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MOTORS
6th
ANNUAL REPORT
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MOTORSAnnual Report 2003-2004
BOARD OF DIRECTORSSh. O.P. Munjal Chairman
Managing Directorh. Pankaj Munjal
Sh. S.D. Khosla
Sh. G.P. Sood
Sh. Sandeep Dinodia
Sh. Yogesh Munjal
Sh. Ashok MunjalSh. Sunil Kant Munjal
CHIEF OPERATING OFFICER
Sh. P.V.V. Srinivasa Rao
FINANCIAL ADVISOR
Sh. A.K. Dewan
GENERAL MANA GER (ACCOUNTS)
Sh. Bhawnesh Vij
COMPANYSECRETARY
Sh. Ajay Pratap
AUDIT COMMITTEE
Sh. Sandeep Dinodia
Sh. G. P. Sood
AUDITORS
M/s B.D. Bansal & Co.
Chartered Accountants.
Amritsar, New Delhi, Ludhiana
COST AUDITORS
M/s. Ramanath Iyer & Co.
Cost Accountants, Delhi.
BANKERS
Punjab National Bank
Canara Bank
Citibank N.A.
ICICI Bank
REGISTERED OFFICE
601, International Trade Tower
Nehru Place, New Delhi-110019
WORKS
10km Stone, P.O. Dujana
Dadri, Dist Gautambudh Nagar,Ghaziabad. U.P.-203207
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Annual Report 2003-2004
HERO MOTORS LIMITED
(Formerly known as Hero Au to Ltd.)NOTICE
Notice is hereby given that the 6th Annual General Meeting of the members of HERO MOTORS LIMITED will be held onWednesday, the 22nd day of December, 2004 at 9.30 AM at Tivoli Garden Resort, Chattarpur Mandir R oad, New Delhi-110030
to transa ct the following business:
ORDINARY BUSINESS
1. To receive, consider and adop t the Audited B alance Sh eet of the Com pany as at September 30, 2004 and the Profit &
Loss accou nt for the period ended on that date together with the reports of the D irectors and A uditors thereon.2. To appoint a director in place of Shri Yogesh Munjal, who retires by rotation and being eligible offers himself for re-
appointment.
3. To appoint a director in place of Shri Ashok Munjal, who retires by rotation and being eligible offers himself for re-
appointment.
4. To appoint Auditors and to fix their remuneration.
M/s. B.D.Bans al& Co., CharteredAccountants, the retiring auditors areeligible for appointment.
SPECIAL BUSINESSTo consider and, if thought fit, to pass, with or without modification(s), the following resolutions:
As Ordinary Resolutions:
5. Appointment of Sh.S.D. Khosla as Director
"RESOLVED THAT Shri S. D. Khosla who was appointed as an additional director of the Company by the Board ofDirectors in terms of Section 260 of the Companies A ct, 1956 w.e.f. August 30, 2004 and in respect of whom thecompany has received a notice from a member under Section 257 of the Companies Act, 1956, be and is herebyappointedas director of the Com pany, liable to retire by rotation."
6 Appointment of Sh.G.P. Sood as Director
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MOTORSAnnual Report 2003-2004^̂̂ ^̂•••••M̂B̂MM r c ^ p , ^ r̂MM»MMMMMMMBM̂ II II I I l l l l l l I l l l l I I I I I I I I II I I l l l l l l l l l l l l l l l l l H IM I l l l l l l l II I II I I l l l l l l l l I I II I
NOTES:
1. A Member entitled to attend and vote at the meeting is entitled to appoint any other person as his/her proxy toattend and vote (in case of poll) instead of himself/herself at the meeting. A proxy need not be a member of theCompany.
2. A proxy form is sent herewith. The proxy form duly completed must be received at the registered office ofthe Company not less than forty eight hours before the meeting.
3. The explanatory statement setting out the material facts concerning Special Business at items No. 5 to 8 of the
accompanying notice as required by section 173(2) of the Companies Act, 1956, is annexed hereto.
4. The Register of Members and Share Transfer Books of the company will remain closed from 15th December, 2004 to 22nd
December, 2004 (both days inclusive).
