Finaical Analysis of Hero Honda Ltd

DeclarationDeclaration

I do hereby declare that this report entitled “Hero

Honda: A Financial Approach with Case Study” is

prepared by me under the guidance of Ms. Pragyan

Paramita Roy, Internal guide, Prof(Dr.) P.K.Jena, Principal

and Mr. R.S. Agarwal , Industrial Engineering & Training-my

Company Guide. I do also declare that this report is neither

copied nor published anywhere and true to the best of my

knowledge.

(Seshasirsha

Acharya)

Regd. No.-:0806205020

BHADRAK INSTITUTE OF ENGINEERING AND TECHNOLOGY, BHADRAK, ORISSA

ACKNOWLEDGEMENT

I do express my deep sense of gratitude to our

institute, Bhadrak Institute of Engineering and Technology

(BIET), for arranging my SIP training in Visa steel Steel Ltd.

I would like to convey my best regards with lot of

thanks to my Faculty Guide , Ms. P.P. Roy , ,company guide

Miss Pragyan Parimita Roy, for their kind cooperation;

cordiality and guidance for making this project a success

one. I am also indebted to my beloved parents for providing

me support and moral courage in this effort.

Seshasirsha Acharya


Hero Honda: A Financial Approach with Case

Study

Introduction

Hero Honda Motors Limited, based in Delhi, India is a joint

venture between the Hero Group of India and Honda of Japan. It

has been referred to as the world's biggest manufacturer of

2-wheeled motorized vehicles since 2001, when it produced

1.3 million motorbikes in a single year. During the fiscal

year 2008-09, the company has sold 3.28 million bikes and

the net profit of the company stood at Rs.1281.7 crore, up

32% from the previous fiscal year.

The company's most popular model is the Hero Honda's

Splendor, which is the world's largest-selling motorcycle,

selling more than one million units per year.[3]

Company profile


http://en.wikipedia.org/wiki/Hero_Honda#cite_note-2%23cite_note-2

http://en.wikipedia.org/wiki/Hero_Honda_Splendor


http://en.wikipedia.org/wiki/Two_wheeler

http://en.wikipedia.org/wiki/Honda

http://en.wikipedia.org/wiki/Hero_Cycles_Ltd

http://en.wikipedia.org/wiki/Delhi,_India

Hero Honda Motors Ltd.

Type Public company BSE:HEROHONDA M

Founded January 19, 1984 in Gurgaon, Haryana, India

Headquarter

sNew Delhi, India

Key people

Brijmohan Lal Munjal (chair and founder)

Toshiaki Nakagawa (joint managing director)

Pawan Munjal (Managing Director & CEO)[1]

Industry Automotive

Products Motorcycles, Scooters

Revenue U$ 2.8 billion

Website www.herohonda.com

“Hero” is the brand name used by the Munjal brothers for

their flagship company Hero Cycles Ltd. A joint venture

between the Hero Group and Honda Motor Company was

established in 1984 as the Hero Honda company.

During the 1980s, the company introduced motorcycles that

were popular in India for their fuel economy and low cost. A


http://www.herohonda.com/

http://en.wikipedia.org/wiki/Website

http://en.wikipedia.org/wiki/Revenue

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Industry

http://en.wikipedia.org/wiki/Hero_Honda#cite_note-0%23cite_note-0

http://en.wikipedia.org/wiki/Brijmohan_Lal_Munjal

http://en.wikipedia.org/wiki/New_Delhi

http://en.wikipedia.org/wiki/Haryana

http://en.wikipedia.org/wiki/Gurgaon

http://www.bseindia.com/price_finder/stockreach.asp?scripcd=500182

http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

http://en.wikipedia.org/wiki/Public

http://en.wikipedia.org/wiki/Types_of_business_entity

http://en.wikipedia.org/wiki/File:HeroHonda.png

http://en.wikipedia.org/wiki/File:Green_Arrow_Up.svg

popular advertising campaign based on the slogan 'Fill it -

Shut it - Forget it' that emphasised the motorcycle's fuel

efficiency helped the company grow at a double-digit pace

since inception.

Hero Honda has three manufacturing facilities based at

Dharuhera and Gurgaon in Haryana and at Haridwar in

Uttarakhand. These plants together are capable of churning

out 3.9 million bikes per year. Hero Honda's has a large

sales and service network with over 3,000 dealerships and

service points across India. Hero Honda's customer loyalty

program, the Hero Honda Passport Program, claims to be

one of the largest programs of its kind in the world with

over 3 million members.

The 2006 Forbes 200 Most Respected companies list has

Hero Honda Motors ranked at 108.

History

India became the second largest two wheeler manufacturer

in the world starting in the 1950s with the Automobile

Products of India (API) that manufactured the Lambrettas

and Bajaj Auto Ltd. with its association with Piaggio of Italy

(manufacturer of Vespa scooters) as the largest

manufacturers within the country.


http://en.wikipedia.org/wiki/Vespa

http://en.wikipedia.org/wiki/Piaggio

http://en.wikipedia.org/wiki/Bajaj_Auto_Ltd.

http://en.wikipedia.org/wiki/Lambretta

http://en.wikipedia.org/w/index.php?title=Automobile_Products_of_India&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Automobile_Products_of_India&action=edit&redlink=1

http://en.wikipedia.org/wiki/Uttarakhand

http://en.wikipedia.org/wiki/Haridwar

http://en.wikipedia.org/wiki/Haryana

http://en.wikipedia.org/wiki/Gurgaon

http://en.wikipedia.org/wiki/Dharuhera

The license raj that existed between the 1940s to 1980s in India

did not allow foreign companies to enter the market and

imports were tightly controlled. This regulatory maze,

before the economic liberalization, made business easier for

local players to have a seller’s market. Customers in India

were forced to wait up to 12 years to buy a scooter from

Bajaj. The CEO of Bajaj commented that he did not need a

marketing department, only a dispatch department. By the

year 1990, Bajaj had a waiting list that was twenty-six times

its annual output for scooters.

The motorcycle segment had the same long wait times with

three manufacturers: Royal Enfield, Ideal Jawa, and Escorts.

Royal Enfield made a 350cc Bullet with the only four-stroke

engine at that time and took the higher end of the market

but there was little competition for their customers. Ideal

Jawa and Escorts took the middle and lower end of the

market respectively.

In the mid-1980s, the Indian government regulations

changed and permitted foreign companies to enter the

Indian market through minority joint ventures. The two-

wheeler market changed with four Indo-Japanese joint

ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic

Motor Company (Kinetic Honda). The entry of these foreign

companies changed the Indian market dynamics from the

supply side to the demand side. With a larger selection of


http://en.wikipedia.org/wiki/Kinetic_Honda

http://en.wikipedia.org/wiki/Kinetic_Honda

http://en.wikipedia.org/wiki/TVS_Suzuki

http://en.wikipedia.org/wiki/Ideal_Jawa

http://en.wikipedia.org/wiki/Royal_Enfield

http://en.wikipedia.org/wiki/License_raj

two-wheelers on the Indian market, consumers started to

gain influence over the products they bought and raised

higher customer expectations. The industry produced more

models, styling options, prices, and different fuel

efficiencies. The foreign companies new technologies

helped make the products more reliable and with better

quality. Indian companies had to change to keep up with

their global counterparts.

