Annual Report 2009-10

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ANNUAL REPORT 2009-10
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CONTENTS
Chairman's Message
Board of Directors
Company at a Glance
Financial & Business Highlights
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Awards
Economic Environment
Industry and Segment Analysis
Company Performance
Financial Performance
I Risks and Outlook

Manufacturing
Rural Marketing
Customer Relationship
Connecting Through Sports
I Information Systems
Human Relations
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Environment Management
%:« Outreach Program
&/
Corporate Information
Directors' Report
\ Corporate Govenance Report
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
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TWO WHEELS OF
GROWTH
In the year gone by, Hero Honda sold more than a record million
units of two-wheelers in each quarter and notched its highest-ever
annual revenues, operating income and earnings per share. All
figures indicate that the Company achieved a pole position in the
industry and continues to maintain its lead. Still, we at Hero Honda
consider these achievements as one amongst many milestones in our
long journey ahead, full of promises and further prosperity for everyone
associated with the Company. Today, we pause to ponder what sets us
apart from the rest. Where can a Company that has already been-there-
and-done-that go from here?
Two Wheels of Growth

For us the answer is simple. We believe in the 'two wheels of
growth1 that will enable us to grow from strength to strength. Going
forward, we are convinced that the two wheels-'creating value' and
'delivering value,' are the primary requisites for distinguishing
ourselves in the marketplace. With superior technology, efficient
manufacturing processes, robust supply chain and highest quality
standards, we are pushing harder than ever in creating value
through our manufacturing prowess. Concurrently, with intensified
efforts to widen customer reach and deepen customer
relationships, we have renewed our focus on delivering value
through continuous improvement and value-addition in the service
processes of our sales and service networks. We believe that by
riding on these 'two wheels of growth', Hero Honda is well-
positioned to chart sustainable growth year-after-year.
CHAIRMAN'S MESSAGE
In India's auto industry today, Hero Honda represents the

TWO WHEELS OF GROWTH, and in our 26th year, this riveted
focus on motorcycles and scooters has borne rich dividends.
Dear Shareholders,
Le Corbusier, the famous Swiss architect, once remarked:

"Less is more. Less is truly more, when you are committed to the
right less."
Over the two and a half decades since Hero Honda came into
being, automobile businesses around India have
diversified and expanded at breakneck speed: four
wheelers, tractors, commercial vehicles, financing and what
have you...
z Through these years, Hero Honda has resolutely stuck to its

knitting, because of a deep down belief within both JV
partners that in emerging countries such as India, less,
could actually be more.
So we focused on our core business - the two wheeler

»
business. We channelised our funds, energies and resources
*-*~a.-*J.
into this business, with a single minded objective: to
provide world class, low-maintenance and affordable
transport to people who needed mobility but had limited
mum budgets.
litmv
uumi Of course, during our evolution, we looked for new
Viiiini opportunities. We created new paradigms and benchmarks.
ilium These endeavours, however, have always been part of our
•limn search for excellence in the two wheeler business.
In India's auto industry today, Hero Honda represents the TWO

airman WHEELS OF GROWTH and in our 26th year, this riveted focus on
motorcycles and scooters has borne rich
dividends.
By any yardstick and through any stretch of imagination,

Hero Honda has seen its best year yet. Annual sales of over
4.6 million, Economic Times 'Company of the Year', record
profits, record market capitalisation, record EBIDTA margins,
highest ever EVA.....the list is endless. Your management
has contributed only partly to these outcomes.
HERO HONDA MOTORS LIMITED ANNUM REPORT 2009-10

For these very reasons, I won't be surprised at all if the two
wheeler industry is able to easily sustain a growth of
10 percent and more over the next 10 years.
To be sure, there will be greater competition and there will be

greater pressure on market share. Yet this is only natural, since
the exciting market will definitely attract fresh
These numbers are the result of critical contributions from investments, better products and better networks. But this
millions of real people - the customer managing his should be a cause for great joy and celebration because it
household budget and making his first vehicle purchase in a will surely benefit the customer.
far-flung village in India, the retail shareholder buying his
It is not that I don't see challenges ahead. The global macro
first lot of Hero Honda shares, or the young worker on an
environment is uncertain. Despite the strong performance of
assembly line making his first contribution towards process
the Indian economy, there are fears of a double dip
improvement during a TPM program, our efficient supply
recession, especially in Europe. Should this happen, some of
chain partners - the list could go on and on.
growth momentum in India could dissipate. On the other hand,
In various different ways, - these people have contributed if the crisis passes and we see a strong recovery, it
towards making the year in review extra special. There is no would impact commodity prices and interest rates.
better forum than this report, to express my gratitude to them.
At a Company level, fresh capacity creation in a growth
No matter where Hero Honda is today or dreams to be
market is a challenge. Pressures on our supply chain to
tomorrow, their wishes and aspirations will always be
make quick ramp ups without compromising on quality
instrumental to our future.
is a second major challenge. Optimising manpower
The future excites me for two reasons. First, India will be a productivity against a backdrop of antiquated labour
better place to live in. As infrastructure services expand laws is a third challenge.
across larger swathes of India and as rural development
Nevertheless, I am confident that we at Hero Honda have
programs create more impact in the new decade, the
the versatility to refine and redefine ourselves. I know we
quality of life will improve for the common man.
have the skills to sail through these uncertain waters.
Second, we will see a different facet of India unfold before us:
I believe we have the vision to navigate through the new
I am convinced that this will be the decade where
decade into a new India.
lower middle class households (earning between Rs 2 lakh to
Rs 5 lakh a year) will become India's largest and most
influential consuming class, more powerful than the
Yours Sincerely
middle-middle class, the upper middle class and the upper
class. In fact, if the last decade belonged to the Great
Indian Middle Class, this decade will belong to the Great to*
Lower Middle Class Indian.

Brijmohan La 11,
Consumer companies that wish to succeed in this Chairman
environment will have to make the lower middle Indian
central to their design of products, processes and strategies.
The two wheeler industry in general and companies such as

Hero Honda in particular, already have a head start in this
area with appropriate products and distribution networks.
In my message last year, I mentioned how champion

companies grow by developing far-reaching branches. I am
happy to report that our rural vertical, which seeks to access
Bharat, has now rolled out nation-wide and in the coming
TWO WHEELS OF
years, will emerge as the primary growth engine of this
Company. GROWTH
02
ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMITED
03
I *
Takashi Nagai Suman Kant Munjal Sunil Kant Munjal

Non-Executive Non-Executive Director Non-Executive Director
Director
1
Yuji Shiga
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Non-Executive Director
▲* a. *% «r^
Pradeep Dinodia
Non-Executive &
Meleveeti Damodaran
Non-Executive &
Ravi Nath
Non-Executive &
Independent Director Independent Director Independent Director
^
Gen.(Retd) V.P.Malik Dr. Pritam Singh Member

Non-Executive &
Independent Director Mr. M. Damodaran Member
(W.e.f. July 29,2009)
SHAREHOLDERS' GRIEVANCE COMMITTEE

Dr. Pritam Singh Chairman
OUTGOING DIRECTORS
Mr. MasahiroTakedagawa Mr. Pradeep Dinodia Member
(upto April 1,2010) Mr. M. Damodaran Member
Mr. Satoshi Matsuzawa REMUNERATION COMMITTEE

(upto April 1,2010)
Mr. O. P. Munjal
(upto July 29,2010)
COMMnTEI OF DIRECTORS
AUDrT COMMITTEE
Mr. Pradeep Dinodia Chairman HERO HONDA MOTORS LIMITED
Gen. (Retd.) V. P. Malik Member

Gen. (Retd.) V. P. Malik Chairman Member
Mr. Pradeep Dinodia Member (W.e.f. January 25,2010)
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BOARD OF DIRECTORS
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Dr. Brijmohan Sumihisa Fukuda Toshiaki Nakagawa
Lall Munjal Technical Director Joint Managing Director
Chairman
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Pawan Munjal
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Managing Director & CEO
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Shobhana Bhartia Dr. Pritam Singh Analjit Singh
Non-Executive & Non-Executive & Non-Executive &
Independent Director Independent Director Independent Director
Dr. Anand C Burman

Non-Executive &
Independent Director
SENIOR MANAGEMENT TEAM

Ravi Sud Sr.Vice President & CFO
Anil Dua Sr.Vice President - Sales,

Marketing and Customer Care
Vikram Kasbekar Head-Operations and Supply Chain
Dr.Anadi S. Pande vice President - HRM, Corporate

Planning and Strategy
A
Neeraj Mathur Vice President - Strategic Sourcing
and Supply Chain
Vijay Sethi Vice President - Information Systems
COMPLIANCE OFFICER
Ham C. Kamboj Sr. G.M. - Legal & Company Secretary
04
TWO WHEELS OF
GROWTH
HERO HONDA MOTORS LIMITED
05
COMPANY AT A GLANCE
Hero Honda is a joint venture, set up in 1984

between India's Hero Group and Japan's Honda
Motor Co. It has been the world's largest two
wheeler Company for nine years in succession
with a customer base of more than 30 million. It
has 48% share of the domestic two wheeler
market; in fact, Every second motorcycle sold in
the country rolls out from one of
Hero Honda's factories.
WE
BELIEVE IN
■EC" Creating relationship Creating and

Hf I •»
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and ethics based sustaining powerful
enterprise brands
• Deriving value through Keeping our promises
seamless and efficient and ensuring
supply chain customer and
> Delivering excellence shareholder delight
OUR through resource
- optimised
VISION manufacturing
To provide world class, affordable
and durable personal transport
for masses.
*»«*>&
Three, globally benchmarked, state of the art

manufacturing facilities.
An extensive sales and service network of over 4500
OUR customer touch points These include authorized
dealerships. Service & Spare Parts outlets, and
PERVASIVE dealer-appointed outlets.
STRENGTHS A widespread reach in rural India, panning over
100,000 villages
HERO HONDA MOTORS UMmSD ANNUAL REPORT 2009-10

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OUR
PRODUCT
PORTFOLIO
Hero Honda offers best - in Deluxe, Splendor Plus, 150cc and above the regular sales channels,
- class motorcycles that set Splendor NXG, Passion Company offers premium the scooter is sold
performance and fuel and Passion Pro. The brands like Hunk, CBZ X- through special women
economy standards across s 125cc segment offers
various market segments. p Glamour, Super Splendor
In the 100 cc segment the o and Glamour Fl. The
Company offers a wide n Company also has single
spectrum of bikes starting s offering called Achiever in
from CD Dawn, CD or 135cc segment In the
s
hi
p
of
D
el
hi
Daredevi
ls have
been the
recent OUR
associati
ons with BRAND
the most
The Company connects and sought disciplines of sports in the country. In addition to
engages with its customers after this, Hero Honda had been one of the main Global
through various initiatives Partners of the
and campaigns based on International Cricket
sports, music and Council (ICC) for flagship
entertainment platform. ODI championships
including the World Cup
MTV Roadies and Sa re ga cricket and the Champions
ma pa are some of the Trophy, and more recently
popular ones amongst the the T20 World Cup in
youth segment. Hero England.
Honda FIH Hockey World
Cup 2010, DLF Indian Hero Honda Indian Open Golf tournament is an
Premier League (IPL) annual event with
participation from
06
international marquee
Twenty20 and team

treme, Karizma and the only showrooms
called
newly-launched fuel-
"Just4her" injection
Karizma ZMR.
Besides,
Hero
Honda players. Besides, Hero at the highest level, the
offers a Honda has signed up Company has also been
100 cc -* many Indian sports stars, committed to the
scooter across multiple promotion of various
Pleasure. disciplines of sports, sports at the grass
Besides to promote the brand. root level.
the Other than promoting
sports and sportspersons
07
FINANCIAL & BUSINESS HIGHLIGHTS
Hero Honda notched a record financial performance in FY10 with the
highest ever annual revenues, operating income and earning per share.
Key financial highlights include:
28.1% increase Sales [Nos.]

"Ihousanas
Operating Proit
Before Tax
23.6% growth in in total turnover (Rs. Crores)
to Rs. 16,099 crores

sales to 4,600,130 over Rs. 12,565 crores m m
two-wheelers in last fiscal i—
m
rn
m
rn
in 2009-10
from 3,722,000
two wheelers in
2008-09
17.4%EBIDTA
margin vs 14.1% in
74.1% growth in last year
net profit
aftertax
to Rs. 2231.83 crores,
EPSofRs.111.77 4$ 4?4 $* 4?4 N /yyyy
i
Profit Before Tax N Profit After Tax
(Rs. Crores) g (Rs. Crores)
5500% dividend '

(1500% final
dividend and
4000% special Silver
f
Jubilee dividend)
amounting to
Rs. 110 per share
on face value of each
share of Rs. 2.
s/sss f/S/J
TWO WHEELS OF
GROWTH
HtKOhCMiv m. roBsuMrriD ANNUAL REPORT 2009-10
n
KEY
MILESTONES
>&&&&
World No. 1 Two Wheeler Company for the
ninth consecutive year
Sales landmark of 30 million two-wheelers
Accomplished production of 11 millionth
i
Splendor motorcycle
59% share in the domestic motorcycle market Net Cash Earning per share »
48 % share in the domestic two wheeler from Operations (Rs.) =
market (Rs. Crores)
Network of 4500 plus customer touch points

with all main dealerships now converted into
4S (Sales, Service, Spares and Safety)
dealerships.
'Hero Honda Passport Program' enhanced
and upgraded to into a smart card based
'Hero Honda Goodlife', with host of new
attractive features, rolled out nationally
Nine product launches including
refreshments and variants
s/sss fffSS
Return on Average Economic
Capital Employed Value Added
(% ) (Rs. Crores)
aT /yyVV sssss
08
ANNUAL REPORT 2009-10 HERO tlONf>A MOTORS LIMITED
09
AWARDS
Brijmohan Lall
Chairman
NDTV Profit Business Leadership Lifetime

Achievement Award 2009
SIAM Golden Jubilee Award for Outstanding
contribution in automobile industry
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Lifetime Achievement Award by ACMA
PHD Lifetime Achievement Award 2009
MM, Lucknow Lakshmipat Singhania Leadership t
Award for 2009
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Pawan Munjal:
Managing Director
&CEO
NDTV Profit Car India Bike
India "Man of the Year"
2009 Award
TWO WHEELS OF
GROWTH
HERO HONDA MOTORS LIMITED ANNUAL REPORT 2009-10
}
Products
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& Company
Awards
Economic Times Corporate Excellence Awards

2009 "Company of the Year" Award
ET Zigwheels Bike Manufacturer of the Year
Award 2009
CNBC TV 18 Overdrive "Hall of Fame" Award to
Splendor
NDTV Profit Car India Bike India 2009 "Bike
Manufacturer Award"
NDTV Profit Car India Bike India 2009 CNB Viewers'
Choice Award to Hero Honda Karizma ZMR
Adjudged among top 10 "Most Admired
Marketing Companies" 2009 by Brand Equity,
Economic Times
Awards
'Trusted Brand" (Motorcycles) 2009 to Hero Honda
Received) by Senior by Reader's Digest magazine
Management Team
Hero Honda adjudged amongst Top 10 marketers
at Pitch India's Top Marketer Awards 2009 awards
ICAI Award for Excellence in Financial Reporting
r
Mr. Ravi Sud - Sr.Vice President & CFO
CNBC TV18 "Best CFO of the Year 2009" in Auto and
Auto Ancillaries category award to Mr. Ravi Sud
"Business Today Yes Bank Best CFO Award" for
X
Liquidity Management
Mr. Anil Dua -Sr.Vice President Sales,

Marketing and Customer Care -
Pitch Exchange for Media -India's Top Marketers
award -2009
The CMO council Best CMO of the year
(Automobile Two wheeler category) by the
World Brand Congress - CMO council.
Mr. Vijay Sethi -Vice President - Information

Systems and CIO
India's Best ClOs 2010
CIO - The Ingenious 100 ~ 2009 Award
10
ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMTTED
11
MQ&A
Economic Environment 14
Industry and Segment Analysis 16
Company Performance 18
Financial Performance 20
Manufacturing 22
Rural Marketing 24
Customer Relationship 26
Connecting Through Sports 28
Information Systems 30
Human Relations 32
Environment Management 34
Outreach Program 36
Corporate Information 40
CAUTIONARY STATEMENT : Statements In this management discussion and

analysis describing the Company's objecives, projections, estimates and
expectations may be forward looking statements' within the meaning of applicable taws
and egulations. Actual '•suits 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
inteest costs.
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TWO WHEELS OF
GROWTH
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India's growth was powered by a robust performance by the
manufacturing sector and an improved performance
by the infrastructure sector.
HERO HONDA MOORS LIMITED ANNUAl REPORT 2009-10

Management Discussion and Analysis
ENVIRONMENT
As 2009-10 progressed, India nonchalantly brushed

aside the side effects of the global economic crisis and
veered back towards the path of growth. The global
economy, especially the crucial US economy, started
showing early signs of recovery towards the end of 2009.
However, India's path to recovery started much earlier.
Significantly, India finished the year with a strong kick;
the economy notched its fastest growth in the March
2010 quarter at 8.75 percent, taking overall growth to
nearly 7.5 percent. Importantly, this growth came
against a backdrop of poor monsoons and negative
agricultural peformance.
India's growth was powered by a robust peformance
by the manufacturing sector and an improved
peformance by the infrastructure sector. Food inflation in March 2009 was hovering
The manufacturing sector clocked consistent, double- dangerously over 17 percent. What was worse, there
digit growth from October 2009, with the consumer were clear signs that by the end of the fiscal, inlation
durables and capital goods sectors leading the way. wasn't restricted to food alone. Crude prices were
The government's thrust on infrastructure inching up and further increases are expected as the
development had a positive impact and nation- global economy recovers. Manufacturing inflation
building sectors such as electricity and mining clocked started building in the last quater of 2009-10 on the
consistent growth. back of higher input costs
utilisation. There is no dou
Some of the growth, of course, could be attributed to the single biggest factor threatening <
govenment's fiscal stimulus package -especially excise economy anu industry in zu i u.
cuts that were in force. However, as the fiscal ended, it The possibility of rising interest rates, thanks to the
became apparent that the growth improved of-take of credit, is the second concern.
momentum could be sustained even after excise duties Higher credit growth could prompt further RBI action
were re-balanced during the Union Budget in February on policy rates, in addition to inflation-induced hikes.
2009. On the plus side, borrowings are under control. Along
Interest rates remained reasonable during the year, with improvements in revenue collections and
thanks mostly due to an accommodative monetary windfalls from government auctions, this could
policy. The flow of resources to the commercial sector provide succor to an inlationary economy.
distinctly improved from both bank as well as non- Going forward, GDP is predicted to grow at between
bank sources during the second half, after credit 8 and 9 percent in the new fiscal year, making India's
growth dropped to a 12-year low in October 2009. peformance one of the best in the world.
Despite the strong growth momentum, there were
some concerns, particularly on the inflation front.
TWO WHEELS OF
GROWTH
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ANNUAI REPORT 2009-10
HERO HONDA MOTOR* LIMITED
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INDUSTRY AND SEGMENT ANALYSIS
•i -J
After growing tepidly at 5 percent in 2008-09 the two

wheeler industry was back on track in 2009-10. Sales
grew by 24 percent and crossed 10 million units for
the irst time ever. Exports contributed 11 percent to
overall sales compared to 12 percent in the previous
fiscal.
Motorcycle sales grew by 24 percent and clocked
more than 8.4 million units. The strong revival in the
scooter market continued during 2009-10 and sales
grew by 25 percent rom 1.2 million units to 1.5
million. Overall, scooters accounted for 16 percent of
^he two wheeierjrtwrlcecJnter^tinglyTTnopeds,
9Cj. whose share in the two wheeler space has been
(HOivrfj^ declining steadily over the years, bucked the trend
*v during the year in review. Mopeds notched the
highest growth in amongst the three product
categories in two-wheelers, with sales going up by
28 percent, from 4,46 lakh units to 5.71 lakh units.
The surprising uptrend in the moped category
points to the fact that government schemes at the
lower end of the socio-economic pyramid have
JSAT07:
started having some impact
pB0B BF 3&8?
Sales grew by 24% this financial year, and crossed 10 million

units for the first time ever. Exports contributed 11 % to
two-wheeler sales in FY 09-10, compared to 12% in
the previous fiscal.
17
COMPANY PERFORMANCE
Hero Honda consolidated its position further on the back of its
strong rural reach. The Company clocked the sales of
During 2008-09 Hero Honda was the only two wheeler 6.13 lacs units in the entry segment growing by 20 percent
Company that emerged strongly and successfully during and garnering 45 percent share of the segment.
the economic slowdown in India. During 2009-10, as
economic environment in India improved, Hero Honda The motorcycle deluxe segment, which accounted for 66
strengthened and consolidated its hold over the two percent of sales in the domestic motorcycle market, grew by
wheeler market. over 29 percent over last year. Hero Honda dominated the
segment cornering 71 percent of sales.
Hero Honda, despite having the highest base of 3.72
million units in the two wheeler industry, could manage a The motorcycle premium segment grew at a remarkable
remarkable growth of 23.6 percent and ended the year pace and contributed 11.23 lacs sales compared to 7.75 lacs
with sales of 4.6 million. The Company continues to lead last year. This segment now makes up 15 percent of the
both in the domestic two wheeler industry and motorcycle domestic motorcycle market, up from 13 percent in the
segment, with the shares of nearly 48 percent and 59 previous year.
percent respectively.
Hero Honda's performance in the premium segment was
Performance Across Key Segments mixed. Although sales grew at a healthy 29 percent, the
During the year under review, the motorcycle entry Company's share came down from 24 percent to 21
segment grew by only 5percent with volumes of 13.49 lacs. percent.
As a result of this modest growth, this segment accounted
for just 18 percent of the motorcycle industry compared to
22 percent in the previous year.
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The Company continues to lead both in the domestic two wheeler
industry and motorcycle segment, with the shares of nearly 48 %
and 59 % respectively.
To create a larger impact of its products overseas, Hero
In the scooter segment, Hero Honda's Pleasure has been Honda introduced a 20 day sales cum technical training
very well accepted. Sales were pegged at 2.08 lacs units, a module for all overseas training managers at the Hero
growth of 36 percent over last year. This resulted in a Honda National Learning Centre in Gurgaon. The overseas
13.9percent market share. training managers, in turn, are expected to replicate their
learnings in their country-specific locations. Training
In the Hero Honda family. Splendor continued to be the Centres for this have also been established in all expot
largest-selling two wheeler brand with sales of close to 2 markets.
million, followed by Passion with sales of over 1.2 million,
and CD Deluxe with sales of 5.7 lac units. These three Service networks were also strengthened in specific
products accounted for a large chunk of Hero Honda's countries. In Bangladesh, for instance, automated
overall sales. workshops are now in place.
Exports Performance Performance and durability of the Company's products have

During the year in review, Hero Honda exported close to created brand equity in international markets. Testimony to the
100,000 two wheelers, a growth of 20 percent compared to the ruggedness of certain models, even the Sri Lankan
previous year. The Company also grew its international spare Army recently decided to place faith the Company's
parts business by around 23 percent. products.
The strong peformance came on the back of successful

new model launches in Sri Lanka and Bangladesh and
Columbia.
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HERO HONDA MOTORS UMfTED
19
FINANCIAL PERFORMANCE
The Company spent Rs. 527.63 crores in investing activities.
Investments in production capacities lead to an outflow of Rs.
212.57 crores. The balance was deployed in financial
Sales assets. Financing activities accounted for an outflow of Rs.
The annual sales of the Company grew at 23.59 percent 2,109.31 crores attributable to dividend outflows.
Hero Honda clocked sales volume of 4,600,130 units in
2009-10 compared to 3,722,000 units in 2008-09. In value Capital Expenditure
terms total sales (net of excise duty) increased by 27.9 During the year the Company incurred a capital
percent to Rs.15,758 crores from Rs.12,319 crores in expenditure of Rs.211.57 crores. The funds went into
2008-09. expansion of operations.
Profitability Raw Material Costs

The Company's earnings before interest depreciation and Softening metal prices particularly aluminum and nickel in
taxes (EBITDA) margins increased from 14.13 percent in second half of the year combined with better sales
2008-09 to 17.45 percent in 2009-10 and the Operating realisation to bring down the share of material costs
profit (PBT before other income) increased by 64.16 considerably. Raw material costs as a propotion of total
percentfrom Rs.1,568.86 crores in 2008-09 to Rs. 2,575.48 cost came down from 71.0 percent to 68.10 percent.
crores in 2009-10. The margin improvements came from
better sales realisations, cost rationlisation and optimisation Current Asset Turnover
measures. These included better control over material cost, This ratio, which shows sales as a propotion of average current
marketing cost and overheads, besides a sharp focus on assets, increased from 14.2 to 17.2 times, on account of lower
operational eficiencies. relative average inventory and bank balance (excluding
dividend bank account).
Other Income, including non-operating income
Other income increased by 38.4 percent from Rs. 246 crores in Debt Structure
2008-09 to Rs. 341 crores in 2009-10. Hero Honda has been a debt free Company for the last 9
years. The unsecured loan of Rs. 66.03 crore from the state
Cash Flows government of Haryana on account of sales tax deferment is
Growth in sales turnover, better eficiencies in the working interest free and has no holding costs. Net interest
capital management improved the cash flow from payment by the Company has been negative during the last
Operations from Rs 1,359.03 crores to Rs. 2,686.64 crores. few years.
Cash flows before working changes have also improved
from Rs. 1,762.16 crores to Rs. 2,777.10 crores on account of
better EBITDA margins.
Key Indicators Of Profitability 76.40%

ROACE % 50.90% ROACE = RETURN ON
AVERAGE CAPITAL
EMPLOYED
200849
| 61.40%
37.80% ROAE= RETURN ON
ROAE % AVERAGE EQUITY
40.00% 50.00% 60.00% 70.00% 80.00% 90.00%

0.00% 10.00% 20.00% 30.00%
14.10%
PAT = PROFIT AFTER TAX
10.40%
PAT/IFO% ôOM9
PBT = PROFIT BEFORE TAX
7.90%
14.40% PBIT = PROFIT BEFORE
PBT/IFO% [~moS,'* INTEREST ANDTAX
■■'''''■sn 14.10% OPBT = OPERATING PROFIT

BEFORE TAX
PBIT/IFO% 2O0M9
16.20% OPBDIT = OPERATING PROFIT
H?i7iT3ni 12.71 BEFORE DEPRECIATION,
OPBT/IFO% 200809 INTEREST ANDTAX
1740%
IFO = INCOME FROM
OPERATIONS
OPBDIT/IFO% ^09
10.00% 12.00% 14.00% 16.00% 18.00% 20.00%
0.00% 2.00% 4.00% 6.00% 8.00%
Table 1: Key Indicators Of Profitability
2009-10 2008-09
Inventory Period 10.6 11.0
Operating Cycle 13.3 16.9
Cash Cycle -17.0 -13.1
Dividend Policy
Over the years, the Company has consistently followed a Current Ratio 0.45 0.51
policy of paying high dividends, keeping in mind the cash-
generating capacities, the expected capital needs of the Acid Test Ratio 0.26 0.30
business and strategic considerations. For 2009-10, the
board has recommended a dividend of 1,500 percent
higher than 1,000 percent declared in previous year and has Notes On Working Capital
maintained a payout ratio of 31.3 percent vis-a-vis 36.5 The average of inventory, receivables and payables has
percent in the previous year. Further, board has also been taken for calculations of inventory period,
declared 4,000 percent interim dividend on the occasion of operating and
25th year. cash cycle.
Working Capital management
Hero Honda has always sought to efficiently use the various
components of working capital cycle. The Company has
been able to effectively control the receivable and
inventories enabling it to continue to operate on negative
working capital.
RISKS AND OUTLOOK

Global uncertainty: While India's growth path remains enhancement.
clear and secure, there could some ripples on liquidity in Labour unrest: The Dharuhera-Gurgaon
India. The debt-related troubles within the Eurozone could industrial belt
slow down the pace of global economic recovery. remains restive and prone to external
Commodity prices:Even though the surge in commodity influences. IR
prices has lessened in recent months, the medium to long- disruptions, especially during peak season, are
term trend remains volatile. a source
Monsoons: Even though the country as a whole may of concern.
receive normal rainfall, wide variances between regions
could impact agricultural production during the kharif
season.
Inflation: Inflation is spreading to non-food categories
such as manufacturing and fuels. A rising rupee and strong
overseas capital flows could also add to the environment of
volatility.
Interest rates: Credit growth started picking up towards
the end of 2009-10 after dropping to a 12-year low in
October 2009. Demand-driven growth could push credit
growth to 20 percent and beyond. This could push up
interest rates.
Increasing competition:Increasing competition across all
key segments, including the bread and butter deluxe
segment will put some pressure on market share.
Capacity constraints: In a
growth market, capacity
20 constraints are always a concern
and the Company will
continue to explore various opportunities of capacity
Outlook volatility.
The Indian economy is back strongly on track and is A revival in agricultural performance could positively
expected to grow in the range of 8-8.5 percent, perhaps impact Hero Honda because of its rural-centric focus. The
even higher. The prospects of normal monsoons auger well Company's reliance on cash-down sales could act as a
for the agricultural sector and will soften prices. At another buffer, in case interest rates go up and sales are impactedthe
at
level, the imminent introduction of GST and the Direct Tax higher end of the two wheeler spectrum.
Code are seen as epochal policy reforms. GST is aimed at The Company is likely to maintain a steady top line
reducing the impact of cascading taxes, lowering performance while maintaining the bottom-line margins
transaction costs and propelling economic performance. on the back of various cost optimisation measures.
The actual impact, however, will be seen once the final
policy is rolled out.
In a nutshell, the business environment is expected to be growth-
oriented, but volatile as well. Of course, it is possible that lower
borrowings could lead to a lowering of fiscal deficit and hence reduce
ANNUAL REPORT
2009-10 HERO
HONDA MOTORS
LIMITED
21
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Hero Honda's manufactuing capacity remained under
pressure for the entire year for several reasons. Most
importantly, better than expected peformance of the
Indian economy pushed up the demand for two
wheelers. In addition, the introduction of several new
features and vaiants during the year and a surge in
demand for the Company's scooter Pleasure also
*» caused the manufacturing capacities to be tested.
The variability of the product mix, the production
upgrades and the unexpected surge in demand
provided the Company an oppotunity to optimise
three plants. Flexible production techniques

implemented across the plants helped reduce
changeover time. In turn this helped the Company
increase its overall eficiency level.
* In line with Hero Honda's core philosophy of ensuring The online vendor connectivity program has made
customer delight, care was taken to ensure the highest rapid progress. Four years ago, the Company had on
mm quality standards despite of increase in production.

