Design & Developed by Bounce Design

Plant Photography by: S Kumar

HOW DO WE

MEASURE
SUCCESS? Every business strives for success. Success however has many
benchmarks and many interpretations. Some view success on a
purely financial plane, others view it in terms of their market reach
while some argue it as their ability to survive in difficult terrain.

25 years of operation have taught us that there are many

yardsticks and measures to qualify success. What however remains
sacrosanct is the inexorable link between faith and success. If you
have faith, success is bound to follow.

This year’s annual report showcases our performance against some

established benchmarks and more importantly, those that make us
truly successful.
CONT Corporate Profile 07
Journey of 25 Years 08
Chairman’s Message 10
Board of Directors 12
Management Discussion & Analysis 20
Economic Environment 24
Industry and Segment Dynamics 26
Results and Financial Analysis 32
Risks and Outlook 34
Operations, Reach & Supply Chain 38

ENTS
People and Environment 42
Social Responsibility 46
Directors’ Report 55
Corporate Governance Report 59
Auditors’ Report 84
Balance Sheet 88
Profit & Loss Account 89
Cash Flow Statement 90
US GAAP 125
IS IT ABOUT THE

STATURE
INTHE HERO HONDA IS
THE LARGEST MANUFACTURER OF
TWO WHEELERS IN THE WORLD….
AND HAS BEEN SO OVER THE
LAST EIGHT YEARS.

INDUSTRY?
CORPORATE PROFILE
A GLORIOUS HISTORY AND AN
EVEN MORE GLORIOUS FUTURE

It all began with a dream… On its part, the Hero Group has taken on the singular
and onerous responsibility of creating world-class
The Hero Honda story began with a simple vision – the
manufacturing facilities with robust processes, building
vision of a mobile and an empowered India, powered by
the supply chain, setting up an extensive distribution
Hero Honda. This vision was driven by Hero Honda's
networks and providing insights into the mind of the
commitment to customer, quality and excellence, and
Indian customer.
while doing so, maintain the highest standards of ethics
and societal responsibilities. Twenty five years and 25 Since both partners continue to focus on their
million two wheelers later, Hero Honda is closer to respective strengths, they have been able to
fulfilling this dream. This vision is the driving force complement each other. In the process, Hero Honda is
behind everything that we do at Hero Honda. recognized today as one of the most successful joint
ventures in the world. It is therefore no surprise that
We understood that the fastest way to turn that dream
there are more Hero Honda bikes on this country's roads
into a reality is by remaining focused on that vision.
than the total population of some European countries
There were many unknowns but we kept faith, and
put together!
today, Hero Honda has been the largest two wheeler
company in the world for eight consecutive years. The company's meteoric growth in the two-wheeler
market in India stems from an intrinsic ability to reach
Our growth has kept compounding. The company
out and come closer to its customers, with every passing
crossed the ten million unit milestone over a 19-year
year. Hero Honda's bikes are sold and serviced through a
span. In the new millennium, Hero Honda has scaled
network of over 3500 customer touch points,
this to 15 million units in just five years!
comprising a mix of dealers, service centres and
In fact, during the year in review, Hero Honda sold more stockists located across rural and urban India.
two wheelers than the second, third and fourth placed
Hero Honda has built two world-class manufacturing
two-wheeler company put together. With Hero Honda,
facilities at Dharuhera and Gurgaon in Haryana, and its
the domestic two wheeler market was able to show
third and most sophisticated plant at Haridwar has just
positive growth during the year in review. Without Hero
completed a full year of operations.
Honda, the domestic market would have actually
shrunk. It is difficult to imagine that all this has happened in the
span of just two and a half decades!
Over the course of two and a half decades, and three
successive joint venture agreements later, both partners The best is yet to come. During the year in review, Hero
have fine-tuned and perfected their roles as joint Honda powered its way in a market that, for all practical
venture partners. purposes, was feeling the full effects of the economic
slowdown in India. With an economic recovery now
What the two partners did was something quite basic.
clearly on the cards, Hero Honda is all set to ride into
They simply stuck to their respective strengths. As one of
another summit.
the world's technology leaders in the automotive sector,
Honda has been able to consistently provide technical As Brijmohan Lall Munjal, the Chairman, Hero Honda
know-how, design specifications and R&D innovations. Motors succinctly puts it, "We pioneered India's two
wheeler industry, we've steered it through difficult
This has led to the development of world class, value-
times; now it is our responsibility to set the pace again.''
for-money motorcycles and scooters for the
Indian market.

06/07
A JOURNEY OF
TWENTY FIVE YEARS
Dr. Brijmohan Lall Munjal,
Hero Honda commences Chairman, Hero Honda Motors
commercial production at Dharuhera Limited, received the Padma Bhushan
Plant, rolls out 1st motorcycle (CD 100) award from the President of India

1985 Hero Honda Passport Program

launched – A first of its kind CRM initiative
2005
in the Indian two wheeler industry.
Hero Honda Splendor becomes the single
largest selling motorcycle in the world

2000
Hero and Honda sign joint Cumulative production volumes
collaboration agreement reached 10 million mark

1983 2004

Hero Honda forays into sports Hero Honda celebrated the 20

promotion with the Hero Cup – a five million cumulative production
nation cricket series, more popular as volumes mark by conducting Bike –
mini world cup A - Thon - a national level bike rally

1993 Hero Honda CBZ launched – First

150 cc motorcycle in the Indian two 2007
wheeler industry

1999

Cumulative production volume Hero Honda Karizma launched Hero Honda forays into scooter
reached 5 lac mark –industry's first 223 cc motorcycle segment, launched 100 cc gearless

1991 2003 scooter, Pleasure.

Cumulative production volumes
reached 15 million mark

2006 Pawan Munjal, Managing Director &

CEO, Hero Honda Motors Limited,
received the coveted Man of the Year
Hero Honda new manufacturing plant Hall of Fame awards by CNBC TV 18
at Gurgaon goes on stream Overdrive Awards 2009.

1997 Hero Honda becomes the world no. 1 2009

two wheeler manufacturer

2002

Birth of a legend - Hero Honda Hero Honda's new manufacturing

Splendor motorcycle launched plant at Haridwar goes on stream

1994 2008

08/09
DEAR
SHAREHOLDERS,
“Two roads diverged in a wood…and I took the one less
travelled by, and that has made all the difference”.
These memorable lines by Robert Frost summarise Hero
Honda's odyssey over these last 25 years. They also
capture the spirit of the Indian people, who proved all
pre-poll forecasts and predictions wrong to vote in the
country's most stable and durable government in
two decades.
The prospect of stability couldn't have come at a better
time for India.
As the country's GDP growth plunged from a very
impressive 9 per cent to 6 per cent during the year in
review, the culture of consumerism that propelled India
in the preceding four years, took a backstage. Family
budgets shrank, and in many companies, pay packets
became slimmer.
Expectedly, defaults also rose. As a result, banks became
even more cautious in offering loans, particularly in
towns where very little information was available to
measure the creditworthiness of a customer.
The trend among consumers to postpone purchase
decisions and the banks decision to withdraw from
certain areas had an impact. The share of financing,
which had increased rapidly to 50-60 per cent of the
total retail sales by early 2007, has now come down to
below 30 per cent.
This was a major setback for the two-wheeler industry,
although just like the preceding year, your company
bucked the trend. In value terms, both top line and
bottom line was up in double digits. Hero Honda
retailed more two wheelers in the domestic market than
the second, third and fourth placed manufacturer put
together. Effectively, this helped your company boost its
domestic motorcycle market share by more than four
percentage points and scooter market share by three
percentage points.
The healthy growth in sales also improved your
company's bottom line. EBIDTA margins for the entire
year increased by 120 basis points compared to the
previous year.
Some of these financial numbers are the highest in our
25-year history. We are fortunate that these numbers
are coinciding with our silver jubilee year. At the same
time, I know they do not represent a peak, but just the
beginning of a climb to another higher summit.
As I mentioned in the opening, we took the road less
travelled. When the two-wheeler industry started going
into a tailspin, our first strategic option was to remain
rock-solid as the winds of the global crisis swept across
companies, businesses and consumers based in
urban India.
We certainly spent some time consolidating our
business. We controlled costs on a war footing. Of
course, plunging commodity prices helped bring down
prices of key inputs such as steel, nickel and aluminum;
this in turn helped us prune manufacturing costs.
Yet your company did not just get lucky; it took a
number of sound business decisions through the year.
To give you an example, your company took a policy
decision and resisted the temptation of offering
discounts to stir up sales in a tepid market. However, we
did not compromise on market development and
customer focus; we upgraded our products, added
features, introduced new products and increased our
advertising spends.
Hero Honda also made its supply chain more robust with
strong online connections both at the front end as well
as at the back-end.
Your company didn't stop at consolidation; it sought to
grow as well. As I mentioned last year, our objective as a
company has been to develop across both
India and Bharat.
We are strongly convinced that the new government's
plan to strengthen inclusive programs in rural India will
create job opportunities and aspiration demand. I have
always believed that rural and small town India
represents our future. Now, after last year's
performance, I am convinced that we have to make
rural India also an integral part of our present.
We have here a market that has incredible depth. This
makes it less susceptible to global economic cycles and a
market where every government which comes to power
is guaranteed to invest heavily.
Although your company has always concentrated on
both urban and rural areas, we have now started adding
more muscle to our rural initiatives; some of our efforts
have started paying off.
It gives me great personal pleasure to see that over the
course of my lifetime, I am being able to see the gradual
evolution of India's villages and small towns: from being
survivors to aspirants and consumers.
I remain confident about the near-term future. Of
course, there will be challenges ahead. But I would
rather see them as opportunities.
Over the next 12 months, the two-wheeler environment
will become much more competitive as more players try
to enter our higher volume executive segment. We
welcome this emerging competition, since it will
provide us with an opportunity to prove our mettle
once again.
There is also some buzz and anticipation surrounding
the low-cost cars. Without doubt, these will be good for
India's consumers. Nevertheless, from the perspective
of our industry and our company, I am convinced that
the two-wheeler segment will continue to remain the
vehicle of choice by the masses in India.
Fuel efficiency and maintenance costs continue to be
the most important considerations for the Indian
customer today. They will be the most important
considerations in the medium term as well.
There are more than seven million new bicycle users
every year in India, and most of them aspire to upgrade
to two-wheelers. The growing aspirations, expanding
road networks and growth of satellite townships across
India are some of the factors that will spur demand for
two-wheelers in the near and medium term.
These factors will operate as the two-wheeler industry's
biggest insurance in the coming decades.
In my preceding year's message, I talked about how
strong companies are ones that are able to grow roots
among the rocks. They have the capacity to hold the
fort, while other bastions around them crumble.
Champion companies don't just grow roots, they
develop far-reaching branches.
Yours sincerely,
Brijmohan Lall
Chairman
10/11
BOARD OF ALTERNATE DIRECTOR SENIOR MANAGEMENT TEAM

DIRECTORS Satoshi Matsuzawa

(Alternate Director to Mr. Takashi
Nagai)
Ravi Sud
Sr. Vice President & CFO

OUTGOING DIRECTORS
Yutaka Kudo
Whole-time Director
(upto May 31, 2008)
Narinder Nath Vohra
Non-Executive and Independent
Director
(upto June 24, 2008)
Anil Dua
Sr. Vice President-Sales,
Marketing and Customer Care
Vikram S. Kasbekar
Plants Head-Operations
and Supply Chain
Dr. Anadi S. Pande
Vice President-HRM, Corporate
Planning and Strategy

Sunil Bharti Mittal Vijay Sethi

Non-Executive and Independent Vice President-Information Systems
Director
(upto April 21, 2009)

Arun Nath Maira

Non-Executive and Independent
Director
(upto July 23, 2009)

COMMITTEE OF DIRECTORS

AUDIT COMMITTEE REMUNERATION COMMITTEE

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

Chairman Chairman

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

Member Member

Dr. Pritam Singh

Member COMPLIANCE OFFICER

Ilam C. Kamboj
SHAREHOLDERS' Sr. G.M. Legal & Company Secretary
GRIEVANCE COMMITTEE

Dr. Pritam Singh

Chairman

Pradeep Dinodia
Member

Meleveetil Damodaran
TOP ROW LEFT TO RIGHT BOTTOM ROW LEFT TO RIGHT Member

Toshiaki Nakagawa Brijmohan Lall Munjal Ms. Shobhana Bhartia Sumihisa Fukuda Dr. Pritam Singh Meleveetil Damodaran For more information please visit www.herohonda.com
Joint Managing Director Chairman Non-Executive and Technical Director Non-Executive and Non-Executive and
Independent Director (w.e.f. June 01, 2008) Independent Director Independent Director
Om Prakash Munjal Pawan Munjal
(w.e.f. June 16, 2008)
Non-Executive Director Managing Director & CEO Takashi Nagai Pradeep Dinodia Sunil Kant Munjal
Non-Executive Director Non-Executive and Independent Director Non-Executive Director
Masahiro Takedagawa
Non-Executive Director Gen. (Retd.) V.P. Malik Analjit Singh
Non-Executive and Independent Director Non-Executive and
Independent Director

12/13/14
NEW PLANT AT HARIDWAR
THE GATEWAY TO ANOTHER
SUCCESS STORY
Literally translated, Haridwar means Gateway to God. In
Hindu mythology, Haridwar is considered one of the
seven holiest places in India, since the devas are said to
have left their footprints here.
Not without reason, therefore, Haridwar was chosen as
the venue for the third Hero Honda plant.
The temples of modern India, borrowing Pt. Nehru's
phrase, are the factories that provide economic
liberation to masses.
Hero Honda's journey to this modern temple, in
Haridwar, has been nothing short of a holy pilgrimage. It
began in October 2006, when the foundation stone
was laid; it continued when the plant went onstream in
April 2008, and gained momentum in March 2009,
when the plant produced 4,000 two wheelers per day.
The journey continues at the time of writing.
The third plant is Hero Honda's finest manufacturing
experience yet, with the essence of Honda and Hero's
learnings and contemporary practices enshrined here.
The plant has lean manufacturing and practices that
ensure efficiency. The main plant is connected with
vendors units through conveyors so that material avoids
multiple handling and is delivered on time.
In keeping with Hero Honda's green philosophy,
production processes have been conceived in a way that
effluents are minimized and there is zero discharge on
liquid effluents. All waste are treated and consumed
within the four walls of the factory.
An integral part of the long term vision at the Haridwar
plant is an ambitious green roof project. The idea is not
just to insulate the shopfloor but also to reduce the run
offs, and promote greenery.
But then, the Hero Honda story at Haridwar is not just
about this plant.
Wherever it sets up a factory, Hero Honda seeks to be a
model corporate citizen, and co-opts local communities
to participate in its progress.
Hero Honda has made a substantial difference in the
socio-economic landscape of the Gurgaon-Dharuhera
belt, and it seeks to make the same qualitative
difference in Dev Bhoomi.
The Hero Group is committed to invest in social and
tangible infrastructure to promote quality of life of
people of Uttrakhand, and is in the process of building,
schools, hospitals, theaters, houses and retail
infrastructure in the region.
These projects will provide jobs, sustenance and
prosperity over the years, and contribute to the all-
round development of this region.
Hero Honda is also adopting a local ITI in the region.
This will not only to enhance the skill level of local
people, it will also go a long way in ensuring a captive
supply of skilled manpower for Hero Honda and its
suppliers.
The Haridwar project is a backward integrated
manufacturing plant which on realization of full
capacity will engage around 5,000 persons.
Currently there are 10 suppliers up and running
operations in the Hero-promoted industrial park next to
the Haridwar factory. In the coming months an
additional 23 no. of suppliers will start supplying to the
factory hub.
In a vast country like India, what Hero Honda is
attempting through this integrated approach is a drop
in the ocean, but it is an important drop. As Mahatma
Gandhi once said:”Whatever you do may be
insignificant, but it is very important that you do it”.
It is said that as the Ganga flows from the Himalayas to
the Bay of Bengal, it nourishes the soul and sustains
many lives along the way. Hero Honda is convinced that
this plant, this shrine of technology, will do the same.
15/16/17
 REACHING THE LENGTH
AND BREADTH OF INDIA

The company has made significant progress in its rural
marketing initiative called Har Gaon, Har Aangan. This
national level program has made strides into thousands
of Indian villages with a population of 5,000 and above.
In all, more than 125,000 opinion leaders in these
villages were met by specially trained 523 rural sales
executives. The program itself has added sales of
25,000 vehicles from these villages in just one year.
The program focuses on many activities to align with the
the events organized by the local administration on
regular basis.
The company believes that the rural mobility is a major
contributor to GDP growth in an agrarian economy like
ours. 'Sikhao Baliye' is company's unique initiative in the
rural market that aims at driving the mobility of rural
women. The program aims at promoting company's
light and zippy gearless scooter Pleasure by creating
awareness amongst its TG which primarily are all rural

RURAL MARKETING FOCUS

objectives that go beyond commercial transactions, in men, particularly opinion leaders and those who wish to
order to build enduring relationship with the customers impart riding training to their wives, daughters,

in these villages. The program generally covers sales daughter-in-laws, sisters etc., and prospects in
promotions, loan and exchange offers, free service and general.The program covered 40 villages, 266 female
check up camps, along with host value adds like riders received basic riding training, and 35 of them
consultation for obtaining driving license, safe riding could ride the scooter immediately after the training.
educational programs and other services like health
check up and awareness camps. These services are
offered free of charges in the interest of society at large.
Under the HGHA program the company makes all the
efforts to be a part of the villages by conducting such
programs either directly or by partnering or sponsoring

18/19
Economic Environment

Industry and Segment Dynamics

Results and Financial Analysis

Risks and Outlook

Operations, Reach & Supply Chain

People and Environment

Social Responsibility

CAUTIONARY STATEMENT : Statements in this management discussion

and analysis describing the Company's objectives, projections, estimates
and expectations may be 'forward looking statements' within the
meaning of applicable laws and regulations. Actual results might differ
substantially or materially from those expressed or implied. Important
developments that could affect the company's operations include
significant changes in political and economic environment in India or key
markets abroad, tax laws, litigation, labour relations and interest costs.
IS IT ABOUT THE

TOP OUR TOP LINE HAS TOUCHED

OVER Rs. 12,300 CRORE

LINE?
WITH OUR NEAREST COMPETITORS
AND PEERS A LONG DISTANCE OFF
 CREATING OPPORTUNITY
IN ADVERSITY

Like any other emerging country, India experienced the
knock-on effects of the global crisis during the year in
review. The effects were felt through the monetary,
financial and real channels.
Drying up of global finance impacted from the middle of
the fiscal impacted domestic capital finance; and
corporate earnings came off peaks. In April 2009,
Reserve Bank of India predicted that the Indian
economy's growth for 2008-09 would slow to 6.6 per
cent, breaking an excellent five-year growth sequence.
to less than 2 per cent, mostly on account of indifferent
production of cotton and pulses.
On its part, the government came out with three rounds
of fiscal measures to revive the economy. Yet the effects
hadn't begun to show, at least till the financial year
had ended.
While the year in review was disappointing by Indian
standards, India was still an outperformer by global
standards. Along with China, India still provided a

ECONOMIC ENVIRONMENT
beacon of light to the world.
There were two dimensions to the economic slowdown.
There were in fact, some signs of some sort of recovery
In the first half, inflation ran into double digits as a result
taking shape towards the end of the financial year, and
of the global crude shock and the global food grain
this momentum continued in the first quarter of
shortage. To control inflation, the RBI clamped down on
2009-10 as well.
money supply, and reduced liquidity in the economy. By
the time inflation started coming under control, Cement despatches in April were the highest in five
domestic interest rates started shooting up. Meanwhile, years, thanks to revival in construction activity.
the global crisis erupted, putting further pressure on
The World Steel estimated that India would be the only
liquidity levels.
major country in 2009 with a positive consumption
By October 2008, slowdown was clearly apparent in trend.
export-intensive sectors, both in the manufacturing and
In March, the monthly ABN Amro Purchasing Managers'
service side. By December, the slowdown turned into
Index crossed 50 for the first time since September
de-growth. The cutback in demand from Europe and
2008, indicating some increase in manufacturing
the US was so sharp that even a competitive rupee,
expansion activity.
which devalued by around 12 per cent during the year,
couldn't act as a buffer. The NHAI invested 60 per cent of its funds in the second
quarter of 2008-09 in various road projects.
By December 2008, the growth momentum of the first
six months was lost. Planned investment projects were Such investments, made during the peak of the
shelved; live projects faced a shortage of funds as credit slowdown, could create important multipliers in a
flows dried up. As money became dearer, pay packets slowing economy.
became slimmer and risk aversion grew both from the
It is expected that some of these measures will create
demand and supply side.
new multipliers and generate new sources of growth in
Compulsions of coalition politics at the Centre and the the coming year.
impending Lok Sabha elections didn't help either, and
The overall economy continues to remain a bit volatile,
slowed down reforms and implementation of projects,
and yet a positive feel-good sentiment does seem to
particularly in critical sectors like roads, ports and power.
have returned, especially with the coming of a stable
The worst hit was the manufacturing sector. From the government at the centre.
second half of the financial year, the index of industrial
production contracted on three occasions, remained
close to zero on two occasions, and was mildly positive
only once.
There was moderation across other sectors as well.
Growth in the service sector slipped from double digits
to single digits. Agriculture growth once again slipped

24/25
 AN INDUSTRY
THAT IS RIDING AHEAD
In the previous year, the domestic two-wheeler industry
entered a period of de-growth. However, this was
arrested in 2008-09, largely on the back of Hero
Honda's performance. After the blip of last year, the
INDUSTRY AND SEGMENT DYNAMICS
two-wheeler industry went back to a growth phase,
largely driven by Hero Honda and exports.
The industry clocked total volumes of 8.5 million during
the year in review, a growth of 5 per cent compared to a
fall of 5 per cent in the previous year. The pace of growth
was lower in the domestic market, where the industry
clocked sales of 7.43 million, a rise of only 2.60 per cent.
This, however, was a significant improvement over the
previous year when the industry had shrunk by
8 per cent.
Motorcycles continue to constitute the largest chunk of
the two-wheeler industry, and during the year in review,
accounted for four fifth of sales. Interestingly, for the
second year in succession, scooters increased their share
in the two-wheeler pie from 14 per cent to 16 per cent.
This is clearly a trend reversal from the last 10 years,
where the share of scooters in the two-wheeler pie had
been shrinking. Changing lifestyles among women, and
the introduction of feature-rich, high-quality scooters
possibly has much to do with the revival in demand.
The entry segment – made up of basic 100 cc bikes -
had started slowing two years ago, and during the year
in review, sales in this segment were down by more than
15 per cent. This could be attributed to the fact that
Deluxe segment bikes have become affordable on
account of a 4 per cent excise cut, 1 per cent reduction
in CST and the special package of reduction in excise
duty in December, which most manufacturers passed on
to the consumers.
The deluxe segment-made up of value for money and
feature-rich bikes in the 100-125 cc category-grew by
15.2 per cent.
The 125-250 cc category-grew at 8.8 per cent. The pace
of growth has fallen from last year's levels. There is no
doubt that the higher interest rates have brought down
growth. Nevertheless, this segment was still able to
clock a growth rate in high single digits mainly because
of the excitement caused by a slew of new models that
came into this segment during the year.
The bigger story, of course, is that buyers in small-town
India and rural India, as well as employees of the state
and Central government, were relatively less affected by
the slowdown, and this benefitted the two wheeler
industry.
26/27
HERO HONDA'S PERFORMANCE
SETTING THE BENCHMARK
Hero Honda was the torchbearer for the two-wheeler
industry during the year in review. It sold more two-
wheelers during the year than the combined volumes of
the second, third and fourth placed competitor.
Overall, the company sold 3.72 million two-wheelers,
up 12 per cent. Motorcycle sales in the domestic
market, which account for more than 95 per cent of
Hero Honda's sales, were up 11 per cent.
During the year, the company also turned in a rollicking
performance with its scooter portfolio, with a 49 per
cent growth in domestic sales to 156,210 units. This
performance allowed Hero Honda to increase its share
in the domestic scooter market by more than three
percentage points.
Hero Honda's performance in the two-wheeler industry
was the only standout performance during the year
amongst the large players. Without Hero Honda's
numbers, the two wheeler industry growth would have
been marginal.
28/29
IS IT ABOUT THE

BOTTOM
LINE?
HERO HONDA HAS BEEN CONSISTENT IN
WEALTH CREATION FOR NEARLY TWO
DECADES. AND OUR CURRENT PROFIT AFTER
TAX OF OVER Rs. 1280 CRORES BEARS
TESTIMONY TO OUR BUSINESS ACUMEN.
RESULTS AND
FINANCIAL ANALYSIS

Sales Capital Expenditure Net Cash Flow From Operations

Table 1 KEY INDICATORS OF PROFITABILITY (Rs. in crores)

1359
Despite a slowdown in the two-wheeler industry, sales During the year the Company incurred a capital
of the company grew by 11.53 per cent. The company 2007-08 2008-09 expenditure of Rs. 315.08 crores. The funds went into 1400