Labor relations

In Hero Group there is no organized labor union and family

members of employees find ready employment within Hero.

The philosophy with regard to labor management is "Hero is

growing, grow with Hero." Hero workers receive a uniform

allowance, as well as House Rent Allowance (HRA) and

Leave Travel Allowance (LTA). Extra benefits include

medical check-ups not just for workers, but also for the

immediate family members. For the majority of the

production workers, who are hired through contractors,

these benefits are out of reach. This and other problems

lead to a strike and factory occupation by 4,000 temp

workers in the Gurgaon plant in spring 2006.

Diversification

The Group Chairman, Mr. Lall has actively looked at

diversification. A considerable level of vertical integration in


http://en.wikipedia.org/wiki/Vertical_integration

http://en.wikipedia.org/wiki/Check-up

http://en.wikipedia.org/wiki/Labor_union

its manufacturing activities has been present in the Group's

growth and led to the establishment of the Hero Cycles Cold

Rolling Division, Munjal and Sunbeam Castings, Munjal

Auto Components and Munjal Showa Limited amongst other

component-manufacturing units.

Expansion into the automotive segment started with the

setting up of Majestic Auto Limited, where the first moped

designed entirely in India, Hero Majestic, went into

commercial production in 1978. Hero Motors, in

collaboration with Steyr Daimler Puch of Austria introduced

the which introduced another moped, the Hero Puch, in

1980. Hero Honda Motors was established in 1984 to

manufacture 100 cc motorcycles.

The Hero Group also plans to expand into into other

segments like exports, financial services, information

technology, insurance and telecommunication.

List of models

Achiever

Ambition 133, Ambition 135

CBZ, CBZ Star, CBZ Xtreme

CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe

(Self Start)


http://en.wikipedia.org/wiki/Hero_Honda_CBZ

http://en.wikipedia.org/wiki/Hero_Honda_Achiever

Glamour, Glamour F.I

Hunk

Joy

Karizma, Karizma R

Passion, Passion+, Passion Pro

Pleasure

Street

Splendor, Splendor+, Splendor+ (Limited Edition),

Super Splendor, Splendor NXG

BOARD OF DIRECTORS

No

.

Name of the Directors Designation

1 Mr. Brijmohan Lall Munjal Chairman & Whole-time

Director

2 Mr. Pawan Munjal Managing Director & CEO

3 Mr. Toshiaki Nakagawa Joint Managing Director

4 Mr. Sumihisa Fukuda Technical Director

5 Mr. Om Prakash Munjal Non-executive Director


http://www.herohonda.com/co_board_directors.htm#5%235






http://en.wikipedia.org/wiki/Hero_Honda_Karizma

http://en.wikipedia.org/wiki/Hero_Honda_Hunk

6 Mr. Sunil Kant Munjal Non-executive Director

7 Mr. Masahiro Takedagawa Non-executive Director

8 Mr. Satoshi Matsuzawa

(Alternate Director to Mr.

Takashi Nagai)

Non-executive Director

9 Mr. Pradeep Dinodia Non-executive &

Independent Director

10 Gen.(Retd.) Ved Prakash

Malik

Non-executive &


11 Mr. Analjit Singh Non-executive &


12 Dr. Pritam Singh Non-executive &


13 Ms. Shobhana Bhartia Non-executive &


14. Mr. Meleveetil Damodaran Non-executive &


15. Mr. Arun Nath Maira Non-executive &
















BRIEF PROFILE OF DIRECTORS

MR. BRIJMOHAN LALL MUNJAL

Mr. Brijmohan Lall Munjal is the founder Director and

Chairman of the Company and the $ 2.8 billion Hero Group.

He is the Past President of Confederation of Indian Industry

(CII), Society of Indian Automobile Manufacturers (SIAM)

and was a Member of the Board of the Country's Central

Bank (Reserve Bank of India ). In recognition of his

contribution to industry, Mr. Lall was conferred the Padma

Bhushan Award by the Union Government.

Mr. Brijmohan Lall Munjal is currently on the board of the

following companies:

No

.

Name of Company Nature of Office

1 Hero Honda Motors

Limited

Chairman and Whole-time

Director

2 Hero Cycles Limited Chairman and Director

3 Hero Honda Finlease

Limited

Chairman and Director

4 Munjal Showa Limited Chairman and Director

5 Sunbeam Auto Limited Chairman and Director


6 Easy Bill Limited Director

7 Hero Financial Services

Limited

Director

8 Munjal Auto Industries

Limited

Director

9 Shivam Autotech Limited Director

MR. PAWAN MUNJAL

Mr. Pawan Munjal is the Managing Director and CEO of the

Company. He is responsible for growth and strategic

planning for the entire Group. A graduate in mechanical

engineering, Mr. Munjal has been instrumental in bringing

about technological and managerial excellence in the

Company's operations. He has been the Chairman of several

Committees of CII.

He is also on the board of Indian Institute of Management,

Lucknow . An avid golfer, Mr. Munjal is Past Chairman of

the Asian PGA Tour Board of Directors and the Past

President of Professional Golfers Association of India (PGAI).

Under his guidance, Hero Honda launched the Hero Indian

Sports Academy (HISA) in collaboration with Laureus

Foundation to provide equal opportunities in sports to

various communities and to reward talent in the country.

Mr. Pawan Munjal is currently on the Board of the following companies:


No

.


1 Hero Honda Motors Limited Managing Director

2 Hero Honda Finlease Limited Director

MR. TOSHIAKI NAKAGAWA

Mr. Toshiaki Nakagawa joined the Company as Joint

Managing Director on February 1, 2006.

He joined Honda Motor Co., Ltd, Japan in April 1973 and

later on took various assignments at Senior Positions in

world wide Honda net work, such as staff member of UK,

Hongkong and President of Honda Czech Republic, Honda

France and General Manager of Honda Beijing Office.

Before joining the Company, he held the position as General

Manager of Operating Office of China, ASEAN succeeding

by Operating Office No.1 (North America, South America

and Europe) at Honda Head Office, Japan.

His specialization is “Overseas Sales of Automobiles and

Motorcycles.”

Mr. Nakagawa is currently on the Board of the following

companies:

No

.



1 Hero Honda Motors Limited Joint Managing Director


MR. SUMIHISA FUKUDA

Mr. Sumihisa Fukuda was appointed as an Additional and

Technical Director in the Whole-time employment of the

Company by way of passing a resolution by Circulation on

May 13, 2008 . Mr. Fukuda 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. In recent past, he was working as Manager –

Asian Autoparts Co. Ltd., Thailand . He brings with him rich

experience of more than 30 years.