5. All documents referred to in the accompanying notice are open for inspection at the registered office of the company
during office hours upto the date of the Annual General Meeting.
6. Pursuant to the provisions of section 109A of the Companies Act, 1956, every shareholdersor joint holders may nominate,
in the prescribed manner, a person to whom all the rights in the shares shall vest in the event of death of the sole holder orall the joint holders.
7. Pursuant to the Scheme of Arrangement between Majestic Auto Ltd. (Transferor Company) and Hero Motors Ltd.
(Transferee Company),as sanctioned by Hon'ble High Court of Punjab & Haryana on 29th May, 2004 and by Hon'ble HighCourt of Delhi on 22nd July, 2004 read with revised order dated 30th July, 2004 the Ghaziabad unit of the Transferor
Company has been demerged from Majestic Auto Ltd. and merged with the Transferee Company i.e Hero Motors Ltd. with
effect from the appointed date i.e. 01.04.2003. In accordance with the Scheme of Arrangement 11,26,142 equity shares
have been allotted proportionately to the shareholders of Majestic Auto Ltd. on 06.10.2004.
8. In pursuanceof the option given to the persons entitled forO% FCDs as per the schemeof arrangement between Majestic
Auto Ltd. & Hero Motors Ltd., the entitlement of 0% FCDs of Rs. 35 Crore have been converted into 3,50,00,000 equity
shares of Rs. 10/each.
9. The name of the company has been changed from Hero Auto Ltd. to Hero Motors Ltd. vide fresh certificate of incorporation
dated 15th September, 2004 issued by Registrar of Companies, NCT of Delhi & Haryana,New Delhi.
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MOTORSAnnua l Report 2003-2004
None of the directors excep t Sh. S.D. Khosla is interested in passing of this resolution.
Item No.6Sh. G.P. Sood was appointed as an additional director of the com pany by the Board of Directors in their meeting held on 30thAugust, 2004 and holds office as such up to the forthcoming Annu al G eneral Meeting of the comp any.
Sh. G.P. Sood, a Post Graduate in political science and holding degree in Law has vast experience in Banking, Accounts &Finance. He is former Deputy General Manager of Bank of India, Hong Kong branch and has held the position of ChiefManager for Hongkong branches of Bank of India. Sh. G.P.Sood has also held the position of Chief Executive Officer ofCommonwealth Finance Corporation Ltd for Hongkong under the Management of Bank of India. Sh. G.P. Sood is an associatemember of Certificated Indian Institute of Bankers (CAI IB) and is holding the position of D irector in Majestic A utoLtd.
The compa ny has received a notice from a member under section 257 of the Comp anies Act,1956 proposing candidature ofSh. G.P. Sood as director of the company. The Board recommends his appointment at the forthcoming Annual GeneralMeeting.
None of the directors except Sh. G.P. Sood is interested in passing of this resolution.
Item No.7
Sh. Sandeep Dinodia was app ointed as an additional director of the company by the Board of D irectors in their meeting held on30th August, 2004 and holds office a s such upto the forthcoming Annual General Meeting of the company.
Sh. Sandeep Dinodia, is a fellow m ember of the "Institute of Chartered Accountants of India", and holds a Law degree fromDelhi University, along with an honors degree in commerce from Shri Ram College of Commerce, New Delhi. He is also amem ber of the Institute of Internal Aud itors, USA .
Sh. Sandeep Dinodia has vast experience in the field of Direct Taxes (Both National & International), Company Law, IndianGAAP, Management Assurance (Auditing), Corporate planning & business restructuring. He is a senior partner of S.R.Dinodia & Co., an eminent Chartered Accountants firm based in New Delhi.
The company has received a notice from a member u nder section 257 of the Companies Act,1956 proposing candidature ofSh. Sandeep Dinodia as director of the company. The Board recomm ends his appointment at the forthcoming Annu al General
Meeting.
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MOTORSAnnual Report 2003-2004
DIRECTORS' REPORT
Dear members,
Your Directors have pleasure in presenting the 6th Annual Report together with the Audited Statement of Accounts for the
period ended 30th
September, 2004.
