Hero Moto Cop

Hero Moto Corp Ltd

Company

Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of

two - wheelers, based in India. In 2001, the company achieved the coveted position of being the

largest two-wheeler manufacturing company in India and also, the 'World No.1' two-wheeler

company in terms of unit volume sales in a calendar year. Hero MotoCorp Ltd. continues to

maintain this position till date.

Vision

The story of Hero Honda began with a simple vision - the vision of a mobile and an empowered

India, powered by its bikes. Hero MotoCorp Ltd., company's new identity, reflects its

commitment towards providing world class mobility solutions with renewed focus on expanding

company's footprint in the global arena.

Mission

Hero MotoCorp's mission is to become a global enterprise fulfilling its customers' needs and

aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts

its customers into its brand advocates. The company will provide an engaging environment for

its people to perform to their true potential. It will continue its focus on value creation and

enduring relationships with its partners.

Strategy

Hero MotoCorp's key strategies are to build a robust product portfolio across categories, explore

growth opportunities globally, continuously improve its operational efficiency, aggressively

expand its reach to customers, continue to invest in brand building activities and ensure customer

and shareholder delight.

Manufacturing

Hero MotoCorp two wheelers are manufactured across three globally benchmarked

manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in

the state of Haryana in northern India. The third and the latest manufacturing plant is based at

Haridwar, in the hill state of Uttrakhand.

Technology

In the 1980's the Company pioneered the introduction of fuel-efficient, environment friendly

four-stroke motorcycles in the country. It became the first company to launch the Fuel Injection

(FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006.

Its plants use world class equipment and processes and have become a benchmark in leanness

and productivity.

Hero MotoCorp, in its endeavor to remain a pioneer in technology, will continue to innovate and

develop cutting edge products and processes

Products

Hero MotoCorp offers wide range of two wheeler products that include motorcycles and scooters, and has set the industry standards across all the market segments.

Distribution

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 MotoCorp's extensive sales and service network now spans over to 5000 customer touch points. These comprise a mix of authorized dealerships, service & spare parts outlets, and dealer-appointed outlets across the country.

Brand

The new Hero is rising and is poised to shine on the global arena. Company's new identity "Hero MotoCorp Ltd." is truly reflective of its vision to strengthen focus on mobility and technology and creating global footprint. Building and promoting new brand identity will be central to all its initiatives, utilizing every opportunity and leveraging its strong presence across sports, entertainment and ground- level activation.

Brand Hero

It's a story about transformation. A company that kept growing stronger through its innovations & quality. An enterprise driven by a burning passion to provide the nation with fuel efficient, comfortable and eco friendly two wheelers.

TOP MANAGEMENT

Dr. Brijmohan Lall Munjal

"Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond of saying. The founder and patriarch of the $3.2 billion Hero Group is your classic first generation entrepreneur. He is a man who started small, dreamt big and used a combination of grit and perseverance to create one of the country's largest corporate groups and the World's No.1 Two Wheeler Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual start in life. Around the time

when the freedom movement in India was taking shape in the late 1920s, he walked into a newly

opened Gurukul (Indian heritage school) near his home in Kamalia (now in Pakistan). He was

only six years old then.

Thus began an extraordinary tale of courage and perseverance. Brijmohan began his business

story after partition in 1947, when he and his brothers relocated to Ludhiana. The family set up a

company that provided poor people with basic transport (cycles). Three decades later, as India

evolved, he added a second crucial chapter - which visualized affordable and technologically

superior transport to millions of middle class Indians. The rest is history.

Building Relationships

When Brijmohan and his brothers started out, there was no concept of organized dealer

networks. Companies just produced, and most dealers functioned like traders. Brijmohan

changed the rules of the business by trusting his gut instincts; introducing business norms that

were ahead of their time, and by investing in strategic relationships. Brijmohan built a series of

bonds and networks with hundreds of family members, vendors, dealers and employees. Much

like the Japanese keiretsu system, these networks are now the glue that holds the Hero Group

together.

"Thanks to the relationships that we have nurtured so passionately in the Hero Family, the

younger generations of some of our bicycle dealers have become dealers of Hero MotoCorp.

