inventory Period (Days) 10.5 10.4 11.9
Cash Cycle (Days) (23.9) (12.2) (10.6)
Acid Test Ratio 0.54 0.59 0.45
Table 2: Key Indicators of Profitability
2006-07 2007-08
OPBT/Sales (%) 10.7 11.9
PBT/Sales (%) 12.6 13.6
ROACE (%) 51.6 49.0
OPBDIT/Sales (%) 13.1
PBIT/Sales (%) 12.4 13.3
PAT/Sales (%) 8.7 9.4
ROAE (%) 38.3 35.5
11.9
Net Cash Flow From Operations(Rs. in Crores)
03-04 04-05 05-06 06-07 07-08
800
600
400
200
1000
0
1200
1400
12
53
97
110
76
81
090
7
72
8
10
56
85
8
04-05 05-06 06-0703-04 07-08
12
25
96
8
1200
900
600
300
0
PROFITS(Rs. in Crores)
1500
WITH EVERY STEP, WE EMBRACE THE WINDS OF CHANGE.
AT EVERY BEND, WE RIDE UPON THE GROUND OF OPTIMISM.
FOR US, LIFE IS A CELEBRATION.
OPERATIONS, REACH
& SUPPLY CHAIN“Price is what you pay. Value is what you get”
Manufacturing
Hero Honda commissioned its third,
plant at Haridwar during the year, with an
initial installed capacity of 500,000 units.
With this new capacity expansion,
HHML now has an overall annual
capacity of 4.5 million two wheelers.
With this, the Company has become a
global-scale manufacturer.
The Haridwar complex is the largest of
the three Hero Honda plants, spanning
about 275 acres.
The plant has lean manufacturing and
practices that ensure efficiency. It is
connected with vendors through
conveyors so that the material can
avoid multiple handling and is delivered
on time.
The Haridwar plant is one of the
greenest automobile plants in the
country. Effluents are minimised, and
there is zero discharge on liquid
effluents. All waste is treated and
consumed within the factory.
The plant has 70 per cent of its area as
green open spaces, and approximately
45,000 square metres of the plant roof
area is being converted into a green
roof.
Vendor Management
Vendor management is critical to Hero
Honda, as nearly 73 per cent of the
production is currently made up of
material cost. During the year, the
company managed an average cost
reduction of Rs. 343 per vehicle despite
volatility in metal prices.
A national network of 256 vendors
- including 36 ancillaries - forms the
backbone of its plant operations.
To improve plant efficiencies and
inventory turns, Hero Honda has
extended "Just in Time” (JIT) beyond
the shopfloor. Vendors are also making
critical investments in quality and
capacity in collaboration with the
Company. For example, the online
vendor connectivity program has made
rapid progress. Three years ago, the
Company had only 46 vendors
connected online to the company's
factories. By the end of 2008-09, it is
estimated that 72 per cent of the
vendors and their supplies would be
connected online.
Around 100 ancillaries will be setting up
their manufacturing base in Haridwar
over the next two years to ensure a fully
integrated supply chain. To begin with,
40 ancillaries will set up their facility in
the Industrial Parks that are being
specially developed for Hero Honda
ancillaries. During 2008-09, Hero
Honda plans to work with vendors to
develop new vendor production
facilities. 3PL service providers have
also been identified for the Haridwar
plant— a first for any two-wheeler
company in India.
2829
3031
As part of an ongoing exercise aimed at
quality control, members of senior
management visited vendor premises
for top quality audits. This has resulted
in the reduction of rejection parts per
million (PPM) by 20 per cent.
During the year, the company launched
a collaborative cost improvement
program with vendors. In this
programme the processes and
methods are continuously toned so that
the material cost can be managed
better. Hero Honda is also evaluating
horizontal deployment of third party
logistic services providers (3PL) to
manage costs along the supply chain
better.
In 2008-09, the Company plans to
further study and tactfully optimise its
supply chain. As part of this plan, raw
materials will be optimised so that the
best possible cost advantages accrue
to the company.
Distribution Network
The company has a conscious strategy
of penetrating new markets and
unrepresented territories through its
distribution network which is made up
of dealers, authorized representatives,
stockists and SSPs. In March 2001, the
company had 826 such customers
points in India. By March 2008, this
number went up to over 3500. On an all
India basis, 50 dealers, 150 SSPs, 267
dealers representatives and 45 city
work agents were added. All the four
marketing zones of the Company
showed a uniform increase in new
customers points during the year in
review.
Rural Network
During the year, Hero Honda's
ambitious rural connect program— Har
Gaon, Har Aangan also got underway. A
total of 18,000 villages were covered
out of the targeted 23360 villages with a
population of 5,000 people. In all, more
than 100,000 opinion leaders in these
villages were approached. The rural
initiative was carried out by 500
specially trained rural sales executives
at the dealership level.
PEOPLE AND ENVIRONMENT“Pupils should not be taught. Instead, they should be
provided conditions in which they can learn.”
The Human Touch
Hero Honda is continuously making
efforts to create a talent pipeline and to
develop potential leaders.
The Company encourages regular
feedback for phasing-in process
improvement and aligning employee's
goals with business objectives. The
detailed feedback process entered its
fourth year in 2007-08 through the
“Gallup Q12 Employee Engagement
Study”. The findings from Gallup have
already helped managers in building
mutual trust and foster teamwork. In the
process, this is helping make Hero
Honda a better workplace.
At Hero Honda's new plant at Haridwar,
a number of best practices have been
put in place. A flatter organization
structure has been created, policies
and guidelines have been framed and
communicated, and job rotation was
made mandatory for level migration. An
assessmen t cen t re was a l so
introduced to evaluate competency
during level migration.
During the year, an i-LEAP (Individual
Learning Excellence and Award
Program) was started for recognising
the best training projects, and to identify
internal trainers. A number of new in-
house programs were also rolled out, in
order to augment and upgrade existing
work-related and technology-related
skills.
Hero Honda has traditionally enjoyed
excellent industrial relations. Union
elections during the year went off
smoothly and the union body was
formed amicably. To ensure smooth
functioning at the plant, shop floor in-
charges were empowered to deal with
grievances and discipline issues. At
another level, a biometric attendance
monitoring systems (to avoid proxy
punching) has been started.
Information Systems
A number of key technology initiatives
were either initiated or completed in
2007-08. The application infrastructure
of the organization was extended to
support business processes at the new
production facility at Haridwar. This is
expected to be operational in 2008-09.
During the year, the organisation's entire
n e t w o r k w a s r e v a m p e d a n d
redundancies were built to support
business users. The IT team also
deployed applications for sending real
time business alerts related to
production, sales, service notifications
automatically from the system using
SMS technology. This helped business
users immensely.
This real time system was also used by
business partners to manage their
dispatches and outstandings. To
improve productivity, a number of
applications with work flow capabilities
were developed or enhanced. Also
during the year, the entire information
security policies of the organization
were revamped in order to mitigate
risks.
A new eco-friendly state-of-the-art data
centre was set up and Hero Honda
migrated to a new technology
architecture that included blade servers
and virtualization. This would help
consolidate servers and storage as well
as reduce complexity.
To help Hero Honda prepare for the
future, two major strategic initiatives are
being planned for 2008-09. The first is
Product Li fecycle Management
software. This will help the company in
managing the increase of complexity of
a diverse product portfolio and help
reduce cost and time for developing
new models. The new software is also
expected to improve and scale up
design-level collaboration with vendors
on an on-line basis. The software is also
expected to reduce warranty costs.
The second initiative comprised of
rolling out a Dealer Management
System software across the front end of
the supply chain. This will help Hero
Honda connect with its entire dealer
network. Once the project is complete,
it is expected to improve customer
service and supply chain performance
extensively.
Environment
For a number of years, Hero Honda has
b e e n o n e o f I n d i a ' s m o s t
environmentally sustainable firms. The
company believes that to create a
sustainable enterprise, it is critical to
3233
strike the right balance between
business, mankind and nature.
The Company has ensured complete
compliance with al l applicable
env i ronmenta l regulat ions and
practices. For its efforts, Hero Honda
was awarded for Safety Performance
and Best working condition and
Canteen facilities in the plant by the
Government of Haryana for 2007. The
Company has also been nominated for
the Green Manufacturer of the year
under the TERI Corporate Award
Scheme.
A green vendor development program
w a s l a u n c h e d o n t h e Wo r l d
Environment Day June 5, 2007. A green
charter was released giving specific
guidelines to the vendors and
suppliers. A total of 31 vendors were
selected in the first phase and in all, 256
vendors will be covered and certified as
green vendors over a period of 5 years.
Each vendor will initiate EARN programs
in the areas of pollution prevention,
waste reduction, water conservation,
energy conservation and statutory
compliances. Each vendor will be
evaluated and certified cluster wise.
During the year, an environmental plan
to reduce hazardous waste from the
pol lut ion control faci l i t ies was
developed. As much as 30% of sludge
generated was reduced through a
sludge decanter system. The company
also increased the conversion rate of
paint sludge into useful primer from 15
MT to 25MT per month.
Hero Honda has also successfully
developed primer from the waste paint
sludge, which used to be incinerated
earlier. This development has been
demonstrated to the state authorities,
and the Company is seeking
authorization to use this practice on a
regular basis. The converted primer has
already been used on the products,
wh ich has passed a l l qua l i ty
parameters.
To fulfill its commitment towards water
conservation, a recycling plant of 400KL
per day capacity with reverse osmosis
technology has been installed which
recycles the sewage effluent into the
process at the Haridwar plant. A similar
project has also under progress at the
Dharuhera plant and this is likely to be
completed in 2008.
The plant has been improved by adding
a forced draft ventilation system. An
additional local exhaust system was
provided in the weld shop and vehicle
testing area to minimize the effects of
airborne contaminants. Electrostatic
precipitators were also installed in the
machine shop to capture the aerosoles
at source and prevent exposure of the
workmen.
Since the state of Haryana is one of the
driest in the country, Hero Honda has
always emphasized heavily on ground
water recharging. During the year, 2
more injection wells were added,
covering an additional area of 4500 Sq
metres. In all, Hero Honda now as 25
injection wells in the plants. Also during
the year, an exhaustive feasibility study
was conducted to extend the Rain
Water Harvesting Scheme for Roads
and other pucca surfaces in the plants.
The project will be executed in 2008-09.
Hero Honda Motors takes considerable pride in its community relationships, especially ones at the grassroots that have evolved over time. The Company has played a pivotal role in bringing an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream through direct interventions in education,
healthcare, vocational training, creation of social and physical infrastructure, and environment management.
Most of the group's social enterprises – including the Rural Development Centre-- are planned and executed by the Raman Kant Munjal Foundation.
To help local people, especially women, Hero Honda has set up a vocational training centre which runs a 6 months Diploma Course for Tailoring, Embroidery and carpet weaving, etc. During the year in review, the Centre was upgraded. It now trains 50 girls per batch up from 25 & the duration of the course was increased from six months
to 9 months. The Centre has also been equipped with modern machines to prepare the girls for the Garment Export Industry, where placement is 100%.
Also during the year, women from four villages near the factory at Dharuhera benefitted from food-processing
courses conducted at the Centre.
In February 2007, the Foundation had set up a computer training & learning centre in partnership with Microsoft. A total of 8 to 10 batches (boys and girls) are run simultaneously consisting of 18-20 students per batch. Till date, close to 400 students have been trained at the centre.
To enhance the value of rural youth in the job market, a spoken English course was started during the year. Currently the course is being run in three Batches during the day. It is proposed to train approx 120 students per year. The Foundation will make an effort to
SOCIAL RESPONSIBILITY“Life laughs at you when you are sad; smiles at youwhen you are happy. But life salutes you when you
make others happy.”
3637
place them with BPO/Call Centres, provided the students also have the requisite computer training.
A vocational centre for boys is expected to start during 2008-09 and will run on the lines of an ITI. The centre will provide training in Fitter, Welding, Carpentry and Plumbing & Electrician Trades. It is planned to train approx. 50 students every year, and efforts will be made to accommodate them in g roup companies.
The Foundation also runs an Adult Literacy Program, a marriage facilitation service for underprivileged girls, besides doorstep healthcare programs and medical camps for the local population. A graduate teacher from the targeted village is appointed to teach the elders. Approx 650 people have benefited from this scheme spread over 20 villages.
In every CSR Project undertaken, the Foundation always involves either a local NGO preferably the village itself or panchayat members not only during execution but also for subsequent sustainability/maintenance of project. In certain areas such as computer learning by rural youth Udyan Care, a reputed NGO has been made a partner in association with Microsoft.
In Projects like Hygiene, Sanitation & Safe Drinking Water, Local Government Representatives such as Block Development Off icers are also involved.
Statutory Auditors
A.F. Ferguson & Co.
Chartered Accountants,
9, Scindia House,
Kasturba Gandhi Marg,
New Delhi 110 001, India
Tel : 011-2331 5884
Principal Bankers
ABN Amro Bank N.V.
Bank of America NT & SA
Canara Bank
Citibank N.A.
HDFC Bank Limited
HSBC Limited
ICICI Bank Limited
Punjab National Bank
Standard Chartered Bank
The Bank of Tokyo-Mitsubishi UFJ Limited
Cost Auditors
Ramanath Iyer & Co.
BL-4 (Paschmi), Shalimar Bagh
Delhi 110 088
Tel. : 011-27481904
Technical & Financial Collaborators
Honda Motor Co., Ltd.,
1-1, 2 - chome,
Minato - ku,
Tokyo 107-8556, Japan
www.world.honda.com
Registered & Corporate Office
34, Community Centre,
Basant Lok, Vasant Vihar,
New Delhi 110 057, India
Tel.: 011-2614 2451, 2614 4121
Fax : 011-2615 3913
www.herohonda.com
Registrar & Transfer Agents
Karvy Computershare Pvt. Ltd.
Plot No. 17-24, Vithlrao Nagar,
Madha Pur, Hyderabad 500 081
Tel.: 040-23420815-820
Fax : 040-23420814
Minami - Aoyama,
Dharuhera Plant
69 KM Stone,
Delhi-Jaipur Highway,
Dharuhera, Distt. Rewari,
Haryana 122 100, India
Tel.: 01274-264 012-15
Fax : 01274-267 024
Gurgaon Plant
37 KM Stone,
Delhi-Jaipur Highway,
Sector 33, Gurgaon,
Haryana 122 001, India
Tel.: 0124-2372 123-134
Fax : 0124-2373 141-142
Haridwar Plant
Plot No. 3 Sector-10,
11E, SIDCUL,
Roshanabad,
Haridwar 248 001
Uttrakhand
Tel.: 01334 - 239513
Fax : 01334 - 239512
CORPORATE
INFORMATION
3839
FINANCIAL HIGHLIGHTS & KEY RATIOS
Financial Highlights(Rupees in crores)
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08
Sales (Nos.) 2070147 2621400 3000751 3336756 3337142
Growth in sales (nos.) (%) 23.4 26.6 14.5 11.2 0.01
Total net income 5997 7559 8870 10090 10517
Growth in Total inocme (%) 15.5 26.1 17.4 13.7 4.2
Profit before tax 1072 1217 1412 1246 1410
Profit after tax 728 810 971 858 968
Share capital 39.94 39.94 39.94 39.94 39.94
Reserves and Surplus 1099 1453 1969 2430 2946
Total debt 175 202 186 165 132
Net fixed assets 589 715 994 1355 1549
Total assets (net) 1314 1695 2195 2635 3118
Market capitalisation 9797 10943 17781 13753 13869
Economic Value Added (EVA) 569 564 641 485 575
Key Ratios
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08
Long term Debt/Equity Nil Nil Nil Nil Nil
OPBDIT*/Net Sales (%) 16.8 15.7 15.7 11.8 13.1
OPBT**/Net Sales (%) 15.6 14.6 14.4 10.7 11.9
Profit after tax/ Total income (%) 12.1 10.7 11.0 8.5 9.2
Return on average equity (%) 72.9 61.6 55.5 38.3 35.5
Return on average capital employed (%) 92.8 80.9 72.3 50.6 49.0
EVA/Capital employed (%) 49.3 37.5 32.9 20.1 20.0
Dividend per share (Rs.) 20 20 20 17 19
Dividend payout (%) 61.9 56.3 46.9 46.3 45.9
Earning per share (Rs.) 36.5 40.6 48.6 43.0 48.5
Market value/book value (times) 8.6 7.3 8.8 5.6 4.6
Notes:
*OPBDIT: Operating Profit before Depreciation, Interest and Tax
**OPBT: PBT before Other income
4041
A N N U A L R E P O R T 0 80 7
(Rupees in crores)
ECONOMIC VALUE ADDED (EVA) STATEMENT
2003-04 2004-05 2005-06 2006-07 2007-08
Avg Cap Employed 1,154 1,504 1,945 2,415 2,877
Avg Debt/Avg Capital (%) 2.2 1.8 1.3 1.1 1.1
Avg Equity/Avg Capital (%) 97.8 98.2 98.7 98.9 98.9
Cost of Debt (% post-tax ) 0.7 0.7 1.0 0.6 0.9
Cost of Equity
Beta 0.90 1.01 0.98 0.75 0.59
Cost of Risk Free Debt (%) 5.13 6.67 7.52 8.15 7.94
Market Premium (%) 10 10 10 10 10
Cost Of Equity (%) 14.18 16.74 17.32 15.65 13.83
EVA
Profit after Tax 728 810 971 858 968
Add: Interest*(1-tax rate) 1 1 2 1 1
NOPAT=PAT + Interest*(1-t) 729 812 973 859 969
Cost of Capital 160 247 333 374 394
EVA 569 564 641 485 575
Return on Capital Employed (%) 63.2 54.0 50.0 35.6 33.7
Weighted Average Cost of Capital (%) 13.9 16.5 17.1 15.5 13.7
EVA/Capital employed (%) 49.3 37.5 32.9 20.1 20.0
ENTERPRISE VALUE
Market Capitalisation 9797 10943 17781 13753 13869
Add: Debt 175 202 186 165 132
Less: Financial Assets 1708 2044 2221 2010 2698
EV (Enterprise Value) 8264 9101 15746 11909 11303
EV/Yr. End Capital Employed (Times) 6.3 5.4 5.9 4.5 3.6
DIRECTORS’ REPORT
On behalf of the Board, I take immense pleasure on presenting the 25th Annual Report of the Company. The report is being presented along with the
Audited Statement of Accounts for the financial year ended March 31, 2008.
FINANCIAL RESULTS
For the year ended
March 31, 2008 March 31, 2007
Gross Sales 12,038.53 11,542.04
Net Sales and other Income 10,517.22 10,089.81
Profit before Finance charges
and Depreciation 1,534.79 1,362.89
Less: Finance charges (35.81) (22.99)
Depreciation 160.32 139.78
Profit before tax (PBT) 1,410.28 1,246.10
Less: Provision for tax
- Current 436.81 375.81
- Deferred 1.20 9.42
- Fringe Benefit Tax (FBT) 4.39 2.98
Profit after tax (PAT) 967.88 857.89
Add: Balance of profit brought forward 1,594.78 1,224.05
Balance available for appropriation 2,562.66 2,081.94
Appropriations
Dividend
- Proposed Final 379.41 339.47
Corporate Dividend Tax 64.48 57.69
Transfer to General Reserve 97.00 90.00
Balance carried to Balance Sheet 2,021.77 1,594.78
Dividend (%) 950 850
Basic and Diluted Earnings Per Share (EPS) (Rs.) 48.47 42.96
(Rupees in crores)
4243
A N N U A L R E P O R T 0 80 7
4445
BUSINESS PERFORMANCE
Your Company defied a process of de-growth in the industry and
achieved cumulative sales of 33,37,142 units of two-wheelers. In the
process, Hero Honda consolidated its leadership position in domestic
two-wheeler market with more than 52 per cent market share. The
Company successfully launched seven new models including
variants during the year under review.
On the financial front, total income (net of excise duty) of the Company
grew by 4.2 per cent from Rs. 10, 090 crores in previous year to
Rs. 10,517 crores during 2007-08. The Company posted a net profit
(PAT) of Rs. 968 crores, compared to Rs. 858 crores in the previous
fiscal, a growth of 13 per cent. Despite the increasing pressure on
inputs, your Company was able to maintain EBIDTA margins at 13.1
per cent, compared to 11.9 per cent in the previous year.
During the year, Hero Honda also retained, for the seventh year in a row,
its position as the World's Number One Two Wheeler Company. During
2007-08, your Company achieved another landmark of reaching
cumulative sales of 20 million bikes.
In the course of the year, your Company launched new models
(including variants) including Splendor NXG, Hunk, New Super
Splendor, New Passion Plus, Commemorative Splendor+ and a
refreshed version of Pleasure.
A detailed discussion on the business performance and future outlook
has been given in the chapter on Management Discussion & Analysis
Report.
DIVIDEND
Few manufacturing companies in the Indian corporate sector have a
better dividend pay out record than Hero Honda. We have
recommended a Dividend of 950 per cent i.e. Rs.19 per equity share of
Rs. 2 aggregating to Rs. 379.41 crores (exclusive of corporate
dividend tax) for your approval for the financial year ended March 31,
2008. The dividend, if approved, will be paid to the eligible members
well within the stipulated period.
Our dividend policy is in line with our strong and consistent belief that if
funds are not re-invested for capital investments, they should be
optimally distributed to shareholders.
TRANSFER TO GENERAL RESERVE
A sum of Rs. 97 crores have been transferred to the General Reserve of
the Company. This reaffirms the inherent financial strength of the
Company.
NEW MANUFACTURING FACILITY AT HARIDWAR
Your Company inaugurated its third plant - the "Shrine of Technology" in
the holy city of Haridwar in Uttarakhand. The plant has an initial
production capacity of 0.5 million units which would be scaled up to a
million units by 2008-end. The total capital outlay on the new
manufacturing facility has been around Rs. 375 crores. The new plant
will employ flexible production techniques enabling production of
different models in the Company's portfolio. In addition to
manufacturing for the domestic market, the plant will also cater to
export requirements.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position
of the Company have occurred between April 1, 2008 and the date on
which this Report has been signed.
BOARD OF DIRECTORS
During the period under review, Mr. Tatsuhiro Oyama resigned from
directorship on May 11, 2007 and Mr. Takashi Nagai was appointed as
an Additional Director in Non-Executive Category on May 11, 2007.
Further, Dr. Vijay Laxman Kelkar has resigned from directorship on
December 31, 2007.
Mr. Satoshi Matsuzawa was appointed as an Alternate Director to Mr.
Takashi Nagai w.e.f. April 24, 2008. Mr. Yutaka Kudo, Whole-time
Director of the Company resigned from both the offices i.e. Director &
Whole-time Director w.e.f. May 31, 2008. Mr Sumihisa Fukuda was
appointed as an Additional and Technical Director in the whole-time
employment of the Company in his stead on June 1, 2008. Mr. M.
Damodaran was appointed as an Additional Director in the Non-
Executive and Independent Category w.e.f. June 16, 2008. Mr.
Narinder Nath Vohra has resigned from Directorship w.e.f. June 24,
2008.
The Board place on record their sincere appreciation and gratitude for
the work put in by the out going members, and wishes them a
rewarding and satisfying career ahead. The Directors also welcome
the new members on the Board and wish them a successful and fruitful
tenure with the Company.
At the ensuing Annual General Meeting, Ms. Shobhana Bhartia,
Mr. Sunil Bharti Mittal, Mr. Masahiro Takedagawa and Mr. Pradeep
Dinodia will retire by rotation and being eligible, offer themselves for
re-appointment in terms of provisions of Articles of Association of the
Company. The brief resume/details relating to Directors, who are to be
appointed and re-appointed has been furnished after the Explanatory
Statement to the Notice of the ensuing Annual General Meeting.
Your Directors recommend their re-appointment at the ensuing Annual
General Meeting.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make
the following statement in terms of Section 217(2AA) of the Companies
Act, 1956:
1. that in the preparation of the annual accounts for the year ended
March 31, 2008, the applicable accounting standards have been
followed;
2. that appropriate accounting policies have been selected and
applied consistently and judgements 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, 2008 and of the profit of
the Company for the financial year ended March 31, 2008;
3. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions
of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities;
4. that the annual accounts for the year ended March 31, 2008 have
been prepared on a going concern basis.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
A detailed chapter on, 'Management Discussion and Analysis'(MDA),
pursuant to Clause 49 of the Listing Agreement forms part of this
Report.
CORPORATE GOVERNANCE
At Hero Honda, 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.
Your Company is committed to benchmark itself with global standards
for providing good Corporate Governance and 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.
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.herohonda.com. A report on
Corporate Governance along with the Auditors' Certificate on its
compliance is annexed hereto as Annexure - I.
INTERNAL CONTROL SYSTEMS
Hero Honda 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
supplement the process of internal control. Properly documented
policies, guidelines and procedures are laid down for this purpose.
The internal control system has been designed so as to ensure that the
financial and other records are reliable for preparing financial and other
statements and for maintaining accountability of assets.
The Company also has an Audit Committee, comprising of three
Independent, Non-Executive and 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 Committee met
nine times.
AUDIT COMMITTEE RECOMMENDATION
During the year there was no such recommendation of the Audit
Committee which was not accepted by the Board. Hence, there is no
need for the disclosure of the same in this Report.
RISK MANAGEMENT SYSTEM
Your Company follows a comprehensive system of Risk Management.
Your Company has adopted a procedure for assessment and
minimization. It ensures that all the Risks are timely defined and
mitigated in accordance with the well structured risk management
Process. The Audit Committee reviews periodically the risk
management process.
RATINGS
The rating agency ICRA Limited, has reviewed and reaffirmed the
ratings assigned to the Company for its Non-convertible Debenture
Programme as LAAA indicating the highest credit quality, A1+ for its
Non-fund based facilities and LAAA to Fund based facilities. These
ratings indicate the highest credit quality carrying lowest credit risk.
Another rating agency CRISIL reviewed and assigned AAA/Stable
rating to the bank loan and P1+ rating to the Cash Credit Limit & Letter
of Credit Limit Facility.
Further, CRISIL also has reaffirmed the 'GVC 1' rating assigned to the
Company for the third consecutive time. This governance and value
creation (GVC) rating indicates that the company's capability with
respect to creating wealth for all its stakeholders while adopting sound
corporate governance practices is the highest. The rating reflects the
high standards of corporate governance practised by your Company.
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FIXED DEPOSITS
During the year under review, the Company has not accepted any
deposit under Sections 58A and 58AA of the Companies Act, 1956
read with the Companies (Acceptance of Deposits) Rules, 1975.
AUDITORS
M/s. A. F. Ferguson & Co., Chartered Accountants, New Delhi, Auditors
of the Company will retire at the conclusion of the ensuing Annual
General Meeting and being eligible, offer themselves for re-
appointment. The Company has received a certificate from the
auditors to the effect that their re-appointment, if made, would be in
accordance with Section 224(1B) of the Companies Act, 1956.
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 under
Section 233B of the Companies Act, 1956 for the financial year
2008-09 and necessary application for obtaining the requisite approval
has been filed with the Government. The Cost Auditors' Report for
2007-08 will be forwarded to the Central Government in pursuance of
the provisions of the Companies Act, 1956.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 217(1)(e) of the Companies Act,
1956, read with Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 is given as per Annexure - II and
forms an integral part of this Report.
LISTING
The shares of your Company are presently listed on Bombay Stock
Exchange Limited (BSE) and National Stock Exchange of India Limited
(NSE). The delisting application, was in-principle approved by the
Committee of the Calcutta Stock Exchange Association Limited, the
formal approval is awaited and is expected to be received in due
course of time.
PERSONNEL
As on March 31, 2008 the total number of employees on the records of
the Company were 4321.