1212
OPBDIT / IFO*(%) 13.3 14.2
ended the year with a market share of around 57 per OPBT / IFO*(%) 11.8 12.7 expansion of operations.
cent. Hero Honda sold 3,722,000 units in 2008-09 PBIT / IFO*(%) 13.3 14.2
Raw Material costs 1200
compared to 3,337,142 units in 2007-08. In value PBT / IFO*(%) 13.6 14.4
terms total sales (net of excise duty) increased by 19.2 PAT / IFO*(%) 9.3 10.4 Softening metal prices particularly aluminum & nickel in
ROACE (%) 49.0 50.9

936
per cent to Rs.12,319 crores from Rs.10,332 crores in second half of the year combined with better sales 1000
ROAE (%) 35.5 37.8
2007-08. realisation to bring down the share of material costs
*Income from operations considerably. Raw material costs as a proportion of total

747
Profitability 800
costs came down from 71.6 per cent to 71.0 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 and the
operating profit (PBT before other income) increased by
28.4 per cent from Rs.1,221.79 crores in 2007-08 to
Rs.1,568.86 crores in 2008-09. The margin
improvements came from better sales realizations, cost
rationlisation and optimization measures. These
included better control over material cost, marketing
cost and overheads, besides a sharp focus on
operational efficiencies.
Other income,
including non-operating income
Other income increased by 19.0 per cent from Rs. 185
crores in 2007-08 to Rs. 221 crores in 2008-09.
PROFITS
(Rs. in crores)
Cash Flows
Growth in sales turnover and better efficiencies in
working capital management improved the cash flow
from operations from Rs. 1,211.78 crores to Rs.
1,359.03 crores. Cash flows before working changes
also improved from Rs. 1,392.56 crores to Rs. 1,762.16
crores on account of better EBITDA margins.
The Company spent Rs. 861.19 crores in investing
activities. Investments in production capacities lead to
an outflow of Rs. 315.08 crores. The balance was
deployed in financial assets. Financing activities
accounted for an outflow of Rs. 499.93 crores
attributable to dividend outflows.
1561
625
Current Asset turnover
This ratio, which shows sales as a proportion of average 600
current assets, increased from 11.2 to 12.7 times, on
account of higher average inventory & bank balance.
400
Debt structure
Hero Honda has been a debt free company for the last 8 200
years. The unsecured loan of Rs.78.49 crores from the
state government of Haryana on account of sales tax
deferment, is interest free and has no holding costs. Net 0
06-07 07-08 08-09
04-05 05-06
interest payment by the company has been negative
during the last few years. Working capital management
Dividend policy
Hero Honda has always sought to efficiently use the
Over the years, the company has consistently followed various components of the working capital cycle.
a policy of paying high dividends, keeping in mind the Despite the adverse conditions in the two-wheeler
cash-generating capacities, the expected capital needs industry, the Company has been able to effectively
of the business and strategic considerations. For 2008- control the receivable and inventories enabling it to

09, the board has recommended a dividend of 1000 per continue to operate on negative working capital.
cent, which is higher than the 950 per cent declared in Notes on working capital
1500
the previous year. However, the payout ratio has come
1282
1253

1225

down to 36.5 per cent vis-a-vis 45.9 per cent in the The average of inventory, receivables and payables has
previous year. been taken for calculations of inventory period,
1076

1056

1200
operating and cash cycle.
968
971

858

TABLE 2 WORKING CAPITAL MANAGEMENT & LIQUIDITY RATIOS

810

900 OPBT - PBT before other income

PAT - Profit after tax
2007-08 2008-09
OPBT PAT
600 Inventory Period 11.9 11.0
Operating Cycle 21.2 16.9
300 Cash Cycle -10.6 -13.1
Current Ratio 0.68 0.64
0 Acid Test Ratio 0.45 0.43
04-05 05-06 06-07 07-08 08-09

32/33
 MANAGING RISK IS
HALF THE BATTLE WON

RISKS AND CONCERNS Demand creation in urban India could remain a

• Slowdown: Sales in the lucrative premium two-
wheeler segment (150 cc and above) have been
affected by the economic slowdown; a quick return
to robust growth is unlikely, and this could affect
Hero Honda's near term plans for an increased
presence in this segment.
• Interest rates: Lending rates have started softening
but effective lending rates for the two-wheeler
industry remain high on account of risk aversion by
banks. However, Hero Honda has de-risked its
business by focusing on segments which are not
challenge for the two wheeler industry as a whole on
account of job insecurity, lower pay packets and less
disposable income. While Hero Honda's rural focus will
continue to provide some buffer during the year, there
could be volume pressure at the upper end of
the market.
A regime of lower interest rates could provide some
succor in urban markets. However, the higher fiscal
deficit and government borrowing program could limit
the fall in interest rates.
On the brighter side, metal prices could remain soft in

RISKS AND OUTLOOK

too dependent on financing. Still, if interest rates
for two-wheelers continue to remain high and the
overall credit-squeeze persists, it is likely to
adversely impact the company's efforts in realizing
its full growth potential.
• Inflation: After climbing to double digits in the first
half, inflation growth was close to zero per cent by
year-end. However, high fiscal deficit and rising
food prices could push up inflation again during
the year. Rising inflation may limit the downward
trend in interest rates.
• Increasing competition: Several two-wheeler
companies introduced new models in the lucrative
premium segment; over time this could impact the
profitability of this segment. At the same time, the
expected fresh competition in the 100 cc segment
in 2010 poses a challenge to the company's
stronghold on this segment.
• Input costs: Prices of critical inputs came down
during the year thanks to lower commodity prices.
However, prices may be close to bottom levels, and
may start perking up in the second half of the
coming year if there is an economic revival.
Outlook the near term. Even if they start rising in the second half
At the end of the financial year, there were some signs against the backdrop of an economic revival in India and
that the worst might be over for the Indian economy. a downsizing of global inventories, the chances of a
The emergence of a stable government at the Centre, commodity bull run in the near term are remote.
and the prospects of policy stability and economic In a nutshell, therefore, the company is likely to turn in a
reforms over the next five years, could enhance the feel- steady performance, rather than a rollicking
good factor both within and outside the country. performance during the year. The bottomline is likely to
However, for the coming year, at least for the first six to grow at a reasonable pace on the back of cost
eight months, there could still be some pockets of pain improvements, plant rationalisation process
across export-dependent sectors, and business sectors efficiencies, and steady metal prices.
that depend heavily on urban markets.

34/35
IS IT ABOUT

REACH? HERO HONDA SPANS OVER 3500

CUSTOMER TOUCH POINTS, 256
MANUFACTURING PARTNERS AND
3 MANUFACTURING PLANTS ACROSS THE
LENGTH AND BREADTH OF INDIA.
 DRIVING TO NEW DESTINATIONS,
STRENGTHENING PROCESSES
ALONG THE WAY
Operations
Hero Honda has two key priorities: first, to expand and
grow aggressively, and second, to develop capabilities

OPERATIONS, REACH & SUPPLY CHAIN

and innovate constantly. Keeping these priorities in
mind, Hero Honda undertook the following activities
during the year:
Commissioning of a new plant at Haridwar:
The commissioning of this third plant gives Hero Honda
a total installed capacity of 4.2 million two wheelers. A
capacity of this magnitude has enabled Hero Honda to
retain its position as the world's largest two-wheeler
manufacturer for eight successive years.
The full commissioning of the Haridwar plant allowed
the company to plan its production better. Depending
on volumes, production was rationalized across the
three plants. This reduced changeover time helped the
company increase its overall efficiency level. In turn, this
helped Hero Honda bring down overall manufacturing
cost per vehicle during the year.
New Models: During the year, seven new models were
introduced across segments. Out of these four models
were launched in the space of a month. The variability of
the product mix could have posed a challenge; but,
flexible systems at the three plants allowed production
to proceed smoothly.
Distribution Network: The company has a conscious
strategy of penetrating new markets and
unrepresented territories through its distribution
network of dealers, authorized representatives,
stockists and SSPs. In March 2001, the company had
826 such sales and service points in India. By March
2009, this number had grown to more than 3500. All
the four marketing zones of the company
demonstrated a uniform increase in new dealerships
and SSPs during the year in review.
Rural network: During the year, Hero Honda's ambitious
rural connect program—Har Gaon, Har Aangan gained
critical mass. Currently, every non-metro dealership has
a dedicated “Rural Sales Executive” who travels to
villages, meets people and drives the initiative on a
sustainable basis across the country. At the moment,
there is a network of more than 500 rural sales
executives working on the rural vertical—which works
on the hub and spoke model. There is a plan to
substantially boost this number in the coming years.
Typically, the rural executives fan out and visit villages
with a population of more than 5000 people. Apart
from meeting opinion leaders, the executives are also
tasked with organising Loan Melas in partnership with

38/39
Gramin Banks, License Camps and Riding Schools. The
idea is not just to increase awareness about the two
wheeler industry but also to increase buy-in for Hero
Honda products.
During the year, more than 23,000 villages with a 5000-
plus population were covered by rural executives under
the Har Gaon, Har Aangan initiative.
Information Technology: IT at Hero Honda is an integral
part of the business. The organisation has a mix of
packaged and in-house applications to support business
transactions, integration with partners, reporting,
productivity and compliance. The applications range
from simple workflows to enterprise applications.
Similarly, at the infrastructure end, the organisation has
a robust and scalable world-class IT infrastructure.
The organisation continued to invest significantly in IT
during the year. Two large initiatives – Product Lifecycle
Management (PLM) and Dealer Management System
(DMS) were initiated.
Most of the processes and operations in the
organisation are fully integrated with IT. During the year,
the organisation tried to leverage the capabilities of
basic software by integrating with other applications.
For example, bar-coding systems are now extensively
used and these are fully integrated with SAP R/3. There
are also SMS based alerts to employees and dealers.
Workflows have been designed to improve internal
productivity. Dashboards and other reporting tools have
been introduced to enhance decision-making abilities.
In addition, the CRM (Customer Relationship
Management) software being used was upgraded.
CRM Software is currently being used by dealers for
ordering spares parts. By using a special feature called
web shop, dealers can directly shop for spare parts
through online catalogues. The system also allows the
Dealers to view the status of dispatch or payments. Also
as part of the CRM initiative, Hero Honda's flagship
CRM program—the passport program—was made
more technology enabled.
Working with Supply chain
Hero Honda continues to build and maintain
sustainable relationships with its supply chain
particularly in relation to long-term strategic direction of
the business. Vendor management is critical to Hero
Honda, as nearly 73 per cent of the production is
currently made up of material cost. A national network
of 256 vendors - including 36 ancillaries - forms the
backbone of its plant operations.
Softening metal prices, particularly of aluminum &
nickel in second half of the year, combined with better
sales realization worked together to bring down the
share of material costs considerably. Raw material costs
as a proportion of total costs scaled down from 72.5 per
cent to 69.5 per cent. Simultaneously, a more
streamlined sourcing policy also helped in
lowering costs.
During the year, the inbound logistic system at the
Haridwar plant was revamped; Hero Honda switched
from the individual logistic model to a specialized third
party logistic service provider for all Haridwar-based
suppliers. This switch helped the company reduce
logistics cost and improve the operational efficiency of
the value chain. During the year, the company also paid
considerable attention to developing a multi-modal
transport system, in order to derive cost economies.
Also at the Haridwar plant, Hero Honda switched from
individual purchase of basic materials by supply chain
partners to consolidated settlements by the company
itself. The resulting economies of scale have resulted in
greater leverage with suppliers and have helped bring
down material costs.
The online vendor connectivity program has made rapid
progress. Three years ago, the company had only 46
vendors connected online to the company's factories.
By the end of 2008-09, it is estimated 72 per cent of the
vendors and their supplies were connected online.
During the year, Hero Honda also worked with vendors
to develop and produce alloy wheels within Haridwar.
This considerably reduced dependence on
costly imports.
40/41
 THE POWER OF
HUMAN CAPITAL
The Human Touch
Dedicated to investing in our people…
We believe it is the passion of our employees that
enables the company to deliver exceptional
performance and growth even in an adverse
market environment.
Rewarding this passion:
PEOPLE AND ENVIRONMENT
Despite the adverse economic conditions and the
automobile industry going through a very difficult year,
the company stayed true to its policy of rewarding its
employees and announced an increment of
7-9 per cent.
Hero Honda has traditionally enjoyed excellent
industrial relations. Taking this a step forward, there
were important wage settlements with the workers at
the Dharuhera plant and Gurgaon plant. The
agreements will go a long way in sustaining cordial and
productive industrial relations in the company.
Encouraging the passion to learn:
Several new models were introduced on the shopfloor,
and this involved mastering different skill sets and
process capabilities on part of the workforce. The latter
were able to cope admirably, leading to increased
efficiency levels. In fact, Hero Honda managed to
increase topline growth at a healthy pace while
retaining control over the size of the organization,
thereby increasing shareholder value.
At Hero Honda's new plant at Haridwar, a number of
best practices have been put in place. One of the
company's core competencies is “Speed of
Implementation”. Taking this forward, a flatter and
leaner manpower structure was introduced at this plant.
Today, this plant is able to ensure considerably higher
levels of output, without compromising on either cost
or quality. Over time, the company plans to introduce a
similar hierarchical and workflow structure at its other
plants in Gurgaon and Dharuhera.
Hero Honda believes in empowering its employees – by
providing them life-long learning opportunities. In sync
with this belief, Hero Honda introduced a study leave
program for the employees this year. The company
hopes that this will provide employees with an
opportunity not only to augment their professional skills
and knowledge, but also to improve their life skills.
Celebrating and sharing the passion: Hero Parivaar
Hero Honda held an annual day for the workers and a
family day for employees across the organisation. The
full-day gala event was held in a festive atmosphere and
was attended by the entire management and Hero
Honda employees, along with their families. Events
flowed seamlessly throughout the day in a completely
informal environment. It is planned to make this an
annual feature from now.
Environmental Stewardship – Reducing our energy
footprint
“We Care about How”
Hero Honda has continuously aspired to become one of
India's most environmentally sustainable firms, and it
strives to strike the right balance between business,
mankind and nature.
It is the company's endeavour to create a culture of
minimum waste across the business. As part of this
philosophy, Hero Honda seeks to institutionalise
resource conservation, in particular, in the areas of oil,
water, electrical energy, paints and chemicals, and
finally, usage of paper in various company offices round
the country.
The company fully complies with all applicable
environmental regulations and practices. Periodic
energy audits are conducted by internal and external
experts. These ensure continuous improvement in areas
related to manufacturing processes and energy
conservation.
The company has trained energy managers who focus
on curbing the wasteful usage of energy. They also
implement and encourage usage of equipment with
better energy efficiency.
In the coming years, Hero Honda seeks to become a
zero-discharge company. Towards this end, the
company is also evaluating various proposals for buying
renewable energy from various sources. The company
has also initiated the process of putting together a
policy to offset carbon credits, in order to mitigate
global warming.
42/43
Green technology
Constant adoption of innovative green practices at Hero
Honda has resulted in the introduction of a special
Acrylic Cathodic Electro Deposition (ACED) painting
process for the frame body. This new process results in
99 per cent paint transfer efficiency and minimizes
effluents. The water soluble paint used is environment
friendly and delivers better quality and productivity.
At another level, the fluidized bed system, a thermal
cleaning process for paint hangers, is more environment
friendly than any other conventional cleaning method.
The incinerator used for sludge burning, along with a
pollution monitoring and control system, provides
proper treatment of flue gases before releasing it to the
atmosphere.
Last year, the company successfully developed primer
from waste paint sludge which had passed all quality
parameters and was at par with the virgin primer. This
ecologically friendly and cost effective re-cycling process
is now an integral part of the manufacturing operations.
Safe manufacturing
Over the last few years, the company has progressively
eliminated the use of a large number of harmful
substances. Today, every raw material and chemical is
thoroughly evaluated for its environmental impact
before it is introduced in a production process.
The company has been successful in eliminating toxic
substances. For example, lead-based balancers used for
cast wheels have been changed to zinc. Hexavalent
chrome has been replaced by trivalent chrome in all
plated parts and asbestos has been completely
eliminated from all product parts and manufacturing
operations.
Conserving energy
In the area of energy conservation, the heat recovery
unit installed in the incinerator exhaust is used for pre-
heating the boiler feed water and furnace oil. This
resulted in a cost saving of Rs. 60 lakh per year.
The boiler systems have also been reengineered and
optimised to save fuel, energy and steam losses which
have helped prune energy costs considerably. Dedicated
power supply to respective shop floors, forced draft
ventilation system and use of CFLs also helped bring
down energy costs.
Hero Honda also ensures complete reuse of treated
water in cooling towers. This saves up to 300 kilo litres
of water in a day.
Rain Water Harvesting
Over the years, Hero Honda has been involved in
rainwater harvesting projects to protect, preserve and
enhance the environment.
The company has implemented the various
recommendations of an extensive study that was done
to assess the scope of Ground Water Recharge in the
factory premises through Rooftop Harvesting, Storm
water Harvesting & Open area Harvesting.
Green Roof
The green roof at the Haridwar plant was one of the
major environment friendly initiatives during the year.
Besides restoring ecological and aesthetic value, it helps
in substantial amount of energy saving by moderating
temperature of roof and surrounding areas. It also helps
in reducing storm water runoff volume and peak flow
rate, and increases the service life of water proofing
membrane.
The Green Supply Chain
Hero Honda believes the process of sustainable
development is incomplete without involving the
company's supply chain.
With this in mind, the company has put together a
“Green Vendor Development Program” for the front
end and a “Green Dealer Development Program” for
the back end of the supply chain. In each of these
programs, the partners' are expected to manage their
environment involving material resources, industrial
wastes, energy resource, pollution and other effluents
based on a number of pre-determined parameters.
Hero Honda plans to support all its partners in the Green
Supply Chain venture by developing required
competencies, sharing knowledge, and by providing
technical support. 31 vendors enrolled under this
program in 2007-08 underwent requisite training and
were certified as green vendors during 2008-09. A fresh
lot of 40 vendors were inducted during the year for
the program.
Green Awards
For its diverse environment initiatives, the company has
received the following certifications:
- Environmental Management Systems as per ISO
14001
- Occupational Health and Safety Management
Systems as per OHSAS18001
- Quality Management Systems as per ISO 9001
The Company has also been awarded the Three Green
Leaves Award for its overall environmental performance
by the Centre for Science & Environment (CSE). It has
also received “Environmental Excellence” Award, given
by The Energy Resource Institute.
Hero Honda has been awarded TERI Corporate Awards
for Environmental Excellence 2008.
44/45
 CREATING SUSTAINABLE BUSINESSES,
MAKING A DIFFERENCE TO THE LIVES
OF STAKEHOLDERS
Behaving responsibly and contributing to the
communities in which we operate is an essential part of
our heritage. Hero Honda takes considerable pride in its
community relationships, especially the ones at
grassroots level that have evolved over time. The
company has played a pivotal role in bringing an
economically and socially backward region in
Dharuhera, Haryana, into the national economic
mainstream through direct interventions in education,
healthcare, vocational training, creation of social and
physical infrastructure, and environment management.
SOCIAL RESPONSIBILITY
Most of the group's social activities are planned and
executed by the Raman Kant Munjal Foundation, which
was set up in memory of Hero Honda's founder
managing director.
We have identified three priority areas for our
community development initiatives where we focus our
efforts and help make a difference:
Sustainable Enterprise/Vocational Training, Healthcare
and Education
Sustainable Enterprise/Vocational Training:
As part of its outreach and capacity building initiative,
the company organised a number of workshops in
different areas. There were six fruit preservation
workshops, four tie and dye workshops, a handicraft
workshop, a training workshop for teachers, and four
HIV awareness workshops. The workshops were
attended by more than 600 villagers, teachers and
schoolchildren in the Hero Honda catchment area.
To help local people, especially women, the Raman Kant
Munjal Foundation has, in the last decade, set up a
vocational training centre which runs diploma courses
in Tailoring, Embroidery and carpet weaving etc. Last
year, the Centre was upgraded, and it is now possible to
train 50 girls per batch. Till date, more than 700 girls
have completed their courses at the centre. While most
of the trainees have been placed in the garment
industry, a number of girls are also self-employed in their
respective village and neighboring towns. On an
average, their earnings range from Rs. 6000-7000 per
month.
Healthcare:
Healthcare outreach is an important cog in
Hero Honda's social outreach matrix, and during the
year, the company organised three cataract surgery
camps, three heart check up camps, eleven mental
health checkup camps, and one camp each for skin care
and the physically challenged. Around 1000 people
from the catchment area benefitted from these camps
during the year.
Education:
In February 2007, the Foundation had set up a
computer training & learning centre in partnership with
Microsoft. A total of 9 batches (boys and girls) are run
simultaneously, consisting of 18-20 students per batch.
Till date, a sizeable number of students have been
trained at the centre. To enhance the value of rural
youth in the job market, a spoken English course was
started recently. Currently, the course is being run in
three batches during the day.
The Raman Kant Munjal Foundation also runs ASHA, an
educational programme for village children who are first
generation learners and attend Govt. Schools. The
objective is to provide these children with additional
support to improve their educational standard and to
achieve their overall development.
The ASHA program was started three years ago and
currently, 10 centres are being managed across 8
villages, and more than 385 children have enrolled.
To ensure that there is overall personality development
of ASHA children, the Foundation organises
recreational activities and soft skills trainings. Regular
get togethers are also organised with Raman Munjal
Vidya Mandir children from time to time.
The Foundation also runs an Adult Literacy program, a
marriage facilitation service for underprivileged girls,
besides doorstep healthcare programs and with medical
camps for the local population.
In every CSR Project undertaken, the Foundation always
involves either a local NGO preferably the village itself or
panchayat members not only during execution but also
for sustaining them in the future.
In Projects like Hygiene, Sanitation, Safe Drinking Water,
Local Government Representatives such as Block
Development Officers are also involved for Govt.
funding & Technical knowhow of the projects.
A number of tree planting initiatives were also carried
out in government schools located in surrounding
villages, along with maintenance activities like repairing
roofs and boundary walls.
46/47
SO WHAT REALLY IS THE TRUE

MEASURE?
OF OUR
SUCCESS?
OUR
RELATIONSHIPS

50/51
 A N N U A L R E P O R T 0 8 - 0 9

CORPORATE FINANCIAL HIGHLIGHTS AND KEY RATIOS

Financial Highlights

INFORMATION Particulars 2004-05 2005-06 2006-07 2007-08

(Rupees in crores)
2008-09
Sales (Nos.) 26,21,400 30,00,751 33,36,756 33,37,142 37,22,000
Growth in sales (nos.) - % 26.6 14.5 11.2 0.01 11.53
Total net income 7,559 8,870 10,090 10,517 12,540
Growth in total income - % 26.1 17.4 13.7 4.2 19.2
Profit before tax 1,217 1,412 1,246 1,410 1,781
Profit after tax 810 971 858 968 1,282
Statutory Auditors Registered & Corporate Office Share capital 39.94 39.94 39.94 39.94 39.94
A.F. Ferguson & Co. 34, Community Centre,
Chartered Accountants, Basant Lok, Vasant Vihar, Reserves and surplus 1,453 1,969 2,430 2,946 3,761
9, Scindia House, New Delhi 110 057, India Total debt 202 186 165 132 78
Kasturba Gandhi Marg, Tel.: 011-2614 2451, 2614 4121
Net fixed assets 715 994 1,355 1,549 1,694
New Delhi 110 001, India Fax : 011-2615 3913
Tel: 011-2331 5884 www.herohonda.com Total assets (net) 1,695 2,195 2,635 3,118 3,879

Principal Bankers Registrar & Share Transfer Agents Market capitalisation 10,943 17,781 13,753 13,869 21,390
ABN Amro Bank N.V. Karvy Computershare Pvt. Ltd. EVA 564 641 485 575 835
Bank of America NT & SA Plot No. 17-24, Vithalrao Nagar,
Canara Bank Madhapur, Hyderabad 500 081
Citibank N.A. Tel.: 040-2342 0815-820 Key Ratios
HDFC Bank Limited Fax : 040-2342 0814
HSBC Limited Email: mailmanager@karvy.com
ICICI Bank Limited Particulars 2004-05 2005-06 2006-07 2007-08 2008-09
Dharuhera Plant
Punjab National Bank Long term debt/Equity Nil Nil Nil Nil Nil
69 KM Stone,
Standard Chartered Bank
Delhi-Jaipur Highway, OPBDIT*/Income from operations-% 16.0 16.0 12.2 13.3 14.2
The Bank of Tokyo-Mitsubishi UFJ Limited
Dharuhera, Distt. Rewari, OPBT**/Income from operations-% 14.8 14.6 10.8 11.8 12.7
Cost Auditors Haryana 122 100, India
Ramanath Iyer & Co. Tel.: 01274-264 012-15 Profit after tax/ Income from operations-% 10.9 11.1 8.6 9.3 10.4
Cost Accountants, Fax : 01274-267 024 Return on average equity- % 61.6 55.5 38.3 35.5 37.8
BL-4 (Paschmi), Shalimar Bagh
Gurgaon Plant Return on average capital employed- % 80.9 72.3 51.6 49.0 50.9
Delhi 110 088
37 KM Stone, EVA/Capital employed-% 37.5 32.9 20.1 20.0 23.9
Tel. : 011-2748 1904, 4702 8048
Delhi-Jaipur Highway,
Email: arrricon@gmail.com Dividend per share (Rs.) 20.0 20.0 17.0 19.0 20.0
Sector 33, Gurgaon,
Technical & Financial Collaborator Haryana 122 001, India Dividend Payout- % 56.3 46.9 46.3 45.9 36.5
Honda Motor Co., Ltd., Tel.: 0124-2372 123-134
Earning per share (Rs.) 40.6 48.6 43.0 48.5 64.2
1-1, 2 - Chome, Fax : 0124-2373 141-142
Minami - Aoyama Market value/book value (times) 7.3 8.8 5.6 4.6 5.6
Haridwar Plant
Minato-ku,
Plot No. 3 Sector-10,
Tokyo 107-8556, Japan
I.I.E. SIDCUL, Notes:
www.world.honda.com
Roshanabad, Haridwar 248 001
* OPBDIT: Operating Profit before Depreciation, Interest and Tax
Uttrakhand
Tel.: 01334-239 513 ** OPBT: PBT before Other income
Fax : 01334-239 512