Despite the pressure on the assembly line, rejection
cost per vehicle has been on a reducing trend in recent
46 vendors connected online to the Company's
factories. At the end of 2009-10, all component
suppliers were connected online with the factories
years, thanks to a slew of cost control and process through business portal.
improvement projects. These measures, in turn, Hero Honda is also in the process of rationalising its
2
heiped Hero Honda bring down overall variable domestic vendor network, as pat of a larger strategy of
manufacturing costs per vehicle during the year. making its supply chain more robust and eficient.
The hig hlight of the year was a doubling of H ero Securing sup plies r om Asian automotive suppliers and
Honda's capacities at its Haridwar plant In fact, the making better use of India's ree trade agreements are
ramp up rom 2008-09 levels was one of the fastest now an integral part of Hero Honda's sourcing plan.
r"fJB T / —ordeci in India's two wheeler history.
nd of the year in review, the Company had a
■tailed capacity of 5.2 million units.
city of this magnitude and robust domestic
To streamline its supply chain, especially at the ront
Hero Honda introduced a inished goods dispatch
automation (FNGD) system. This system has enabled
end,
real-
p
id growth in excess of 20 percent helped Hero time inventory management with the use of
>nda retain its position as the world's largest two- barcodes to identify and track motorcycles and
wheeler manufacturer for yet another year, for the ninth scooters. This level of minute tracking is expected to
time in a row. facilitate cost effective and scientific dispatch and
m
encourage lean production.
I
The highlight of the year was a doubling of Hero Honda's

capacities at its Haridwar plant. In fact, the ramp up from
2008-09 levels was one of the fastest ever recorded in
India's two wheeler history.
23
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At the moment, there is a network of more than 2000 rural sales

channel partners working on the rural vertical through the Har Gaon
Har Aangan and its extensions like Service Har Jagah program.

Nj3 ?
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lit RAL MARKETING

Duing the year, Hero Honda's ambitious rural connect
program Har Gaon, Har Aangan program roiled out
across most states of the country.
It was also a year in which Hero Honda cascaded its
unique rural connect program Service Har Jagan. Ater
successfully testing this grassroots rural connect
°^$i&*?^ mi
program in some states, Hero Honda went national in
October 2009.
At the moment, there is a network of more than 2,000
rural sales channel patners working on the rural
vertical through the Har Gaon Har Aangan and its
extensions such as Service Har Jagah program.
There is a plan to substantially boost this number in the
coming years by spreading to villages that have a
population of even less than 5,000.
Apart from meeting opinion leaders, the rural sales
executives are also tasked with organising free check¬ details of sales in the rural market It gave the
up bike camps, loan melas, test ride camps, marketing team a much better idea of the cu:
conducting Ride Safe Programs to educate customers mix and demand forecast and simultaneous!;
on "Safety" and "Maintenance" and conducting other enhanced coordination between the i'
awareness camps on various value added features and Hero Honda.
such as Genuine Spare Parts, Good Life Program, Hero
The Company has placed brand displays in
Honda Advantage and other services ofered bythe
DCM Hariyali Kisaan Bazaar Centres, spanning across
Company.
many states namely Uttar Pradesh, Uttaranchal,
The idea is not just to increase awareness about the Madhya Pradesh, Haryana and Punjab. These premises
—two wheeferindustry but also to increase buy-in for— were also used for conducting free check up camps
Hero Honda products. and education camps on Safety Riding skills. Such
To improve its rural presence, Hero Honda is relying camps were also held in association with Monsanto,
heavily on information technology and during the Godrej Aadhar, IFFCO and various other fertilizer and
year, the Company made speciic efforts to capture seed companies in many parts of the count
-1
TWO WHEELS OF
GROWTH
24
ANNUAL REPORT 2009-10 HERO HONDA MOTORS UMmTD
25
CUSTOMER RELATIONSHIP
Front end Experience
Hero Honda's visual identity program aims to give a
consistent, contemporary and youthful brand experience to
Goodlife Program its customers across all its touch points.
The customer has always been at the heat of Hero Honda's
success. While, the new visual identity concept has been designed
keeping in view the evolving customer needs and
Eight years ago. Hero Honda pioneered one of India's changing retail landscape, it symbolises the Company's brand
largest customer loyalty programs, the Passpot Program. values, technology leadership and customer centric focus.
Over the years customers and channel partners have shown The new age design ofers modularity to cater to diferent
immense faith in the program which has gone from space requirement.
strength to strength. Currently, more than ive million plus
customers are enrolled in the program. The new visual identity programme not only gives a fresh
new look to customer touch points, it also enhances and
During the year in review, Hero Honda sought to upgrade enriches their overall experience with Hero Honda.
this unique program and turn into a world class and
contemporary CRM property the Hero Honda Good Life. Learning and Innovation
To enhance the customer experience at all touch points
The new real-time program is magnetic card-based and Hero Honda has intensified focus on sensitising its
customers can connect to the program from anywhere in customer facing teams.
India. It ofers incremental points to members on workshop
and showroom spends. It provides additional avenues to Customised training programs for dealers and their staff
earn bonus points and make easy redemptions. It also has are being developed and deployed. The results have
special member privileges and will incorporate many value stated paying of.
ofers from associate patners in the months to come.
Over 20 new and customised programs were developed
For channel patners, end-to-end processes have been and shared with the dealers and their staf during the year.
provided. There is an exclusive interactive website in which
the channel patners and members are give individual id's
.The website provides all the information and analytics for
reviewing the performance of the program from time to
time. With all authorised outlets now fully upgraded and
operational on the Good Life inteface sotware, the
membership is expected to grow at a much faster pace.
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HFKO HONOA MOTORS LIMITED

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TWO WHEELS OF
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Over the years customers & channel partners have shown

immense faith in the Company's Customer
26 Relationship program which has gone from
strength to strength.
ANNUAL REPORT 2009-10 HERO HONDA MOTORS I IMfrED
27
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Besides promoting sports and sportspersons at the highest

level, the Company has also been committed to the promotion
of various sports at the grass root level.
HERO HONDA MOTORS LIMTED ANNUAL REPORT 2009-10

CONNI THROUGH SPORTS
Hero Honda has been actively promoting vaious

disciplines of spots such as hockey, cricket and golf. In
addition to promoting sports and sportspersons at the
highest level, the Company has also been committed to
the promotion of sports at the grass root level.
During the year, Hero Honda was the title sponsor of
the Hero Honda FIH Hockey World Cup being played in
Delhi in the months of February and March 2010.
The Company is also the Presenting Patner of the
Queen's Baton Relay and a partner of the
Commonwealth Games Delhi 2010.
Hero Honda, which has more than two decades of
association with cricket, is one of the Patners of the
path-breaking DLF Indian Premier League (IPL)
Twenty20. Additionally, the Company is also the Team The Company is also committed to the promotion of
Sponsor of Delhi Daredevils. golf in the country, hosting the annual Hero Honda
The Company had been one of the Main Global Indian Open Golf tournament with paticipation from
Partners of the International Cricket Council (ICQ for intenational marquee players.
flagship ODI championships including the World Cup Hero Honda also traditionally supports new talent. As
cricket and the Champions Trophy and more recently the part of this philosophy, the Company recently signed up
T20 World Cup in England. three promising young Indian golfers Anirban
Iconic cricketers such as Virender Sehwag, Suresh Lahiri, Gaganjeet Bhuliar and Shiv Kapur as brand
Raina, Ifan Pathan, Gautam Gambhir, Ishant Sharma ambassadors.
and Manoj Tiwary are brand ambassadors of the Ace shooter and Athens Olympic silver medalist Col.
Company. Rajyavardhan Singh Rathore is also one of the brand
ambassadors of the Company.
er*,
TWO WHEELS OF
GROWTH
28
INFORMATION SYSTEMS
To fulfill the external and internal needs, Hero Honda constantly focuses on
all aspects of people, process and technology by giving thrust on
training and awareness, building more efficient support processes and
deploying and ensuring usage of the latest technology.
Connecting people, products and processes, seamlessly

with speed, IT at Hero Honda works very closely with
r business to ensure organisation remains prepared for the
future.
During the year, the Company took up a number of IT

initiatives in order to increase the agility in the
organisation, some of which are as follows:
A A The organisation upgraded its primary transaction system
i/V LTtR
1 ,1 SAP R/3 to the latest version Business Suite 7 that helped in

improving operational eficiency.
f :*. ■ To assist the organisation take faster decisions and plan

better, the organisation enhanced its business intelligence
* (Bl) capabilities. One major feature that got deployed was
p rural footprint and retail capturing sotware to capture
7 details of sales at dealer end which would help the

organisation better understand the customer mix.
<
A product lifecycle management solution was deployed
during the year to manage complexity arising out of the
rapid growth in the product portfolio. This was also one of
the fastest PLM implementation in the country.
The Company also progressed signiicantly in the

development of dealer management system (DMS) and
successfully conducted pilots for the system.
TWO WHEELS OF
GROWTH 29
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During the year, considerable emphasis was placed on risk

mitigation and information security processes based on ISO
27001 controls. In addition, a number of steps were taken to
promote Green IT.
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Hero Honda's consistent efots at becoming a
technology-enabled organisation won it several
accolades during the year in review, including CIO Green t
Edge Award, Top 10 Green IT Enterprise Award, CIO 100
*
Award and The India's Best ClOs 2010 Award. iM v**
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One of the new programs introduced for the plant employees

lays an emphasis on inculcating a spiritual mindset and
reinforcing Indian values.
-V
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> During the year in review, selective education and
■ \ talent development courses and e-learning modules
were introduced in line with the organisational needs
V to suppot the Company's mandate of being a world
^ class manufacturer.
W "On-the-job" learning program through
r
implementation, review and "Gemba-consulting" was
* highly efective in creating continuous L
improvements. The program is being c
r under the guidance of an international TPM Sensei
v
The entry-level induction for workers has been
< strengthened with the help of numerous technical
* training modules in each of the three plants. A new
- program was introduced for plant employees with an
emphasis on inculcating a spiritual mindset and
reinforcing Indian values.
7 Training programs for junior and mid-level
v
management emphasised on function-wise
proficiency modules. Some of them were speciically
-/ targeted on leadership, strategic thinking, people
development, inteface management and positive
i •- f attitude across levels and locations.
*
'
< For the leadership team, the emphasis s was on
i 'emotional intelligence.' The merits and beneits of

'Predictive Index', a key recruitment tool, was outlined
members of the senior team through a 'hands-on'
to
training program.
1
Duing the year in review, the leadership team also
expeienced a spiritual journey through a tai"
program: 'Leadership through Indian l<
Employee relations at Hero Honda con
cordial even amidst turbul
industrial belt. Duing
election at the Gurgaon
harmoniously.
K»
TWO WHEELS OF
GROWTH
32
33
ENVIRONMENT MANAGEMENT
Waste heat recovery units are installed to recover heat from
exhaust of DG sets. The recovered heat is used for heating
Hero Honda has always remained committed to clean water in the generator system.
environment, though its environment friendly products and
use of clean manufacturing processes. The green aspect of Efluent treatment plants across all the locations use
the business has been kept active with its energy managers sophisticated technology that treats the waste water,
continuously focusing on identifying new green initiatives. recycles the treated effluent and finally reuses the water.
During the year, Hero Honda enabled some of its key These plants have lead to a drastic reduction in the water
energy management processes. The Company has consumption for the manufacturing purpose over the years,
introduced an Energy Management System (EMS) which from 1.07 kilolitre per vehicle in 2000-01 to just 280 grams per
captures data from the machines for monitoring energy vehicle in 2008-09.
consumption and the data links to SAP. The system helps in
strategising to adapt to new-age energy norms and Over the years Hero Honda has been actively involved in
improves speed and accuracy of processes. rainwater harvesting projects to protect, preserve and
enhance the environment. Access to water is one of the
The Company has also deployed a modern and eficient way most challenging issues facing the world today and the
of managing hazardous and non hazardous solid waste with Company is doing its bit to mitigate the crisis in Haryana,
the introduction of incinerators at all the three plants. These which is one of the driest states of India.
incinerators each have a waste-disposal capacity of 250 kg/
hour and play a key role in preventing toxic Through a multi-layered ground water recharge program at
emissions and controlling land pollution. the factories, Hero Honda has met with considerable
success. For example, at the Dharuhera plant, the ground
A well planned and secured land fill site at the Gurgaon water has been recharged by more 25,000 cubic metres,
plant ensures safe disposal of hazardous waste. despite the fact that Dharuhera receives an average rainfall
of just 726mm per year. Similar recharge projects have been
Organic waste convenors at each plant convets organic executed at the other plants as well.
waste rom kitchen, green leaves and grass cuttings into
useful compost which is used for hoticulture. The Hero Honda Haridwar plant has a 'green roof covering an
area of approx. 45,000s. The Green Roof conserves
The paint shops have a new hanger cleaning system with energy by moderating the roof temperature and the
fluidised technology. This prevents uncontrolled temperature in the surrounding areas. It has also led to a
combustion of hangers, which in turn leads to air pollution. In dramatic reduction in the storm water runof. Equally
addition, Hero Honda's unique initiative of recycling impotant, the green roof has provided an additional bufer
primer from the waste paint sludge is recognised by TERI for the conventional rooing system, by doubling the
corporate award for environmental excellence. service life of the underlying waterproofing membrane.
The Company has switched from a solvent painting system to
a corrosion-resistant, water-based painting system. This
prevents the generation of volatile organic compounds in the
process which considerably reduces wastage of paints.
Moreover, this technology is safe and fire resistant.
TWO WHEELS OF
GROWTH
\
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The green aspect of the business has been kept active with its
energy managers continuously focusing on identifying new
green initiatives.
34 ANNUAL REPORT 2009 10 HERO HONDA MOTORS LIMITED

35
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Hero Honda is now taking its outreach and capacity

building program to newer pastures. At Haridwar, for
example, Hero Honda has adopted an Industrial
Training Institute at Barkot.
OUTREACH PROGRAM
IF
Hero Honda Motors takes considerable pride in its
community relationships, especially ones at the grassroots
that have evolved over time. The Company has played a
pivotal role in bringing an economically and socially
backward region in Dharuhera, Haryana, into the national
um
economic mainstream through direct interventions in
education, healthcare, vocational training, creation of social
and physical infrastructure and environment management. r**.
Many of these programs are the brainchild of the Raman
Kant Munjal Foundation, a trust set up in memory of Hero
Honda's irst managing director.
Hero Honda is now taking its outreach and capacity

building program to newer pastures. At Haridwar, for
example, Hero Honda has adopted an Industrial Training Around 900 villagers, including children beneitted directly
Institute at Barkot. from these programs. Futhermore, during the year, various
physical infrastructures, water and environment projects were
implemented in the Dharuhera belt, benefitting
In addition to the existing curriculum, the Company is several villages.
introducing courses for itters, for motor mechanics and for
electricians. To begin with, there will be seven training A number of tree planting initiatives were also carried out in
shits. ITI teachers will be brought to the Hero Honda government schools located in surrounding villages, along
Haridwar plant for training on HHH induction training with maintenance activities such as repairing roofs and
modules, so that the imparted skills are contemporary and boundary walls.
relevant. The students opting for these courses will also be
provided apprenticeship training at the Haridwar plant. Healthcare outreach is also an impotant cog in Hero Honda's
social matrix and during the year, the Company organised
The six-acre learning centre is being renovated, including several cancer detection camps, cataract surgery camps, heat
the classrooms. Hoticulture projects are under check up camps, mental health checkup camps and camps
implementation to beautify the campus. The Company also for physically challenged.
plans to establish a library; commence smat classes and
upgrade its computer laboratory. Meanwhile, ongoing
outreach and capacity building initiatives continue to be
suppoted in the Gurgaon Haryana belt. During the year,
the Company organised a number of workshops on fruits
and vegetable preservation, detergent-making and tie and
dye-making. Workshops for motor mechanics were also
held in collaboration with the Indira Gandhi National Open
University.
There were also a number of projects on literacy and health

education implemented, which were organised in
collaboration with government and local agencies.
TWO WHEELS OF
GROWTH
36
ANNUAL REPORT 2009 10 HEBO HONDA MOTORS LIMITED
37
OUTREACH PROGRAM (contd.]
literate and to get into the BPO industry. Till date, a total of
458 trainees have been trained and awarded Microsot's
In addition to these programs, a number of ongoing diploma certificates.
projects were executed by the Raman Kant Munjal
Foundation as pat of its long term social mandate in the "HAMARIASHA - A Group of Rural Friends", a new initiative by
region. RKMF, was introduced during the year in review. As part of a
pilot project, a group of 35 rural women are being
Over the last decade, the Foundation had established a trained in inancial empowerment with the objective of
vocational training centre to impart training on Tailoring, providing them the ability to sustain a livelihood with local
Embroidery and Carpet Weaving to local women. The recourses. The group is also being sensitised towards social
Centre was recently upgraded and expanded to allow the development issues such as dowry, female foeticide, girl child
training of upto 50 girls per batch. Till date, nearly 1000 girls education and mother and child health care.
have completed their courses at the centre. While most of
the trainees have been placed in the garment industry, a During the year, the women were trained to work on Diwali
number of girls are also self-employed in their respective dia designing, decoration, packaging and marketing work for
villages and neighboring towns. On an average, they have a month in the village of Gujjar Ghatal. RKMF plans to cascade
enhanced their income earning capacity by earning Rs. 3000- this project across diferent villages in the coming months and
10,000 per month. years.
In 2007, the Foundation set up a computer training and

learning centre in collaboration with Microsot and Udyan
Care, a Delhi based N.G.O. to make rural youth computer
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HERO HONDA MOTORS LIMBED ANNUAL REPORT 2009-10
38
KHAcaa
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The Foundation also runs Asha, an educational programme f%#*~
for village children who are first generation learners and
attend to Government Schools. The objective is to provide
WM
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these children with additional support to improve their
educational standard and to achieve their overall
development.
The Asha program stated ive years ago and currently, 11

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 sot skills training. Regular get together 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.
* îik
* ^
In every CSR project undertaken, the Foundation takes care to
involve either a local NGO or the local panchayat
members themselves to ensure good execution and future
sustainability of a given project. In Projects such as
Hygiene, Sanitation, Safe Drinking Water, Local Government HBil
Representatives such as Block Development Oficers are
also involved for Government funding and Technical
knowhow of the projects.
r
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M ANNUAL REPORT 2009-10 HERO HONDA MOTORS I iMrrcD
39
CORPORATE INFORMATION
Technical & Financial PLANT LOCATIONS
Collaborators Dharuhera Plant
Honda Motor Co., Limited 69 K.M. Stone,
Statutory Auditors 1-1,2, Chome, Minami Aoyama, Delhi-Jaipur Highway,
A.F. Ferguson & Co., Minato-ku, Tokyo, Dharuhera, Distt. Rewari 122 100,
Chatered Accountants 107-8556, Japan Haryana, India
9, Scindia House, www.world.honda.com Tel: 01274 264 000
Kasturba Gandhi Marg, Fax: 01274 267 018
New Delhi 110001 India Registered & Corporate Office
Tel: 011-2331 5884/2371 3899 34, Community Centre, Gurgaon Plant
Fax:011-23314561 Basant Lok, Vasant Vihar, 37 K.M. Stone Delhi-Jaipur Highway,
Email: afdelhi@vsnl.com New Delhi 110 057 India Sector 33, Gurgaon 122 001
Tel: 011-46044100,2614 2451 Haryana, India
Principal Bankers Fax: 011- 2614 3321,2614 3198 Tel: 0124 2894200/2372123
The Royal Bank of Scotland NV. www.herohonda.com Fax: 0124 237314142
Ba n k of America NT & SA
Canara Bank Registrar & Share Transfer Agents Haridwar Plant
Citibank N.A., Karvy Computershare Pvt.Ltd. Plot No. 3, Sector 10,
HDFC Bank Limited Plot No. 17-24, Vittal Rao Nagar, I.I.E, SIDCUL, Roshanabad,
HSBC Limited Madhapur, Hyderabad-500 081, Haridwar 249 403 Uttrakhand
ICICI Bank Limited Tel No:040-23420815-28, Tel: 01334 238500/239514-16
Punjab National Bank Fax: 040-2342 0814/2342 0859 Fax:01334 239512-13
Standard Chartered Bank E-mail: einward.ris@karvy.com
The Bank of Tokyo-Mitsubishi www.karvycomputershare.com
UFJ Ltd.
Cost Audiors
Ramanath Iyer & Co.,
Cost Accountants
BL-4, (Paschimi), Shalimar Bagh,
Delhi 110008 India
Tel: 011 - 2748 1904,4702 8048
Fax:011-27481904
Email: arrricon@gmail.com,
arrricon@redifmail.com
HERO HONOA MOTORS LIMITED ANNUAL

REPORT 2009-10
FINANCIAL RESULT
Directors' Report
Corporate Governance Report
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
US GAAP
TWO WHEELS OF
GROWTH
FINANCIAL HIGHLIGHTS AND KEY RATIO
Financial Highlights
(Rupees in crores)
2005-06
2006-07 2007-08 2008-09 2009-10
Sales (Nos.) 3,000,751
3,336,756 3,337,142 3,722,000 4600130
Growth in sales (nos.) - % 14.5
11.2 0.01 11.53 23.59
Total net income 8,870
10,090 10,517 12,565 16,099
Growth in Total inocme - % 17.4
13.7 4.2 19.5 28.1
Profit before tax 1,412
1,246 1,410 1,781 2,832
Profit after tax 971
858 968 1,282 2,232
Share capital 39.94
39.94 39.94 39.94 39.94
Reserves and Surplus 1969
2430 2946 3761 3425
Total debt 186
165 132 78 66
Net fixed assets 994
1,355 1,549 1,694 1,707
Total assets (net) 2,195
2,635 3,118 3,879 3,531
Market capitalisation 17,781
13,753 13,869 21,390 38,827
EVA 641
485 575 835 1723
Key Ratios
(Rupees in crores)
Paticulars 2005-06
2006-07 2007-08 2008-09 2009-10
Long term debt/Equity Nil
Nil Nil Nil Nil
OPBDITVIncomefrom operations-% 16.0
12.2 13.3 14.1 17.4
OPBT**/lncome from operations-% 14.6
10.8 11.8 12.7 16.2
Profit ater tax/ Income rom operations-% 11.1
8.6 9.3 10.4 14.1
Return on average equity- % 55.5
38.3 35.5 37.8 61.4
Return on average capital employed- % 72.3
51.6 49.0 50.9 76.4
EVA/Capital employed-% 32.9
20.1 20.0 23.9 46.5
Dividend per share (Rs.) 20.0
17.0 19.0 20.0 30.0
Dividend Payout- % 46.88
46.29 45.86 36.45 31.3
Earning per share (Rs.) 48.6
43.0 48.5 64.2 111.8
Market value/book value (times) 8.8
5.6 4.6 5.6 11.2
Notes:
* OPBDIT: Operating Profit before Depreciation, Interest and Tax **
OPBT: PBT before Other income
40 ANNUALREPO«T20O9 )0
HERO I lONDA MOTORS LIMfTcD
41
ECONOMIC VALUE ADDED [EVA] STATEMENT
(Rupees in crores)
i-IERO
HONDA
MOORS 2005-06 2006-07
LIMITED
1,945 2,415
Avg Cap Employed 1.3 1.1
Avg Debt/Avg Capital (%) 98.7 98.9
Avg Equity/Avg Capital (%)