Your Directors place on record their appreciation for the significant
contribution made by all employees, who through their competence,
dedication, hard work, co-operation and support have enabled the
Company to cross new milestones on a continual basis.
A detailed note is given in the chapter "Human Resource Management"
of Management Discussion & 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 Companies
(Particulars of Employees) Rules, 1975 forms an integral part of this
Report. As per the provisions of Section 219(1)(b) of the Companies
Act, 1956, the Report and Accounts are being sent to the shareholders
of the Company excluding the statement of particulars of employees
under Section 217(2A) of the Companies Act, 1956. Any shareholder
interested in obtaining a copy of such statement may write to the
G.M. Legal & Company Secretary at the Registered Office of the
Company.
ACKNOWLEDGMENT
It is our strong belief that caring for our business constituents has
ensured our success in the past and will do so in future. Your Directors
acknowledge with sincere gratitude the co-operation and assistance
extended by the Central Government, State Government(s), Financial
Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary
Undertakings. The Directors also place on record their appreciation for
the valuable assistance and guidance extended to the Company by
Hero Cycles Limited and Honda Motor Co., Ltd., Japan and for the
encouragement and assurance, which our collaborator has given for
the growth and development of the Company.
The Board, also, takes this opportunity to express its deep gratitude for
the continued co-operation and support received from its valued
shareholders.
For and on behalf of the Board
Brijmohan Lall Munjal
Chairman
New Delhi
July 29, 2008
ANNEXURE - I TO DIRECTORS' REPORT
CORPORATE GOVERNANCE REPORT
Philosophy on 'Code of Corporate Governance'
Hero Honda's philosophy of Corporate Governance stems from its 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 and leverage these resources to maximize long-term shareholder value, while preserving the interests of multiple stakeholders, including society at large.
Corporate Governance rests upon the four pillars of: transparency, full disclosure, independent monitoring and fairness to all, especially to minority shareholders. Hero Honda 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 Exchanges.
Hero Honda 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 & Analysis' and 'General Shareholder's Information' constitute Hero Honda's compliance with the Clause 49 of the Listing Agreement.
BOARD OF DIRECTORS
Composition of the Board
As on March 31, 2008, the Company's Board of Directors consisted of fifteen Directors. Four Directors, including the Chairman, are Executive; four are Non-Executive and seven are Non-Executive and Independent. The fifty per cent of the Board consists of Independent Directors including Dr. Vijay Laxman Kelkar, Non-Executive and Independent Director, who resigned from the directorship of the Company w.e.f. December 31, 2007, the vacancy has been filled within the prescribed 180 days with the appointment of Mr. M. Damodaran, as Non-executive and Independent Director, therefore the composition of the Board is in consonance with the Clause 49. Details of the composition of the Board, number of meetings held during their tenure and attended by them etc., are given in Table 1.
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Number of Board Attendance at Number of Committee Number of Committee Number of outside Meetings held during last AGM Memberships Chairmanships held Directorships heldhis/her tenure and (including Chairman
Name of Director attended by him/her ships) held
Held Attended (excluding Private Companies, Foreign Companies andSection 25 Companies)
Executive Directors
Mr. Brijmohan Lall Munjal 6 6 Yes None None 8
Mr. Pawan Munjal 6 6 Yes None None 1
Mr. Toshiaki Nakagawa 6 6 Yes None None 1
Mr. Yutaka Kudo 6 6 Yes None None 1
Non-Executive Directors
Mr. Om Prakash Munjal 6 Nil No None None 10
Mr. Sunil Kant Munjal 6 5 Yes None None 14
Mr. Masahiro Takedagawa 6 3 Yes 1 None 2
1Mr. Tatsuhiro Oyama 1 Nil N.A. None None 1
2Mr. Takashi Nagai 5 Nil No None None Nil
Non-Executive and
Independent Directors
Mr. Narinder Nath Vohra 6 3 Yes 2 1 1
Mr. Pradeep Dinodia 6 6 Yes 7 5 8
Gen. (Retd.) Ved Prakash Malik 6 4 Yes 4 None 3
Mr. Analjit Singh 6 2 No None None 12
Dr. Pritam Singh 6 3 Yes 3 None 5
3Dr. Vijay Laxman Kelkar 5 2 Yes 4 None 13
Ms. Shobhana Bhartia 6 2 No 2 2 14
Mr. Sunil Bharti Mittal 6 1 No None None 8
TABLE 1: DETAILS ABOUT COMPANY'S BOARD OF DIRECTORS / ATTENDANCE RECORD DURING FINANCIAL YEAR 2007-08 Four Directors namely Mr. Brijmohan Lall Munjal (Executive Chairman in the whole-time employment of the Company), Mr. Pawan Munjal (Managing Director & CEO), Mr. Om Prakash Munjal (Non-Executive Director) and Mr. Sunil Kant Munjal (Non-Executive Director) belong to the promoter family of the Hero Group, which owns 26 per cent equity in the Company. Four Directors namely Mr. Toshiaki Nakagawa (Joint Managing Director), Mr. Yutaka Kudo (Whole-time Director), Mr. Masahiro Takedagawa (Non-Executive Director) and Mr. Takashi Nagai (Non-Executive Director) are nominees of Honda Motor Co., Ltd., Japan, which too, owns 26 per cent equity in the Company. Apart from these, the rest of the Board constitutes of Non-Executive and Independent Directors.
Board Meetings
During 2007-08, the Board of Directors met 6 (six) times on May 11, 2007; May 31, 2007; July 24, 2007; September 18, 2007; October 18, 2007 and January 31, 2008.
The longest gap between any two Board Meetings was for a period of 3 months and 13 days.
Directors' Attendance Record and Directorships / Committee Memberships
Details are given in Table 1.
As per Clause 49 of the Listing Agreement entered into with the Stock Exchange(s), an Independent Director means a Non-Executive Director who;
• apart from receiving director's remuneration, does not have any material pecuniary relationships or transactions with the Company, its promoters, its directors, its senior management, its holding Company, its subsidiaries or associates which may affect independence of the director;
• is not related to promoters or persons occupying management positions at the board level or at one level below the board;
• has not been an executive of the company in the immediately preceding three financial years;
• is not a partner or an executive of the statutory audit firm or the internal audit firm that is associated with the company and has not been a partner or an executive of any such firm for the last three years and the legal firm(s) and consulting firm(s) that have a material association with the entity.
• is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the Director;
• is not a substantial shareholder of the Company i.e. owning two percent or more of the block of voting shares.
None of the Director on the Board holds the office of Director in more than 15 companies nor are they members in Committees of the Board in more than 10 Committees or Chairman of more than 5 Committees.
Notes:1. Mr. Tatsuhiro Oyama has resigned from his Directorship on May 11, 2007. 2. Mr. Takashi Nagai was appointed as an Additional Director on the Board w.e.f. May 11, 2007.3. Dr. Vijay Laxman Kelkar has resigned from the Directorship on December 31, 2007.4. Mr. Yutaka Kudo has resigned from his Directorship and Whole-time Directorship on May 31, 2008.5. Mr. Narinder Nath Vohra has resigned from the Directorship on June 24, 2008.
Further, there are no pecuniary relationships or transactions between the Independent Directors and the Company, except for the sitting fees drawn by the Non-executive Directors and sitting fees and commission drawn by the Non-executive and Independent Directors for attending the meeting of the Board and its Committee(s) thereof.
Shareholding of Non-Executive Directors
Name of the Director Category No. of shares held
Mr. Om Prakash Munjal Non-Executive 25,000Director
Mr. Sunil Kant Munjal Non-Executive 32,500Director
Apart from the above, none of the Non-Executive (including Independent) Directors hold any shares (as own or on behalf of other person on beneficial basis) in 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 Committee(s). However, in case of business exigencies or urgency of matter, 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 Committee and Committee of Director's meetings;
• Information on recruitment and remuneration of senior management just below the Board level including appointment or removal of CFO and Company Secretary;
• Any material defaults in financial obligations to and by the Company, or substantial non-payments for goods sold by the Company;
• 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;
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• Details of Joint Ventures and 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.;
• Investments 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 solutions. Also, any significant development in Human Resources/Industrial Relations front like signing of Wage Agreement, implementation of Voluntary Retirement Schemes etc.
Code of Conduct
We at Hero Honda have laid down a code of conduct for all Board members and senior management of the Company. The code of conduct is available on the website of the Company www.herohonda.com. The code has been circulated to all the members of the Board and senior management and they have affirmed compliance with the code of conduct. A declaration signed by the Chief Executive Officer (CEO) to this effect is attached to the Annual Report.
Risk Management
We at Hero Honda have established an effective risk assessment and minimization procedures, which are reviewed by the Board periodically. There is a structure in place to identify and mitigate various risks faced by the Company from time to time.
BOARD LEVEL COMMITTEES
AUDIT COMMITTEE
The genesis of Hero Honda'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 having 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 of the Stock Exchange(s).
As on March 31, 2008, the Committee had four Non-Executive and Independent Directors in accordance with the prescribed guidelines. Mr. Pradeep Dinodia, a leading Chartered Accountant, is the Chairman of the Committee. The other members are Dr. Pritam Singh,
Gen.(Retd.) Ved Prakash Malik and Mr. Narinder Nath Vohra, 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
- with the management the annual financial statements 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, qualifications in draft audit reports, related party transactions & the going concern assumption.
- with the management, the quarterly financial statements 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.
- 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
- into the reasons for substantial defaults in the payments to the shareholders (in the case of non-payment of declared dividends) and creditors.
The Sr. Vice President & CFO, Internal Auditors, Statutory Auditors and Cost Auditors attend the meetings of the Committee on the invitation of the Chairman. Mr Ilam C. Kamboj, G.M. Legal & Company Secretary acts as the Secretary of the Committee.
During the year, 9 (Nine) meetings of the Audit Committee were held on April 09, 2007; April 23, 2007; May 11, 2007; July 24, 2007; September 18, 2007; September 28, 2007; October 18, 2007; December 14, 2007; and January 29, 2008 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 committee Position No. of meetings No. of meetingsmember held held during attended
his tenure
Mr. Pradeep Dinodia Chairman 9 9
Gen. (Retd.) V.P. Malik Member 9 7
Dr. Pritam Singh Member 9 7
Mr. N.N.Vohra Member 9 7
REMUNERATION COMMITTEE
The Company had set up a Remuneration Committee on January 16, 2001 to review and recommend the payment of annual salaries, commission, and finalise service agreements and other employment conditions of Executive Directors. The Committee takes into consideration the best remuneration practices being followed in the industry while fixing appropriate remuneration packages.
As on March 31, 2008, the Committee had three Non-Executive and Independent Directors as its members in accordance with the prescribed guidelines. Gen. (Retd.) Ved Prakash Malik, is the Chairman of the Committee. The other members are Mr. Narinder Nath Vohra and Mr. Pradeep Dinodia. Mr. Ilam C. Kamboj, G.M. Legal & Company Secretary acts as the Secretary of the Committee.
During the year the committee did not meet, as there was no business to transact.
Remuneration Policy
Remuneration paid to Executive Directors
The remuneration paid to Executive Directors is recommended by the Remuneration Committee and approved by the Board of Directors, in the Board meeting, subject to the subsequent approval by the shareholders at the general meeting and such other authorities, as the case may be.
At the Board meeting, only the Non-Executive and Independent Directors participate in approving the remuneration paid to the Executive Directors. The remuneration is fixed considering various factors such as qualification, experience, expertise, prevailing remuneration in the corporate world and the financial position of the Company. The remuneration structure comprises of Basic Salary, Commission, Perquisites and allowances, Contribution to provident fund and other funds. Besides these, a fixed commission @ 1 per cent of net profit computed in accordance with Section 198 of the Companies Act, 1956, is paid as per the terms of appointment.
As of now, the Company does not have any Employee Stock Options Plans (ESOPs). Term of appointment of Executive Director is 5 (five) years. Further, no notice period and severance fee is applicable for the above-mentioned Executive Directors.
Remuneration paid to Non-Executive Directors
The Non-Executive Directors of the Company are paid sitting fees of Rs. 16,500 for each meeting of the Board, Audit Committee, Remuneration Committee and Shareholders' Grievance Committee attended by them.
However, in addition to the sitting fees, Non-executive and Independent Directors shall be entitled to remuneration by way of commission upto 0.10 per cent of profits of the Company for every
thfinancial year as approved by the members at their 24 Annual General Meeting held on July 24, 2007.
Tables 3 and 4 gives details of remuneration paid to Directors. During 2007-08, the Company did not advance any loans to any of its Directors.
TABLE 3: REMUNERATION TO EXECUTIVE DIRECTORS
Executive Directors Salary* (Rs.) Commission Fixed ** (Rs.) Total (Rs.)
Mr. Brijmohan Lall Munjal 97,99,178 14,78,25,000 15,76,24,178
Mr. Pawan Munjal 95,32,492 14,78,25,000 15,73,57,492
Mr. Toshiaki Nakagawa 41,91,795 14,78,25,000 15,20,16,795
Mr. Yutaka Kudo 34,29,869 14,78,25,000 15,12,54,869
Notes:* Salary includes Basic Salary, Perquisites and allowances, Contribution to provident and other funds.** Total Commission is calculated @ 1% of the net profit calculated in accordance with Section 198 of the Companies Act, 1956.
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TABLE 4: REMUNERATION TO NON-EXECUTIVE DIRECTORS
Non-Executive Directors Sitting fees (Rs.) Commission (Rs.) Total (Rs.)
Mr. Sunil Kant Munjal 82,500 N.A. 82,500
Mr. Pradeep Dinodia 3,13,500 11,50,000 14,63,500
Mr. N.N. Vohra 2,31,000 7,50,000 9,81,000
Gen.(Retd.) V.P. Malik 1,81,500 6,50,000 8,31,500
Dr. Pritam Singh 2,14,500 6,13,000 8,27,500
Mr. Analjit Singh 33,000 1,00,000 1,33,000
Ms. Shobhana Bhartia 33,000 1,00,000 1,33,000
1Dr. Vijay L. Kelkar 33,000 1,00,000 1,33,000
# #Mr. Sunil Bharti Mittal Nil Nil
#Mr. Masahiro Takedagawa Nil N.A. Nil
No sitting fee was paid to Mr. Om Prakash Munjal, Mr. Tatsuhiro Oyama (Director upto May 11, 2007) & Mr. Takashi Nagai (Director w.e.f. May 11, 2007) as they did not attend any of the meetings of the Board held during the financial year 2007-08.
# Mr. Sunil Bharti Mittal & Mr. Masahiro Takedagawa have opted not to receive sitting fees which were accrued to them on account of attending the meetings of the Board.
1 Dr. Vijay Laxman Kelkar has resigned from the Directorship w.e.f. December 31, 2007.
SHAREHOLDERS' GRIEVANCE COMMITTEE
This Committee, constituted on January 16, 2001, specifically looks into redressal of shareholders' and investors' grievances arising out of issues regarding share transfers, dividends, dematerialisation and related matters. As on March 31, 2008, the Committee had three Non-Executive and Independent Directors in accordance with the prescribed guidelines. Mr. Narinder Nath Vohra, is the Chairman of the Committee. The other members are Dr. Pritam Singh and Mr. Pradeep Dinodia. Mr. Ilam C. Kamboj, G.M. Legal & Company Secretary acts as the Secretary of the Committee.
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 investors as and when necessary. The Company Secretary being the Compliance Officer carefully looks into each issue and reports the same to the Shareholders' Grievance Committee. In the meetings of the committee the status of all shareholders' complaints, requests etc. alongwith letters received from all statutory authorities were reviewed.
During the year, 4 (four) meetings of the Shareholders' Grievance Committee were held on April 09, 2007; July 24, 2007; October 18, 2007 and January 29, 2008.
Details of shareholders complaints and their status are given in the section on "General Shareholder's Information". The attendance record of members of the Shareholders' Grievance Committee is given in Table 5.
TABLE 5: DETAILS OF SHAREHOLDERS' GRIEVANCE COMMITTEE
Name of committee Position No. of meetings No. of meetingsmember held held during attended
his tenure
Mr. N.N. Vohra Chairman 4 4
Mr. Pradeep Dinodia Member 4 4
Dr. Pritam Singh Member 4 3
COMMITTEE OF DIRECTORS
Apart from these Committees, the Company also has a Committee of Directors. As on March 31, 2008, the Committee comprised of Mr. Brijmohan Lall Munjal, Chairman; Mr. Pawan Munjal, Managing Director & CEO; Mr. Toshiaki Nakagawa, Joint Managing Director; Mr. Yutaka Kudo, Whole-time Director, Mr. Ravi Sud, Sr. Vice President & CFO and Mr. Ilam C. Kamboj, G.M. Legal & Company Secretary as its members.
Constituted in 1985, the Committee deals with matters delegated by the Board from time to time.
This Committee meets whenever required. During the year under review 4 (four) meetings of the Committee were held.
SHARE TRANSFER COMMITTEE
This Committee was constituted on January 31, 2007 as a 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, G.M. Legal & Company Secretary are its members.
This Committee meets whenever required. During the year under review 35 (thirty five) meetings of the Committee were held.
DISCLOSURES
Related Party Transactions
The Company follows the following policy in disclosing 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 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 relatives etc. that may have potential conflict with the interest of the Company at large.
Accounting Treatment in preparation of Financial Statements
The guidelines/accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) 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 authorities, on any matters related to capital market during the last three years.
Insider Trading
In compliance with the SEBI regulation on prevention of insider trading, the Company has instituted a comprehensive code of conduct for its management, staff and relevant business associates. The code 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.
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5455
Year Time, Day, Date & Location Summary of Resolutions Passed 2006-07 10:30 A.M.
Tuesday, July 24, 2007,Airforce Auditorium, Subroto Park, Dhaula Kuan, New Delhi 110010
2005-06 04:30 P.M.Thursday, September 14, 2006,Airforce Auditorium, Subroto Park, Dhaula Kuan, New Delhi 110010
2004-05 10:00 A.M.Tuesday, August 23, 2005,Airforce Auditorium, Subroto Park, Dhaula Kuan, New Delhi 110010
GENERAL BODY MEETINGS
Details of Annual General Meeting (AGM)
Location, date and time of general meetings held during the last three years and Ordinary and Special resolutions passed thereat are given in Table 6.
Pursuant to the provisions of Section 192A of the Companies Act, 1956, there was no matter as required to be dealt by the Company to be passed through postal ballot.
TABLE 6: DETAILS OF AGM'S
CEO & CFO CERTIFICATION
Certificate from Mr. Pawan Munjal, Managing Director & CEO and Mr. Ravi Sud, Sr. Vice President & CFO in terms of Clause 49(V) of the Listing Agreement for the year under review was placed with the Board of Directors of the Company in their meeting held on April 24, 2008. A copy of the same certificate on the financial statements for the financial year ended March 31, 2008 and the Code of Conduct is given along with this Report.
APPOINTMENT AND RE-APPOINTMENT OF DIRECTORS
Ms. Shobhana Bhartia, Mr. Sunil Bharti Mittal, Mr. Masahiro Takedagawa and Mr. Pradeep Dinodia, Directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.
Further, since the last AGM, Mr. Sumihisa Fukuda and Mr. M. Damodaran were appointed as Additional Directors on the Board of the Company and has been proposed to be appointed as Directors by the shareholders at the ensuing AGM of the Company.
The brief resume of the said Directors proposed to be appointed and re-appointed is given alongwith the Notice of the AGM being sent along with the Annual Report.
MEANS OF COMMUNICATION
The Company has regularly sent, both by post as well as by fax (within 15 minutes of closure of the Board meeting) the annual audited as well as quarterly un-audited results to both the Stock exchanges, BSE & NSE, after they are taken on record by the Board of Directors.
The Company's half yearly results (period ended September 30, 2007) and annual results (year ended March 31, 2008) have been published in English, Hindi and other Regional newspapers (viz. The Times of India, The Economic Times, Hindustan Times, Financial Express, The Mint, Navbharat Times, Mumbai Mirror and Financial Times).
Results for the quarter ended June 30, 2007 and December 31, 2007 have been published in English, Hindi and other Regional newspapers (viz. The Economic Times, The Times of India, The Hindustan Times, Financial Times, Mumbai Mirror, Bangalore Mirror, Ahmedabad Mirror, Financial Express and Jansatta). Further, the Company's quarterly, half yearly and annual results have also been sent to the individual shareholders of the Company. Results for each quarter, half year and annual results for the year ended March 31, 2008 have been displayed on the Company's website www.herohonda.com. The website also displays official news releases and distribution schedule, as required by Clause 35 of the Listing Agreement.
Moreover, pursuant to Clause 51 of the Listing Agreement, financial information like annual and quarterly financial statements and shareholding pattern etc. are available on the SEBI web-site www.sebiedifar.nic.in. The Company Secretary being the Compliance Officer ensures the correctness and authenticity of the information filed in the said website.
During the year ended March 31, 2008, various presentations were made to analysts and Institutional investors. Further, the Management Discussion & Analysis (MDA) Report, throwing light on the operations, business performance, financial and other important aspects of the Company's functioning forms part of this Annual Report.
Ordinary Resolutions• Appointment of Mr. Yutaka Kudo as Director and Whole-time Director.• Appointment of Mr. Takashi Nagai as Director.
Special Resolution• Payment of commission to Non-Executive Independent Director(s).
Ordinary Resolutions• Appointment of Mr. Sunil Bharti Mittal as Director.• Appointment of Mr. Toshiaki Nakagawa as Director and Joint Managing Director.• Appointment of Mr. Masahiro Takedagawa as Director.• Re-appointment of Mr. Pawan Munjal as Managing Director.
Special Resolutions• Re-appointment of Mr. Brijmohan Lall Munjal as Chairman and Director in the
Whole-time employment of the Company.• Keeping of Registers/Returns/ Documents at the Registered Office.
Ordinary Resolutions• Appointment of Mr. Analjit Singh as Director.• Appointment of Dr. Pritam Singh as Director. • Appointment of Ms. Shobhana Bhartia as Director.• Appointment of Dr. Vijay Laxman Kelkar as Director.• Appointment of Mr. Miki Yamamoto as Director and Joint Managing Director.• Appointment of Mr. Takao Eguchi as Director and Whole-time Director.• Appointment of Mr. Motohide Sudo as Director.
A N N U A L R E P O R T 0 80 7
GENERAL SHAREHOLDER'S INFORMATION
Annual General Meeting
Date: September 25, 2008
Day: Thursday
Time: 11:00 A.M.
Venue: Airforce Auditorium, Subroto Park,
Dhaula Kuan, New Delhi 110010
Financial Calendar
Financial year: April 1 to March 31
For the year ended March 31, 2008 results were announced on:
First quarter ended June 30, 2007 July 24, 2007
Second quarter and half year ended September 30, 2007 October 18, 2007
Third quarter ended December 31, 2007 January 31, 2008
Fourth quarter and year ended March 31, 2008 April 24, 2008
For the year ending March 31, 2009, results will be announced on: (Tentative and subject to change)
First quarter ending June 30, 2008 July, 2008 (4th week)
Second quarter and half year ending September 30, 2008 October, 2008 (3rd week)
Third quarter ending December 31, 2008 January, 2009 (3rd week)
Fourth quarter and year ending March 31, 2009 April, 2009 (3rd week)
Book closure
The dates of book closure are from Thursday, September 11, 2008 to Thursday, September 25, 2008 (both days inclusive).
Dividend payment
The Board of Directors has recommended 950 per cent dividend for the financial year 2007-08. The dividend, if approved by shareholders at the ensuring AGM shall be paid to those shareholders whose names appear on the Register of Members as on Thursday, September 25, 2008. In respect of shares held in electronic form, the dividend will be payable to the beneficial owners of the shares as on the closing hours of business on Wednesday, September 10, 2008 as per the details furnished by the Depositories for this purpose.
Listing on Stock Exchange
As on March 31, 2008, the securities of the Company are listed on the following exchanges:
1. Bombay Stock Exchange Limited, (BSE) based at Phiroz thJeejeebhoy Towers, 25 Floor, Dalal Street, Mumbai 400 001; &
2. National Stock Exchange of India Limited, (NSE) based at
Exchange Plaza, Plot No. C/1 G Block, Bandra Kurla Complex, Bandra East, Mumbai 400 051.
Further, the Company had applied for delisting of its shares from The Calcutta Stock Exchange Association Limited (CSE) and complied with the procedural formalities for the same immediately after the approval received from the shareholders, but the final approval of the same is still awaited. However, the in-principal approval has been received after the grant of approval by the De-listing Committee of the CSE.
Listing Fees
Listing fees for the year 2008-09 has been paid to the stock exchanges, wherein the equity shares of the Company are listed (i.e. BSE & NSE) within the stipulated time.
Stock Codes
The Company's stock codes at the primary exchanges are:
Stock Code Reuters Code Bloomberg
BSE 500182 HROH.BO HH IN
NSE HEROHONDA HROH.NS NHH IN
Stock Market Data
The Company's market capitalisation is included in the computation of the BSE -100, BSE - 200, BSE - 500, BSE Sectoral Indices, S&P CNX Nifty, S&P CNX 500 and CNX 100. Monthly high and low quotations as well as the volume of shares traded at the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) is given in Table 7.
HERO HONDA’S SHARE PRICE MOVEMENT VIS A VIS NIFTY (Monthly High)
TABLE 7: SHARE PRICE DATA FOR 2007-08 (IN RS.) (SHARES OF RS. 2 PAID UP VALUE)
National Stock Exchange of India Limited, Mumbai (NSE)
Month Total High Date Volume on Low Date Volume onVolume that date that date
Quantity (In Rs.) Quantity (In Rs.) Quantity
April' 07 4265707 700.00 25-Apr-07 335022 620.90 12-Apr-07 238021
May' 07 5406193 742.80 31-May-07 1082189 647.80 22-May-07 123080
June' 07 4348615 744.85 1-Jun-07 287935 650.00 19-Jun-07 153965
July' 07 4379334 730.00 3-Jul-07 103368 655.10 11-Jul-07 222773
August' 07 5055233 684.00 9-Aug-07 219978 610.00 24-Aug-07 81740
September' 07 3710303 775.00 25-Sep-07 337672 633.50 5-Sep-07 65151
October' 07 4984564 774.70 15-Oct-07 332802 690.00 3-Oct-07 161838
November' 07 5086172 752.00 2-Nov-07 335338 619.90 23-Nov-07 219044
December ' 07 3683215 749.00 26-Dec-07 52786 680.00 10-Dec-07 91320
January' 08 5329007 721.00 3-Jan-08 730380 550.00 22-Jan-08 282771
February' 08 6687308 779.00 4-Feb-08 454881 662.30 12-Feb-08 368631
March' 08 7300970 785.00 3-Mar-08 815989 631.35 24-Mar-08 507010
5657
A N N U A L R E P O R T 0 80 7
675
685
695
705
715
725
735
745
755
765
775
785
795
Sh
are
Pri
ce
4200
4400
4600
4800
5000
5200
5400
5600
5800
6000
6200
6400
Nift
y
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2007-08
HHML NIFTY
A N N U A L R E P O R T 0 80 7
Bombay Stock Exchange Limited, Mumbai (BSE)
Month Total High Date Volume on Low Date Volume onVolume that date that date
Quantity (In Rs.) Quantity (In Rs.) Quantity
April' 07 956109 696.90 26-Apr-07 61839 565.00 19-Apr-07 28068
May' 07 1197136 739.00 31-May-07 203059 655.20 25-May-07 11429
June' 07 1167911 745.00 1-June-07 114285 651.05 19-Jun-07 187870
July' 07 788397 726.90 18-July-07 83270 663.00 12-July-07 46457
August' 07 1137264 685.00 9 Aug-07 34586 605.05 29-Aug-07 18467
September' 07 935331 786.00 25-Sep-07 63652 631.50 6- Sep-07 41094
October' 07 1251800 775.00 11- Oct-07 48306 701.00 19- Oct-07 33451
November' 07 692195 747.95 30-Nov-07 41356 655.00 9- Nov-07 4532
December' 07 702928 735.00 6- Dec-07 29714 680.00 31-Dec-07 9463
January' 08 1455231 723.90 4-Jan-08 14345 561.00 22-Jan-08 92235
February' 08 2704988 785.00 4-Feb-08 122844 662.00 12- Feb-08 16904
March' 08 1314564 785.00 4-Mar-08 274302 633.00 24-Mar-08 14193
Distribution of Shareholding by Size
Table 8 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, 2008.