52/53
 A N N U A L R E P O R T 0 8 - 0 9

ECONOMIC VALUE ADDED (EVA) STATEMENT DIRECTORS’ REPORT

(Rupees in crores) 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.
2004-05 2005-06 2006-07 2007-08 2008-09
Average Cap Employed 1,504 1,945 2,415 2,877 3,499
FINANCIAL RESULTS
Average Debt/Average Capital (%) 1.8 1.3 1.1 1.1 0.6
(Rupees in crores)
Average Equity/Average Capital (%) 98.2 98.7 98.9 98.9 99.4
For the year ended
March 31, 2009 March 31, 2008
Cost of Debt (% post-tax ) 0.7 1.0 0.6 0.9 1.6
Gross Sales 13,543.09 12,038.53
Cost of Equity
Net Sales and other Income 12,539.84 10,517.22
Beta 1.01 0.98 0.75 0.59 0.59
Profit before Finance charges and Depreciation 1,930.44 1,534.79
Cost of Risk Free Debt (%) 6.7 7.52 8.15 7.94 6.99
Less: Finance charges (31.68) (35.81)
Market Premium (%) 10 10 10 10 10
Depreciation 180.66 160.32
Cost of Equity (%) 16.74 17.32 15.65 13.83 12.85

Profit before tax (PBT) 1781.46 1410.28

EVA
Less: Provision for tax
Profit after Tax 810.47 971.34 857.89 967.88 1281.76
- Current 475.65 436.81
Add: Interest*(1-tax rate) 1.22 1.85 1.02 1.32 1.67
- Deferred 19.06 1.20
NOPAT= PAT + Interest*(1-t) 812 973 859 969 1283
- Fringe Benefit Tax (FBT) 4.99 4.39
Cost of Capital 247 333 374 394 448
EVA 564 641 485 575 835
Profit after tax (PAT) 1,281.76 967.88
Add: Balance of profit brought forward 2,021.77 1,594.78
Return on Capital Employed (%) 54.0 50.0 35.6 33.7 36.7
Balance available for appropriation 3,303.53 2,562.66
Weighted Average Cost of Capital (%) 16.5 17.1 15.5 13.7 12.8
EVA/Capital employed (%) 37.5 32.9 20.1 20.0 23.9
Appropriations
Dividend
ENTERPRISE VALUE
- Proposed Final 399.38 379.41
Market Capitalisation 10943 17781 13753 13869 21390
Corporate Dividend Tax 67.87 64.48
Add: Debt 202 186 165 132 78
Transfer to General Reserve 129.00 97.00
Less: Financial Assets 2044 2221 2010 2698 3588
Balance carried to Balance Sheet 2,707.28 2,021.77
EV (Enterprise Value) 9101 15746 11909 11303 17880
Dividend (%) 1,000 950
EV/Yr. End Capital Employed (Times) 5.4 5.9 4.5 3.6 4.6
Basic and Diluted Earnings Per Share (EPS)(Rs.) 64.19 48.47
The Audited statement of accounts for the year ended March 31, 2009 is attached along with the Report.

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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
Discussion & 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'
A N N U A L R E P O R T 0 8 - 0 9
Certificate on its compliance is annexed hereto as Annexure - I.
INTERNAL CONTROL SYSTEMS
Hero Honda has a proper and adequate system of internal
controls. This ensures that all assets are safeguarded and
protected against loss from unauthorised use or disposition and
those transactions are authorised, recorded and reported
correctly.
An extensive programme of internal audits and management
reviews supplement the process of internal control. Properly
documented policies, guidelines and procedures are laid down
for this purpose. The internal control system has been designed
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.
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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.
ACKNOWLEDGEMENT
It is our strong belief that caring for our business constituents has
ensured our success in the past and will do so in future. Your
Directors acknowledge with sincere gratitude the co-operation
and assistance extended by the Central Government, State
Government(s), Financial Institution(s), Bank(s), Customers,
Dealers, Vendors and Ancillary Undertakings. The Directors also
place on record their appreciation for the valuable assistance and
guidance extended to the Company by Hero Cycles Ltd. and
Honda Motor Co., Ltd., Japan and for the encouragement and
assurance, which our collaborator has given for the growth and
development of the Company.
The Board, also takes this opportunity to express its deep
gratitude for the continued co-operation and support received
from its valued shareholders.
For and on behalf of the Board
Brijmohan Lall
Chairman
New Delhi
July 29, 2009
ANNEXURE - I TO DIRECTORS' REPORT
CORPORATE GOVERNANCE REPORT
Philosophy on 'Code of Corporate Governance'
Hero Honda's philosophy of Corporate Governance stems from
a belief that the Company's business strategy and plans should
be consistent with the welfare of all its stakeholders, including
shareholders. Good Corporate Governance practices enable a
Company to attract financial and human capital. In turn, these
resources are leveraged to maximize long-term shareholder
value, while preserving the interests of multiple stakeholders,
including society at large.
Corporate Governance rests upon the four pillars of:
transparency, full disclosure, independent monitoring and
fairness to all, especially to minority shareholders. Hero Honda
has always strived to promote Good Governance practices,
which ensure that:
• A competent management team is at the helm of affairs;
• The Board is strong with an optimum combination of
Executive and Non-Executive (including Independent)
Directors, who represent the interest of all stakeholders;
• The Board is effective in monitoring and controlling the
Company's affairs;
• The Board is concerned about the Company's shareholders; and
• The Management and Employees have a stable environment.
A N N U A L R E P O R T 0 8 - 0 9
We believe that the essence of Corporate Governance lies in the
phrase “Your Company”. It is “Your” Company because it
belongs to you – the shareholders. The Chairman and Directors
are “Your” fiduciaries and trustees. Their objective is to take the
business forward to maximise “Your” long-term value.
The Securities and Exchange Board of India (SEBI) has specified
certain mandatory governance practices, which are incorporated
in Clause 49 of the Listing Agreement of Stock Exchanges.
Hero Honda is committed to benchmarking itself with the best
standards of Corporate Governance, not only in form but also in
spirit. This section, along with the section on 'Management
Discussion & Analysis' and 'General Shareholder's Information'
constitute Hero Honda's compliance with the Clause 49 of the
Listing Agreement of Stock Exchanges.
BOARD OF DIRECTORS
Composition of the Board
As on March 31, 2009, the Company's Board of Directors
comprised of Sixteen Directors. Four Directors, including the
Chairman, are Executive; four are Non-Executive and eight are
Non-Executive and Independent. Fifty per cent of the Board
consists of Independent Directors, therefore the composition of
the Board is in consonance with the Clause 49. Details of the
composition of the Board, number of meetings held during their
tenure and attended by them etc., are given in Table 1.
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 A N N U A L R E P O R T 0 8 - 0 9

TABLE 1: DETAILS ABOUT COMPANY'S BOARD OF DIRECTORS / ATTENDANCE RECORD DURING FINANCIAL YEAR 2008-09 The longest gap between any two Board Meetings was for a Apart from the above, none of the Non-Executive (including
period of 3 months and 4 days. Independent) Directors hold any shares (as own or on behalf of
Number of Board Attendance at Number of Committee Number of Committee Number of outside
Meetings held during last AGM Memberships Chairmanships held Directorships held other person on beneficial basis) in the Company.
Directors' Attendance Record and Directorships /
his/her tenure and (including Chairman Committee Memberships Information Supplied to the Board
Name of Director attended by him/her ships) held
Held Attended (excluding Private Companies, Foreign Companies and Details are given in Table 1. Board members are given agenda papers along with necessary
Section 25 Companies) documents and information in advance of each meeting of the
As per Clause 49 of the Listing Agreement entered into with the
Executive Directors Board and Committee(s). However, in case of business exigencies
Stock Exchange(s), an Independent Director means a Non-
or urgencies, the resolutions are passed by way of circulation. In
Mr. Brijmohan Lall Munjal 4 4 Yes None None 9 Executive Director who;
addition to the regular business items, the following items /
Mr. Pawan Munjal 4 4 Yes None None 2 • apart from receiving director's remuneration, does not have
Mr. Toshiaki Nakagawa 4 4 Yes None None 1 information are regularly placed before the Board to the extent
any material pecuniary relationships or transactions with the applicable:
Mr. Yutaka Kudo2 1 1 N.A. None None 1
Mr. Sumihisa Fukuda3 3 3 Yes None None 1 Company, its promoters, its directors, its senior management,
its holding Company, its subsidiaries or associates which may • Annual operating plans and Budgets, Capital budgets and
affect independence of the director; updates;
Non-Executive Directors
Mr. Om Prakash Munjal 4 Nil No None None 10 • is not related to promoters or persons occupying management • Purchase and disposal of major fixed assets;
Mr. Sunil Kant Munjal 4 4 Yes None None 14
positions at the board level or at one level below the board;
Mr. Masahiro Takedagawa 4 Nil No 1 None 2 • Quarterly and half yearly results of the Company;
Mr. Satoshi Matsuzawa1 4 4 No None None None • has not been an executive of the company in the immediately
• Minutes of the Audit Committee, Shareholders' Grievance
preceding three financial years;
Non-Executive and Committee, Remuneration Committee and Committee of
• is not a partner or an executive of the statutory audit firm or Director's meetings;
Independent Directors
Mr. Narinder Nath Vohra4 1 1 N.A. 2 1 1 the internal audit firm that is associated with the company and
has not been a partner or an executive of any such firm for the • Information on recruitment and remuneration of senior
Mr. Pradeep Dinodia 4 4 Yes 8 4 8
Gen. (Retd.) V.P. Malik 4 4 Yes 4 None 3 last three years and the legal firm(s) and consulting firm(s) that management just below the Board level including
Mr. Analjit Singh 4 2 No None None 13 have a material association with the entity; appointment or removal of CFO and Company Secretary;
Dr. Pritam Singh 4 4 No 3 None 5
• is not a material supplier, service provider or customer or a • Any material defaults in financial obligations to and by the
Ms. Shobhana Bhartia 4 1 No 2 2 14
Mr. Sunil Bharti Mittal 4 1 No 2 2 7 lessor or lessee of the company, which may affect Company, or substantial non-payments for goods sold by the
Mr. Meleveetil Damodaran5 3 2 No None None 3 independence of the Director; Company;
Mr. Arun Nath Maira6 1 1 N.A. 1 1 5 • is not a substantial shareholder of the Company i.e. owning • Fatal or serious accidents, dangerous occurrences, any
Notes: two percent or more of the block of voting shares; material effluent or pollution problems;
1. Mr. Satoshi Matsuzawa was appointed as an Alternate Director to Mr. Takashi Nagai w.e.f. April 24, 2008. • is not less than 21 years of age.
• Transactions that involve substantial payment towards
2. Mr. Yutaka Kudo resigned from the Directorship and Whole-time Directorship on May 31, 2008. None of the Director on the Board holds the office of Director in goodwill, brand equity or intellectual property;
more than 15 companies nor are they members in Committees
3. Mr. Sumihisa Fukuda was appointed as an Additional Director and Technical Director in the Whole-time employment of the Company • Materially important show cause, demand, prosecution and
w.e.f. June 1, 2008. of the Board in more than 10 Committees or Chairman of more
penalty notices;
than 5 Committees. Further, there are no pecuniary relationships
4. Mr. Narinder Nath Vohra resigned from the Directorship on June 24, 2008. or transactions between the Independent Directors and the • Details of quarterly foreign exchange exposures and steps
5. Mr. Meleveetil Damodaran was appointed as an Additional Director on the Board w.e.f. June 16, 2008. Company, except for the sitting fees drawn by the Non-executive taken by the management to limit the risks of adverse
Directors and sitting fees and commission drawn by the exchange rate movement;
6. Mr. Arun Nath Maira was appointed as an Additional Director on the Board w.e.f. December 20, 2008.
Non-executive and Independent Directors for attending the • Sale of material nature, of investments and assets, which are
meeting of the Board and its Committee(s) thereof. not in the normal course of business;
Four Directors namely Mr. Brijmohan Lall Munjal (Executive (Non-Executive Director) and Mr. Takashi Nagai (Non-Executive
Chairman in the Whole-time employment of the Company), Director) are nominees of Honda Motor Co., Ltd., Japan, which Shareholding of Non-Executive Directors • Details of Joint Ventures and Agreements or variations
Mr. Pawan Munjal (Managing Director & CEO), Mr. Om Prakash too, owns 26 per cent equity in the Company. Apart from these,
Name of the Director Category No. of thereof;
Munjal (Non-Executive Director) and Mr. Sunil Kant Munjal (Non- the rest of the Board comprises of Non-Executive and
Executive Director) belong to the promoter family of the Hero Independent Directors. shares held • Quarterly Statutory Compliance Report;
Group, which owns 26 per cent equity in the Company. Four Mr. Om Prakash Munjal Non-Executive Director 25,000 • Non-compliance of any regulatory, statutory nature or listing
Board Meetings
Directors namely Mr. Toshiaki Nakagawa (Joint Managing requirements and shareholder's service such as
Mr. Sunil Kant Munjal Non-Executive Director 32,500
Director), Mr. Sumihisa Fukuda (Technical Director in the Whole- During 2008-09, the Board of Directors met 4 (four) times on April non-payment of dividend, delay in share transfer etc.;
time employment of the Company), Mr. Masahiro Takedagawa 24, 2008; July 29, 2008; October 21, 2008 and January 20, 2009.

60/61

• Investments strategy / plan;
• Any issue which involves possible public or product liability
claims of substantial nature, including any judgment or order
which may have passed strictures on the conduct of the
Company or taken an adverse view regarding another
enterprise that can have negative implications on the
Company; and
• Significant labour problems and their proposed solutions.
Also, any significant development in Human Resources /
Industrial Relations front like signing of Wage Agreement,
implementation of Voluntary Retirement Schemes etc.
Code of Conduct
We at Hero Honda have laid down a code of conduct for all Board
members and senior management of the Company. The code of
conduct is available on the website of the Company i.e.
www.herohonda.com. The code has been circulated to all the
members of the Board and senior management and they have
affirmed compliance with the code of conduct. A declaration
signed by the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO) to this effect is attached to the Annual Report.
Risk Management
We at Hero Honda have established effective risk assessment and
minimization procedures, which are reviewed by the Board
periodically. There is a structure in place to identify and mitigate
various risks faced by the Company from time to time.
BOARD LEVEL COMMITTEES
AUDIT COMMITTEE
The genesis of Hero Honda's Audit Committee can be traced
back to the Audit Sub-Committee, constituted in 1987. Since
then it has been dealing with matters prescribed by the Board of
Directors on a case to case basis. In general, the primary
role/objective of the Audit Committee is to review the financial
statements of the Company, strengthen internal controls & look
into all transactions that have monetary implications on the
functioning of the Company. The nomenclature, constitution
and terms of reference of the Committee were revised on
January 16, 2001 and an Audit Committee was set up as per the
provisions of the Section 292A of the Companies Act, 1956 and
clause 49 of the Listing Agreement of the Stock Exchange(s).
As on March 31, 2009, the Committee had three Non-Executive
and Independent Directors in accordance with the prescribed
guidelines. Mr. Pradeep Dinodia, a leading Chartered
Accountant, is the Chairman of the Committee. The other
members are Dr. Pritam Singh and Gen.(Retd.) V.P. Malik, all
learned personalities in their respective fields. The members of
the Committee have adequate knowledge in the field of finance,
accounting, and law. The role and "terms of reference" of the
Audit Committee includes the following:
• Overseeing
- the Company's financial reporting process and disclosure of
its financial information to ensure that the financial
statements are correct, sufficient and credible.
• Recommending
- the appointment, re-appointment, replacement and
removal of the statutory auditor, fixation of audit fees and
approving payments for any other services.
• Reviewing
- the annual financial statements with the management with
primary focus on matters required to be included in the
Directors' Responsibility Statement, changes, if any in
accounting policies and practices and reasons thereof,
compliance with accounting standards and guidelines of
stock exchange(s), major accounting entries, qualifications
in draft audit reports, related party transactions & the going
concern assumption.
- the quarterly financial statements with the management
before submission to the board for approval.
- the adequacy of internal control systems and the internal
audit function and reviewing the Company's financial and
risk management policies.
- the findings of any internal investigations by the internal
auditors into matters where there is suspected fraud or
irregularity or a failure of internal control systems of a
material nature and reporting the matter to the Board.
- the reports furnished by the internal auditors, discussion
with internal auditors on any significant findings and
ensuring suitable follow up thereon.
- Directors' overseas traveling expenses; and
- Foreign exchange exposure.
• Complying
- with the provisions of listing agreement laid down by the
Stock Exchange(s) and legal requirements concerning
financial statements.
• Discussing
- with external auditors before the audit commences, of the
nature and scope of audit. Also post audit discussion to
ascertain any area of concern.
A N N U A L R E P O R T 0 8 - 0 9
• Looking TABLE 3: DETAILS OF THE REMUNERATION COMMITTEE
- into the reasons for substantial defaults in the payments to Name of Committee Position No. of No. of
the Shareholders (in the case of non-payment of declared member held meetings meetings
dividends) and creditors. held during attended
his tenure
The Sr. Vice President & CFO, Internal Auditors, Statutory
Auditors and Cost Auditors attend the meetings of the Gen. (Retd.) V.P.Malik Chairman 2 2
Committee on the invitation of the Chairman. Mr. Ilam
Mr. Pradeep Dinodia Member 2 2
C. Kamboj, Sr. G.M. Legal & Company Secretary acts as the
Secretary of the Committee. Mr. N.N.Vohra1 Member 1 1
During the year, 7 (Seven) meetings of the Audit Committee 1. Mr. Narinder Nath Vohra has resigned from the Directorship
were held on April 07, 2008; April 24, 2008; June 02, 2008; July on June 24, 2008.
29, 2008; October 21, 2008; January 08, 2009 and January 20,
Remuneration Policy
2009 in due compliance with the stipulated provisions. The
attendance record of members of the Audit Committee is given Remuneration paid to Executive Director
in Table 2. The remuneration paid to Executive Directors is recommended
by the Remuneration Committee and approved by the Board of
TABLE 2: DETAILS OF THE AUDIT COMMITTEE
Directors, in the Board meeting, subject to the subsequent
Name of Committee Position No. of No. of approval by the shareholders at the general meeting and such
member held meetings meetings other authorities, as the case may be.
held during attended
At the Board meeting, only the Non-Executive and Independent
his tenure
Directors participate in approving the remuneration paid to the
Mr. Pradeep Dinodia Chairman 7 7 Executive Directors. The remuneration is fixed considering
various factors such as qualification, experience, expertise,
Gen. (Retd.) V.P.Malik Member 7 7
prevailing remuneration in the corporate world and the financial
Dr. Pritam Singh Member 7 5 position of the Company. The remuneration structure comprises
of Basic Salary, Commission, Perquisites and allowances,
Mr. N.N.Vohra1 Member 3 2
Contribution to provident fund and other funds. Besides these, a
fixed commission @ 1 per cent of net profit computed in
1. Mr. Narinder Nath Vohra has resigned from the Directorship
accordance with Section 198 of the Companies Act, 1956, is
on June 24, 2008.
paid as per the terms of appointment.
REMUNERATION COMMITTEE
As of now, the Company does not have any Employee Stock
The Company had set up a Remuneration Committee on Options Plans (ESOPs). Term of appointment of Executive
January 16, 2001 to review and recommend the payment of Directors is 5 (five) years. Further, no notice period and severance
annual salaries, commission and finalise service agreements and fee is applicable for the above-mentioned Executive Directors.
other employment conditions of Executive Directors. The Remuneration paid to Non-Executive Directors
Committee takes into consideration the best remuneration
The Non-Executive Directors of the Company are paid sitting fees
practices being followed in the industry while fixing appropriate
of Rs.16,500 for each meeting of the Board, Audit Committee,
remuneration packages.
Remuneration Committee and Shareholders' Grievance
As on March 31, 2009, the Committee had two Non-Executive Committee attended by them.
and Independent Directors as its members in accordance with
However, in addition to the sitting fees, Non-Executive and
the prescribed guidelines. Gen. (Retd.) V.P. Malik, is the
Independent Directors shall be entitled to remuneration by way
Chairman of the Committee and Mr. Pradeep Dinodia is the
of commission upto 0.10 per cent of profits of the Company.
member of the Committee. Mr Ilam C. Kamboj, Sr. G.M. Legal &
Tables 4 and 5 gives details of remuneration paid to Directors.
Company Secretary acts as the Secretary of the Committee.
During 2008-09, the Company did not advance any loans to any
During the year, 2 (two) meetings of the Remuneration of its Directors.
Committee were held on May 12, 2008 and December 2, 2008.
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 A N N U A L R E P O R T 0 8 - 0 9

TABLE 4: REMUNERATION TO EXECUTIVE DIRECTORS SHAREHOLDERS' GRIEVANCE COMMITTEE comprised of Mr. Brijmohan Lall Munjal, Chairman; Mr. Pawan
Munjal, Managing Director & CEO; Mr. Toshiaki Nakagawa, Joint
Executive Directors Salary* (Rs.) Commission (Fixed) ** (Rs.) Total (Rs.) This Committee, constituted on January 16, 2001, specifically
Managing Director; Mr. Sumihisa Fukuda, Technical Director in
looks to redress shareholders' and investors' grievances arising
Mr. Brijmohan Lall Munjal 11,828,384.00 186,100,000.00 197,928,384.00 the whole-time employment of the Company; Mr. Ravi Sud, Sr.
out of issues regarding share transfers, dividends,
Vice President & CFO and Mr. Ilam C. Kamboj, Sr. G.M. Legal &
Mr. Pawan Munjal 10,767,535.95 186,100,000.00 196,867,535.95 dematerialisation and related matters.
Company Secretary as its members.
Mr. Toshiaki Nakagawa 4,721,406.00 186,100,000.00 190,821,406.00 As on March 31, 2009, the Committee had two Non-Executive
Constituted in 1985, the Committee deals with matters
1 and Independent Directors as its members in accordance with
Mr. Yutaka Kudo 919,221.00 30,591,780.00 31,511,001.00 delegated by the Board from time to time.
the prescribed guidelines. Dr. Pritam Singh is the Chairman of the
Mr. Sumihisa Fukuda2 3,143,210.00 154,998,356.00 158,141,566.00 Committee. The other member of the Committee is Mr. Pradeep This Committee meets whenever required. During the year
Dinodia. Mr Ilam C. Kamboj, Sr. G.M. Legal & Company under review 2 (two) meetings of the Committee were held.
Notes:
Secretary, acts as the Secretary of the Committee.
SHARE TRANSFER COMMITTEE
1. Mr. Yutaka Kudo resigned from the Directorship and Whole-time Directorship on May 31, 2008.
The Company has an efficient system of dealing with investors'
2. Mr. Sumihisa Fukuda was appointed as an Additional Director and Technical Director in the whole-time employment of the Company This Committee was constituted on January 31, 2007 as a
grievances. The Chairman and the Managing Director & CEO of
w.e.f. June 1, 2008. measure of Good Corporate Governance practice and to
the Company take personal interest in all matters of concern for
streamline the work related to share transfer etc. which was
* Salary includes Basic Salary, Perquisites and allowances, Contribution to provident and other funds. investors as and when necessary. The Company Secretary being
earlier approved by the Committee of Directors. Mr. Ravi Sud,
the Compliance Officer carefully looks into each issue and
** Total Commission is calculated @ 1% of the net profit calculated in accordance with Section 198 of the Companies Act, 1956. Sr. Vice President & CFO and Mr. Ilam C. Kamboj , Sr. G.M. Legal
reports the same to the Shareholders' Grievance Committee. In
& Company Secretary are its members.
the meetings of the Committee the status of all shareholders'
TABLE 5: REMUNERATION TO NON-EXECUTIVE DIRECTORS complaints, requests, queries etc. along with letters received This Committee usually meets whenever required. During the
Non-Executive Directors Sitting fees (Rs.) Commission (Rs.) Total (Rs.) from all statutory authorities were reviewed. year under review 15 (fifteen) meetings of the Committee were
held.
Mr. Sunil Kant Munjal 66,000 N.A. 66,000 During the year, 4 (four) meetings of the Shareholders' Grievance
Committee were held on April 24, 2008; July 29, 2008; October DISCLOSURES
Mr. Pradeep Dinodia 2,80,500 10,25,000 13,05,500 21, 2008 and January 20, 2009.
Related Party Transactions
Mr. Satoshi Matsuzawa1 Nil# N.A. Nil Details of shareholders complaints and their status are given in
The Company follows the following policy in disclosing the
Mr. Meleveetil Damodaran2 33,000 1,00,000 1,33,000 the section on "General Shareholder's Information". The
related party transactions to the Audit Committee:
attendance record of members of the Shareholders' Grievance
Mr. Narinder Nath Vohra3 82,500 3,25,000 4,07,500 Committee is given in Table 6. a) A Statement in the Summary form of transactions with
Gen.(Retd.) V.P. Malik 2,14,500 7,25,000 9,39,500 related parties in the ordinary course of business is placed
TABLE 6: DETAILS OF SHAREHOLDERS' GRIEVANCE COMMITTEE
periodically before the Audit Committee.
Dr. Pritam Singh 2,14,500 7,00,000 9,14,500 Name of Committee Position No. of No. of
b) There are no material individual transactions with related
Mr. Analjit Singh 33,000 1,00,000 1,33,000 member held meetings meetings
parties, which are not in the normal course of business and
held during attended
Mr. Arun Nath Maira4 16,500 50,000 66,500 which are not on an arm's length basis.
his tenure
Ms. Shobhana Bhartia 16,500 1,00,000 1,16,500 Disclosures on materially significant related party
Mr. N.N. Vohra1 Chairman 1 1
transactions that may have potential conflict with the
Mr. Sunil Bharti Mittal Nil# N.A. Nil interest of the company at large.
Dr. Pritam Singh2 Chairman 4 4
#
Mr. Masahiro Takedagawa Nil N.A. Nil Mr. Pradeep Dinodia Member 4 4 There are no materially significant transactions made by the
No sitting fee was paid to Mr. Om Prakash Munjal as he did not attend any of the meetings of the Board held during the financial Company with its promoters, Directors or Management or
1. Mr. Narinder Nath Vohra has resigned from the Directorship
year 2008-09. relatives etc. that may have potential conflict with the interest of
on June 24, 2008.
the Company at large.
# Mr. Sunil Bharti Mittal, Mr. Masahiro Takedagawa and Mr. Satoshi Matsuzawa (Alternate Director to Mr. Takashi Nagai), have
2. Dr. Pritam Singh was appointed as Chairman w.e.f. July 29,
opted not to receive sitting fees which were accrued to them on account of attending the meetings of the Board. Accounting Treatment in preparation of Financial
2008.
1. Mr. Satoshi Matsuzawa has been appointed as an Alternate Director to Mr. Takashi Nagai w.e.f. April 24, 2008. Statements
COMMITTEE OF DIRECTORS
2. Mr. Meleveetil Damodaran was appointed as an Additional Director on the Board w.e.f. June 16, 2008. The guidelines/accounting standards laid down by the Institute
Apart from these Committees, the Company also has a of Chartered Accountants of India (ICAI) have been followed in
3. Mr. Narinder Nath Vohra has resigned from the Directorship on June 24, 2008.
Committee of Directors. As on March 31, 2009, the Committee preparation of the financial statements of the Company.
4. Mr. Arun Nath Maira was appointed as an Additional Director on the Board w.e.f. December 20, 2008.