1.0 0.6
Cost of Debt (% post-tax)
Cost of Equity 0.98 0.75
Beta 7.52 8.15
Cost of Risk Free Debt (%) 10 10
Market Premium (%) 17.32 15.65
Cost Of Equity (%)
EVA 971.34 857.89
Profit ater Tax 1.85 1.02
Add: lnterest*(1-tax rate) 973 859
NOPAT=PAT + Interests -t) 333 374
Cost of Capital 641 485
EVA
50.0 35.6
Return on Capital Employed (%) 17.1 15.5
Weighted Average Cost of Capital (%) 32.9 20.1
EVA/Capital employed (%)
ENTERPRISE VALUE 17781 13753
Market Capitalisation 186 165
Add: Debt 2221 2010
Less: Financial Assets 15746 11909
EV (Enterprise Value) 5.9 4.5
EV/Yr. End Capital Employed (Times)
ANNUAL REPORT 2009 10

2007-08 2008-09 2009-10 13.83 12.85
13.80
2,877 3,499 3,705 33.7 36.7 60.3
1.1 0.6 0.2 13.7 12.8 13.8
98.9 99.4 99.8 20.0 23.9 46.5
967.88 1,281.76
2,231.83
0.9 1.6 1.9 1.32 1.67
1.39
13869 21390 38827
969 1283
2233 132 78.49 66.03
0.59 0.59 0.63 2698 3,588 5833
394 448
7.94 6.99 7.50 510
11303 17880 33060
10 10 10 575 835
1723 3.6 4.6 9.4
TWO WHEELS OF
GROWTH
DIRECTORS' REPORT
Dear Members,
We the Directors of Hero Honda Motors Limited feel elated to present the 27* Annual Repot for the financial year 2009-10. The
Repot is being presented along with the Audited Statement of Accounts for the financial year ended March 31,2010.
FINANCIAL RESULTS
(Rupees in crores)
For the year ended

March 31,2010 March 31,2009
16,780.62 13,543.09
Gross Sales 16,098.79 12,565.21
Net Sales and other Income 3,002.58 1,930.44
Profit before Interest and Depreciation (20.62) (31.68)
Less: Interest (net) 191.47 180.66
Depreciation 2,831.73 1,781.46
Profit before tax (PBT)
Less: Provision for taxation 591.58 475.65
- Current 8.32 19.06
- Deferred 4.99
Fringe Benefit 2,231.83 1,281.76
Profit after tax (PAT) 2,707.28 2,021.77
Add: Balance of profit brought forward 4,939.11 3,303.53
Balance available for appropriation
Appropriations
Dividend 1,597.50
- Interim (Silver Jubilee Special Dividend) 599.06 399.38

- Proposed Final 371.00 67.87
Tax on Dividend 225.00 129.00
Transfer to General Reserve 2,146.55 2,707.28
Balance carried to Balance Sheet 5500 1000
Dividend (%) 111.77 64.19
Basic and Diluted Earnings Per Share (EPS)(Rs.)
42 ANNUALHEPO«T2009 10 HERO I lONDA MOTORS LIMITcD

43
TRANSFER TO GENERAL RESERVE
Reaffirming the financial strength of the Company, a sum of
Rs. 225 crores has been transferred to the General Reserve of
theCompanyforthefinancialyear2009-10.
MATERIAL CHANGES AND COMMITMENTS

BUSINESS PERFORMANCE No material changes and commitments affecting the
During the year under review, your Company, the world's financial position of the Company have occurred between
largest two-wheeler manufacturer for the past nine years in a April 1,2010 and the date of this Repot.
row recorded its highest-ever annual revenue, operating
BOARD OF DIRECTORS
income and earnings per share. The Company repoted a
During the period under review, Mr. Arun Nath Maira
consolidated turnover (Net sales and other income) of
resigned rom the Directorship of the Company w.e.f.
Rs. 16,098.79 crores, a whopping growth of 28.12 percent over
July 23,2009. Mr. Ravi Nath and Dr. Anand C. Burman were
the consolidated turnover recorded in the previous financial
appointed as Additional Directors in the category of Non-
year, i.e. Rs. 12,565.21 crores. For the year under review, the
Executive and Independent Directors with effect from
Company has recorded an EBIDTA margin of 17.45 per cent as October 14,2009and January 13,2010 respectively.
compared to 14.13 per cent inthefinancialyear2008-09.
During the current financial year, Mr. Satoshi Matsuzawa,
The year under review was also a witness to significant Alternate Director to Mr. Takashi Nagai, resigned from the
milestones in the history of your Company. During the Board of Directors with efect from April 1, 2010. Further
year, your Company achieved the significant landmark of Mr. MasahiroTakedagawa also resigned from the Directorship
recording total cumulative sales of 30 million two- of the Company w.e.f. April 1,2010. Also, Mr. O. P. Munjal has
wheelers, with the milestone surpassed in the month of resigned rom the Board of Directors of the Company w.e.f.
March, 2010. Also, the Company recorded a million units July 29,2010.The Board appreciated and expressed gratitude
sales in each quarter of fiscal '10, capping the year with forthe valuable contribution made by Mr. Satoshi Matsuzawa,
the highest-ever quarter sales of 11,86,536 two-wheelers Mr. Masahiro Takedagawa and Mr. Om Prakash Munjal during
in the fourth quarter. their fruitful tenure as Directors of the Company and wished
them all the best for their future endeavours. Subsequently,
Mr. Yuji Shiga has been appointed as a Director w.e.f. April 19,
Futher, during the year, nine new models were launched by
2010 consequent to the casual vacancy caused due to
your Company across various segments. It is heatening to
resignation of Mr. Masahiro Takedagawa. Also, Mr. Suman
note that the sales of Hero Honda Pleasure (the 100 cc
Kant Munjal has been appointed as an Additional Director of
scooter) has surpassed the threshold of 20,000 units per
the Company w.e.f. July 29,2010.
month and further looks promising.
The Directors extend their warm welcome to the new
DIVIDEND members on the Board and wish them a successful and
Your Directors, celebrating the strength of its operations and ruitful tenure with theCompany.
the resulting strong financial position, declared and paid an In terms of the provisions of the Companies Act, 1956 & the
Interim Silver Jubilee Special Dividend of 4,000% i.e. Rs. 80 Articles of Association of the Company, Mr. Analjit Singh,
per Equity Share of the face value of Rs. 2 each, aggregating Dr. Pritam Singh, Mr. Sumihisa Fukuda and Mr. M. Damodaran
to Rs. 1,597.5 crores (exclusive of Tax on Dividend). The Directors, will retire by rotation at the ensuing Annual
dividend, in percentage terms, is the highest pay out by an General Meeting and being eligible, ofer themselves for re-
Indian company till date. appointment. Brief resume/details of the Directors, who are
to be appointed/re-appointed as mentioned herein above
Futher, following the policy laid down by the Company in has been furnished alongwith the Explanatory Statement to
regard to funds which, if not re-invested for capital the Notice of the ensuing Annual General Meeting.
investments, should be optimally distributed to
Your Directors recommend their re-appointment at the
shareholders, your Directors are pleased to recommend a
ensuing Annual General Meeting.
final Dividend of 1,500% i.e. Rs. 30 per Equity Share of the
face value of Rs. 2 per share, aggregating to Rs. 599.06 crores
(exclusive of Tax on Dividend), for the financial year ended
March 31, 2010 for your approval. The final dividend, if
approved, will be paid to the eligible members well within
the stipulated period.
i-IEBO HONDA MOORS LIMITED ANNUAL REPORT 2009 10
TWO WHEELS OF
GROWTH
Your Company is committed to benchmark itself with global

standards for practicing good Corporate Governance and
has put in place an efective Corporate Governance System
DIRECTORS' RESPONSIBILITY STATEMENT which ensures that the provisions of Clause 49 of the Listing
To the best of their knowledge and belief and according to Agreementareduly complied with.
the information and explanations obtained by them, your
Directors make the following statement in terms of Section The Board has also evolved and adopted a Code of Conduct
217 (2AA) of the Companies Act, 1956: (Code) based on the principles of Good Corporate
Governance and best management practices being
1. that in the preparation of the annual accounts for the followed globally. The Code is available on the website ofthe
year ended March 31, 2010, the applicable accounting Company - www.herohonda.com. A Repot on Corporate
standards have been followed; Governance, along with the Auditors' Cetificate on its
compliance is annexed hereto as Annexure-1.
2. that appropriate accounting policies have been selected
and applied consistently and judgments and estimates The Ministry of Corporate Afairs has issued Corporate
that are reasonable and prudent have been made so as to Governance Voluntary Guidelines 2009 ("Guidelines") for
give a true and fair view of the state of afairs as at March voluntary adoption ofthe same by the Companies, which are in
31,2010 and of the Profit of the Company forthe financial addition to the mandatory requirements of Clause 49 of the
yearendedMarch31,2010; Listing Agreement.
3. that proper and sufficient care has been taken for the The Guidelines broadly outline a framework for corporate
maintenance of adequate accounting records in sector on important parameters like appointment of
accordance with the provisions of the Companies Act, Directors (including Independent Directors), guiding
1956 for safeguarding the assets of the Company and principles to remunerate Directors, responsibilities of the
for preventing and detecting fraud and other Board, risk management, the enhanced role of Audit
irregularities; Committee, rotation of audit patners and firms and conduct
of secretarial audit.
4. that the annual accounts for the financial year ended
March 31, 2010 have been prepared on a going The Board of Directors of the Company discussed and
concern basis. reviewed the same at its meeting held on April 19,2010. Your
Company while already complying with a major part of these
MANAGEMENT DISCUSSION & ANALYSIS various requirements has already initiated appropriate
Pursuant to Clause 49 of the Listing Agreement, a detailed actionfor compliance.
section on 'Management Discussion and Analysis' (MDA),
formsan integral partoftheAnnual Report. INTERNAL CONTROL SYSTEMS
Hero Honda has a proper, efficient & adequate system of
CORPORATE SOCIAL RESPONSIBILITY internal control. This ensures that all assets are safeguarded
At Hero Honda, Corporate Social Responsibility (CSR) and protected against loss from unauthorised use or
encompasses much more than social outreach programs disposition and the transactions are authorised, recorded
and is an integral pat of the way the Company conducts its and repoted correctly.
business. Detailed information on the initiatives of the
An extensive programme of internal audit and management
Company towards CSR activities is provided in the Corporate
review supplements the process of internal control. Properly
Social Responsibility section ofthe MDA.
documented policies, guidelines and procedures are laid
down for this purpose. The internal control system has been
CORPORATE GOVERNANCE
designed so as to ensure that the financial and other records
Hero Honda believes that the essence of Corporate
ofthe Company are reliable for preparing the financial and
Governance lies in the phrase 'Your Company'. It is 'Your'
other statements and for maintaining accountability of
Company because it belongs to 'You' - the shareholders. The
assets ofthe Company.
Chairman and the 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.
44
ANNUALHEPORT20O9 10 HERO HONDA MOORS LIMfTcD
45
FIXED DEPOSITS
During the year under review, the Company has not
accepted any deposit under Sections 58A and 58AA ofthe
Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.
AUDITORS
The Company has also appointed an Audit Committee,
M/s. A. F. Ferguson & Co., Chatered Accountants, New Delhi,
comprising of four Independent, Non-Executive and
Auditors ofthe Company will retire at the conclusion ofthe
professionally qualified Directors, who regularly interact
ensuing Annual General Meeting and being eligible, ofer
with the Statutory Auditors, Internal Auditors, Cost Auditors
themselves for re-appointment. The Company has received a
and Auditees in dealing with matters specified within its
certificate from the auditors to the efect that their re-
terms of reference. The Committee mainly deals with
appointment, if made, at the ensuing Annual General
accounting matters, financial reporting and internal
Meeting would be in accordance with Section 224(1 B) ofthe
controls. During the year under review, the Committee met
Companies Act, 1956. Further, the Auditors have
seven times. A detailed synopsis ofthe functioning and role
represented that they hold a valid Peer Review Certificate
ofthe Audit Committee, its composition and the details of
issued by the 'Peer Review Board' of ICAI.
attendance of its members at various meetings of the
Committee held during the year has been substantiated in The Board accordingly recommends their re-appointment.
the Report on Corporate Governance annexed alongwith
this Report as Annexure-1. AUDITORS' REPORT
The observations of Auditors in their repot, read with the
AUDIT COMMITTEE RECOMMENDATION relevant notes to accounts are self explanatory and
During the year under review there was no such therefore do not require futher explanation.
recommendation of the Audit Committee which was not
accepted by the Board. Hence, there is no need for disclosure COST AUDITORS
ofthe same in this Report. The Board has re-appointed M/s. Ramanath Iyer & Co., Cost
Accountants, New Delhi, as the Cost Auditors of the
RISK MANAGEMENT SYSTEM Company under Section 233B ofthe Companies Act, 1956
Your Company follows a comprehensive & efective system of for the financial year 2010-11 and the necessary approval in
Risk Management. The Company has adopted a regard to appointment of M/s. Ramanath Iyer & Co. as the
procedure for risk assessment and its minimization. It Cost Auditors, has been granted by the Central Government
ensures that all the Risks are timely identified and mitigated in vide its letter dated May 26,2010. The Cost Auditors' Report
accordance with the well structured Risk Management for 2009-10 will be forwarded to the Central Government in
Process. The Board of Directors & the Audit Committee pursuance ofthe provisions ofthe Companies Act, 1956.
periodically review the Risk Management System.
CONSERVATION OF ENERGY, TECHNOLOGY
RATINGS ABSORPTION, FOREIGN EXCHANGE EARNINGS
ICRA Limited, a leading rating agency has reviewed and
AND OUTGO
reaffirmed the rating assigned to the Company for its Non-
Convertible Debenture Programme and Fund Based Limits Information required under Section 217 (1) (e) of the
rom Bankas "LAAA" [pronounced "L triple A"] indicating the Companies Act, 1956, read with Companies (Disclosure of
highest credit quality and "A1 +" [pronounced "A one Plus"] for Particulars in the Repot of the Board of Directors) Rules,
its Non-fund based facilities and "LAAA" [pronounced "L triple 1988 is given as per Annexure - II and forms an integral pat
A with"] to Fund based facilities indicating the highest of this Repot.
creditquality rating carrying lowest credit risk.
During the year under review, rating agency CRISIL assigned the
bank loan ratings of "AAA/Stable" and "P1 +" to the Cash Credit
Limit & Letter of Credit Limit Facility respectively to
yourCompany.
HERO HONDA MOORS LIMITED ANNUAL REPORT 2009 10
TWO WHEELS OF
GROWTH
interested in obtaining a copy of such statement may write to

the Sr. G.M. Legal & Company Secretary at the Registered
Ofice ofthe Company.
LISTING
The shares of your Company are listed on the Bombay Stock ACKNOWLEDGEMENT
Exchange Limited (BSE) and the National Stock Exchange of It is our strong belief that caring for our business
India Limited (NSE). The delisting application filed with the constituents has ensured our success in the past and will do
Calcutta Stock Exchange Association Limited (CSE) was so in future. The Directors acknowledge with sincere
approved by the Committee ofthe exchange vide its letter gratitude the co-operation and assistance extended by the
dated December 7,2009. Central Government, State Government(s), Financial
Institution(s), Bank(s), Customers, Dealers, Vendors and
PERSONNEL Ancillary Undertakings. The Directors also place on record
As on March 31,2010 the total number of employees on the their appreciation for the valuable assistance and guidance
records of the Company was4,751. extended to the Company by Hero Cycles Ltd. and Honda
Motor Co., Ltd., Japan and for the encouragement and
Your Directors place on record their appreciation for the assurance, which our collaborator has given for the growth
significant contribution made by all employees, who and development ofthe Company.
through their competence, dedication, hard work, co¬
operation and support have enabled the Company to cross The Board also takes this oppotunity to express its deep
new milestones on a continual basis. gratitude for the continued co-operation and support
received from its valued shareholders.
A detailed note is given in the chapter "Human Resource
Management" of Management Discussion & Analysis, which For and on behalf of the Board
forms a pat of this Annual Repot.
PARTICULARS OF EMPLOYEES
n/Q
Particulars of Employees as required under Section 217(2A)
Brijmohan Lall Munjal
of the Companies Act, 1956 read with The Companies
Chairman
(Paticulars of Employees) Rules, 1975 forms an integral
pat of this Report. In terms ofthe proviso to Section 219(1) New Delhi
ofthe Companies Act, 1956 the Report and Accounts are July 29,2010
being sent to the shareholders of the Company excluding
the statement of particulars of employees under
Section 217(2A) ofthe Companies Act, 1956. Any member
46
ANNUALHEPOlT2009 10 HERO I lONDA MOTORS LIMfTcD
47
ANEXURE-I TO DIRECTORS' REPORT
We believe that the essence of Corporate Governance lies in

CORPORATE GOVERNANCE REPORT the phrase "Your Company". It is "Your" Company
because it belongs to 'You' - the shareholders. The
Philosophy on 'Code of Corporate Governance' Chairman and Directors are "Your" fiduciaries and trustees.
Hero Honda's philosophy of Corporate Governance stems Their objective is to take the business forward to maximise
from a belief that the Company's business strategy and plans "Your" long-term value.
should be consistent with the welfare of all its stakeholders,
including shareholders. Good Corporate Governance The Securities and Exchange Board of India (SEBI) has
practices enable a Company to attract financial and human specified cetain mandatory governance practices, which
capital. In turn, these resources are leveraged to maximize are incorporated in Clause 49 of the Listing Agreement of
long-term shareholder value, while preserving the interests Stock Exchanges.
of multiple stakeholders, including the society at large.
Hero Honda is committed to benchmarking itself with the
Corporate Governance rests upon the four pillars of best standards of Corporate Governance, not only in form
transparency, full disclosure, independent monitoring and but also in spirit. This section, along with the section on
fairness to all, especially to minority shareholders. Hero 'Management Discussion & Analysis' and 'General
Honda has always strived to promote Good Governance Shareholders' Information', constitute Hero Honda's
practices, which ensure that: compliance with Clause 49 of the Listing Agreement,
entered into by the Company with the Stock Exchanges.
• A competent management team is at the helm of afairs;
BOARD OF DIRECTORS
• The Board is strong with an optimum combination of Composition ofthe Board
Executive and Non-Executive (including Independent) As on March 31, 2010, the Company's Board of Directors
Directors, who represent the interest of all stakeholders; comprised of Sixteen Directors. Four Directors, including the
• The Board is efective in monitoring and controlling the Chairman, are Executive; four are Non-Executive and eight
Company's affairs; are Non-Executive and Independent. Fifty per cent of the
Board consists of Independent Directors, therefore the
• The Board is concerned about the Company's composition ofthe Board is in consonance with Clause 49 of
shareholders; and the Listing Agreement. Details of the composition of the
• The Management and Employees have a stable Board, number of meetings held during their tenure and
environment. attended by them etc., are given in Table 1.
TWO WHEELS OF
GROWTH
TABLE 1: DETAILS ABOUT COMPANY'S BOARD OF DIRECTORS
ATTENDANCE RECORD DURING FINANCIAL YEAR 2009-10 DIRECTORSHIP/MEMBERSHIP ON MARCH 31,2010
Name of Director Number of Board Attendance Number of Committee Number of Number of

Meetings held during at last AGM Memberships Committee outside
his/her tenure and (including Chairman Chairman¬ Directors¬
attended by him/her ships) held ships held hips held
Held Attended (excluding Private Companies, Foreign Companies
& Section 25 Companies
Executive Directors
Mr. Brijmohan Lall Munjal 6 Yes None None 7
Mr. Pawan Munjal 6 Yes None None 1
Mr. Toshiaki Nakagawa 6 Yes None None 1
Mr. Sumihisa Fukuda 6 Yes None None 1
Non-Executive Directors
Mr. Om Prakash Munjal Nil No None None 10
Mr. Sunil Kant Munjal 5 No None None 13
Mr. Masahiro Takedagawa 1 No 1 None 2
Mr. Satoshi Matsuzawa
(Alternate Director to
Mr.T. Nagai) No None None None
Non-Executive and
Independent Directors
Mr. Pradeep Dinodia Yes 8 4 8
Gen. (Retd.) Ved Prakash Malik No 4 None 3
Mr. Analjit Singh No None None 13
Dr. Pritam Singh Yes 2 1 5
Mrs. Shobhana Bhartia No 1 1 14
Mr. Sunil Bharti Mittal' Not 2 2 7
applicable
Mr. M. Damodaran No 2 1 5
Mr. Arun Nath Maira2 Not 1 1 5
applicable
Mr. Ravi Nath3 Not 2 3
applicable
Dr. Anand C. Burman4 Not 2 None 8
applicable
Notes:
1. Mr. Sunil Bharti Mittal resigned from the Board of Directors w.e.f. April 21,2009.
2. Mr. Arun Nath Maira resigned from the Board of Directors w.e.f. July 23,2009.
3. Mr. Ravi Nath was appointed as an Additional Director on the Board w.e.f. October 14,2009.
4. Dr. Anand C. Burman was appointed as an Additional Director on the Board w.e.f. January 13,2010.
Mr. Brijmohan Lall Munjal is the father of Mr. Pawan Munjal and Mr. Sunil Kant Munjal and the brother of
Mr. Om Prakash Munjal
48 ANNUALHEPORT2009 10 HERO I lONDA MOORS LIMITcD

49
 is not a material supplier, service provider or customer or
a lessor or lessee of the Company, which may affect
independence of the Director;
 is not a substantial shareholder of the Company i.e.
owning two percent or more of the block of voting shares;
 is not less than 21 years of age.
Four Directors namely Mr. Brijmohan Lall Munjal (Executive
None of the Director on the Board holds the office of Director
in
Chairman in the Whole-time employment of the Company),
more than 15 companies nor are they members in
Mr. Pawan Munjal (Managing Director & CEO),
Committees of the Board in more than 10 Committees or
Mr. Om Prakash Munjal (Non-Executive Director) and Mr.
Chairman of more than 5 Committees. Further, there are no
Sunil Kant Munjal (Non-Executive Director) belong to the
pecuniary relationships or transactions between the
promoter family of the Hero Group, which owns 26 per cent
Independent Directors and the Company, except for the
equity in the Company. Four Directors namely
sitting fees drawn by the Non-executive Directors and sitting
Mr. Toshiaki Nakagawa (Joint Managing Director),
fees and commission drawn by the Non-executive and
Mr. Sumihisa Fukuda (Technical Director in the Whole-time
Independent Directors for attending the meeting of the
employment of the Company), Mr. Masahiro Takedagawa
Board and its Committee(s) thereof.
(Non-Executive Director) and Mr. Takashi Nagai (Non-
Executive Director) are nominees of Honda Motor Co. Ltd.,
Shareholding of Non-Executive Directors, as on
Japan, which too, owns 26 per cent equity in the Company.
Apart from these, the rest of the Board comprises of Non- March 31, 2010
Executive and Independent Directors.
Name of the Director Category No. of shares
held
Board Meetings
During 2009-10, the Board of Directors met 6 (six) times on Mr. Om Prakash Munjal Non-Executive 25,000
Director
April 21, 2009; June 10, 2009; July 29, 2009; October 21, 2009;
January 25, 2010 and March 30, 2010. Mr. Sunil Kant Munjal Non-Executive 32,500
Director
The period between any two consecutive meetings of the
Board of Directors of the Company was not more than 4 Apart from the above, none of the Non-Executive (including
months. Independent) Directors holds any shares (as own or on behalf of any
other person on beneficial basis) in the Company.
Directors' Attendance Record and Directorships/
Committee Memberships Information Supplied to the Board
Details are given in Table 1. Board members are given agenda papers along with
necessary documents and information in advance of each
Pursuant to Clause 49 of the Listing Agreement entered into meeting of the Board and Committee(s). However, in case of
with the Stock Exchange(s), an Independent Director meansa business exigencies or urgencies, the resolutions are passed
by
Non-Executive Director who: way of circulation. In addition to the regular business
items, the following items/ information are regularly placed
 apart from receiving Director's remuneration, does not before the Board to the extent applicable:
have any material pecuniary relationships or
transactions with the Company, its Promoters, its  Annual operating plans and budgets, capital budgets
Directors, its senior management, its holding Company, and updates;
its subsidiaries or associates which may affect
independence of the Director;  Purchase and disposal of major fixed assets;
 is not related to Promoters or persons occupying  Quarterly and half yearly results of the Company;
management positions at the Board level or at one level  Minutes of the Audit Committee, Shareholders'
below the Board; Grievance Committee, Remuneration Committee and
 has not been an executive of the Company in the Committee of Directors' meetings;
immediately preceding three financial years;
 is not a partner or an executive of the statutory audit firm
or the internal audit firm that is associated with the
Company and has not been a partner or an executive of
any such firm for the last three years and the legal firm(s)
and
consulting firm(s) that have a material association with
the Company;
TWO WHEELS OF
GROWTH
Oficer (CEO) and the Chief Financial Oficer (CFO) to this

efect isattached to the Annual Repot.
Risk Management
• Information on recruitment and remuneration of senior
We at Hero Honda have established effective risk
management just below the Board level including
assessment and minimization procedures, which are
appointment or removal of the Chief Financial Oficer
reviewed by the Board periodically. The procedures
and the Company Secretary;
comprises of an in-house exercise on Risk Management,
• Any material defaults in financial obligations to and by carried out periodically by the Company, including the
the Company or substantial non-payments for goods functioning of a structure to identify and mitigate various
sold by the Company; risks faced by the Company from time to time. The structure
also comprises of risk identification and assessment by the
• Fatal or serious accidents, dangerous occurrences, any
concerned departments, identification of controls in
material effluent or pollution problems;
place/mitigation process in place, updation of Risk registers
• Transactions that involve substantial payment towards by various departments and the consolidation and
goodwill, brand equity or intellectual property; presentation of the risk reports by the Chief Risk Officer
• Materially important show cause, demand, prosecution (CRO) before the Board of Directors of the Company.
and penalty notices;
BOARD LEVEL COMMITTEES
• Details of quaterly foreign exchange exposures and
steps taken by the management to limit the risks of
AUDIT COMMITTEE
adverse exchange rate movement; The genesis of Hero Honda's Audit Committee can be traced
back to the Audit Sub-Committee, constituted in 1987. Since
• Sale of material nature of investments and assets, which then it has been dealing with matters prescribed by the
are not in the normal course of business; Board of Directors on a case to case basis. In general, the
• Details of Joint Ventures and Agreements or variations primary role/objective ofthe Audit Committee is to review
thereof; the financial statements of the Company, strengthen
internal controls & look into all transactions that have
• Quaterly Statutory Compliance Report; monetary implications on the functioning ofthe Company.
• Non-compliance of any regulatory, statutory nature or The nomenclature, constitution and terms of reference of
listing requirements and shareholder's service such as the Committee were revised on January 16, 2001 and an
non-payment of dividend, delay in share transfer etc.; Audit Committee was set up in accordance with the
provisions of Section 292A ofthe Companies Act, 1956 and
• Investments strategy/plan;
clause49of the Listing Agreement of the StockExchange(s).
• Any issue which involves possible public or product
liability claims of substantial nature, including any As on March 31, 2010, the Committee comprised of four
judgment or order which may have passed strictures on the Non-Executive and Independent Directors in accordance
conduct of the Company or taken an adverse view with the prescribed guidelines. Mr. Pradeep Dinodia, a
regarding another enterprise that can have negative leading Chartered Accountant, is the Chairman of the
implications on the Company; and Committee. The other members are Dr. Pritam Singh,
Gen.(Retd.) V. P. Malik and Mr. M. Damodaran; all learned
• Significant labour problems and their proposed personalities in their respective fields. The members ofthe
solutions. Also, any significant development in Human Committee have adequate knowledge in the field of finance,
Resources/Industrial Relations front like signing of Wage accounting and law. The role and "terms of reference" ofthe
Agreement, implementation of Voluntary Retirement Audit Committee includes the following:
Schemes etc.
• Overseeing
Code of Conduct
- the Company's financial repoting process and
We at Hero Honda have laid down a code of conduct for all disclosure of its financial information to ensure that
Board members and senior management ofthe Company. the financial statements are correct, sufficient and
The code of conduct is available on the website of the credible.
Company i.e. www.herohonda.com. The code has been
50
circulated to all the members of the Board and senior
management and they have affirmed compliance with the
code of cond uct. A decla ration signed by the Ch ief Executive
ANNUALHEPORT2009 10 HERO I lONDA MOTORS LIMfTcD
51
• Approving
- the appointment ofthe CFO before finalization ofthe
same by the management. Futher while approving
the appointment, it shall assess the qualifications,
experiences background etc.of thecandidate.
The Sr. Vice President & CFO, Internal Auditors, Statutory