TABLE 8:
No. of shares held (Rs.2 paid up) Folios Shares of Rs. 2 paid up
Numbers % Numbers %
Upto 500 39189 79.64 3833856 1.92
501 - 1000 7634 15.51 5782140 2.90
1001- 5000 1872 3.80 3661189 1.83
5001-10000 153 0.31 1067062 0.53
10001- 50000 180 0.38 4465555 2.24
50001 and above 178 0.36 180877698 90.58
TOTAL 49206 100.00 199687500 100.00
Shareholding Pattern
Category Category of Number of Total number Number of Total shareholding code shareholder shareholders of shares shares held in as a percentage of
dematerialized form total number of shares
As a As a percentage percentageof (A+B) of (A+B+C)
(A) Shareholding of Promoter and Promoter Group
(1) Indian(a) Individuals/ Hindu 59 4044715 361365 2.03 2.03
Undivided Family(b) Central Government/ 0 0 0 0 0
State Government(s)(c) Bodies Corporate 8 53788840 52163330 26.93 26.93(d) Financial Institutions/ 0 0 0 0.00 0.00
Banks(e) Any Other (Specify) 0 0 0 0.00 0.00
Sub-Total (A)(1) 67 57833555 52524695 28.96 28.96(2) Foreign(a) Individuals (Non-Resident Individuals
/ Foreign Individuals)(b) Bodies Corporate 1 51918750 0 26.00 26.00(c) Institutions 0 0 0 0.00 0.00(d) Any Other (specify) 0 0 0 0.00 0.00
Sub-Total (A)(2) 1 51918750 0 26.00 26.00
Total Shareholding of 68 109752305 52524695 54.96 54.96Promoter and Promoter Group (A)= (A)(1)+(A)(2)
(B) Public shareholding(1) Institutions(a) Mutual Funds/ UTI 81 7753072 7677237 3.88 3.88(b) Financial Institutions/ Banks 35 315464 295409 0.16 0.16
HERO HONDA’S SHARE PRICE MOVEMENT VIS A VIS SENSEX .(Monthly High)
HHML Sensex
5859
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2007-08
650660670680690700710720730740750760770780790800
Sh
are
Pri
ce
14000144001480015200156001600016400168001720017600180001840018800192001960020000204002080021200
Sen
sex
6061
Dematerialisation of Shares and Liquidity
The shares of the Company are traded in compulsory demat segment. As on March 31, 2008, 68.40 per cent of the total share capital is held in dematerialised form with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). During the year under review, share certificates involving 5,26,11,075 shares of Rs. 2 each, were dematerialised by the shareholders. These represent 26.35 percent of the total share capital of the Company.
Outstanding GDR's/ADR's/Warrants or any Convertible Instruments Conversion Date and likely impact on equity
Not Applicable
Details of Public Funding obtained in the last three years
The Company has not obtained any public funding in the last three years.
TABLE 9: COMPLAINTS/REQUESTS RECEIVED AND REDRESSED DURING 2007-08
Sl. No Nature of Complaints / Requests Received Cleared Pending
1. Non receipt of shares 159 158 1
2. Request for issue of duplicate shares 104 104 0
3. Non receipt of dividend warrant 352 352 0
4. Change of address 354 354 0
5. Mandate cases/bank description 187 187 0
6. Miscellaneous (Shares) 2070 2070 0
Registrar & Transfer Agents
All work related to Share Registry, both in physical form and electronic form, is handled by the Company's Registrar and Transfer Agents. Company has appointed M/s. Karvy Computershare Private Limited as the Registrar & Share Transfer Agent of the Company in place of M/s. MCS Limited w.e.f. June 1, 2007.
Karvy Computershare Pvt.Ltd.(Unit: Hero Honda Motors Limited) Plot No. 17-24, Vithalrao Nagar, Madhapur, Hyderabad-500081,Tel No : 040-23420815-820, Fax : 040-23420814E-mail: [email protected]
Share Transfer System
The Share Transfers (pertaining to shares in physical mode) are approved by the Share Transfer Committee which meets regularly on a weekly/fortnightly basis. The total number of shares transferred during
(c) Central Government/ State Government(s)(d) Venture Capital Funds(e) Insurance Companies 18 14867980 14867980 7.45 7.45(f) Foreign Institutional Investors 261 49208761 49170561 24.64 24.64(g) Foreign Venture Capital Investors(h) Any Other (Foreign Banks)
Sub-Total (B)(1) 395 72145277 72011187 36.13 36.13(2) Non-institutions(a) Bodies Corporate 795 1448160 1412594 0.73 0.73(b) Individuals -
i. Individual shareholders holding 47238 13885673 9186764 6.95 6.95nominal share capital up to Rs. 1 lakh.ii. Individual shareholders holding 5 1070315 65650 0.54 0.54nominal share capital in excess of Rs. 1 lakh.
(c) Any Other (Specify) 576 182408 182338 0.09 0.09- Non Resident Indians 116 19302 19302 0.01 0.01- Clearing Members- Trusts 12 1182810 1182810 0.59 0.59- Foreign Nationals 1 1250 1250 0.00 0.00Sub-Total (B)(2) 48743 17789918 12050708 8.91 8.91Total Public Shareholding 49138 89935195 84061895 45.04 45.04(B)= (B)(1)+(B)(2)
TOTAL (A)+(B) 49206 199687500 136586590 100.00 100.00(C) Shares held by Custodians and against 0 0 0 0.00 0.00
which Depository Receipts have been issued
GRAND TOTAL (A)+(B)+(C) 49206 199687500 136586590 100.00 100.00
Contd... the financial year 2007-08 were 83,586 which were completed in the prescribed period. Shares under objection were returned within two weeks time.
Confirmations in respect of the requests for dematerialisation of shares are being sent to the respective depositories i.e. NSDL & CDSL expeditiously.
COMPANY'S REGISTERED ADDRESS34, Community Centre, Basant Lok, Vasant Vihar, New Delhi 110 057Tel: 011 2614 2451, 2614 4121Fax: 011 2615 3913website: www.herohonda.com
PLANT LOCATIONS
Gurgaon Plant37 K.M. Stone, Delhi-Jaipur Highway, Sector 33,Gurgaon 122 001 Haryana Tel: 0124 - 2372 123-134 Fax: 0124 - 2373 141-142
Dharuhera Plant69 K.M. Stone, Delhi-Jaipur Highway,Dharuhera, Distt. Rewari 122 100 Haryana Tel: 01274 - 264 012-015Fax: 01274 - 267 024
Haridwar Plant Plot No. 3, Sector - 10, 11E, SIDCUL, Roshanabad, Haridwar 248 001Uttrakhand Tel: 01334 - 239513 Fax: 01334 - 239512
NON-MANDATORY REQUIREMENTSThe Company has not adopted the non-mandatory requirements as specified in Annexure - 3 of the Listing Agreement except clause (b) relating to Remuneration Committee.
Investors' Correspondence may be addressed toMr. Ilam C. Kamboj, G.M.-Legal & Company Secretary, e-mail: [email protected] or to the Registrar & Transfer Agents i.e Karvy Computershare Pvt. Ltd. e-mail: [email protected]
Queries Relating to the Financial Statements of the Company may be addressed toMr. Ravi Sud, Sr. Vice President & CFO, e-mail: [email protected]
For and on behalf of the Board
Brijmohan Lall
Chairman
July 29, 2008New Delhi
Investors' Services
The Company has Board Level Committees dealing with investor issues, which have been discussed in detail earlier. Table 9 lists the complaints/requests/reminders received and redressed during 2007-08. During the financial year, the Company has attended to most of the investors' grievances/correspondence within a period of 10-15 days from the date of receipt of the same.
A N N U A L R E P O R T 0 80 7
CERTIFICATE
TO THE MEMBERS OF HERO HONDA MOTORS LIMITED
We have examined the compliance of conditions of Corporate Governance by Hero Honda Motors Limited for the year ended March 31, 2008, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate 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 according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
For A .F. FERGUSON & CO. Chartered Accountants
Manjula BanerjiPartner(Membership no. 86423)
Place: New DelhiDate: July 29, 2008
CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY
We, Pawan Munjal, Managing Director & Chief Executive Officer (CEO) and Ravi Sud, Sr. Vice President & Chief Financial Officer (CFO) of Hero Honda Motors Limited, to the best of our knowledge and belief certify that:
1. We have reviewed the Balance Sheet and Profit and Loss Account of the Company for the year ended March 31, 2008 and all its schedule and notes on accounts, as well as the Cash Flow Statement.
2. To the best of our knowledge and information:
a. these statements do not contain any materially untrue statement or omit to state a material fact or figures or contains statement that might be misleading;
b. these statements together present a true and fair view of the Company's affairs and are in compliance with existing accounting standards, applicable laws and regulations.
3. We also certify, that based on our knowledge and the 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 controls and procedures.
5. We have disclosed, based on our most recent evaluation, wherever applicable, to the company's auditors and through them to the audit committee of the Company's Board of Directors:
a. Significant changes in internal control during the year;
b. Any fraud, which we have become aware of and that involves Management or other employees who have a significant role in the Company's internal control systems;
c. Significant changes in accounting policies during the year.
We further declare that all board members and senior management have affirmed compliance with the code of conduct for the year 2007-08.
For Hero Honda Motors Ltd. For Hero Honda Motors Ltd.
CERTIFICATE OF CEO & CFO
New Delhi,April 24, 2008
Pawan Munjal Managing Director & CEO
Ravi SudSr. Vice President & CFO
6263
A N N U A L R E P O R T 0 80 7
6465
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, 2008 ;
I. CONSERVATION OF ENERGY
a) Energy conservation measures taken and their impact
- Power consumption has been reduced with the following
measures taken during the year under review:
Additional Investments and Proposals being implemented for
reduction of consumption of energy
For the reduction in power consumption the following measures has
been envisaged and planned for:
•
Hero Honda Motors Limited has always recognised the importance of
energy. Energy is a vital resource for industrialization and economic
growth but also is responsible for factors leading to climate change. By
reducing emissions, energy conservation is an important part of
lessening climate change. Energy conservation is often the most
economical solution to energy shortages and is a more
environmentally benign alternative to increased energy production.
The company has BEE trained energy managers who are continuously
working to curb the wasteful usage of energy and adopting
equipments with better energy efficiency.
• Installation of VFD on air supply unit in paint shop - saving
energy 71000 KWH/ year.
• Replacement of Fixed speed compressors with VFD
compressors in AC & Refrigeration system - saving energy
12342 KWH / year.
• Installation of VFD on cooling tower fans - saving energy in
winter season 2448 KWH / year.
• Provision of FRP fans in place of aluminum casting in cooling
towers - saving energy 264132 KWH/year.
• Replacement of low rating oil injected compressors with higher
rating oil free compressors - saving energy 51000 KWH/ year.
• Installation of real timer on FDV's - saving energy
150000 KWH / year.
• Installation of individual circuits for main machine - saving
power of AC chillers 6000 KWH/year.
BIO MASS gasifier power generating set
• Vapour Absorption machine for chillers
• Heat Recovery from Incinerator
• Heat Recovery from DG sets at HHD
• Alternate power i.e wheeling power from Electrical grid
Note: The additional investment cannot be precisely ascertained, and
is part of the Repairs and Maintainence; consumables expenditure and
investments in fixed assets.
c) Impact of measures at a) and b) for reduction of energy
consumption and consequent impact on the cost of
production of goods.
d) Total energy consumption and energy consumption per unit of
production as per Form - A given below.
FORM-A
Form for Disclosure of Particulars with respect to Conservation of
Energy
For Dharuhera Plant Current Year Previous Year
A. Power and fuel consumption per unit of production
Product Unit (Motorcycle 1672595 1598921
1. Electricity
a) Purchased
Units (KWH) 5426026 8451452
Amount (Rs.) 23,464,923 34,295,811
Rate/unit (Rs.) 4.32 4.06
b) Own generation
Through diesel generator Unit
Self (KWH) 41664025 34847158
Hired (KWH) Nil Nil
Unit per-ltr.of Diesel Oil (Cost/unit)
Self (KWH/Ltr.) 4.12 3.98
Hired (KWH/Ltr.) Nil Nil
2. Furnace Oil, LDO, HPS* etc.
Quantity (K.Ltrs) 2,067.888 1824.905
Total amount (Rs.) 41,704,620 3,02,48,767
Average Rate/Ltr. (Rs.) 20.17 16.58
B. Consumption per unit of production
1) Electricity (KWH/Motorcycle) 28.15 27.08
2) Furnace Oil, LDO, HPS etc 1.24 1.14
(Ltr./Motorcycle)
*used for the purpose of Boiler used for production of motorcycle.
It is difficult to quantify the impact of individual projects on
production as no. of equipments are being added during the
period.
For Gurgaon Plant Current year Previous year
A. Power and fuel consumption per unit of production
Product unit (Motorcycle) 1660865 1740975
1. Electricity
a) Purchased Unit (KWH) Nil Nil
Amount (Rs.) Nil Nil
Rate/unit Nil Nil
b) Own generation
Through diesel generator unit
Self (KWH) 56115270 56830801
Hired (KWH) Nil Nil
Unit per-ltr.of Diesel Oil Cost/unit
Self, (KWH/Ltr.) 4.08 4.11
Hired (KWH/Ltr.) Nil Nil
2. Furnace Oil, LDO, HPS etc.**
Quantity (K.Ltrs) 159.201 481.893
Total amount (Rs.) 4,398,916 1,10,05,176
Average Rate/Ltr. (Rs.) 27.63 22.84
B. Consumption per Current Year Previous Year
unit of production
1) Electricity (KWH/Motorcycle) 33.79 32.64
2) Furnace Oil. LDO, HPS etc. 0.10 0.28
(Ltr./Motorcycle)
**used for the purpose of hot water generator used for
production of motorcycle.
II. PARTICULARS AS PER FORM B
(A) Research & Development (R&D)
1 Specific areas in which R & D carried out by the Company
• New Model Technology Absorption carried out by the
company.
• Indigenisation of CKD Parts
• Multi Source Approval
• Meeting Legislative Norms
• Active Participation in deciding the needs of future
Automobile regulations in India
2 Benefits derived as a result of the above R & D activities
• Splendor NXG (100 cc - 4 Stroke), Hunk (150 cc - 4 Stroke),
Pleasure New Aesthetics, Super Splendor Cast Wheel,
Passion Plus Cast Wheel, CD Deluxe Cast Wheel, Splendor
Plus Cast Wheel and Splendor Plus Limited Edition were
launched.
• Multi source Components have been added to existing
models
• New sources added for existing models
• During the year under review 6 more items have been
localised.
• Compliance made to the Regulations
3 Future plan of action
• Launching of new Models;
• Indigenisation plan 17 more items to be localized;
• Compliance Plan for Future Regulations :-
T.A & COP for Safety Critical Components, EMC, Mass
Emission Norms (BS- IV), Safety Related Standards, E-10
compliance
4. Expenditure on R & D
(Rupees in Crores)
Year Ended Year Ended
March 31, 2008 March 31, 2007
I) Capital 19.42 8.11
ii) Recurring 18.78 17.85
iii)Total R & D expenditure 0. 37 0. 26
as a percentage of Sales
(as per P & L A/c)
B) Technology Absorption, Adaptation and Innovation
1 Efforts in brief, made India technology absorption,
adaptation and innovation
More parts development approval in India
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.
Further in the last five years the Company’s ancillaries have imported
technologies regarding Emission Devices (Cat. Converter), Digital
Speedo Meter, Gear Primary Driven (Forging), Cast Wheels, Drive
Chain (Solid Bush Type), Fuel Injection, Real Time Mileage Indicator,
Non-asbestos Brake Shoe & Gasket, Trichrome, Low Friction High F.E.
Engine Technology, LED Lighting Devices, Puncture Resistant Wheel
Tube & Rear Cushion with Reservoir Tank etc.
A N N U A L R E P O R T 0 80 7
6667
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
A) Export Activities / Initiatives to Increase Exports /
Development of New Export Markets / Export Plans
EXPORT INITIATIVES IN 2007-08
During the year under review, your Company exported 90571 two-
wheelers, and in value terms, this implied a decline of 7 per cent.
There was no significant growth in exports as per projection.
The Company however was successful in launching New CD Deluxe,
Passion, Glamour, Splendor NXG and HUNK in Bangladesh and
Sri Lanka. The Company was also able to combat the competition in
the premium segment due to the positive response from HUNK.
The concept of Just 4 her showroom and the New Pleasure launch in
Sri Lanka helped us gain higher share in the Scooter category.
Infrastructure development and process improvement on the after sale
service front has been undertaken extensively.
EXPORT PLAN FOR 2008-09
• Concentration on existing markets and Exploration of New
channels for business growth;
• To maintain market leadership in Bangladesh;
• Launch Splendor NXG in Columbia;
• Continue Sales & Service training as ongoing process in
overseas markets;
• Launch seasonal/festival based Promotional and Contest
schemes;
• Focus on workshop Automation and after sale service to the
customer;
• Explore to increase spare parts business.
B) EARNINGS & OUTGO
Foreign exchange earnings during the period under report was
Rs. 243.64 crores, compared to Rs. 263.50 crores in the previous year.
On account of Royalty, Technical Guidance Fee, Technical Know-how
fee, Export Commission, Travel and other accounts, Advertisement
a n d P u b l i c i t y, t h e f o r e i g n e x c h a n g e o u t g o w a s
Rs. 332.49 crores, compared to Rs. 371.61 crores in the previous year,
a decline of 10.52 per cent.
The outgo on account of Dividend was Rs. 88.26 crores compared to
Rs.103.84 crores in the previous year.
Outgo for import of components, spare parts, raw materials and capital
goods ou tgo was Rs . 574.06 c ro res compared to
Rs. 283.07 crores in the previous year.
DETAILS OF DIRECTORS OF HERO HONDA MOTORS LIMITED
Name of Director Status Directorship held Committee Committee Membership Chairmanship
Mr. Brijmohan Lall Munjal EC Daimler Hero Commercial Vehicles Limited
Easy Bill Limited
Hero Cycles Limited
Hero Financial Services Limited
Hero Honda Finlease Limited
Hero Honda Motors Limited
Munjal Auto Industries Limited
Munjal Showa Limited
Shivam Autotech Limited
Sunbeam Auto Limited
BCM Energies Private Limited
Munjal Bros. Private Limited
Mr. Pawan Munjal MD Daimler Hero Commercial Vehicles Limited
Hero Honda Finlease Limited
Hero Honda Motors Limited
Hero Investment Private Limited
Mr. Toshiaki Nakagawa JMD Hero Honda Finlease Limited
Hero Honda Motors Limited
Mr. Sumihisa Fukuda TD Hero Honda Finlease Limited
Hero Honda Motors Limited
Mr. Om Prakash Munjal NED Easy Bill Limited
Hero Cycles Limited
Hero Financial Services Limited
Hero Global Design Limited
Hero Honda Finlease Limited
Hero Honda Motors Limited
Hero Motors Limited
Highway Industries Limited
Majestic Auto Limited
Munjal Auto Industries Limited
Shivam Autotech Limited
Munjal Bros. Private Limited
Roma Cycle Manufacuturing Co. (P) Limited
Mr. Sunil Kant Munjal NED Abhyuday Manufacturing & Automotive Limited
Arrow Infrastructure Limited
Daimler Hero Commercial Vehicles Limited
DCM Shriram Consolidated Limited
Easy Bill Limited
Flourish Manufacturing & Automotive Limited
Hero Corporate Services Limited
Hero Cycles Limited
Hero Ergo Life Insurance Company Limited
Hero Honda Motors Limited
A N N U A L R E P O R T 0 80 7
6869
Hero Management Service Limited
Hero Mindmine Institute Limited
Hero Motors Limited
Satyam Auto Components Limited
Shivam Autotech Limited
Bahadur Chand Investments (P) Limited
Thakurdevi Hydro (P) Limited
Thakurdevi Investments (P) Limited
Mr. Masahiro Takedagawa NED Hero Honda Motors Limited
Honda Siel Cars India Limited
Honda Siel Power Products Limited Audit Committee
Honda Motor India Private Limited
Honda Motorcycle & Scooters India Private Limited
Mr. Takashi Nagai NED Hero Honda Motors Limited
Gen. (Retd.) Ved Prakash Malik NEID BSES Rajdhani Power Limited Audit Committee
BSES Yamuna Power Limited Audit Committee
Hero Honda Motors Limited Audit Committee
Reliance Infrastructure Limited Audit Committee
Mr. Pradeep Dinodia NEID DCM Shriram Consolidated Limited Audit Committee Shareholders'
Grievance
Committee
DFM Foods Limited Audit Committee
Hero Corporate Services Limited Audit Committee
Hero Honda Motors Limited Shareholders'
Grievance
Committee Audit Committee
Micromatic Grinding Technologies Limited
RSWM Limited
Shriram Pistons & Rings Limited Audit Committee
SPR International Auto Exports Limited
Ultima Finvest Limited
Manisha Commercial Pvt. Limited
Panasonic Sales and Services India Pvt. Limited
Seracom Pvt. Limited
Serva Commercial Pvt. Limited
Shabnam Commercial Pvt. Limited
Shriram Holographics Pvt. Limited
Dr. Pritam Singh NEID Delhi Stock Exchange Limited
Dish TV India Limited Audit Committee
Godrej Properties Limited
Hero Honda Motors Limited Audit Committee Shareholders'
Grievance
Committee
Parsvnath Developers Limited
Mr. Analjit Singh NEID Acqvire Talent Services Limited
Hero Corporate Services Limited
Hero Honda Motors Limited
IDBI Limited
Malsi Estates Limited
Malsi Holdings Limited
Max Health Staff International Limited
Max Healthcare Institute Limited
Max India Limited
Max Medical Services Limited
Max New York Life Insurance Company Limited
Neeman Medical International (Asia) Limited
Vodafone Essar Limited
BAS Investments Private Limited
Boom Investments Private Limited
Delhi Guest Houses Private Limited
Doon Holiday Resorts Private Limited
Dynavest India Private Limited
Mohair Investments and Trading Co. (P) Limited
MV Healthcare Services Private Limited
Scorpios Beverages Private Limited
Terra Planet Estates Private Limited
Trophy Estates Private Limited
Trophy Holdings Private Limited
Trophy Resorts Guest Houses Private Limited
TVP Investments Private Limited
Urban Space Consultants Private Limited
Vitasta Estates Private Limited
Ms.Shobhana Bhartia NEID Air Travel Bureau Limited
Britex India Limited
Firefly e-ventures Limited
Goldmerry Investment & Trading Co. Limited
Hero Honda Motors Limited
HT Media Limited Audit Committee
HT Music and Entertainment Limited
HTL Investment & Trading Co. Limited
Nilgiri Plantation Limited
Name of Director Status Directorship held Committee Committee Membership Chairmanship
Name of Director Status Directorship held Committee Committee Membership Chairmanship
A N N U A L R E P O R T 0 80 7
7071
Ronson Traders Limited
Shradhanjali Investment & Trading Co. Limited
The Hindustan Times Limited Audit Committee
Udit (India) Limited
Usha Flowell Limited
Yashovardhan Investment & Trading Co. Limited
Earthstone Holding Private Limited
Earthstone Holding (one) Private Limited
Earthstone Holding (two) Private Limited
Earthstone Holding (three) Private Limited
Mr. Sunil Bharti Mittal NEID Bharti Airtel Limited
Bharti AXA General Insurance Company Limited
Bharti AXA Life Insurance Company Limited
Bharti Enterprises Limited
Bharti Telecom Limited
Bharti Telesoft Limited
Bharti Teletech Limited
Bharti Ventures Limited
Hero Honda Motors Limited
Bharti (LM) Holdings Pvt. Limited
Bharti (SBM) Holdings Pvt. Limited
Bharti Enterprises (Holdings) Pvt. Limited
Bharti Retail (Holdings) Pvt Limited
Bharti Wal-Mart Pvt Limited
Field Fresh Foods Pvt. Limited
Mr. Meleveetil Damodaran NEID Hero Honda Motors Limited
Tech Mahindra Limited
SREI Sahaj e-Village Limited
Notes:
EC : Executive Chairman
MD : Managing Director
JMD : Joint Managing Director
TD : Technical Director
NED : Non- Executive Director
NEID : Non- Executive & Independent Director
Details of Directorships is as on July 29, 2008
Q: There is nominal growth in Topline but Profitability has increased in double digit of the Company, reasons?
A: Total Turnover during the financial year 2007-08 increased 4.24% to a record high of Rs.10,517.22 crores from Rs.10,089.81 crores during 2006-07. The Profit after tax (PAT) for 2007-08 was recorded at Rs. 967.88 crores as compared to Rs.857.89 crores in 2006-07. PAT as a percentage of Total Turnover has been increased from 8.50% to 9.20%.
The improvements on the margins was accomplished through better sales realisations and effective cost rationalisation measures which included better control over Material cost, Marketing cost, Overheads and all-round focus on operational efficiencies .
Q: What is your outlook on two wheeler industry?
A: The long term outlook for two wheelers and motorcycles in particular remains positive given the low levels of penetration which provide tremendous growth potential and a healthy GDP growth in years to come. However, our outlook for the next fiscal ie 2008-09 remains conservative driven by continued slackness in credit availability and higher financing cost and rising inflation, which erodes the purchasing power of the consumer.
Q: Last year Company has launched several new models, please appraise us the performance of these models and what about new launch during the current year ?
A: During the year 2007-08 Company has launched following new models HUNK & SPLENDOR-NXG along with several new variants and refreshes. These new models have been very well accepted by the market and now running under mass production.
There are several new and improved models in pipeline and will be disclosed in due course of time.
Q: With the hardening of interest rates, would the demand for motorcycles be affected ?
A: A sizeable segment of the two wheelers sales today happens through financing. Hence, any increase in the interest cost would adversely affect the sales growth. However, the low levels of two wheeler penetrations, rising disposable income and a favourable age demography of Indian population would help in increasing the market size. The Company has tie-ups with various preferred financers and is in the process to empanelling regional players with proven credentials to increase the penetration in smaller towns semi urban and rural areas.
Q: What is the Company strategy on exploring new markets for exports ?
A: The penetration level of two wheelers in India is still very low and it is perceived that domestic demand would continue to be robust in the foreseeable future. Therefore, the Company would focus primarily on fulfillment of the domestic demand. With the start of new manufacturing facilities at Hardwar, the Company would enhance focus on export segment as well and explore new markets in co-operation with Honda.
Q: When the New Plant at Haridwar would start, level of capacity and its impact on profitability of the Company?
A: The new plant at Haridwar has been started in April 2008 with initial capacity of 500,000 units. New plant would be using a state of the art technology with significant scalability option at relativity low investment. We plan to increase the capacities to 1,000,000 and subsequently to 1,500,000 over the coming years.Considering the excise and income tax incentive available to the new plant there would be positive impact on the profitability of the Company.