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Compliances by the Company
There has neither been any non-compliance of any legal
provision of applicable law nor any penalty, stricture imposed by
the stock exchanges or SEBI or any other authorities, on any
matters related to capital market during the last three years.
Insider Trading
In compliance with the SEBI regulation on prevention of insider
trading, the Company has instituted a comprehensive code of
conduct for its management, staff and relevant business
associates. The code lays down guidelines, which advises them
on procedures to be followed and disclosures to be made, while
dealing with shares of the Company and cautioning them on
consequences of non-compliances.
CEO & CFO CERTIFICATION
Certificate from Mr. Pawan Munjal, Managing Director & CEO
and Mr. Ravi Sud, Sr. Vice President & CFO in terms of Clause
49(V) of the Listing Agreement for the year under review was
placed before the Board of Directors of the Company in their
meeting held on April 21, 2009. A copy of the same certificate on
the financial statements for the financial year ended March 31,
2009 and the Code of Conduct is given along with this Report.
APPOINTMENT AND RE-APPOINTMENT OF DIRECTORS
Gen. (Retd.) V.P. Malik, Mr. Brijmohan Lall Munjal, Mr. Sunil Kant
Munjal and Mr. Takashi Nagai, Directors of the Company, retire
by rotation at the ensuing Annual General Meeting (AGM) and
being eligible, offer themselves for re-appointment.
The brief resume of the said Directors proposed to be
re-appointed is being provided along with the Notice of the
AGM which is being sent along with the Annual Report.
MEANS OF COMMUNICATION
The Company has regularly sent, both by post as well as by fax
(within 15 minutes of closure of the Board meeting) the annual
audited as well as quarterly un-audited results to both the Stock
exchanges, BSE & NSE, after they are taken on record by the
Board of Directors.
A N N U A L R E P O R T 0 8 - 0 9
The Company's half yearly results (period ended September 30, GENERAL BODY MEETINGS
2008) and annual results (year ended March 31, 2009) have been
Details of Annual General Meeting (AGM)
published in English, Hindi and other Regional newspapers (viz.
The Times of India, The Economic Times, Hindustan Times, Location, date and time of general meetings held during the last three years and Ordinary and Special resolutions passed thereat are
Financial Express, The Mint, Navbharat Times, Mumbai Mirror given in Table 7.
and Financial Times etc).
Pursuant to the provisions of Section 192A of the Companies Act, 1956, there was no matter as required to be dealt by the Company to be
Results for the quarter ended June 30, 2008 and December 31, passed through postal ballot.
2008 have been published in English, Hindi and other Regional
newspapers (viz. The Economic Times, The Times of India, The TABLE 7: DETAILS OF AGM'S
Hindustan Times, Financial Times, Mumbai Mirror, Bangalore
Mirror, Ahmedabad Mirror, Financial Express and Jansatta etc). Year Time, Day, Date & Location Summary of Resolutions Passed
Further, the Company's quarterly, half yearly results have also Ordinary Resolutions
2007-08 11:00 A.M.
been sent to the individual shareholders of the Company. Results Thursday, • Appointment of Mr. Sumihisa Fukuda Director & as Technical Director in the
for each quarter, half year and annual results for the year ended September 25, 2008 Whole-time employment of the Company.
March 31, 2009 have been displayed on the Company's website Airforce Auditorium, • Appointment of Mr. Meleveetil Damodaran as Director.
Subroto Park,
www.herohonda.com. The website also displays official news
Dhaula Kuan,
releases and distribution schedule, as required by Clause 35 of New Delhi 110010
the Listing Agreement.
Moreover, pursuant to Clause 51 of the Listing Agreement, 2006-07 10:30 A.M. Ordinary Resolutions
financial information like annual and quarterly financial Tuesday, • Appointment of Mr. Yutaka Kudo as Director and Whole-time Director.
statements and shareholding pattern etc. are available on the July 24, 2007, • Appointment of Mr. Takashi Nagai as Director.
Airforce Auditorium,
web-site www.corpfiling.com. The Company Secretary being
Subroto Park, Special Resolution
the Compliance Officer ensures the correctness and authenticity
Dhaula Kuan, • Payment of commission to Non-Executive Independent Director(s).
of the information filed in the said website. New Delhi 110010
During the year ended March 31, 2009, various presentations
were made to analysts and Institutional investors. Further, the 2005-06 04:30 P.M. Ordinary Resolutions
Management Discussion & Analysis (MDA) Report, Thursday, • Appointment of Mr. Sunil Bharti Mittal as Director.
throwing light on the operations, business performance, September 14, 2006, • Appointment of Mr. Toshiaki Nakagawa as Director and Joint Managing
financial and other important aspects of the Company's Airforce Auditorium, Director.
Subroto Park, • Appointment of Mr. Masahiro Takedagawa as Director.
functioning forms part of this Annual Report. Dhaula Kuan, • Re-appointment of Mr. Pawan Munjal as Managing Director.
New Delhi 110010
Special Resolutions
• Re-appointment of Mr. Brijmohan Lall Munjal as Chairman and Director in the
Whole-time employment of the Company.
• Keeping of Registers / Returns / Documents at the Registered Office.
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 A N N U A L R E P O R T 0 8 - 0 9

GENERAL SHAREHOLDER'S INFORMATION Stock Codes Stock Market Data

The Company's stock codes at the primary exchanges are: The Company's market capitalisation is included in the
Annual General Meeting
computation of the BSE -100, BSE- 200, BSE- 500, BSE Sectoral
Date: September 22, 2009 Stock Code Reuters Code Bloomberg Indices, S&P CNX Nifty, S&P CNX 500 and CNX 100. Monthly
high and low quotations as well as the volume of shares traded at
Day: Tuesday BSE 500182 HROH.BO HH IN the NSE & BSE is given in Table 8.
Time: 04:30 P.M.
NSE HEROHONDA HROH.NS NHH IN
Venue: Sri Satya Sai International Centre,
Pragati Vihar, Lodhi Road, New Delhi 110 003
TABLE 8: SHARE PRICE DATA FOR 2008-09 (IN RS.) (SHARES OF RS. 2 PAID UP VALUE)
Financial Calendar National Stock Exchange of India Limited, Mumbai (NSE)
Financial year: April 1 to March 31
Month Total High Date Volume on Low Date Volume on
Volume that date that date
For the year ended March 31, 2009 results were announced on:
First quarter ended June 30, 2008 July 29, 2008 Quantity (In Rs.) Quantity (In Rs.) Quantity

Second quarter and half year ended September 30, 2008 October 21, 2008 April'08 4655726 867.70 29-Apr-08 558930 694.00 01-Apr-08 269683

Third quarter ended December 31, 2008 January 20, 2009 May'08 4933922 865.00 02-May-08 342126 732.35 30-May-08 258499
Fourth quarter and year ended March 31, 2009 April 21, 2009 June'08 3963125 835.00 11-Jun-08 178037 663.00 25-Jun-08 218902
July'08 5792164 808.90 31-Jul-08 619127 632.50 16-Jul-08 183679
For the year ending March 31, 2010, results will be announced on: (Tentative and subject to change) August'08 5810646 848.00 05-Aug-08 642626 770.25 01-Aug-08 244947
First quarter ending June 30, 2009 July, 2009 (3rd week) September'08 10533296 890.00 04-Sep-08 618649 740.00 12-Sep-08 306664
Second quarter and half year ending September 30, 2009 October, 2009 (3rd week) October'08 12005090 898.00 03-Oct-08 751098 661.10 27-Oct-08 427550
Third quarter ending December 31, 2009 January, 2010 (3rd week) November'08 10086006 823.70 28-Nov-08 845901 691.25 21-Nov-08 685629
Fourth quarter and year ending March 31, 2010 April, 2010 (3rd week) December'08 9203005 842.80 19-Dec-08 550335 720.05 02-Dec-08 533848
January'09 8965518 890.00 29-Jan-09 601241 751.25 09-Jan-09 462178
February'09 8047182 999.60 10-Feb-09 431505 861.25 02-Feb-09 271465
Book closure 1. Bombay Stock Exchange Limited, (BSE) based at Phiroz
March'09 12605701 1103.85 27-Mar-09 934713 896.00 3-Mar-09 315750
Jeejeebhoy Towers, 25th Floor, Dalal Street, Mumbai
The dates of book closure are from Tuesday, September 1, 2009
400 001; &
to Friday, September 4, 2009 (both days inclusive). HERO HONDA'S SHARE PRICE MOVEMENT VIS A VIS NIFTY
2. National Stock Exchange of India Limited, (NSE) based at HHML VS NSE NIFTY (Monthly High)
Dividend payment
Exchange Plaza, Plot No. C/1, G Block, Bandra Kurla
The Board of Directors has recommended 1000 per cent Complex, Bandra East, Mumbai 400 051. HHML NIFTY

dividend for the financial year 2008-09. The dividend, if 5500.00

Further, the Company had applied for delisting of its shares from
approved by shareholders at the ensuing AGM shall be paid to 1150.00 5250.00
The Calcutta Stock Exchange Association Limited (CSE) and 5000.00
those shareholders whose names appear on the Register of
complied with the procedural formalities for the same 4750.00
Members as on Friday, September 4, 2009. In respect of shares 1050.00
immediately after the approval received from the shareholders, 4500.00
held in electronic form, the dividend will be payable to the
Share Price
but the final approval of the same is still awaited. However, the

Nifty
4250.00
beneficial owners of the shares as on the closing hours of 4000.00
in-principal approval has been received after the grant of 950.00
business on Monday, August 31, 2009 as per details furnished by 3750.00
approval by the De-listing Committee of the CSE.
the Depositories for this purpose. 3500.00
850.00
Listing Fees 3250.00
Listing on Stock Exchange
3000.00
Listing fees for the year 2009-10 has been paid to the stock 750.00 2750.00
As on March 31, 2009, the securities of the Company are listed
exchanges, wherein the equity shares of the Company are listed Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
on the following exchanges:
(i.e. BSE & NSE) within the stipulated time. 2008-2009

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 A N N U A L R E P O R T 0 8 - 0 9

Bombay Stock Exchange Limited, Mumbai (BSE) Distribution of Shareholding by Size

Month Total High Date Volume on Low Date Volume on Table 9 lists the distribution of Shareholding by number of shares held, Shareholding Pattern (pursuant to Clause 35 of the Listing
Agreement) and consolidated shareholding pattern in percentage as on March 31, 2009.
Volume that date that date
TABLE 9
Quantity (In Rs.) Quantity (In Rs.) Quantity
April'08 639777 864.90 30-Apr-08 113310 694.00 1-Apr- 08 60292 No. of shares held (Rs.2 paid up) Folios Shares of Rs. 2 paid up

May'08 334551 865.00 02-May-08 115328 725.00 26-May-08 21998 Numbers % Numbers %

June'08 224745 829.00 11-Jun-08 37777 665.00 25-Jun-08 70725 Upto 500 34092 77.93 3483765 1.74

July'08 862112 809.80 31-Jul-08 325055 630.15 16-Jul-08 44219 501 - 1000 7146 16.33 5413633 2.71

August'08 491203 880.00 25-Aug-08 22605 760.00 4-Aug-08 47831 1001-5000 1778 4.06 3532117 1.77

September'08 2589650 888.00 08-Sep-08 75124 786.05 18-Sep-08 79027 5001-10000 188 0.43 1352834 0.68

October'08 441782 894.80 03-Oct-08 58267 663.00 27-Oct-08 34734 10001-50000 275 0.63 6862665 3.44

November'08 533828 813.75 28-Nov-08 40467 690.00 21-Nov-08 82221 50001 and above 268 0.61 179042486 89.66

December'08 1081591 840.00 19-Dec-08 265638 725.00 02-Dec-08 80932 TOTAL 43747 100.00 199687500 100.00

January'09 204170 887.35 30-Jan-09 40497 755.00 09-Jan-09 81872

February'09 1678661 950.00 18-Feb-09 48819 863.05 05-Feb-09 27109
March'09 716582 1098.00 27-Mar-09 90266 889.00 04-Mar-09 47324 Shareholding Pattern
Sl. No. CATEGORY Number of Number of Number of Percentage
HERO HONDA’S SHARE PRICE MOVEMENT VIS A VIS SENSEX . Shareholders Shares Held Shares Dematted
(Monthly High)
A PROMOTERS
HHML Sensex 1 Indian 67 57833555 52524695 28.96
1150.00 20000.00 2 Foreign 1 51918750 0 26.00
19000.00 B PUBLIC SHAREHOLDING
1100.00
18000.00
1050.00 1 Mutual Funds / UTI 158 9430549 9358434 4.72
17000.00
1000.00 16000.00 2 Financial Institutions / Banks 23 62496 42441 0.03
Share Price

Sensex

15000.00 3 Insurance Companies 33 9613873 9613873 4.81

950.00
14000.00
900.00
4 Foreign Institutional Investors 489 53983362 53945162 27.03
13000.00
850.00 12000.00 5 Bodies Corporate 696 1169640 1134074 0.59
11000.00 6 Indian Public 41525 13893018 8456049 6.96
800.00
10000.00
7 Trusts 14 1185232 1185232 0.59
750.00 9000.00
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 8 Clearing Members 107 415910 415910 0.21
2008-2009 9 Non Resident Indians 634 181115 181045 0.09
Grand Total 43747 199687500 136856915 100.00

Consolidated Shareholding Pattern

Category No. of Holders % to Total Total Shares % to Equity
holders
Physical 9407 21.50 62830585 31.46
NSDL 28816 65.87 135779847 68.00
CDSL 5524 12.63 1077068 0.54
TOTAL 43747 100.00 199687500 100.00

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 A N N U A L R E P O R T 0 8 - 0 9

Dematerialisation of Shares and Liquidity Karvy Computershare Private Limited. COMPANY'S REGISTERED ADDRESS NON-MANDATORY REQUIREMENTS
(Unit: Hero Honda Motors Limited) 34, Community Centre, The Company has not adopted the non-mandatory
The shares of the Company are traded in compulsory demat
Plot No. 17-24, Vithalrao Nagar, Basant Lok, Vasant Vihar, requirements as specified in Annexure – IA of the Listing
segment. As on March 31, 2009, 68.54 per cent of the total
Madhapur, Hyderabad-500 081, New Delhi 110 057 Agreement except clause (b) relating to Remuneration
share capital is held in dematerialised form with National
Tel No : 040-2342 0815-820, Fax : 040-2342 0814 Tel:011-2614 2451, 2614 4121 Committee.
Securities Depository Limited (NSDL) and Central Depository
E-mail: mailmanager@karvy.com Fax: 011-2615 3913
Services (India) Limited (CDSL). During the year under review, Investors' Correspondence may be addressed to
Website: www.herohonda.com
share certificates involving 2,73,646 shares of Rs. 2 each, were Share Transfer System Mr. Ilam C. Kamboj
dematerialised by the shareholders. These represent 0.14 PLANT LOCATIONS Sr. G.M. Legal & Company Secretary & Compliance Officer,
The Share Transfers (pertaining to shares in physical mode) are
percent of the total share capital of the Company. Gurgaon Plant e-mail: ickamboj@herohonda.com or
approved by the Share Transfer Committee which meets
37 K.M. Stone, Delhi-Jaipur Highway, to the Registrar & Transfer Agents i.e
Outstanding GDR's/ADR's/Warrants or any Convertible regularly whenever required. The total number of shares
Sector 33, Karvy Computershare Pvt. Limited
Instruments Conversion Date and likely impact on equity transferred during the financial year 2008-09 were 39,960
Gurgaon 122 001 e-mail: mailmanager@karvy.com
which were completed in the prescribed period. Shares under
Not Applicable Haryana
objection were returned within two weeks time. Queries relating to the Financial Statements of the
Tel: 0124-2372 123–134
Details of Public Funding Obtained in the last three years Company may be addressed to
Confirmations in respect of the requests for dematerialisation of Fax: 0124-2373 141–142
Mr. Ravi Sud
The Company has not obtained any public funding in the last shares are being sent to the respective depositories i.e. NSDL &
Dharuhera Plant Sr. Vice President & CFO,
three years. CDSL expeditiously.
69 K.M. Stone, Delhi-Jaipur Highway, e-mail: ravisud@herohonda.com
Registrar & Transfer Agents Investors' Services Dharuhera, Distt. Rewari 122 100
For and on behalf of the Board
All work related to Share Registry, both in physical form and The Company has Board Level Committees dealing with investor Haryana
electronic form, is handled by the Company's Registrar and issues, which have been discussed in detail earlier. Table 10 lists Tel: 01274-264 012-15
Transfer Agents, M/s. Karvy Computershare Private Limited. The the complaints/requests/queries received and redressed during Fax: 01274-267 024
communication address of the Registrar and Transfer Agents is as 2008-09. During the financial year, the Company has attended Haridwar Plant
BRIJMOHAN LALL
follow: to most of the investors' grievances/correspondence within a Plot No. 3, Sector – 10,
Chairman
period of 10-15 days from the date of receipt of the same. I.I.E., SIDCUL,
Roshanabad, Haridwar 248 001 June 10, 2009
Uttrakhand New Delhi
Tel: 01334-239513
TABLE 10: COMPLAINTS/REQUESTS RECEIVED AND REDRESSED DURING 2008-09 Fax: 01334-239512
SL. NO NATURE OF COMPLAINTS/ REQUESTS OPENING RECEIVED CLEARED PENDING
1. Non receipt of shares 1 188 189 0
2. Request for issue of duplicate shares 0 56 56 0
3. Non receipt of dividend warrant 0 692 692 0
4. Change of address 0 287 287 0
5. Mandate cases/bank description 0 82 82 0
6. Miscellaneous 0 1997 1997 0

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 A N N U A L R E P O R T 0 8 - 0 9

CERTIFICATE CERTIFICATE OF CEO & CFO

TO THE MEMBERS OF HERO HONDA MOTORS LIMITED CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY

We have examined the compliance of conditions of Corporate Governance by Hero Honda Motors
Limited for the year ended March 31, 2009, as stipulated in clause 49 of the Listing Agreement of
the said Company with stock exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the management.
Our examination was limited to procedures and implementation thereof, adopted by the
Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an
audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us,
we certify that the Company has complied with the conditions of Corporate Governance as
stipulated in the abovementioned Listing Agreement.
We, Pawan Munjal, Managing Director & Chief Executive Officer (CEO) and Ravi Sud, Sr. Vice President &
Chief Financial Officer (CFO) of Hero Honda Motors Limited, to the best of our knowledge and belief certify
that:
1. We have reviewed the Balance Sheet and Profit and Loss Account of the Company for the year ended
March 31, 2009 and all its schedule and notes on accounts, as well as the Cash Flow Statement.
2. To the best of our knowledge and information:
a. these statements do not contain any materially untrue statement or omit to state a material fact or
figures or contains statement that might be misleading;
b. these statements together present a true and fair view of the Company's affairs and are in
compliance with existing accounting standards, applicable laws and regulations.

We state that such compliance is neither an assurance as to the future viability of the Company nor 3. We also certify, that based on our knowledge and the information provided to us, there are no
the efficiency or effectiveness with which the management has conducted the affairs of the transactions entered into by the Company, which are fraudulent, illegal or violate the company's code
Company. of conduct.

4. We are responsible for establishing and maintaining internal controls and procedures for the
For A .F. Ferguson & Co.
Company, and we have evaluated the effectiveness of the Company's internal controls and
Chartered Accountants procedures.

5. We have disclosed, based on our most recent evaluation, wherever applicable, to the company's
auditors and through them to the audit committee of the Company's Board of Directors:

Manjula Banerji a. Significant changes in internal control during the year;

Partner
b. Any fraud, which we have become aware of and that involves Management or other employees
(Membership No. 86423)
who have a significant role in the Company's internal control systems;

c. Significant changes in accounting policies during the year.

We further declare that all board members and senior management have affirmed compliance with the code
Place: New Delhi of conduct for the year 2008-09.
Date : June 10, 2009

For Hero Honda Motors Ltd. For Hero Honda Motors Ltd.