These relationships have survived through generations - through bad times and good times'' the

patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been personally responsible for

kindling a spirit of entrepreneurship amongst his employees, and today, 40 of his former

employees are successful entrepreneurs.

Staying Ahead

Though not technically qualified in the conventional sense, few of his contemporaries have

understood the dynamics of technology better than Brijmohan Lall has. He could always

visualize the applicability of technology before others could. For example, in the 1980s, when all

two-wheeler companies in India opted for two-stroke engine technology, Brijmohan preferred a

four-stroke engine - a technology that dramatically increased fuel efficiency and reduced

maintenance costs. This technology was one of the biggest reasons for Hero MotoCorp's

stupendous success.

A Corporate Citizen

A frugal upbringing and a value system modeled on the famous Gurukul system - which stresses

the sanctity of the teacher-pupil relationship - imbibed in Brijmohan a strong sense of social

commitment and responsibility.

There is a special place in his heart for Ludhiana, the city where he took roots. Today, Ludhiana

is a modern, bustling city, but Brijmohan has played no mean role in its evolution. Several

schools and educational institutions in Ludhiana owe their existence to the Munjal family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's vision as does the Ludhiana

Flying Club. He's also set up the not-for-profit Dayanand Medical College and Hospital-an

institute now rated as one of the best medical colleges in India, in terms of infrastructure, quality

of staff and alumni profile.

In and around Dharuhera, near the first Hero MotoCorp plant, Brijmohan and his family have left

their stamp of philanthropy. The Raman Kant Munjal Foundation - which Brijmohan set up in

memory of his eldest son, today runs a higher secondary school and a very modern and well-

equipped 100-bed hospital at Dharuhera. The group has also adopted numerous villages and

provides education, vocational training, drinking water, roads, streetlights and sewerage.

Dr. Brijmohan Lall Munjal

Chairman

MILESTONES

1983

Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed

Shareholders Agreement signed

1984

Hero Honda Motors Ltd. incorporated

1985

First motorcycle "CD 100" rolled out

1987

100,000th motorcycle produced

1989

New motorcycle model - "Sleek" introduced

1991

New motorcycle model - "CD 100 SS" introduced

500,000th motorcycle produced

1992

Raman Munjal Vidya Mandir inaugurated - A School in the memory of founder Managing

Director, Mr. Raman Kant Munjal

1994

New motorcycle model - "Splendor" introduced

1,000,000th motorcycle produced

1997

New motorcycle model - "Street" introduced

Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated

1998


1999

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

2000


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

2001

New motorcycle model - "Passion" introduced

One million productions in one single year

New motorcycle model - "Joy" introduced


2002

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

2003

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

2004

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

2005

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

2006


15 million production milestone achieved

2006



2007


New 'Splendor NXG' launched

New 'CD Deluxe' launched

New 'Passion Plus' launched

New motorcycle model 'Hunk' launched


2008

Hero Honda Haridwar Plant inauguration

New 'Pleasure' launched

Splendor NXG lauched with power start feature

New motorcycle model 'Passion Pro' launched

New 'CBZ Xtreme' launched


CD Deluxe lauched with power start feature

New 'Glamour' launched

New 'Glamour Fi' launched

2009

Hero Honda GoodLife Program launched Hunk' (Limited Edition) launched

Splendor completed 11 million production landmark

New motorcycle model 'Karizma - ZMR' launched

Silver jubilee celebrations

2010

New model Splendor Pro launched

Launch of new Super Splendor and New Hunk

2011

New licensing arrangement signed between Hero and Honda

Launch of new refreshed versions of Glamour, Glamour FI, CBZ Xtreme, Karizma

Crosses the landmark figure of 5 million cumulative sales in a single year

CSR

Hero MotoCorp takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream.

An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community.

The Foundation has adopted various villages located within vicinity of the Hero MotoCorp factory at Dharuhera for integrated rural development. This includes:

Installation of deep bore hand pumps to provide clean drinking water.

Constructing metalled roads and connecting these villages to the National Highway (NH -8).

Renovating primary school buildings and providing hygienic water and toilet facilities.

Ensuring a proper drainage system at each of these villages to prevent water-logging.

Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas

plants.

AWARDS

2011

Two-wheeler Manufacturer of the Year award by Bike India magazine.