Q: What is the management's outlook on the operating margin in the coming period considering hardening of metal prices and weakening of rupee ?
A: The incessant increase in most of the input commodities ranging from Steel Aluminum Rubber etc would adversely affect the operating margins of any automobile manufacturer. However we have tried protecting our margins through various measures, which include higher sales realization, increased focus on controlling cost and operational efficiencies.
Q: What steps the Company has taken to improve corporate governance?
A: The Company is committed to benchmark itself with global standards in all areas including corporate governance. The Company's annual report contains substantial disclosures on the Board of Director, audit committee, remuneration committee, shareholders grievance committee, financial and stock performance, etc. In addition, an attempt has been made to benchmark governance with the guidelines recommended by the SEBI Committee on Corporate Governance (SEBI is the apex authority for regulating capital markets in India)
Financial results are published as per the latest Accounting Standards prescribed by the Institute of Chartered Accountants of India. The results are published in a transparent manner and there has been no non-compliance of any legal provision of applicable laws.
FREQUENTLY ASKED QUESTIONS (FAQS)
Name of Director Status Directorship held Committee Committee Membership Chairmanship
A N N U A L R E P O R T 0 80 7
Auditors' Report
Annexure to Auditors' Report
Balance Sheet, Profit & LossAccount and Cash Flow Statement
Schedules
US GAAP
7475
AUDITORS’ REPORT
TO THE MEMBERS OF HERO HONDA MOTORS LIMITED
1. We have audited the attached balance sheet of Hero Honda Motors Limited, as at March 31, 2008 and also the profit and loss account and the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
i) 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;
ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement, dealt with by this report, comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
v) on the basis of written representations received from the Directors and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, 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 March 31, 2008;
b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
c) in the case of Cash Flow statement, of the cash flows for the year ended on that date.
FOR A.F. FERGUSON & CO.Chartered Accountants
Manjula BanerjiPartner(Membership number: 86423)
Place: New DelhiDate: April 24, 2008
(I) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) As explained to us, the Company has a system of physical verification, which is designed to cover all fixed assets over a period of three years and in accordance therewith, physical verification of a major portion of fixed assets of the Company was carried out during the current year. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and the nature of its fixed assets.
(c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.
(ii) (a) During the year, the inventories have been physically verified by the management. In our opinion, the frequency of verification is reasonable.
(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 are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.
(iii) (a) According to the information and explanations given to us, the Company has, during the year, not granted any loan, secured or unsecured to Companies, firms and other parties covered in the registered maintained under Section 301 of the Companies Act, 1956, other than unsecured loans aggregating Rs. 240 crores granted to a Company covered in the registered maintained under Section 301 of the Companies Act, 1956. The maximum amount due during the year was Rs. 60 crores and the year end balance of loans granted was Rs. 50 crores.
(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans granted by the Company, as referred to in paragraph 4(iii)(a) of the Companies (Auditor's Report) Order, 2003 (hereinafter referred to as the Order) above, are, prima- facie, not prejudicial to the interest of the Company.
(c) According to the information and explanations given to us, the parties, to whom the loans have been granted by the Company, as referred to in paragraph 4(iii)(a) above, have been regular in repayment of the principal amount as stipulated and have been regular in payment of interest.
(d) According to the information and explanations given to us, there are no overdue amounts in respect of the loans granted as referred to in paragraph 4(iii) (a) above and interest thereon.
(e) According to the information and explanations given to us, 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, paragraphs 4(iii) (f) and (g) of the Order are not applicable.
(iv) According to the information and explanations given to us, there is
an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and with regard to the sale of goods. There are no sales of services during the year. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in the aforesaid internal control system.
(v) (a) According to the information and explanations given to us, we are of the opinion that during the year, the particulars of the contracts/arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.
(b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, and exceeding the value of Rs. 5 lacs in respect of any party during the year, having regard to the explanation that some of services/ items purchased are of a specialized nature for which there are no alternate sources of supply to enable comparison of the prices, these have been made at prices which are reasonable to prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public.
(vii) According to the information and explanations given to us, the Company has an adequate internal audit system commensurate with its size and nature of its business.
ANNEXURE REFERRED TO IN PARAGRAPH '3' OF THE AUDITORS’ REPORT TO THE MEMBERS
OF HERO HONDA MOTORS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008.
A N N U A L R E P O R T 0 80 7
7677
(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.
(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax,
wealth tax, customs duty, excise duty, cess, value added tax, Haryana local area development tax and other material statutory dues applicable to it with the appropriate authorities. We are informed that there are no undisputed statutory dues as at the year end, outstanding for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no disputed dues in respect of wealth tax, customs duty and cess, which have not been deposited. The following are the particulars of sales tax, excise duty, service tax and income tax dues not deposited/deposited under protest by the Company on account of disputes as at March 31, 2008:-
(x) The Company does not have accumulated losses at the end of the financial year March 31, 2008. Further, the Company has not incurred any cash losses during the financial year ended March 31, 2008 and in the immediately preceding financial year ended March 31, 2007.
(xi) According to the records of the Company examined by us and on the basis of information and explanations given to us, the Company has not defaulted in repayment of dues to banks during the year. The Company has not taken any loans from financial institutions and has not issued debentures during the year.
(xii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances during the year on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) According to the information and explanations given to us, the provisions of any special statute as specified under paragraph 4(xiii) of the Order are not applicable to the Company.
(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.
(xv) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions.
(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.
(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that short term funds have not been used to finance long term investments.
(xviii) The Company has not made any preferential allotment of shares during the year.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised any money by way of public issue during the year.
(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2008.
For A.F. FERGUSON & CO.Chartered Accountants
Manjula BanerjiPartner(Membership No.: 86423)
Place : New DelhiDate: April 24, 2008
Name of the Statute Nature of dues Amount* Amount paid Period to which (Rs. in crores) under protest the amount relates dispute is pending
(Rs. in crores)
Sales Tax laws Sale Tax 1.90 1.90 1998-1999 to 1999-00 Commissioner (Appeals)
Central Excise Laws Excise Duty 0.32 - 2000-01 CESTAT
0.39 - 2002-03 to 2005-06 Commissioner (Appeals)
Service Tax 22.10 0.45 2002-03 to 2005-06 CESTAT
Income-tax Act Income Tax 5.73 5.73 2000-01 to 2001-02 Income Tax Appellate Tribunal
31.44 31.44 2001-02 to 2003-04 Commissioner (Appeals)
* Amount as per demand orders including interest and penalty wherever quantified in the order.
Forum where
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 Forum where dispute (Rs. in crores) amount relates is pending
Central Excise Laws Excise Duty 2.57 1986-87 to 1990-91 Supreme Court
Income-tax Act Income-Tax 6.43 1987-88, 1989-90, 1992-93 High Court1993-94, 1995-96, 1996-97
0.96 1995-96, 1997-98, 2000-01 Income Tax Appellate Tribunal
A N N U A L R E P O R T 0 80 7
7879
HERO HONDA MOTORS LIMITED
BALANCE SHEET AS AT MARCH 31, 2008
(Rupees in crores)
Schedule As at March As at March
No. 31, 2008 31, 2007
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital 1 39.94 39.94
Reserves and surplus 2 2,946.30 2,430.12
2,986.24 2,470.06
LOAN FUNDS 3
Unsecured 132.00 165.17
132.00 165.17
DEFERRED TAX LIABILITIES 9 130.59 129.58
TOTAL 3,248.83 2764.81
APPLICATION OF FUNDS
FIXED ASSETS 4
Gross block 1,938.78 1800.63
Less: Depreciation 782.52 635.10
Net block 1,156.26 1165.53
Capital work in progress 392.44 189.92
1,548.70 1355.45
PRE - OPERATIVE EXPENSES (PENDING ALLOCATION) 5 16.05 -
INVESTMENTS 6 2,566.82 1973.87
DEFERRED TAX ASSETS 9 5.22 1.38
CURRENT ASSETS, LOANS AND ADVANCES 7
Inventories 317.10 275.58
Sundry debtors 297.44 335.25
Cash and bank balances 131.09 35.78
Other current assets 5.69 3.60
Loans and advances 185.46 263.06
936.78 913.27
Less: CURRENT LIABILITIES AND PROVISIONS 8
Current liabilities 1,324.98 1041.92
Provisions 499.76 437.24
1,824.74 1479.16
Net current assets (887.96) (565.89)
TOTAL 3,248.83 2764.81
Notes to the accounts 13
Per our report attachedFor A. F. FERGUSON & CO.Chartered Accountants
MANJULA BANERJIPartnerMembership no. 86423
New Delhi April 24, 2008
For and on behalf of the Board of Directors
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
PRADEEP DINODIA Director
RAVI SUD Sr. Vice President & CFO
ILAM C. KAMBOJ G.M. Legal & Company Secretary
Per our report attached to the balance sheetFor A. F. FERGUSON & CO.Chartered Accountants
MANJULA BANERJIPartnerMembership no. 86423
New Delhi April 24, 2008
For and on behalf of the Board of Directors
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
PRADEEP DINODIA Director
RAVI SUD Sr. Vice President & CFO
ILAM C. KAMBOJ G.M. Legal & Company Secretary
HERO HONDA MOTORS LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008
(Rupees in crores)
Schedule Year ended Year ended
No. March 31, 2008 March 31, 2007
INCOME
Gross sales 12,038.53 11,542.04
Less: Excise duty 1,706.73 1,642.08
Net sales 10,331.80 9,899.96
Other income 10 185.42 189.85
10,517.22 10,089.81
EXPENDITURE
Manufacturing and other expenses 11 8,982.43 8,726.92
Depreciation 4 160.32 139.78
Interest (net) 12 (35.81) (22.99)
9,106.94 8,843.71
Profit for the year before tax 1,410.28 1,246.10
Provision for taxation
- current 436.81 375.81
- deferred 1.20 9.42
- fringe benefit 4.39 2.98
Profit after tax 967.88 857.89
Balance of profit brought forward 1,594.78 1,224.05
Balance available for appropriation 2,562.66 2,081.94
APPROPRIATIONS
Proposed dividend 379.41 339.47
Tax on dividend 64.48 57.69
Transfer to general reserve 97.00 90.00
Balance carried to balance sheet 2,021.77 1,594.78
2,562.66 2,081.94
Basic and diluted earnings per share face value Rs. 2/-each ( in rupees) 48.47 42.96
Notes to the accounts 13
A N N U A L R E P O R T 0 80 7
8081
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008(Rupees in crores)
Year ended Year endedMarch 31, 2008 March 31, 2007
A. CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax 1,410.28 1,246.10
Adjustments for:
Add: Depreciation 160.32 139.78
Loss on fixed assets sold/discarded 4.36 13.80
Exchange differences (0.98) 1.66
Loss on sale of non-trade current investments 19.54 19.62
Provision for diminution in value of investment:
Current non trade investment 1.29 1.00
Long term non trade investment 1.28 1.27
Interest - others and financial charges 2.00 1.61
Provision for doubtful debts 4.59 0.30
192.40 179.04
Less: Interest received on long term non-trade investments 12.81 10.64
Interest received on loans, deposits etc. 37.81 24.60
Profit on sale of fixed assets 0.09 0.32
Dividend income:
On current Investments - Non-trade 4.24 6.53
On long-term investments-Trade 2.72 5.43
Profit on sale of non-trade investments:
On current investments 152.45 150.02
210.12 197.54
Operating profit before working capital changes 1,392.56 1,227.60
Adjustments for:
Add: Increase / (decrease) in trade payables 185.64 (30.83)
Increase in security deposits from dealers 2.04 2.34
187.68 (28.49)
Less: Increase /(decrease) in trade and other receivables (115.05) 129.68
Increase in inventories 41.52 49.03
(73.53) 178.71
Cash generated from operations 1,653.77 1,020.40
Less: Direct taxes paid 441.99 395.35
Net cash from operating activities 1,211.78 625.05
B. CASH FLOW FROM INVESTING ACTIVITIES
Sale of fixed assets 1.03 3.87
Sale of investments 13,703.86 13,633.86
Inter corporate deposits received back 190.00 211.75
Interest received on long term non-trade investments 10.72 10.57
Interest received on loans, deposits etc. 37.81 24.60
Dividend income:
On current investments-Non-trade 4.24 6.53
On long-term investments-Trade 2.72 5.43
13,950.38 13,896.61
Per our report attached to the balance sheetFor A. F. FERGUSON & CO.Chartered Accountants
MANJULA BANERJIPartnerMembership no. 86423
New Delhi April 24, 2008
For and on behalf of the Board of Directors
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
PRADEEP DINODIA Director
RAVI SUD Sr. Vice President & CFO
ILAM C. KAMBOJ G.M. Legal & Company Secretary
HERO HONDA MOTORS LIMITED
Less: Purchase of fixed assets 374.92 519.03
Inter corporate deposits paid 190.00 233.00
Purchase of investments 14,166.47 13,417.71
14,731.39 14,169.74
Net cash (used) in investing activities (781.01) (273.13)
C. CASH FLOW FROM FINANCING ACTIVITIES
Interest paid - others and financial charges 2.00 1.61
Dividend paid 339.47 415.23
Tax on dividend 57.69 56.01
Repayment of long term borrowings 33.17 20.61
432.33 493.46
Net cash (used) in financing activities (432.33) (493.46)
D. Increase/(decrease) in cash and cash equivalents (A+B+C) (1.56) (141.54)
Cash and cash equivalents at the beginning of the year 16.66 158.72
Cash and cash equivalents at the end of the year
Cash and bank balances 15.19 16.66
Unrealised exchange loss/(gain) (0.09) 0.52
15.10 17.18
Notes to the accounts Schedule 13
(Rupees in crores)
Year ended Year ended March 31, 2008 March 31, 2007
A N N U A L R E P O R T 0 80 7
8283
SCHEDULES 1 to 13 ANNEXED TO AND FORMING PART OF THE ACCOUNTS
1) SHARE CAPITAL(Rupees in crores)
As at March As at March
31, 2008 31, 2007
AUTHORISED
25,00,00,000 (Previous year 25,00,00,000 )
Equity shares of Rs. 2 each 50.00 50.00
4,00,000 (Previous year 4,00,000 ) Cumulative
convertible preference shares of Rs. 100 each 4.00 4.00
4,00,000 (Previous year 4,00,000 ) Cumulative
redeemable preference shares of Rs. 100 each 4.00 4.00
58.00 58.00
ISSUED, SUBSCRIBED AND PAID UP
19,96,87,500* (Previous year 19,96,87,500) Equity
shares of Rs. 2 each fully paid up 39.94 39.94
39.94 39.94
* Of the above 11,98,12,500 (Previous year 11,98,12,500) shares had been allotted as fully paid
bonus shares by capitalisation of general reserve.
2) RESERVES AND SURPLUS
(Rupees in crores)
As at Additions Deductions As at
March 31,2007 March 31, 2008
CAPITAL RESERVES
On shares forfeited (#Rs. 4250) # - - #
Share premium account on forfeited
shares reissued(##Rs. 25500) ## - - ##
REVENUE RESERVES
General reserve 835.34 97.00 7.81* 924.53
Surplus, being balance in profit
and loss account 1,594.78 426.99 - 2,021.77
2,430.12 523.99 7.81 2,946.30
Previous year 1,969.39 460.73 - 2,430.12
* Adjustment of employee benefit schemes as per revised accounting standard AS 15, net of deferred tax assets of Rs 4.03 crores (refer note - 14)
HERO HONDA MOTORS LIMITED
3) LOAN FUNDS
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
UNSECURED LOANS
Other loans and advances
Sales tax deferment from the
State Government of Haryana 132.00 165.17
(Include Rs. 53.51 crores (previous year Rs. 33.17 crores) due within one year)
132.00 165.17
4) FIXED ASSETS
(Rupees in crores)
Gross block (at cost) Depreciation Net block
As at Additions Deductions As at As at For the On As at As at As at
March March March year deductions March March March
31, 2007 31, 2008 31, 2007 31, 2008 31, 2008 31, 2007
Tangible assets
Land
- Freehold 77.55 3.24 - 80.79 - - - - 80.79 77.55
- Leasehold 81.80# - - 81.80 0.52 1.15 - 1.67 80.13 81.28
Buildings 191.68 20.46 - 212.14 29.30 6.13 - 35.43 176.71 162.38
Plant and machinery 1,222.69 86.52 * 15.06 1,294.15 496.06 108.80 11.96 592.90 701.25 726.63
Furniture, fixtures and
office equipment 17.64 3.50 1.79 19.35 5.30 1.12 0.60 5.82 13.53 12.34
Vehicles 14.78 8.04 1.69 21.13 4.04 3.14 0.75 6.43 14.70 10.74
Computer and data
processing machines 43.32 4.43 0.82 46.93 29.01 4.13 0.75 32.39 14.54 14.31
Intangible assets
- Model fee 151.17 31.32 - 182.49 70.87 37.01 - 107.88 74.61 80.30
Total 1,800.63 157.51 19.36 1,938.78 635.10 161.48@ 14.06 782.52 1,156.26
Previous year 1,471.97 373.29 44.63 1,800.63 522.60 139.78 27.28 635.10 1,165.53
Capital work in progress {including capital advances Rs. 73.39 crores (Previous year Rs. 38.26 crores)} 392.44 189.92
1,548.70 1,355.45
Note :
* Includes Rs. Nil (Previous year decrease of Rs. 1.13 crore) due to fluctuation in exchange rates
# Include land at Haridwar pending registration in the name of the Company.
@ Includes Rs. 1.16 crores(Previous year Rs. Nil) transferred to Pre- operative expenditure (pending allocation)
A N N U A L R E P O R T 0 80 7
5) PRE-OPERATIVE EXPENDITURE (PENDING ALLOCATION)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
Consumption of raw materials
and components 0.19 -
Consumption of stores and spares 0.05 -
Power and fuel 5.73 -
Payments to and provisions for employees:
Salaries, wages, bonus, gratuity and
leave encashment benefit 4.12 -
Contribution to provident and other funds 0.33 -
Rent 0.09 -
Exchange fluctuation 0.82 -
Insurance 0.53 -
Rates and Taxes 0.45 -
Technical guidance fee 0.40 -
Professional charges 2.18 -
Depreciation 1.16 -
16.05 -
25000000 (Previous year Nil) units in FMP Series36-Eighteen Months
Plan B -Institutional Growth 25.00 -
25000000 (Previous year Nil) units in Interval Fund II Quarterly Interval
Plan C-Retail Cumulative 25.00 -
40000000 (Previous year Nil) units in FMP Series 39-Six Months
Plan A Retail Cumulative 40.00 -
25000000 (Previous year Nil) units in FMP Series41-Fourteen Months
Plan Institutional Cumulative 25.00 -
15000000 (Previous year Nil) units in FMP Series42-Three Months
Plan A Retail Growth 15.00 -
12500000(Previous year Nil) units in FMP Series43-Thirteen Months
Plan B Institutional Growth 12.50 -
20000000 (Previous year Nil) units in FMP Series43-Thirteen Months
Plan D Retail Growth 20.00 -
Birla Sunlife Mutual Fund
Nil (Previous year 16000000) units in fixed term plan series D -Growth - 16.00
Nil (Previous year 7500000) units in FTP -Quarterly-Series-5 -Growth - 7.50
Nil (Previous year 15000000) units in FTP -Half Yrly-Series-2 -Growth - 15.00
20000000 (Previous year 20000000) units in FTP -INSTL-Series U-Growth 20.00 20.00
15000000 (Previous year Nil) units in FTP -INSTL-Series V-Growth 15.00 -
20000000 (Previous year Nil) units in Qtly Interval-Series 5-Growth 20.00 -
30000000 (Previous year Nil) units in FTP-INSTL-Series AK-Growth 30.00 -
24475250 (Previous year Nil) units in Interval Income 25.00 -
Fund -INSTL-Quarterly-Series 2-Growth
4227865 (Previous year Nil) units in Income Plus-Growth 15.00 -
HDFC Mutual Fund
Nil(Previous year 20000000) units in FMP 13 M June 2006
(1)-Institutional Plan- Growth - 20.00
Nil (Previous year 5000000) units in FMP 90 D January 2007
(3)-Wholesale Plan- Growth - 5.00
25000000 (Previous year Nil) units in FMP 18M November 2007
(VI) Wholesale Plan- Growth 25.00 -
30000000 (Previous year Nil) units in FMP 18M January 2008
(VII) Wholesale Plan- Growth 30.00 -
18100000 (Previous year Nil) units in Arbitrage Fund Wholesale Plan - Growth 18.10 -
Standard Chartered Mutual Fund
Nil (Previous year 5000000) units in Grindlays fixed maturity 7th plan -B -Growth - 5.00
Nil (Previous year 25000000) units in Grindlays fixed maturity -16th plan A -Growth - 25.00
Nil (Previous year 5000000) units in fixed maturity Plan - Yearly Series 1-Growth - 5.00
Nil (Previous year 10000000) units in fixed maturity Plan - Quarterly Series 3-Growth - 10.00
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
6) INVESTMENTS
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
CURRENT INVESTMENTS
(cost or fair value which ever is lower)
Non-trade
Unquoted
In Mutual fund units:
Debt fund
(Units of the face value of Rs. 10 each)
ICICI Prudential Mutual Fund
Nil (Previous year 46644836) units in institutional FMP -15 months plan-series-XXV - 50.00
Nil (Previous year 70653402) units in blended plan A-Growth - 73.25
Nil (Previous year 20000000) units in hybrid fixed maturity plan-13 months plan-Institutional-Growth - 20.00
Nil (Previous year 35000000) units in FMP Series 35-Three Months Plan A-Retail -Growth - 35.00
Nil (Previous year 96344009) units in FMP Series 35-Three Months Plan B-Retail -Growth - 96.34
Nil (Previous year 10000000) units in FMP Series 34-1 Year Plan A-Institutional -Growth - 10.00
30000000 (Previous year 30000000) units in FMP Series 34-Fifteen Months Plan -Institutional -Growth 30.00 30.00
20000000 (Previous year 20000000) units in FMP Series 34-One Year Plan B Institutional Growth 20.00 20.00
70000000 (Previous year 175000000) units in equity and derivatives fund -Income
optimiser-Institutional Growth 70.00 175.00
8485
A N N U A L R E P O R T 0 80 7
Nil (Previous year 10000000) units in fixed maturity Plan - Quarterly Series 4-Growth - 10.00
Nil (Previous year 5000000) units in fixed maturity Plan - Quarterly Series 7-Growth - 5.00
20000000 (Previous year Nil) units in fixed maturity Plan - Yearly Series 8-Growth 20.00 -
9641249 (Previous year Nil) units in Arbitrage Fund -Plan B-Growth 10.00 -
24488468 (Previous year Nil) units in Arbitrage Fund -Plan B-Dividend 25.35 -
Tata Mutual Fund
Nil (Previous year 25000000) units in fixed horizon fund series 6-scheme B-Growth - 25.00
Nil (Previous year 25000000) units in fixed horizon fund series 8-scheme D-IG-Growth - 25.00
Nil (Previous year 10000000) units in fixed horizon fund series 8-scheme
E-Growth-Inst Plan - 10.00
Nil (Previous year 15000000) units in fixed horizon fund series 8-scheme
F-Growth-Inst Plan - 15.00
12000000(Previous year 12000000) units in S I P FUND -Scheme I-Growth 12.00 12.00
Nil (Previous year 5000000) units in fixed horizon fund series 9-scheme
E-Growth-Inst Plan - 5.00
19143885 (Previous year Nil) units in Dynamic Bond Fund Option B-Growth 25.00 -
20000000 (Previous year Nil) units in Fixed Horizon Fund Series 17
Scheme D-Institutional Plan -Growth 20.00 -
15000000 (Previous year Nil) units in Fixed Income Portfolio Fund
Scheme A2 Institutional -Growth 15.00 -
15000000 (Previous year Nil) units in Fixed Income Portfolio Fund
Scheme B2 Institutional -Growth 15.00 -
24740431(Previous year Nil) units in Floating Rate Fund Long Term-Growth 30.00 -
Kotak Mutual Fund
Nil (Previous year 5000000) units in FMP series 14 -Growth - 5.00
Nil (Previous year 7500000) units in FMP 3 M series 8 -Growth - 7.50
15000000 (Previous year 15000000) units in FMP 15 M Series 2 -Growth 15.00 15.00
20000000 (Previous year Nil) units in FMP 12 M Series 4 Institutional-Growth 20.00 -
51056254 (Previous year Nil) units in FMP 3 M Series 26-Growth 51.05 -
7124384 (Previous year Nil) units in Bond (Short Term)-Growth 10.00 -
Templeton Mutual Fund
Nil (Previous year 15000000) units in Fixed Horizon Fund -
3 months plan-inst. -Growth - 15.00
20000000 (Previous year Nil) units in Fixed Horizon Fund Series VII -Plan
D -institutional -Growth 20.00 -
HSBC Mutual Fund
Nil (Previous year 35000000) units in fixed term series 9-Growth - 35.00
ABN Amro Mutual Fund
Nil (Previous year 41703848) units in fixed term plan series 4 quarterly plan D Growth - 41.71
Nil (Previous year 15000000) units in fixed term plan series 4 quarterly plan E Growth - 15.00
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
Nil (Previous year 51848377) units in fixed term plan series 4 Half Yearly plan A Growth - 51.85
Nil (Previous year 20000000) units in Dual Advantage Fund Plan A Series 1 Inst Growth - 20.00
5000000 (Previous year 5000000) units in FTPS5 14 Mths plan Inst Growth 5.00 5.00
5000000 (Previous year Nil) units in Fixed Term Plan -Ser-8-Yly Plan A -Inst. Growth 5.00 -
9572584 (Previous year Nil) units in Flexible short Term Plan -Ser A Gr.-Renewal 10.00 -
33542575 (Previous year Nil) units in Interval Fund Quarterly Plan H Growth-Ren 35.00 -
15000000 (Previous year Nil) units in FTP Ser 10 Plan F Inst. Growth 15.00 -
40256676 (Previous year Nil) units in Flexi Debt Fund -Regular -Growth 50.00 -
Deutsche Mutual Fund
Nil (Previous year 25000000) units in fixed term fund-series 14-Growth Plan - 25.00
Nil (Previous year 10000000) units in fixed term fund-series 23-Growth Option - 10.00
Nil (Previous year 5000000) units in fixed term fund-series 27-Growth Option - 5.00
5000000 (Previous year 5000000) units in fixed term fund-series
24-Institutional Plan-Growth Option 5.00 5.00
Escorts Mutual Fund
Nil (Previous year 471885) units in income plan - Growth - 1.00
ING Vysya Mutual Fund
Nil (Previous year 20000000) units in fixed maturity fund series VII -Growth option - 20.00
Nil (Previous year 10000000) units in fixed maturity fund series xxi -Growth option - 10.00