Mr. Fukuda is currently on the Board of the following companies:

No

.


1 Hero Honda Motors Limited Whole-time Director


MR. OM PRAKASH MUNJAL

Mr. Om Prakash Munjal is also founder Director of the

Company. He is the Co-Chairman and CEO of Hero Cycles

Limited, the largest producer of bicycles and bicycle

components in the world. Under his leadership, Hero Cycles

has found its way into the Guinness Book of World Records.


In 1990, Mr. Munjal was awarded the "Indira Gandhi

National Unity Award" by the President of India.

Mr. Om Prakash Munjal is currently on the Board of the


No

.


1 Hero Cycles Limited Co-Chairman and Managing

Director

2 Majestic Auto Limited Chairman & Director

3 Hero Financial Services

Limited

Chairman & Director

4 Hero Motors Limited Director

5 Munjal Auto Industries

Limited

Director

6 Shivam Autotech Limited Director

7 Highway Industries

Limited

Director

8 Hero Global Design

Limited

Director


10 Hero Honda Motors

Limited

Director

11 Hero Honda Finlease Director


Limited

MR. SUNIL KANT MUNJAL

Mr. Sunil Kant Munjal born on December 14, 1957 , at

Ludhiana is aged 49 years. After his graduation he

underwent training in the field of Mechanical Engineering.

Presently he is Managing Director of Hero Cycles Ltd. (C.R.

Division) and Hero Corporate Services Limited.

In 2004-05, Mr. Munjal became the President of

Confederation of Indian Industry (CII), India 's premier

business association. He is also on the Board of Indian

School of Business, Hyderabad and is visiting faculty at

various Business Schools and Corporate. His specialization

is in Business Studies and Holistic Management Practices.

Apart from the above he is a member of Prime Minister's

Council on Trade and Industry, Consultative Group on

Industry, Planning Commission, Government of India and

SEBI Committee on Disclosures. He has made significant

contributions to some of the National-level Economic and

Labour reforms in India either by chairing some of the

reforms Committee or as a member.

Mr. Sunil Kant Munjal is currently on the board of the following companies:

No

.


1 Hero Management Service Chairman &


Limited Managing Director

2 Hero Corporate Service Limited Chairman

3 Shivam Autotech Limited Chairman

4 Hero Cycles Limited Managing Director

5 DCM Shriram Consolidated

Limited

Director


7 Hero Honda Motors Limited Director

8 Hero Motors Limited Director

9 Satyam Auto Components

Limited

Director

10 Flourish Manufacturing &

Automotive Ltd.

Director

11 Abhayuday Manufacturing &

Automotive Ltd

Director

12 Arrow Infrastructure Limited Director

13 Hero Mindmine Institute

Limited

Director

14 Hero Ergo Life Insurance

Company Limited

Director

MR. MASAHIRO TAKEDAGAWA

Mr. Masahiro Takedagawa was appointed as an Additional

Director on the Board of the Company w.e.f. May 30, 2006 .


He joined Honda Motors Co., Ltd, Japan as an Area Manager

in the Car Retail Operations. He was thereafter deputed in

the Sales & Marketing Division of Honda Motors at USA ,

Italy & Thailand . Before joining Honda Siel Cars India

Limited as President & CEO in April 2005, he was stationed

at the Product Planning & Marketing office at Tokyo.

Mr. Takedagawa holds the directorship and membership of the Committee(s) of the Board

of the following companies:

No

.


1 Honda Siel Cars India

Limited

President & CEO

2 Honda Siel Power Products

Limited

Director Member-Audit

Committee

3 Hero Honda Motors

Limited

Director

MR. TAKASHI NAGAI

Mr. Takashi Nagai has been appointed as an Additional

Director on the Board of the Company w.e.f May 11, 2007.

After completing his graduation from Keio University, Japan

in the year 1982, he joined Honda Motors Co., Ltd, Japan.

Presently, he is working as Executive Vice President, Asian

Honda Motor, Thailand . Mr. Nagai brings with him vast


experience in Automobile Industry.

Mr. Nagai is on the board of the following companies.:

No

.



MR. SATOSHI MATSUZAWA

Mr. Satoshi Matsuzawa aged 48 years has been appointed

as an Alternate Director to Mr. Takashi Nagai w.e.f. April

24, 2008 . He was born on March 2, 1960 at Tokyo , Japan .

After completing his graduation in Science and Engineering

from Waseda University , Japan in the year 1982, he joined

Honda Motors Co., Ltd, Japan . Currently, he holds the

position of General Manager, Overseas Operations.

Mr. Matsuzawa is on the board of the following companies.:

No

.


1 Hero Honda Motors Limited Alternate Director

MR. PRADEEP DINODIA

Mr. Pradeep Dinodia was appointed as an Additional

Director on the Board of the Company on March 31, 2001 .


Mr. Dinodia is a fellow member of The Institute of Chartered

Accountants of India and a senior partner in the Delhi-based

Chartered Accountancy firm M/s. S.R. Dinodia & Company.

He has considerable experience in corporate affairs and

allied legal and taxation matters.

Mr. Dinodia holds the directorship and membership of the Committee(s) of the Board of

the following companies:

No

.


1 DCM Shriram

Consolidated Limited

Director and Chairman -

Shareholders & Investors

Grievance Committee

Member- Audit Committee

2 DFM Foods Limited Director

Chairman - Audit Committee

3 Hero Corporate

Services Limited

Director


4 Hero Honda Motors

Limited

Director and Chairman - Audit

Committee

Member - Shareholder &

Investors Grievance Committee

5 Micromatic Grinding

Technologies Limited

Director

6 Ultima Finvest Director


Limited

7 Shriram Pistons &

Rings Limited

Director


Member - Remuneration

Committee

8 JK Lakshmi Cement

Limited

Director

9 SPR International

Auto Exports Limited

Director

GEN. (RETD.) VED PRAKASH MALIK

Gen. (Retd.) Ved Prakash Malik was appointed as an

Additional Director on the Board of the Company on May 4,

2001 . Gen. Malik retired as Chief of the Indian Army in

September, 2000. During his distinguished military career,

he received number of awards including the Ati Vishista

Seva Medal (AVSM) and the Param Vishishta Seva Medal

(PVSM) - the highest National award for distinguished

services.

He holds the directorship and membership of the Committee(s) of the Board of the


No

.



Member- Audit


Committee

2 Reliance Infrastructure

Limited

Director

Member- Audit

Committee

3 BSES Rajdhani Power

Limited

Director

Member- Audit

Committee

4 BSES Yamuna Power Limited Director

Member- Audit

Committee

MR. ANALJIT SINGH

Mr. Analjit Singh was appointed as an Additional Director on

the Board of the Company on September 28, 2004 . He is

currently Chairman of Max India Limited, New Delhi.

Mr. Singh brings with him rich and varied experience in

businesses like Pharmaceuticals, telecom services,

packaging, specialty plastic products and electronic

components.