• Recommending Auditors and Cost Auditors attend the meetings of the
- the appointment, re-appointment, replacement and Committee on the invitation of the Chairman. Mr Ham C.
removal of the statutory auditor, fixation of audit fees Kamboj, Sr. G.M. Legal & Company Secretary acts as the
and approving payments for any other services. Secretary ofthe Committee.
• Reviewing During the year, 7 (seven) meetings ofthe Audit Committee

were held on April 21, 2009; May 04, 2009; July 29, 2009;
- the annual financial statements with the
October 21, 2009; January 25, 2010; March 11, 2010 and
management with primary focus on matters
March 30, 2010 in due compliance with the stipulated
required to be included in the Directors'
provisions. The attendance record of members ofthe Audit
Responsibility Statement, changes, if any in
Committee is given in Table 2.
accounting policies and practices and reasons
thereof, compliance with accounting standards and
guidelines of stock exchange(s), major accounting
TABLE 2: DETAILS OF THE AUDIT COMMITTEE
entries & related paty transactions.
Name of Committee Position No. of No. of
- the quarterly financial statements with the Member held meetings meetings
management before submission to the board for held during Attended
approval. his tenure
Mr. Pradeep Dinodia Chairman 7 7
- the adequacy of internal control systems and the Gen. (Retd.) V.P.Malik Member 7 7
internal audit function and reviewing the Company's
Dr. Pritam Singh Member 7 5
financial and risk management policies.
Mr. Arun Nath Maira1 Member 1 Nil
- the findings of any internal investigations by the Mr. VL Damodaran Member 4 3
internal auditors into matters where there is
suspected raud or irregularity or a failure of internal 1. Mr. Arun Nath Maira was appointed as a member of the
control systems of a material nature and reporting Committee w.e.f. April 21,2009. However, he resigned from the
Board of Directors of the Company on July 23, 2009 and as a
the mattertothe Board. result, ceased to be a member ofthe Committee.
- the reports furnished by the internal auditors, 2. Mr. M. Damodaran was appointed as a member of the
discussions with internal auditors on any significant Committee w.e.f. July 29,2009
findingsand ensuring suitable follow upthereon.
- Directors' overseas travelling expenses and Foreign REMUNERATION COMMITTEE
exchange exposure. The Company had set up a Remuneration Committee on
• Complying January 16,2001 to review and recommend the payment of
- with the provisions of Listing Agreement laid down annual salaries, commission and finalise service agreements
by the Stock Exchange(s) and legal requirements and other employment conditions of Executive Directors.
concerning financial statements. The Committee takes into consideration the best
remuneration practices being followed in the industry while
• Discussing fixing appropriate remuneration packages.
- with external auditors before the audit commences,
the nature and scope of audit. Also post audit
discussion to ascertain any area of concern.
• Looking
- into the reasons for substantial defaults in the
payments to the shareholders (in the case of non¬
payment of declared dividends) and creditors.
HERO HONDA MOTORS LIMITED ANNUAL REPORT 2009 10
TWO WHEELS OF
GROWTH
the Company. The remuneration structure comprises of

Basic Salary, Commission, Perquisites and Allowances,
Contribution to provident fund and other funds. Besides
As on March 31, 2010, the Committee had three Non- these, fixed commission @ 1 per cent of the net profit,
Executive and Independent Directors as its members in computed in accordance with Section 198 ofthe Companies
accordance with the prescribed guidelines. Gen. (Retd.) Ved Act, 1956, is paid as per the terms of appointment.
Prakash Malik is the Chairman of the Committee and
As of now, the Company does not have any Employee Stock
Mr. Pradeep Dinodia and Mr. Ravi Nath are the members of
Options Plans (ESOPs). The term of appointment of
the Committee. Mr. Nath was appointed as a member ofthe
Executive Directors is 5 (five) years. Further, no notice period
Committee w.e.f. January 25, 2010. Mr Ham C. Kamboj,
and severance fee is applicable for the above-mentioned
Sr. G.M. Legal & Company Secretary acts as the Secretary of
Executive Directors.
the Committee.
Remuneration paid to Non-Executive Directors
During the year, no meeting of the Remuneration
The Non-Executive Directors of the Company are paid sitting
Committee was held as there was no business to transact.
fees of Rs.16,500 for each meeting of the Board, Audit
REMUNERATION POLICY Committee, Remuneration Committee and Shareholders'
Grievance Committee attended by them.
Remuneration paid to Executive Director
The remuneration paid to Executive Directors is recommended by However, in addition to the sitting fees, Non-Executive and
the Remuneration Committee and approved by the Board of Independent Directors shall be entitled to remuneration by
Directors in the Board meeting, subject to the subsequent way of commission aggregating upto 0.10 per cent of profits
approval by the shareholders at the general meeting and such ofthe Company.
other authorities, as the case may be.
Tables 4 and 5 gives details of remuneration paid to
At the Board meeting, only the Non-Executive and
Independent Directors participate in approving the Directors. During 2009-10, the Company did not advance
remuneration paid to the Executive Directors. The any loanstoany of its Directors.
remuneration is fixed considering various factors such as
qualification, experience, expertise, prevailing
remuneration in the industry and the financial position of
TABLE 4: REMUNERATION TO EXECUTIVE DIRECTORS (Amount in Rs.]
Name ofthe Directors Salary* Commission (Fixed) ** Total

Mr. Brijmohan Lall Munjal 1,13,84,073 29,50,00,000 30,63,84,073
Mr. Pawan Munjal 1,38,11,534 29,50,00,000 30,88,11,534
Mr.Toshiaki Nakagawa 53,35,691 29,50,00,000 30,03,35,691
Mr. Sumihisa Fukuda 41,49,632 29,50,00,000 29,91,49,632
Notes:
* Salary includes Basic Salary, Perquisites and Allowances, Contribution to provident fund and other funds.
** Total Commission is calculated @ 1 % ofthe net profit calculated in accordance with Section 198 ofthe Companies Act, 1956.
52
ANNUALHEPORT20O9 10 HERO HONDA MOORS LIMITED
53
(Amount in Rs.)
Commission Total
25,93,750 29,07,250
18,25,000 20,56,000
TABLE 5: REMUNERATION TO NON-EXECUTIVE DIRECTORS 18,25,000 20,56,000
Name ofthe Directors Sitting fees 14,06,250 16,20,750
Mr. Pradeep Dinodia 3,13,500 Not applicable 82,500
Gen.(Retd.) V.P. Malik 2,31,000 Not applicable Nil
Dr. Pritam Singh 2,31,000 Not applicable Nil
Mr. M. Damodaran 2,14,500 2,50,000 2,99,500

Mr. Sunil Kant Munjal 82,500 2,50,000 2,83,000
Mr. Masahiro Takedagawa Nil' 1,25,000 1,41,500
Mr. Satoshi Matsuzawa Nil' Nil Nil
Mr. Analjit Singh 49,500 3,75,000 4,24,500
Ms. Shobhana Bhatia 33,000 2,50,000 2,83,000
Mr. Arun Nath Maira1 16,500

Mr. Sunil Bhati Mittal2 Nil'
Mr. Ravi Nath3 49,500
Dr. Anand C. Burman" 33,000
No sitting fee was paid to Mr. Om Prakash Munjal as he did not attend any of the meetings ofthe Board held during thefinancial year 2009-10.
# Mr. Sunil Bharti Mittal, Mr. Masahiro Takedagawa and Mr. Satoshi Matsuzawa (Alternate Director to Mr. Takashi Nagai), have opted not
to receive sitting fees or commission which were accrued to them on account of attending the meetings of the Board.
1. Mr. Sunil Bharti Mittal resigned from the Directorship on April 21,2009.
2. Mr. Arun Nath Maira resigned from the Directorship on July 23,2009.
3. Mr. Ravi Nath was appointed as an Additional Director on the Board w.e.f. October 14,2009.
4. Dr. Anand C. Burman was appointed as an Additional Director on the Board w.e.f. January 13,2010.
TWO WHEELS OF
GROWTH
COMMITTEE OF DIRECTORS
Apart from these Committees, the Company also has a
Committee of Directors. As on March 31, 2010, the
SHAREHOLDERS' GRIEVANCE COMMITTEE
Committee comprised of Mr. Brijmohan Lall Munjal,
This Committee, constituted on January 16, 2001, Chairman; Mr. Pawan Munjal, Managing Director & CEO;
specifically looks into shareholders' and investors' Mr. Toshiaki Nakagawa, Joint Managing Director;
grievances arising out of issues regarding share transfers, Mr. Sumihisa Fukuda, Technical Director in the whole-time
dividends, dematerialisation and related matters and takes employment of the Company; Mr. Ravi Sud, Sr. Vice
requisite action(s) to redress the same. As on March 31, President & CFO and Mr. Ham C. Kamboj, Sr. G.M. Legal &
2010, the Committee had three Non-Executive and Company Secretary as its members.
Independent Directors as its members, in accordance with
the prescribed guidelines. Dr. Pritam Singh is the Chairman Constituted in 1985, the Committee deals with matters
ofthe Committee. The other members ofthe Committee are delegated by the Board from time to time.
Mr. Pradeep Dinodia and Mr M. Damodaran.
Mr. Ham C. Kamboj, Sr. G.M. Legal & Company Secretary, acts The meeting of the committee is convened as per
as the Secretary of the Committee. requirement. During the year under review 8 (eight)
meetings ofthe Committee were held.
The Company has an efficient system of dealing with
investors' grievances. The Chairman and the Managing SHARE TRANSFER COMMITTEE
Director & CEO ofthe Company take personal interest in all This Committee was constituted on January 31, 2007 as a
matters of concern for investors as and when necessary. The measure of Good Corporate Governance practice and to
Company Secretary, being the Compliance Oficer, carefully streamline the work related to share transfer etc. which was
looks into each issue and reports the same to the earlierapproved by theCommittee of Directors. Mr. Ravi Sud,
Shareholders' Grievance Committee. In the meetings ofthe Sr. Vice President & CFO and Mr. Ham C. Kamboj, Sr. G.M.
Committee the status of all shareholders' complaints, Legal & Company Secretary are its members. The meeting of
requests, queries etc. along with letters received from all the committee is convened as per requirement. During the
statutory authorities are reviewed. year under review 24 (twenty four) meetings of the
Committee were held.
During the year, 4 (four) meetings of the Shareholders'
Grievance Committee were held on May 4, 2009; July 29,
DISCLOSURES
2009; October 21,2009 and January 25,2010.
Related Party Transactions
Details of shareholders' complaints and their status are The Company follows the following policy in regard to
given in the section on "General Shareholders' disclosure of the related party transactions to the Audit
Information". The attendance record of members of the Committee:
Shareholders'Grievance Committee is given in Table 6.
a) A Statement in the Summary form of transactions with
TABLE 6: DETAILS OF SHAREHOLDERS'GRIEVANCE related parties in the ordinary course of business is
placed periodically before the Audit Committee.
COMMITTEE
b) There are no material individual transactions with
Name of Committee Position No. of No. of related paties, which are not in the normal course of
Member held meetings meetings business and which are not on an arm's length basis.
held during Attended
his tenure
Disclosures on materially significant related party
Dr. Pritam Singh Chairman 4 4 transactions that may have potential conflict with the
Mr. Pradeep Dinodia Member 4 4 interest ofthe company at large.
Mr. M. Damodaran1 Member 4 3

1. Mr. M. Damodaran was appointed as a member of the
Committee w.e.f. April 21,2009.
54
ANNUALHEPORT2009 10 HERO HONDA MOORS LIMITED
55
Further, since the last AGM, Mr. Ravi Nath, Dr. Anand C. Burman
and Mr. Suman Kant Munjal were appointed as Additional
Directors on the Board of the Company and have been
recommended by the Board of Directors to be appointed as
Directors of the Company at the ensuing AGM of
the Company.
There are no materially significant transactions made by the Brief resume of the said Directors proposed to be
Company with its Promoters, Directors or Management or appointed and re-appointed have been provided along
relatives etc. that may have potential conflict with the with the Notice of the AGM, annexed along with the
interest ofthe Company at large. Annual Report.
Accounting Treatment in preparation of Financial MEANS OF COMMUNICATION

Statements Pursuant to Clause 41 (l)(f) of the Listing Agreement, the
Company has regularly furnished, both by post as well as by
The guidelines/accounting standards laid down by the
fax (within 15 minutes of closure of the Board meeting) the
Institute of Chatered Accountants of India (ICAI) and
annual audited as well as quaterly un-audited results to both
notified by the Companies (Accounting Standards) Rules,
the Stock exchanges, BSE & NSE, post approval and adoption
2006 have been followed in preparation of the financial
ofthe same by the Board of Directors ofthe Company.
statements ofthe Company.
The Company's half yearly results (period ended
Compliances by the Company September 30, 2009), annual results (year ended March 31,
There has neither been any non-compliance of any legal 2010) and the results for the quaters ended June 30,2009 and
provision of applicable law, nor any penalty, stricture December 31,2009 have been published in English, Hindi
imposed by the stock exchanges or SEBI or any other and other Regional newspapers (viz. The Economic Times,
authority, on any matter related to capital market during the Financial Times, Business Standard, Dainik Bhaskar, Deccan
lastthree years. Chronicle, Financial Chronicle, Financial Express, Jansatta,
Hindustan, The Hindu, Business Line, Hindustan Times,
Insider Trading Mint and The Times of India). Results for each quarter, half
In compliance with the SEBI regulation on prevention of year and annual results for the year ended March 31,2010
insider trading, the Company has instituted a are also regularly updated and are thus displayed on the
comprehensive code of conduct for its management, staf Company's website : www.herohonda.com. The website
and relevant business associates. The code lays down also displays official news releases and distribution
guidelines, which advises them on procedures to be schedule, as required under the terms of Clause 35 ofthe
followed and disclosures to be made, while dealing with Listing Agreement.
shares of the Company and cautioning them on
consequences of non-compliances. Moreover, pursuant to Clause 52 of the Listing Agreement,
financial information like annual, half yearly and the quarterly
financial statements and shareholding pattern etc. are available
CEO & CFO CERTIFICATION
on the SEBI web-site www.corpfiling.co.in. The Company
Cetificate from Mr. Pawan Munjal, Managing Director&CEO Secretary being the Compliance Officer ensures the correctness
and Mr. Ravi Sud, Sr. Vice President & CFO pursuant to and authenticity ofthe information filed with the said website.
provisions of Clause 49(V) of the Listing Agreement, for the
year under review was placed before the Board of Directors During the year ended March 31,2010, various presentations
ofthe Company in its meeting held on April 19,2010. A copy were made to analysts and institutional investors. Further, the
ofthe cetificate on the financial statements for the financial Management Discussion & Analysis (MDA) Report,
year ended March 31, 2010 and the Code of Conduct is highlighting the operational & business performance,
annexed along with this Report. financial and the other important aspects of the Company's
functioning, forms an integral part of this Annual Report.
APPOINTMENT AND RE-APPOINTMENT OF
DIRECTORS
Mr. Analjit Singh, Dr. Pritam Singh, Mr. Sumihisa Fukuda
and Mr. M. Damodaran, Directors of the Company, shall
retire by rotation at the ensuing Annual General Meeting
(AGM) and being eligible, offer themselves for re-
appointment.
TWO WHEELS OF
GROWTH
GENERAL BODY MEETINGS
Details of Annual General Meeting (AGM)
Location, date and time of general meetings held during the last three years and Ordinary and Special resolutions passed
thereat are given in Table 7.
There was no matter required to be dealt by the Company through postal ballot, as required pursuant to Section 192A ofthe
Companies Act, 1956,
TABLE 7: DETAILS OF AGM'S
Summary of Resolutions Passed in regard to Special Business

Year Time, Day, Date & Location
None
2008-09 04:30 P.M.
Tuesday,
September 22,2009,
Sri Sathya Sai
International Centre,
PragatiVihar,
LodhiRoad,
New Delhi 110003
Ordinary Resolutions
2007-08 11:00 A.M. • Appointment of Mr. Sumihisa Fukuda as Technical Director in the
Thursday,
Whole-time employment ofthe Company.
September 25,2008,
Airforce Auditorium, • Appointment of Mr. M. Damodaran as DirectoroftheCompany.
Subroto Park,
Dhaula Kuan,
New Delhi 110010
Ordinary Resolutions
2006-07 10:30 A.M. • Appointment of Mr. Yutaka Kudo as Director and Whole-time
Tuesday, Director.
July 24,2007,
Airforce Auditorium, • AppointmentofMr.TakashiNagaiasDirector.
Subroto Park, Special Resolution
Dhaula Kuan, • Payment of commission to Non-Executive Independent
New Delhi 110010
Director(s).
56 ANNUALHEPORT2009 10 HERO I lONDA MOTORS LIMITED

57
GENERAL SHAREHOLDER'S INFORMATION
Details of Annual General Meeting (AGM)
Annual General Meeting 27th
Date: September 20,2010
Day: Monday
Time: 10:30 AM
Venue: Sri Sathya Sai International Centre,

Pragati Vihar, Lodhi Road,
New Delhi 110003
Financial Calendar
Financial year: April 1 to March 31
For the financial year 2009 -10 results were announced on:
First quater ended June 30,2009 July 29,2009
Second quarter and half year ended September 30,2009 October 21,2009
Third quater & nine months ended December 31,2009 January 25,2010
Fouth quarter and year ended March 31,2010 April 19,2010
For the financial year 2010 -11, results are likely to be announced on:
(Tentative and subject to change)
First quater ending June 30,2010 July, 2010(3"* week)
Second quarter and half year ending September 30,2010 October, 2010 (3 rd week)
Third quater & nine months ending December 31,2010 January, 2011 (3rd week)
Fouth quarter and year ending March 31,2011 April, 2011 (3rd week)
Listing on Stock Exchange

As on March 31, 2010, the securities of the Company are
Book closure listed on thefollowing exchanges:
The dates of book closure shall be from Wednesday, September
1. Bombay Stock Exchange Limited, (BSE) based at Phiroz
1,2010toFriday,September3,2010(bothdaysindusive).
JeejeebhoyTowers,25*Floor,Dalal Street, Mumbai400001;&
Dividend payment 2. National Stock Exchange of India Limited, (NSE) based at
The Board of Directors havedeclared an Interim Silver Jublee Exchange Plaza, Plot No. C/1 G Block, Bandra Kurla
Special Dividend @ 4,000 per cent. The dividend has been Complex, Bandra East, Mumbai 400 051.
paid to those shareholders whose names appeared on the
Further, the delisting application filed with Calcutta Stock
Register of Members as on Thursday, April 15,2010.
Exchange Limited (CSE), approved by the Board of Directors
earlier, was approved by the CSE Committee vide their letter
The Board of Directors has also recommended a Final
dated December 7, 2009. Consequently, the shares of the
Dividend @ 1,500 per cent for the financial year 2009-10. The Company now stands delisted from CSE.
dividend, if approved by shareholders at the ensuing AGM
shall be paid to those shareholders whose names appear on Listing Fees
the Register of Members as on Friday, September 3,2010. In
Listing fees for the year 2010-11 has been paid to the stock
respect of shares held in electronic form, the dividend will be
exchanges, wherein the equity shares of the Company are
payable to the beneficial owners of the shares as on the
listed (i.e. BSE & NSE) within the stipulated time.
closing hours of business on Tuesday, August 31,2010 as per
details furnished by the Depositories for this purpose.
TWO WHEELS OF
GROWTH
Stock Market Data

The Company's market capitalisation is included in the
computation ofthe BSE -100, BSE- 200, BSE- 500, BSE Sectoral
Stock Codes Indices, S&P CNX Nifty, S&P CNX 500 and CNX 100. Monthly
The Company's stockcodes at the primary exchanges are: high and lowquotations as well as the volume of shares traded
at the National Stock Exchange of India Limited (NSE) and
Stock Code Reuters Code Bloomberg
Bombay Stock Exchange Limited (BSE) is given in Table 8.
BSE 500182 HROH.BO HHIN
NSE HEROHONDA HROH.NS NHH IN
TABLE 8: SHARE PRICE DATA FOR 2009-10 (SHARES OF THE PAID UP VALUE OF RS. 2 EACH)
National Stock Exchange of India Limited, Mumbai (NSE)
Month Total High Date Volume on Low Date Volume on

Volume that date that date
Quantity (In Rs.) Quantity (In Rs.) Quantity
April'09 1,36,07,480 1,199.00 29-Apr-09 5,76,627 1,015.25 2-Apr-09 10,40,776
May'09 1,11,99,791 1,587.80 19-May-09 17,28,704 1,163.00 12-May-09 8,84,586
June'09 1,20,37,226 1,574.70 11-Jun-09 2,12,191 1,332.50 5-Jun-09 3,96,946
July'09 1,42,21,281 1,765.00 27-Jul-09 11,98,518 1,311.70 6-Jul-09 2,89,507
August'09 1,33,00,237 1,648.85 4-Aug-09 4,09,521 1,344.00 19-Aug-09 11,96,421
September'09 82,31,758 1,748.45 22-Sep-09 3,79,686 1,502.30 1-Sep-09 8,17,209
October'09 75,29,842 1,774.70 7-Oct-09 5,55,314 1,535.00 29-Oct-09 3,37,488
November'09 1,00,38,945 1,808.70 26-Nov-09 12,35,974 1,460.50 4-Nov-09 3,57,350
December' 09 79,12,339 1,777.10 29-Dec-09 4,11,794 1,640.00 17-Dec-09 1,89,783
January' 10 84,92,511 1,738.50 4-Jan-10 3,33,481 1,495.00 29-Jan-10 4,32,901
February'10 82,95,645 1,800.00 26-Feb-10 4,14,280 1,522.65 5-Feb-10 2,89,159
March'10 1,02,66,074 2,079.65 26-Mar-10 12,04,017 1,780.00 2-Mar-10 4,07,909
HERO HONDA'S SHARE PRICE MOVEMENT VIS A VIS NIFTY

HHMLVs NIFTY (Monthly)
HHML Vs NIFTY (Monthly High)
■ HHML
■ NIFTY
2100.00 5500..00
2000.00 5250,,00
1900.00 5000.,00
3 1800.00 4750..00
£ 1700.00 4500..00 ^
£ 1600.00
J2 1500.00
"> 1400.00
1300.00
1200.00
1100.00 i i i i i i i i i i i A
58
Apr May lun Jul Aug Sep Oct Nov Dec Jan Feb Mar
4250..00 £
4000.,00 z
3750..00
3500..00
3250..00
3000..00
2750..00
HERO I lONDA MOTORS LIMITED
59
Bombay Stock Exchange Limited, Mumbai (BSE)
Month Total High Date Volume on Low Date Volume on

Volume that date that date
Quantity (In Rs.) Quantity (In Rs.) Quantity
April'09 24,15,238 1,198.00 29-Apr-09 95,538 1,011.00 2-Apr-09 1,44,804

May'09 12,66,616 1,500.00 19-May-09 90,431 1,164.00 12-May-09 2,92,315
June'09 10,61,328 1,550.10 12-Jun-09 1,38,314 1,346.00 1-Jun-09 1,67,866
July'09 15,93,268 1,780.00 27-Jul-09 63,348 1,301.15 6-Jul-09 20,814
August'09 18,31,488 1,641.00 4-Aug-09 37,017 1,345.10 19-Aug-09 1,79,473
September'09 13,08,280 1,746.00 22-Sep-09 86,190 1,504.00 1-Sep-09 1,56,081
October'09 9,25,915 1,687.00 1-Oct-09 34,290 1,534.00 29-Oct-09 23,298
November'09 12,01,168 1,797.80 26-Nov-09 1,41,184 1,452.00 4-Nov-09 41,771
December' 09 18,63,153 1,776.00 29-Dec-09 52,620 1,644.00 16-Dec-09 18,522
January' 10 22,89,418 1,739.00 4-Jan-10 64,897 1,497.00 29-Jan-10 33,846
February'10 8,25,007 1,782.00 26-Feb-10 79,935 1,535.00 1-Feb-10 38,189
March'10 14,58,368 2,077.70 26-Mar-10 2,05,510 1,779.20 4-Mar-10 23,444
HERO HONDA'S SHARE PRICE MOVEMENT VIS A VIS SENSEX

HHML Vs NIFTY (Monthly)
HHML Vs SENSEX (Monthly High)

■ HHML
■ SENSEX
20000.00
2100.00 19000.00
2000.00 18000.00
1900.00 17000.00
3 1800.00 16000.00 *
£ 1700.00 15000.00 S
<u 1600.00 14000.00 ai
JS 1500.00 13000.00 ■"
<" 1400.00 12000.00
1300.00 11000.00
1200.00 10000.00
1100.00 9000.00
Apr May Jim Jul Aug Sep Oct Nov Dec Jan Feb Mar
2009-2010

TWO WHEELS OF
GROWTH
Distribution of Shareholding by Size

Table 9 lists the distribution of Shareholding by number of shares held and Shareholding Pattern in percentage (pursuant to
Clause 35 ofthe Listing Agreement) as on March 31,2010.
TABLE 9
Folios Shares of Rs. 2 paid up