5000000 (Previous year 5000000) units in fixed maturity fund series xxii -Growth option 5.00 5.00
Nil (Previous year 3000000) units in fixed maturity fund series xxiv -Growth - 3.00
5000000 (Previous year Nil) units in fixed maturity fund- xxviii -Growth 5.00 -
Reliance Mutual Fund
Nil (Previous year 50000000) units in fixed tenor fund plan A -Growth Option - 50.00
10000000(Previous year 10000000) units in fixed tenor fund plan B -Growth Plan 10.00 10.00
5000000(Previous year 5000000) units in fixed Horizon fund- Institutional 5.00 5.00
plan C -Series I-Institutional Growth plan
Nil (Previous year 40000000) units in fixed Horizon fund I- Annual
Plan -Series III-Institutional Growth plan - 40.00
Nil (Previous year 77401572) units in fixed Horizon fund II- Quarterly
Plan -Series II-Institutional Growth plan - 77.40
Nil (Previous year 25000000) units in fixed Horizon fund II- Quarterly
Plan -Series I-Institutional Growth plan - 25.00
25000000(Previous year 25000000) units in fixed Horizon fund III- Annual
Plan Series IV-Institutional Growth Plan 25.00 25.00
10000000 (Previous year Nil) units in Annual Interval Fund
-Series1-Institutional Growth Plan 10.00 -
25000000 (Previous year Nil) units in Fixed Horizon Fund IV
-Series 6-Institutional Growth Plan 25.00 -
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
8687
A N N U A L R E P O R T 0 80 7
8889
30000000 (Previous year Nil) units in Fixed Horizon Fund IV
-Series 7-Institutional Growth Plan 30.00 -
46542367 (Previous year Nil) units in Monthly Interval Fund -Series
II-Institutional Growth Plan 50.00 -
5000000 (Previous year Nil) units in Fixed Horizon Fund -VI -Series
2-Institutional Growth Plan 5.00 -
12500000 (Previous year Nil) units in Fixed Horizon Fund -IX -Series
1-Institutional Growth Plan 12.50 -
20000000 (Previous year Nil) units in Fixed Horizon Fund VII -Series
5-Institutional Growth Plan 20.00 -
Principal Mutual Fund
Nil (Previous Year 47963255) units in income fund Growth plan - 50.00
Nil (Previous year 25000000) units in fixed maturity plan (FMP-31) Series
III Instt. Growth plan-Nov 06 - 25.00
Lotus India Mutual Fund
20000000 (Previous year Nil) units in FMP-14 Months -Series II-Institutional Growth 20.00 -
20000000 (Previous year Nil) units in FMP-14 Months -Series III-Institutional Growth 20.00 -
(Units of the face value of Rs.100 each)
Reliance Mutual Fund
68780 (Previous year Nil) units in Gold ETF -Open Ended Scheme 7.00 -
(Units of the face value of Rs. 1000 each)
AIG Global Investment Group Mutual Fund
150000 (Previous year Nil) units in Short Term Fund Institutional Growth 15.00 -
DSP Merrill Lynch Mutual Fund
Nil (Previous year 154224) units in fixed term plan - series 1 H-Growth Institutional - 15.42
Nil (Previous year 203789) units in fixed term plan - series1 I-Growth Institutional - 20.38
606525 (Previous year Nil) units in Strategic Bond Fund -Institutional- Growth 61.39 -
250000 (Previous year Nil) units in fixed term plan series3D-Institutional-Growth 25.00 -
50000 (Previous year Nil) units in fixed term plan series3H-Institutional Growth 5.00 -
Repurchase Price Rs. 1302.86 crores (Previous year Rs. 1425.42 crores) 1,249.89 1,383.35
Fund of Funds
(Units of the face value of Rs. 10 each)
Optimix Mutual Fund
21612178 (Previous year 25000000) units of active debt
multi -manager FOF scheme- Growth 21.61 25.00
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
Nil (Previous year 25000000) units of dynamic multi- manager FOF scheme -Series 2-Growth - 25.00
14000000 (Previous year Nil) units of dynamic multi- manager FOF scheme -Series 3-Growth 14.00 -
13300000 (Previous year Nil) units of dynamic multi- manager FOF scheme -Series 4-Growth 13.30 -
5000000 (Previous year Nil) units of Active Short Term FOF -Growth 5.00 -
ABN AMRO MUTUAL FUND
15000000 (Previous year 15000000) units in Multi Manager Fund Series 2A Growth 15.00 15.00
5000000 (Previous year 5000000) units in Multi Manager Fund Series 3- Growth 5.00 5.00
73.91 70.00
Less: Provision for Diminution in Value - (1.00)
Repurchase Price Rs. 76.46 crores (Previous year Rs. Rs. 69.00 crores) 73.91 69.00
Equity fund
(Units of the face value of Rs. 10 each)
Escorts Mutual Fund
21839119 (Previous year 14734210) units in opportunities fund -dividend 29.41 19.12
2439024 (Previous year 3414634) in units of high yeild equity plan-Dividend 2.50 3.50
3000000 (Previous year Nil) in units of Infrastructure Fund-Growth 3.00 -
ING Vysya Mutual Fund
Nil (Previous year 1000000) units in CUB fund - Dividend Option - 1.00
DSP Merrill Lynch Mutual Fund
Nil (Previous year 5000000) units in DSP Merrill Lynch Small and Mid Cap -Reg Dividend - 5.00
Optimix Mutual Fund
25000000 (Previous year Nil) units in Multi-Manager Equity fund - Option A-Growth 25.00 -
ABN Amro Mutual Fund
5000000 (Previous year Nil) units in Sustainable Development Fund - Growth 5.00 -
Birla Sunlife Mutual Fund
4000000 (Previous year Nil) units in Long Term Advantage Fund Series 1 - Growth 4.00 -
10000000 (Previous year Nil) units in Special Situations Fund - Growth 10.00 -
JP Morgan Mutual Fund
1955990 (Previous year Nil) units in India Smaller Companies Fund- Growth Plan 2.00 -
Tata Mutual Fund
7000000 (Previous year Nil) units in Indo-Global Infrastructure Fund- Growth 7.00 -
A N N U A L R E P O R T 0 80 7
9091
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
LIC Mutual Fund
3000000 (Previous year Nil) units in Infrastructure Fund- Growth Plan 3.00 -
Repurchase Price Rs. 89.04 crores (Previous year Rs. 28.71 crores) 90.91 28.62
Less: Provision for diminution in value (1.87) -
89.04 28.62
Liquid fund
(Units of the face value of Rs. 10 each)
ICICI Prudential Mutual Fund
115809498 (Previous year 83112217) units in Institutional Liquid Plan -Super Institutional Growth 137.80 91.15
Birla Sunlife Mutual Fund
43365134 (Previous year 4210065) units in cash plus- institutional premium-Growth 56.00 5.00
HSBC Mutual Fund
Nil (Previous year 8492857) units in cash fund - institutional plus - Growth - 10.00
Reliance Mutual Fund
111112150 (Previous year 116324079) units in Liquidity Fund- Growth Option 135.00 130.55
Kotak Mutual Fund
14710840 (Previous year Nil) units in Liquid (Institutional Premium)- Growth 24.00 -
ABN Amro Mutual Fund
104536055 (Previous year Nil) units in Money Plus Institutional Growth 125.01 -
Lotus India Mutual Fund
31498614 (Previous year Nil) units in Liquid Fund -Super Institutional Growth 35.00 -
(Units of the face value of Rs. 1000 each)
DSP Merrill Lynch Mutual Fund
292149 (Previous year 320146) units in liquidity Fund Instt. - Growth 33.02 35.00
Reliance Mutual Fund
914761 (Previous year Nil) units in Liquid Plus Fund- Institutional Option-Growth Option 100.00 -
AIG Global Investment Group Mutual Fund
481912 (Previous year Nil) units in Liquid Fund- Super Institutional Growth 50.20 -
Mirae Asset Mutual Fund
500000 (Previous year Nil) units in Liquid Plus Fund- Super Inst Growth Option 50.00 -
Repurchase Price Rs. 747.04 crores (Previous year Rs. 272.09 crores) 746.03 271.70
Debentures
CitiFinancial Consumer Finance India Ltd
Citi Financial 500 Debentures -Redeemable Non Convertible Secured 5.00 -
NCD Issue Series-326 of Rs 100000 each
Repurchase Price Rs. 5.00 crores (Previous year Rs. Nil) 5.00 -
Non-trade
Unquoted
Investments under Portfolio Management Services #
ICICI Prudential Asset Management Company
Debt Fund
ICICI Prudential Mutual Fund (units of the face value of Rs.10 each)
Nil (Previous year 7642650) units in FMP Series 34-3 Months C - 7.64
2000000 (Previous year Nil) units in FMP Series 42-3 Months Plan B Retail Growth 2.00 -
10503452 (Previous year Nil) units in Interval Fund-Quarterly Interval Plan1Retail Growth 10.77 -
Liquid Fund
ICICI Prudential Mutual Fund (units of the face value of Rs.10 each)
8448391 (Previous year 2202315) units in liquid plan Super institutional Growth Option 10.04 2.38
Debentures
50 Debentures (Previous year Nil) of Citicorp Finance Ref 4.90 -
NCD SR 187 MD 20/01/2010 of Rs 980000 each
Repurchase Price Rs. 28.31 crores (Previous year Rs. 10.23 crores) 27.71 10.02
IIM -Optimix Portfolios- Capital Enhancer
Liquid Fund
Principal Mutual Fund (Units of Face Value of Rs 10 each)
Nil (Previous year 180485) units in Principal Cash Management Fund Liquid Option Growth - 0.25
Debt Fund
Reliance Mutual Fund - Debt Fund (units of the face value of Rs.10 each)
Nil (Previous year 25506476) units in Fixed Horizon Fund -2 Qly PLN Series -5 - 25.51
ICICI Prudential Mutual Fund (units of the face value of Rs.10 each)
20991585 (Previous year Nil) units in Flexible Income Fund - Growth 31.30 -
Deutsche Mutual Fund (units of the face value of Rs.10 each)
49198196 (Previous year Nil) units in DWS Money Plus Advantage Instl Fund 50.02 -
Repurchase Price Rs. 82.30 crores (Previous year Rs. 25.92 crores) 81.32 25.76
A N N U A L R E P O R T 0 80 7
9293
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
Reliance Portfolio Management
Debentures
Reliance Blended Debt Plus -Hybrid Option -Series II-500000 Debentures of 5.00 5.00
Citicorp Finance (India) Ltd NCDS Series 163 of Rs 100.00 each
Reliance Blended Debt Plus -Hybrid Option -Series VII-1000000 Debentures of 10.00 -
DSP Merrill Lynch Capital Ltd Series 2007/EQ of Rs 100.00 each
Reliance Blended Debt Plus -Hybrid Option -Series X-1000000 Debentures of 10.00 -
DSP Merrill Lynch Capital Ltd Series 2008/AM of Rs 100.00 each
Repurchase Price Rs. 25.00 crores (Previous year Rs. 5.10 crores) 25.00 5.00
Escorts Securities Limited
Debt Fund
Escorts Mutual Fund (units of the face value of Rs.10 each)
14641 (Previous year 29747) units in Floating Rate Fund -Growth Option 0.02 0.03
Liquid Fund
Templeton Mutual Fund- (units of the face value of Rs.1 each)
Nil (Previous year 121800000) units in India Money Market Account -Dividend Plan - 12.18
Escorts Mutual Fund (units of the face value of Rs.10 each)
2825896 (Previous year Nil) units in Liquid Plan Growth 3.31 -
HDFC Mutual Fund (units of the face value of Rs.10 each)
7646722 (Previous year Nil) units in Cash Management Fund Savings Plan 12.73 -
Repurchase Price Rs. 16.30 crores (Previous year Rs. 12.22 crores) 16.06 12.21
Equity Shares Quoted
Nil (Previous year 20000) equity shares of Rs. 1.00 each fully paid up of Ashok Leyland - 0.09
Nil (Previous year 40000) equity shares of Rs. 10 each fully paid up of IFCI Ltd - 0.12
Nil (Previous year 1250) equity shares of Rs. 2 each fully paid up of IVRCL Infrastructure & Project Ltd - 0.05
Nil (Previous year 1500) equity shares of Rs. 10 each fully paid up of IPCL - 0.04
Nil (Previous year 4000) equity shares of Rs. 10 each fully paid up of Syndicate Bank - 0.03
Market Price Rs. Nil (Previous year Rs. 0.33 crores) - 0.33
# Investments have been made under the Discretionary Portfolio Management
Agreement entered into between the Company and ICICI Prudential Asset
Management Company Limited, IIM-Optimix Portfolios -Capital Enhancer,
Escorts Securities Ltd, Reliance Portfolio Management (Portfolio Managers)
are being held in the name of the Portfolio Manager as envisaged in the aforesaid Agreement.
Non-trade
In Equity Shares:
Quoted
Nil (Previous year 6181) equity shares of Rs. 10 each fully paid up of Parsvnath Developers Limited - 0.19
Nil (Previous year 152202) equity shares of Rs. 10 each fully paid up of Idea Cellular Ltd - 1.14
Nil (Previous year 55200) equity shares of Rs. 2 each fully paid up of HCL Tech Ltd - 1.81
6) INVESTMENTS (contd.)
(Rupees in crores)
As at March As at March
31, 2008 31, 2007
125523 (Previous year Nil) equity shares of Rs. 10 each fully paid up of Bharat Heavy Electricals Ltd 16.04 -
52238 (Previous year Nil) equity shares of Rs.10 each fully paid up of ICICI Bank 5.11 -
276654 (Previous year Nil) equity shares of Rs.2 each fully paid up of Siemens Ltd 26.29 -
6430 (Previous year Nil) equity shares of Rs10 each fully paid up of 0.28 -
Mundra Port & Special Economic Zone Ltd
109489 (Previous year Nil) equity shares of Rs10 each fully paid up of 1.15 -
Rural Electrification Corporation Ltd
Market value Rs. 48.45 crores (Previous year Rs. 3.21 crores) 48.87 3.14
Less: Provision for diminution in value (0.42) -
48.45 3.14
Unquoted
10800 (Previous year Nil) equity shares of Rs.5496.12 each fully paid up of Bombay Stock Exchange 5.94 -
LONG TERM INVESTMENTS
(at cost less provision for permanent diminution, if any)
Non-trade
Quoted
In Bonds
UNIT TRUST OF INDIA
15918732 (Previous year 15918732) 6.75% Tax free US64 bonds of Rs.100 each 165.47 165.47
60903 (Previous year 60903) 6.60% Tax free ARS bonds of Rs.100 each 0.63 0.63
166.10 166.10
Less: Provision for diminution in value (6.10) (4.82)
Market value Rs.160.75 crores (Previous year Rs.154.32 crores) 160.00 161.28
Maturity value Rs 159.80 crores (Previous year Rs 159.80 crores)
Unquoted
National Bank For Agriculture and Rural Development
42700 (Previous year Nil) Bhavishya Nirman Bonds @ 8200 each
A 10 Year Zero Coupen Bond of NABARD- maturity Rs 20000.00 per bond 35.01 -
Trade
Unquoted
In Equity Shares:
2715000 (Previous year 2715000) equity shares of Rs. 10 each fully paid up
of Hero Honda Finlease Limited. 3.46 3.46
2,566.82 1,973.87
A N N U A L R E P O R T 0 80 7
9495
Mutual Funds
Liquid Funds
Units of the face value of Rs.1000 each 681320 75.00 681320 75.00
Units of the face value of Rs.10 each 751219003 870.19 685482598 796.71
Units of the face value of Rs.1 each 94700000 9.47 217175389 21.65
Debt Funds
Units of the face value of Rs.10 each 372646256 424.67 372300345 413.74
Debentures
Debentures of Citicorp Finance Ref NCD
SR 187 MD 20/01/2010 of Rs 980000 each 50 4.90 - -
Reliance Blended Debt Plus -Hybrid Option -Series
VII-1000000 Debentures of DSP Merrill Lynch Capital Ltd
Series 2007/EQ of Rs 100.00 each 1000000 10.00 - -
Reliance Blended Debt Plus -Hybrid Option -
Series X-1000000 Debentures of DSP Merrill Lynch
Capital Ltd Series 2008/AM of Rs 100.00 each 1000000 10.00 - -
Equity SharesShares of Face value of Rs 10 each
ABG Shipyard Limited 530 0.02 530 0.02
Allsec Technologies Limited 852 0.03 852 0.03
Alstom Projects India Limited 43522 2.68 43522 2.68
Arvind Mills Ltd 483500 2.38 483500 2.38
Axis Bank Limited 1500 0.07 1500 0.07
Bank Of India 8015 0.13 8015 0.13
Bharat Heavy Electricals Ltd 1450 0.21 1450 0.21
Bhushan Steel Limited 250 0.02 250 0.02
Britannia Industries Ltd 17 0.00 17 0.00
Cairn India Limited 2000 0.03 2000 0.03
Canara Bank 3000 0.06 3000 0.06
Cummins India Ltd. 1250 0.03 1250 0.03
Deccan Aviation Limited 5100 0.08 5100 0.08
Educomp Solutions Limited 150 0.02 150 0.02
Era Infra Engineering Limited 3000 0.15 3000 0.15
Escorts Ltd 775 0.01 775 0.01
HDFC Bank Ltd 750 0.07 750 0.07
Hindustan Petroleum Corporation Ltd. 1300 0.05 1300 0.05
ICICI Bank Limited 4202 0.44 4202 0.44
IFCI Limited 1079432 7.23 1119432 7.34
Indian Petrochemichals Corporation Ltd 23300 0.75 18200 0.58
6) INVESTMENTS (contd.)
The following investments were purchased and sold during the year under portfolio management scheme At Cost(Rupees in crores)
Purchase Sold
Units Amount Units Amount
Mutual Funds
Debt Funds
Units of the face value of Rs.10 each 1817355216 1,914.26 2061474411 2,125.30
Units of the face value of Rs.1000 each 1366378 137.79 599085 60.20
Fund of Funds
Units of the face value of Rs.10 each 32300000 32.30 28387822 28.39
Equity Fund
Units of the face value of Rs.10 each 95813299 99.29 36728009 37.00
Liquid Fund
Units of the face value of Rs.10 each 5866673866 6,815.99 5657780794 6,539.90
Units of the face value of Rs.1000 each 33481146 3,536.25 31612468 3,338.04
Equity Shares
Shares of Face value of Rs 10 each
Parsvnath Developers Limited - 6181 0.19
Idea Cellular Limited - 152202 1.14
ICICI Bank Limited 278476 26.71 226238 21.60
Bharat Heavy Electricals Ltd 401364 51.27 275841 35.24
Omaxe Ltd 11250 0.35 11250 0.35
Central Bank of India 38094 0.39 38094 0.39
Bombay Stock Exchange 10800 5.94 - -
PowerGrid Corporation of India Ltd 122380 0.64 122380 0.64
Mundra Port and Special Economic Zone Ltd 7430 0.33 1000 0.04
Rural Electrification Corporation Ltd 109489 1.15 - -
Shares of Face value of Rs 2 each
HCL Technologies Limited - 55200 1.81
Siemens Ltd 346654 32.94 70000 6.65
Bonds
Bhavishya Nirman Bonds @ 8200 each-A 10 Year Zero 42700 35.01 -
Coupen Bond of NABARD- maturity Rs 20000.00 per bond
Debentures
Citi Financial Debentures -Redeemable Non Convertible 500 5.00 -
Secured NCD Issue Series-326 of Rs 100000 each
12,695.61 12,196.88
6) INVESTMENTS (contd.)
(Rupees in crores)
Purchase Sold
Units Amount Units Amount
The following investments were purchased and sold during the year At Cost
A N N U A L R E P O R T 0 80 7
6) INVESTMENTS (contd.)
(Rupees in crores)
Purchase Sold
Units Amount Units Amount
Infrastructure Development Finance Company Limited 22750 0.20 22750 0.20
Jaiprakash Hydro-Power Limited 544269 2.04 544269 2.04
Kalpataru Power Transmission Ltd 750 0.08 750 0.08
Mangalore Refinery And Petrochemicals Ltd. 1125 0.00 1125 0.00
Man Aluminium Limited 3000 0.05 3000 0.05
Mphasis Limited 50450 1.48 50450 1.48
Nagarjuna Fertiliser & Chemicals Ltd. 1957889 4.23 1957889 4.23
NIIT Technologies Limited 2351 0.09 2351 0.09
Nucleus Software Exports Limited 2200 0.08 2200 0.08
Orchid Chemicals & Pharmaceuticals Ltd 130827 3.43 130827 3.43
Petronet LNG Limited 4400 0.02 4400 0.02
Power Finance Corporation Limited 2000 0.02 2000 0.02
Power Grid Corporation Of India Limited 7700 0.08 7700 0.08
Punjab National Bank 1500 0.07 1500 0.07
Reliance Capital Limited 5650 0.96 5650 0.96
Reliance Industries Ltd - - 1320 0.21
Reliance Petroleum Limited 135675 3.09 135675 3.09
Sasken Communication Technologies Limited 1100 0.04 1100 0.04
Spanco Telesystems And Solutions Ltd 1500 0.04 1500 0.04
Strides Arcolab Limited 336 0.01 336 0.01
Syndicate Bank 15000 0.09 19000 0.12
Tata Elxsi (India) Ltd 1500 0.05 1500 0.05
Tata Teleservices (Maharashtra) Limited 1829950 7.68 1829950 7.68
Tech Mahindra Limited 400 0.06 400 0.06
TRF Ltd 500 0.03 500 0.03
Union Bank Of India 12000 0.13 12000 0.13
United Spirits Limited 500 0.04 500 0.04
Vijaya Bank 238406 1.50 238406 1.50
Voltamp Transformers Limited 500 0.03 500 0.03
Shares of Face value of Rs 5 each
Havells India Limited 4000 0.24 4000 0.24
Infosys Technologies Ltd. 450 0.08 450 0.08
Maharashtra Seamless Ltd 1067 0.05 1067 0.05
Reliance Communications Ltd 2700 0.11 2700 0.11
Reliance Natural Resources Limited 2767391 11.77 2767391 11.77
Welspun Gujarat Stahl Rohren Limited 4800 0.05 4800 0.05
Shares of Face value of Rs 4 each
New Delhi Television Limited 175710 6.45 175710 6.45
Shares of Face value of Rs 2 each
ABB Limited 150 0.05 150 0.05
Amtek Auto Ltd 1500 0.06 1500 0.06
Berger Paints (I) Ltd 4391 0.02 4391 0.02
Bharat Forge Co. Ltd 2000 0.06 2000 0.06
Deccan Chronicle Holdings Ltd. 2000 0.03 2000 0.03
DLF Limited 55602 3.15 55602 3.15
Elecon Engineering Co Ltd 300 0.01 300 0.01
Everest Kanto Cylinder Limited 200 0.02 200 0.02
HCLTechnologies Ltd 2000 0.06 2000 0.06
IVRCL Infrastructures & Projects Ltd 29151 1.35 30401 1.41
Larsen & Toubro Limited 1050 0.23 1050 0.23
Nagarjuna Construction Co. Ltd 6500 0.11 6500 0.11
Nicholas Piramal India Ltd 2500 0.06 2500 0.06
Punj Lloyd Limited 2000 0.08 2000 0.08
Satyam Computer Services Ltd 17310 0.76 17310 0.76
Siemens Ltd 988 0.11 988 0.11
Wipro Ltd 2700 0.13 2700 0.13
Shares of Face value of Rs 1 each
Ashok Leyland Ltd 87479 0.33 107479 0.43
Centurion Bank Of Punjab Limited 45300 0.21 45300 0.21
Dabur India Ltd 2700 0.03 2700 0.03
Hindustan Construction Co. Ltd 1400 0.02 1400 0.02
Hindustan Unilever Limited 25862 0.55 25862 0.55
Marico Limited 2640 0.02 2640 0.02
Panacea Biotec Ltd. 2315 0.10 2315 0.10
Tata Consultancy Services Limited 1350 0.14 1350 0.14
Voltas Ltd 10756 0.11 10756 0.11
1,470.86 1,374.07
As at March 31,2008 As at March 31,2007
Aggregate value of Book value Market value Book value Market value
Quoted investments -Long Term 160.00 160.75 161.28 154.32
Quoted investments-Current 48.45 48.45 3.47 3.53
Unquoted investments 2,358.37 - 1809.12 -
2,566.82 1973.87
6) INVESTMENTS (contd.)
(Rupees in crores)
Purchase Sold
Units Amount Units Amount
9697
A N N U A L R E P O R T 0 80 7
7) CURRENT ASSETS, LOANS AND ADVANCES(Rupees in crores)
As at March As at March31, 2008 31, 2007
CURRENT ASSETS
INVENTORIES #
Stores and spares (at cost or under) 22.27 19.30
Loose tools (at cost or under) 13.46 12.95
Raw materials and components * 219.77 167.59
Finished goods *
Two wheelers 30.92 44.31
Spare parts 14.08 13.46
Work in progress * 16.60 17.97
317.10 275.58
* Lower of cost and net realisable value
# Includes goods in transit Rs. 64.87 crores (Previous year Rs 17.78 crores)
SUNDRY DEBTORS
Debts outstanding for a year exceeding
six months
Secured - considered good 1.19 0.49
Unsecured - considered good 2.76 1.49
- considered doubtful 6.96 2.37
Other debts
Secured - considered good 14.77 14.20
Unsecured - considered good 278.72 319.07
304.40 337.62
Less: Provision for doubtful debts 6.96 2.37
297.44 335.25
CASH AND BANK BALANCES
Cash in hand 0.25 0.21
Cheques in hand 0.11 0.25
With scheduled banks:
On current accounts 14.32 15.64
On deposit accounts 0.51 0.51
On dividend current accounts 115.90 19.12
With post office (pledged with excise authorities)
On deposit account - 0.01
On savings account - 0.04
131.09 35.78
OTHER CURRENT ASSETS
Interest accrued on investments 5.69 3.60
5.69 3.60
LOANS AND ADVANCES
(Unsecured and considered good)
Advances recoverable in cash or in kind or for
value to be received 82.32 165.05
Inter corporate deposits 50.00 50.00
8) CURRENT LIABILITIES AND PROVISIONS
(Rupees in crores)
As at March As at March31, 2008 31, 2007
CURRENT LIABILITIES
Sundry creditors: ( refer note no. 12)
Total outstanding dues of small and micro
Enterprises # - 3.75
Total outstanding dues of creditors other
than small scale industrial undertakings 756.07 551.07
Other liabilities ## 541.21 461.44
Security deposits from dealers 27.70 25.66
1,324.98 1041.92
PROVISIONS
Proposed dividend 379.41 339.47
Provision for taxation less payments 6.39 3.85
Provision for tax on dividend 64.48 57.69
Employee benefit schemes 5.80 -
Warranties 43.68 36.23
499.76 437.24
# The Company does not owe any sum which is outstanding for more than 30 days
## Other liabilities do not include any amount outstanding as on March 31, 2008 which are required to be credited to the Investor
Education and Protection Fund (Fund)
9) DEFERRED TAX ASSETS AND LIABILITIES (Rupees in crores)
As at March As at March
31, 2008 31, 2007
DEFERRED TAX ASSETS
Accrued expenses deductible on payment 1.97 0.24
Others 3.25 1.14
5.22 1.38
DEFERRED TAX LIABILITIES
Accumulated depreciation 130.59 129.58
130.59 129.58
7) CURRENT ASSETS, LOANS AND ADVANCES(Rupees in crores)
As at March As at March31, 2008 31, 2007
Income-tax recoverable 47.51 43.52
Income-tax deducted at source 3.50 4.16
Deposits with excise authorities on
current account 2.13 0.33
185.46 263.06
9899
A N N U A L R E P O R T 0 80 7
10) OTHER INCOME
(Rupees in crores)
Year ended Year ended
March 31, 2008 March 31, 2007
Dividend income
On current investments - Non trade 4.24 6.53
On long term investments - Trade 2.72 5.43
6.96 11.96
Interest on long term non trade investments 12.81 10.64
Profit on sale of non trade current investments* 132.91 130.40
Profit on sale of fixed assets 0.09 0.32
Exchange difference 1.38 -
Miscellaneous income 31.27 36.53
185.42 189.85
* After adjusting loss on sale of current investments aggregating Rs. 19.54 crores (previous year Rs. 19.62 crores)
11) MANUFACTURING AND OTHER EXPENSES
(Rupees in crores)
Year ended Year ended
March 31, 2008 March 31, 2007
MATERIALS CONSUMED
Purchase of spares etc. for re-sale - 58.56
Consumption of raw materials and components 7911.58 7335.83
Less: - Sale of components to ancillaries on cost to cost basis 470.53 178.28
7441.05 7157.55
Less: - Cash discount 39.44 28.21
7401.61 7129.34
Add: Opening stock
Two wheelers 44.31 31.43
Spare parts 13.46 27.16
Work in progress 17.97 13.95
75.74 72.54
Less: Excise duty on opening stock 11.22 5.78
Net opening stock 64.52 66.76
Less: Closing stock
Two wheelers 30.92 44.31
Spare parts 14.08 13.46
Work in progress 16.60 17.97
61.60 75.74
Less: Excise duty on closing stock 7.78 11.22
Net closing stock 53.82 64.52
Net consumption 7412.31 7190.14
Less: Scrap sales 9.77 11.43
7402.54 7178.71
OTHER EXPENSES#
Payments to and provisions for employees:
Salaries, wages, bonus, gratuity and
leave encashment benefit 350.48 327.74
Contribution to provident and other funds 14.01 12.21
Staff welfare expenses 18.96 13.86
Expenses for manufacturing, administration and selling:
Stores and tools consumed 63.75 67.76
Power and fuel 56.55 52.45
Rent 4.22 3.36
Repairs and maintenance:
Plant and machinery 27.41 25.80
Buildings 3.66 2.96
Others 0.83 0.64
Insurance 10.90 11.40
Exchange fluctuation - 0.70
Rates and taxes 15.27 13.50
Packing, forwarding, freight etc. 266.75 250.06
Royalty 276.70 254.37
Advertisement and publicity 221.78 241.43
Commission:
Export 11.60 12.59
Others 3.49 3.02
15.09 15.61
Donations 0.91 1.37
Lease rent 11.47 12.15
Provision for doubtful debts 4.59 0.30
Other expenses 209.63 224.47
Provision for diminution in value of investments:
Current non trade investment 1.29 1.00
Long term non trade investment 1.28 1.27
2.57 2.27
Loss on fixed assets sold/discarded 4.36 13.80
8,982.43 8,726.92
# Research and development expenses of Rs. 18.78 crores (previous year Rs. 17.85 crores) have been
charged to respective heads
12) INTEREST (NET)
(Rupees in crores)
Year ended Year ended
March 31, 2008 March 31, 2007
Interest - others and financial charges 2.00 1.61
Less: Interest received on loans, deposits, etc* 37.81 24.60
(35.81) (22.99)
* Income tax deducted at source Rs. 2.15 crores (previous year Rs. 1.03 crores)
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A N N U A L R E P O R T 0 80 7
13) NOTES TO THE ACCOUNTS
1 SIGNIFICANT ACCOUNTING POLICIES
i ) Accounting convention
The financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards and
relevant presentational requirements of the Companies Act, 1956.
ii) Fixed / Intangible assets and depreciation / amortisation
Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties , taxes and other
incidental expenses. Roll over charges on forward exchange contracts and loss or gain on translation of foreign currency liabilities for
acquisition of fixed assets from a country outside India incurred upto March 31, 2007 are added to or deducted from the cost of the
assets. All loss or gain on translation of foreign currency liabilities for fixed assets commissioned subsequent to March 31, 2007 are
charged to revenue in the year in which they arise.