Mr. Singh is currently on the board of the following companies:

No

.


1 Max India Limited Chairman and Mg.

Director

2 Max New York Life Insurance Chairman


Company Limited

3 Max Healthcare Institute Limited Chairman

4 IDBI Limited Director

5 Max Neeman Medical

International Limited

Chairman

6 Max Bupa Health Insurance

Limited

Chairman

7 Grow Talent Company Limited Director

8 Malsi Holdings Limited Chairman

9 Malsi Estates Limited Chairman

10 Malsi Hotels Limited Director

11 Vodafone Essar Limited Director

12 Tata Tea Limited Director

13 Dabur India Limited Director


DR. PRITAM SINGH

Dr. Pritam Singh was appointed as an Additional Director on

the Board of the Company on September 28, 2004 . He is

author of seven academically reputed books and over 50

research papers. Dr. Pritam Singh is one of the pioneers of

Management Education in India who has devoted his life to

the development of Management Education in India and

abroad. Dr. Singh received the "Padam Shri" award in


2003 for his contributions in this field. He is also on the Board of the

following companies and their committees:

No

.


1 Hero Honda Motors Limited Director and Member -

Audit Committee

Member - Shareholder's

Grievance Committee

2 Parsvnath Developers

Limited

Director

3 Dish TV India Limited Director

4 Indian Medicines

Pharmaceuticals Corporation

Ltd.

Director

5 Delhi Stock Exchange

Limited

Director

6 Godrej Properties Limited Director

MRS. SHOBHANA BHARTIA

Mrs. Shobhana Bhartia was appointed as an Additional

Director on the Board of the Company on March 24, 2005 .

She belongs to the distinguished Birla family and has

married into another major industrial family, the Bhartia

Group. Currently, she is the Vice Chairperson and Editorial

Director of HT Media Limited. 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).

Mrs. Bhartia is director on the Board of the following companies and their committee(s):

No

.



2 Air Travel Bureau Limited Director

3 Britex (India) Limited Director

4 Goldmerry Investment &

Trading Co. Limited

Director

5 HT Media Limited Chairperson & Editorial

Director

6 HTL Investment & Trading

Co. Limited

Director

7 Nilgiri Plantation Limited Director

8 Ronson Traders Limited Director

9 Shradhanjali Investment

& Trading Co. Limited

Director

10 The Hindustan Times Limited Chairperson and

Chairperson – Audit

Committee

11 H.T. Music and Director and


Entertainment Limited Chairperson - Audit

Committee

12 Udit (India) Limited Director

13 Usha Flowell Limited Director

14 Yashovardhan Investment

& Trading Co. Limited

Director

15 Firefly e-ventures Limited Director

MR. MELEVEETIL DAMODARAN

Mr. Meleveetil Damodaran has been appointed as an

Additional Director w.e.f. June 16, 2008 in the category of

Non-Executive and Independent Director. Mr. Damodaran,

aged 61 years was born on May 4, 1947 and belongs to the

Indian Administrative Service, Manipur-Tripura Cadre. He

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 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


three identified weak public sector banks.

Mr. Damodaran is currently on the board of the following companies:

No.


1 Hero Honda Motors Limited

Director and Member - Shareholder's Grievance Committee

2 Tech Mahindra Limited Director

3 Sahaj e-village Limited Director

4 ING Vysya Bank Limited Director

5 ING Investment Management (India) Pvt. Limited

Director

MR. ARUN NATH MAIRA

Mr. Arun Nath Maira has been appointed as an Additional

Director w.e.f. December 20, 2008 in the category of Non-

Executive and Independent Director. Mr. Maira, aged 65

years got his Master’s Degree in Physics from St. Stephen's

College, Delhi. Mr. Maira has a work span of over 35 years

in creating and transforming organizations all across the

globe. After receiving his degrees, he joined Tata

Administrative Service and served the Tata group for 25

years. Subsequently, Mr. Maira worked with Arthur D Little

(ADL) USA, for 10 years as the Leader of ADL's Global

Organisation Practice and as a Managing Director of


Innovation Associates - ADL's subsidiary.

Mr. Maira has been a member of The Confederation of

Indian Industry’s (CII) National Council for many years, as

well as Chairman of several of CII’s National Councils,

including the National Council for Corporate Governance,

and Chairman of CII’s Leadership Summit.

He is also on the Board of the following companies:

No

.


1 Hero Honda Motors

Limited

Director and Member – Audit

Committee

2 Mahindra Ugine Steel

Company Limited

Director

3 Aditya Birla Nuvo

Limited

Director

4 Patni Computer Systems

Limited

Director and Member -

Shareholder's Grievance

Committee


5 Tata Chemicals Limited Director

6 Godrej Industries

Limited

Director

Changes during 2005-06 Committee

of Directors

Senior Management Code of

Conduct

KEY MILESTONES OF HERO HONDA

Yea

r

Event

198

3

Joint Collaboration Agreement with Honda Motor Co.

Ltd. Japan signed

Shareholders Agreement signed

198

4 Hero Honda Motors Ltd. Incorporated

198

5

First motorcycle "CD 100" rolled out

198

7

100,000th motorcycle produced

198 New motorcycle model - "Sleek" introduced


http://www.herohonda.com/co_board_directors_codeofconduct.htm

http://www.herohonda.com/co_board_directors_codeofconduct.htm

http://www.herohonda.com/co_board_directors_management.htm

http://www.herohonda.com/co_board_directors_committee.htm

http://www.herohonda.com/co_board_directors_committee.htm

http://www.herohonda.com/co_board_directors_changes05-06.htm

9

199

1

New motorcycle model - "CD 100 SS" introduced

500,000th motorcycle produced

199

2

Raman Munjal Vidya Mandir inaugurated - A School in

the memory of founder Managing Director, Mr. Raman

Kant Munjal

199

4

New motorcycle model - "Splendor" introduced

1,000,000th motorcycle produced

199

7

New motorcycle model - "Street" introduced

Hero Honda's 2nd manufacturing plant at Gurgaon

inaugurated

199

8


199

9

New motorcycle model - "CBZ" introduced

Environment Management System of Dharuhera Plant

certified with ISO-14001 by DNV Holland

Raman Munjal Memorial Hospital inaugurated - A

Hospital in the memory of founder Managing Director,

Mr. Raman Kant Munjal

200 4,000,000th motorcycle produced


0

Environment Management System of Gurgaon Plant

certified ISO-14001 by DNV Holland

Splendor declared 'World No. 1' - largest selling single

two-wheeler model

"Hero Honda Passport Programme" - CRM Programme

launched

200

1

New motorcycle model - "Passion" introduced

One million production in one single year

New motorcycle model - "Joy" introduced


200

2

New motorcycle model - "Dawn" introduced

New motorcycle model - "Ambition" introduced

Appointed Virender Sehwag, Mohammad Kaif, Yuvraj

Singh, Harbhajan Singh and Zaheer Khan as Brand

Ambassadors

200

3

Becomes the first Indian Company to cross the

cumulative 7 million sales mark


Splendor has emerged as the World's largest selling

model for the third calendar year in a row (2000, 2001,

2002)

New motorcycle model - "CD Dawn" introduced

New motorcycle model - "Splendor +" introduced

New motorcycle model - "Passion Plus" introduced

New motorcycle model - "Karizma" introduced

200

4

New motorcycle model - "Ambition 135" introduced

Hero Honda became the World No. 1 Company for the

third consecutive year.