Adjudged the "Bike Manufacturer of the Year" at the Economic Times ZigWheels Car and Bike

Awards.

- CNBC Awaaz - Storyboard special commendation for "Effective rebranding of a new

corporate entity" by CNBC Awaaz Consumer Awards

- "Most Recommended Two-Wheeler Brand of the Year" award by CNBC Awaaz

Consumer Awards

- Colloquy Loyalty Awards "Innovation in Loyalty Marketing International 2011" for Hero

GoodLife

- "Best Activity Generating Short or Long-Term Brand Loyalty" by the Promotion

Marketing Award of Asia Order of Merit for Hero GoodLife

- Ranked No 1 brand in the Auto (Two-Wheelers) category in the Brand Equity "Most Trusted

Brand"2011 survey

2010

Rated as Top Indian Company in Automobile - Two Wheelers sector by Dun & Bradstreet -

Rolta Corporate Awards 2009

Most Preferred Brand of Two-Wheelers" award at the CNBC Awaaz Consumer Awards.

Adjudged at top of the two-wheeler category in the Brand Equity Most Trusted Brands 2010

Survey.

Ranked No. 3 Most Trusted Brand across categories amongst Young Adult Males

Company of the Year awarded by Economic Times Awards for Corporate Excellence 2008-09.

CNBC TV18 Overdrive Awards 2010 'Hall of Fame' to Splendor

NDTV Profit Car & Bike Awards 2010

- Two-wheeler Manufacturer of the Year

- CnB Viewers' Choice Two-wheeler of the Year (Karizma ZMR)

- Bike Maker of the Year by ET-ZigWheels Car & Bike of the Year Awards 2009"

2009

'Two-wheeler Manufacturer of the Year' by NDTV Profit Car & Bike Awards 2009 and

Passion Pro adjudged as CNB Viewers' Choice two-wheeler

Top Indian Company under the 'Automobile - Two-wheelers' sector bythe Dun & Bradstreet-

Rolta Corporate Awards

Won Gold in the Reader's Digest Trusted Brand 2009 in the 'Motorcycles' category

NDTV Profit Business Leadership Awards 2009 - two-wheeler category

2008

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 categoryIndiaTimes 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

2007

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.

2006

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

2005

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.

2004

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.

2003

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.

2002


Winner of the Review 200 - Asia 's Leading Companies 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.

2001


Winner of the Review 200 - Asia 's Leading Companies 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.

1999

National Productivity Award for the Best Productivity Award in the category of Automobile &

Tractor presented by Vice President of India.

1995

The Analyst Award 1995 presented to Hero Honda Motors Ltd. on being ranked 9th amongst the

most investor rewarding companies in India.

National Award for outstanding contribution to the Development of Indian Small Scale Industry

(NSIC Award - Presented by President of India).

1991

Economic Times-Harvard Business School Award for Corporate Performance to Hero Honda

Motors Ltd.

KEY POLCIES

A company that believes in maintaining ecological standards along with business standards.

"We must do something for the community from whose land we generate our wealth."

- Chairman Dr.Brijmohan Lall Munjal..

At Hero MotoCorp, our goal isn't limited to business but encompasses the broader spectrum of

serving humanity through social initiatives. Hero MotoCorp takes a stand as a socially

responsible enterprise respectful of its environment.

Hero MotoCorp has been strongly devoted not only to environmental conservation programs but

also expresses the increasingly inseparable balance between economic concerns, environmental

and social issues faced by business. A business must not grow at the expense of mankind but

must serve humankind at large.

ENVIRONMENT POLICY

We at Hero MotoCorp have been committed to demonstrate excellence in our environmental

performance on a continuous 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 and strengthening

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).

Institutionalize resource conservation 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 MotoCorp 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

We believe that 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.

Promoting safety and health awareness amongst employees, suppliers and contractors.

Continuous improvements in safety performance through precautions besides participation and

training of employees.

Ensuring compliance with all applicable legislative requirements.

Empowering employees to ensure safety in their respective work places.