Depreciation is charged on a pro-rata basis at the straight line method rates prescribed in schedule XIV to the Companies Act, 1956
except where the historical cost of a depreciable asset has undergone a change due to increase or decrease in foreign currency
liability on account of exchange fluctuations. The depreciation on the revised unamortised depreciable amount is provided
prospectively over the residual useful life of the asset. Assets covered under employee benefit schemes are amortised over a period
of five years. Assets costing upto Rs. 5000 each are fully depreciated in the year of purchase.
Intangible assets, comprising of expenditure on model fee etc, incurred are being amortised on a straight line method over a period of
five years.
Leasehold land has been amortised over the period of lease.
iii) 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.
iv) Investments
Current investments are stated at lower of cost and fair value computed categorywise. Long term investments are stated at cost less
provision for permanent diminution, if any.
v) Inventories
Stores and spares and loose tools are stated at cost or under.
Raw materials and components, finished goods and work in progress are valued at cost or net realisable value, whichever is lower.
The bases of determining cost for various categories of inventories are as follows:-
Stores and spares, loose tools, raw materials and components - Weighted average cost
Materials in transit - Actual cost
Work in progress and finished goods - Material cost plus appropriate share of
labour, manufacturing overheads and excise duty.
vi) Employee benefits
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 profit and loss account 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. Actuarial gains or loss arising from such valuation are charge to revenue in the year in which they arise.
vii) 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. In case of liabilities relating
to the acquisition of fixed assets from a country outside India, incurred upto March 31, 2007, the loss or gain on translation (at the rates
prevailing at the year end or at the forward rates where forward cover has been taken) and roll over charges in respect of forward cover
are included in the carrying amount of the related fixed assets and liabilities. All loss or gain on translation subsequent to March, 31
2007 are charged to revenue in the year in which it is incurred other than expenses relating to preoperative period.
Current assets (other than inventories) and current liabilities, (other than relating to fixed assets) are restated at the rate prevailing at the
year end. In respect of forward contracts, the forward premium or discount is recognised as income or expense over the life of contract
in the profit and loss account 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 profit and loss account.
viii) Sales
Sale of goods is recognised at the 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.
- Scrap is accounted for on sale basis.
ix) Warranty claims
Warranty costs are provided on accrual basis on the total sales of two wheelers during the year, which are based on past experience of
claims.
x) 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.
xi) 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.
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.
xii) Provisions and contingent liabilities
Provision involving substantial degree of estimation in measurement are recognized when there is a permanent obligation as a result
of past events and it is probable that there will be an out flow of resources. Contingent liabilities are not recognized but are disclosed in
the notes.
xiii) Derivatives
Foreign currency derivatives are used to hedge risk associated with foreign currency transactions. All open position as at the close of
the year are valued by marking them to the market and provision is made for losses if any.
2. CONTINGENT LIABILITIES :
(Rs. in crores)
This year Previous year
i) In respect of income-tax cases pending at various stages of appeal with the authorities - 20.24
102103
A N N U A L R E P O R T 0 80 7
The above matters are subject to legal proceedings in the ordinary course of business. The legal proceeding when ultimately concluded will
not, in the opinion of management, have a material effect on the result of operation or the financial position of the Company.
3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 56.37 crores (Previous year Rs. 145.35
crores).
4. The Company has also 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 Rs. 11.47 crores (Previous year Rs. 12.15 crores) have been charged under "Lease rentals " in Schedule 11.
5. As the Company's business activity falls within a single primary business segment viz. "Two wheelers and its parts" and is a single geographical
segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", issued by The Institute of Chartered
Accountants of India are not applicable.
6. Two wheeler sales are covered by a warranty period of two/three years. The details of provision for warranties are as under:
(Rs. in crores)
This year Previous year
Provision at the beginning of the year 36.23 30.50
Additional provision made during the year 33.35 30.01
Amount used during the year 25.90 24.28
Provision at the end of the year 43.68 36.23
7 Related party disclosures under Accounting Standard 18
a) Parties in respect of which the Company is a joint venture/associate.
Honda Motor Co. Limited, Japan
Hero Cycles Limited
Bhadurchand Investments Private Limited
Hero Investments Private Limited
Hero Honda Finlease Limited
b) Key management personnel
Mr. Brijmohan Lall Munjal - Chairman
Mr. Pawan Munjal - Managing Director & CEO
Mr. Toshiaki Nakagawa - Joint Managing Director
Mr. Yutaka Kudo - Whole time director (wef April 1, 2007)
Mr. Takao Eguchi - Whole time director (Upto March 31, 2007)
c) Enterprises over which key management personnel and their relatives are able to exercise significant influence:-
Brijmohan Lall Associates, A.G. Industries Private Limited, Hero Corporate Services Limited, Highway Industries Limited, Majestic
Auto Limited, Munjal Auto Industries Limited, Munjal Showa Limited, Rockman Industries Limited, Sunbeam Auto Limited, Satyam
Auto Components Limited, Hero Motors Limited, Shivam Autotech Limited, Cosmic Kitchen Private Limited, Easy Bill Limited,
Hero Mindmine Institute Limited, Indian School of Business and Raman Kant Munjal Foundation.
Transactions with related parties during the year
a) Parties in respect of which the Company is an joint venture/associate.
(Rs. in crores)
This year Previous year
Honda Motors Co. Limited, Japan
Dividend paid 88.26 103.84
Royalty 276.70 254.37
Export commission 11.60 12.59
Model fees 31.32 47.13
Technical guidance fee 0.87 1.38
Purchase of raw materials, components and spares 16.39 19.87
Hero Cycles Limited
Dividend paid 29.42 34.61
Purchase of raw materials, components and spares 63.59 53.62
Hero Investments Private Limited
Dividend paid 29.42 34.61
Bhadurchand Investments Private Limited
Dividend paid 29.42 34.61
Hero Honda Finlease Limited
Lease rental expenses 11.47 12.15
Dividend received 2.72 5.43
Intercorporate deposits given 190.00 233.00
Intercorporate deposits repaid 190.00 208.00
Interest received on Inter corporate deposits 1.51 1.22
Expenses recovered - 3.99
Balance outstanding at the year end
-Receivables 50.00 50.00
-Payables 3.84 4.33
b) Key management personnel
(Rs. in crores)
This year Previous year
Managerial Remuneration
Mr. Brijmohan Lall Munjal 15.76 14.00
Mr. Pawan Munjal 15.74 13.89
Mr. Takao Eguchi (upto March 31, 2007) - 13.32
Mr. Toshiaki Nakagawa 15.20 13.44
104105
A N N U A L R E P O R T 0 80 7
Mr Yutaka Kudo (wef April 1, 2007) 15.13 -
Balance outstanding at the year end
-Payables (including commission) 59.20 52.16
c) Enterprises over which key management personnel and their relatives are able to exercise significant influence
(Rs. in crores)
This year Previous year
Purchase of raw materials and components 1976.60 2034.93
Sale of components etc 2.83 5.11
Intercorporate deposits repaid - 3.75
Interest received on Inter corporate deposits - 0.01
Payment towards rent and other services 3.56 3.47
Donation 0.60 0.73
Balance outstanding as at the year end
-Receivables - -
-Payables 177.22 145.87
Significant related party transactions included in the above are as under :-
(Rs. in crores)
This year Previous year
Purchase of raw materials and component
Munjal Auto Industries Limited 186.56 172.91
Munjal Showa Limited 556.06 566.90
Sunbeam Auto Limited 379.23 470.50
Sale of components etc.
Satyam Auto Components Limited 1.69 3.03
Sunbeam Auto Limited - 0.97
Hero Motors Limited 0.85 -
Payment for services
Hero Corporate Services Limited 3.20 3.20
Donation
Raman Kant Munjal Foundation 0.60 0.40
Indian School of Business - 0.33
8. Earnings per share
This Year Previous Year
Profit after taxation as per profit and loss account (Rs.in crores) 967.88 857.89
Weighted average number of equity shares outstanding 19,96,87,500 19,96,87,500
Basic and diluted earnings per share in rupees (face value -Rs.2 per share) 48.47 42.96
9. The Company has entered into Discretionary Portfolio Management Agreements, administered through ICICI Prudential Asset Management
Company Limited, IIM-Optimix Porfolios-Capital enhancer, Escorts Securities Limited, Reliance Portfolio Manager (Portfolio Managers). In
terms of the said agreements, the Portfolio Managers have dealt in mutual funds, debentures, equity stock futures, equity stock options and
equity index options on behalf of the Company. However, there are no outstanding derivative contracts as at March 31, 2008.
10. 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, 2008, pending with various authorities
Name of the Statute Nature of dues Amount* Amount paid under Period to which Forum where pending
(Rs in crores) protest (Rs in crores) the amount relates
Sales Tax Laws Sales tax 1.90 1.90 1998-99 to 1999-00 Commissioner (Appeals)
Central Excise Laws Excise duty 0.32 - 2000-01 CESTAT
0.39 - 2002-03 To 2005-06 Commissioner (Appeals)
Services Tax 22.10 0.45 2002-03 to 2005-06 CESTAT
Income-tax Act Income-Tax 5.73 5.73 2000-01 to 2001-02 Income Tax
Appellate Tribunal
31.44 31.44 2001-02 to 2003-04 Commissioner (Appeals)
* Amount as per demand orders including interest and penalty wherever quantified in the order.
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 Amount Period to which Forum where
(Rs in crores) the amount relates Department has
(various years covering preferred appeals
the period)
Central Excise Laws Excise Duty 2.57 1986-87 to 1990-91 Supreme Court
Income-tax Act Income-tax 6.43 1987-88, 1989-90, 1992-93, High Court
1993-94, 1995-96, 1996-97
0.96 1995-96, 1997-98, 2000-01 Income Tax
Appellate Tribunal
11. The Company's borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way of
106107
A N N U A L R E P O R T 0 80 7
108109
Current service cost 2.15
Benefits paid (0.95)
Actuarial (gain)/ loss on obligation 3.59
Present value of defined benefit obligation at the end of the year 32.23
Changes in the present value of the plan asset is as follows
Fair value of plan asset at the beginning of the year 17.44
Return on plan asset 1.62
Contributions 14.12
Benefits paid -
Actuarial (gain)/ loss on obligation (0.95)
Fair value of plan asset at the end of the year 32.23
Reconciliation of the present value of defined benefit obligation and the fair value of the plan assets
Present value of defined benefit obligation at the end of the year 32.23
Fair value of plan asset at the end of the year 32.23
Net asset/(liability) as at the close of the year -
Expenses recognised in the profit and loss account
Current service cost 2.15
Interest cost 2.03
Return on plan assets (1.62)
Net actuarial (gain) / loss 3.59
Expenses recognised in the profit and loss account. 6.15
Discount rate 8.00%
Expected Rate of return on plan assets 9.10%
Note:- 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
hypothecation of inventories, receivables, movable assets and other current assets.
12. The Company has identified parties covered under the "The Micro, Small, and Medium Enterprises Development Act, 2006” on the basis of the
confirmation received. There is no outstanding balance payable as at the close of the financial year to such parties. Further, no interest has
been paid or payable to such parties under the said Act. In the previous year amount of Rs 3.75 crores was related to small scale industrial
undertakings.
13. The unhedged foreign currency exposures as at March 31 are as under:
Purpose This Year Previous Year
Amount in Foreign Amount in Rs Amount in Foreign Amount in Rs
currency (crores) (crores) currency (crores) (crores)
Receivables USD 1.10 44.43 USD 0.69 29.90
Payables JPY 38.71 15.28 JPY 3.09 1.12
USD - USD 0.07 2.95
EURO 0.02 1.21 EURO 0.27 15.49
14. Employee Benefit Schemes
During the year the Company has adopted Accounting Standard 15 (Revised 2005) Employee Benefits. Accordingly, the Company has
provided for defined benefit schemes and long term employee benefits on the basis of actuarial valuation done as per projected unit credit
method. In accordance with the transitional provision in the revised accounting standard Rs 7.81 crores net of deferred tax asset of Rs 4.03
crores has been adjusted from the opening balance of general reserves.
Defined contribution plans
This year Previous year
(Rs. in crores) (Rs. in crores)
Employer Contribution to Provident Fund 9.77 8.39
Employer Contribution to Supperannuation Fund 4.27 3.53
Employer Contribution to ESIC 3.03 2.90
Defined benefit plans
In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, a defined benefit plan. The gratuity plan provides for a
lumsum payment to the employees at the time of separation from the service on completion of vested period 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 a fund.
This year
(Rs. in crores)
Changes in the present value of the defined benefit plan are as follows
Present value of defined benefit obligation at the beginning of the year 25.41
Interest cost 2.03
15. Additional Information
a) Details of capacity and production:
Class of goods Units Licensed capacity* Installed capacity** Actual Production***
This year Previous year This year Previous year This year Previous year
Motorised two wheelers upto
350CC engine capacity Nos. 200000 200000 3400000 3400000 3333460 3339896
A N N U A L R E P O R T 0 80 7
110111
*The Company's products are exempt from Licensing requirements under New Industrial Policy in terms of Notification no. S.O.477(E) dated 25th July,1991.
** On triple shift basis, as certified by the management and relied on by the auditors being a technical matter.
*** Includes 175 (Previous year 243) two wheelers produced and capitalised during the year.
b) Particulars in respect of opening stock, purchases, sales and closing stock for each class of goods dealt with by the Company:
Class of goods Units Opening stock Purchases
This year Previous year This year Previous year
Quantity Value Quantity Value Quantity Value Quantity Value
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs.in crores)
Two wheelers Nos. 14812 44.31 11915 31.43 - - - -
Spares - * 13.46 * 27.16 * - * 58.56
57.77 58.59 - 58.56
Class of goods Units Gross Sales Closing stock
This year Previous year This year Previous yearQuantity Value Quantity Value Quantity Value Quantity Value
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs.in crores)
Two wheelers Nos. 3337142+ 11,353.48 3336756+ 10,913.08 10955 30.92 14812 44.31
Spares - * 684.73 * 628.16 * 14.08 * 13.46
Miscellaneous * 0.32 * 0.80 Components
12,038.53 11,542.04 45.00 57.77
* It is not practicable to furnish quantitative information in view of the considerable number of items diverse in size and nature. These items in
value individually account for less than 10% of the total value of the purchases, stocks and turnover of the aforesaid spares and miscellaneous
components.
+ Excluding 175 (Previous year 243) two wheelers capitalised.
c) Raw materials and components consumed:
Class of goods Units This year Previous year
Quantity Value Quantity Value
(Rs. in crores) (Rs. in crores)
Steel sheets MT 6130.02 27.94 7514.26 35.73
Components * 7,413.11 * 7,121.82
7,441.05 ** 7,157.55 **
* It is not practicable to furnish quantitative information of components consumed in view of the considerable number of items diverse in
size and nature. These items in value individually account for less than 10% of the total value of components consumed.
**Excludes Rs.0.44 crore (Previous year Rs.0.64 crore) for two wheelers produced and capitalised during the year.
d) CIF Value of imports:
Class of goods This year Previous year(Rs. in crores) (Rs. in crores)
Capital goods* 66.14 109.13
Raw materials ** 103.92 7.58
Components, spare parts and others ** 404.00 166.36
* Excludes increase of Rs. Nil (Previous year increase of Rs.1.13 crore) capitalised due to fluctuation in exchange rates.
** Includes items sold to ancillaries on cost to cost basis for assembling of components.
e) Value of imported and indigenous raw materials, components and spares consumed and percentage of each to the total
consumption:
Class of goods This year Previous year
Value Percentage Value Percentage
(Rs. in crores) % (Rs. in crores) %
Raw materials
-Imported ** 0.24 0.00 0.30 0.00
-Indigenous 27.70 0.38 35.43 0.50
Components
-Imported ** 49.99 0.67 78.97 1.10
-Indigenous 7,363.12 98.95 7,042.85 98.40
7,441.05 * 100.00 7,157.55 * 100.00
Spares consumed (charged to
repairs and maintenance)
-Imported 5.96 34.08 4.71 27.99
-Indigenous 11.53 65.92 12.12 72.01
17.49 100.00 16.83 100.00
*Excludes Rs.0.44 crore (Previous year Rs 0.64 crore) for two wheelers produced and capitalised during the year
** Excludes items sold and purchased as indigenous components.
f) Expenditure in foreign currency (on accrual basis) :
This year Previous year
(Rs. in crores) (Rs. in crores)
Royalty 276.70 254.37
Technical guidance fee 2.62 2.36
Model fee 29.87 47.13
Export commission 11.60 12.59
Travel and other accounts 5.45 3.64
Advertisement and Publicity 6.25 51.52
A N N U A L R E P O R T 0 80 7
112113
g) Earnings in foreign currency (on accrual basis) :
This year Previous year
(Rs. in crores) (Rs. in crores)
FOB value of exports 242.79 262.56
Freight and insurance 0.85 0.94
h) Managerial remuneration:
This year Previous year
(Rs. in crores) (Rs. in crores)
Whole time Directors* Remuneration 2.70 2.55
Commission 59.13 52.10
61.83 54.65
Non-Executive Independent Directors Commission 0.35 -
62.18 54.65
Directors' sitting fee 0.11 0.13
62.29 54.78
* Excludes incremental contribution for gratuity, as the contributions are determined for the Company as a whole.
Computation of net profit in accordance with section 198 of the Companies Act,1956.
This year Previous year
(Rs. in crores) (Rs. in crores)
Profit before taxation as per
profit and loss account 1,410.28 1,246.10
Add:-
Managerial remuneration 62.29 54.78
Provision for doubtful debts 4.59 0.30
Provision for diminution in value of investment long term 1.28 1.27
Net profit as per section 349 of the
Companies Act,1956 1,478.44 1,302.45
Maximum managerial remuneration to four whole time
directors( including commission) at 10% of net profit 147.84 130.25
Maximum managerial remuneration to non whole time
directors( including commission) at 1% of net profit 14.78 -
162.62 130.25
Commission component of managerial remuneration to
- Four whole time directors restricted to 1% of net profit
( 1% of net profit) per director 59.13 52.10
- Non-Executive Independent Directors
0.10% of net profit. Restricted to 0.35 -
Commission restricted to 59.48 52.10
I) Provision and/or payment in respect of Auditors' Remuneration :
This year Previous year
(Rs. in crores) (Rs. in crores)
a) As auditors (Audit fee) 0.28 0.28
b) In other capacity
- limited review of unaudited financial results 0.20 0.20
- corporate governance and other certification 0.01 0.03
c) Out of pocket expenses # #
# This year Rs 80329 (Previous year Rs 85871 )
j) Amount remitted in foreign currencies towards dividends during the year:
This year Previous year
No. of No. of equity Dividend No. of No of equity Dividend
Non-Resident shares held remitted Non-Resident shares held remitted
shareholders (Rs. in crores) shareholders (Rs. in crores)
2005-2006 - Final - 1 51918750 103.84
2006-2007 - Final 1 51918750 88.26 -
88.26 103.84
16. Previous year's figures have been recast/regrouped wherever necessary.
New Delhi
April 24, 2008
For and on behalf of the Board of Directors
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
PRADEEP DINODIA Director
RAVI SUD Sr. Vice President & CFO
ILAM C. KAMBOJ G.M. Legal & Company Secretary
A N N U A L R E P O R T 0 80 7
PART IV OF SCHEDULE VI
TO THE COMPANIES ACT, 1956
Balance Sheet Abstract and Company's General Business Profile
I. Registration Details
Registration No. 17354
State Code 55
Balance Sheet Date 31.03.2008
II. Capital Raised during the year (Rupees in crores)
Public Issue Nil Rights Issue Nil
Bonus Issue Nil Private Placement Nil
III. Position of Mobilisation and Deployment of Funds (Rupees in crores)
Total Liabilities 3118.24 Total Assets 3118.24
Sources of Funds Application of Funds
Paid-Up Capital 39.94 Net Fixed Assets 1548.70
Reserves & Surplus 2946.30 Investments 2566.82
Secured Loans Nil Net Current Assets* (997.28)
Unsecured Loans 132.00 Misc. Expenditure Nil
*Includes Deferred Tax Liability (Net) Rs. 125.37 crores
IV. Performance of Company (Rupees in crores)
Turnover 10517.22
Total Expenditure 9106.94
Profit before tax 1410.28
Profit after Tax 967.88
Earnings per share (Rs.) 48.47
Dividend Rate (%) 950
V. Generic names of Three Principal Products/ Services of Company (as per monetary terms)
Item Code No. (ITC Code)
Product Description 87112003
New Delhi
April 24, 2008
For and on behalf of the Board of Directors
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
PRADEEP DINODIA Director
RAVI SUD Sr. Vice President & CFO
ILAM C. KAMBOJ G.M. Legal & Company Secretary
Reconciliation of Net Income as per US GAAP Accounts and Audited Accounts as per Indian Companies Act 1956
(Rupees in Millions)
2008 2007 2006 2005 2004
Net Profit after tax for the year as per audited accounts 9,678.80 8,578.90 9,713.40 8,104.70 7,283.21 Add / (Less) : Profit / (Loss) of
- Income from investments ( unrealised gain/loss )
- affiliated company 12.16 10.67 30.60 57.19 8.66
- held to maturity securities - - 22.90 (11.77) (11.13)
- Exchange fluctuations - 11.30 (8.40) (3.90) 2.40
- Depreciation effect of exchange fluctuations 0.68 5.37 18.26 21.75 18.27
- Depreciation on leased assets - (76.60) (93.18) (137.96)
- Lease rentals paid - 135.58 117.83 132.16
- Interest portion of lease rentals - (9.90) (15.51) (31.60)
- Provision for deferred tax 180.33 (167.24) (103.56) (2.11) 1.30
- Deferred revenue expenditure - - - 7.00
Net Income as per US GAAP 9,871.97 8,439.00 9,722.28 8,175.00 7,272.31
Balance sheet as at March 31
(Rupees in Millions)
2008 2007 2006 2005 2004
ASSETS
Current Assets
Cash and cash equivalents 1,310.92 357.82 1,587.22 176.01 371.20
Trade accounts receivables 2,974.38 3,352.48 1,586.58 895.49 438.01
Inventories 3,171.04 2,755.84 2,265.54 2,042.62 1,881.99
Pre-paid expenses and other current assets 1,911.49 2,666.58 2,773.08 2,431.20 2,398.70
Total current assets 9,367.83 9,132.72 8,212.42 5,545.32 5,089.90
Investment (held to maturity securities) 1,599.99 1,612.79 1,595.18 1,596.07 1,601.56
Investment in mutual funds 24,617.11 18,522.31 19,680.81 18,973.12 14,663.41
Investment in affiliate, at equity 264.58 252.42 241.75 211.14 153.96
Property, plant and equipment 15,494.75 13,401.08 9,765.51 7,049.94 5,860.07
Total assets 51,344.26 42,921.32 39,495.67 33,375.59 27,368.90
114115
A N N U A L R E P O R T 0 80 7
Statement of income for the year ended March 31
(Rupees in Millions)
2008 2007 2006 2005 2004
Net sales 103,318.00 98,999.60 87,139.81 74,216.53 58,324.32
Cost of goods sold 82,724.62 79,931.23 67,548.97 57,308.71 43,933.64
Selling, administrative and general expense 8,619.10 8,558.40 6,979.60 6,055.73 5,296.11
Other (income) and expense (1,783.26) (1,748.47) (1,572.20) (1,397.42) (1,635.94)
Interest net expense (income) (358.10) (229.90) (51.40) 4.61 18.10
Total expense 89,202.36 86,511.26 72,904.97 61,971.63 47,611.91
Income before income taxes 14,115.64 12,488.34 14,234.84 12,244.90 10,712.41
Indian taxes on income 4,243.97 4,049.34 4,512.56 4,069.90 3,440.10
Net income 9,871.97 8,439.00 9,722.28 8,175.00 7,272.30
Net earning per share
On share value of Rs. 2 each 49.44 42.26 48.69 40.94 36.42
Average common stock outstanding (numbers) 199,687,500 199,687,500 199,687,500 199,687,500 199,687,500
(Rupees in Millions)
2008 2007 2006 2005 2004
LIABILITIES
Trade accounts payable 7,560.70 5,548.20 6,462.70 6,619.60 6,989.90
Accrued expenses 494.82 417.58 305.02 247.50 195.70
Indian income taxes 63.90 38.50 40.30 45.70 113.50
Other current liabilities 5,689.15 4,871.05 4,266.15 3,538.05 3,048.75
Long term debt due within one year 184.93 206.10 227.27 222.83 190.23
Total current liabilities 13,993.50 11,081.43 11,301.44 10,673.68 10,538.08
Deferred income taxes 1,391.67 1,529.68 1,375.63 981.67 964.78
Long-term debt 1,135.07 1,445.60 1,630.53 1,920.45 1,784.76
Total liabilities 16,520.24 14,056.71 14,307.60 13,575.80 13,287.62
STOCKHOLDER’S EQUITY
Common stock, par value; Rs. 2 (previous year Rs 2)
Authorised 250,000,000 ;
Outstanding shares 199687500
( Previous year 199687500) of Rs 2 each 399.38 399.38 399.38 399.38 399.38
Capital surplus 0.03 0.03 0.03 0.03 0.03
Retained earnings 34,424.61 28,465.20 24,788.66 19,400.38 13,681.87
Total stockholder’s equity 34,824.02 28,864.61 25,188.07 19,799.79 14,081.28
Total liabilities and stockholder’s equity 51,344.26 42,921.32 39,495.67 33,375.59 27,368.90
116117
A N N U A L R E P O R T 0 80 7
NOTICE
ORDINARY BUSINESS:
SPECIAL BUSINESS:
As Ordinary Resolutions:
8. APPOINTMENT OF MR. SUMIHISA FUKUDA AS DIRECTOR
AND TECHNICAL DIRECTOR IN THE WHOLE-TIME
EMPLOYMENT OF THE COMPANY
thNOTICE is hereby given that the 25 ANNUAL GENERAL MEETING of
the Members of HERO HONDA MOTORS LIMITED will be held on
Thursday, September 25, 2008 at 11:00 A.M., at Airforce Auditorium,
Subroto Park, Dhaula Kuan, New Delhi - 110 010 to transact the
following business:
1. To receive, consider and adopt the Audited Balance Sheet of
the Company as at March 31, 2008 and the Profit and Loss
Account for the year ended on that date together with the
reports of the Directors and Auditors thereon.