Crossed sales of over 2 million units in a single year, a

global record.

Splendor - World's largest selling motorcycle crossed

the 5 million mark

New motorcycle model - "CBZ*" introduced

Joint Technical Agreement renewed


Total sales crossed a record of 10 million motorcycles

200

5

Hero Honda is the World No. 1 for the 4th year in a

row

New motorcycle model - "Super Splendor" introduced

New motorcycle model - "CD Deluxe" introduced

New motorcycle model - "Glamour" introduced

New motorcycle model - "Achiever" introduced

First Scooter model from Hero Honda - "Pleasure"

introduced

200

6

Hero Honda is the World No. 1 for the 5th year in a

row


DIRECTORS' REPORT

We, the Directors of Hero Honda Motors Limited are

delighted to present the 26th Annual Report for the Silver

Jubilee Year. The Report is being presented along with the

Audited Statement of Accounts for the financial year ended

March 31, 2009.

BUSINESS PERFORMANCE

During the year under review your Company, despite a

slowdown in the two wheeler industry, achieved the 11.53

per cent growth in annual sales by clocking the sales

volume of 3,722,000 units compared to 3,337,142 units in

2007-08. In value terms total sales (net of excise duty)

increased by 19.2 per cent to Rs. 12,319 crores from Rs.

10,332 crores in 2007-08. Your Company consolidated its

leadership position in domestic motor cycle market with 57

percent market share. The Company successfully launched

eight new models including variants during the year under

review.

On the financial front, total income of the Company

grew by 19.2 per cent from Rs. 10,517 crores in previous

year to Rs. 12,540 crores during 2008-09. The Company


posted a Profit after tax (PAT) of Rs. 1,282 crores, compared

to Rs. 968 crores in the previous fiscal, a growth of 32 per

cent. The Company's earnings before interest depreciation

and taxes (EBITDA) margins increased from 13.33 per cent

in 2007-08 to 14.16 per cent in 2008-09. The improvements

on the margins was accomplished through better sales

realizations, effective cost rationalisation measures which

included better control over material cost, marketing cost

and overheads, apart from sharp focus on operational

efficiencies.

During the year Hero Honda also retained for the eighth

year in a row, its position as the World's Number One Two

Wheeler Company.

A detailed discussion on the business performance and

future outlook has been given in the chapter on

Management Discussions Analysis.

DIVIDEND

Very few manufacturing companies in the Indian

corporate sector have a better dividend payout record than

Hero Honda. We are pleased to recommend a Dividend of

1000 per cent i.e. Rs. 20 per equity share of Rs. 2

aggregating to Rs. 399.38 crores (exclusive of corporate

dividend tax) for your approval for the financial year ended


March 31, 2009. 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. 129 crores have been transferred to the

General Reserve of the Company. This reaffirms the

inherent financial strength of the Company.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the

financial position of the Company have occurred between

April 1, 2009 and the date on which this Report has been

signed.

BOARD OF DIRECTORS

During the period under review, 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. Meleveetil

Damodaran was appointed as an Additional Director in the

Non-Executive and Independent Category w.e.f. June

16,2008 and Mr. N.N.Vohra resigned from the Board w.e.f.

June 24,2008 on his being appointed as Governor of the

state of Jammu & Kashmir. Mr. Arun Nath Maira was

appointed as an Additional Director w.e.f. December 20,

2008. Since he has been appointed as member of Planning

Commission, he resigned from the Board of the Directors on

July 23, 2009. The members while congratulating Mr.

Maira, has accepted his resignation in the Meeting of Board

of Directors held on July 29, 2009. Mr. Sunil Bharti Mittal

resigned from the Directorship on April 21, 2009.

The Board places on record its sincere appreciation

and gratitude for the guidance and 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 wishes them a successful

and fruitful tenure with the Company.

At the ensuing Annual General Meeting, Gen. (Retd.)

V.P. Malik, Mr. Brijmohan Lall Munjal, Mr. Sunil Kant

Munjal and Mr. Takashi Nagai 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 of the Directors, who are to be re-

appointed has been furnished after the notes 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, 2009, the applicable accounting

standards have been followed;

2. that appropriate accounting policies have been

selected and applied consistently and judgments and

estimates that are reasonable and prudent have been

made so as to give a true and fair view of the State of

Affairs as at March 31,2009 and of the Profit of the

Company for the financial year ended March 31,2009;

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,

2009 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION & ANALYSIS

A detailed chapter on, 'Management Discussion and

Analysis' (MDA), pursuant to Clause 49 of the Listing

Agreement is annexed and forms part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

At Hero Honda, Corporate Social Responsibility (CSR)

encompasses much more than social outreach programs and

is an integral part of the way the Company conducts its

business. Detailed information on the initiatives of the

Company towards CSR activities is provided in the Social

Responsibility section of the MDA.

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 -1.

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 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

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 seven 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

risk assessment and its minimization. It ensures that all the


Risks are timely defined and mitigated in accordance with

the well structured Risk Management Process. The Audit

Committee and Board reviews periodically the Risk

Management Process.

RATINGS

The rating agency ICRA Limited, has reviewed and

reaffirmed the rating assigned to the Company for its Non-

convertible Debenture Programme as LAAA [pronounced "L

triple A"] indicating the highest credit quality and A1+

[pronounced "A one Plus"] for its Non-fund based facilities

and LAAA [pronounced "L triple A"] to Fund based facilities

indicating the highest credit quality rating carrying lowest

credit risk.

The rating agency CRISIL, during the year under

review assigned the bank loan ratings of" AAA/Stable" and

P1 + to the Cash Credit Limit & Letter of Credit Limit

facility respectively to your Company.

FIXED DEPOSITS

During the year under review, the Company has not

accepted any deposit under Section 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 2009-10 and necessary application for

obtaining the requisite approval has been filed with the

Government. The Cost Auditors' Report for 2008-09 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, 2009 the total number of employees on the

records of the Company was 4513.

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 "People and

Environment" of MDA, 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) (iv) 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 Sr. G.M. Legal & Company

Secretary at the Registered Office of the Company.


Financial Analysis

Profit and Loss Statement

(Rs.in Millions)

Particulars Mar 200

9

Mar 20

08

Mar 20

07

Mar 20

06

Mar 20

05

No of

Months12 12 12 12 12

+Gross Sales13543

0.90

120385

.30

11542

0.40

10086

1.60

85968

.10

Less :Inter

divisional

transfers

0 0 0 0 0

Less: Sales

Returns0 0 0 0 0

Less: Excise12239.