New Delhi, Pawan Munjal Ravi Sud

April 21, 2009 Managing Director & CEO Sr. Vice President & CFO

74/75

ANNEXURE - II TO DIRECTORS' REPORT
Information Under Section 217(1)(e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 and forming part of the
Directors' Report for the year ended March 31, 2009;
I. CONSERVATION OF ENERGY
a) Techno-economic viability of few energy saving proposals
are being carried out and few proposals have been already
implemented
Energy conservation measures taken and their impact
- Power consumption has been reduced with the following
measures taken during the year under review
• Replacement of CT Fan Blades FRP Blades
• Reduction in usage of Cooling Towers from 2 to 1 thereby
reducing the Pumps required to run the Cooling towers
from 6 to 4
• Replacement of tube lights with CFL Bulbs in ignored
areas of the plant with effective reflector, maintaining
same lux level.
• Erection and Commissioning of RO Plant
• Installation of Automatic Power Factor Control Panel for
controlling and regulating the Load on Generators
• Automation of Boilers
• Automatic Blowdown
• Oxygen Trimming
• Lighting Automation
- Power generation cost has been reduced with Waste Heat
Recovery System installation done to utilize the waste heat
from the MAN DG sets
- Fuel consumption has been reduced with use of Effimax
System
b) Additional Investments and Proposals being
implemented for reduction of consumption of energy
- For the reduction in power consumption the following
measures has been envisaged and planned for
• Study scope of vapour Absorption System
• Waste Heat Recovery Boiler
• Installation of Waste Heat Recovery Unit at HHD as well
- For the reduction in power generation cost, installation of
more and more HPS DG Sets has been envisaged.
- For effective resource utilization it has been decided to
Study of transmission and distribution losses to reduce the
same and installation of vapor absorption chiller machine
for air conditioning.
Note: The additional investment cannot be precisely ascertained,
and is part of the Repairs and Maintainence; consumables
expenditure and investments in fixed assets.
c) Impact of measures at a) and b) for reduction of energy
consumption and consequent impact on the cost of
production of goods.
It is difficult to quantify the impact of individual projects on
production as no. of equipments are being added during
the year.
d) Total energy consumption and energy consumption per
unit of production as per Form - A is given in Table - A.
II. PARTICULARS AS PER FORM B
(A) RESEARCH & DEVELOPMENT(R&D)
1 Specific areas in which R & D carried out by the
Company
• New Model Technology Absorption
• Indigenisation of CKD Parts
• Multi Source Approval
• Meeting Legislative Norms
• Active Participation in deciding the needs of future
Automobile Regulations in India
2 Benefits derived as a result of the above R & D activities
• Launched Passion Pro (100 cc - 4 Stroke), CBZ-Extreme
(150cc - 4 Stroke), Pleasure New Aesthetics, Splendor NXG
(Self Start), CD Deluxe (Self Start), Glamour FI, Glamour
(Carb.), HUNK Special Edition;
• 198 Multi source Components and 6 new sources added
for existing models;
• Indigenisation of 10 items was done during the year;
• Compliance to the Regulations
• T.A. & COP for Safety Critical Components - Phase-I (AIS-
037 : Tyres, Brake Hose, Horns)
• E-10 Compliance (on-going)
• BS-III Compliance ground work.
3 Future plan of action
• New Model Launch
• Indigenisation plan, 8 more items to be localised
• Participation at different Forums for formation of two
wheeler Regulations in India & GTRs.
• Compliance Plan for Future Regulations :-
A N N U A L R E P O R T 0 8 - 0 9
- T.A. & COP for Safety Critical Components - Phase-II & III III. FOREIGN EXCHANGE EARNINGS AND OUTGO
- EMC A) Export Activities / Initiatives To Increase Exports /
- Mass Emission Norms (BS-IV) Development Of New Export Markets / Export Plans
- Safety Related Standards EXPORT INTIATIVES 2008-09
- E-10 Compliance (on-going) During the year under review, your Company exported 81,194
two-wheelers, a decline of 10 per cent. There was no significant
- Spray Suppression growth in exports as per projection and no new markets were
4. Expenditure on R & D added. The proposal for Development of new markets is being
discussed with Honda Motors Co., Ltd., Japan.
(Rupees in Crores)
The Company however was successful in launching Splendor
Particulars Year Ended Year Ended NXG Self start; Passion Pro and New CBZ in Srilanka &
March 31, 2009 March 31, 2008 Bangladesh markets which helped it to improve its share in the
markets. For the first time, Glamour with fuel injection
i) Capital 8.59 19.42
technology was launched in Sri Lanka. Further, Splendor NXG
ii) Recurring 23.71 18.78 was launched in Columbia resulting in improved market share of
the Company in Columbia's market. The Pleasure scooter was
iii) Total R & D expenditure 0.26 0. 37
introduced to the Bangladesh market for the first time during the
as a percentage of sale
previous financial year.
(as per P & L A/c) (%)
The Company successfully organised a Customer meet with
Brand Ambassadors in Sri Lanka in a promotional campaign
B) Technology Absorption, Adaptation and Innovation during the Cricket test matches. The Company also initiated the
process of Training the technical and sales staff for the Export
1 Efforts in brief, made towards technology absorption,
Markets. The Company is focusing on improved after sales
adaptation and innovation
service, through automation of workshops and process
More parts development Approval in India improvements in each market.
2. Benefits derived as a result of the above efforts e.g. EXPORT PLAN FOR 2009-10
product improvement, cost reduction, product
development, import substitution • Concentrate on existing market for business growth.
• New Model Development to increase market share; • Maintain leadership in Bangladesh and to achieve No. 1
position in other markets also.
• Supply capacities and quality of bought out parts (BOP)
• Promotional activities through campaigns, contests etc.
increased with Multi Source Development to support the
increasing production; • Strengthening of after sale service back up.
• Indigenisation - To meet Cost Challenge; • Focus on training process.
• Compliance to Latest Regulations. B) EARNINGS & OUTGO
Further, in last five years the Company's ancillaries have Foreign exchange earnings during the period under report was
imported technologies regarding Emission Devices - Cat. Rs. 248.11 crores, compared to Rs. 243.64 crores in the previous
Converter, Digital Speedometer, Gear Primary Driven (Forging), year.
Cast Wheel, CV Carb., Drive Chain (Solid Bush type), Fuel
On account of Royalty, Technical Guidance Fee, Model Fee,
Injection, RTMI (Real Time Mileage Indicator), Non-Asbestos
Brake Shoe & Gaskets, Migration from Hexachrome to Export Commission, Travel and other accounts, Advertisement
Trichrome, Low Friction High F.E Engine Technology, LED Lighting and Publicity, the foreign exchange outgo was Rs. 377.80 crores,
compared to Rs. 332.49 crores in the previous year, a growth of
Device, Self Sealing - Puncture Resistance Wheel Tube, Rear
Cushion with Reservoir Tank and Emission Devices - Low Cost 13.63 per cent.
Cat. Converter etc.
The outgo on account of Dividend was Rs. 98.65 crores
compared to Rs.88.26 crores in the previous year.
Outgo for import of components, spare parts, raw materials and
capital goods outgo was Rs. 476.05 crores compared to Rs.
574.06 crores in the previous year.
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TABLE - A DETAILS OF DIRECTORS OF HERO HONDA MOTORS LIMITED

TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION AS PER FORM - A FOR GURGAON,
Name of Director Status Directorship held Committee Committee
DHARUHERA AND HARIDWAR PLANT(S) OF THE COMPANY.
Membership Chairmanship
Particulars Gurgaon Plant Dharuhera Plant Haridwar Plant
Mr. Brijmohan Lall Munjal EC Easy Bill Limited NIL NIL
Current Previous Current Previous Current Previous Hero Cycles Limited
Year Year Year Year Year Year Hero Honda Finlease Limited
A Power and Fuel consumption Hero Honda Motors Limited
per unit of Production Munjal Auto Industries Limited
Munjal Showa Limited
Product Unit (Two Wheeler) 1558928 1660865 1533141 1672595 629775 NA
Shivam Autotech Limited
1. Electricity Sunbeam Auto Limited
BCM Energies (P) Limited
(a) Purchased Units (KWH) Nil Nil 6710089 5426026 15093925 NA BML Investments (P) Limited
Total Amount (Rs.) Nil Nil 29,233,697 23,464,923 61,543,296 NA Munjal Bros. (P) Limited

Rate/unit (Rs.) Nil Nil 4.36 4.32 4.08 NA Mr. Pawan Munjal MD & CEO Hero Honda Finlease Limited NIL NIL
Hero Honda Motors Limited
(b) Own generation Through
Hero Investment (P) Limited
Diesel Generator Units
Self (KWH) 55883492 56115270 40998530 41664025 414700 NA Mr. Toshiaki Nakagawa JMD Hero Honda Finlease Limited NIL NIL
Hero Honda Motors Limited
Hired (KWH) Nil Nil Nil Nil Nil NA
Unit per ltr. of Diesel Oil Cost/Unit Mr. Sumihisa Fukuda TD Hero Honda Finlease Limited NIL NIL
Hero Honda Motors Limited
Self (KWH / Ltr.) 4.02 4.08 4.19 4.12 3.66 NA
Mr. Om Prakash Munjal NED Easy Bill Limited NIL NIL
Hired (KWH / Ltr.) Nil Nil Nil Nil Nil NA Hero Cycles Limited
2. Furnace Oil, HSD etc. ** * ** Hero Financial Services Limited
Hero Global Design Limited
Quantity (K.ltrs) 109.956 159.201 1,765.062 2,067.888 171.485 NA Hero Honda Finlease Limited
Hero Honda Motors Limited
Total Amount (Rs.) 2,758,011 4,398,916 43,450,167 41,704,620 5,108,834 NA
Hero Motors Limited
Average Rate/ Ltrs. (Rs.) 25.08 27.63 24.62 20.17 29.79 NA Highway Industries Limited
Majestic Auto Limited
Munjal Auto Industries Limited
B Consumption per unit of Production Shivam Autotech Limited
Munjal Bros (P) Limited
1. Electricity (KWH / Veh.) 35.85 33.79 31.12 28.15 24.63 NA Roma Cycle Manufacuturing Co. (P) Limited
2. Furnace Oil, HSD etc.(Ltr./ Veh.) 0.07 0.10 1.15 1.24 0.27 NA Mr. Sunil Kant Munjal NED Abhyuday Manufacturing & Automotive Limited NIL NIL
Arrow Infrastructure Limited
* fuels (Furnace Oil/HSD) used in direct production (Boiler) of two wheeler only DCM Shriram Consolidated Limited
** fuels (Furnace Oil/HSD) used in direct production (Hot Water Generator) of two wheeler only Easy Bill Limited
Hero Corporate Services Limited
Hero Cycles Limited
Hero Honda Motors Limited
Hero Life Insurance Company Limited
Hero Management Service Limited
Hero Mindmine Institute Limited
Hero Motors Limited
Satyam Auto Components Limited
Shivam Autotech Limited
Weave Engineering and Design Limited
Bahadurchand Investments (P) Limited
BML Investments (P) Limited
Thakurdevi Hydro (P) Limited
Thakurdevi Investments (P) Limited

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 A N N U A L R E P O R T 0 8 - 0 9

Name of Director Status Directorship held Committee Committee Name of Director Status Directorship held Committee Committee
Membership Chairmanship Membership Chairmanship
Mr. Masahiro Takedagawa NED Hero Honda Motors Limited Delhi Guest Houses Private Limited
Honda Siel Cars India Limited Doon Holiday Resorts Private Limited
Honda Siel Power Products Limited Audit Committee Dynavest India Private Limited
Honda Motor India Private Limited Leo Retaling and Health Services Private Limited
Honda Motorcycle & Scooters India (P) Limited Mohair Investments and Trading Co. (P) Limited
MV Healthcare Services Private Limited
Mr. Takashi Nagai NED Hero Honda Motors Limited Nurture Health Services Private Limited
Honda Motorcycle & Scooters India (P) Ltd. Scorpios Beverages Private Limited
Terra Planet Estates Private Limited
Gen. (Retd.) V.P. Malik NEID BSES Rajdhani Power Limited Audit Committee Trophy Estates Private Limited
BSES Yamuna Power Limited Audit Committee Trophy Holdings Private Limited
Hero Honda Motors Limited Audit Committee Urban Space Consultants Private Limited
Reliance Infrastructure Limited Audit Committee Veer Health Services Private Limited
Vitasta Estates Private Limited
Mr. Pradeep Dinodia NEID DCM Shriram Consolidated Limited Audit Committee Shareholders'
Grievance Ms.Shobhana Bhartia NEID Air Travel Bureau Limited
Committee Britex (India) Limited
DFM Foods Limited Audit Committee Firefly e-Ventures Limited
Hero Corporate Services Limited Audit Committee Goldmerry Investment & Trading Co. Limited
Hero Honda Motors Limited Shareholders' Audit Committee Hero Honda Motors Limited
Grievance HT Media Limited Audit Committee
Committee HT Music and Entertainment Co. Limited
JK Lakshmi Cement Limited HTL Investment & Trading Co. Limited
Micromatic Grinding Technologies Limited Nilgiri Plantation Limited
Shriram Pistons & Rings Limited Audit Committee Ronson Traders Limited
Shareholders' Shradhanjali Investment & Trading Co. Limited
Grievance The Hindustan Times Limited Audit Committee
Committee Udit (India) Limited
SPR International Auto Exports Limited Usha Flowell Limited
Ultima Finvest Limited Yashovardhan Investment & Trading Co. Limited
Earthstone Holding Private Limited
Dr. Pritam Singh NEID Delhi Stock Exchange Limited Earthstone Holding (one) Private Limited
Dena Bank Limited Earthstone Holding (two) Private Limited
Dish TV India Limited Audit Committee Earthstone Holding (three) Private Limited
Godrej Properties Limited
Hero Honda Motors Limited Audit Committee Shareholders' Mr. Meleveetil Damodaran NEID Hero Honda Motors Limited Shareholders'
Grievance Grievance
Committee Committee
Parsvnath Developers Limited Tech Mahindra Limited
SREI Sahaj e-Village Limited
Mr. Analjit Singh NEID Dabur India Limited NIL NIL ING Vysya Bank Limited
Grow Talent Company Limited ING Investment Management (India) Private Limited
Hero Honda Motors Limited
IDBI Limited
Notes:
Malsi Estates Limited
Malsi Holdings Limited EC : Executive Director
Max Bupa Health Insurance Limited MD : Managing Director
Max Healthcare Institute Limited JMD : Joint Managing Director
Max India Limited TD : Technical Director
Max Neeman Medical International Limited NED : Non-Executive Director
Max New York Life Insurance Company Limited NEID: Non-Executive & Independent Director
Tata Tea Limited
Vodfafone Essar Limited
BAS Enterprises Private Limited Details of Directorships is as on July 29, 2009
Boom Investments Private Limited
Capricon Health Services Private Limited
Capricon Retailing and Services Private Limited

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 A N N U A L R E P O R T 0 8 - 0 9

FINANCIAL
RESULTS
2008-2009

82/83

AUDITORS’ REPORT
TO THE MEMBERS OF HERO HONDA MOTORS LIMITED
1. We have audited the attached balance sheet of Hero Honda
Motors Limited as at March 31, 2009 and also the profit and
loss account and the cash flow statement for the year ended
on that date, annexed thereto. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with auditing
standards generally accepted in India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
3. As required by the Companies (Auditor's Report) Order,
2003 issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956,
we enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report that;
i) we have obtained all the information and explanations,
which to the best of our knowledge and belief were
necessary for the purposes of our audit;
ii) in our opinion, proper books of account as required by
law have been kept by the Company so far as appears
from our examination of those books;
iii) the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report are in
agreement with the books of account;
iv) in our opinion, the Balance Sheet, Profit and Loss
Account and Cash Flow Statement, dealt with by this
report, comply with the accounting standards
referred to in sub-section (3C) of section 211 of the
Companies Act, 1956;
v) on the basis of written representations received from
the Directors and taken on record by the Board of
Directors, we report that none of the Directors is
disqualified as on March 31, 2009 from being
appointed as a Director in terms of clause (g) of sub-
section (1) of section 274 of the Companies Act, 1956;
vi) In our opinion and to the best of our information and
according to the explanations given to us, the said
accounts give the information required by the
Companies Act, 1956, in the manner so required and
give a true and fair view in conformity with the
accounting principles generally accepted in India:
a) in the case of the Balance Sheet, of the state of
affairs of the Company as at March 31, 2009;
b) in the case of the Profit and Loss Account, of the
profit for the year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash
flows for the year ended on that date.
FOR A.F. FERGUSON & CO.
Chartered Accountants
Manjula Banerji
Partner
(Membership number: 86423)
Place: New Delhi
Date: April 21, 2009
ANNEXURE REFERRED TO IN PARAGRAPH '3' OF THE AUDITORS’ REPORT TO THE MEMBERS
OF HERO HONDA MOTORS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2009.
(i) (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of
fixed assets.
(b) As explained to us, the Company has a programme of
physically verifying all of its fixed assets over a period of
three years and in accordance therewith, physical
verification of certain fixed assets of the Company was
carried out during the year. In our opinion, the frequency
of physical verification is reasonable having regard to the
size of the Company and the nature of its fixed assets. The
discrepancies noticed on such verification were not
material and have been properly dealt with in the books
of account.
(c) In our opinion and according to the information and
explanations given to us, a substantial part of the fixed
assets has not been disposed off by the Company during
the year.
(ii) (a) During the year, the inventories have been physically
verified by the management. In our opinion, the
frequency of the verification is reasonable.
(b) In our opinion and according to the information and
explanations given to us, the procedures of physical
verification of inventories followed by the management
are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) On the basis of our examination of the records of
inventories, we are of the opinion that, the Company is
maintaining proper records of inventories. The
discrepancies noticed on physical verification of
inventories as compared to book records were not
material and have been properly dealt with in the books
of account.
(iii) (a) According to the information and explanations given to
us, the Company has, during the year, not granted any
loan, secured or unsecured to companies, firms and other
parties covered in the register maintained under Section
301 of the Companies Act, 1956, other than unsecured
loans aggregating Rs. 545.50 crores granted to a
company covered in the register maintained under
Section 301 of the Companies Act, 1956. The maximum
amount due during the year was Rs. 210 crores and there
is no amount outstanding at the year end.
(b) In our opinion and according to the information and
explanations given to us, the rate of interest and other
terms and conditions of the loans granted by the
A N N U A L R E P O R T 0 8 - 0 9
Company, as referred to in paragraph 4(iii) (a) of the
Companies (Auditor's Report) Order, 2003 (hereinafter
referred to as the Order) above, are, prima-facie, not
prejudicial to the interest of the Company.
(c) According to the information and explanations given to
us, the party, to whom the loans have been granted by
the Company, as referred to in paragraph 4(iii)(a) above,
has been regular in repayment of principal amount as
stipulated and has been regular in payment of interest.
(d) According to the information and explanations given to
us, there are no overdue amounts in respect of the loans
granted as referred to in paragraph 4(iii)(a) above and
interest thereon.
(e) According to the information and explanations given to
us, the Company has, during the year, not taken any
loans, secured or unsecured, from companies, firms and
other parties covered in the register maintained under
Section 301 of the Companies Act, 1956. Accordingly,
paragraph 4(iii) (f) and (g) of the Order are not applicable.
(iv) According to the information and explanations given to
us, there is an adequate internal control system
commensurate with the size of the Company and the
nature of its business with regard to purchase of
inventories, fixed assets and with regard to sale of goods.
There are no sales of services during the year. Further, on
the basis of our examination and according to the
information and explanations given to us, we have
neither come across nor have been informed of any
instance of major weaknesses in the aforesaid internal
control system.
(v) (a) According to the information and explanations given to
us, we are of the opinion that during the year the
particulars of the contracts or arrangements referred to in
Section 301 of the Companies Act, 1956, have been
entered in the register required to be maintained under
that section.
(b) According to the information and explanations given to
us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under
Section 301 of the Companies Act, 1956, and exceeding
the value of Rs.5 lacs in respect of any party during the
year, having regard to the explanation that some of
services/ items purchased are of a specialized nature for
which there are no alternate sources of supply to enable
comparison of the prices, these have been made at prices
which are reasonable to prevailing market prices at the
relevant time.
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 A N N U A L R E P O R T 0 8 - 0 9

(vi) The Company has not accepted any deposits from the
public.
(vii) According to the information and explanations given to
us, the Company has an adequate internal audit system
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the books of account
maintained by the Company pursuant to the Rules made
by the Central Government for the maintenance of cost
records under section 209 (1) (d) of the Companies Act,
1956 and are of the opinion that, prima-facie, the
prescribed accounts and records have been made and
maintained. We have not, however, made a detailed
examination of the records with a view to determining
whether they are accurate or complete.
(ix) (a) According to the information and explanations given to
us and the records of the Company examined by us, the
Name of the Statute Nature of dues Amount*
(Rs. in crores)
Company has been regular in depositing undisputed
statutory dues including provident fund, investor
education and protection fund, employees' state
insurance, income-tax, sales tax, wealth tax, customs
duty, excise duty, cess, value added tax, Haryana local
area development tax and other material statutory dues
applicable to it with the appropriate authorities. We are
informed that there are no undisputed statutory dues as
at the year end outstanding for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to
us and the records of the Company examined by us, there
are no disputed dues in respect of wealth tax, sales tax,
customs duty, and cess, which have not been deposited.
The following are the particulars of excise duty, service tax
and income-tax dues not deposited/ deposited under
protest by the Company on account of disputes as at
March 31, 2009:-
Amount paid Period to which Forum where
under protest the amount relates dispute is pending
(Rs. in crores)
(x) The Company does not have accumulated losses at the
end of the financial year March 31, 2009. Further, the
Company has not incurred any cash losses during the
financial year ended March 31, 2009 and in the
immediately preceding financial year ended March 31,
2008.
(xi) According to the records of the Company examined by us
and on the basis of information and explanations given to
us, the Company has not defaulted in repayment of dues
to banks during the year. The Company has not taken any
loans from financial institutions and has not issued
debentures during the year.
(xii) In our opinion and according to the information and
explanations given to us, the Company has not granted
any loans and advances during the year on the basis of
security by way of pledge of shares, debentures and other
securities.
(xiii) According to the information and explanations given to
us, the provisions of any special statute as specified under
paragraph 4(xiii) of the Order are not applicable to the
Company.
(xvii) According to the information and explanations given to us
and on an overall examination of the balance sheet of the
Company, we report that short term funds have not been
used to finance long term investments.
(xviii) The Company has not made any preferential allotment of
shares during the year.
(xix) The Company has not issued any debentures during the
year.
(xx) The Company has not raised any money by way of public
issue during the year.
(xxi) During the course of our examination of the books of
account and records of the Company, carried out in
accordance with the generally accepted auditing practices
in India and according to the information and explanations
given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during
the year ended March 31, 2009 nor have we been
informed of such case by the management.

Central Excise Laws Excise Duty 9.03 0.09 2000,2002-03 to CESTAT (xiv) In our opinion and according to the information and For A.F. FERGUSON & CO.
2004-05 explanations given to us, the Company is not dealing or Chartered Accountants
trading in shares, securities, debentures and other
0.14 - 2005-06 Commissioner investments.
(Appeals) Manjula Banerji
(xv) According to the information and explanations given to Partner
Service Tax 1.90 0.45 2004-05 to 2005-06 CESTAT us, the Company has not given any guarantees during the (Membership No.: 86423)
year for loans taken by others from banks or financial
Income Tax Act Income Tax 9.61 9.61 2000-01 to 2001-02 Income Tax institutions.
Appellate Tribunal Place : New Delhi
(xvi) In our opinion and according to the information and Date : April 21, 2009
128.61 52.90** 2001-02 to 2004-05 Commissioner explanations given to us, the term loans have been applied
(Appeals) for the purposes for which they were obtained.

* Amount as per demand orders including interest and penalty wherever quantified in the order.
** Balance of unpaid demand has been stayed.