2. To declare a dividend of Rs. 19 per Equity Share on
19,96,87,500 Equity Shares of Rs. 2 each for the financial year
2007-08.
3. To appoint a Director in place of Mrs. Shobhana Bhartia, who
retires by rotation and being eligible, offers herself for
re-appointment.
4. To appoint a Director in place of Mr. Sunil Bharti Mittal, who
retires by rotation and being eligible, offers himself for
re-appointment.
5. To appoint a Director in place of Mr. Masahiro Takedagawa,
who retires by rotation and being eligible, offers himself for
re-appointment.
6. To appoint a Director in place of Mr. Pradeep Dinodia, who
retires by rotation and being eligible, offers himself for
re-appointment.
7. To appoint M/s. A.F.Ferguson & Co., Chartered Accountants,
New Delhi, the retiring auditors, to hold office as auditors from
the conclusion of this meeting until the conclusion of the next
Annual General Meeting and to fix their remuneration.
To consider, and if thought fit, to pass, with or without modification(s),
the following resolutions:
"RESOLVED THAT Mr. Sumihisa Fukuda, who was appointed
as an Additional Director of the Company by the Board of
Directors, in terms of Section 260 of the Companies Act, 1956
w.e.f. June 1, 2008 and in respect of whom the Company has
received a notice under Section 257 of the Companies Act,
1956 together with a deposit of Rs. 500 (Rupees five hundred)
as required under the Act, be and is hereby appointed as a
Director of the Company and the period of his office shall be
liable to determination by retirement of Directors by rotation.
RESOLVED FURTHER THAT pursuant to the recommendation
of the Remuneration Committee and subject to the approval of
the Central Government under Sections 269, 198, 309 read
with Schedule XIII and other applicable provisions, if any, of the
Companies Act, 1956 approval of the Company be and is
hereby accorded to the appointment of Mr. Sumihisa Fukuda,
as Technical Director in the Whole-time employment of the
Company for a period of five years w.e.f. June 1, 2008 on a
remuneration including minimum remuneration and on terms
and conditions as set out in the Explanatory Statement
attached hereto.
RESOLVED FURTHER THAT the aggregate amount of
remuneration payable to Mr. Sumihisa Fukuda in a particular
financial year will be subject to the overall ceiling limit laid down
in Sections 198 and 309 read with Schedule XIII of the
Companies Act, 1956.”
“RESOLVED THAT Mr. Meleveetil Damodaran, who was
appointed as an Additional Director of the Company by the
Board of Directors, in terms of Section 260 of the Companies
Act, 1956 w.e.f. June 16, 2008 and in respect of whom the
Company has received a notice under Section 257 of the
Companies Act, 1956 together with a deposit of Rs. 500
(Rupees five hundred) as required under the Act, be and is
hereby appointed as a Director of the Company and the period
of his office shall be liable to determination by retirement of
Directors by rotation.”
By Order of the Boardfor Hero Honda Motors Limited
New Delhi Ilam C. Kamboj
July 29, 2008 G.M. Legal & Company Secretary
Registered Office:
34, Community Centre,
Basant Lok, Vasant Vihar,
New Delhi-110 057
9. APPOINTMENT OF MR. MELEVEETIL DAMODARAN AS
DIRECTOR OF THE COMPANY
01
A N N U A L R E P O R T 0 80 7
NOTES:
A MEMBER ENTITLED TO ATTEND AND VOTE AT THE
MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND
AND VOTE (ON A POLL ONLY) INSTEAD OF
HIMSELF/HERSELF AND THE PROXY NEED NOT BE A
MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE
EFFECTIVE MUST BE RECEIVED AT THE REGISTERED
OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS
BEFORE THE MEETING.
1. The Explanatory Statement pursuant to Section 173(2) of the
Companies Act, 1956, which sets out details relating to
Special Business to be transacted at the meeting is attached
hereto.
2.
3. Pursuant to Section 154 of the Companies Act, 1956, the
Register of Members and the Share Transfer Books of the
Company will remain closed from Thursday, September 11,
2008 to Thursday, September 25, 2008 (both days inclusive).
4. Pursuant to Clause 49 of the Listing Agreement, the brief
resume/profile of the Directors eligible for re-appointment vide
Item Nos. 3 to 6 are attached hereto.
5. The dividend as recommended by the Board of Directors, thupon declaration by the members at the 25 Annual General
Meeting, shall be paid to those members whose names
appear on the Register of Members of the Company on
Thursday, September 25, 2008.
In respect of shares held in electronic form, the dividend will be
payable to the beneficial owners of the shares as on closing
hours of business on Wednesday, September 10, 2008 as per
details furnished by the Depositories for this purpose.
6. In view of the circular no. DCC/FIIT/Cir-3/2001 dated October
15, 2001 issued by SEBI, the ECS facility should mandatorily
be used by the Companies for the distribution of dividend to its
members. Your Company has already started this process and
sent the required forms and details to all the members on
various occasions. Those members holding shares in
physical form, who inspite of repeated reminders have not yet
sent the duly filled in ECS form, which can be downloaded
from the website of the Company to avail the benefits of this
facility, are once again requested to send the same at the
earliest. In case of members holding shares in demat mode,
they should furnish details in the prescribed format to their
Depositories Participant (DP).
7. The Company is obliged to print such bank details on the
dividend warrants as furnished by National Securities
Depository Limited (NSDL) and Central Depository Services
Limited (CDSL), "the Depositories" to the Company and the
Company can not entertain any request for deletion/change of
bank details already printed on the dividend warrant(s) based
on the information received from the concerned Depositories,
without confirmation from them. In this regard, members are
advised to contact their DP and furnish them the particulars of
any change desired.
8. Pursuant to the provisions of Section 205A(5) of the
Companies Act, 1956, the amount of dividend which remains
unpaid/unclaimed for a period of 7 years is transferred to the
"Investor Education and Protection Fund (IEPF)", constituted
by the Central Government and member(s) would not be able
to claim any amount of dividend so transferred to the IEPF. As
such, member(s) who have not yet encashed his/their
dividend warrant(s) is/are requested in his/their own interest to
write to the Registrar & Transfer Agent of the Company i.e. M/s
Karvy Computershare Private Limited for
claiming outstanding dividend declared by the Company
during the years 2002 and onward.
The dividend paid for the year from 1995 to 2001 and
remaining unpaid/ unclaimed in the accounts has already
been transferred to IEPF.
9. Members must quote their Folio Number / De-mat Account
No. and contact details such as email address, contact no.
etc. in all correspondence with the Company/ Registrar and
Transfer Agent.
10. Pursuant to the provisions of Section 109A of the Companies
Act, 1956, every member or joint holders holding shares in
physical form may nominate, in the prescribed manner, a
person to whom all the rights in the shares shall vest in the
event of death of the sole holder or all the joint holders. Member
or joint holders holding shares in demat form may contact their
respective DP for availing this facility.
11. Members are requested to notify
in case of their physical holdings to the
Registrar & Transfer Agent of the Company i.e. M/s Karvy
Computershare Private Limited and to the respective DP in
case of shares held in electronic mode.
12. Entry to the Auditorium will be strictly against entry coupon
available at the counters at the venue and against the
exchange of duly filled in, signed and valid attendance slip.
13. Any briefcase / bags / eatables will not be allowed to be taken
inside the Auditorium.
14. Corporate Members intending to send their authorized
representatives to attend the Meeting are requested to send a
certified copy of Board Resolution authorizing their
representative to attend and vote on their behalf in the Meeting.
15. Members are requested to bring their copy of the Annual
Report to the meeting.
immediately
immediately any change in
address and signature
EXPLANATORY STATEMENT
Item No. 8
pursuant to Section 173(2) of the Companies Act, 1956
Mr. Yutaka Kudo, Whole-time Director of the Company has been
assigned another responsibility by Honda Motor Co., Ltd., Japan.
Consequently, he has tendered his resignation from the position of
Director and Whole-time Director of the Company w.e.f. May 31, 2008.
He was associated with the management of the Company since
April 1, 2007.
Mr. Kudo has been succeeded by Mr. Sumihisa Fukuda w.e.f. June 1,
2008. Mr. Fukuda aged 53 years, was born on December 12, 1955 at
Nagasaki, Japan and after completing a course in Mechanical
Engineering, he joined Honda Motor Co., Ltd., Japan as an Engineer &
has completed various assignments in Honda. Immediately before
joining the Company, he was working as Manager in Asian Autoparts
Co. Ltd., Thailand. His specialization to name a few are:
• New model quality & standard control methods;
• Production, manufacturing and quality control for overseas
production; and
• Production and support for overseas production.
Apart from being on the Board of Hero Honda Motors Limited, Mr.
Fukuda is Director on the Board of Hero Honda Finlease Limited.
Mr. Fukuda does not hold any shares (as own or on behalf of other
person on beneficial basis) in the Company.
Your Board of Directors on the recommendation by the Remuneration
Committee in its meeting held on May 12, 2008, appointed Mr.
Sumihisa Fukuda as an Additional Director and Technical Director in
the whole time employment of the Company by way of passing a
resolution by circulation on May 13, 2008 pursuant to Sections 260,
269, 198, 309 read with Schedule XIII and other applicable provisions,
if any, of the Companies Act, 1956 w.e.f. June 1, 2008 for a period of 5
(five) years subject to the approval of the Central Government, if
required and the shareholders in the General Meeting on the
remuneration, including minimum remuneration and other terms and
conditions given hereunder.
I. Basic Salary: Rs. 2,01,314 ( Rupees Two lacs one thousand
three hundred fourteen only) per month; (Subject to an
increase of 10% per annum on the Basic Salary of preceding
year);
II. Commission: He will also be allowed remuneration by way of
commission in addition to Basic Salary, Perquisites and any
other Allowances, benefits or amenities subject to the
condition that the amount of commission shall not exceed 1%
of the net profit of the Company in a particular financial year as
computed in the manner referred to in Section 198 of the
Companies Act, 1956;
III. Perquisites and allowances: In addition to the above Basic
Salary and Commission, he shall be entitled to the following
Perquisites and allowances:
I) Residential Accommodation: The appointee shall be
provided free furnished residential accommodation. In
addition to this the appointee shall be provided with
cook(s), servant(s) and security guard(s);
ii) Medical Reimbursement: Actual Medical Expenses
incurred by the appointee and his family shall be
reimbursed;
iii) Club Fees: Actual fees of clubs will be reimbursed;
iv) Personal Accident Insurance: Actual premium to be paid
by the Company;
v) Insurance of House-hold goods: Actual premium to be
paid by the Company;
vi) Car: Facility of car with driver to be used for the business of
the Company;
vii) Telephone: Free telephone facility at residence including
Mobile phone to be used for the business of the
Company;
viii) Leave: One month's leave with full salary for every 11
months of service subject to the condition that leave
accumulated but not availed will not be encashed; and
ix) Reimbursement of expenses: Reimbursement of
entertainment, traveling, hotel and other expenses actually
and properly incurred for the business of the Company.
IV. Leave Travel Concession: For the appointee and his family
once in a year incurred in accordance with the rules of the
Company. In case it is proposed that the leave be spent in
home country instead of anywhere in India, return passage
may be allowed for self and family in accordance with the rules
of the Company;
V. Children's Education Allowance: In case of children studying
in India or abroad expenses subject to maximum of Rs. 5,000
per month per child shall be reimbursed by the Company.
Such allowance shall be admissible upto a maximum of two
children;
VI. Holiday passage for children studying outside India/family
staying abroad: Return holiday passage is admissible once in
a year by economy class or once in two years by first class to
children from their place of study abroad to India and to the
members of the family from the place of their stay abroad to
India if they are not residing in India with the appointee;
VII. Reimbursement of expenses incurred for joining duty and
0203
A N N U A L R E P O R T 0 80 7
returning to home country after completion of tenure: Actual
expenses incurred on travel and packing, forwarding, loading/
unloading as well as freight, insurance, custom duty, clearing
expenses, local transportation and installation expenses in
connection with the moving of personal effects for self and
family for joining duty in India. On completion of the tenure, all
the expenses referred to herein above for travel and forwarding
the personal effects to Japan including the passage money
shall also be allowable to the appointee on his finally leaving
the employment of the Company.
If however, the appointee joins another branch of the
same/related multinational Company, the Company shall not
bear their expenses.
Explanation: For the aforesaid purposes "Family" means the
spouse, the dependent children and dependent parents of
the appointee; and
VIII. Minimum Remuneration:
If in any financial year during the currency of tenure of the
Whole-time Director, the Company has no profits or its profits
are inadequate, the appointee shall be entitled to minimum
remuneration by way of Basic Salary, Perquisites, allowances,
not exceeding the ceiling limit of Rs. 2,00,000 per month and in
addition thereto, he shall also be eligible to the perquisites not
exceeding the limits specified, under para 2 of Section II, Part II
of Schedule XIII to the Companies Act, 1956 or such other
limits as may be prescribed by the Government from time to
time as Minimum Remuneration.
However, the appointee shall not be entitled to any sitting fee for
attending meetings of the Board and/or Committee of Directors. His
office shall be liable to determination by retirement of Director by
rotation.
Mr. Sumihisa Fukuda may be deemed to be interested/ concerned in
the Resolution contained under Item No. 8 of the notice. None of the
other directors is deemed to be interested/concerned in the Ordinary
Resolution under Item No. 8 of the Notice.
The Board of Directors of your Company recommends passing of the
aforesaid Ordinary Resolution.
Mr. Meleveetil Damodaran has been appointed as an Additional
Director on the Board on June 16, 2008.
Mr. Meleveetil Damodaran, son of Late Sh. P. Chandrasekhara
Menon aged 61 years was born on May 4, 1947.
Mr. Damodaran belongs to the Indian Administrative Service,
Manipur-Tripura cadre and had held various coveted positions in
Government/ Public Sector and Regulatory Bodies.
In the past he held the position of Joint Secretary (Banking Division) in
Item No. 9
RELEVANT INFORMATION
Mrs. Shobhana Bhartia
Mr. Sunil Bharti Mittal
pursuant to Clause 49 IV(G) (i) of the Listing Agreement regarding
Directors being appointed and re-appointed:
Mrs. Shobhana Bhartia, wife of Mr. Shyam Sunder Bhartia, aged 51
years was born on January 4, 1957 at Kolkata. She belongs to the
distinguished Birla family and has married into another major Industrial
family, the Bhartia Group. Presently, she is the Vice Chairperson and
Editorial Director of HT Media Limited and by virtue of her considerable
domain expertise, especially in the media business she has been
nominated as Rajya Sabha member. She has been conferred the
"Padam Shri" by the Union Government for her contribution to the
media. Mrs. Bhartia is also the Chairperson of International Press
Institute (India Chapter).
She is presently holding the membership of the Board/ Committee(s)
of the following Companies.
Sl. No. Name of Company Nature of Office
1. Air Travel Bureau Limited Director
2. Britex India Limited Director
3. Firefly e-ventures Limited Director
4. Goldmerry Investment & Trading Co. Ltd. Director
5. Hero Honda Motors Limited Director
6. HT Media Limited V. C. & Editorial
Director
Chairperson -
Audit Committee
7. HT Music and Entertainment Limited Director
8. HTL Investment & Trading Co. Limited Director
9. Nilgiri Plantation Limited Director
10. Ronson Traders Limited Director
11. Shradhanjali Investment & Trading Co. Ltd. Director
12. The Hindustan Times Limited Director
Chairperson -
Audit Committee
13. Udit (India) Limited Director
14. Usha Flowell Limited Director
15. Yashovardhan Investment & Trading Co. Ltd. Director
Mrs. Bhartia does not hold any shares (as own or on behalf of other
person on beneficial basis) in the Company.
Mr. Sunil Bharti Mittal, son of Late Sh. Sat Paul Mittal, a parliamentarian,
aged 50 years was born on October 23, 1957 at Ludhiana. He has
been appointed as an Additional Director on the Board of the
Company w.e.f. December 30, 2005. He is the founder Director of
Bharti Tele-Ventures Limited (now Bharti Airtel Limited). He is an
Alumnus of Harvard Business School, MA, USA. He is a member of the
Prime Minister's Council on Trade & Industry and is also the founder,
past president and Member of various telecom industry associations.
Mr. Mittal is immediate past President of the Confederation of Indian
Industry (CII) and the Honorary Consul General of the Republic of
Seychelles in India. He has been conferred the "Padam Bhushan" by
the Union Government for his contribution to the industry. He is winner
of number of awards at national and international level and has been
inducted into the globally renowned and respected International
Telecommunication Union (ITU) Telecom Board, Geneva. He brings
with him around thirty years of rich and diversified industrial experience.
He is presently on the Board of following Companies and does not
hold membership of any other committee of the Board of Directors.
Sl. No. Name of Company Nature of Office
1. Bharti Airtel Limited Chairman &
Managing Director
2. Bharti AXA General Insurance Co. Ltd. Chairman
3. Bharti AXA Life Insurance Co. Ltd. Chairman
4. Bharti Enterprises Limited Chairman
5. Bharti Telecom Limited Chairman
6. Bharti Telesoft Limited Chairman
7. Bharti Teletech Limited Chairman
8. Bharti Ventures Limited Chairman
9. Hero Honda Motors Limited Director
He (either own or held by/for other persons on a beneficial basis)
does not have any shareholding in the Company.
Mr. Masahiro Takedagawa, son of Mr. Hironobu Takedagawa, aged 53
years was born on April 26, 1955 at Kyoto, Japan. He has been
appointed as an Additional Director of the Company w.e.f. May 30,
2006. Mr. Takedagawa started his career with Honda Motor Co.,
Limited, Japan in the year 1979 after having completed his graduation
in Economics from Rikkyo University, Japan. Since then, he has served
Honda at various responsible positions in countries across the globe in
the Sales and Marketing division. At present, he is working as President
& CEO of Honda Siel Cars India Limited, India.
He is presently holding the membership of the Board/ Committee(s) of
the following Companies.
Sl. No. Name of Company Nature of Office
1. Hero Honda Motors Limited Director
2. Honda Siel Cars India Limited President & CEO
3. Honda Siel Power Products Limited Director
Member-
Audit Committee
He (either own or held by/for other persons on a beneficial basis)
does not have any shareholding in the Company.
Mr. Masahiro Takedagawa
the Ministry of Finance, Chairman Unit Trust of India. He headed the
IDBI Bank before being appointed as the Chairman of the Securities
and Exchange Board of India (SEBI), the country's financial market
watchdog. He was also appointed as Officer on Special Duty with the
Reserve Bank of India dealing primarily with the restructuring of 3
identified weak public sector banks.
He is presently, holding the membership of the Board of the following
Companies.
Sl. No. Name of Company Nature of Office
1. Hero Honda Motors Limited Director
2. Tech Mahindra Limited Director
3. SREI Sahaj e-Village Limited Director
Mr. Damodaran does not hold any shares (as own or on behalf of other
person on beneficial basis) in the Company.
Mr. Damodaran may be deemed to be interested/ concerned in the
Resolution contained under Item No. 9 of the notice. None of the other
directors is deemed to be interested/concerned in the Ordinary
Resolution under Item No. 9 of the Notice.
The Board of Directors of your Company recommends passing of the
aforesaid Ordinary Resolution.
By Order of the Boardfor Hero Honda Motors Limited
New Delhi Ilam C. Kamboj
July 29, 2008 G.M. Legal & Company Secretary
Registered Office:
34, Community Centre,
Basant Lok, Vasant Vihar,
New Delhi-110 057
0405
A N N U A L R E P O R T 0 80 7
0607
Mr. Pradeep Dinodia
Mr. Pradeep Dinodia, son of Sh. S. R. Dinodia, aged 54 years was born
on December 2, 1953, at New Delhi. He joined the Board of the
Company w.e.f. March 31, 2001. Mr. Dinodia is a Law Graduate (L.LB)
and a fellow member of The Institute of Chartered Accountants of India
(ICAI). He is a senior partner of M/s. S.R. Dinodia & Company,
Chartered Accountants, New Delhi, looking after Accounting, Legal
and Taxation issue particularly FEMA, Company Law and Direct Tax
matters of various Indian Companies and Multinational Corporations.
Presently he is the Chairman of Taxtation Committee of Federation
Indian Chamber of Commerce and Industry and member of the peer
review Board of the ICAI and member of Executive Committee -
International Fiscal Association, Indian Branch. He has wide and rich
experience in the field of corporate affairs and allied legal, Taxtation
matters. Since his appointment as a Director, he has been regularly
making valuable contributions in the meetings of Board of Directors
and Committee(s) thereof held from time to time.
He is presently holding the membership of the Board/ Committee(s) of
the following Companies.
Sl. No. Name of Company Nature of Office
1. DCM Shriram Consolidated Limited Director
Member-
Audit Committee
Chairman-
Shareholders’
Grievance Comm.
2. DFM Foods Limited Director
Chairman-
Audit Committee
Sl. No. Name of Company Nature of Office
3. Hero Corporate Services Limited Director
Chairman-
Audit Committee
4. Hero Honda Motors Limited Director
Chairman-
Audit Committee
Member-
Shareholders’
Grievance Comm.
5. Micromatic Grinding Tech. Limited Director
6. RSWM Limited Director
7. Shriram Pistons & Rings Limited Director
Chairman-
Audit Committee
8. SPR International Auto Exports Ltd. Director
9. Ultima Finvest Limited Director
He (either own or held by/for other persons on a beneficial basis) does
not have any shareholding in the Company.
The brief profile of Mr. Sumihisa Fukuda has been given in the
Explanatory Statement to Ordinary Resolution No. 8 of this Notice.
The brief profile of Mr. Meleveetil Damodaran has been given in the
Explanatory Statement to Ordinary Resolution No. 9 of this Notice.
Mr. Sumihisa Fukuda
Mr. Meleveetil Damodaran
CONTENTS
I. At a Glance
II. Investor Service and Grievance Handling Mechanism
III. Matters requiring urgent attention of Shareholders’
IV. Dividend
V. Dematerialisation / Rematerialisation of Shares
VI. Nomination Facility
VII. Transfer / Transmission / Transposition / Duplicate Certificates
etc.
VIII. Miscellaneous
IX. Investor Servicing and Grievance Redressal at External
Agencies
X. Important Contact Details
SHAREHOLDERS’
REFERENCER
I. AT A GLANCE
II. INVESTOR SERVICE AND GRIEVANCE HANDLING
MECHANISM
III. MATTERS REQUIRING THE URGENT ATTENTION OF
SHAREHOLDERS
Company in present:
• Has over 47000 folios of shareholders holding Equity Shares in
the Company.
• Face value of its Equity Shares is Rs. 2.
• 68 per cent of the Company's Equity Shares are held in demat
form. The ISIN No. of the Company is INE158A01026.
• Share are under compulsory trading in demat form only.
• Equity Shares are listed on Bombay Stock Exchange Limited
(BSE) stock code being 500182 and National Stock Exchange
of India Limited (NSE) stock code being HEROHONDA.
• Company’s shares are most actively traded security on both
BSE and NSE.
• Share are freely transferable except as may be required
statutorily.
• Karvy Computershare Private Limited (Karvy), Hyderabad, an
ISO 9002 Certified Registrars and Transfer Agents, is the
Registrars and Transfer Agents (R&TA) of the Company.
All share related transactions viz., transfer, transmission, transposition,
nomination, dividend, change of name / address / signature,
Registration of mandate / Power of Attorney, replacement / split /
consolidation of share certificates / demat / remat of shares, issue of
duplicate certificates etc. are being handled by Karvy.
Karvy, the largest Registrar in the country, discharges investor service
functions effectively, efficiently and expeditiously. Investors are
requested to correspond directly with Karvy, on all share related
matters.
The Board of Directors of the Company has constituted a
Shareholders' Grievance Committee which oversees and reviews the
redressal of shareholders' complaints related to shares, non-receipt of
Annual Report, non receipt of dividend etc. The Committee oversees
performance of the R&TA and recommends measures for overall
improvement in the quality of investor services.
Register your e-mail address and contact details
Shareholders are requested to register their email address and other
contact details i.e. Mobile / Telephone No., Fax No., etc. with Karvy in
order to get prompt and timely response/communication in the future.
Open Demat Account and Dematerialise your shares
Investors should convert their physical holdings of securities into
demat (electronic) holdings. Holding securities in demat form helps
investors to get immediate transfer of securities. No stamp duty is
payable on transfer of shares held in demat form and risks associated
with physical certificates such as forged transfers, fake certificates and
bad deliveries are avoided.
Consolidate Multiple Folios
Investors should consolidate their shareholding held in multiple folios.
This would facilitate one-stop tracking of all corporate benefits on the
shares and would reduce time and efforts required to monitor multiple
folios.
Register ECS Mandate and furnish correct bank account particulars
with Company / Depository Participant
Investor should provide an ECS mandate to the Company in case of
shares held in physical form and ensure that the correct and updated
particulars of their bank account are available with the Depository
Participant (DP) in case of shares held in demat form. This would
facilitate in their receiving direct credits of dividends, refunds etc., from
companies and avoid postal delays and loss in transit.
Fill and submit Nomination Form
Investors should register the nominations, in case of physical shares,
with the Company and in case of dematerialised shares with their DP.
Nomination would help successors to get the shares transmitted in
their favor without hassles.
Change in Details
To avoid any hassle and fraudulent transfers, the shareholders are
requested to inform the Karvy about any change in address, signatures
etc. Similarly, information of death of shareholders should also be
communicated immediately to Karvy.
Important Matters relating to Shareholders.
Electronic Clearing Service (ECS) facility
What is payment of dividend through ECS Facility and how does it
operate?