70

17067.

30

16420.

80

13721.

80

11751.

60

Net Sales123191

.20

103318

.00

98999.

60

87139.

80

74216.

50

EXPENDIT

URE :

+

Increase/

Decrease in

Stock

-

182.10

107.00 22.40

-

122.5

0

-

149.5

0

+Raw 88164. 74410. 72161. 60975 52273


Materials

Consumed70 50 10 .60 .90

Power &

Fuel Cost737.00 565.50 524.50 466.50

328.80

Employee

Cost

3707.1

0

3211.6

0

2990.3

0

2594.7

0

2152.9

0

Other

Manufactur

ing

Expenses

4316.4

0

3723.5

0

3515.3

0

3059.7

0

2332.6

0

General and

Administrat

ion

Expenses

3707.1

0

3137.8

0

3196.6

0

2713.2

0

2492.1

0

Selling and

Distribution

Expenses

5821.6

0

5036.2

0

5071.0

0

4044.6

0

3166.9

0

Miscellaneo

us

Expenses

773.60 124.30 184.40 66.40 101.90

Less: Pre-

operative

Expenses

Capitalised

0 0 0 0 0

Total

Expenditur

107045

.40

90316.

40

87665.

60

73798.

20

62699.

60


e

Operating

Profit (Excl

OI)

16145.

80

13001.

60

11334.

00

13341.

60

11516.

90

+Other

Income

3500.7

0

2724.4

0

2540.9

0

1956.

20

1568.

70

Operating

Profit

19646.

50

15726.

00

13874.

90

15297.

80

13085.

60

Interest 25.30 20.00 16.10 29.20 19.30

PBDT19621.

20

15706.

00

13858.

80

15268.

60

13066.

30

Depreciatio

n

1806.6

0

1603.2

0

1397.8

0

1146.2

0

893.80

Profit

Before

Taxation &

Exceptional

Items

17814.

60

14102.

80

12461.

00

14122.

40

12172.

50

Exceptional

Income /

Expenses

0 0 0 0 0

Profit

Before Tax

17814.

60

14102.

80

12461.

00

14122.

40

12172.

50

+Provision for

Tax

4997.0

0

4424.0

0

3882.1

0

4409.

00

4067.

80

Profits After 12817. 9678.8 8578.9 9713.4 8104.7


Tax 60 0 0 0 0

+Appropriatio

ns

33035.

30

25626.

60

20819.

40

17794

.40

13490

.00

Equity

Dividend %

1000.0

0 950.00 850.00

1000.0

0

1000.0

0

Earnings

Per Share64.18 48.47 42.96 48.64 40.58

Book Value 190.32 149.54 123.69 100.62 74.78

Balance Sheet Statement

(Rs.in Millions)

Particulars Mar 200

9

Mar 200

8

Mar 200

7

Mar 200

6

Mar 200

5

SOURCES

OF FUNDS

+Share Capital 399.40 399.40 399.40 399.4

0 399.40

Share

warrants &

Outstandings

0.00 0.00 0.00 0.00 0.00

+Total Reserve37608.

10

29463.

00

24301.

20

19693

.90

14534.

40

Shareholder'

s Funds

38007.5

0

29862.4

0

24700.6

0

20093.3

0

14933.8

0

+Secured Loans 0 0 0 0 0


+Unsecured

Loans784.90

1320.0

0

1651.7

0

1857.

80

2017.6

0

Total Debts 784.90 1320.00

1651.70

1857.80

2017.60

Total

Liabilities

38792.4

0

31182.4

0

26352.3

0

21951.1

0

16951.4

0

APPLICATIO

N OF FUNDS

:

Gross Block25162.7

0

19387.8

0

18006.3

0

14719.7

0

11041.9

0

Less:

Accumulated

Depreciation

9425.60

7825.20

6351.00

5226.00

4297.10

Less:

Impairment

of Assets

0 0 0 0 0

Net Block15737.1

0

11562.6

0

11655.3

0

9493.70

6744.80

Lease

Adjustment

A/c

0 0 0 0 0

Capital Work

in Progress

1205.40

3924.40

1899.20

441.90 408.50

Pre-operative

Expenses

0 160.50 0 0 0


pending

Assets in

transit0 0 0 0 0

+Investments33687.

50

25668.

20

19738.

70

20618

.90

20266.

50

Current

Assets, Loans

& Advances

+Inventories3268.3

0

3171.0

0

2755.8

0

2265.

50

2042.6

0

+Sundry

Debtors

1499.4

0

2974.4

0

3352.5

0

1586.

60 895.50

Cash and

Bank

2195.70

1310.90

357.80

1587.20

176.00

Other

Current

Assets

58.90 56.90 36.00 35.30 35.10

Loans and

Advances

3112.60

1854.60

2630.60

2737.80

2396.10

Total

Current

Assets

10134.9

0

9367.80

9132.70

8212.40

5545.30

Less :

Current

Liabilities

and


Provisions

+Current

Liabilities

15258.

50

13249.

80

10419.

20

10728

.80

10157.

60

+Provisions5269.7

0

4997.6

0

4372.4

0

4899.

20

4847.1

0

Total Current

Liabilities

20528.2

0

18247.4

0

14791.6

0

15628.0

0

15004.7

0

Net Current

Assets

-

10393.3

0

-

8879.60

-

5658.90

-

7415.60

-

9459.40

Miscellaneou

s Expenses

not written

off

0 0 0 0 0

Deferred

Tax Assets86.50 52.20 13.80 13.20 6.30

Deferred

Tax Liability

1530.80

1305.90

1295.80

1201.00

1015.30

Deferred Tax

Assets /

Liabilities

-

1444.30

-

1253.70

-

1282.00

-

1187.80

-

1009.00

Total Assets38792.4

0

31182.4

0

26352.3

0

21951.1

0

16951.4

0

Contingent

Liabilities81.70 0 202.40 734.80 799.40


Cash Flow

(Rs.in Millions)

Particulars Mar 20

09

Mar 20

08

Mar 20

07

Mar 20

06

Mar 20

05

Profit

Before Tax

17814

.60

14102

.80

12461

.00

14122

.40

12172.

50

+Adjustment

-

193.0

0

-

177.20

-

185.0

0

-

159.4

0

-

233.20

+

Changes In

working

Capital

985.0

0

2612.1

0

-

2072.

00

-

361.8

0

-

541.40


+

Cash Flow

after

changes in

Working

Capital

18606

.60

16537.

70

10204

.00

1360

1.20

11397.

90

Cash Flow

from

Operating

Activites

13590

.30

12117

.80

6250.

50

9360.

80

7468.3

0

+

Cash Flow

from

Investing

Activities

-

8611.

90

-

7810.1

0

-

2731.

30

-

3234.

90

-

5628.5

0

+

Cash Flow

from

Financing

Activites

-

4999.

30

-

4323.3

0

-

4934.

60

-

4712.