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

Name of the Statute Nature of the dues Amount Period to which Forum where dispute
(Rs. in crores) amount relates is pending

Central Excise Laws Excise Duty 2.57 1986-87 to 1990-91 Supreme Court

Income Tax Act Income Tax 8.18 1987-88, 1989-90, 1992-93 High Court
1993-94, 1995-96, 1996-97
1998-99, 2000-01

12.30 1999-00, 2001-02 Income Tax Appellate Tribunal

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HERO HONDA MOTORS LIMITED HERO HONDA MOTORS LIMITED

BALANCE SHEET AS AT MARCH 31, 2009 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009
(Rupees in crores) (Rupees in crores)
Schedule As at March As at March Schedule Year Ended Year Ended
No. 31, 2009 31, 2008 No. March 31, 2009 March 31, 2008
SOURCES OF FUNDS INCOME
SHAREHOLDERS' FUNDS Gross sales 13,543.09 12,038.53
Share capital 1 39.94 39.94 Less: Excise duty 1,223.97 1,706.73
Reserves and surplus 2 3,760.81 2,946.30 Net sales 12,319.12 10,331.80
3,800.75 2,986.24 Other income 10 220.72 185.42
LOAN FUNDS 3 12,539.84 10,517.22
Unsecured 78.49 132.00 EXPENDITURE
78.49 132.00 Manufacturing and other expenses 11 10,609.40 8,982.43
DEFERRED TAX LIABILITIES 9 153.08 130.59
Depreciation 4 180.66 160.32
TOTAL 4,032.32 3248.83
Interest (net) 12 (31.68) (35.81)
APPLICATION OF FUNDS 10,758.38 9,106.94
FIXED ASSETS 4 Profit for the year before tax 1,781.46 1,410.28
Gross block 2,516.27 1938.78 Provision for taxation
Less: Depreciation 942.56 782.52 - current 475.65 436.81
Net block 1,573.71 1156.26 - deferred 19.06 1.20
Capital work in progress 120.54 392.44
- fringe benefit 4.99 4.39
1,694.25 1548.70
Profit after tax 1,281.76 967.88
PRE - OPERATIVE EXPENSES (PENDING ALLOCATION) 5 - 16.05
Balance of profit brought forward 2,021.77 1,594.78
INVESTMENTS 6 3,368.75 2566.82
Balance available for appropriation 3,303.53 2,562.66
DEFERRED TAX ASSETS 9 8.65 5.22
CURRENT ASSETS, LOANS AND ADVANCES 7
APPROPRIATIONS
Inventories 326.83 317.10
Proposed dividend 399.38 379.41
Sundry debtors 149.94 297.44
Tax on dividend 67.87 64.48
Cash and bank balances 219.57 131.09
Other current assets 5.89 5.69 Transfer to general reserve 129.00 97.00
Loans and advances 311.26 185.46 Balance carried to balance sheet 2,707.28 2,021.77
1,013.49 936.78 3,303.53 2,562.66
Less: CURRENT LIABILITIES AND PROVISIONS 8 Basic and diluted earnings per share face value Rs. 2/-each (in rupees) 64.19 48.47
Current liabilities 1,525.85 1324.98 Notes to the accounts 13
Provisions 526.97 499.76
2,052.82 1824.74
Net current assets (1,039.33) (887.96) Per our report attached to the balance sheet For and on behalf of the Board of Directors
For A. F. FERGUSON & CO. BRIJMOHAN LALL MUNJAL Chairman
TOTAL 4,032.32 3248.83
Chartered Accountants
Notes to the accounts 13 PAWAN MUNJAL Managing Director & CEO
MANJULA BANERJI
Partner PRADEEP DINODIA Director
Per our report attached For and on behalf of the Board of Directors Membership no. 86423
For A. F. FERGUSON & CO. RAVI SUD Sr. Vice President & CFO
BRIJMOHAN LALL MUNJAL Chairman New Delhi
Chartered Accountants
PAWAN MUNJAL Managing Director & CEO April 21, 2009 ILAM C. KAMBOJ Sr. G.M. Legal & Company Secretary
MANJULA BANERJI
Partner PRADEEP DINODIA Director
Membership no. 86423
RAVI SUD Sr. Vice President & CFO
New Delhi
April 21, 2009 ILAM C. KAMBOJ Sr. G.M. Legal & Company Secretary

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HERO HONDA MOTORS LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009
(Rupees in crores) (Rupees in crores)
Year ended Year ended Year ended Year ended
March 31, 2009 March 31, 2008 March 31, 2009 March 31, 2008
A. CASH FLOW FROM OPERATING ACTIVITIES Dividend income
Net profit before tax 1,781.46 1,410.28
On current investments-Non-trade 12.77 4.24
Adjustments for:
On long-term investments-Trade 2.72 2.72
Add: Depreciation 180.66 160.32
18,661.23 13,950.38
Loss on fixed assets sold/discarded 3.57 4.36
Less: Purchase of fixed assets 315.08 374.92
Exchange differences (0.64) (0.98)
Inter corporate deposits paid 495.50 190.00
Loss on sale of non-trade current investments 38.89 19.54
Purchase of investments 18,711.84 14,166.47
Provision for diminution in value of investment:
19,522.42 14,731.39
Current non trade investment 0.20 1.29
Net cash (used) in investing activities (861.19) (781.01)
Long term non trade investment 12.49 1.28
Interest - others and financial charges 2.53 2.00
C. CASH FLOW FROM FINANCING ACTIVITIES
Provision for doubtful debts/ written back (0.75) 4.59
Interest paid - others and financial charges 2.53 2.00
236.95 192.40
Dividend paid 379.41 339.47
Less: Interest received on long term non-trade investments 22.04 12.81
Tax on dividend 64.48 57.69
Interest received on loans, deposits etc. 34.21 37.81
Repayment of long term borrowings 53.51 33.17
Profit on sale of fixed assets 0.19 0.09
499.93 432.33
Dividend income
Net cash (used) in financing activities (499.93) (432.33)
On current Investments - Non-trade 12.77 4.24
On long-term investments-Trade 2.72 2.72
D. Increase/(decrease) in cash and cash equivalents (A+B+C) (2.09) (1.56)
Profit on sale of non-trade investments
Cash and cash equivalents at the beginning of the year 15.19 16.66
On current investments 184.32 152.45
256.25 210.12 Cash and cash equivalents at the end of the year
Operating profit before working capital changes 1,762.16 1,392.56 Cash and bank balances 13.45 15.19
Adjustments for: Unrealised exchange loss/(gain) (0.35) (0.09)
Add: Increase / (decrease) in trade payables 111.95 185.64 13.10 15.10
Increase in security deposits from dealers 0.89 2.04 Notes to the accounts Schedule 13
112.84 187.68
Less: Increase /(decrease) in trade and other receivables 4.60 (115.05)
Increase in inventories 9.74 41.52
14.34 (73.53)
Cash generated from operations 1,860.66 1,653.77
Less:Direct taxes paid 501.63 441.99
Net cash from operating activities 1,359.03 1,211.78
Per our report attached to the balance sheet For and on behalf of the Board of Directors
For A. F. FERGUSON & CO. BRIJMOHAN LALL MUNJAL Chairman
B. CASH FLOW FROM INVESTING ACTIVITIES
Chartered Accountants
Sale of fixed assets 1.54 1.03 PAWAN MUNJAL Managing Director & CEO
MANJULA BANERJI
Sale of investments 18,042.65 13,703.86 Partner PRADEEP DINODIA Director
Inter corporate deposits received back 545.50 190.00 Membership no. 86423
Interest received on long term non-trade investments 21.84 10.72 RAVI SUD Sr. Vice President & CFO
New Delhi
Interest received on loans, deposits etc. 34.21 37.81 ILAM C. KAMBOJ Sr. G.M. Legal & Company Secretary
April 21, 2009

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HERO HONDA MOTORS LIMITED

SCHEDULES 1 to 13 ANNEXED TO AND FORMING PART OF THE ACCOUNTS 3) LOAN FUNDS
1) SHARE CAPITAL (Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008
AUTHORISED UNSECURED LOANS
25,00,00,000 (Previous year 25,00,00,000 ) Other loans and advances
Equity shares of Rs. 2 each 50.00 50.00 Sales tax deferment from the
State Government of Haryana 78.49 132.00
4,00,000 (Previous year 4,00,000 ) Cumulative (Include Rs. 12.45 crores (previous year Rs. 53.51 crores) due within one year)
convertible preference shares of Rs. 100 each 4.00 4.00 78.49 132.00

4,00,000 (Previous year 4,00,000 ) Cumulative

redeemable preference shares of Rs. 100 each 4.00 4.00
58.00 58.00 4) FIXED ASSETS
ISSUED, SUBSCRIBED AND PAID UP (Rupees in crores)
19,96,87,500* (Previous year 19,96,87,500) Equity Gross block (at cost) Depreciation Net block
shares of Rs. 2 each fully paid up 39.94 39.94
As at Additions Deductions As at As at For the On As at As at As at
39.94 39.94 March March March year deductions March March March
* Of the above 11,98,12,500 (Previous year 11,98,12,500) shares had been allotted as fully paid 31, 2008 31, 2009 31, 2008 31, 2009 31, 2009 31, 2008
bonus shares by capitalisation of general reserve.
Tangible assets
Land
2) RESERVES AND SURPLUS
- Freehold 80.79 3.16 - 83.95 - - - - 83.95 80.79
(Rupees in crores)
- Leasehold # 81.80 - - 81.80 1.67 0.83 - 2.50 79.30 80.13
As at Additions Deductions As at
Buildings 212.14 203.46 0.03 415.57 35.43 12.51 0.03 47.91 367.66 176.71
March 31,2008 March 31, 2009
Plant and machinery 1,294.15 340.39 17.32 1,617.22 592.90 123.26 14.42 701.74 915.48 701.25
CAPITAL RESERVES Furniture, fixtures and
On shares forfeited (#Rs. 4250) # - - # office equipment 19.35 8.03 0.54 26.84 5.82 1.55 0.20 7.17 19.67 13.53
Share premium account on forfeited Vehicles 21.13 8.73 2.33 27.53 6.43 3.87 0.99 9.31 18.22 14.70
shares reissued(##Rs. 25500) ## - - ## Computer and data
REVENUE RESERVES processing machines 46.93 15.21 5.32 56.82 32.39 5.76 4.98 33.17 23.65 14.54
General reserve 924.53 129.00 - 1,053.53 Intangible assets
Surplus, being balance in profit - Model fee 182.49 24.05 - 206.54 107.88 32.88 - 140.76 65.78 74.61
and loss account 2,021.77 685.51 - 2,707.28 Total 1,938.78 603.03 25.54 2,516.27 782.52 180.66 20.62 942.56 1,573.71
2,946.30 814.51 3,760.81 Previous year 1,800.63 157.51 19.36 1,938.78 635.10 161.48 @ 14.06 782.52 1,156.26

Previous year 2,430.12 523.99 7.81* 2,946.30 Capital work in progress {including capital advances Rs. 37.21 crores (Previous year Rs. 73.39 crores)} 120.54 392.44
1,694.25 1,548.70
* Adjustment of employee benefit schemes as per revised accounting standard AS 15, net of deferred tax assets of Rs Nil
(Previous Year Rs. 4.03 crores) Note :
# Include land at Haridwar pending registration in the name of the Company.
@ Includes Rs. Nil (Previous year Rs. 1.16 crores) transferred to Pre- operative expenditure (pending allocation)

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5) PRE-OPERATIVE EXPENDITURE (PENDING ALLOCATION) 6) INVESTMENTS (contd.)

(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008
Consumption of raw materials 20000000 (previous year 20000000) units in FMP Series43-Thirteen Months
and components 0.19 0.19 Plan D Retail Growth 20.00 20.00
Consumption of stores and spares 0.05 0.05 20000000 (previous year Nil) units in FMP Series 42-Fifteen Months
Power and fuel 5.73 5.73 Plan Institutional Growth 20.00 -
Payments to and provisions for employees: 15000000 (previous year Nil) units in FMP Series 42-Thirteen Months Plan
D Institutional Growth 15.00 -
Salaries, wages, bonus, gratuity and
10000000 (previous year Nil) units in FMP Series 44-One Year Plan A Institutional Growth 10.00 -
leave encashment benefit 4.12 4.12 10000000 (previous year Nil) units in FMP Series 46-One Year Plan A Institutional Growth 10.00 -
Contribution to provident and other funds 0.33 0.33 5480736 (previous year Nil) units in Institutional Income Plan Growth 15.06 -
Rent 0.09 0.09 58499249 (previous year Nil) units in Floating Rate Plan D-Growth 75.55 -
Exchange fluctuation 0.82 0.82 22894268 (previous year Nil) units in Long Term Floating Rate Plan C-Growth 22.93 -
8998489 (previous year Nil) units in Income Opportunities Fund Institutional -Growth 9.05 -
Insurance 0.53 0.53
51430640 (previous year Nil) units in Short Term Plan Cumulative Option 93.06 -
Rates and Taxes 0.45 0.45 Nil (previous year 70000000) units in Equity & Derivatives Fund-Income
Technical guidance fee 0.40 0.40 Optimiser -Institutional Growth - 70.00
Professional charges 2.18 2.18
Depreciation 1.16 1.16 Birla Sunlife Mutual Fund
Nil (previous year 20000000) units in FTP -INSTL-Series U-Growth - 20.00
16.05 16.05
Nil (previous year 15000000) units in FTP -INSTL-Series V-Growth - 15.00
Less: Allocated to fixed assets and capital work in progress 16.05 - Nil (previous year 20000000) units in Qtly Interval-Series 5-Growth - 20.00
- 16.05 30000000 (previous year 30000000) units in FTP-INSTL-Series AK-Growth 30.00 30.00
Nil (previous year 24475250) units in Interval Income Fund -INSTL-Quarterly-Series 2-Growth - 25.00
Nil (previous year 4227865) units in Income Plus-Growth - 15.00
6) INVESTMENTS 10000000 (previous year Nil) units in FTP-INSTL-Series AZ-Growth 10.00 -
(Rupees in crores)
As at March As at March HDFC Mutual Fund
31, 2009 31, 2008 25000000 (previous year 25000000) units in FMP 18M November 2007
CURRENT INVESTMENTS (VI) Wholesale Plan- Growth 25.00 25.00
(Cost or fair value which ever is lower) 30000000 (previous year 30000000) units in FMP 18M January 2008
Non-trade (VII) Wholesale Plan- Growth 30.00 30.00
Unquoted 42046745 (previous year Nil) units in High Interest Fund -Short Term Plan-Growth 70.01 -
In Mutual fund units: 28447832 (previous year Nil) units in Short Term Plan-Growth 47.46 -
Nil (previous year 18100000) units in Arbitrage Fund-Wholesale Plan-Growth - 18.10
Debt fund
(Units of the face value of Rs. 10 each) IDFC MUTUAL FUND
Nil (previous year 20000000) units in fixed maturity Plan - Yearly Series 8-Growth - 20.00
ICICI Prudential Mutual Fund 17433600 (previous year Nil) units in SSIF-ST-Plan D-Growth 20.00 -
Nil (previous year 30000000) units in FMP Series 34-Fifteen Months Plan -Institutional -Growth - 30.00 157067324 (previous year Nil) units in Money Manager Fund -Treasury
Nil (previous year 20000000) units in FMP Series 34-One Year Plan B Institutional Growth - 20.00 Plan -Super Inst Plan C-Growth 161.03 -
Nil (previous year 25000000) units in FMP Series36-Eighteen Months Plan B -Institutional Growth - 25.00 Nil (previous year 9641249) units in Arbitrage Fund-Plan B-Growth - 10.00
Nil (previous year 25000000) units in Interval Fund II Quarterly Interval Plan C-Retail Cumulative - 25.00 Nil (previous year 24488468) units in Arbitrage Fund-Plan B-Dividend - 25.35
Nil (previous year 40000000) units in FMP Series 39-Six Months Plan A Retail Cumulative - 40.00
25000000 (previous year 25000000) units in FMP Series41-Fourteen Months Plan Tata Mutual Fund
Institutional Cumulative 25.00 25.00 Nil (previous year 12000000) units in S I P Fund -Scheme I-Growth - 12.00
Nil (previous year 15000000) units in FMP Series42-Three Months Plan A Retail Growth - 15.00 Nil (previous year 19143885) units in Dynamic Bond Fund Option B-Growth - 25.00
12500000 (previous year 12500000) units in FMP Series43-Thirteen Months Nil (previous year 20000000) units in Fixed Horizon Fund Series 17
Plan B Institutional Growth 12.50 12.50 Scheme D-Institutional Plan -Growth - 20.00

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6) INVESTMENTS (contd.) 6) INVESTMENTS (contd.)

(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008

Nil (previous year 15000000) units in Fixed Income Portfolio Fund Nil (previous year 5000000) units in Fixed Horizon Fund- Institutional Plan
Scheme A2 Institutional -Growth - 15.00 C -Series I-Institutional Growth Plan - 5.00
Nil (previous year 15000000) units in Fixed Income Portfolio Fund Nil (previous year 25000000) units in Fixed Horizon Fund III- Annual Plan
Scheme B2 Institutional -Growth - 15.00 Series IV-Institutional Growth Plan - 25.00
Nil (previous year 24740431) units in Floating Rate Fund Long Term-Growth - 30.00 23553564 (previous year 10000000) units in Annual Interval Fund
19173646 (previous year Nil) units in Fixed Investment Plan -2 -Series1-Institutional Growth Plan 25.00 10.00
Scheme-A-Institutional Plan -Growth 19.17 - 25000150 (previous year 25000000) units in Fixed Horizon
Fund IV -Series 6-Institutional Growth Plan 28.09 25.00
Kotak Mutual Fund 29999911 (previous year 30000000) units in Fixed Horizon Fund IV
Nil (previous year 15000000) units in FMP 15 M Series 2 -Growth - 15.00 -Series 7-Institutional Growth Plan 33.51 30.00
Nil (previous year 20000000) units in FMP 12 M Series 4 Institutional-Growth - 20.00 Nil (previous year 46542367) units in Monthly Interval Fund
Nil (previous year 51056254) units in FMP 3 M Series 26-Growth - 51.05 -Series II-Institutional Growth Plan - 50.00
Nil (previous year 7124384) units in Bond (Short Term)-Growth - 10.00 Nil (previous year 5000000) units in Fixed Horizon Fund -VI
15000000 (previous year Nil) units in FMP 13 M Series 5-Growth 15.00 - -Series 2-Institutional Growth Plan - 5.00
94909187 (previous year Nil) units in Floater Long Term -Growth 130.54 - 12500000 (previous year 12500000) units in Fixed Horizon Fund -IX
-Series 1-Institutional Growth Plan 12.50 12.50
Frankilin Templeton Investments 19999989 (previous year 20000000) units in Fixed Horizon Fund VII
20000000 (previous year 20000000) units in Fixed Horizon Fund -Series 5-Institutional Growth Plan 22.05 20.00
Series VII -Plan D -Institutional -Growth 20.00 20.00 40030230 (previous year Nil) units in Fixed Horizon Fund XII -Series 3
20000000 (previous year Nil) units in Fixed Horizon Fund Series IX -Plan B -Growth 20.00 - -Super Institutional Plan-Growth 40.03 -
60045345 (previous year Nil) units in Fixed Horizon Fund XII
-Series 4-Super Institutional Plan-Growth 60.05 -
HSBC Mutual Fund
17904653 (previous year Nil) units in Income Fund -Retail Plan
60820129 (previous year Nil) units in Floating Rate Fund
-Growth Plan -Growth Option 52.04 -
-Long Term Plan-Institutional Option -Growth 83.02 -

Religare Mutual Fund

Fortis Mutual Fund
20000000 (previous year 20000000) units in FMP-14 Months -Series II-Institutional Growth 20.00 20.00
Nil (previous year 5000000) units in FTPS5 14 Mths Plan Inst Growth - 5.00
20000000 (previous year 20000000 ) units in FMP-14 Months -Series III-Institutional Growth 20.00 20.00
Nil (previous year 5000000) units in Fixed Term Plan -Ser-8-Yly Plan A -Inst. Growth - 5.00
Nil (previous year 9572584) units in Flexible short Term Plan -Ser A Gr.-Renewal - 10.00
Fidelity Mutual Fund
Nil (previous year 33542575) units in Interval Fund Quarterly Plan H Growth-Ren - 35.00
5000000 (previous year Nil) units in Flexi Gilt Fund -Growth 5.00 -
Nil (previous year 15000000) units in FTP Ser 10 Plan F Inst. Growth - 15.00
Nil (previous year 40256676) units in Flexi Debt Fund -Regular -Growth - 50.00 (Units of the face value of Rs. 100 each)
52684375 (previous year Nil) units in Money Plus Institutional -Growth 66.56 - Reliance Mutual Fund
15000000 (previous year Nil) units in FTP Ser 10 Plan F Inst. Growth 15.00 - 68781 (previous year 68781) units in Gold ETF -Open Ended Scheme 7.00 7.00
15000000 (previous year Nil) units in FTP Ser 14 Plan C Inst. Growth 15.00 -
(Units of the face value of Rs. 1000 each)

Deutsche Mutual Fund AIG Global Investment Group Mutual Fund

Nil (previous year 5000000) units in Fixed Term Fund-Series 24-Institutional Plan-Growth Option - 5.00 Nil (previous year 150000) units in Short Term Fund Institutional Growth - 15.00
70000000 (previous year Nil) units in DWS Fixed Term Fund Series 52- Institutional Growth 70.00 -
DSP BlackRock Mutual Fund
ING Vysya Mutual Fund Nil (previous year 606525) units in Strategic Bond Fund -Institutional- Growth - 61.39
Nil (previous year 5000000) units in Fixed Maturity Fund series xxii -Growth option - 5.00 Nil (previous year 250000) units in Fixed Term Plan Series 3D-Institutional-Growth - 25.00
Nil (previous year 5000000) units in Fixed Maturity Fund- xxviii -Growth - 5.00 Nil (previous year 50000) units in Fixed Term Plan Series 3H-Institutional Growth - 5.00
Repurchase Price Rs. 1555.16 crores (previous year Rs. 1302.86 crores) 1,501.21 1,249.89
Reliance Mutual Fund
Nil (previous year 10000000) units in Fixed Tenor Fund Plan B -Growth Plan - 10.00

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6) INVESTMENTS (contd.) 6) INVESTMENTS (contd.)

(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008

Fund of Funds LIC Mutual Fund

(Units of the face value of Rs. 10 each) Nil (previous year 3000000) units in Infrastructure Fund- Growth Plan - 3.00

Optimix Mutual Fund ICICI Prudential Mutual Fund

Nil (previous year 21612178) units of Active Debt Multi -Manager FOF scheme- Growth - 21.61 60975610 (previous year Nil) units in Equity & Derivatives Fund-Income
Nil (previous year 14000000) units of Dynamic Multi- Manager FOF scheme -Series 3-Growth - 14.00 Optimiser -Institutional Growth 66.47 -
Nil (previous year 13300000) units of Dynamic Multi- Manager FOF scheme -Series 4-Growth - 13.30
Nil (previous year 5000000) units of Active Short Term FOF -Growth - 5.00 IDFC Mutual Fund
13304241 (previous year Nil) units in Arbitrage Fund-Plan B-Growth 14.49 -
Fortis Mutual Fund 24488469 (previous year Nil) units in Arbitrage Fund-Plan B-Dividend 25.35 -
Nil (previous year 15000000) units in Multi Manager Fund Series 2A Growth - 15.00 20764327 (previous year Nil) units in Arbitrage Plus Fund-Plan B-Growth 21.46 -
Nil (previous year 5000000) units in Multi Manager Fund Series 3- Growth - 5.00
HDFC Mutual Fund
DSP BlackRock Mutual Fund 44409641 (previous year Nil) units in Arbitrage Fund-Wholesale Plan-Growth 47.65 -
3690582 (previous year Nil) units in World Gold Fund -Growth 5.00 - 211.08 90.91
Less: Provision for diminution in value - (1.87)
AIG Mutual Fund Repurchase Price Rs. 214.94 crores (previous year Rs. 89.04 crores) 211.08 89.04
5000000 (previous year Nil) units in World Gold Fund Growth 5.00 -
10.00 73.91 Liquid fund
Less: Provision for diminution in Value (0.91) - (Units of the face value of Rs. 10 each)
Repurchase Price Rs. 9.09 crores (previous year Rs. 76.46 crores) 9.09 73.91
ICICI Prudential Mutual Fund
Equity fund 212663052 (previous year 115809498) units in Institutional Liquid Plan
(Units of the face value of Rs. 10 each) -Super Institutional Growth 275.13 137.80

Escorts Mutual Fund Birla Sunlife MutualFund

24888747 (previous year 21839119) units in Opportunities Fund -Dividend 31.16 29.41 Nil (previous year 43365134) units in Cash Plus- Institutional Premium-Growth - 56.00
2439024 (previous year 2439024) in units of High Yeild Equity Plan-Dividend 2.50 2.50
2000000 (previous year 3000000) in units of Infrastructure Fund-Growth 2.00 3.00 Reliance Mutual Fund
211168475 (previous year 111112150) units in Liquidity Fund- Growth Option 279.50 135.00
Optimix Mutual Fund
Nil (previous year 25000000) units in Multi-Manager Equity fund - Option A-Growth - 25.00 Kotak Mutual Fund
Nil (previous year 14710840) units in Liquid (Institutional Premium)- Growth - 24.00
Fortis Mutual Fund
Nil (previous year 5000000) units in Sustainable Development Fund - Growth - 5.00 Fortis Mutual Fund
Nil (previous year 104536055) units in Money Plus Institutional Growth - 125.01
Birla Mutual Fund 93523069 (previous year Nil) units in Overnight- Institutional Plus-Growth 102.00 -
Nil (previous year 4000000) units in Long Term Advantage Fund Series 1 - Growth - 4.00
Nil (previous year 10000000) units in Special Situations Fund - Growth - 10.00 Religare Mutual Fund
Nil (previous year 31498614) units in Liquid Fund -Super Institutional Growth - 35.00
JP Morgan Mutual Fund
Nil (previous year 1955990) units in India Smaller Companies Fund- Growth Plan - 2.00 HDFC Mutual Fund
101578892 (previous year Nil) units in Liquid Fund -Premium Plan -Growth 178.11 -
Tata Mutual Fund
Nil (previous year 7000000) units in Indo-Global Infrastructure Fund- Growth - 7.00 Principal Mutual Fund
14192863 (previous year Nil) units in Cash Management Fund
-Liquid Option Instl.Prem.Plan-Growth 19.50 -

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6) INVESTMENTS (contd.) 6) INVESTMENTS (contd.)