No. of shares held (Rs.2/- paid up)
Numbers % Numbers %
47,333 83.29 39,23,336 01.96
Upto 500
6,941 12.22 52,39,231 02.62
501-1000
1,832 03.22 36,09,525 01.81
1001-5000
199 00.35 14,41,100 00.72
5001-10000
291 00.51 74,99,072 03.76
10001-50000
233 00.41 1,779,75,236 89.13
50001 and above
56,829 100.00 19,96,87,500 100.00
TOTAL
Shareholding Pattern
No. of No. of No. of Shares Percentage
SI. No. CATEGORY Holders Shares Held Dematerialised
A PROMOTERS
67 5,78,30,555 5,25,27,445 28.96
1 Indian
1 5,19,18,750 0 26.00
2 Foreign
B PUBLIC SHAREHOLDING
139 42,21,004 41,48,889 02.11
1 Mutual Funds/UTI
22 43,921 25,216 00.02
2 Financial Institutions/Banks
53 91,96,924 91,96,924 04.61
3 Insurance Companies
517 5,98,19,423 5,97,81,223 29.96
4 Foreign Institutional Investors
1,065 9,29,225 8,95,824 00.47
5 Bodies Corporate
53,771 1,40,62,827 90,20,174 07.04
6 Indian Public
16 11,90,990 11,90,990 00.60
7 Trusts
170 2,67,285 2,67,285 00.13
8 Clearing Members
1008 2,06,596 2,06,526 00.10
9 Non Resident Indians
56,829 1,996,87,500 13,72,60/496 100.00
GrandTotal
60 ANNUALHEPORT2009 10 HERO I lONDA MOTORS LIMITED

61
Indian Promoter Group I
Foreign Promoter
Mutual Funds/UTI
Financial
Institutions/Banks
Insurance Companies
/
Foreign Institutional
Investors
Bodies Corporate
Shareholding Pattern
Public Shareholding
Consolidated Shareholding Pattern as on March 31,2010
Category No. of
Holder %to Total Shares %to
Total Holder Numbers Equity
Physical 8,761
15.42 62,427,004 31.26
NSDL 34/155
60.63 135,557,558 67.89
CDSL 13,613
23.95 1,702,938 00.85
TOTAL 56,829
100.00 199,687,500 100.00
PHYSICAL
Consolidated Shareholding Pattern as NSDL |

on March 31,2010 CDSL I

TWO WHEELS OF
GROWTH
Share Transfer System

The Share Transfers (pertaining to shares in physical mode)
are approved by the Share Transfer Committee which meets
Dematerialisation of Shares and Liquidity regularly whenever required. The total number of shares
The shares ofthe Company are traded in compulsory demat transferred during the financial year 2009-10 were 48,934
segment. which were completed in the prescribed period. Shares
under objection were returned within two weeks time.
As on March 31,2010,68.79 per cent ofthe total share capital
is held in dematerialised form with National Securities Confirmations in respect of the requests for
Depository Limited (NSDL) and Central Depository Services dematerialisation of shares are being sent to the respective
Limited (CDSL). During the year under review, share depositories i.e. NSDL & CDSL expeditiously.
certificates involving 4,06,052 shares of Rs. 2 each, were
dematerialised by the shareholders, however share Investors' Services
certificates involving 2,471 shares of Rs. 2 each, were
The Company has Board Level Committees dealing with
rematerialised. The net dematerialisation represents 0.20
investor issues, which have been discussed in detail earlier.
percent of thetotal share capital of the Company.
Table 10 lists the complaints/requests/queries received and
redressed during 2009-10. During the financial year, the
Outstanding GDR's/ADR's/Warrants or any Company has attended to most of the investors'
Convertible Instruments Conversion Date and likely grievances/correspondence within a period of 10-15 days
impact on equity from the date of receipt ofthe same.
Notapplicable
Details of Public Funding Obtained in the last

three years
The Company has not obtained any publicfunding in the last
three years.
Registrar & Transfer Agents

All work related to Share Registry, both in physical form and
electronic form, is handled by the Company's Registrar and
Share Transfer Agents, M/s. Karvy Computershare Private
Limited. The communication address of the Registrar and
Transfer Agents is given hereunder.
Karvy Computershare Pvt.Ltd.
(Unit: Hero Honda Motors Limited)
Plot No. 17-24, Vittal Rao Nagar,
Madhapur,Hyderabad-500081,
Tel No: 040-4465 5116, Fax: 040-2342 0814/2342 0859 E-
mail: einward.ris@karvy.com
TABLE 10: COMPLAINTS/REQUESTS RECEIVED AND REDRESSED DURING 2009-10

(Shares)
SI. No Nature of Complaints/ Requests

1. Non receipt of shares
2. Request for issue of duplicate shares
3. Non receipt of dividend warrant
4. Change of address
5.Mandate cases/bank
62 description
6. Miscellaneous
2,897 2,897 0
Opening Received Cleared Pending
83 83 0
211 211 0
305 305 0 ANNUALHEPORT2009 10 HERO I lONDA MOTORS LIMITED
402
65
402
65
0
0
63
COMPANY'S REGISTERED ADDRESS

34, Community Centre,
Basant Lok, Vasant Vihar,
New Delhi 110057
Tel:011-46044100,26142451
Fax:011-26143321,26143198
Website: www.herohonda.com
PLANT LOCATIONS
Gurgaon Plant
37 K.M. Stone Delhi-Jaipur Highway,
Sector 33, Gurgaon 122 001
Haryana
Tel: 0124 2894200,2372123
Fax:01242373141-42
Dharuhera Plant
69 K.M. Stone, Delhi-Jaipur Highway,
Dharuhera, Distt. Rewari 122100
Haryana
Tel:01274264000
Fax: 01274 267 018
Haridwar Plant
Plot No. 3, Sector 10,
I.I.E.,SIDCUL,Roshanabad,
Haridwar 249 403 Uttrakhand
Tel: 01334 238500,239514-16
Fax:01334239512-13
President & CFO,
e-mail: ravisud@herohonda.com
For and on behalf of the Board
h2
Brijmohan Lall Munjal
NON-MANDATORY REQUIREMENTS Chairman
The Company has not New Delhi
adopted the non- July 29,2010
mandatory
requirements as specified in
Annexure - ID of the Listing
Agreement except clause

(2) relating to
Remuneration
Committee.
Investors' Correspondence
may be addressed to
• Mr. Ham C. Kamboj, Sr.
G.M. Legal & Company
Secretary
& Compliance Officer,
e-mail: ickamboj@herohonda.com; or
• to the Registrar & Transfer
Agents i.e Karvy
Computershare
Pvt Limited.
e-mail: einward@karvy.com or
Queries relating to the
Financial Statements of
the
Company may be addressed
to
• Mr. Ravi
Sud, Sr.
Vice
TWO WHEELS OF
GROWTH
CERTIFICATE
AUDITORS' CERTIFICATE ON THE COMPLIANCE OF CONDITIONS OF CORPORATE

GOVERNANCE UNDERCLAUSE490FTHE LISTING AGREEMENT
TO THE MEMBERS OF HERO HONDA MOTORS LIMITED
We have examined the compliance of conditions of Corporate Governance by Hero Honda Motors Limited for the year ended
March 31,2010, as stipulated in clause 49 ofthe Listing Agreement ofthe said Company with stock exchanges.
The compliance of conditions of Corporate Governance is the responsibility ofthe 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 thefinancial statements ofthe 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 above mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability ofthe Company nor the efficiency or
effectiveness with which the management has conducted the affairs of theCompany.
For A. F. Ferguson & Co.

Chartered Accountants
(Registration No. 112066W)
Manjula Banerji
Partner
(Membership No. 86423)
New Delhi
July 29,2010
64 ANNUAL REPORT 2009 10 HERO I lONDA MOTORS LIMITED

65
CERTIFICATE OF CEO & CFO
CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF

THECOMPANY
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 ofthe Company for the year ended March 31,2010 and all
its schedule and notes to 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 contain
statement that might be misleading;
b. these statements together present a true and fair view of the Company's affairs and are in compliance with existing
accounting standards, applicable laws and regulations.
3. We also certify that based on our knowledge and the information provided to us, there are no transactions entered into by
the Company, which are fraudulent, illegal orviolatethecompany'scode of conduct.
4. We are responsible for establishing and maintaining internal controls and procedures for the Company, and we have
evaluated the effectiveness ofthe Company's internal controls and procedures.
5. We have disclosed, based on our most recent evaluation, wherever applicable, to the company's auditors and through
them to the Audit Committee ofthe Company's Board of Directors:
a. Significant changes in internal control during the year;
b. Any fraud, which we have become aware of and that involves Management or other employees who have a significant
role in the Company's internal control systems;
c. Significant changes in accounting policiesduringtheyear.
6. We furtherdeclarethatall board membersand senior management have affirmed compliance with the code of conductfor
the year 2009-10.
For Hero Honda Motors Limited For Hero Honda Motors Limited
i[oe a&S%5
New Delhi
Pawan Munjal Ravi Sud
April 19,2010
Managing Directors CEO Sr.Vice Presidents CFO
66 HERO HONDA MOTORS LIMITED ANNUAL REPORT 2009 10

TWO WHEELS OF
GROWTH
ANNEXURE - II TO DIRECTORS' REPORT
d) Total energy consumption and energy consumption

per unit of production as per Form - A is given in
Information Under Section 217(1)(e) ofthe Companies Act, Table-A.
1956 read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 and forming part of II. PARTICULARS AS PER FORM B
the Directors' Reportfortheyearended March 31,2010;
(A) RESEARCH & DEVELOPMENT(R&D)
I. CONSERVATION OF ENERGY (a) Specific areas in which R&Dcarriedoutby theCompany
a) Techno-economic viability of few energy saving
• New Model Technology;
proposals is being carried out and few proposals have
been already implemented. • Indigenisation of CKD Parts;
Energy conservation measures taken and their impact: • Multi Source Approval to support Production level;
• Installation of heat recovery unit from incinerator for • Meeting Legislative Norms (BS - III most stringent
hot water, saving around 48,000 KG fuel per annum; emission norms); &
• FA DOL and dispatch area lighting connected with • Active Participation in deciding the needs of future
lighting transformer for power, saving around 24,000 Automobile Regulations in India.
KWH power perannum;
(b) Benefits derived as a result ofthe above R&D activities
• Standardization of Air conditioning temperature by • Launched Karizma ZMR - Fl (233cc - 4 stroke),
25 degree centigrade throughout the plant, saving HUNK - New Aesthetics, Splendor+ Special Edition,
approximately 12,000 KWH power perannum; Splendor NXG (BS-III Compliance), Passion Pro (Digital
• Power saving in air compressor by optimizing air Meter + MF Batt + BS-III compliance), Glamour (New
pressure to plant, saving approximately 1,20,000 KWH Aesthetics + MFBattery+BS-IIICompliance),CD-DLX/
perannum; Dawn, Pleasure-New Aesthetics and Splendor+(BS-III
Compliance) Special Edition;
• Improvementin Lighting circuits&control;
• 299 Multi source Components and 2 new sources
• Installation of additional power saving circuits; & added for existing models;
• Controlling of idle running of machines and • Indigenisation of 8 items was done during the year; & •
equipments.
Compliancetothefollowing Regulations:
b) Additional Investments and Proposals being
♦ T.A & COP for Safety Critical Components - Phase-
implemented for reduction of consumption of energy
I I(AIS-037: Rear view mirrors, bulbs) and Phase III
The company is exploring more projects to minimize the (AIS-037: Lighting and signaling division. Reflex
energy consumption and technical details in regard to the reflector,fuel tank);
sameare being evaluated.The same are enumerated below:
♦ E-10 Compliance (on-going); ♦
• BIO MASS Gasified Power generating set; •
BS-III Compliance; &
Vaporabsorption machine for chillers; •
♦ EMC Compliance,
Heat Recovery from Incinerator;
c) Future plan of action
• Heat Recoveryfrom DG sets;&
• New Model Launch;
• Alternate power i.e. wheeling power from Electrical
grid. • Indigenisation plan, 9 more items to be localized;
• Participation at different Forums forformation of two
c) Impact of measures at (a) and (b) for reduction of wheeler Regulations in India &GTRs;&
energy consumption and consequent impact on the
cost of production of goods. • Compliance Plan forthe following future regulations :-
♦ Mass Emission Norms (BS-IV);
It is difficult to quantify the impact of individual projects on
production as no. of equipments are being added ♦ EMC;
duringtheyear.
ANNUALREPORT2009 10 HERO I lONDA MOTORS LIMITED
67
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
(A) EXPORT ACTIVITIES / INITIATIVES TO INCREASE
EXPORTS/ DEVELOPMENT OF NEW EXPORT MARKETS/
EXPORTPLANS
♦ Tell tales, symbols & controls; ♦
EXPORT INITIATIVES DURING 2009-10
Safety Related Standards;
During the year under review, your Company exported
♦ E-10 Compliance (on-going); ♦ 97,699 Two Wheelers (20% growth over the previous year)
and Spare Parts worth Rs. 17.60 crores (23% growth). Further
SpraySuppression;
launched successfully New Models in Srilanka, Bangladesh &
♦ Brake GTR;& Columbia, which led to overall growth in the export
Business. Exhaustive Training on Sales and Technology was
♦ Noise. imparted to the Overseas Training Managers. The Company
has established training centres in all export markets. CD
4. ExpenditureonR&D Deluxe model has been supplied to SriLankan Army. The
(Rupees in crores)
after sale service concepts have been strengthened in
Year Ended Year Ended Bangladesh-with automated workshops.
March 31,2010 March 31,2009
EXPORT PLAN FOR 2010-11
i) Capital 3.15 8.59
• Launch new models in all Export markets successfully for
ii) Recurring 27.16 23.71 growth;
iii) Total R&D expenditure • Enhance Brand building efforts through more ground
as a percentage of sale level activities;
(as per P & L A/c) (%) 0.19 0.26
• Strengthen position in premium segment with ZMR;
B) TECHNOLOGY ABSORPTION, ADAPTATION AND • Training on Spare Parts Management and Safety for
INNOVATION overseas Managers; &
(a) Efforts, in brief, made towards technology absorption,
adaptation and innovation • Focus on After Sale Service.
More parts development approval in India

(B) EARNINGS & OUTGO
(b) Benefits derived as a result of the above efforts e.g.
Foreign exchange earnings during the period under report
product improvement, cost reduction, product
was Rs. 337.59 crores, compared to Rs. 248.11 crores in the
development,import substitution
previous year, a growth of 36.06%.
♦ New Model Developmentto increase market share;
On account of Royalty, Technical Guidance Fee, Model Fee,
♦ Supply capacities and quality of bought out parts
Export Commission, Travel and other accounts,
(BOP) increased with Multi Source Development to
Advertisement and Publicity, the foreign exchange outgo
supportthe increasing production; ♦ was Rs. 485.46 crores, compared to Rs. 377.80 crores in the
Indigenisation -to meetCostChallenge;& ♦ previous year,an increase of 28.50%.
Complianceto Latest Regulations. The foreign exchange outgo on account of Dividend was
Rs. 103.84 crores compared to Rs. 98.65 crores in the
Further, in last five years the Company, its ancillaries and
previous year.
Vendors have imported technologies regarding Digital
Speedometer, Gear Primary Driven (Forging), Cast Wheel, CV Foreign exchange outgo for import of components, spare
Carburetor, Fuel Injection, RTMI (Real Time Mileage
parts, raw materials and capital goods was Rs. 624.73 crores
Indicator), Non-Asbestos Brake Shoe & Gaskets, Migration
compared to Rs. 476.05 crores in the previousyear.
from Hexachrome to Trichrome, Low Friction High F.E
Engine Technology, LED Lighting Device, Self Sealing -
Puncture Resistance Wheel Tube, Rear Cushion with
Reservoir Tank, Emission Devices - Low Cost Catalytic
Converter, Rear Disk Brake, Oil Temp. Sensor / 02 Sensor,
Honda Intelligent Ignition System, MF Battery and Bank
Angle Sensor.
TWO WHEELS OF
GROWTH
TABLE A
TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION AS PER FORM A
FOR GURGAON, DHARUHERA AND HARIDWAR PLANT(S) OF THE COMPANY.
Particulars Gurgaon Plant Dharuhera Plant Haridwar Plant

Current Previous Current Previous Current Previous
Year Year Year Year Year Year
A Power and Fuel consumption
per unit of Production
Product Unit (Two Wheeler) 15,92,463 15,58,928 15,99,454 15,33,141 14,04,327 6,29,775
1. Electricity
(a) Purchased Units (KWH) Nil Nil 50,65,988 67,10,089 2,06,03,625 150,93,925
Total Amount (Rs.) Nil Nil 2,22,64,222 2,92,33,697 8,09,67,950 6,15,43,296
Rate/unit (Rs.) Nil Nil 4.39 4.36 3.93 4.08
(b) Own generation Through Diesel
Generator Units
Self (KWH) 5,88,76,342 5,58,83,492 4,62,55,864 4,09,98,530 37,00,260 4,14,700
Hired (KWH) Nil Nil Nil N il Nil Nil
Unit per Itr. of Diesel Oil Cost/Unit
Self (KWH/Ltr.) 3.96 4.02 4.20 4.19 3.60 3.66
Hired (KWH / Ltr.) Nil Nil Nil Nil Nil Nil
2. Furnace Oil, HSD etc. **

Quantity (rCltrs) 210.15 109.95 1,608.18 1,765.06 585.09 171.48
Total Amount (Rs) 71,49,406 27,58,011 3,62,32,460 4,34,50,167 1,69,22,602 51,08,834
Average Rate/ Ltrs. (Rs.) 34.02 25.08 22.53 24.62 28.92 29.79
B Consumption per unit of Production.
Electricity (KWH /Veh.) 36.97 35.85 32.09 31.12 17.31 24.63
Furnance Oil, HSD etc.( Ltr./ Veh.) 0.13 0.07 1.01 1.15 0.42 0.27
fuels (Furnace Oil/HSD) used in Boiler for direct production of two wheeler only
* fuels (Furnace Oil/HSD) used in Hot Water Generator for direct production of two wheeler only
68 ANNUALREPORT2009 10 HERO I lONDA MOTORS LIMITED

69
DETAILS OF DIRECTORS OF HERO HONDA MOTORS LIMITED
Name of Director /DIN Status Type of Directorship held Committee

Company Membership Chairmanship
Mr. Brijmohan Lall Munjal EC L Hero Honda Motors Limited

00004134 L Munjal Showa Limited
L Shivam Autotech Limited
UL Easy Bill Limited
UL Hero Honda Finlease Limited
UL Rockman Industries Limited
P BCM Energies (P) Limited
P BML Investments (P) Limited
Mr. Pawan Munjal MD & CEO L Hero Honda Motors Limited

00004223 UL Hero Honda Finlease Limited
UL Hero Investments Pvt. Limited
P Bahadur Chand Investments (P) Limited
P Puja Investments (P) Limited
Mr. Toshiaki Nakagawa ED L Hero Honda Motors Limited

Mr. Sumihisa Fukuda TD L Hero Honda Motors Limited

Mr. Sunil Kant Munjal NED L DCM Shriram Consolidated Limited

00003902 L Hero Honda Motors Limited
L Shivam Autotech Limited
UL Abhayuday Manufacturing &
Automotive Limited
U L Arrow I nfra Li m ited
UL Easy Bill Limited
UL Hero Corporate Services Limited
UL Hero Life Insurance Co. Limited
UL Hero Management Services Limited
UL Hero Mindmine Institute Limited
UL Hero Realty & Infra Limited
UL Hero Steels Limited
UL Satyam Auto Components Limited Weave
UL Engineering and Design Limited Bahadur
P Chand Investments (P) Limited BML
P Investments (P) Limited
P Thakurdevi Hydro (P) Limited
P Hero Investments (P) Limited
Mr. Suman Kant Munjal NED L Hero Honda Motors Limited
00002803 UL Rockman Industries Limited Audit
UL Survam Infrastructure Limited
UL Hero Corporate Services Limited
UL Munjal Acme Packaging Systems Limited -
P Bahadur Chand Investments (P) Limited
P Hero Investments (P) Limited
P Rockman Auto (P) Limited
P BCM Energies (P) Limited
P Thakurdevi Hydro (P) Limited
P Survam Investments (P) Limited
P Survam Real Estate (P) Limited

TWO WHEELS OF
GROWTH

Mr. Takashi Nagai NED L Hero Honda Motors Limited
01493933 L Honda Siel Powers Products Limited
UL Honda Siel Cars India Limited
P Honda Motorcycle & Scooters
India Pvt. Limited
P Honda Motors India Pvt. Limited
Mr. Yuji Shiga NED Hero Honda Motors Limited

03043452
Gen. (Retd.) V.P. Malik NEID L Hero Honda Motors Limited Audit
00006628 L Reliance Infrastructure Limited Audit
UL BSES Rajdhani Power Limited Audit
UL BSES Yamuna Power Limited Audit
Mr. Pradeep Dinodia NEID DCM Shriram Consolidated Audit Shareholders'

00027995 Limited Grievance
DFM Foods Limited Audit
Hero Honda Motors Limited Shareholders' Audit
Grievance
J K Lakshmi Cement Limited
Shriram Pistons & Rings Limited Audit
Shareholders'
Grievance
UL Hero Corporate Services Limited Audit
UL Micromatic Grinding
Technologies Limited
UL SPR International Auto Exports Limited
UL Ultima Finvest Limited
Dish TV India Limited Audit

Dr.Pritam Singh NEID L Hero Honda Motors Limited Audit Shareholders'
00057377 L Grievance
Parsvnath Developers Limited
L Dena Bank Limited
L Godrej Properties Limited
UL
Hero Honda Motors Limited
Mr.Analjit Singh NEID L IDBI Bank Limited
00029641 L Max India Limited
L Tata Beverages Limited
L Dabur India Limited
L Indus Towers Limited
UL Malsi Hotels Limited
UL Malsi Estates Limited
UL Malsi Holdings Limited
UL Max Healthcare Institute Limited
UL Max Neeman Medical
UL International Limited
Vodafone Essar Limited
UL Max Bupa Health Insurance
UL Company Limited
Max New York Life Insurance
UL Company Limited
Boom Investments Pvt. Limited
P Capricon Hospitality Services
P Private Limited
Capricorn Health Services Pvt. Limited
P

Delhi Guest Houses Private Limited
Doon Holiday Resorts Pvt. Limited
Dynavest India Pvt. Limited
Leo Retailing and Health
Services Private Limited
Mohair Investments and
Trading Co. (P) Ltd
Nurture Health Services Private Limited
Scorpios Beverages Pvt. Limited
Terra Planet Estates Private Limited
Trophy Holdings Private Limited
Urban Space Consultants Private Limited
Veer Health Services Private Limited Vitasta
Estates Private Limited
BAS Enterprises Private Limited
Trophy Estates Private Limited
Ms.Shobhana Bhartia NEID L

00020648 L Britex (India) Ltd.
L Hero Honda Motors Limited
L HT Media Limited
L Udit (India) Limited
L Usha Flowell Limited
UL The Hindustan Times Limited Audit
UL Air Travel Bureau Limited
UL Firefly e-Ventures Limited
Goldmerry Investment &
UL Trading Co. Limited
UL HTL Investment & Trading Co. Limited
UL Nilgiri Plantation Limited
UL Ronson Traders Limited
Shradhanjali Investment &
Yashovardhan Investment &
P Hindustan Media Ventures Limited
P Earthstone Holding Private Limited
P Eathstone Holding (One) Private Limited
P Eathstone Holding (Two) Private Limited
Earthstone Holding (Three)
Private Limited
Mr. M. Damodaran NEID L
02106990 L Tech Mahindra Limited Audit
Hero Honda Motors Limited Audit
Shareholders'
L Grievance
L Satyam Computer Services Limited Audit
UL Sobha Developers Limited
UL SREI Sahaj e-Village Limtied
UL ING Vysya Bank Limited
Dedicated Freight Corridor
P Corporation of India Limited
ING Investment Management
India Pvt. Limited

71
TWO WHEELS OF
GROWTH
Name of Director / DIN Status Type of Directorship held Committee

Mr. Ravi Nath NEID L Hero Honda Motors Limited
00062186 L Kanoria Chemicals & Industries Limited
L Somany Ceramics Limited
L Voith Paper Fabrics India Limited Audit Shareholders'
Grievance
Areva India Pvt. Limited
P Citron Holdings Pvt. Limited
P Kadimi Constructions Private Limited
P Rajinder Narain & Co. Consultatnts
P Private Limited
SIPA India Pvt. Limited
P
Dabur India Limited
Dr. Anand C Burman NEID L Fresenius Kabi Oncology Limited Audit
00056216 L Shareholders'
Grievance
Hero Honda Motors Limited
L Hindustan Motors Limited
L Althea Lifesciences Limited
UL Aviva Life Insurance Co. India Limited
UL Dabur Overseas Limited
UL Dabur Pharmaceuticals Limited
UL H&B Stores Limited
UL B.A. Holdings Pvt. Limited
P Excellent (India) Pvt. Limited
P 1MB Infrastructures Pvt. Limited
P Interx Laboratories Pvt. Limited
P KBC India Pvt. Limited
P M.B. Finmart Pvt. Limited
P Milky Investment and Trading Co.
P Moon Light Ranch Pvt. Limited
P Puran Associates Pvt. Limited
P Vansh Holdings Pvt. Limited
P VIC Enterprises Pvt. Limited
P Windy Investments Pvt. Limited
P
Details as on July 29,2010.