SALES PERFORMANCE

FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09

Total Sales 26,21,400 30,00,751 33,36,756 33,37,142 37,22,000

Exports (incl in above)

64,015 92,666 97,341 90,571 81,193

HERO HONDA REGISTERS 23% GROWTH IN JUNE '06

Records a growth of 21% Sales in Q1 Of 2006-07

New Delhi, July 01, 2006: Hero Honda, the 'World No.1' two-wheeler company, continues to

strengthen its leadership in the Indian two-wheeler industry, registering impressive growth in

sales in the first quarter of the FY 2006 - 07.

For the quarter ending June 2006, the company achieved cumulative sales of 8,32,692 units,

recording a growth of 21.29% compared to the same period last year. During the corresponding

period last Financial Year, the company had recorded sales of 6,86,494 units in the first quarter

ending June 2005.

In June 2006, the company sold 2,78,660 units registering an impressive growth of 23.26% as

against 2,26,073 units in June last year.

During the month, Hero Honda launched Glamour FI - India's first Fuel Injection motorcycle.

The new technology eliminates the need for a carburetor, offers the most comfortable drive and

the lowest emissions, in addition to a host of other features, which is now available for the first

time to Indian two-wheeler riders.

CORPORATE SALES

Advantages of Corporate Sales at Hero:

Single window processing for delivery at multiple locations

No running around for documentation

Attractive finance options

Hero MotoCorp Passport - Unique CRM Program

Bulk Incentive Schemes

GREEN MANUFACTURING

Sustainable development lies at the core of Hero MotoCorp's vision of being one of India's most

environment friendly companies.

Hero MotoCorp believes that to create a sustainable enterprise, it is critical to strike the right

balance between business, mankind and nature.

CLEANER PROCESSES

Every raw material and chemical is thoroughly evaluated for its environmental impact before it is

introduced into our production process.

Over the last few years, Hero MotoCorp has proactively eliminated the use of harmful

substance like

Asbestos

Hexavalent Chromium

Phenolic Substances

EVENTS & NEWS

Global Conditions

With better-than-expected economy numbers coming in from US and China, it now seems likely

that the world will not slip into a double dip recession. However, global growth path in the short

to medium term is likely to be anemic.

There is no doubt today that even two years after it erupted, the world is still grappling with the

aftershocks of the global financial earthquake that hit in 2008. The crisis that unfolded around

the world since then has challenged many of our ideas; it has also reopened questions that we

thought have been settled.

For example, before the crisis erupted in 2007, many of us believed that emerging countries had

de-coupled from advanced countries. That hasn't quite happen. All emerging market economies,

including India, have been affected by the crisis in different ways.

But having said that, it also appears to be that in a developing market economy like India it is

possible to plan a slightly different path for two reasons. First, the pulse of the economy is

essentially domestic. This makes it possible to create virtuous circles of demand and supply

continuously. Second, as growth spreads into the hinterland, completely new pockets of demand

- young workers, workers in rural India, women workers--are emerging, and they supplement

and strengthen the existing virtuous circles.

So what we are seeing is some "soft or gradual decoupling" at work. In fact, this phenomenon

appears to be gaining momentum as we move forward.

Growth Momentum Builds

The Indian economy grew at over 7 per cent during 2009-10. For two successive quarters from

January 2010 to June 2010, GDP growth has been in excess of 8.5 per cent. The performance of

the Indian economy has been especially remarkable, considering that the country suffered from

its worst agricultural drought in several decades.

India’s Industrial Sector

where growth bottomed out during the early part of the year in review, began staging a recovery

after June 2009. This process gained momentum from October 2009-and at the time of writing,

the industry continues to grow robustly in double digits.

Restocking by manufacturers, following the earlier cutbacks in factory output & drawdown of

inventories have clearly had a positive impact on growth. More important, industrial recovery is

becoming broad-based, with as many as 14 out of 17 major manufacturing sectors clocking

positive growth during Jan-Dec 2009. This holds out prospects of even faster recovery in the

months to come.

Besides, the industrial sector continues to get strong support from the services sector, which

makes up close to 57 per cent of the country's GDP.

Prospects for the current year are promising. With a normal monsoon playing out in 2010,

agricultural growth is likely to rebound strongly from last year's decline; in turn, this will

enhance rural consumption and tame inflation. As demand picks up, companies will be forced to

create fresh capacities. Evidence of this is already at hand, with capital goods production in July

notching a whopping growth of 63 per cent.