30

-

2035.1

0

Net Cash

Inflow /

Outflow

-20.90 -15.60

-

1415.

40

1413.

60

-

195.30

Opening

Cash &

Cash

Equivalents

151.9

0

166.6

0

1587.

20

176.0

0371.20

Cash & 0 0 0 0 0


Cash

Equivalent

on

Amalgamatio

n / Take over

/ Merger

Cash &

Cash

Equivalent of

Subsidiaries

under

liquidations

0 0 0 0 0

Translation

adjustment

on reserves /

op cash

balalces frgn

subsidiaries

0 0 0 0 0

Effect of

Foreign

Exchange

Fluctuations

3.50 0.90 -5.20 -2.40 0.10

Closing

Cash & Cash

Equivalent

134.50 151.90 166.601587.2

0176.00


Ratio Analysis

(Rs.in Millions)

Particulars Mar 20

09

Mar 20

08

Mar 20

07

Mar 20

06

Mar 20

05

Operational &

Financial Ratios

Earnings Per

Share (Rs)64.18 48.47 42.96

48.64

40.58

CEPS(Rs) 73.23 56.49 49.96 54.38

45.06

DPS(Rs) 20.00 19.00 17.00 20.00

20.00

Book 190.3 149.54 123.69 100.6 74.78


NAV/Share(Rs) 2 2

Tax Rate(%) 28.05 31.37 31.15 31.22

33.42

Margin Ratios

Core EBITDA

Margin(%)14.51 13.06 12.02

15.17

15.22

EBIT

Margin(%)13.17 11.73 10.81

14.03

14.18

Pre Tax

Margin(%)13.15 11.71 10.80

14.00

14.16

PAT Margin (%) 9.46 8.04 7.43 9.63 9.43

Cash Profit

Margin (%)10.80 9.37 8.64

10.77

10.47

Performance

Ratios

ROA(%) 33.04 31.04 32.55 44.25

47.81

ROE(%) 33.72 32.41 34.73 48.34

54.27

ROCE(%) 45.99 45.29 47.35 64.47

71.92

Asset

Turnover(x)0.26 0.24 0.21 0.19 0.17

Sales/Fixed

Asset(x)6.08 6.44 7.05 7.83 8.51

Working -0.08 -0.07 -0.05 -0.07 -0.11


Capital/Sales(x)

Efficiency

Ratios

Fixed

Capital/Sales(x)16.45 15.53 14.18

12.77

11.75

Receivable

days6.03 9.59 7.81 4.49 2.83

Inventory Days 8.68 8.98 7.94 7.80 8.33

Payable days 25.26 26.79 25.24 32.24

37.53

Valuation

Parameters

PER(x) 16.67 14.24 15.95 18.26

13.51

PCE(x) 14.61 12.22 13.71 16.34

12.16

Price/Book(x) 5.62 4.62 5.54 8.83 7.33

Yield(%) 1.87 2.75 2.48 2.25 3.65

EV/Net Sales(x) 1.72 1.33 1.40 2.04 1.50

EV/Core

EBITDA(x)10.81 8.77 9.95

11.61

8.51

EV/EBIT(x) 11.90 9.76 11.07 12.55

9.13

EV/CE(x) 5.47 4.42 5.24 8.09 6.57

M Cap / Sales 1.73 1.33 1.38 2.04 1.47

Growth Ratio


Net Sales

Growth(%)19.23 4.36 13.61

17.41

27.25

Core EBITDA

Growth(%)24.93 13.34 -9.30

16.91

14.03

EBIT

Growth(%)26.32 13.19 -11.83

16.07

13.50

PAT Growth(%) 32.43 12.82 -11.68 19.85

11.28

EPS Growth(%) 32.41 12.83 -11.68 19.85

11.28

Financial

Stability Ratios

Total

Debt/Equity(x)0.02 0.04 0.07 0.09 0.14

Current

Ratio(x)0.66 0.71 0.88 0.77 0.55

Quick Ratio(x) 0.45 0.47 0.61 0.55 0.34

Interest

Cover(x)

705.1

3

706.14

774.98

484.6

4

631.70

Total

Debt/Mcap(x)0.00 0.01 0.01 0.01 0.02


PROMINENT AWARDS TO THE COMPANY

Yea

r

Awards & Recognitions

200

9

ET Awards for Corporate Excellence - Hero Honda is

the winner of the " Company of the Year" award for

2008 - 09.

200

8

NDTV Profit Business Leadership Award 2008 - Hero

Honda Wins the Coveted "NDTV Profit Business

Leadership Award 2008"


TopGear Design Awards 2008 - Hunk Bike of the Year

Award

NDTV Profit Car India & Bike India Awards - NDTV

“Viewers’ Choice Award” to Hunk in Bike category

IndiaTimes Mindscape and Savile Row ( A Forbes Group

Venture ) Loyalty Awards - “Customer and Brand

Loyalty Award” in Automobile (two-wheeler) sector

Asian Retail Congress Award for Retail Excellence

(Strategies and Solutions of business innovation and

transformation) - Best Customer Loyalty Program in

Automobile category

NDTV Profit Car India & Bike India Awards - Bike

Manufacturer of the year

Overdrive Magazine - Bike Manufacturer of the year

TNS Voice of the Customer Awards:

No.1 executive motorcycle Splendor NXG

No.1 standard motorcycle CD Deluxe

No. premium motorcycle CBZ Xtreme

200

7

The NDTV Profit Car India & Bike India Awards 2007

in the following category:

Overall "Bike of the Year" - CBZ X-treme

"Bike of the Year" - CBZ X-treme (up to 150 cc

category)

"Bike Technology of the Year" - Glamout PGM

FI


"Auto Tech of the Year" - Glamout PGM FI by Overdrive

Magazine.

"Bike of the Year" - CBZ X-treme by Overdrive

Magazine.

Ranked CBZ X-treme "Bike of the Year" - by B S

Motoring Magazine

“Most Trusted Company” , by TNS Voice of the

Customer Awards 2006.

CD Deluxe rated as "No 1 standard motorcycle" by TNS

Voice of the Customer Awards 2006.

200

6

Adjudged 7th Top Indian Company by Wallstreet Journal

Asia (Top Indian Two Wheeler Company).

One of the 8 Indian companies to enter the Forbes top

200 list of world’s most reputed companies.

No. 1 in automobile industry by TNS Corporate Social

Responsibility Award.

Best in its class awards for each category by TNS Total

Customer Satisfaction Awards 2006:

Splendor Plus (Executive)


CD Deluxe (Entry)

Pleasure (Gearless Scooters)

Splendor & Passion - Top two models in two wheeler

category by ET Brand Equity Survey 2006.

Adjudged 7th Top Indian Company by Wallstreet Journal

Asia (Top Indian Two Wheeler Company).

Top Indian company in the Automobile - Two Wheeler

sector by Dun & Bradstreet - American Express

Corporate Awards 2006.

Hero Honda Splendor rated as India's most preferred

two-wheeler brand at the Awaaz Consumer Awards

2006.