1. FINANCIAL RESULTS
The salient features of the Company's financial results for the period under review are as follows:
(Rs. in lacs)
Sales and other income
Gross Profit/(Loss)
Depreciation
Profit/(Loss) before tax
Provision for taxes
Profit/(loss) after tax
Prior period item
Prior year tax adjustments
Profit/ (loss) brought forward
Profit/(loss) b/f from Demerger Scheme
Transitional cumulative amortisation
Transitional cumulative deferred Tax
Period ended
30.09.2004(18Months)
"Tesos.Ve"(3854.60)
(1748.79)
(5603.40)
(53.15)
(5656.55)
12.64
(0.80)
(111.19)
(966.98)
(92.86)
NIL
Year ended
31.03.2003
(12Months)
(117.45)
(116.13)
(233.58)
(472.35)
(705.93)
(0.13)
NIL
70.36
NIL
NIL
524.51
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Annual Report 2003-2004
b.) Further, during the period under review, company issued 4,95,00,000, 6%Non-cumulative Convertible Redeemable
Preference Shares of Rs. 10/- each on private placement basis.
5. DIVIDEND
Inview of the losses suffered during the period ended 18 months under review, your directors are unable to recommend
any dividend.
6. FUTURE PROSPECTS
In view of the emerging scenario world-over, the company is focusing on auto component business and trying to evolve as
an integrated system solution provider, means end-to-end solutions, or design to parts for the automobile industry in
domestic and international market. The company is in touch with leading international automobile manufactures to cater to
their need at low cost with high quality components. The company is also proposing to acquire sizeable chunk of domesticauto components business to strengthen its presence in auto component industry.
The company has been successfully supplying Swing Arms, Painted components, Chain Case, Cylinder Block, Main
Stand and Side Standto Hero Honda Motors Limited and plans toenhance volume ofthese components in the near future
apart from the exploring the possibilities of developing more components for them. The company is also exploring the
possibility of supplying cylinder, piston and crankshaft for compressor to other consumer durables industry.
Further, the company during the period signed long term supply agreement with leading overseas auto manufacturer. This
will give continuous business on sustainable basis.
In view of the sharp decline in the moped segment in the country, the company will be focusing on auto parts business for
the growth of the company.
7. DIRECTORS
Shri Yogesh Munjal and Shri Ashok Munjal retire by rotation at the ensuing Annual General Meeting and are eligible for re-
appointment. The Board recommends their re-appointment.
Shri S.D. Khosla. Shri G.P. Sood and Shri Sandeep Dinodia have been appointed as additional directors of the company
w.e.f 30.08.2004.Thecompany has received notice(s) fromthemember(s) proposing their candidature for theoffice of the
director of the company. The Board recommends their appointment at the Annual General Meeting.
Shri Pankaj Munjal has been appointed as Managing Director of the company w.e.f. 03.09.2004. The Board recommends
approval of appointment by the members at the ensuing Annual General Meeting.
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Annual Report 2003-2004
Motors Ltd., with effect from the appointed date i.e. 01.04.2003. The Scheme of Arrangement has become effective from27th August, 2004.
1 1 . CHANGE OF NAME OF THE COMPANY
The name of the company ha s been changed from Hero Auto Limited to Hero Motors Ltd. vide fresh certificate ofIncorporation dated 15th September, 2004 issued by Registrar of Companies, NCT of Delhi & Haryana, NewDelhi.
12. FIXED DEPOSITS
During the period under review the companyhas not invited or accepted any deposit under Section 58A of the Companies
Act, 1956, readwith Companies (Acceptance of Deposits) Rules, 1975.
13. CORPORATE GOVERNANCE
Your company has been practicing the principles of Corporate governance over the years. The Board of Directorssupports the broad principles of Corporate Governance in addition to the basic governance issue. The Board lays strongemphasis on transparency, accountability and integrity.