73
AUDITORS' REPORT
TO THE MEMBERS OF HERO HONDA

MOTORS LIMITED
(d) in our opinion, the Balance Sheet, the Profit and Loss
1. We have audited the attached Balance Sheet of Hero Account and the Cash Flow Statement dealt with by
Honda Motors Limited ("the Company") as at March 31, this report are in compliance with the Accounting
2010, the Profit and Loss Account and the Cash Flow Standards referred to in Section 211 (3C) of the
Statement of the Company for the year ended on that Companies Act, 1956;
date, both annexed thereto. These financial statements
(e) in our opinion and to the best of our information and
are the responsibility of the Company's Management.
according to the explanations given to us, the said
Our responsibility is to express an opinion on these
accounts give the information required by the
financial statements based on our audit.
Companies Act, 1956 in the manner so required and
2. We conducted our audit in accordance with the auditing give a true and fair view in conformity with the
standards generally accepted in India. Those Standards accounting principles generally accepted in India:
require that we plan and perform the audit to obtain (i) in the case of the Balance Sheet, of the state of
reasonable assurance about whether the financial affairs of the Company as at March 31,2010;
statements are free of material misstatements. An audit
(ii) in the case ofthe Profit and Loss Account, ofthe
includes examining, on a test basis, evidence supporting
profit ofthe Company forthe year ended on that
the amounts and the disclosures in the financial
date and;
statements. An audit also includes assessing the
accounting principles used and the significant estimates (iii) in the case of the Cash Flow Statement, of the
made by the Management, as well as evaluating the cash flows of the Company for the year ended on
overall financial statement presentation. We believe that that date.
ouraudit provides a reasonable basisforouropinion. On the basis ofthe written representations received from
the Directors as on March 31,2010 and taken on record
3. As required by the Companies (Auditor's Report) Order, by the Board of Directors, none of the Directors is
2003 issued by the Central Government in terms of disqualified as on March 31,2010 from being appointed
Section 227(4A) ofthe Companies Act, 1956, we enclose in as a director in terms of Section 274 (1 )(g) of the
the Annexure a statement on the matters specified in Companies Act, 1956.
paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in For A. F. Ferguson & Co.
paragraph 3 above, we reportasfollows: Chartered Accountants
(a) we have obtained all the information and (Registration No. 112066W)
explanations which to the best of our knowledge and
belief were necessary forthe purposes of ouraudit;
Manjula Banerji
(b) in our opinion, proper books of account as required Partner
by law have been kept by the Company so far as it (Membership No. 86423)
appears from our examination of those books;
Place: New Delhi
(c) the Balance Sheet, the Profit and Loss Account and Date : April 19,2010
the Cash Flow Statement dealt with bythisreportare in
agreement with the books of account;
TWO WHEELS OF
GROWTH
ANNEXURE TO THE AUDITORS* REPORT
[Referred to in paragraph 3 of our report of even date)
Having regard to the nature of the Company's business/
activities/result, clauses 4 (x) and (xiii) of Companies covered in the register maintained under Section
(Auditor's Report) Order, 2003 (hereinafter referred to as the 301 ofthe Companies Act, 1956. The maximum
Order) are not applicable. amount due during the year was Rs.35 crores and
the yearend balance of loansgranted was Rs. Nil.
(i) (a) The Company has maintained proper records (b) In our opinion and according to the information
showing full particulars, including quantitative and explanations given to us, the rate of interest
detailsand situation of the fixed assets. and other terms and conditions of the loans
(b) As explained to us, the Company has a granted by the Company, as referred to in
programme of physically verifying all of its fixed paragraph 4(iii) (a) above, are, prima-facie, not
assets over a period of three years and in prejudicial to the interest ofthe Company.
accordance therewith, physical verification of (c) According to the information and explanations
certain fixed assets ofthe Company was carried given to us, the party, to whom the loans have
out during the year. In our opinion, the frequency been granted by the Company, as referred to in
of physical verification is reasonable having paragraph 4(iii)(a) above, have been regular in
regard to the size ofthe Company and the nature repayment of principal amount as stipulated and
of its fixed assets. The discrepancies noticed on have been regular in payment of interest.
such verification were not material and have been
properly dealt with in the books of account. (d) According to the information and explanations
given to us, there are no overdue amounts in
(c) The fixed assets disposed off during the year, in respect of the loans granted as referred to in
our opinion, do not constitute a substantial part paragraph 4(iii)(a)aboveand interest thereon.
of the fixed assets of the Company and such
disposal has, in our opinion, not affected the (e) According to the information and explanations
going concern status ofthe Company. given to us, the Company has,duringtheyear, not
taken any loans, secured or unsecured, from
(ii) (a) During the year, the inventories have been companies, firms and other parties covered in the
physically verified by the management except for register maintained under Section 301 of the
inventory lying with third parties at the end ofthe Companies Act, 1956. Accordingly, paragraph
year for which confirmations have been obtained in 4 (iii) (f) and (g) ofthe Order are not applicable.
most ofthe cases. In our opinion, the frequency of
the verification is reasonable. (iv) In our opinion and according to the information and
explanations given to us, having regard to the
(b) In our opinion and according to the information
explanations that some ofthe items purchased are of
and explanations given to us, the procedures of special nature and suitable alternative sources are not
physical verification of inventories followed by readily available for obtaining comparable
the management are reasonable and adequate in
quotations, there is an adequate internal control
relation to the size of theCompany and the nature of
system commensurate with the size ofthe Company
its business.
and the nature of its business with regard to
(c) On the basis of our examination ofthe records of purchases of inventory and fixed assets and the sale of
inventories, we are of the opinion that, the goods and services. During the course of our audit, we
Company has maintained proper records of have not observed any major weakness in such
inventories. The discrepancies noticed on internal control system.
physical verification of inventories as compared to
(v) In respect of contracts or arrangements entered in the
book records were not material and have been
Register maintained in pursuance of Section 301 of
properly dealt with in the books of account.
the Companies Act, 1956, to the best of our
(iii) (a) According to the information and explanations knowledge and belief and according to the
given to us, the Company has, during the year, not information and explanations given to us:
granted any loan, secured or unsecured to
(a) The particulars of contracts or arrangements
companies, firms and other parties covered in the
referred to Section 301 that needed to be entered
register maintained under Section 301 of the
in the Register maintained under the said Section
Companies Act, 1956, other than unsecured loans
have been so entered.
aggregating Rs. 100 crores granted to a company
74
75
(ix) (a) According to the information and explanations
given to us and the records of the Company
examined by us, the Company has been regular in
depositing undisputed statutory dues including
provident fund, investor education and protection
fund, employees' state insurance, income-tax,
(b) Where each of such transaction is in excess of Rs.5 sales tax, wealth tax, service tax, customs duty,
lakhs in respect of any party, the transactions excise duty, cess, value added tax, Haryana local
have been made at prices which are prima facie area development tax and other material statutory
reasonable having regard to the prevailing dues applicable to it with the appropriate
market prices at the relevant time except in authorities. We are informed that there are no
respect of certain purchases for which undisputed statutory dues as at the year end
comparable quotations are not available and in outstanding for a period of more than six months
respect ofwhich we are unable to comment. from the date they became payable.
(vi) The Company has not accepted any deposits from the (b) According to the information and explanations
public. given to us and the records of the Company
examined by us, there are no disputed dues in
(vii) In our opinion, the internal audit function carried out respect of sales tax, wealth tax, customs duty and
during the year by firms of Chartered Accountants cess, which have not been deposited. The
appointed by the Management have been following are the particulars of excise duty, service
commensurate with the size ofthe Company and the tax and income-tax dues not deposited/ deposited
nature of its business. under protest by the Company on account of
(viii) We have broadly reviewed the books of account disputes as at March 31,2010:-
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,
Amount paid Period to which Forum where
prima-facie, the prescribed accounts and records have under protest amount relates dispute is
been made and maintained. We have, however, not (Rs. in crores) pending
made a detailed examination ofthe records with a view
to determining whether they are accurate or complete. 1.05 2000-01 and CESTAT
2002 to 2008
2002-03 to 2005-06 Commissioner
Name of the statuteNature ofthe duesAmount* (Appeals)
(Rs. in crores)
0.45 2003-04 to 2005-06 CESTAT
Central excise laws Excise duty 14.31

54.40 ** 2002-03 to 2004-05 Commissioner
(Appeals)
1.21
Service tax 1.93
Income-tax Act Income tax 136.91
Amountasperdemand orders including interestand penalty whereverquantified in the order.

Balance of unpaid amount has been stayed.
TWO WHEELS OF
GROWTH
The following matters have been decided in favour of the Company, although the department has preferred appeals at
higher levels:
Period to which Forum where

Name of the statuteNature of the duesAmount amount relates dispute is
(Rs. in crores) pending
1986-87 to 1990-91 Supreme Court
Central excise laws Excise duty 2.57 2005-06 to 2008-09 CESTAT
0.03 2005 High Court
Service tax 0.03
1987-88,1989-90,1992-93, High Court
Income-tax Act Income tax 8.39 1993-94,1995-96 to 1998-99,
2000-01
1999-00,2001-02 Income Tax
12.30 Appellate Tribunal
sheet of the Company, we report that short term

(x) According to the records ofthe Company examined funds have not been used to finance long term
by us and on the basis of information and investments.
explanations given to us, the Company has not
(xvi) The Company has not made any preferential
defaulted in repayment of dues to banks during the
allotment of sharesduring the year.
year. The Company has not taken any loans from
financial institutions and has not issued debentures (xvii) The Company has not issued any debentures during
during theyear. theyear.
(xi) In our opinion and according to the information and (xviii) The Company has not raised any money by way of
explanations given to us, the Company has not public issue during theyear.
granted any loans and advances during the year on (xix) To the best of our knowledge and according to the
the basis of security by way of pledge of shares, information and explanations given to us, no fraud
debenturesand other securities. by the Company and no material fraud on the
(xii) In our opinion and according to the information and Company has been noticed or reported during the
explanations given to us, the Company is not dealing or year.
trading in shares, securities, debentures and other
investments.
(xiii) According to the information and explanations given For A. F. Ferguson & Co.
to us, the Company has not given any guarantees
(Registration No. 112066W)
during the year for loans taken by others from banks
orfinancial institutions.
(xiv) In our opinion and according to the information and Manjula Banerji
explanations given to us, the term loans have been Partner
applied for the purposes for which they were (Membership No. 86423)
obtained.
Place: New Delhi
(xv) According to the information and explanations given Date : April 19,2010
to us and on an overall examination ofthe balance
76
77
BALANCE SHEE
as at March 31, 2010
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital
Reserves and surplus
LOAN FUNDS
Unsecured
DEFERRED TAX LIABILITIES

TOTAL
APPLICATION OF FUNDS
FIXED ASSETS
Gross block
Less: Depreciation
Net block
Capital work in progress
INVESTMENTS
DEFERRED TAX ASSETS
CURRENT ASSETS, LOANS AND ADVANCES
Inventories
Sundry debtors
Cash and bank balances
Other current assets
Loans and advances
Less: CURRENT LIABILITIES AND PROVISIONS

Current liabilities
Provisions
Net current assets

TOTAL
Notes to the accounts
In terms of our report attached

For A. F. FERGUSON & CO.
MANJULABANERJI
Partner
Membership no. 86423
Place : New Delhi

Date :April 19,2010
4032.32
2,750.98 2516.27
HERO HONDA MOTORS 1,092.20 942.56
1,658.78 1573.71
LIMITED 48.14 120.54
1,706.92 1694.25
(R 5 3,925.71 3368.75
up
8 7.88 8.65
ee
s 6
in 436.40 326.83
cr 108.39 149.94
or 1,907.21 219.57
es) 24.82 5.89
Schedule As at March 405.76 311.26
As at March 2,882.58 1013.49
No. 31,2010
31,2009 3,805.06 1525.85
1,026.35 526.97
4,831.41 2052.82
39.94 (1,948.83) (1,039.33)
3,691.68 4032.32
39.94 12
3,425.08
3,760.81 Forand on behalf of the Board of Directors

3,465.02 BRIJMOHAN LALL MUNJAL Chairman
3,800.75 PAWAN MUNJAL Managing Director&CEO
66.03 PRADEEP DINODIA Director
78.49 RAVI SUD Sr.Vice Presidents CFO

66.03
ILAMC. KAMBOJ Sr. G. M. Legal & Company Secretary
78.49
160.63
153.08
3,691.68 ANNUAL REPORT 2009 10
TWO WHEELS OF
GROWTH
PROFIT AND LOSS ACCOUNT HERO HONDA MOTORS LIMITED
for the year ended March 31, 2010
(Rupees in crores)
Schedule Year ended Year ended

No. March 31,2010 March 31,2009
INCOME
Gross sales 16,780.62 13,543.09
Less: Excise duty 1,022.44 1,223.97
Net sales 15,758.18 12,319.12
Other income 340.61 246.09
16,098.79 12,565.21
EXPENDITURE
Manufacturing and other expenses 10 13,096.21 10,634.77
Depreciation 4 191.47 180.66
Interest (net) 11 (20.62) (31.68)
13,267.06 10,783.75
Profit for the year before tax 2,831.73 1,781.46
Provision for taxation
- current 591.58 475.65
- deferred 8.32 19.06
-fringe benefit 4.99
Profit after tax 2,231.83 1,281.76
Balance of profit brought forward 2,707.28 2,021.77
Balance available for appropriation 4,939.11 3,303.53
APPROPRIATIONS
Dividend
- Interim 1,597.50
- Proposed final 599.06 399.38
Tax on dividend 371.00 67.87
Transfer to general reserve 225.00 129.00
Balance carried to balance sheet 2,146.55 2,707.28
4,939.11 3,303.53
Basic and diluted earnings per share face
value Rs.2/-each (in rupees) 111.77 64.19
Notes to the accounts 12
In terms of our report attached Forand on behalf of the Board of Directors

For A.F.FERGUSON &CO.
BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL Managing Director&CEO
MANJULABANERJI
Partner
PRADEEP DINODIA Director
RAVI SUD Sr.Vice Presidents CFO
Place : New Delhi
Date : April 19,2010
ILAMC. KAMBOJ Sr. G. M. Legal & Company Secretary

79
CASH FLOW STATEMENT (Rupees in crores)
for The Year Ended March 31, 2010
Year ended Year ended
March 31,2010 March 31,2009
2,831.73 1,781.46
A. CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax 191.47 180.66
Adjustments for: 6.18 3.57
Add: Depreciation 2.04 (0.64)
Loss on fixed assets sold/discarded 11.80 38.89
Exchange differences
Loss on sale of non-trade current investments 2.27 0.20
Provision for diminution in value of investment: 0.38 12.49
Current non trade investment 2.10 2.53
Long term non trade investment 2.16 (0.75)
Interest - others and financial charges 218.40 236.95
Provision for doubtful debts/written back 35.13 22.04
22.72 34.21
Less: Interest on long term non-trade investments 0.23 0.19
Interest received on loans, deposits etc.
Profit on sale of fixed assets 4.12 12.77
Dividend income 2.72 2.72
On current Investments - Non-trade 208.11 184.32
On long-term investments-Trade 273.03 256.25
Profit on sale of non-trade current investments 2,777.10 1,762.16
Operating profit before working capital changes 629.82 111.95

Adjustments for: 1.05 0.89
Add: Increase in trade payables 630.87 112.84
Increase in security deposits from dealers 36.71 4.60
109.57 9.74
Less: Increase in trade and other receivables 146.28 14.34
Increase in inventories 3,261.69 1,860.66
575.05 501.63
Cash generated from operations 2,686.64 1,359.03
Less: Direct taxes paid
Net cash from operating activities
1.48 1.54
CASH FLOW FROM INVESTING ACTIVITIES 22,771.48 18,042.65
Sa le of fixed assets 100.00 545.50
Sale of investments 16.20 21.84
Inter corporate deposits received back 22.72 34.21
Interest received on long term non-trade investments
Interest received on loans, deposits etc. 4.12 12.77
Dividend income 2.72 2.72
On current investments-Non-trade 22,918.72 18,661.23
On long-term investments-Trade 211.57 315.08
100.00 495.50
Less: Purchase of fixed assets 23,134.78 18,711.84
Inter corporate deposits paid 23/446.35 19,522.42
Purchase of investments (527.63) (861.19)
Net cash (used) in investing activities

TWO WHEELS OF
GROWTH
(Rupees in crores)

March 31,2010 March 31,2009
C. CASH FLOW FROM FINANCING ACTIVITIES
Interest paid - others and financial charges 2.10 2.53
Dividend deposited in dividend current accounts 1,996.88 379.41
Tax on dividend 97.87 64.48
Repayment of long term borrowings 12.46 53.51
2,109.31 499.93
Net cash (used) in financing activities (2,109.31) (499.93)
D. Increase/(decrease) in cash and cash equivalents (A+B+C) 49.70 (2.09)

Cash and cash equivalents at the beginning of the year 13.45 15.19
Cash and cash equivalents at the end ofthe year
Cash and bank balances 62.61 13.45
Unrealised exchange loss/(gain) 0.54 (0.35)
63.15 13.10
Notes to the accounts 12
In terms of our report attached Forand on behalf of the Board of Directors

ForA.F.FERGUSON&CO. BRIJMOHAN LALL MUNJAL Chairman
PAWAN MUNJAL
Managing Director&CEO
MANJULABANERJI
Partner PRADEEP DINODIA Director
Place : New Delhi
Date :April 19,2010 ILAMC. KAMBOJ Sr. G.M. Legal &Company Secretary
80 ANNUALREPORT2009 10 HERO HONDA MOTORS LIMITED

81
SCHEDULES 1 to 12 ANNEXED
to and Forming Part of The Accounts 1) (Rupees in crores)
SHARE CAPITAL
As at March As at March
31,2010 31,2009
AUTHORISED 50.00 50.00

25,00,00,000 (previous year 25,00,00,000)
Equity shares of Rs. 2 each
4.00 4.00
4,00,000 (previous year 4,00,000) Cumulative
convertible preference shares of Rs. 100 each
4.00 4.00
4,00,000 (previous year 4,00,000) Cumulative 58.00 58.00
redeemable preference shares of Rs. 100 each
ISSUED, SUBSCRIBED AND PAID UP 39.94 39.94

19,96,87,500* (previous year 19,96,87,500) Equity 39.94 39.94
shares of Rs. 2 each fully paid up
Ofthe above 11,98,12,500 (previous year 11,98,12,500) shares had been allotted as fully paid bonus shares by
capitalisation of general reserve.
HERO HONDA
MOTORS
LIMITED
2) RESERVES AND SURPLUS

As at March Additions
31,2009
CAPITAL RESERVES #
On shares forfeited (#Rs. 4250)
Share premium account on forfeited ##
shares reissued(##Rs. 25500)
REVENUE RESERVES 1,053.53 225.00
General reserve
Surplus, being balance in profit 2,707.28
and loss account 3,760.81 225.00
2,946.30 814.51
Previous year

1,278.53
#
(Rupees in crores) 560.73 2,146.55
## 560.73 3,425.08
Deductions As at March 3,760.81
31,2010
TWO WHEELS OF
GROWTH
(Ruoees in crores)
3) LOAN FUNDS As at March

31,2009
As at March
31,2010
78.49
UNSECURED LOANS
Other loans and advances
78.49
Sales tax deferment from the State Government of Haryana 66.03
[Include Rs. 33.32 crores (previous year Rs. 12.46 crores) due within one year]
66.03
(Rupees in crores)
Net block
4) FIXED ASSETS
As at As at
March March
Gross block (at cost) Depreciation 31,2010 31,2009
As at AdditionsDeductions As at As at For the On As at
March March March year deductions March
31,2009 31,2010 31,2009 31,2010
84.65 83.95
Tangible assets
78.47 79.30
Land
379.10 367.66
- Freehold 83.95 0.70 84.65
956.85 915.48
- Leasehold # 81.80 81.80 2.50 0.83 3.33
Buildings ## 415.57 26.54 2.09 440.02 47.91 13.95 0.94 60.92 21.63 19.67
Plant and machinery 1,617.22 173.73 38.66 1,752.29 701.74 128.02 34.32 795.44 21.37 18.22
Furniture, fixtures and
office equipment 26.84 4.51 1.54 29.81 7.17 1.92 0.91 8.18
59.69 23.65
Vehicles 27.53 9.04 2.50 34.07 9.31 4.94 1.55 12.70
Computer and data
57.02 65.78
processing machines 56.82 44.25 4.47 96.60 33.17 7.85 4.11 36.91
1,658.78
Intangible assets
Model fee 206.54 25.20 231.74 140.76 33.96 174.72 1,573.71
Total 2,51627 283.97 49.26 2,750.98 942.56 191.47 41.83 1,092.20 48.14 120.54
Previous year 1,938.78 603.03 25.54 2,516.27 782.52 180.66 20.62 942.56 1.706.92 1.694.25
Capital work in progress (including capital advances Rs. 15.02 crores (previous year Rs. 37.21 crores)}
Note: A
# Include land at Haridwar pending registration in the name ofthe Company.
## Include office building at Nagpur pending registration in the name ofthe Company.
82
i_ l_
83
5) INVESTMENTS
Units as at Units as at
March 31,2010 March 31,2009
CURRENT INVESTMENTS
(Cost or fair value which ever is lower)
Non-trade
Unquoted
In Mutual fund units:
Debt fund
(Units of the face value of Rs. 10 each)
ICICI Prudential Mutual Fund

FMP Seies 41-Fourteen Months Plan Institutional Cumulative 25000000
FMP Series 43-Thirteen Months Plan B Institutional Growth 12500000
FMP Series 43-Thirteen Months Plan D Retail Growth 20000000
FMP Series 42-Fiteen Months Plan Institutional Growth 20000000
FMP Series 42-Thirteen Months Plan D Institutional Growth 15000000
FMP Series 44-One Year Plan A Institutional Growth 10000000
FMP Series 46-One Year Plan A Institutional Growth 10000000
FMP Series 49-1 Year Plan B Institutional Growth 50000000
FMP Series 50-19 Months Plan A Cumulative 15051469
FMP Series 51-15 Months Plan E Cumulative 10000000
Institutional Income Plan Growth 5480736
Floating Rate Plan D-Growth 58499249
Long Term Floating Rate Plan C-Growth 22894268 22894268
Income Opportunities Fund Institutional -Growth 8998489
Short Term Plan Cumulative Option 92082258 51430640
Ultra Short Term Plan Super Premium Growth 144298829
Banking and PSU Debt Fund Growth 49813669
Birla Sunlife Mutual Fund

FTP-INSTL-Series AK-Growth 30000000
FTP-INSTL-Series AZ-Growth 10000000
HDFC Mutual Fund

FMP 18M November 2007 (vl) Wholesale Plan- Growth - 25000000
FMP 18M January 2008 (vll) Wholesale Plan-Growth - 30000000
High Interest Fund-Short Term Plan-Growth - 42046745
Short Term Plan-Growth 28447832 28447832
FMP20MSep200»Growth-Series-XI 20000000 -
IDFC MUTUAL FUND

SSIF-ST-Plan D-Growth - 17433600
Money Manager Fund -Treasury Plan
-Super Inst Plan C-Growth 117001180 157067324
Money Manager Fund -Investment Plan
-Inst Plan B-Growth 14976980 -
10.00
50.00
15.05
10.00
15.06
75.55
22.93 22.93
9.05
169.14 93.06
(Rupees in crores) 146.01
50.01
31,2010 31,2009
30.00
10.00
25.00
30.00
70.01
47.46 47.46
20.00
25.00
12.50 20.00
20.00
20.00 121.08 161.03
15.00
10.00 21.10
TWO WHEELS OF
GROWTH
A
5) INVESTMENTS (contd.)
March 31,2010 March 31,2009
Tata Mutual Fund
Fixed Investment Plan -2 Scheme-A-
Institutional Plan -Growth 19173646
Fixed Maturity Plan Series 25 Scheme
A -Super High Invest Plan-Growth 25000000
Kotak Mutual Fund

FMP 13M Series 5-Growth 15000000 15000000
Floater Long Term -Growth 94909187
Franklin Templeton Investments

Fixed Horizon Fund Series VII -Plan
D -Institutional -Growth 20000000
Fixed Horizon Fund Series IX -Plan B -Growth 20000000
HSBC Mutual Fund

Floating Rate Fund -Long Term Plan-Institutional
Option -Growth 60820129
Fortis Mutual Fund

Money Plus Institutional -Growth 96278790 52684375
FTP Ser 10 Plan F Inst. Growth 15000000
FTP Ser 14 Plan C Inst. Growth 15000000 15000000
Deutsche Mutual Fund

DWS Fixed Term Fund Series 52- Institutional Growth 70000000
DWS Treasury Fund Investment-Institutional
Plan-Growth 19592377
Reliance Mutual Fund

Annual Interval Fund -Seriesl-Institutional Growth Plan - 23553564
Fixed Horizon Fund IV-Series 6-lnstitutional Growth Plan - 25000150
Fixed Horizon Fund IV-Series 7-lnstitutional Growth Plan - 29999911
Fixed Horizon Fund-IX-Seriesl-Institutional Growth Plan - 12500000
Fixed Horizon Fund VII-Series 5-lnstitutional Growth Plan - 19999989
Fixed Horizon Fund XII -Series 3-Super Institutional
Plan-Growth 40030230 40030230
Fixed Horizon Fund XII -Series 4-Super
Institutional Growth 60045345 60045345
Income Fund-Retail Plan-Growth Plan-Growth Option - 17904653
Fixed Horizon Fund -Xlll-Series 1 -Growth Plan 50000000
Fixed Horizon Fund -Xlll-Series 4-Growth Plan 50000000
Fixed Horizon Fund-Xlll-Series 2-Growth Plan 61673009
Fixed Horizon Fund -Xlll-Series 3-Growth Plan 24047744
Fixed Horizon Fund-Xlll-Series 6-Growth Plan 17779171
Quarterly Interval Fund -Series
ll-lnstitutional Growth Plan 24029332
84
15.00 15.00
70.00
(Rupees in crores)
20.00
31,2010 31,2009
25.00
28.09
33.51
19.17 12.50
22.05
25.00
40.03 40.03
15.00 15.00 60.05 60.05

130.54 52.04
50.00
50.00
61.67
20.00 24.05
20.00 17.78
30.00
83.02
129.79 66.56
15.00
85
HERO HONDA
MOTORS LIMITED
March 31,2010 March 31,2009
41747895
20562256
5) INVESTMENTS (contd.) 13111108
20000000
20000000
Quarterly Interval Fund -Series Ill-
25000000
Institutional Growth Plan
Short Term Fund-Retail Plan-Growth Plan
Monthly Income Plan-Growth Plan 5000000
Religare Mutual Fund
FMP-14 Months -Series ll-lnstitutional Growth 20000000
FMP-14 Months -Series Ill-Institutional Growth
FMP-Series ll-Plan B (15 Months)
15267282
Fidelity Mutual Fund
Flexi Gilt Fund -Growth
20172298
Morgan Stanley Mutual Fund
Short Term Bond Fund Institutional Plus Growth
Axis Mutual Fund 20000000
Fixed Term Plan-Series 1 (384 days)-Retail Growth
10000000
DSP BlackRock Mutual Fund
FMP 13M Series 2-Growth
20542654
UTI Mutual Fund
Fixed Maturity Plan-Yearly Series(YFMP 11/09) 47845516
-Institutional Growth Plan
Fixed Term Income Fund Series VII-1 (428 Days)
-Growth Plan
10000000
Fixed Income Interval Fund -Quarterly Plan Series
Ill-Institutional -Growth Plan
Short Term Income Fund Institutional
-Growth Option 35853 68781
Taurus Mutual Fund
Fixed Maturity Plan 15Months Series 1 47174242
-Institutional Growth Plan
Gold ETF -Open Ended Scheme
6798280
Flexible Income Plan Premium -Growth
Money Manager Fund-Institutional Option-
Growth Plan
Repurchase Price Rs. 3240.87 crores
(previous year Rs. 1555.16 crores)
20.00
25.00 50.00
5.00
10.00
20.00
(Rupees in crores) 15.27 3.65 7.00
20.17 795.81
31,2010 31,2009
51.43
34.74 20.00
25.00 833.88
10.00
20.00 3,151.10 1,501.21