Certificate of Export Excellence for outstanding export performance during 2003-

04 for two-wheeler & three- wheelers - Complete (Non SSI) by Engineering Export

Promotion Council.

The NDTV Profit Car India & Bike India Awards 2006 in

the following category:

Bike Maker of the Year

Bike of the Year - Achiever

Bike of the Year - Achiever (up to 150 cc category)

Bike of the Year - Glamour (up to 125 cc category)


NDTV Viewers' Choice Award to Glamour in the

bike category

200

5

Awaaz Consumer Awards 2005 - India's most preferred

two-wheeler brand by CNBC in the 'Automobiles'

category.

Bike Maker of the Year Award by Overdrive Magazine.

ICWAI National Award for Excellence (Second) in Cost

Management 2004 in the private sector category by

ICWAI.

10th Motilal Oswal Wealth Creator Award for as the

most consistent wealth creator for the period 1991-

2005.

200

4

Winner of the Review 200 - Asia's Leading Companies

Award (3rd Rank amongst the top 10 Indian

companies).

GVC Level 1 (Highest Rating) by CRISIL for corporate

Governance.

Adjudged as the Best Value Creator - Large Size

Companies 2003-04 by The Outlook Money.

Corporate Excellence Award 2004 by Indian Institute of

Materials Management.

Adjudged as the Organization with Innovative HR


Practices by HT Power Jobs for HR Excellence.

ICSI National Award for Excellence in Corporate

Governance 2004 by The Institute of Company

Secretaries of India.

200

3

Winner of the Review 200 - Asia 's Leading Companies

Award (3rd Rank amongst the top 10 Indian

companies).

Most Respected Company in Automobile Sector by

Business World.

Bike Maker of the Year by Overdrive Magazine.

200

2



Award (4th Rank amongst the top 10 Indian companies).

Company of the Year of ET Awards for Corporate

Excellence.

Ranked 4th in 'Overall Best Managed Company'

category, ranked 3rd in 'Best Financial Management'

and 'Best Operational Efficiency' category, ranked 6th

in 'Overall Best Investor Relations' category, by

Asiamoney.

Highest Wealth Creating Company of the Year Award by


the Money.

GVC Level 1 (Highest Rating) by CRISIL for Corporate

Governance.

200

1



Award (9th Rank amongst the top 10 Indian

Companies).

Winner of Three Leaves Award for showing Corporate

Environment Responsibility in the Automobile Sector by

Centre for Science & Environment.

199

9

National Productivity Award for the Best Productivity

Award in the category of Automobile & Tractor

presented by Vice President of India.

199

5

The Analyst Award 1995 presented to Hero Honda

Motors Ltd. on being ranked 9th amongst the most

investor rewarding companies in India.

199

5

National Award for outstanding contribution to the

Development of Indian Small Scale Industry (NSIC

Award - Presented by President of India).

199

1

Economic Times-Harvard Business School Award for

Corporate Performance to Hero Honda Motors Ltd.

KEY POLICIES


AN ENVIRONMENTALLY AND SOCIALLY, AWARE

COMPANY

At Hero Honda, our goal is not only to sell you a bike, but

also to help you every step of the way in making your world

a better place to live in. Besides its will to provide a high-

quality service to all of its customers, Hero Honda takes a

stand as a socially responsible enterprise respectful of its

environment and respectful of the important issues.

Hero Honda has been strongly committed not only to

environmental conservation programmes but also expresses

the increasingly inseparable balance between the economic

concerns and the environmental and social issues faced by a

business. A business must not grow at the expense of

mankind and man's future but rather must serve mankind.

"We must do something for the community from

whose land we generate our wealth."

A famous quote from our Worthy Chairman Mr.Brijmohan

Lall Munjal.

Environment Policy

We at Hero Honda are committed to demonstrate

excellence in our environmental performance on a

continual basis, as an intrinsic element of our corporate


philosophy.

To achieve this we commit ourselves to:

Integrate environmental attributes and cleaner

production in all our business processes and practices

with specific consideration to substitution of hazardous

chemicals, where viable and strengthen the greening

of supply chain.

Continue product innovations to improve

environmental compatibility.

Comply with all applicable environmental legislation

and also controlling our environmental discharges

through the principles of "alara" (as low as reasonably

achievable).

Institutionalise resource conservation, in particular, in

the areas of oil, water, electrical energy, paints and

chemicals.

Enhance environmental awareness of our employees

and dealers / vendors, while promoting their

involvement in ensuring sound environmental

management.

Quality Policy

Excellence in quality is the core value of Hero Honda's

philosophy.

We are committed at all levels to achieve high quality in


whatever we do, particularly in our products and services

which will meet and exceed customer's growing aspirations

through:

Innovation in products, processes and services.

Continuous improvement in our total quality

management systems.

Teamwork and responsibility.

Safety Policy

Hero Honda is committed to safety and health of its

employees and other persons who may be affected by its

operations. We believe that the safe work practices lead to

better business performance, motivated workforce and

higher productivity.

We shall create a safety culture in the organization by:

Integrating safety and health matters in all our

activities.

Ensuring compliance with all applicable legislative

requirements.

Empowering employees to ensure safety in their

respective work places.

Promoting safety and health awareness amongst


employees, suppliers and contractors.

Continuous improvements in safety performance

through precautions besides participation and training

of employees.

Conclusion:

Hero Honda has consistently grown at double digits since

inception; and today, every second motorcycle sold in the

country is a Hero Honda. Every 30 seconds, someone in

India buys Hero Honda's top -selling motorcycle – Splendor.

This festive season, the company sold half a million two

wheelers in a single month—a feat unparalleled in global

automotive history.

Hero Honda bikes currently roll out from its three globally

benchmarked manufacturing facilities. Two of these are

based at Dharuhera and Gurgaon in Haryana and the third

state of the art manufacturing facility was inaugurated at

Haridwar, Uttrakhand in April this year. These plants

together are capable of producing out 4.4 million units per

year.


Hero Honda's extensive sales and service network now

spans over 3000 customer touch points. These comprise a

mix of dealerships, service and spare points, spare parts

stockiest and authorized representatives of dealers located

across different geographies.

Hero Honda values its relationship with customers. Its

unique CRM initiative - Hero Honda Passport Program, one

of the largest programs of this kind in the world, has over 3

million members on its roster. The program has not only

helped Hero Honda understand its customers and deliver

value at different price points, but has also created a loyal

community of brand ambassadors.

Having reached an unassailable pole position in the Indian

two wheeler market, Hero Honda is constantly working

towards consolidating its position in the market place. The

company believes that changing demographic profile of

India, increasing urbanization and the empowerment of

rural India will add millions of new families to the economic

mainstream. This would provide the growth ballast that

would sustain Hero Honda in the years to come. As

Brijmohan Lall Munjal, the Chairman, Hero Honda Motors

succinctly points out, "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.''


Documents

Finaical Analysis of Hero Honda Ltd