14. AUDIT COMMITTEEOF THE BOARD
The Board has constituted the Audit Committee of the Board. The committee consists of the following directors:
Non Executive Directors
1. Sh. Sandeep Dinodia Chairman
2. Sh. S.D. Khosla
3. Sh. G.P. Sood
Executive Director
Sh. Pankaj Munjal
15. SHAREHOLDERSGRIEVANCE COMMITTEE
The Board has constituted the Shareholders Grievance Committee of the Board. The committee consists of the
following directors:
Non Executive Directors
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MOTORSAnnual Report 2003-2004
18. EXIT OPTION TO MINORITY SHAREHOLDERS
As per the provision made in the Scheme of Arrangement between Majestic Auto Ltd. and Hero Motors Ltd., the minorityshareholders of Majestic Auto Ltd. have been given an exit option, through a group company, to continue or exit as equity
shareholders of Majestic Auto Ltd. and Hero Motors Ltd., subject to a maximum of 10% of the total paid upcapital of the
respective companies. In pursuance of this, an exit option by Group Company was given to the shareholders of Majestic
Auto Ltd. and Hero Motors Ltd. tocontinue or exit as equity shareholdersof Majestic Auto Ltd. and Hero Motors Ltd. Theexit option has been closed on the 25th October 2004. Total 259 shareholders have exercised the option, for which the
papers received from shareholders are being scrutinised.
19. COST RECORDS* COSTAUDITOR
The Company has maintained Cost Accounts Records asprescribed under Cost Accounting Rules 1968.
The directors have appointed M/s. Ramanath Iyer & Co. as Cost Auditors for the year 2004-2005 subject to the approval of
the Central Government.
20. AUDITOR'S REPORT
i.) As mentioned in para (xi) of the annexure to Auditors Report, the Company has suffered cash losses due to lowering
demand of mopeds in the country and the Company is taking adequate steps to improve the position by new business
orientations. Further, as mentioned in para (xviii), the use of long term funds is a temporary phenomenon for which
steps are being taken by the Company to address the same in view of new business orientations.
ii.) The other observations made in the Auditor's Report and in the notes to the accounts are self-explanatory and hence
do not call for any further commentST
21. INSURANCE
All properties and insurable assets of the Company including building, plant and machinery and stock have been
adequately insured, wherever necessary, and to the extent required.
22. OTHER COMPLIANCE
Th e Company has already taken and further initiated steps to strengthen the net worth by adding new line of business and
other measures. Though technically Section 23 of SICA is applicable to the company, however, the net worth of thecompany is positive significantly to the tune of Rs. 41 crores. The necessary compliance in this connection will be made to
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A n n u a l R e p o r t 2003-2004
Annexure-A to Directors R eportStatement of Particulars of Employees pursuant to the provisions of section 217(2A) of the Companies Act,1956 and theCompanies (Particulars of Employees)Rules, 1975 forming part of the Director's Report for the period ended 30.09.2004
A. Employed throughout the Period
Name of theEmployee
Mr. P.V.V.Srinivasa Rat
Designation
Chief OperatingOfficer
Nature of Duty
As a Chief of operationsincluding Businessplanning, strategic
management, newprojects and productmarketingetc.
GrossRemuneration
44,16,931
Qualification
B.Tech
MB A
Experience(Years)
11
ShareHolding% (Nos.)
NIL
Date ofJoining
01.01.03
Age
36
Last Employmentheld beforeJoining Comp any
Associate VicePresident(Customer
Development)ElectroluxKelvinator
Limited
B. Part of the Period : NONE
Notes:
1. Information has been furnished on the basis of employees employed throughout the period, who were in receipt of remuneration for that period which, in theaggregate, was not less than Rs. 24,00,0007- (Rupees Twenty Four Lacs). None of the employee worked part of the Financial Year, wh o were in receipt ofremuneration for any part of that period at a rate which, in the aggregate was not less than Rs . 2,00,000 (Rupees Tw o Lacs) per month. There was no personemployed either throughout the financial year or part thereof,who was holding either himself or along with the spouse and dependen t children 2% or more of the
shares of the company and drawing in excess of the remuneration drawn by the Managing Director or Manager.
2. Remuneration includes salary, other allowances, payment and expenditure incurred on perquisites and Company's contribution to provident fund,superannuation fund and gratuity fund.
3. All appointments are / were noncontractual andterminablebynotice oneither side.
4. Mr. P.V.V. Srinivasa Rao is not relative of any director or manager of the company.
Annual Report period is 01.04.2003 to 30.09.2004 (18 Months)
w w w . r e p o r t j u n c t i o n . c o m