25.00
TWO WHEELS OF
GROWTH
A
March 31,2010 March 31,2009
Fund of Funds
(Units ofthe face value of Rs. 10 each)
DSP BlackRock Mutual Fund
World Gold Fund -Growth 3690582
AIG Mutual Fund
World Gold Fund Growth 5000000
Less: Provision for diminution in Value

Repurchase Price Rs. Nil (previous year Rs.9.09 crores)
Equity fund
Escorts Mutual Fund

Opportunities Fund -Dividend 39101284 24888747
High Yeild Equity Plan-Dividend 1463414 2439024
Infrastructure Fund-Growth 2000000 2000000
Equity & Derivatives Fund-Income Optimiser
-Institutional Growth 41050903 60975610
Blended plan A-Growth 18413357
IDFC Mutual Fund
Arbitrage Fund-Plan B-Growth 13304241
Arbitrage Fund-Plan B-Dividend 24488469
Arbitrage Plus Fund-Plan B-Growth 20764327
HDFC Mutual Fund
Arbitrage Fund-Wholesale Plan-Growth 44409641
Liquid fund
Liquid Superlnstitutional Plan-Growth 212663052
Liquidity Fund- Growth Option 10822823 211168475
Fortis Mutual Fund
Overnight- Institutional Plus-Growth 93523069
86
14.49
25.35
21.46
(Rupees in crores)
As at March As at March 47.65

31,2010 31,2009
115.39 211.08
5.00
275.13
5.00
10.00 15.00 279.50
(0.91)
9.09
102.00
39.97 31.16
1.50 2.50
2.00 2.00
46.92 66.47 HERO I lONDA MOTORS LIMITED

25.00
87
HERO HONDA MOTORS
LIMITED
March 31,2010 March 31,2009
HDFC Mutual Fund
Liquid Fund -Premium Plan -Growth 101578892
Principal Mutual Fund

Cash Management Fund -Uquid Option lnsd.Prem.Plan-Growth 14192863
Tata Mutual Fund

Liquid Super High Inv. Fund- Appreciation 962567
Taurus Mutual Fund

Liquid Fund-Super Institutional Growth 9984
Debentures
Citi Financial Consumer Finance India Limited

Debentures of Citi inancial -Redeemable Non Convertible
Secured NCD Issue Series-326 of Rs 100000 each 500
Maturity Value Rs. Nil (previous year Rs. 5.00 crores)
Investments under Portfolio Management Services # In

Mutual fund units:
Debt Fund
(Units of the face value of Rs.10 each)
Escorts Mutual Fund

Floating Rate Fund -Growth Option 14641 14641
Income Plan -Growth Option 320465 442612
Fixed Maturity Plan 400000
Income Bond Fund 372962 152373
Fortis Mutual Fund

Flexi Debt Fund Regular Daily Div 27154982
Money Plus Fund IP Growth 6076810
Religare Mutual Fund

Ultra Short Term Fund 2619246
UTI Mutual Fund

Short Term Income Fund Institutional -Growth Plan 608605
(Units of the face value of Rs.1000 each)

Money Manager Treasury Plan Weekly Dividend 9713
Money Manager Fund-Institutional Plan Growth Option 52730
5.00
5.00
(Rupees in crores)
As at March As at March 0.02 0.02

31,2010 31,2009 0.80 1.10
0.40
178.11 0.85 0.35
19.50 26.28
8.00
3.20
155.82
0.63
1.00
16.00 1,010.06
0.97
6.18
TWO WHEELS OF
GROWTH
A
March 31,2010 March 31,2009
UTI Mutual Fund
Treasury Advantage Fund -Institutional Plan -Growth 7093
Repurchase price Rs. 14.29 crores

Liquid Fund
(Units ofthe face value of Rs.10 each)
Escorts Mutual Fund

Liquid Plan Growth 1424293 718478
HDFC Mutual Fund

Cash Management Fund Savings Plan - 220928
Birla Mutual Fund

Savings Fund-Inst-Growth - 21756507

Liquid Super Institutional Plan-Growth 1139995

Liquid Plus Fund Instt -Growth Plan - 258332
UTI Mutual Fund

Treasury Advantage Fund -Institutional Plan -Growth - 78241
Repurchase price Rs. 17.48 crores

Debentures / Bonds
Face Value of Rs 10000000 each
125% Deccan Chronicle Holdings Limited NCD06JN12 10
Indian Infrastructure Equipment Receivables Trust,
July2009-SeriesA3B 53
Citicorp finance NCD SR 187 50
Citi Financial Consumer Finance India Limited 600
Sky Deck Properties and Development Pvt. Limited

ZCB 28.01.2013 350
Power Finance Corporation Limited 11 NCD 15SP18 50
9.20% Bank of Baroda RR Perpetual BD 50
88
30.19
9.00
(Rupees in crores)
17.15 76.54
31,2010 31,2009
0.82 10.96
53.21
13.47 36.15
4.90
1.91 0.88 50.15
0.40 35.00
5.91
36.07
5.15
15.24
89
March 31,2010 March 31,2009
8.60%SardarSarovarNarmadaNigamUmited 09MR15 150 -
8.60% SardarSarovarNarmadaNigam Limited 09MR15 100 -
8.60% SardarSarovarNarmadaNigam Limited 09MR15 10 -
Non Convertibile Debentures Emerald Wealth Management - 18300
Asset Linked Portolio -Accelerator-Seies 2 -5000 - Debentures
of Citi Financial Consumer Finance India Limited - 5000
Asset Linked Portfolio -Accelerator-Series 5 -1500
- Debentures of Barclays Investment & Loans
India Limited INR Equity Linked
Principal Protected Debentures - 1500
Asset Linked Potfolio -Accelerator-Series 2 -5000
Debentures of Citi Financial Consumer
Finance India Limited 5000 -
11.50% DamodarValley 11.5 BD20SP10 300 -
8.95% Gujarat Una VikasNigam Limited Sr-8 8.95 BD 21AP16 135 -
Tamil Nadu Electicity Board Sr5/03-04 8 Bd 15SP11 500 -
Face Value of Rs. 100 each
Reliance Blended Debt Plus -Hybrid Option
-Series VII-1000000 - Debentures of DSP
Merrill Lynch Capital Limited Series 2007/EQ - 1000000
-Series X-1000000 -Debentures of DSP
Merrill Lynch Capital Limited Series 2008/AM - 1000000
-Series XII-1000000 - Debentures of CitiFinancial
Consumer Finance India Limited Series 338 - 1000000
-Series XIIIB-1000000 - Debentures of
CitiFinancial Consumer Finance
India Limited Series 359 - 1000000
-Series XIVA-1000000 - Debentures of
CitiFinancial Consumer Finance
India Limited Series 394 - 1000000
8.55% IRFC NCD - 1000000
6.05%GOI2019 - 5000000
50.00
3.14
1.47
3.39
(Rupees in crores)
- 10.00
31,2010 31,2009
15.23 - 10.00
10.19
1.02
- 10.00
- 183.00
- 50.00 - 10.00
- 15.00 - 10.00
- 9.97
- 48.43
TWO WHEELS OF
GROWTH
A
March 31,2010 March 31,2009
Less: Provision for diminution in value

MaturityValueRs.246.60coroes (previousyear Rs.365.77 crores)
Commerical Paper
Tata Capital Limited 100

Reliance Communications Limited 100
Birla Global Finance Co Limited 100
Maturity Value Rs. Nil (previous year Rs. 14.54 crores)
# Investments have been made under the Discretionary

Portolio Management Agreements entered into between
the Company and IQG Prudential Asset Management
Company Limited-PMS, Escorts Securities Limited,
Reliance Capital Asset Management Limited (Potolio
Management Services), Fortis Investment Mangement and
Birla Sunlife Asset Management Company Private Umited are
being held in the name ofthe Potfolio Managers as envisaged
in the aoresaid Agreements.
Non-trade
Equity Shares
Quoted
Indian Oil Corporation Limited 517000

Crompton Greaves Limited 371250

Market value Rs. 25.03 crores (previous year Rs Nil)
LONG TERM INVESTMENTS

Non-trade
Equity Shares
Quoted

Bharat Heavy Electricals Limited* 70331

Siemens Limited* 172904
Larsen & Tubro Limited * 367200
Less: Provision on reclassiication of current investment

Market value Rs. Nil (previous year Rs 39.94 crores)
* During the previous year the company has reclassified
90
16.89
9.51
(Rupees in crores) 26.40
(1.37)
25.03
31,2010 31,2009
238.91 367.21
(0.90) (1.44)
238.01 365.77
8.98
4.54
4.50
16.42
4.47
50.02
13.51 75.42
268.63 491.97 (12.42)
63.00
91
March 31,2010 March 31,2009
current investment into long term investment
and has provided for loss on reclassifiaction.
Unquoted
National Stock Exchange Limited 75000 75000
Bombay Stock Exchange Limited 140400 140400
Non-trade
Bonds/ Debentures
Quoted

Unit Trust of India
6.60% Tax free ARS Bonds 60903
Unquoted

10.75% Shriram Transport NCD -Maturity-26.08.2012 52201
8.40% L&T Finance Limited-Maturity-08.03.2013 247377

12.00% Shriram Transport NCD -Maturity-18.07.2014 1300
6.85% India Infrastructure Finance Company Limited
2014Tax Free Bonds-Maturity 22.01.2014 10000

7.20% Fullerton India Credit Co. Limited-Maturity-10.112010 1000

7.90% Rural Electrification Corporation -Maturity-06.10.2012 200
8.45% Rural Electrification Corporation -Maturity-19.02.2015 200
7.75% Indian Railway Finance Corporation Limited-

Maturity-26.03.2011 250
7.65% HDFC Bonds-Maturity-15.12.2012 150

Maturity Value Rs 272.96 crores (previous year Rs 0.61 crores)
Non-trade
Unquoted
National Bank For Agriculture and Rural Development

0.63
5.36
24.74
13.85
(Rupees in crores)
As at March As at March 100.90

31,2010 31,2009
47.40
20.15
26.26 26.26 20.08
5.94 5.94
32.20 32.20 25.70
15.03
273.21 0.63
(0.38) (0.02)
272.83 (0.61)
TWO WHEELS OF
GROWTH
(Rupees in crores)
Units as at Units as at As at March As at March

March 31,2010 March 31,2009 31,2010 31,2009
50200 50200 41.07 41.07

Bhavishya Nirman Bonds @ 8182 each A 10 Year 41.07 41.07
Zero Coupen Bond of NABARD- maturity Rs.
20000.00 per bond
Trade
Unquoted
2715000 2715000 3.46 3.46
Equity Shares 3,925.71 3,368.75
Equity shares of Rs. 10 each fully paid up of
Hero Honda Finlease Limited At Cost
The following investments were purchased and sold during the year (Rupees in crores)
Sold
Purchased Amount Units Amount
Units
Mutual Funds
Liquid Fund 9,805.47 7,446,026,558 10,644.72
Units ofthe face value of Rs.10 each 6,823,723,031 2,952.47 218,370,561 2,952.47
Units ofthe face value of Rs.100 each 218,370,561 1,215.07 9,819,892 1,369.88
Units ofthe face value of Rs.1000 each 8,867,310
Debt Fund 3,554.12 2,553,230,416 3,530.57
Units ofthe face value of Rs.10 each 2,624,101,856 795.81
Units ofthe face value of Rs.100 each 47,174,243 1,631.02 6,791,330 800.50
Fund of Funds 8,690,582 10.00
Units ofthe face value of Rs.10 each
Equity Fund 197.50 265,097,284 293.18
Gilt Fund 37.77 12,016,444 37.77

Equity Shares
Shares of Face value of Rs 1 each 17.62 450,000 17.62
Tata Consultancy Services Limited 450,000
Shares of Face value of Rs 2 each 172,904 16.42

Siemens Limited 367,200 50.02
Larsen SiTubro Limited 22.19 495,000 12.68
Crompton Greaves Limited 866,250
Bharat Heavy Electricals Limited 3.15 315,548 3.16
Adani Power Limited 315,548 33.80 517,000 16.90
India Oil Corporation Limited 1,034,000 0.66 182,649 0.66
NHPC Limited 182,649 2.76 52,484 2.76
Oil India Limited 26,242
Bonds / Debentures
Face Value of Rs. 100 each 0.61
Unit Trust Of india -6.60% Tax Free ARS Bonds
92 ANNUALREPORT2009 10
93
(Rupees in crores)
Purchased Sold
Units Amount Units Amount
52,201 5.36
247,377 24.74
10.75% Shriram Transpot NCD -Maturity-26.08.2012
8.40% L&T Finance Limited-Maturity-08.03.2013 500 5.00
Citi Financial Debentures -Redeemable Non Convetible 10,000 100.90
Secured NCD Issue Series-326 1,300 13.85
6.85% India Infrastructure Finance Company Limited 2014
Tax Free Bonds-Maturity 22.01.2014
1,000 47.40
12.00% Shriram Transpot NCD -Maturity-18.07.2014
200 20.15
7.20% Fullerton India Credit Co. Limited-Maturity-10.11.2010
200 20.07
Face Value of Rs. 1000000 each 250 25.70
7.90% Rural Electrification Corporation -Maturity-06.10.2012 150 15.03
8.45% Rural Electrification Corporation -Maturity-19.02.2015 20,542.61 19,773.90
7.75% Indian Railway Finance Corporation Limited-Maturity-26.03.2011
7.65% HDFC Bonds-Maturity-15.12.2012
The following investments were purchased and sold during the year under Portfolio Management Scheme At Cost
(Rupees in crores)
Purchased Sold
Units Amount
Mutual Funds
Liquid Funds HERO HONDA MOTORS 177,470,408 250.09
LIMITED
Units ofthe face value of Rs.10 each 1,151,198 15.39
Debt Funds 577,308,934 897.74

Units ofthe face value of Rs.10 each 490,026 52.52
Debentures / Bonds
Face Value of Rs. 100 each 3,000,000 36.17

11.25% PFC 2018
6.05%GOI2019 9,000,000 88.08
6.07% GOI 2014 5,000,000 48.06
6.35% GOI 2020 9,000,000 90.00
6.49% GOI 2015
8.55%IRFC2019 2,000,000 21.15
7.94% GOI 2021 39,000,000 380.84
6.90% GOI 2019 2,500,000 24.06
7.40% GOI 2035 5,000,000 48.96
7.02% GOI 2016 9,500,000 90.76
6.49% GOI 2015 1,000,000 9.07
6.35% GOI 2015 8,000,000 79.59
7.02% GOI 2015
Units Amount 3,000,000 36.17
5,000,000 48.42
9,000,000 88.08
176,764,592 249.06 5,000,000 48.06
11,202 0.15 9,000,000 90.00
1,000,000 9.97
2,000,000 21.15
39,000,000 380.84
629,591,868 964.86
2,500,000 24.06
757,064 83.75
5,000,000 48.96
9,500,000 90.76
1,000,000 9.07
8,000,000 79.59
TWO WHEELS OF
GROWTH
(Rupees in crores)
Purchased Sold
Units Amount Units Amount
1,000,000 10.00
Reliance Blended Debt Plus -Hybrid Option -Series
Xll-Debentures of CitiFinancial Consumer Finance
India Limited Series 338 1,000,000 10.00
XIIIB-Debentures of CitiFinancial Consumer Finance
XIVA-Debentures of CitiFinancial Consumer Finance
VII-1000000 - Debentures of DSP Merrill Lynch
Capital Limited Series 2007/EQ 1,000,000 10.00
Reliance Blended Debt Plus -Hybrid Option -Series X-
1000000- Debentures of DSP Merrill Lynch Capital
Limited Series 2008/AM
5,978 0.31 5,978 0.31

6% Non Convertible Debenture Bajaj Auto Finance 10,000,000 46.57 10,000,000 46.57

0%NABARD2019 21,435 214.35 39,735 397.35
Face Value of Rs. 100000 each 1,500 15.00

Emerald Wealth Management 500 3.39
Asset Linked Portfolio -Accelerator-Series 5 -1500 135 1.48
- Debentures of Barclays Investment & Loans India Limited 300 3.29 0.15
Tamil Nadu Electicity Board Sr5/03-04 8 Bd 15SP11
8.95% Gujarat Urja Vikas Nigam Limited Sr-8 8.95 BD 21AP16
11.50% Damodar Valley 11.5 BD 20SP10 50 4.90

Citicorp finance NCD SR 187
600 50.15

CitiFinancial Consumer Finance India Limited
Sky Deck Properties and Development Pvt. Limited ZCB 28.01.2013 350
A
8.60% Sardar Sarovar Narmada Nigam Limited 09MR15 10
Power Finance Corporation 11 NCD 15SP18
11.25% Power Finance Corporation 2018 50
9.20% Bank Of Baroda RR Perpetual BD 50
8.60% Sardar Sarovar Narmada Nigam Limited 09MR 15 150
8.60% Sardar Sarovar Narmada Nigam Limited 09MR15 100
12.5% Deccan Chronicle Holdings Limited NCD 06JN12 10
Indian Infrastructure Equipment Receivables Trust,July 2009-Series A3B 53
94
35.00 10.96
1.02 53.21
50 5.91
6.16 50 6.16
5.15
15.23
10.19
95
HERO HONDA MOTORS
LIMITED
Purchased
Units Amount
Commercial Papers

Tata Capital Limited 1,700 0.04
Reliance Communication Limited 4,700 0.03
Birla Global Finance Co Limited 5,625 0.09
85,754 0.51
Equity Shares
5,700 0.18
Shares of Face value of Rs 1 each
Hindustan Unilever Limited
Marico Limited 2,000 0.10
Motilal Oswal Financial Services Limited 800 0.03
Zee News Limited 1,900 0.08
18,414 0.37
Areva T & D India Limited 26,400 0.08
Asian Hotels Limited 5,150 0.07
Canara Bank 4,200 0.10
Corporation Bank 24,900 0.05
ETC Networks Limited 17,025 0.33
Great Offshore Limited 2,000 0.12
Gujarat NRE Coke Limited 7,200 0.11
Geecee Ventures Limited 1,550 0.06
Indraprastha Gas Limited 20 0.00
HSBC Investdirect (India) Limited 11,475 0.31
Ispat Industries Limited 1,850 0.03
Kalyani Steels Limited 2,592.17
Micro Inks Limited
Orientel Bank Of Commerce
Punjab National Bank As at March 31,2010
Religare Enterprises Limited Book Value Market Value
Surana Industries Limited
Union Bank Of India
25.03 25.03
3900.68
3,925.71
Aggregate value of
Quoted investments -Long Term
Quoted investments-Current
Unquoted investments
4,200 0.10
24,900 0.05
17,025 0.33
2,000 0.12
1,700 0.04
7,200 0.11
4,700 0.03
1,550 0.06
5,625 0.09
20 0.00
85,754 0.51
11,475 0.31
1,850 0.03
(Rupees in crores) 5,700 0.18 2,816.06
Sold
Units Amount 2,000 0.10
As at March 31,2009
800 0.03
Book Value Market Value
1,900 0.08
18,414 0.36
10,000 0.51 63.61 40.55
100 4.55
26/100 0.08
100 4.50 3305.14
5,500 0.05
100 4.47 3,368.75
5,150 0.07
TWO WHEELS OF
GROWTH
A
6) CURRENT ASSETS, LOANS AND ADVANCES
CURRENT ASSETS
INVENTORIES #
Stores and spares (at cost or under)
Loose tools (at cost or under)
Raw materials and components *
Finished goods *
Two wheelers
Spare parts
Work in progress *
* Lower of cost and net realisable value

# Includes goods in transit Rs. 46.11 crores (previous year Rs. 18.33 crores)
SUNDRY DEBTORS
Debts outstanding for a period exceeding
six months
Secured -considered good
Unsecured -considered good
-considered doubtful
Other debts
Secured -considered good
Unsecured - considered good
Less: Provision for doubtful debts
CASH AND BANK BALANCES

Cash in hand
Cheques in hand
With scheduled banks:
On current accounts
On deposit accounts
On dividend current accounts
OTHER CURRENT ASSETS

Interest accrued on investments
LOANS AND ADVANCES

(Unsecured and considered good)
Advances recoverable in cash or in kind or for
value to be received
Income-tax recoverable
Income-tax deducted at source
Deposits with excise authorities on
current account
96
7.41 5.26
108.39 149.94
0.26 0.20
(Ruoees in crores) 0.18
As at March As at March 18.62 10.99

31,2010 31,2009 43.73 2.08
1,844.60 206.12
1,907.21 219.57
29.56 27.19 24.82 5.89

13.02 14.51 24.82 5.89
321.67 201.44
19.68 28.52
22.67 32.49 307.94 237.42
29.80 22.68 75.34 62.51
436.40 326.83 18.22 11.16
4.26 0.17
405.76 311.26
0.38 0.70
2.28 3.24
7.41 5.26
2.88 7.12
102.85 138.88
115.80 155.20 HERO I lONDA MOTORS LIMITED
97
(Rupees in crores)
31,2010 31,2009
7) CURRENT LIABILITIES AND PROVISIONS

1,111.44 703.03
1,066.48 794.23
29.64 28.59
CURRENT LIABILITIES 1,597.50
Sundry creditors:* 3,805.06 1525.85
Total outstanding dues of creditors other
than micro and small enterprises 599.06 399.38
44.48 8.06
Other liabilities ##
341.00 67.87
Security deposits from dealers
4.14 6.73
Interim dividend payable
37.67 44.93
1,026.35 526.97
PROVISIONS
Proposed dividend
Provision for taxation less payments
Provision for tax on dividend
Employee benefit schemes
Warranties
# No due to micro and small enterprises (refer note -12 of Schedule -12)
## Other liabilities do not include any amount outstanding as on March 31,2010 which are required to be credited to the
Investor Education and Protection Fund (Fund)
8) DEFERRED TAX ASSETS AND LIABILITIES
DEFERRED TAX ASSETS

Accrued expenses deductible on payment
Others
DEFERRED TAX LIABILITIES

Accumulated depreciation
Others
7.88 8.65
(Ru 159.49 153.08

pees 1.14
in 160.63 153.08
cror
es)
As at March
As at March
31,2010
31,2009
1.38
2.29
6.50
6.36
AMNUALREPOin 20W-10
TWO WHEELS OF
GROWTH
(Rupees in crores)
9) OTHER INCOME Year ended Year ended

March 31,2010 March 31,2009
4.12 12.77
2.72 2.72
Dividend income:
6.84 15.49
On current investments - Non trade
35.13 22.04
On long term investments - Trade
196.31 145.43
0.75
Interest on long term non trade investments
0.23 0.19
Profit on sale of non trade current investments*
63.81 38.20
Provision for doubtful debts written back
4.21
Profit on sale of fixed assets
34.08 23.99
Income from services rendered
340.61 246.09
Exchange difference
Miscellaneous income
f After adjusting loss on sale of current investments aggregating Rs. 11.80 crores (previous year Rs. 38.89 crores)
10) MANUFACTURING AND OTHER EXPENSES (Rupees in crores)

March 31,2010 March 31,2009
MATERIALS CONSUMED 11,334.53 9,369.28

Consumption of raw materials and components
Less: Sale of components to ancillaries 553.94 552.81
on cost to cost basis 10,780.59 8,816.47
38.18 46.11
Less: Cash discount 10,742.41 8,770.36
Add: Opening stock 28.52 30.92

Two wheelers 32.49 14.08
Spare parts 22.68 16.60
Work in progress 83.69 61.60
11.66 7.78
Less: Excise duty on opening stock 72.03 53.82
Net opening stock
Less: Closing stock 19.68 28.52
Two wheelers 22.67 32.49
Spare parts 29.80 22.68
Work in progress 72.15 83.69
6.07 11.66
Less: Excise duty on closing stock 66.08 72.03
Net closing stock
10,748.36 8,752.15
Net consumption 12.00 10.14
Less: Scrap sales 10,736.36 8,742.01
98
99
(Rupees in crores)

March 31,2010 March 31,2009
1 (^MANUFACTURING AND OTHER EXPENSES (contd.)