Reserve Bank of India's ECS facility provides investors an option to
receive dividend / interest directly in their bank accounts rather than
receiving the same through post. Under this option, investor's bank
account is directly credited and an advice thereof is issued by the
Company after the transaction is effected. The concerned bank
branch credits investor's account and indicates the credit entry as
"ECS" in his / her passbook / statement of account. The investor does
not have to open a new bank account for the purpose.
What are the benefits of ECS (payment through electronic facilities)?
Some of the major benefits of ECS facility are:
a) Avoid visits to bank for depositing the physical warrant.
b) Prompt credit to the bank account.
c) Fraudulent encashment of warrants is avoided.
IV. DIVIDEND
d) Exposure to delays / loss in postal service avoided.
e) As there can be no loss in transit of warrants, issue of duplicate
warrants is not required.
Which cities provide ECS facility?
ECS Facility is currently available to the shareholders at following 68
locations:
Ahmedabad, Agra, Allahabad, Amritsar, Aurangabad, Bengaluru,
Baroda, Bhilwara, Bhopal, Bhubaneshwar, Burdwan, Calicut,
Chandigarh, Chennai, Coimbatore, Dehradun, Dhanbad, Durgapur,
Erode, Gorakhpur, Guwahati, Gwalior, Haldia, Hubli, Hyderabad,
Indore, Jabalpur, Jaipur, Jalandhar, Jammu, Jamshedpur, Jodhpur,
Kakinada, Kanpur, Kochi / Ernakulam, Kolhapur, Kolkata, Lucknow,
Ludhiana, Madurai, Mangalore, Mumbai, Mysore, Nagpur, Nashik,
Nellore, New Delhi, Panaji, Patna, Pondicherry, Pune, Raipur, Rajkot,
Ranchi, Salem, Shimla, Sholapur, Siliguri, Surat, Thiruvananthapuram,
Tirupati, Tirupur, Trichur, Trichy, Udaipur, Varanasi, Vijaywada and
Visakhapatnam.
How to avail of ECS Facility?
Investors holding shares in physical form may send their ECS Mandate
Form, duly filled in, to Karvy. The Form may be downloaded from the
Company's website www.herohonda.com under the section "Investor
Relations" However, if shares are held in dematerialised form, ECS
mandate has to be sent to the concerned Depository Participant (DP)
directly, in the format / procedure prescribed by the DP.
Why cannot the Company take on record bank details in case of
dematerialised shares?
As per the Depository Regulations, the Company is obliged to pay
dividend on dematerialised shares as per the bank account details
furnished by the concerned Depository. The Company is not
authorized to make any changes in such details received from the
Depository. Therefore, investors are requested to keep their bank
particulars updated with the Depository Participants.
Can ECS Facility be opted out by investors?
Investors have a right to opt out from this mode of payment by giving an
advance notice of four weeks, prior to payment of dividend, either to
the Karvy or to the concerned DP, as the case may be.
Course of Action in case of Non-receipt of Dividend, Revalidation of
Dividend Warrant etc.
What should a shareholder do in case of non-receipt of dividend?
Shareholders may write to the Karvy furnishing the particulars of the
dividend not received, and quoting the folio number/DPID and Client
ID particulars (in case of dematerialised shares). On checking the
details Karvy shall issue duplicate dividend warrant if the dividend
remains unpaid in the records of the Company after expiry of the validity
period of the warrant which is normally three months from the date of its
issue. If the validity period of the lost dividend warrant has not expired,
shareholders will have to wait till the expiry date since duplicate warrant
cannot be issued during the validity of the original warrant. On expiry of
the validity period, if the dividend warrant is still shown as unpaid in
records of the Company, duplicate warrant will be issued. Karvy would
request the concerned shareholder to execute an indemnity before
issuing the duplicate warrant.
No duplicate warrant will be issued in respect of dividends which have
remained unpaid / unclaimed for a period of seven years in the unpaid
dividend account of the Company as they are required to be
transferred to the Investor Education and Protection Fund (IEPF)
constituted by the Central Government.
Why do the shareholders have to wait till the expiry of the validity
period of the original warrant?
As the dividend warrants are payable at par at several centres across
the country, banks do not accept 'stop payment' instructions. Hence,
shareholders have to wait till the expiry of the validity of the original
warrant.
What is the procedure for revalidation of dividend warrants?
Shareholders who have not encashed their dividend warrants within
the validity period may send their request of revalidation to Karvy
enclosing the said dividend warrants. Karvy will after due verification of
the records, issue a revalidated dividend warrant. The revalidated
warrant will be valid for a period not exceeding 3 months from the date
of such warrant.
How can a bank or any other person be authorised to receive
dividends on behalf of shareholders?
Shareholders may write to Karvy furnishing the name and address of
the authorised person/bank along with folio number and current
communication address. Karvy will despatch the respective
shareholders' dividend warrants to the concerned person / bank. This
facility is applicable only for the shareholders holding shares in physical
form.
Unclaimed / Unpaid Dividend
What are the statutory provisions governing unclaimed dividend?
Prior to amendment of Section 205A and enactment of Section 205C
by the Companies (Amendment) Act, 1999, companies were required
to transfer to the General Revenue Account of the Central Government,
any moneys transferred to the 'unpaid dividend account' and which
remained unpaid or unclaimed for a period of 3 years from the date of
transfer to the unpaid dividend account. With effect from October 31,
1998, any moneys transferred to the 'unpaid dividend account' of the
Company and remaining unpaid or unclaimed for a period of 7 years
from the date it becomes due, shall be transferred to the Investor
Education and Protection Fund (IEPF). Investors are requested to note
that no claims shall lie against the Company or IEPF for any moneys
transferred to IEPF in accordance with the provisions of Section 205C
of the Companies Act, 1956.
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A N N U A L R E P O R T 0 80 7
What is the status of unclaimed dividend for different years?
In view of the statutory provisions, as aforesaid, the status of unclaimed
and unpaid dividend of the Company is given below:
Year Particulars of Percent Date of Declaration Last Date of
Dividend Paid Claiming unpaid
Dividend
2001-02 Interim 250 17-Oct-01
2001-02 Final 600 12-Aug-02 11-Aug-09
2002-03 Final 900 01-Aug-03 31-Jul-10
2003-04 Interim 500 23-Jan-04 22-Jan-11
2003-04 Final 500 17-Aug-04 16-Aug-11
2004-05 Final 1000 22-Aug-05 21-Aug-12
2005-06 Final 1000 14-Sep-06 13-Sep-13
2006-07 Final 850 24-Jul-07 23-Jul-14
What is dematerialisation of shares?
Dematerialisation (Demat) is the process by which securities held in
physical form are cancelled and destroyed and the ownership thereof
is entered into and retained in a fungible form on a depository by way of
electronic balances. Trading in demat form is regulated by the
Depositories Act, 1996 and is monitored by the Securities and
Exchange Board of India (SEBI). The two depositories presently
functioning are National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL).
Why dematerialise shares?
SEBI has notified various companies whose shares shall be traded in
demat form only. By virtue of such notification, the shares of the
Company are also subject to compulsory trading only in demat form on
the Stock Exchanges.
Benefits of Demat
• A safe, convenient way to hold securities;
• Immediate transfer of securities;
• No stamp duty on transfer of securities;
• Elimination of risks associated with physical certificates such
as bad delivery, fake securities, delays in transit, thefts etc.
• Reduction in paperwork involved in transfer of securities;
• Reduction in transaction cost;
• No odd lot problem, even one share can be sold;
• Change in address recorded with DP gets registered with all
companies in one go in which the investor holds securities
electronically thereby eliminating the need to correspond with
each of them separately;
• Easy Nomination facility;
• Smooth Transmission of securities in case of any eventualities.
16-Oct-08
V. DEMATERIALISATION / REMATERIALISATION OF SHARES
How to dematerialise shares?
The procedure for dematerialising shares is as under:
• Open Beneficiary Account with a Depository Participant (DP)
registered with SEBI.
• Submit Demat Request Form (DRF) as given by the DP, duly
signed by all the holders with the names and signatures in the
same order as appearing in the concerned certificate(s) and
the Company records.
• Obtain acknowledgment from the DP on handing over the
share certificate(s) along with the DRF.
• Demat confirmations are required to be completed in 21 days
as against 30 days (excluding time for despatch) for physical
transfer. Service standards prescribed by the Company for
completing demat is three days from the date of the receipt of
requisite documents for the purpose.
• Receive a confirmation statement of holdings from the DP.
Statement of holdings is sent by the DPs from time to time.
Presently, confirmation is given by DPs on an immediate basis
through email or SMS facilities, thus enabling shareholders to
further trade in the securities immediately. Shareholders should
not send share certificate(s) / documents to the Company /
Company's R&TA directly.
How to get dividend on dematerialised shares? Will such
shareholders be eligible for receiving Annual Report every year and
also to attend General Meetings?
Dividend of shareholders holding shares in dematerialised will be
credited through ECS/ electronically to the bank accounts as opted by
them while opening the Beneficiary Accounts with the DP. In other
cases, dividend warrants will be despatched to them with the bank
account details, as furnished by the Depositories, printed thereon.
Holding shares in dematerialised form will not have any adverse affect
on the rights of the Shareholders. As members of the Company, they
will be entitled to receive Annual Report, attend General Meetings and
participate and vote thereat to the extent of their shareholding.
Is pledge of dematerialised shares possible?
Dematerialised shares can be pledged for the purpose of availing of
any funding / loan arrangement with a bank.
What is rematerialisation of shares?
It is the process through which shares held in demat form are
converted into physical form by issuance of share certificate(s).
What is the procedure for rematerialisation of shares?
• Shareholders should submit duly filled in Rematerialisation
Request Form (RRF) to the concerned DP.
• DP intimates the relevant Depository of the request through the
system.
• DP submits RRF to the Company's R&TA.
• Depository confirms rematerialisation request to the
Company's R&TA.
• The Company's R&TA updates accounts and prints
certificate(s) and informs the Depository.
• Depository updates the Beneficiary Account of the shareholder
by deleting the shares so rematerialised.
• Share certificate(s) is despatched to the shareholder.
What is nomination facility and to whom it is more useful? What is the
procedure of appointing a nominee?
Section 109A of the Companies Act, 1956 provides the facility of
nomination to shareholders. This facility is mainly useful for individuals
holding shares in sole name. In the case of joint holding of shares by
individuals, nomination will be effective only in the event of the death of
all joint holders.
Investors, especially those who are holding shares in single name, are
advised to avail of the nomination facility by submitting the prescribed
Form 2B to Karvy. The said Form may be downloaded from the
Company's website, www.herohonda.com under the section "Investor
Relations". However, if shares are held in dematerialised form,
nomination has to be registered with the concerned DP directly, as per
the format prescribed by the DP.
Who can appoint a nominee and who can be appointed as a
nominee?
Individual shareholders holding the shares / debentures in single name
or joint names can appoint a nominee. In case of joint holding, joint
holders together have to appoint the nominee. While an individual can
be appointed as a nominee, a trust, society, body corporate,
partnership firm, karta of HUF or a power of attorney holder cannot be
appointed as nominee(s). Minors can, however, be appointed as a
nominee.
How to avail of nomination facility for more than one folio?
There can be only one nomination for one folio. Folios having different
order or combination of names of shareholders will require separate
nominations.
Can a nomination once made be revoked / varied?
It is possible to revoke / vary a nomination once made. If nomination is
made by joint holders, and one of the joint holders dies, the remaining
joint holder(s) can make a fresh nomination by revoking the existing
nomination.
Are the joint holders deemed to be nominees to the shares?
Joint holders are not nominees, they are joint holders of the relevant
shares having joint rights on the same. In the event of death of any one
of the joint holders, the surviving joint holder(s) of the shares is / are the
only person(s) recognized under law as holder(s) of the shares. Joint
Shareholders may together appoint a nominee.
VI. NOMINATION FACILITY
What rights are conferred on the nominee and how can he exercise
the same?
The nominee is entitled to all the rights of the deceased shareholder to
the exclusion of all other persons. In the event of death of the
shareholder, all the rights of the shareholder shall vest in the nominee.
In case of joint holding, all the rights shall vest in the nominee only in the
event of death of all the joint holders. The nominee is required to apply
to the Company by reporting death of the nominator along with the duly
attested copy of the death certificate. The nominee has an option to
decide to register himself as a shareholder or he/she could send an
application to have the shares transferred to any other person to whom
the nominator could have otherwise transferred the shares. If the
nominee opts to transfer the shares to a third party, he/she should
submit to the Company's R&TA, the transfer deed(s) duly stamped and
executed, along with the relevant certificate(s) and other documentary
proof(s). If shares are held in dematerialised form, nomination has to be
registered with the concerned DP directly, as per the format prescribed
by the DP.
How to get shares registered in favour of transferee(s)?
Transferee(s) need to send share certificate(s) along with share transfer
deed in the prescribed form 7B, duly filled in, executed and affixed with
share transfer stamps, to Karvy. It takes about 7 days for them to
process the transfer, although the statutory time limit fixed for
completing a transfer is one month under the Listing Agreement and
two months under the Companies Act, 1956.
The Government of India, Ministry of Finance, Department of Revenue,
has fixed the Stamp Duty on Transfer (whether with or without
consideration) of shares at the rate of twenty five paise (25 paise) for
every Rs. 100 or part thereof of the market value of the shares on the
date of execution of the transfer deed. The transfer deed is valid for a
period of one year from the date of presentation or till the book closure
date, whichever is later. In case the transfer deed has expired, the
holder may approach the Registrar of Companies to get the same
revalidated. In case of dematerialised shares, the shares are credited
to the purchaser's account by the respective Depository Participant
under the directions of the concerned Depository. Presently, transfer of
dematerialised shares does not attract stamp duty.
Can shares be transferred to a minor, Hindu Undivided Family, Firm,
Trust etc.?
Yes, shares can be transferred to a minor. In such a case the share
transfer deed is required to be signed by the natural guardian on behalf
of the minor.
In the case of Hindu Undivided Family (HUF) shares can be transferred
in the name of the Karta of HUF, in the case of a Firm shares can be
transferred to a partner of the firm and in the case of a Trust shares can
be transferred to a trustee of the trust.
VII. TRANSFER / TRANSMISSION / TRANSPOSITION / DUPLICATE
CERTIFICATES ETC.
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A N N U A L R E P O R T 0 80 7
Can single holding of shares be converted into joint holdings or joint
holdings into single holding? If yes, what is the procedure involved
in doing the same?
Yes, conversion of single holding into joint holdings or joint holdings
into single holding or transfer within the family members leads to a
change in the pattern of ownership, and therefore, procedure for a
normal transfer as mentioned above needs to be followed.
How to get shares registered which are received by way of gift?
Does it attract stamp duty?
The procedure for registration of shares gifted (held in physical form) is
same as the procedure for a normal transfer. The stamp duty payable
for registration of gifted shares would be @ 25 paise for every Rs. 100
or part thereof, of the face value or the market value of the shares
prevailing as on the date of the document, if any, conveying the gift or
the date of execution of the transfer deed, whichever is higher. The
procedure for registration of shares gifted (held in demat form) is the
same as the procedure for transfer of shares in demat form in off
market mode.
What is the procedure for getting shares in the name of surviving
shareholder(s), in case of joint holding, in the event of death of one
shareholder?
The surviving shareholder(s) will have to submit a request letter
supported by a duly attested copy of the death certificate of the
deceased shareholder and accompanied by the relevant share
certificate(s). Karvy on receipt of the said documents and after due
scrutiny, will delete the name of the deceased shareholder from its
records and return the share certificate(s) to the surviving
shareholder(s) with necessary endorsement.
If a shareholder who holds shares in his sole name dies without
leaving a Will, how can his legal heir(s) claim the shares?
The legal heir(s) should obtain a Succession Certificate or Letter of
Administration with respect to the shares and send a true copy of the
same, duly attested, along with a request letter, transmission form, and
the share certificate(s) in original, to Karvy for transmission of the shares
in his / their name(s).
In case of a deceased shareholder who held shares in his / her own
name (single) and had left a Will, how do the legal heir(s) get the
shares transmitted in their name(s)?
The legal heir(s) will have to get the Will probated by the Court of
competent jurisdiction and then send to Karvy a copy of the probated
copy of the Will, along with relevant details of the shares, the relevant
share certificate(s) in original and transmission form for transmission of
the shares in his / their name(s).
How can the change in order of names (i.e. transposition) be
effected?
Share certificates along with a request letter duly signed by all the joint
holders may be sent to Karvy for change in order of names, known as
'transposition'.
Transposition can be done only for the entire holdings under a folio and
therefore, requests for transposition of part holding will not be
accepted by Karvy.
What is the procedure for obtaining duplicate share certificate(s) in
case of loss / misplacement of original share certificate(s)?
Immediately on the knowledge of loss of share certificates, one should
inform Karvy. The information should contain the details of share
certificates so lost, folio no., no. of shares and other relevant
particulars. The said information needs to be signed by the first holder
as per the specimen signature recorded with Hero Honda Motors
Limited. Karvy after checking the details and signatures will mark a
cautionary stop on the folio to prevent any further transfer of such lost
share certificates. On receipt of such request Karvy will send the
complete procedure of obtaining duplicate share certificates.
In the meanwhile, one should lodge a complaint with the police
regarding loss of share certificates.
Change of address
What is the procedure to get change of address registered in the
Company's records?
Shareholders holding shares in physical form, may send a request
letter duly signed by all the holders giving the new address along with
Pin Code. Shareholders are also requested to quote their folio number
and furnish a duly attested copy of any of the following documents i.e.
Ration Card / PAN Card / Passport / Latest Electricity or Telephone Bill /
Lease Agreement etc. towards proof of address.
If shares are held in dematerialised form, information about change in
address needs to be sent to the DP concerned.
Change of name
What is the procedure for registering change of name of
shareholders?
Shareholders may request Karvy for effecting change of name in the
share certificate(s) and records of the Company. Original share
certificate(s) along with the supporting documents like marriage
certificate, court order etc. should be enclosed. Karvy after verification,
will effect the change of name and send the share certificate(s) in the
new name of the shareholders. Shareholders holding shares in demat
form, may request the concerned DP in the format prescribed by DP.
Authority to another person to deal with shares
What is the procedure for authorising any other person to deal with
the shares of the Company?
Shareholders need to execute a Power of Attorney in favour of the
concerned person and submit a notarised copy of the same to Karvy.
After scrutiny of the documents, they will register the Power of Attorney
and inform the shareholders concerned about the registration number
of the same. Whenever a transaction is done by the Power of Attorney
holder this registration number should be quoted in the
communication.
VIII.MISCELLANEOUS
Shareholders' General Rights - interalia
• To receive not less than 21 days notice of general meetings
unless consented for a shorter notice.
• To receive notice and forms for Postal Ballots in terms of the
provisions of the Companies Act, 1956 and the concerned
Rules issued thereunder.
• To receive copies of Balance Sheet and Profit and Loss
Account along with all annexures.
• To participate and vote at general meetings either personally or
through proxy (proxy can vote only in case of a poll).
• To receive dividends and other corporate benefits like bonus,
rights etc. once approved.
• To demand poll on any resolution at a general meeting in
accordance with the provisions of the Companies Act, 1956.
• To inspect statutory registers and documents as permitted
under law.
• To require the Board of Directors to call an extraordinary general
meeting in accordance with the provisions of the Companies
Act, 1956.
Duties / Responsibilities of Shareholders’
• To remain abreast of corporate developments, company
specific information and take informed investment decision(s).
• To be aware of relevant statutory provisions and ensure
effective compliance therewith.
• Not to indulge in fraudulent and unfair trading in securities nor
to act upon any unpublished price sensitive information.
• To participate effectively in the proceedings of shareholders'
meetings.
• To respond to communications seeking shareholders'
approval through Postal Ballot.
• To respond to communications of SEBI / Depository /
Depository Participant / Brokers / Sub-brokers / Other
Intermediaries / Company, seeking investor feedback /
comments.
i) Ministry of Corporate Affairs
Ministry of Corporate Affairs (MCA) has launched a major
e-Governance initiative - "MCA 21" on the MCA portal
(www.mca.gov.in). One of the key benefits of this initiative includes
timely redressal of investor grievances. MCA 21 system accepts
complaints under the e-form prescribed, which has to be filed online.
The nature of complaint may relate to:
• Shares / Dividends
IX. INVESTOR SERVICING AND GRIEVANCE REDRESSAL AT
EXTERNAL AGENCIES
• Debentures / Bonds
• Fixed Deposits - non receipt of amount
• Miscellaneous - non receipts
• Any other
The status of complaint can be viewed by quoting the Service Request
Number (SRN) provided at the time of filing the complaint.
ii) Investor Education and Protection Fund (IEPF)
IEPF is for promotion of investors' awareness and protection of the
interests of investors. IEPF through Investor Helpline is assisting
investors free of charge, in redressal of their grievances. It provides a
facility, to the investors, to lodge their grievance on the website itself.
This facility is available on website www.investorhelpline.in. The
complaints can be lodged on various issues such as:
• Refund Order / Allotment Advice related
• Non-Receipt of Dividend
• Non-Receipt of Share certificates / Units after allotment /
transfer / Bonus / Transmission etc.
• Non-Receipt of Debentures / Bond Certificate or Interest /
Redemption Amount
• Offer for Rights Issue
• Non-Receipt of Investments and returns thereon on Collective
Investment Schemes / Plantation Companies
• Non-Receipt of Annual Report / AGM Notice / Proxy Form
• Non-Registration of Change in Address of Investor
• Non-Receipt of Fixed / Public Deposits related amounts
• Demat related Grievances
iii) Securities and Exchange Board of India (SEBI)
SEBI, in its endeavour to protect the interest of investors, has provided
a platform wherein the investors can lodge their grievances. This facility
is available on the SEBI website (www.sebi.gov.in) under the Investor
Guidance Section. The complaints can be lodged on various issues
such as:
• Non receipt of dividend
• Non receipt of share certificates after transfer
• Matters pertaining to non-receipt of allotment advice/ Refund
Orders
• Matters pertaining to Debentures
• Non receipt of letter of offer of rights
• Any other
After lodging the complaint, the Investors can track the status as well.
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A N N U A L R E P O R T 0 80 7
iv) Stock Exchanges
a. National Stock Exchange of India Limited (NSE)
NSE has formed an Investor Grievance Cell (IGC) to redress investors'
grievances electronically. IGC is manned by a team of professionals
who possess relevant experience in the areas of capital markets,
company and legal affairs; especially trained to identify the problem
faced by the investor, and to find and resolve at the earliest. The
Investors have to log on to the website of NSE i.e. www.nseindia.com
and in the Investors Service Centre Section they can fill in Form I or
Form II depending upon the type of complaint and file the same
electronically with NSE. Generally, complaints are resolved within a
period of 45 days.
b. Bombay Stock Exchange Limited (BSE)
BSE provides an opportunity to its members to file their complaints
electronically through its website www.bseindia.com under the
Investor Desk Section. Here again as in case of NSE, the Investors can
fill in various complaint forms depending upon the nature of their
complaint and file them electronically.
v) Depositories
a. National Securities Depository Limited (NSDL)
In order to help its clients resolve their doubts, queries, complaints,
NSDL has provided an opportunity wherein they can raise their queries
by logging on to www.nsdl.co.in under the 'Query Now' section or an
email can be marked mentioning the query to [email protected].
b. Central Depository Services (India) Limited (CDSL)
Investors who wish to seek general information on depository services
may mail their queries to [email protected]. With respect to the
complaints / grievances of the demat accountholders relating to the
services of the Depository participants, mails may be addressed to
Registrars and Transfer Agents
Karvy Computershare Private Limited
Plot No. 17-24,
Vithalrao Nagar, Madhapur,
Hyderabad - 500 081
e-mail : [email protected]
Tel : 040 - 23420272 3333
Fax : 040 - 2272 3199 / 2272 2072
Ministry of Corporate Affairs
Shastri Bhawan, 5th Floor, A Wing,
Dr. Rajendra Prasad Road, New Delhi - 110 001.
Tel : 011 - 23384660, 23384470, 23389403
Website : www.mca.gov.in
X. IMPORTANT CONTACT DETAILS
Regional Director (North)
A-14, Sector 1,
PDL Bhawan,
Noida - 201 301
Tel : 0120 - 2445342
Fax : 0120 - 2445341
Registrar of Companies (ROC)
4th Floor, IFCI Tower,
61, Nehru Place,
New Delhi - 110 019
Tel : 011 - 26235704
Fax : 011 - 26235702
Depositories
National Securities Depository Limited (NSDL)
Trade World, A Wing, 4th & 5th Floors,
Kamala Mills Compound, Senapati Bapat Marg,
Lower Parel, Mumbai 400 013.
Tel : 022 - 2499 4200
Fax : 022 - 2497 2993 / 2497 6351
Website : www.nsdl.co.in
Central Depository Services (India) Limited (CDSL)
Phiroze Jeejeebhoy Towers,
16th Floor, Dalal Street,
Mumbai 400 023.
Tel : 022 - 2272 3333
Fax : 022 - 2272 3199 / 2272 2072
Website : www.cdslindia.com
Securities and Exchange Board of India (SEBI)
SEBI Bhavan, Plot No. C4-A,
'G' Block, Bandra-Kurla Complex, Bandra (East),
Mumbai 400 051.
Tel : 022 - 26449000 / 40459000
Fax : 022 - 26598514
Website : www.sebi.gov.in
Bombay Stock Exchange Limited (BSE)
Phiroze Jeejeebhoy Towers,
Dalal Street,
Mumbai 400 001.
Tel : 022 - 2272 1233 / 4
Fax : 022 - 2272 1919
Website : www.bseindia.com
The National Stock Exchange of India Limited (NSE)
"Exchange Plaza" Plot No. C/1,
"G" Block Bandra-Kurla Complex, Bandra (E),
Mumbai 400 051.
Tel : 022 - 2659 8100 / 8114
Fax : 022 - 22 2659 8120
Website : www.nseindia.com
HERO HONDA MOTORS LIMITEDRegd. Office : 34, Community Centre, Basant Lok, Vasant Vihar, New Delhi - 110 057
Please complete this attendance slip and hand it over at the entrance of the meeting hall.
L.F. No. No. of Shares Held
Dp.Id.* Client Id.*
Name(s) in full Father's/Husband's Name Address as Regd. with the Company
1.
2.
3.
thI/We hereby record my/our presence at the 25 Annual General Meeting of the Company being held o , 2008 at 11:00 a.m. at Airforce Auditorium, Subroto Park, Dhaula Kuan, New Delhi 110010.
Signature of the shareholder(s)/proxy**
1. 2. 3.
* Applicable for investors holding shares in electronic form** Strike out whichever is not applicableNote: Attendance slip in original should be complete in all respects.
n Thursday, September 25
ATTENDANCE SLIP
HERO HONDA MOTORS LIMITEDRegd. Office : 34, Community Centre, Basant Lok, Vasant Vihar, New Delhi - 110 057
L.F. No. No. of Shares Held
Dp.Id.* Client Id.*
I/We;Name(s) in full Father's/Husband's Name Address as Regd. with the Company
1.
2.
3.
being a member/members of Hero Honda Motors Limited hereby appoint of or failing him/her thof as my/our proxy to vote for me/us and on my/our behalf at the 25 Annual General Meeting of the Company
being held on Thursday, September 25, 2008 at 11:00 a.m. at Airforce Auditorium, Subroto Park, Dhaula Kuan, New Delhi 110010.
Signature of the shareholder(s) Signature of Proxy(s)
1. 2. 3. 1.
2.
* Applicable for investors holding shares in electronic form
Note: The proxy must be returned so as to reach the registered office of the Company not less than 48 hours before the time for holding the aforesaid meeting. The proxy need not be a member of the Company.
PROXY
No gift of any nature will be distributed at the Annual General Meeting.The members seeking gifts may excuse us.
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