(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008

(Units of the face value of Rs. 1000 each) Fortis Mutual Fund
DSP BlackRock Mutual Fund 27154982 (previous year Nil) units in Flexi Debt Fund Regular Daily Div 26.28 -
Nil (previous year 292149) units in Liquidity Fund Instt. - Growth - 33.02 6076810 (previous year Nil) units in Money Plus Fund IP Growth 8.00 -
Repurchase price Rs. 36.33 crores (previous year Rs. 95.67 crores) 36.15 94.11
Reliance Mutual Fund
Nil (previous year 914761) units in Liquid Plus Fund- Institutional Option-Growth Option - 100.00 Liquid Fund
(Units of the face value of Rs.10 each)
AIG Global Investment Group Mutual Fund
Nil (previous year 481912) units in Liquid Fund- Super Institutional Growth - 50.20 ICICI Prudential Mutual Fund
Nil (previous year 8448391) units in liquid Plan Super institutional Growth Option - 10.04
Mirae Asset Mutual Fund
Nil (previous year 500000) units in Liquid Plus Fund- Super Inst Growth Option - 50.00 Escorts Mutual Fund
718478 (previous year 2825896 ) units in Liquid Plan Growth 0.88 3.31
Tata Mutual Fund
962567 (previous year Nil) units in Liquid Super High Inv. Fund- Appreciation 155.82 - HDFC Mutual Fund
Repurchase Price Rs. 1013.20 crores (previous year Rs. 747.04 crores) 1,010.06 746.03 220928 (previous year 7646722) units in Cash Management Fund Savings Plan 0.40 12.73

Debentures Birla Mutual Fund

21756507 (previous year Nil) units in Savings Fund -Inst -Growth 36.07 -
CitiFinancial Consumer Finance India Ltd. (Units of the face value of Rs.1000 each)
500 (previous year 500) Debentures of Citi Financial -Redeemable Non
Convertible Secured NCD Issue Series-326 of Rs 100000 each 5.00 5.00 Reliance Mutual Fund
Repurchase Price Rs. 5.00 crores (previous year Rs. 5.00 crores) 5.00 5.00 258332 (previous year Nil) units in Liquid Plus Fund Instt -Growth Plan 30.19 -

Investments under Portfolio Management Services # UTI Mutual Fund

78241 (previous year Nil) units in Treasury Advantage Fund -Institutional Plan -Growth 9.00 -
Debt Fund Repuchase price Rs. 77.56 crores (previous year Rs. 26.34 crores) 76.54 26.08
(Units of the face value of Rs.10 each)
Debentures
ICICI Prudential Mutual Fund 50 (previous year 50) Bonds Citicorp finance NCD SR 187 of Rs 980000 each 4.90 4.90
Nil (previous year 2000000) units in FMP Series 42-3 Months Plan B Retail Growth - 2.00 (Debentures of face value of Rs. 100 each)
Nil (previous year 10503452) units in Interval Fund-Quarterly Interval Plan1Retail Growth - 10.77 Reliance Blended Debt Plus -Hybrid Option -Series II- Nil (previous year 500000)
Debentures of Citicorp Finance (India) Ltd NCDS Series 163 - 5.00
IIM -Optimix Portfolios- Capital Enhancer Reliance Blended Debt Plus -Hybrid Option -Series VII-1000000
Nil (previous year 20991585) units in Flexible Income Fund - Growth - 31.30 (previous year 1000000) Debentures of DSP Merrill Lynch Capital Ltd Series 2007/EQ 10.00 10.00
Reliance Blended Debt Plus -Hybrid Option -Series X-1000000
Deutsche Mutual Fund (previous year 1000000) Debentures of DSP Merrill Lynch Capital Ltd Series 2008/AM 10.00 10.00
Nil (previous year 49198196) units in DWS Money Plus Advantage Instl Fund - 50.02 Reliance Blended Debt Plus -Hybrid Option -Series XII-1000000
(previous year Nil) Debentures of CitiFinancial Consumer Finance India Limited Series 338 10.00 -
Escorts Mutual Fund Reliance Blended Debt Plus -Hybrid Option -Series XIIIB-1000000
14641 (previous year 14641) units in Floating Rate Fund -Growth Option 0.02 0.02 (previous year Nil) Debentures of CitiFinancial Consumer Finance India Limited Series 359 10.00 -
442612 (previous year Nil) units in Income Plan -Growth Option 1.10 - Reliance Blended Debt Plus -Hybrid Option -Series XIVA-1000000 (previous year Nil)
400000 (previous year Nil) units in Fixed Maturity Plan 0.40 - Debentures of CitiFinancial Consumer Finance India Limited Series 394 10.00 -
152373 (previous year Nil) units in Income Bond Fund 0.35 - 100000 units (previous year Nil) 8.55% IRFC NCD 9.97 -
(Debentures of face value Rs. 100000 each)
18300 (previous year Nil) Non Convertibile Debentures Emerald Wealth Management 183.00 -

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6) INVESTMENTS (contd.) 6) INVESTMENTS (contd.)

(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008

Asset Linked Portfolio -Accelerator-Series 2 -5000 (previous year Nil) LONG TERM INVESTMENTS
Debentures of Citi Financial Consumer Finance India Limited. 50.00 - Non-trade
Asset Linked Portfolio -Accelerator-Series 5 -1500 (previous year Nil) Debentures of In Equity Shares:
Barclays Investment & Loans India Ltd INR Equity Linked Principal Protected Debentures 15.00 - Quoted*
312.87 29.90
Less: Provision for diminution in value (0.05) - 70331(previous year*) equity shares of Rs. 10 each fully paid up of
Repuchase price Rs. 312.82 crores (previous year Rs. 29.90 crores) 312.82 29.90 Bharat Heavy Electricals Limited. 8.98 -
172904 (previous year*) equity shares of Rs.2 each fully paid up of Siemens Ltd. 16.42 -
Commerical Paper 367200 (previous year Nil ) equity shares of Rs. 2 each fully paid up of
500000 (previous year Nil) of Tata Capital Ltd. 4.54 - Larsen & Tubro Limited. 50.02 -
500000 (previous year Nil) of Reliance Communications Ltd. 4.50 - 75.42 -
500000 (previous year Nil) of Birla Global Finance Co. Ltd. 4.47 - Less: Provision on reclassification of current investment (12.42)
Repuchase price Rs. 14.54 crores (previous year Nil) 13.51 - Market value Rs. 39.94 crores (previous year Nil) 63.00 -
* During the year the company has reclassified current investment into
Bonds long term investment and has provided for loss on reclassifiaction.
50 (previous year Nil) 11% PFC 2018 5.91 -
5000000 (previous Year Nil) 6.05% GOI 2019 48.43 - Unquoted
54.34 - 75000 (previous year Nil) equity shares of Rs. 10 each fully paid up of
Less: Provision for diminution in value (1.39) - National Stock Exchange 26.26 -
Market price Rs. 52.95 crores (previous year Rs. 151.91 crores) 52.95 - 140400 (previous year 10800) equity shares of Rs.1each fully paid up of
491.97 150.09 Bombay Stock Exchange. 5.94 5.94
# Investments have been made under the Discretionary Portfolio Management 32.20 5.94
Agreement entered into between the Company and ICICI Prudential Asset In Bonds
Management Company Limited-PMS, IIM-Optimix Portfolios -Capital Enhancer, Quoted
Escorts Securities Ltd, Reliance Capital Asset Management Ltd (Portfolio Management UNIT TRUST OF INDIA
Services), Fortis Investment Mangement and Birla Sunlife Asset Management Company Nil (previous year 15918732) 6.75% Tax free US64 bonds of Rs.100 each - 165.47
Private Limited are being held in the name of the Portfolio Manager as envisaged 60903 (previous year 60903) 6.60% Tax free ARS bonds of Rs.100 each 0.63
in the aforesaid Agreement. 0.63 0.63
0.63 166.10
Non-trade Less: Provision for diminution in value (0.02) (6.10)
In Equity Shares: Market value Rs.0.61 crores (previous year Rs.154.32 crores) 0.61 160.00
Quoted Maturity value Rs 0.61 crores (previous year Rs 159.80 crores)

Nil (previous year 52238) equity shares of Rs.10 each fully paid up of ICICI Bank Ltd. - 5.11 Non-trade
Nil (previous year 6430) equity shares of Rs10 each fully paid up of Mundra Port & Unquoted
Special Economic Zone Ltd. - 0.28 National Bank For Agriculture and Rural Development
Nil (previous year 109489) equity shares of Rs10 each fully paid up of 50200 (previous year 42700) Bhavishya Nirman Bonds @ 8182 each
Rural Electrification Corporation Ltd. - 1.15 A 10 Year Zero Coupon Bond of NABARD- maturity Rs 20000.00 per bond 41.07 35.01
41.07 35.01
Nil (previous year 125523) equity shares of Rs. 10 each fully paid up of Trade
Bharat Heavy Electricals Limited.* - 16.04 Unquoted
Nil (previous year 276654) equity shares of Rs.2 each fully paid up of Siemens Ltd.* - 26.29 In Equity Shares:
- 48.87 2715000 (previous year 2715000) equity shares of Rs. 10 each fully paid up of
Less: Provision for diminution in value - (0.42) Hero Honda Finlease Limited. 3.46 3.46
Market value Nil (previous year 48.45 crores) - 48.45 3,368.75 2,566.82

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6) INVESTMENTS (contd.) 6) INVESTMENTS (contd.)

The following investments were purchased and sold during the year At Cost The following investments were purchased and sold during the year under Portfolio Management Scheme At Cost
(Rupees in crores) (Rupees in crores)
Purchase Sold Purchase Sold
Units Amount Units Amount Units Amount Units Amount

Mutual Funds Mutual Funds

Liquid Fund Liquid Funds

Units of the face value of Rs.10 each 7905962611 10,350.37 7589332498 9,883.93 Units of the face value of Rs.1000 each 117474 13.24 41673 4.45
Units of the face value of Rs.1000 each 27694342 3,497.53 28920599 3,574.93 Units of the face value of Rs.10 each 219779873 322.40 237254919 316.80

Fund of Funds Debt Funds

Units of the face value of Rs.10 each 15166814 17.00 80388411 80.91 Units of the face value of Rs.10 each 289336375 415.77 316089900 437.65

Equity Fund Debentures

Units of the face value of Rs.10 each 221187548 264.11 233381340 267.40 Reliance Blended Debt Plus -Hybrid Option -Series II-
Debentures of Citicorp Finance (India) Ltd NCDS Series 163 - - 500000 5.00
Debt Fund Reliance Blended Debt Plus -Hybrid Option -Series XII-Debentures
Units of the face value of Rs.10 each 2460475824 2,854.29 2281880618 2,559.53 of CitiFinancial Consumer Finance India Limited Series 338 1000000 10.00 - -
Units of the face value of Rs.1000 each - - 450000 45.00 Reliance Blended Debt Plus -Hybrid Option -Series XIIIB-
Debentures of CitiFinancial Consumer Finance
Equity Shares India Limited Series 359 1000000 10.00 - -
Shares of Face value of Rs 10 each Reliance Blended Debt Plus -Hybrid Option
ICICI Bank Limited. 3077 0.22 55315 5.34 -Series XIVA-Debentures of CitiFinancial Consumer
Bharat Heavy Electricals Ltd. - - 55192 7.05 Finance India Limited Series 394 1000000 10.00 - -
Mundra Port and Special Economic Zone Ltd. - - 6430 0.28 Asset Linked Portfolio -Accelerator-Series 2
-Debentures of Citi Financial Consumer Finance India Limited 5000 50.00 - -
Rural Electrification Corporation Ltd. - - 109489 1.15
Asset Linked Portfolio -Accelerator-Series 5 -Debentures of
Barclays Investment & Loans India Ltd. 1500 15.00 - -
Shares of Face value of Rs 2 each
10.75% Reliance Industries Ltd. 1000000 10.34 1000000 10.34
Siemens Ltd. 104 0.01 103854 9.87
7.5% GOI Bonds 2034 5000000 54.65 5000000 54.65
Larsen & Toubro Limited. 393200 53.57 26000 3.54
7.95% GOI Bonds 2032 3900000 45.27 3900000 45.27
8.24% GOI Bonds 2018 3500000 39.95 3500000 39.95
Shares of Face value of Rs 1 each
8.55% IRFC NCD 2019 1000000 9.97 - -
Sesa Goa Ltd. 140129 4.61 140129 4.61
6.05% GOI Bonds 2019 5000000 48.42 - -
National Stock Exchange 75000 26.26 - -
Emerald Wealth Management 23300 233.00 5000 50.00
10% Tata Motors Finance NCD 5000000 5.00 5000000 5.00
Bonds
Bhavishya Nirman Bonds @ Rs 8200 each-A 10 Year Zero 11% PFC 2018 50 5.91 - -
Coupon Bond of NABARD- maturity Rs 20000.00 per bond 7500 6.06 - -
BONDS
Unit Trust of India -6.75% Bonds -US 64@ Rs100 - - 15918732 159.19 Indian Bond ReceivablesTr08 Sr 1 10000 100.00 10000 100.00
17,074.03 16,602.73 Lotus Trust PTC-IDBI Trust 20000 200.00 20000 200.00

Commercial Papers
Tata Capital Ltd. 100 4.55 - -
Reliance Communication Ltd. 100 4.50 - -
Birla Global Finance Co. Ltd. 100 4.47 - -

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6) INVESTMENTS (contd.) 6) INVESTMENTS (contd.)

(Rupees in crores) (Rupees in crores)
Purchase Sold Purchase Sold
Units Amount Units Amount Units Amount Units Amount
Equity Shares Andhra Bank 21900 0.12 21900 0.12
Arvind Ltd. 137600 0.50 137600 0.50
Shares of Face value of Rs 1 each Canara Bank 4400 0.08 4400 0.08
Glenmark Pharmaceuticals Ltd. 33473 0.75 33473 0.75 Chambal Fertilizers & Chemicals Ltd. 17250 0.11 17250 0.11
Tata Consultancy Services Ltd. 4716 0.22 4716 0.23 Dena Bank 24798 0.14 24798 0.14
Dabur India Ltd. 42050 0.34 42050 0.34 Hindustan Oil Exploration Co. Ltd. 193870 2.76 193870 2.76
Hindustan Unilever Ltd. 13600 0.33 13600 0.33 IFCI Ltd. 295500 1.38 295500 1.38
ITC Ltd. 86625 1.48 86625 1.48 Ispat Industries Ltd. 29050 0.07 29050 0.07
Wire and Wireless (India) Ltd. 216904 0.95 216904 0.95 Jaiprakash Hydro-Power Ltd. 3125 0.01 3125 0.01
Mangalore Refinery and Petrochemicals Ltd. 6675 0.04 6675 0.04
Shares of Face value of Rs 2 each Mahanagar Telephone Nigam Ltd. 10500 0.07 10500 0.07
Crompton Greaves Ltd. 28932 0.38 28932 0.38 Nagarjuna Fertilizer & Chemicals Ltd. 215450 1.04 215450 1.04
Cummins India Ltd. 12374 0.24 12374 0.24 NTPC Ltd. 30100 0.53 30100 0.53
Divis Laboratories Ltd. 4351 0.38 4351 0.38 Oriental Bank of Commerce 3600 0.04 3600 0.04
DLF Ltd. 16848 0.35 16848 0.35 Petronet LNG Ltd. 30000 0.10 30000 0.10
Larsen & Toubro Ltd. 3229 0.22 3229 0.22 Power Finance Corporation Ltd. 3100 0.03 3100 0.03
Sintex Industries 52513 0.48 52513 0.48 Power Grid Corporation of India Ltd. 12430 0.09 12430 0.09
Sterlite Industries Ltd. 13015 0.34 13015 0.34 Pyramid Saimira Theatre Ltd. 10000 0.08 10000 0.08
United Phosphorous Ltd. 57797 0.50 57797 0.50 Reliance Petroleum Ltd. 51925 0.95 51925 0.95
GMR Infrastructure Ltd. 87500 0.65 87500 0.65 Rural Electrification Corporation Ltd. 27300 0.26 27300 0.26
HCL Infosystems Ltd. 2028 0.02 2028 0.02 Spice Communications Ltd. 50000 0.34 50000 0.34
Jaiprakash Associates Ltd. 12000 0.22 12000 0.22 Steel Authority of India Ltd. 37800 0.53 37800 0.53
Satyam Computer Services Ltd. 34541 0.54 34541 0.54 Tata Teleservices (Maharashtra) Ltd. 245575 0.68 245575 0.68
Union Bank of India 10250 0.15 10250 0.15
Shares of Face value of Rs 5 each
Maruti Suzuki India Ltd. 9867 0.54 9867 0.54 1,637.81 1,294.49
Ranbaxy Laboratories Ltd. 25161 0.92 25161 0.92
Infosys Technologies Ltd. 800 0.12 800 0.12 (Rupees in crores)
Reliance Communications Ltd. 2450 0.10 2450 0.10 As at March 31,2009 As at March 31,2008
Aggregate value of Book value Market value Book value Market value
Shares of Face value of Rs 10 each Quoted investments -Long Term 63.61 40.55 160.00 160.75
Aditya Birla Nuvo Ltd. 8591 0.47 8591 0.47 Quoted investments-Current - - 48.45 48.45
Bank of India 11883 0.30 11883 0.30 Unquoted investments 3,305.14 - 2358.37 -
Bharat Heavy Electricals Ltd. 1078 0.14 1078 0.14 3,368.75 2566.82
Cairn India Ltd. 14927 0.23 14927 0.23
Great Eastern Shipping Company Ltd. 6655 0.12 6655 0.12
HDFC Bank Ltd. 5598 0.61 5598 0.61
ICICI Bank Ltd. 10044 0.43 10044 0.43
Infrastructure Development Finance Company Ltd. 100519 0.60 100519 0.60
Mahindra & Mahindra Ltd. 7216 0.00 7216 0.00
Punjab National Bank 16051 0.57 16051 0.57
Reliance Capital Ltd. 8017 0.30 8017 0.30
Reliance Industries Ltd. 1908 0.28 1908 0.28
State Bank of India. 4249 0.56 4249 0.56
Tata Motors Ltd. 11749 0.35 11749 0.35
Tata Power Ltd. 3635 0.24 3635 0.24

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7) CURRENT ASSETS, LOANS AND ADVANCES 7) CURRENT ASSETS, LOANS AND ADVANCES
(Rupees in crores) (Rupees in crores)
As at March As at March As at March As at March
31, 2009 31, 2008 31, 2009 31, 2008
CURRENT ASSETS Income-tax deducted at source 11.16 3.50
INVENTORIES # Deposits with excise authorities on
Stores and spares (at cost or under) 27.19 22.27 current account 0.17 2.13
Loose tools (at cost or under) 14.51 13.46 311.26 185.46
Raw materials and components * 201.44 219.77
Finished goods *
Two wheelers 28.52 30.92 8) CURRENT LIABILITIES AND PROVISIONS
Spare parts 32.49 14.08 (Rupees in crores)
Work in progress * 22.68 16.60
As at March As at March
326.83 317.10 31, 2009 31, 2008

* Lower of cost and net realisable value CURRENT LIABILITIES

# Includes goods in transit Rs.18.33 crores (Previous year Rs 64.87 crores) Sundry creditors: #
Total outstanding dues of creditors other
SUNDRY DEBTORS than Micro and small enterprises 703.03 756.07
Debts outstanding for a period exceeding
six months Other liabilities ## 794.23 541.21
Secured - considered good 0.70 1.19 Security deposits from dealers 28.59 27.70
Unsecured - considered good 3.24 2.76 1,525.85 1324.98
- considered doubtful 5.26 6.96 PROVISIONS
Other debts Proposed dividend 399.38 379.41
Secured - considered good 7.12 14.77 Provision for taxation less payments 8.06 6.39
Unsecured - considered good 138.88 278.72 Provision for tax on dividend 67.87 64.48
155.20 304.40 Employee benefit schemes 6.73 5.80
Less :Provision for doubtful debts 5.26 6.96 Warranties 44.93 43.68
149.94 297.44 526.97 499.76
CASH AND BANK BALANCES # No due to Micro and small enterprises (refer note - 13 of Schedule - 13)
Cash in hand 0.20 0.25 ## Other liabilities do not include any amount outstanding as on March 31, 2009 which are required to be credited to the Investor
Cheques in hand 0.18 0.11 Education and Protection Fund (Fund)
With scheduled banks:
On current accounts 10.99 14.32
On deposit accounts 2.08 0.51
9) DEFERRED TAX ASSETS AND LIABILITIES (Rupees in crores)
On dividend current accounts 206.12 115.90
As at March As at March
219.57 131.09
31, 2009 31, 2008
OTHER CURRENT ASSETS
DEFERRED TAX ASSETS
Interest accrued on investments 5.89 5.69
Accrued expenses deductible on payment 2.29 1.97
5.89 5.69
Others 6.36 3.25
LOANS AND ADVANCES
8.65 5.22
(Unsecured and considered good)
DEFERRED TAX LIABILITIES
Advances recoverable in cash or in kind or for
Accumulated depreciation 153.08 130.59
value to be received 237.42 82.32
153.08 130.59
Inter corporate deposits - 50.00
Income-tax recoverable 62.51 47.51

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10) OTHER INCOME OTHER EXPENSES#

(Rupees in crores) Payments to and provisions for employees:
Year ended Year ended Salaries, wages, bonus, gratuity and leave encashment benefit 409.14 350.48
March 31, 2009 March 31, 2008 Contribution to provident and other funds 17.34 14.01
Dividend income Staff welfare expenses 22.17 18.96
On current investments - Non trade 12.77 4.24 Expenses for manufacturing, administration and selling
On long term investments - Trade 2.72 2.72 Stores and tools consumed 71.78 63.75
15.49 6.96 Power and fuel 73.70 56.55
Rent 5.25 4.22
Interest on long term non trade investments 22.04 12.81
Repairs and maintenance:
Profit on sale of non trade current investments* 145.43 132.91
Plant and machinery 30.07 27.41
Provision for doubtful debts written back 0.75 -
Buildings 3.58 3.66
Profit on sale of fixed assets 0.19 0.09
Others 2.20 0.83
Exchange difference - 1.38
Insurance 16.44 10.90
Miscellaneous income 36.82 31.27
Exchange fluctuation 13.74 -
220.72 185.42
Rates and taxes 30.32 15.27
Packing, forwarding, freight etc. 316.09 266.75
* After adjusting loss on sale of current investments aggregating Rs. 38.89 crores (previous year Rs. 19.54 crores)
Royalty 324.01 276.70
Advertisement and publicity 249.60 221.78
11) MANUFACTURING AND OTHER EXPENSES Commission
(Rupees in crores) Export 11.67 11.60
Year ended Year ended Others 4.80 3.49
March 31, 2009 March 31, 2008 16.47 15.09
MATERIALS CONSUMED Donations 6.43 0.91
Consumption of raw materials and components 9369.28 7911.58 Lease rent 10.51 11.47
Less:- Sale of components to ancillaries on cost to cost basis 552.81 470.53 Other expenses 230.25 209.63
8816.47 7441.05 Provision for diminution in value of investments
Less:- Cash discount 46.11 39.44 Current non trade investment 12.49 1.29
8770.36 7401.61 Long term non trade investment 0.20 1.28
Add: Opening stock 12.69 2.57
Two wheelers 30.92 44.31 Loss on sale of long term non trade investments 2.04 -
Spare parts 14.08 13.46 Doubtful debts written off 0.95
Work in progress 16.60 17.97 Less: Charged against provision for doubtful debts 0.95 -
61.60 75.74 Provision for doubtful debts - 4.59
Less: Excise duty on opening stock 7.78 11.22 Loss on fixed assets sold/discarded 3.57 4.36
Net opening stock 53.82 64.52 10,609.40 8,982.43
# Research and development expenses of Rs. 23.71 crores (previous year Rs. 18.78 crores) have been
Less: Closing stock charged to respective heads
Two wheelers 28.52 30.92
Spare parts 32.49 14.08 12) INTEREST (NET)
Work in progress 22.68 16.60 (Rupees in crores)
83.69 61.60 Year ended Year ended
Less: Excise duty on closing stock 11.66 7.78 March 31, 2009 March 31, 2008
Net closing stock 72.03 53.82 Interest - others and financial charges 2.53 2.00
Less: Interest received on loans, deposits, etc.* 34.21 37.81
Net consumption 8752.15 7412.31 (31.68) (35.81)
Less: Scrap sales 10.14 9.77 * Income tax deducted at source Rs. 1.87 crore (previous year Rs. 2.15 crore)
8742.01 7402.54

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13) NOTES TO THE ACCOUNTS vii) Foreign currency transactions

1) SIGNIFICANT ACCOUNTING POLICIES Exchange differences are dealt with as follows:-
i) Accounting convention Transactions in foreign currency are recorded at the exchange rate prevailing at the time of the transaction. All loss or gain on
translation are charged to revenue in the year in which it is incurred other than expenses relating to preoperative period.
The financial statements are prepared under the historical cost convention, in accordance with applicable accounting
standards and relevant presentational requirements of the Companies Act, 1956. Current assets and current liabilities, are restated at the rate prevailing at the year end. In respect of forward contracts, the
forward premium or discount is recognised as income or expense over the life of contract in the profit and loss account and the
ii) Fixed / Intangible assets and depreciation / amortisation
exchange difference between the exchange rate prevailing at the year end and the date of the inception of the forward
Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties , taxes and other
exchange contract is recognised as income or expense in the profit and loss account.
incidental expenses. All loss or gain on translation of foreign currency liabilities for fixed assets commissioned subsequent to
viii) Sales
March 31, 2007 are charged to revenue in the year in which they arise.
Sale of goods is recognised at the point of despatch of finished goods to the customers. Gross sales are inclusive of applicable
Depreciation is charged on a pro-rata basis at the straight line method rates prescribed in schedule XIV to the Companies
excise duty and freight but are exclusive of sales tax.
Act, 1956. Assets covered under employee benefit schemes are amortised over a period of five years. Assets costing upto Rs.
5000 each are fully depreciated in the year of purchase. - Scrap is accounted for on sale basis.
Intangible assets, comprising of expenditure on model fee etc, incurred are amortised on a straight line method over a period ix) Warranty claims
of five years. Warranty costs are provided on accrual basis on the total sales of two wheelers during the year, which are based on past
Leasehold land has been amortised over the period of lease. experience of claims.
iii) Preoperative expenses pending allocation x) Research and development expenses
Expenses directly related to construction activity or incidental thereto, are allocated to fixed assets at the time of completion of Research and development expenditure of a revenue nature is expensed out under the respective heads of account in the year
the project. in which it is incurred.
iv) Investments xi) Taxation
Current investments are stated at lower of cost and fair value computed categorywise. Long term investments are stated at The provision for taxation is ascertained on the basis of assessable profits computed in accordance with the provisions of the
cost less provision for permanent diminution, if any. Income Tax Act, 1961.
v) Inventories Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between
taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent
Stores and spares and loose tools are stated at cost or under.
periods.
Raw materials and components, finished goods and work in progress are valued at cost or net realisable value, whichever is
lower. The bases of determining cost for various categories of inventories are as follows:- xii) Provisions and contingent liabilities

Stores and spares, loose tools, raw materials and components - Weighted average cost Provision involving substantial degree of estimation in measurement are recognized when there is a permanent obligation as
a result of past events and it is probable that there will be an out flow of resources. Contingent liabilities are not recognized but
Materials in transit - Actual cost
are disclosed in the notes.
Work in progress and finished goods - Material cost plus appropriate share of
xiii) Derivatives
labour, manufacturing overheads and excise duty.
Foreign currency derivatives are used to hedge risk associated with foreign currency transactions. All open positions as at the
vi) Employee benefits
close of the year are valued by marking them to the market and provision is made for losses if any.
a) Defined contribution plan
2. CONTINGENT LIABILITIES :
Provident fund, Superannuation fund and Employee' State Insurance Corporation (ESIC) are the defined contribution
(Rupees in crores)
schemes offered by the Company. The contributions to these schemes are charged to the profit and loss account of the year in
which contribution to such schemes becomes due. This year Previous year

b) Defined benefit plan and Long term Employee benefits i) In respect of excise matters 8.17 -

Gratuity liability and long term employee benefits, are provided on the basis of an actuarial valuation made at the end of each The above matters are subject to legal proceedings in the ordinary course of business. The legal proceedings when ultimately
concluded will not, in the opinion of management, have a material effect on the results of operations or the financial position of
financial year as per unit credit method. Actuarial gains or losses arising from such valuation are charged to revenue in the year the Company.
in which they arise.