The growth projections are robust for the long term as well, and CII estimates that at current

rates of growth, India will become a 2 trillion dollar economy by 2016.

Infrastructural Impetus

There are good tidings emerging from the infrastructure sector-long considered the stump of the

economy. Gross Capital Formation in Infrastructure as a percentage of GDP has almost doubled

since 2002. It is expected to be 9% of GDP till 2012.

Equally significant, it now seems that the public private partnership (PPP) model is gaining

traction. During the Tenth Plan (2002-2007), about 25 per cent of the total investment in

infrastructure in India came from the private sector. Private investment in infrastructure is

expected to be around 36% during the Eleventh Plan (2007-12).

Challenges Remain

Of course, despite the strong underpinnings of growth, there are challenges that have to be met.

There were some concerns, particularly on the inflation front. Food inflation remains a major

source of concern, and with stronger recovery, it is spreading to the manufacturing sector.

At another level, India's physical and social infrastructure is still grossly inadequate. Inadequate

progress in these areas will quite clearly affect the sustainability of the country's growth story in

the coming months and years.

India as attractive Market

Still, in terms of potential, few countries can match India today.

The growth of India's middle class purchasing power - World Bank data shows that India's per

capita GDP adjusted in PPP terms doubled in the ten year period between 1998 to 2008-is

creating consumptive capacities never seen in the country before.

Industry Environment

It was a year of strong recovery for the two wheeler industry. After growing tepidly at 5 percent,

in 2008-09 the two wheeler industry was back on track in 2009-10. Sales grew by 24 per cent

and crossed 10 million units for the first time ever. Today, it is heartening to see that two

wheelers make up around three fourth of the total vehicle production in the country.

Some of the strong growth during the year in review, has perhaps come due to the government's

fiscal stimulus package -especially excise cuts that were in force through most of 2009-10.

However, as the financial year ended, it became apparent that the growth momentum could be

sustained even after excise duties were re-balanced during the Union Budget in February 2010.

Lower interest rates also contributed to higher two wheeler sales during the year in review. Yet

at the time of writing, even with rates hardening slightly, the two wheeler industry continues to

grow comfortably in double digits.

This is a clear indication of the kind of growth impulses that exist.

Consider, for example, the level of consumer confidence. As per the AC Nielsen Consumer

Confidence Survey released in July 2010, consumer confidence was highest in India, ahead of

other promising emerging economies like Vietnam and Indonesia. Indians emerged the most

optimistic globally on all parameters, whether it was with regard to their job prospects, personal

finances or attitude towards spending.

Meanwhile, inside India's vast hinterland, there is growing evidence of potential getting

converted to demand, thanks to better distribution.

Rising two wheeler demand is also an indication that government schemes at the lower end of

the socio-economic pyramid have started having some impact.

Company Performance

During 2009-10, as the economic environment in India improved, your company strengthened

and consolidated its hold over the two wheeler market.

Strong support for flagship brands, and strategically timed new launches and variant launches

ensured continued dominance in the crucial commuter segment of the two wheeler market.

A series of cost rationalization measures helped your company maintain strong growth in

profitability, despite the fact that material costs rose sharply.

Despite the extremely competitive business environment, Hero Honda was able to turn in its

best-ever performance during the year in review.

Even with a high base of 3.72 million units in the previous year, your company notched a

remarkable growth of 23.6 per cent and ended the year with sales of 4.6 million. Today, your

company continues to be the overwhelming leader both in the domestic two wheeler industry and

motorcycle segment.

In value terms, total sales increased by 27.9 per cent to Rs.15,758 crores. The Company's

earnings before interest depreciation and taxes (EBITDA) margins increased to a record 17.45

per cent. Operating profit (PBT before other income) increased by 64.16 per cent.

The surge in profitability came from better sales realisations, cost rationlisation and optimisation

measures. These included better control over material cost, marketing cost and overheads,

besides a sharp focus on operational efficiencies.

The robust performance of the two wheeler industry has increased both the stakes and the

competitive pitch in the market. Two wheeler manufacturers have increased capacities. They

have become more aggressive and are rolling out products faster.

But this has not unfazed your company. I remain confident about your company's future. As I

have always done so in the past, I'd rather see the challenges as opportunities to learn, create and

grow.

Documents

Hero Moto Cop