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3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 92.37 crores (previous year Transactions with related parties during the year
Rs. 56.37 crores).
a) Parties in respect of which the Company is a joint venture and associate of the Company.
4. Commercial production commenced at Haridwar plant on April 7, 2008. Expenditure incurred on the project upto April 6, 2008
(Rupees in crores)
has been included in Schedule 5 under the head ' Pre-operative Expenditure (pending allocation)'. Pre-operative expenditure
other than those which are directly allocable has been allocated pro-rata to fixed assets and capital work in progress. This year Previous year
5. The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These lease Honda Motor Co. Limited, Japan
arrangements are cancellable in nature and range between two to four years. The aggregate lease rentals under these
arrangements amounting to Rs. 10.51 crores (previous year Rs. 11.47 crores) have been charged under "Lease rentals " in Dividend paid 98.65 88.26
Schedule 11. Royalty 324.01 276.70
6. As the Company's business activity falls within a single primary business segment viz. "Two wheelers and its parts" and is a single Export commission 11.67 11.60
geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", specified in the
Companies (Accounting Standards) Rules, 2006 are not applicable. Model fees 32.54 31.32

7. Two wheeler sales are covered by a warranty period of two/three years. The details of provision for warranties are as under: Technical guidance fee 0.38 0.87

(Rupees in crores) Purchase of raw materials, components and spares 15.36 16.39

This year Previous year Hero Cycles Limited

Provision at the beginning of the year 43.68 36.23 Dividend paid 32.88 29.42

Additional provision made during the year 27.37 33.35 Purchase of raw materials, components and spares 72.90 63.59

Amount used during the year 26.12 25.90 Hero Investments Private Limited

Provision at the end of the year 44.93 43.68 Dividend paid 32.88 29.42
Bhadurchand Investments Private Limited

8. Related party disclosures under Accounting Standard 18 Dividend paid 32.88 29.42
a) i) Parties in respect of which the Company is a Joint venture: Hero Honda Finlease Limited
Honda Motor Co. Limited, Japan Lease rental expenses 10.51 11.47
Hero Cycles Limited Dividend received 2.72 2.72
Bhadurchand Investments Private Limited Intercorporate deposits given 495.50 190.00
Hero Investments Private Limited Intercorporate deposits repaid 545.50 190.00
Interest received on Inter corporate deposits 3.63 1.51
ii) Associate of the Company: Balance outstanding at the year end
Hero Honda Finlease Limited -Receivables - 50.00
-Payables 8.82 3.84
b) Key management personnel
Mr. Brijmohan Lall Munjal Chairman b) Key management personnel
Mr. Pawan Munjal Managing Director & CEO (Rupees in crores)
Mr. Toshiaki Nakagawa Joint Managing Director This year Previous year

Mr. Yutaka Kudo Whole time director (w.e.f. April 1, 2007 to May 30,2008) Managerial Remuneration
Mr. Sumihisa Fukuda Whole time director (w.e.f .June 1, 2008) Mr. Brijmohan Lall Munjal 19.79 15.76
Mr. Pawan Munjal 19.69 15.74
c) Enterprises over which key management personnel and their relatives are able to exercise significant influence:- Mr. Toshiaki Nakagawa 19.08 15.20
Brijmohan Lall Associates, A.G. Industries Private Limited, Hero Corporate Services Limited, Highway Industries Limited, Mr. Yutaka Kudo (w.e.f April 1, 2007 to May 30,2008) 3.15 15.13
Majestic Auto Limited, Munjal Auto Industries Limited, Munjal Showa Limited, Rockman Industries Limited, Sunbeam
Mr. Sumihisa Fukuda (w.e.f June 1, 2008) 15.81 -
Auto Limited, Satyam Auto Components Limited, Hero Motors Limited, Shivam Autotech Limited, Cosmic Kitchen Private
Limited, Easy Bill Limited, Hero Mindmine Institute Limited, Indian School of Business and Raman Kant Munjal
Foundation.

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Balance outstanding at the year end 9. Earnings per share

-Payables (including commission) 74.80 59.20 This Year Previous Year

Profit after taxation as per profit and loss account (Rupees in crores) 1281.76 967.88

c) Enterprises over which key management personnel and their relatives are able to exercise significant influence Weighted average number of equity shares outstanding 19,96,87,500 19,96,87,500

(Rupees in crores) Basic and diluted earnings per share in rupees (face value -Rs.2 per share) 64.19 48.47

This year Previous year

Purchase of raw materials and components 2622.86 1976.60 10. The Company has entered into Discretionary Portfolio Management Agreements, administered through ICICI Prudential Asset
Management Company Limited-PMS, IIM-Optimix Porfolios-Capital enhancer, Escorts Securities Limited, Reliance Capital Asset
Sale of components etc 2.82 2.83 Management Ltd, Fortis Investment Management, Birla Sunlife Asset Management Company Private Limited collectively called
Payment towards rent and other services 4.09 3.56 Portfolio Managers. In terms of the said agreements, the Portfolio Managers have dealt in mutual funds, debentures, bonds,
government securities, equity shares, equity stock futures, equity stock options equity index options and such other securities,
Donation 5.67 0.60 made on behalf of the Company. However, there are no outstanding derivative contracts as at March 31, 2009.
Balance outstanding as at the year end 11. Information pursuant to clause 4 (ix) (b) of the Companies (Auditor's Report) Order, 2003 in respect of disputed dues, not
- Payables 233.28 177.22 deposited as at March 31, 2009, pending with various authorities

Name of the Statute Nature of dues Amount* Amount paid under Period to which Forum where dispute
Significant related party transactions included in the above are as under :-
(Rs in crores) protest (Rs in crores) the amount relates is pending
(Rupees in crores)
Central Excise Laws Excise Duty 9.03 0.09 2000,2002-03 To CESTAT
This year Previous year 2004-05
Purchase of raw materials and components 0.14 - 2005-06 Commissioner (Appeals)
A .G. Industries 278.51 188.54 Services Tax 1.90 0.45 2004-05 to 2005-06 CESTAT
Munjal Showa Limited 676.80 556.06 Income Tax Act Income Tax 9.61 9.61 2000-01 to 2001-02 Income Tax
Appellate Tribunal
Sunbeam Auto Limited 437.72 379.23
128.61 52.90** 2001-02 to 2004-05 Commissioner (Appeals)
Rockman Cycle Industries Limited 324.91 167.44
Satyam Auto Components Limited 267.35 147.07 * Amount as per demand orders including interest and penalty wherever quantified in the order.

Sale of components etc. ** Balance of unpaid demand has been stayed.

A.G.Industries Private Limited 0.61 0.22

The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:
Majestic Auto Limited 0.50 -
Name of the Statute Nature Amount Period to which Forum where
Satyam Auto Components Limited 0.53 1.69 (Rs in crores) the amount relates Department has
Munjal Auto Industries 0.85 - (various years covering preferred appeals
the period)
Hero Motors Limited 0.26 0.85
Central Excise Laws Excise Duty 2.57 1986-87 to 1990-91 Supreme Court
Payment for services
Income Tax Act Income Tax 8.18 1987-88, 1989-90, 1992-93, High Court
Hero Corporate Services Limited 3.20 3.20 1993-94, 1995-96, 1996-97
Donation 1998-99, 2000-01
Raman Kant Munjal Foundation 0.30 0.60 12.30 1999-00, 2001-02 Income Tax
Indian School of Business 5.37 - Appellate Tribunal

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12. The Company's borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by way
This year Previous year
of hypothecation of inventories, receivables, movable assets and other current assets. (Rupees in crores) (Rupees in crores)
13. The Company has identified parties covered under the "The Micro, Small, and Medium Enterprises Development Act, 2006' on Changes in the present value of the plan asset is as follows
the basis of the confirmations received. There is no outstanding balance payable as at the close of the financial year to such parties.
Fair value of plan asset at the beginning of the year 32.23 17.44
Further, no interest has been paid or payable to such parties under the said Act.
Return on plan asset 3.02 1.62
14. The unhedged foreign currency exposures are as under:
Contributions 6.67 14.12
benefits paid (1.14) (0.95)
Purpose As at March 31, 2009 As at March 31, 2008
Actuarial (gain)/ loss on obligation - -
Amount in Foreign Amount in Amount in Foreign Amount in
currency in crores Rs. in crores currency in crores Rs. in crores Fair value of plan asset at the end of the year 40.78 32.23
Receivables USD 0.64 32.74 USD 1.10 44.43
Payables JPY 13.81 7.08 JPY 38.71 15.28 Reconciliation of the present value of defined benefit obligation
and the fair value of the plan assets
USD 0.41 20.99 - -
Present value of defined benefit obligation at the end of the year 40.78 32.23
- - EURO 0.02 1.21
Fair value of plan asset at the end of the year 40.78 32.23
Net asset/(liability) as at the close of the year - -
15. Employee Benefits
Defined contribution plans
Expenses recognised in the profit and loss account
This Year Previous Year
(Rupees in crores) (Rupees in crores) Current service cost 2.77 2.15
Employer's Contribution to Provident Fund 11.67 9.77 Interest cost 2.26 2.03
Employer's Contribution to Superannuation Fund 5.17 4.27 Return on plan assets (3.02) (1.62)
Employer's Contribution to ESIC 0.49 0.30 Net actuarial (gain) / loss 4.66 3.59
Expenses recognised in the profit and loss account 6.67 6.15
Defined benefit plans
In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as a defined benefit plan. The gratuity Discount rate 7.00% 8.00%
plan provides for a lumsum payment to the employees at the time of separation from the service on completion of vested Expected Rate of return on plan assets 9.40% 9.10%
period of employment i.e five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each
financial year based on which the Company contributes the ascertained liability to a Group Gratuity Scheme of Life Insurance
Corporation of India.
Note:- The estimates of future salary increases considered in the actuarial valuation take into account inflation, seniority promotion
and other relevant factors such as supply and demand in the employment market.
This year Previous year
(Rupees in crores) (Rupees in crores)
Changes in the present value of the defined benefit 16. Additional Information
obligation is as follows
a) Details of capacity and production:
Present value of defined benefit obligation at the beginning of the year 32.23 25.41
Interest cost 2.26 2.03 Class of goods Units Licensed capacity* Installed capacity** Actual Production***

Current service cost 2.77 2.15 This year Previous year This year Previous year This year Previous year
Benefits paid (1.14) (0.95) Motorised two wheelers upto
Actuarial (gain)/ loss on obligation 4.66 3.59 350CC engine capacity Nos. 200000 200000 5200000 3400000 3721844 3333460

Present value of defined benefit obligation at the end of the year 40.78 32.23

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*The Company's products are exempt from Licensing requirements under New Industrial Policy in terms of Notification no. d) CIF Value of imports:
S.O.477(E) dated 25th July,1991.
**On triple shift basis, as certified by the management and relied on by the auditors being a technical matter. Class of goods This year Previous year
(Rs. in crores) (Rs. in crores)
***Includes 220 (Previous year 175) two wheelers produced and capitalised during the year.
Capital goods 48.51 66.14
Raw materials* 31.54 103.92
b) Particulars in respect of opening stock, purchases, sales and closing stock for each class of goods dealt with by the
Company: Components, spare parts and others * 396.00 404.00

Class of goods Units Opening stock Purchases * Includes items sold to ancillaries on cost to cost basis for assembling of components.
This year Previous year This year Previous year e) Value of imported and indigenous raw materials, components and spares consumed and percentage of each to the
Quantity Value Quantity Value Quantity Value Quantity Value total consumption:
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs.in crores)
Class of goods This year Previous year
Two wheelers Nos. 10955 30.92 14812 44.31 - - - -
Value Percentage Value Percentage
Spares - * 14.08 * 13.46 - - - - (Rs. in crores) % (Rs. in crores) %
45.00 57.77 - - Raw materials
-Imported ** 0.79 0.01 0.24 0.00
Class of goods Units Gross Sales Closing stock -Indigenous 25.41 0.30 27.70 0.38
This year Previous year This year Previous year Components
Quantity Value Quantity Value Quantity Value Quantity Value
-Imported ** 69.28 0.79 49.99 0.67
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs.in crores)
-Indigenous 8,720.99 98.90 7,363.12 98.95
Two wheelers Nos. 3722000+ 12,719.77 3337142+ 11,353.48 10579 28.52 10955 30.92
8,816.47 * 100.00 7,441.05 * 100.00
Spares - * 823.32 * 684.73 * 32.49 * 14.08
Spares consumed (charged to
Miscellaneous * - * 0.32
Components repairs and maintenance)
13,543.09 12,038.53 61.01 45.00 -Imported 6.47 30.38 5.96 34.08
* It is not practicable to furnish quantitative information in view of the considerable number of items diverse in size and nature. -Indigenous 14.83 69.62 11.53 65.92
These items in value individually account for less than 10% of the total value of the purchases, stocks and turnover of the aforesaid 21.30 100.00 17.49 100.00
spares and miscellaneous components.
*Excludes Rs. 0.55 crore (Previous year Rs 0.44 crore) for two wheelers produced and capitalised during the year.
+ Excluding 220 (Previous year 175) two wheelers capitalised. ** Excludes items sold and purchased as indigenous components.
c) Raw materials and components consumed:

Class of goods Units This year Previous year f) Expenditure in foreign currency (on accrual basis) :
Quantity Value Quantity Value This year Previous year
(Rs. in crores) (Rs. in crores)
(Rs. in crores) (Rs. in crores)
Steel sheets MT 5369.46 26.20 6130.02 27.94
Royalty 324.01 276.70
Components * 8,790.27 * 7,413.11
Technical guidance fee 3.33 2.62
8,816.47** 7,441.05 **
Model fee 30.78 29.87
* It is not practicable to furnish quantitative information of components consumed in view of the considerable number of items Export commission 11.67 11.60
diverse in size and nature. These items in value individually account for less than 10% of the total value of components
Travel and other accounts 3.78 5.45
consumed.
Advertisement and Publicity 4.23 6.25
** Excludes Rs.0.55 crore (Previous year Rs.0.44 crore) for two wheelers produced and capitalised during the year.

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g) Earnings in foreign currency (on accrual basis) : i) Provision and/or payment in respect of Auditors' Remuneration :
This year Previous year This year Previous year
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs. in crores)
FOB value of exports 247.04 242.79
a) As auditors (Audit fee) 0.38 0.28
Freight and insurance 1.07 0.85
b) In other capacity
- limited review of unaudited financial results 0.24 0.20
h) Managerial remuneration: - corporate governance and other certification 0.02 0.01
This year Previous year
(Rs. in crores) (Rs. in crores) c) Out of pocket expenses # #
Whole time Directors
# This year Rs 40143 (Previous year Rs 80329 )
Remuneration* 3.14 2.70
Commission** 74.39 59.13
j) Amount remitted in foreign currencies towards dividends during the year:
77.53 61.83
Non-Executive Independent Directors This year Previous year
Commission 0.31 0.35 No. of No. of equity Dividend No. of No of equity Dividend
77.84 62.18 Non-Resident shares held remitted Non-Resident shares held remitted
Directors' sitting fee 0.10 0.11 shareholders (Rs. in crores) shareholders (Rs. in crores)

77.94 62.29 2006-2007 - Final - 1 51918750 88.26

*Excludes incremental contribution for gratuity, as the contributions are determined for the Company as a whole. 2007-2008 - Final 1 51918750 98.65 -

** Mr.Yutaka Kudo, whole time director was in employment with the Company up to May 30, 2008. Mr. Sumihisa Fukuda 98.65 88.26
joined the Company in place of Mr. Yutaka Kudo with effect from June 01, 2008. Accordingly, commission on profit has been
apportioned on a pro-rata basis to these whole-time directors and to the other three whole-time directors on a full year basis.
17. Previous year's figures have been recast/regrouped wherever necessary.
Computation of net profit in accordance with section 198 of the Companies Act,1956.
This year Previous year
(Rs. in crores) (Rs. in crores)
Profit before taxation as per profit and loss account 1,781.46 1,410.28
Add:-
Managerial remuneration 77.94 62.29
Provision for doubtful debts - 4.59
Provision for diminution in value of investment long term 0.20 1.28
Loss on sale of long term non-trade investments 2.04 -
For and on behalf of the Board of Directors
Net profit as per section 349 of the Companies Act,1956 1,861.64 1,478.44
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director & CEO
Maximum managerial remuneration to four whole time
PRADEEP DINODIA Director
directors( including commission) at 10% of net profit 186.16 147.84

New Delhi RAVI SUD Sr. Vice President & CFO

Maximum managerial remuneration to non whole time
directors( including commission) at 1% of net profit 18.61 14.78 April 21, 2009
204.77 162.62 ILAM C. KAMBOJ Sr. G.M. Legal & Company Secretary
Commission component of managerial remuneration to
- Four whole time directors restricted to 1% of net profit
( 1% of net profit) per director 74.39 59.13
- Non-Executive Independent Directors
0.10% of net profit. Restricted to 0.31 0.35

Commission restricted to 74.70 59.48

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PART IV OF SCHEDULE VI Reconciliation of Net Income as per US GAAP Accounts and Audited Accounts as per Indian Companies Act 1956
TO THE COMPANIES ACT, 1956
(Rupees in Millions)
Balance Sheet Abstract and Company's General Business Profile
2009 2008 2007 2006 2005
I. Registration Details
Net Profit after tax for the year as per audited accounts 12,817.60 9,678.80 8,578.90 9,713.40 8,104.70
Registration No. 17354
State Code 55 Add / (Less) : Profit / (Loss) of
Balance Sheet Date 31.03.2009 - Income from investments ( unrealised gain/loss )
- affiliated company 2.62 12.16 10.67 30.60 57.19
II. Capital Raised during the year (Rupees in crores) - held to maturity securities - - - 22.90 (11.77)
Public Issue Nil Rights Issue Nil - Exchange fluctuations - - 11.30 (8.40) (3.90)
Bonus Issue Nil Private Placement Nil - Depreciation effect of exchange fluctuations 0.68 0.68 5.37 18.26 21.75
- Depreciation on leased assets - - (76.60) (93.18)
III. Position of Mobilisation and Deployment of Funds (Rupees in crores)
- Lease rentals paid - - 135.58 117.83
Total Liabilities 3879.24 Total Assets 3879.24
- Interest portion of lease rentals - - (9.90) (15.51)
Sources of Funds Application of Funds
Paid-Up Capital 39.94 Net Fixed Assets 1694.25 - Provision for deferred tax (151.18) 180.33 (167.24) (103.56) (2.11)
Reserves & Surplus 3760.81 Investments 3368.75 - Deferred revenue expenditure - - - - -
Secured Loans Nil Net Current Assets* (1183.76) Net Income as per US GAAP 12,669.72 9,871.97 8,439.00 9,722.28 8,175.00
Unsecured Loans 78.49 Misc. Expenditure Nil
*Includes Deferred Tax Liability (Net) Rs. 144.43 crores

IV. Performance of Company (Rupees in crores) Balance sheet as at March 31

Turnover 12,539.84
Total Expenditure 10,758.38 (Rupees in Millions)
Profit before tax 1,781.46 2009 2008 2007 2006 2005
Profit after Tax 1,281.76
Earnings per share Rs. 64.19 ASSETS
Dividend Rate 1000%
Current Assets
Cash and cash equivalents 2,195.72 1,310.92 357.82 1,587.22 176.01
V. Generic names of Three Principal Products/ Services of Company (as per monetary terms)
Item Code No. (ITC Code) 87112003 Trade accounts receivables 1,499.38 2,974.38 3,352.48 1,586.58 895.49
Product Description Motorised two wheelers upto 350cc engine capacity Inventories 3,268.34 3,171.04 2,755.84 2,265.54 2,042.62
Pre-paid expenses and other current assets 3,171.48 1,911.49 2,666.58 2,773.08 2,431.20

For and on behalf of the Board of Directors Total current assets 10,134.92 9,367.83 9,132.72 8,212.42 5,545.32
BRIJMOHAN LALL MUNJAL Chairman Investment (held to maturity securities) 416.79 1,599.99 1,612.79 1,595.18 1,596.07
PAWAN MUNJAL Managing Director & CEO Investment in mutual funds 33,637.31 24,617.11 18,522.31 19,680.81 18,973.12
PRADEEP DINODIA Director Investment in affiliate, at equity 267.20 264.58 252.42 241.75 211.14

RAVI SUD Sr. Vice President & CFO Property, plant and equipment 16,790.44 15,494.75 13,401.08 9,765.51 7,049.94
New Delhi
Total assets 61,246.66 51,344.26 42,921.32 39,495.67 33,375.59
April 21, 2009 ILAM C. KAMBOJ Sr. G.M. Legal & Company Secretary

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(Rupees in Millions) Statement of income for the year ended March 31

(Rupees in Millions)
2009 2008 2007 2006 2005
2009 2008 2007 2006 2005
LIABILITIES
Net sales 123,191.20 103,318.00 98,999.60 87,139.81 74,216.53
Trade accounts payable 7,030.30 7,560.70 5,548.20 6,462.70 6,619.60
Cost of goods sold 97,838.08 82,724.62 79,931.23 67,548.97 57,308.71
Accrued expenses 516.62 494.82 417.58 305.02 247.50
Selling, administrative and general expense 9,871.34 8,619.10 8,558.40 6,979.60 6,055.73
Indian income taxes 80.60 63.90 38.50 40.30 45.70
Other (income) and expense (2,019.32) (1,783.26) (1,748.47) (1,572.20) (1,397.42)
Other current liabilities 8,228.25 5,689.15 4,871.05 4,266.15 3,538.05
Interest net expense (income) (316.80) (358.10) (229.90) (51.40) 4.61
Long term debt due within one year 184.93 184.93 206.10 227.27 222.83
Total expense 105,373.30 89,202.36 86,511.26 72,904.97 61,971.63
Total current liabilities 16,040.70 13,993.50 11,081.43 11,301.44 10,673.68
Income before income taxes 17,817.90 14,115.64 12,488.34 14,234.84 12,244.90
Deferred income taxes 1,671.49 1,391.67 1,529.68 1,375.63 981.67
Indian taxes on income 5,148.18 4,243.97 4,049.34 4,512.56 4,069.90
Long-term debt 599.97 1,135.07 1,445.60 1,630.53 1,920.45
Total liabilities 18,312.16 16,520.24 14,056.71 14,307.60 13,575.80 Net income 12,669.72 9,871.97 8,439.00 9,722.28 8,175.00
STOCKHOLDER’S EQUITY Net earning per share
Common stock, par value; Rs. 2 (previous year Rs 2) On share value of Rs. 2 each 63.45 49.44 42.26 48.69 40.94
Authorised 250,000,000 ; Average common stock outstanding (numbers) 199,687,500 199,687,500 199,687,500 199,687,500 199,687,500
Outstanding shares 199687500
(Previous year 199687500) of Rs 2 each 399.38 399.38 399.38 399.38 399.38
Capital surplus 0.03 0.03 0.03 0.03 0.03
Retained earnings 42,535.09 34,424.61 28,465.20 24,788.66 19,400.38

Total stockholder’s equity 42,934.50 34,824.02 28,864.61 25,188.07 19,799.79

Total liabilities and stockholder’s equity 61,246.66 51,344.26 42,921.32 39,495.67 33,375.59

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