513.90 409.14
22.53 17.34
23.89 22.17
OTHER EXPENSES* 80.58 71.78

Payments to and provisions for employees: 81.05 73.70
Salaries, wages, bonus, gratuity and 6.51 5.25
leave encashment benefit
Contribution to provident and other funds 38.00 30.07
Staff welfare expenses 5.21 3.58
Expenses for manufacturing, administration and selling: 19.70 7.90
Stores and tools consumed 20.67 16.44
Power and fuel 13.74
Rent 37.93 30.32
Repairs and maintenance:
372.58 316.09
Plant and machinery
416.36 324.01
Buildings
364.97 249.60
Others
Insurance 15.91 11.67
Exchange fluctuation
6.95 4.80
Rates and taxes 22.86 16.47
Packing, forwarding, freight etc. 4.39 6.43
Royalty 9.04 10.51
Advertisement and publicity 308.69 249.92
Commission:
Export 2.27 12.49
Others 0.38 0.20
2.65 12.69
Donations 2.04
Lease rent
0.95
Other expenses 0.95
Provision for diminution in value of investments:
Current non trade investment
2.16
Long term non trade investment
6.18 3.57
13,096.21 10,634.77
Loss on sale of long term non trade investments
Doubtful debts written off
Less: Charged against provision for doubtful debts
Provision for doubtful debts

Loss on fixed assets sold/discarded
# Research and development expenses of Rs. 27.16 crores (previous year Rs. 23.71 crores) have been charged to respective heads.
TWO WHEELS OF
GROWTH
(Rupees in crores)
11 INTEREST (NET) Year ended Year ended

March 31,2010 March 31,2009
2.10 2.53
22.72 34.21
(20.62) (31.68)
Interest-others and financial charges
Less: Interest received on loans, deposits, etc.*
* Income tax deducted at source Rs. 0.55 crore (previous year Rs. 1.87 crore)
12) NOTESTOTHE ACCOUNTS

1) SIGNIFICANT ACCOUNTING POLICIES i)
Accounting convention
The financial statements are prepared under the historical cost convention, in accordance with applicable accounting
standards and relevant presentational requirements ofthe Companies Act, 1956.
ii) Use of estimates
The preparation of financial statements requires the management of theCompany to make estimates and assumptions that
affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to the
contingent liabilities. The management believes that the estimates used in preparation ofthe financial statements are
prudent and reasonable. Future results could differ from these estimates. Any revision to accounting estimates is
recognised prospectively in the current and future periods.
iii) Fixed /Intangible assets and depreciation /amortisation
Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and
other incidental expenses.
Depreciation is charged on a pro-rata basis at the straight line method rates prescribed in schedule XIV to the
Companies 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 yearof purchase.
Intangible assets, comprising of expenditure on model fee etc, incurred are amortised on a straight line method over a
period of five years.
Leasehold land has been amortised overthe period of lease.
iv) Investments
Current investments are stated at lower of cost and fair value computed categorywise. Long term investments are
stated at cost less provision for permanent diminution, if any.
v) Inventories
Stores and spares and loose tools are stated at cost or under.
Raw materials and components, finished goods and work in progress are valued at cost or net realisable value,
whichever is lower.
The basis of determining cost for various categories of inventories are as follows:-
Stores and spares, loose tools, raw materials and components - Weighted average cost
Materials in transit - Actual cost
Workinprogressandfinished goods - Material cost plus appropriate share of labour,
manufacturing overheads and excise duty
100
101
vi) Employee benefits
a) Defined contribution plan
Provident fund, Superannuation fund and Employee' State Insurance Corporation (ESIC) are the defined
contribution schemes offered by the Company. The contributions to these schemes are charged to the profit and loss
account of the year in which contribution to such schemes becomes due.
b) Defined benefit plan and Long term Employee benefits
Gratuity liability and long term employee benefits, are provided on the basis of an actuarial valuation made at the end
of each financial year as per projected unit credit method. Actuarial gains or loss arising from such valuation are
charged to revenue in theyear in which they arise.
vii) Foreign currency transactions
Exchange differences are dealt with as follows:-
Transactions in foreign currency are recorded at the exchange rate prevailing at the time of the transaction. All loss or
gain on translation is charged to revenue in the year in which it is incurred.
Monetary assets and liabilities denominated inforeign currency are restated at the rate prevailing attheyearend and
resultant gain or loss is recognised.
In respect of forward contracts, the forward premium or discount is recognised as income or expense over the life of
contract in the profit and loss account and the exchange difference between the exchange rate prevailing at the year end
and the date ofthe inception ofthe forward exchange contract is recognised as income or expense in the profit and
loss account,
viii) Sales
Sale of goods is recognised at the point of despatch of finished goods to the customers. Gross sales are inclusive of
applicable excise duty and freight but are exclusive of sales tax. Services income is recognized when the services are
rendered.
Scrap is accounted for on sale basis.
ix) Warranty claims
Warranty costs are provided on accrual basis on the total sales of two wheelers during the year, which are based on past
experience of claims,
x) Research and development expenses
Research and development expenditure of a revenue nature is expensed out under the respective heads of account in the
yearin which itisincurred.
xi) Taxation
The provision for taxation is ascertained on the basis of assessable profits computed in accordance with the provisions
ofthe Income-tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one period and are capable of reversal in one or
more subsequent periods.
xii) Provisions and contingent liabilities
Provision involving substantial degree of estimation in measurement are recognized when there is a present
obligation as a result of past events and it is probable that there will be an out flow of resources. Contingent liabilities
are not recognized but are disclosed in the notes.
xiii) Derivatives
Foreign currency derivatives are used to hedge risk associated with foreign currency transactions. All open positions
as at the close of the year are valued by marking them to the market and provision is made for losses, if any.
2. CONTINGENT LIABILITIES: (Rupees in crores)
31,2010 31,2009
i) In respect of excise matters 13.72 8.17
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 result of operations or the
financial position ofthe Company.
HERO HONDA MOTORS LIMITED AMNUALREPOin KXW-10

TWO WHEELS OF
GROWTH
3 Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 59.32 crores (previous
year Rs. 92.37 crores).
4 The Company has entered into operating lease agreements for motor vehicles, dies and data processing machines. These
lease arrangements are cancellable in natureand range between two to fouryears.The aggregate lease rentals underthese
arrangements amounting to Rs. 9.04 crores (previous year Rs. 10.51 crores) have been charged under "Lease rentals" in
Schedule 10.
5 As the Company's business activity falls within a single primary business segment viz. "Two wheelers and its parts" and is a
single geographical segment, the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", notified in
the Companies (Accounting Standards) Rules, 2006arenotapplicable.
6 Two wheeler sales are covered by a warranty period of two/three years. The details of provision for warranties are as under:
(Rupees in crores)
This year Previous Year
Provision at the beginning ofthe year 44.93 43.68

Additional provision made during the year 14.19 27.37
Amount utilised during the year 21.45 26.12
Provision as at the end ofthe year 37.67 44.93
7 Related party disclosures under Accounting Standard 18

a) i) PartiesinrespectofwhichtheCompanyisajointventure.
Honda MotorCo. Limited, Japan

Hero Cycles Limited
Bhadurchand Investments Private Limited
Hero Investments Private Limited
ii) AssociateoftheCompany
Hero Honda Finlease Limited
b) Key management personnel
Mr. Brijmohan Lall Munjal - Chairman

Mr. Pawan Munjal - Managing Director & CEO
Mr. Toshiaki Nakagawa - Joint Managing Director
Mr. Yutaka Kudo - Whole time director (upto May 30,2008)
Mr. Sumihisa Fukuda - Whole time director (w.e.f. June 1,2008)
c) Enterprises over which key management personnel and their relatives areable to exercise significant influence:-
Brijmohan Lall Associates, A.G. Industries Private Limited, Hero Corporate Services Limited, Highway Industries Limited,
Majestic Auto Limited, Munjal Auto Industries Limited, Munjal Showa Limited, Rockman Industries Limited, Sunbeam
Auto Limited, Satyam Auto Components Limited, Hero Motors Limited, Shivam Autotech Limited, Cosmic Kitchen
Private Limited, Easy Bill Limited, Hero Mindmine Institute Limited, Indian School of Business and Raman Kant Munjal
Foundation.
102 ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMITED

103
Transactions with related parties during the year
a) Parties in respect ofwhich the Company is a joint venture and associate ofthe Company
(Rupees in crores)
Honda Motor Co. Limited, Japan

Dividend*
Royalty
Export commission
Model fees
Technical guidance fee
Purchase of raw materials, components and spares
Hero Cycles Limited
Dividend*
Purchase of raw materials, components and spares
Hero Investments Private Limited
Dividend*
Bhadurchand Investments Private Limited
Dividend*
Hero Honda Finlease Limited
Lease rental expenses
Dividend received
Intercorporate deposits given
Intercorporate deposits repaid
Interest received on Inter corporate deposits
Balance outstanding at the year end-Payables
"Exclude proposed dividend
b) Key management personnel
Managerial Remuneration
Mr. Brijmohan Lall Munjal Mr.
Pawan Munjal
Mr.Toshiaki Nakagawa
Mr. Yutaka Kudo (upto May 30,2008) Mr.
Sumihisa Fakuda (w.e.f June 1,2008)
Balance outstanding at the year end
-Payables (including commission)
This year Previous Year 100.00 495.50
100.00 545.50
519.19 98.65 0.08 3.63
416.36 324.01 10.49 8.82
15.91 11.67
15.91 32.54
0.44 0.38
34.39 15.36 (Rupees in crores)
173.06 32.88 This year Previous Year

78.92 72.90
30.64 19.79
173.06 32.88 30.88 19.69
30.03 19.08
3.15
173.06 32.88
29.91 15.81
9.04 10.51 118.45 74.80

2.72 2.72
TWO WHEELS OF
GROWTH
c) Enterprises over which key management personnel and their relatives are able to exercise significant influence
(Rupees in crores)

Purchase of raw materials and components 3495.61 2622.86
Sale of components etc 8.83 2.82
Payment towards rent and other services 3.86 4.09
Donation 0.55 5.67
Balance outstanding as at the year end - Payables 342.72 233.28
Significant related party transactions included in theaboveare as under :-

(Rupees in crores)

Purchase of raw materials and components
A .G. Industries Private Limited 423.78 278.51
Munjal Showa Limited 837.00 676.80
Sunbeam Auto Limited 410.26 437.72
Rockman Industries Limited 580.14 324.91
Satyam Auto Components Limited 390.79 267.35
Sale of components etc.
A.G. Industries Private Limited 0.30 0.61
Majestic Auto Limited 0.50
Satyam Auto Components Limited 2.93 0.53
Munjal Auto Industries Limted 0.85
Rockman Industries Limited 5.33 0.01
Payment for services
Hero Corporate Services Limited 3.20 3.20
Hero Mindmine Institute Limited 0.52 0..80
Donation
Raman Kant Munjal Foundation 0.55 0.30
Indian School of Business 5.00
8 Earnings pershare

Profit after taxation as per profit and loss account (Rupees in crores) 2231.83 1281.76
Weighted average number of equity shares outstanding 19,96,87,500 19,96,87,500
Basic and diluted earnings per share in rupees (face value -Rs.2 per share) 111.77 64.19
The Company has entered into Discretionary Portfolio Management Agreements, administered through ICICI Prudential
Asset Management Company Limited-PMS, Escorts Securities Limited, Reliance Capital Asset Management Ltd, Fortis
Investment Management, Birla Sunlife Asset Management Company Private Limited collectively called Portfolio Managers. In
terms of the said agreements, the Portfolio Managers have dealt in mutual funds, debentures, bonds, government
securities, equity shares, equity stockfutures, equity stock options, equity index options and such other securities, made on
behalf of the Company. However, there are no outstanding derivative contracts as at March 31,2010.
104 ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMITED

105
10 Information pursuant to clause 4 (ix) (b) ofthe Companies (Auditor's Report) Order, 2003 in respect of disputed dues, not
deposited as at March 31,2010, pending with various authorities
(Amount Rupees in crores)
Name ofthe Nature of Amount* Amount paid Period to which Forum where
statute the dues under protest amount relates dispute is pending
Central excise lawsExcise duty 14.31 1.05 2000-01 and CESTAT

2002 to 2008
1.21 2002-03 to Commissioner
2005-06 (Appeals)
Service tax 1.93 0.45 2003-04 to CESTAT
2005-06
Income-tax Act Income tax 136.91 54.40 ** 2002-03 to Commissioner
2004-05 (Appeals)
* Amount as per demand orders including interest and penalty wherever quantified in the order. **
Balance of unpaid amount has been stayed.
Thefollowing matters have been decided in tavourofthe Company,although thedepartment has preferred appeals at higher levels:
(Amount Rupees in crores)
Name ofthe Nature of Amount Period to which Forum where

statute the dues amount relates dispute is pending
Central excise laws Excise duty 2.57 1986-87 to 1990-91 Supreme Court
0.03 2005-06 to 2008-09 CESTAT
Service tax 0.03 2005 High Court
Income-tax Act Income-tax 8.39 1987-88,1989-90, High Court
1992-93,1993-94,
1995-96 to 1998-99,
2000-01
12.30 1999-00,2001-02 Income Tax
Appellate Tribunal
11 The Company's borrowing facilities, comprising fund based and non fund based limits from various bankers, are secured by
way of hypothecation of inventories, receivables, movable assets and other current assets.
12 The Company has identified parties covered under the "The Micro, Small and Medium Enterprises Development Act, 2006"
on the basis ofthe confirmation received. There is no outstanding balance payable as at the close ofthe financial year to
such parties. Further, no interest has been paid or payable to such parties under the said Act.
13 The categorywise derivative instruments outstanding as at March 31 are as under:
Foreign currency forward contracts
Purpose This Year Previous Year

Currency bought Currency sold Currency bought Currency sold
(in crores) (in crores) (in crores) (in crores)
Hedging USD 0.40 USD 1.05

TWO WHEELS OF
GROWTH
The unhedged of foreign currency exposures are as under:
As at March 31,2010 As at March 31,2009

Purpose
Amount of foreign Amount in Amount of foreign Amount in
currency (in crores) Rupees (crores) currency (in crores) Rupees (crores)
USD 0.71 31.93 USD 0.64 32.74
Receivables JPY 26.02 12.50 JPY 13.81 7.08
Payables USD 1.21 55.03 USD 0.41 20.99
EUR 0.09 5.73
SGD 0.02 0.56
14 Employee Benefits
(Rupees in crores)
Defined contribution plans
Employer's Contribution to Provident Fund 15.20 11.67
Employer's Contribution to Superannuation Fund 6.64 5.17
Employer's Contribution to ESIC 0.69 0.49
Defined benefit plans

In accordance with the Payment of Gratuity Act 1972, Company provides for gratuity, as defined benefit plan. The gratuity
plan provides for a lumpsum payment to the employees at the time of separation from the service on completion of vested
period of employment i.e five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of
each financial year based on which the Company contributes the ascertained liability to Life Insurance Corporation of India by
whom the plan assets are maintained.
(Rupees in crores)
Year ended March 31,

2010 2009 2008
Changes in the present value ofthe defined benefit obligation is as follows
Present value of defined benefit obligation at the beginning ofthe year 40.78 32.23 25.41
Interest cost 2.85 2.26 2.03
Current service cost 3.42 2.77 2.15
Benefits paid (0.87) (1.14) (0.95)
Actuarial (gain)/ loss on obligation 5.10 4.66 3.59
Present value of defined benefit obligation at the end ofthe year 51.28 40.78 32.23
Changes in the present value ofthe plan asset is as follows
Fair value of plan asset at the beginning ofthe year 40.78 32.23 17.44
Return on plan asset 3.83 3.02 1.62
Contributions 7.56 6.67 14.12
Benefits paid (0.87) (1.14) (0.95)
Actuarial (gain)/ loss on obligation (0.02)
Fair value of plan asset at the end ofthe year 51.28 40.78 32.23
106 ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMrTED

107
(Rupees in crores)
Year ended March 31,

2010 2009 2008
Reconciliation ofthe present value of defined benefit
obligation and the fair value of the plan assets
Present value of defined benefit obligation at the end ofthe year 51.28 40.78 32.23
Fair value of plan asset at the end ofthe year 51.28 40.78 32.23
Net asset/(liability) as at the close ofthe year
Expenses recognised in the profit and loss account
Current service cost 3.42 2.77 2.15
Interest cost 2.85 2.26 2.03
Return on plan assets (3.83) (3.02) (1.62)
Net actuarial (gain) / loss 5.12 4.66 3.59
Expenses recognised in the profit and loss account 7.56 6.67 6.15
Discount rate 7.00% 7.00% 8.00%
Expected Rate of return on plan assets 9.40% 9.40% 9.10%
Note:- The estimates of future salary increases considered in the actuarial valuation take into account inflation seniority
promotion and other relevant factors such as supply and demand in the employment market.
15. ADDITIONAL INFORMATION
a) Details of capacity and production:
Units Licensed capacity* Installed capacity* Actual Production***

Class of goods
This year Previous As at March As at March This year Previous
year 31,2010 31,2009 year
Motorised two wheelers upto Nos. 200000 200000 5400000 5200000 4596244 3721844
350CC engine capacity
* The Company's products are exempt from Licensing requirements under New Industrial Policy in terms of Notification no.
S.0.477(E) dated 25th July,1991.
** On multiple shift basis, as certified by the managementand relied on bytheauditors being a technical matter.
***lncludes218 (previous year 220) two wheelers produced and capitalised during the year.
b) Particulars in respect of opening stock, sales and closing stockfor each class of goods dealt with by
the Company:
(Value Rupees in crores)
Class of goods Units Opening stock

This year Previous year
Quantity Value Quantity Value
Two wheelers Nos. 10579 28.52 10955 30.92
Spares 32.49 14.08
61.01 45.00
TWO WHEELS OF
GROWTH
Class of goods Units Gross Sales

Two wheelers Nos. 4600130+ 15,718.45 3722000+ 12,719.77
Spares * 1,062.17 823.32
16,780.62 13,543.09
Class of goods Units Closing Stock

Two wheelers Nos. 6475 19.68 10579 28.52
Spares * 22.67 32.49
42.35 61.01
* It is not practicable to furnish quantitative information in view of the considerable number of items diverse in size and
nature. These items in value individually account for less than 10% of the total value of the stocks and turnover of the
aforesaid spares.
+ Excluding218 (previousyear220) twowheelerscapitalised.
c) Raw materials and components consumed:

Class of goods Units This year Previous year

Steel sheets MT 18426.95 102.50 5369.46 26.20
Components * 10,678.09 8,790.27
10,780.59** 8,816.47**
* It is not practicable to furnish quantitative information of components consumed in view ofthe considerable number of
items diverse in size and nature. These items in value individually account for less than 10% of the total value of
components consumed, include processing charges.
** Excludes Rs.0.62 crore (previousyearRs.0.55 crore)fortwo wheelers produced and capitalised during theyear.
d) CIF Value of imports:

(Rupees in crores)
Class of goods This year Previous year

Capital goods 44.83 48.51
Raw materials * 30.66 31.54
Components, spare parts and others * 549.24 396.00
Includes items sold toancillariesoncosttocostbasisforassembling of components.
108 ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMrTED

109
e) Value of imported and indigenous raw materials, components and spares consumed and
percentage of each to the total consumption:
Class of Goods This year Previous year

Value Percentage Value Percentage
Raw materials
-Imported ** 37.15 0.34 0.79 0.01
-Indigenous 65.35 0.61 25.41 0.30
Components
-Imported ** 142.13 1.32 69.28 0.79
-Indigenous 10,535.96 97.73 8,720.99 98.90
10,780.59* 100.00 8,816.47 100.00
Spares consumed (charged to
repairs and maintenance)
-Imported 8.15 29.82 6.47 30.38
-Indigenous 19.18 70.18 14.83 69.62
27.33 100.00 21.30 100.00
Excludes Rs. 0.62 crore (previous year Rs 0.55 crore) for two wheelers produced and capitalised during theyear.
Excludes imported items sold and purchased as indigenous components.
f) Expenditure in foreign currency (on accrual basis):

(Rupees in crores)
AMNUALREPOin KXW-10
Royalty
Technical guidance fee
Model fee
Export commission
Travel and other accounts
Advertisement and Publicity
g) Earnings in foreign currency (on accrual basis):
FOB value of exports

Freight and insurance
416.36 324.01 (Rupees in crores)
2.22 3.33
15.91 30.78 This year Previous year
15.91 11.67 337.27 247.04
6.97 3.78 0.32 1.07
28.09 4.23
TWO WHEELS OF
GROWTH
h) Managerial remuneration:
(Rupees in crores)

Whole time Directors
Remuneration* 3.47 3.14
Commission 118.00 74.39
121.47 77.53
Non-Executive Independent Directors
Commission 0.89 0.31
122.36 77.84
Directors' sitting fee 0.13 0.10
122.49 77.94
Excludes incremental contribution forgratuity,asthecontributionsaredeterminedfortheCompany as a whole.
Computation of net profit in accordance with section 198 ofthe Companies Act,1956.
(Rupees in crores)

Profit before taxation as per profit and loss account 2,831.73 1,781.46
Add:-
Managerial remuneration 122.49 77.94
Provision for doubtful debts 2.16
Provision for diminution in value of investment long term 0.38 0.20
Loss on sales of long term non-trade investments 2.04
Net profit as per section 349 ofthe Companies Act,1956 2,956.76 1,861.64
Maximum managerial remuneration to four whole time

directors (including commission) at 10% of net profit 295.68 186.16
Maximum managerial remuneration to non whole time directors

(including commission) at 1 % of net profit 29.56 18.61
325.24 204.77
Commission component of managerial remuneration to
- Four whole time directors restricted to 1% of net profit
( 1 % of net profit) per director. Restricted to 118.00 74.39
- Non-Executive Independent Directors 0.10% of net profit.

Restricted to 0.89 0.31
Commission restricted to 118.89 74.70
1 10 ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMrTED

111
i) Provision and/or payment in respect of Auditors' remuneration:
(Rupees in crores)

a) As Statutory Auditors
- Audit fee 0.45 0.38
Limited Review of unaudited financial results 0.24 0.24
- Corporate Governance and other certification 0.05 0.02
b) In other capacity 0.15
c) Out of pocket expenses # #
# This year Rs 38,000 (previous year Rs 40,143)
j) Amount remitted in foreign currencies towards dividends during theyear:

(Rupees in crores)

No. of No of equity Dividend No. of No of equity Dividend
Non-Resident shares held remitted Non-Resident shares held remitted
shareholders shareholders
2007-2008 - Final 1 51918750 98.65
2008-2009 - Final 1 51918750 103.84
103.84 98.65
16. Previous year's figures have been recast/regrouped wherever necessary.
17. Schedules 1 to 12 form an integral part ofthe accounts.
Forand on behalf ofthe Board of Directors


Place : New Delhi
Date :April 19,2010 ILAMC. KAMBOJ Sr. G.M. Legal & Company Secretary

1 12
TWO WHEELS OF
GROWTH
PART IV OF SCHEDULE VI HERO HONDA MOTORS LIMITED
TO THE COMPANIES ACT, 1956
Balance Sheet Abstract and Company's General Business Profile
I. Registration Details
Registration No. 17354
State Code 55
Balance Sheet Date 31.03.2010
II. Capital Raised during the year (Rupees in crores)

Public Issue Nil Rights Issue Nil
Bonus Issue Nil Private Placement Nil
Position of Mobilisation and Deployment of Funds (Rupees in crores)

Total Liabilities 3531.05 Total Assets 3531.05
Sources of Funds Application of Funds
Paid-Up Capital 39.94 Net Fixed Assets 1706.92
Reserves & Surplus 3425.08 Investments 3925.71
Secured Loans Nil Net Current Assets* (2101.58)
Unsecured Loans 66.03 Misc. Expenditure Nil
•Includes Deferred Tax Liability (Net) Rs. 152.75 crores
IV. Performance of Company (Rupees in crores)

Turnover 16,098.79 Total Expenditure 13,267.06
Profit before tax 2,831.73 Profit after Tax 2,231.83
Earnings per share Rs. 111.77 Dividend Rate 5500%
V. Generic names of Three Principal Products/ Services of Company (as per monetary terms)
Item Code No. (ITC Code) 87112003
Product Description Motorised two wheelers upto
350cc engine capacity
Forand on behalf of the Board of Directors


Place : New Delhi
Date :April 19,2010 ILAMC. KAMBOJ Sr. G.M. Legal &Company Secretary

1 13
Reconciliation of Net Income as per US GAAP Accounts and Audited Accounts as per Indian Companies Act 1956
(Rs. In millions)
2010
2009 2008 2007 2006
Net Profit after tax for the year as per audited accounts 22,318.30
Add / (Less): Profit / (Loss) of 12,817.60 9,678.80 8,578.90 9,713.40
- income from investments (unrealised gain/loss)
- affiliated company 15.13
- held to maturity securities 2.62 12.16 10.67 30.60
- Exchange fluctuations 22.90
- Depreciation effect of exchange fluctuations 2.41 11.30 (8.40)
- Depreciation on leased assets 0.68 0.68 5.37 18.26
- Lease rentals paid (76.60)
- Interest portion of lease rentals 135.58
- Provision for deferred tax (5.15) (9.90)
Net Income as per US GAAP 22,330.69 (151.18) 180.33 (167.24) (103.56)
12,669.72 9,871.97 8,439.00 9,722.28
Balance sheet as at March 31 (As per US GAAP)

(Rs. In millions)
2010
2009 2008 2007 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents 19,072.12
Trade accounts receivables 1,083.88 2,195.72 1,310.92 357.82 1,587.22
Inventories 4,364.04 1,499.38 2,974.38 3,352.48 1,586.58
Pre-paid expenses and other current assets 4,605.78 3,268.34 3,171.04 2,755.84 2,265.54
3,171.48 1,911.49 2,666.58 2,773.08
Total current assets 29,125.82
Investment (held to maturity securities) 3,138.99 10,134.92 9,367.83 9,132.72 8,212.42
Inestment in mutual funds 37,126.22 416.79 1,599.99 1,612.79 1,595.18
Investment in affiliate, at equity 282.33 33,637.31 24,617.11 18,522.31 19,680.81
Property, plant and equipment 16,919.54 267.20 264.58 252.42 241.75
16,790.44 15,494.75 13,401.08 9,765.51
Total assets 86,592.90
61,246.66 51,344.26 42,921.32 39,495.67
LIABILITIES
Trade accounts payable 11,114.40

Accrued expenses 418.12 7,030.30 7,560.70 5,548.20 6,462.70
Indian income taxes 444.80 516.62 494.82 417.58 305.02
Other current liabilities 29,651.25 80.60 63.90 38.50 40.30
Long term debt due within one year 184.93 8,228.25 5,689.15 4,871.05 4,266.15
Total current liabilities 41,813.50 184.93 184.93 206.10 227.27
Deferred income taxes 1,977.88 16,040.70 13,993.50 11,081.43 11,301.44
Long-term debt 475.37 1,671.49 1,391.67 1,529.68 1,375.63
Total liabilities 44,266.75 599.97 1,135.07 1,445.60 1,630.53
18,312.16 16,520.24 14,056.71 14,307.60

TWO WHEELS OF
GROWTH
(Rs. In millions)
2010 2009 2008 2007 2006

STOCKHOLDERS' EQUITY
Common stock, par value; Rs. 2 (previous year Rs. 2)
Authorised 250,000,000;
Outstanding shares 199,687,500
(Previous year 199,687,500) 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 41,926.74 42,535.09 34,424.61 28,465.20 24,788.66
Total stockholders' equity 42,326.15 42,934.50 34,824.02 28,864.61 25,188.07
Total liabilities and stockholders' equity 86,592.90 61,246.66 51,344.26 42,921.32 39,495.67
Profit & Loss statement for the year ended March 31 (As per US GAAP)
(Rs. In millions)
2010 2009 2008 2007 2006

Net sales 157,581.80 123,191.20 103,318.00 98,999.60 87,139.81
Cost of goods sold 119,749.34 97,838.08 82,724.62 79,931.23 67,548.97
Selling, administrative and general expense 13,122.75 9,871.34 8,619.10 8,558.40 6,979.60
Other (income) and expense (3,418.93) (2,019.32) (1,783.26) (1,748.47) (1,572.20)
Interest net expense (income) (206.20) (316.80) (358.10) (229.90) (51.40)
Total expense 129,246.96 105,373.30 89,202.36 86,511.26 72,904.97
Income before income taxes 28,334.84 17,817.90 14,115.64 12,488.34 14,234.84
Indian taxes on income 6,004.15 5,148.18 4,243.67 4,049.34 4,512.56
Net income 22,330.69 12,669.72 9,871.97 8,439.00 9,722.28
Net earning per share
On share value of Rs. 2 each 111.83 63.45 49.44 42.26 48.69
Average common stock outstanding (numbers) 199,687,500 199,687,500 199,687,500 199,687,500 199,687,500
1 14 ANNUAL REPORT 2009-10HERO HONDA MOTORS LIMITED

1 15
NOTES
NOTES
NOTES
NOTES
NOTES
a
34, Community Centre,
Basant Lok, Vasant Vihar,
New Delhi-110 057, India
Ph. 91-11-2614 2451,26144121
www.hcrohonda.corn
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ANNUAL REPORT 2009-10

I Risks and Outlook

Two Wheels of Growth

In India's auto industry today, Hero Honda represents the

Le Corbusier, the famous Swiss architect, once remarked:

z Through these years, Hero Honda has resolutely stuck to its

So we focused on our core business - the two wheeler

In India's auto industry today, Hero Honda represents the TWO

By any yardstick and through any stretch of imagination,

HERO HONDA MOTORS LIMITED ANNUM REPORT 2009-10

To be sure, there will be greater competition and there will be

Lower Middle Class Indian.

The two wheeler industry in general and companies such as

In my message last year, I mentioned how champion

Takashi Nagai Suman Kant Munjal Sunil Kant Munjal

Gen.(Retd) V.P.Malik Dr. Pritam Singh Member

SHAREHOLDERS' GRIEVANCE COMMITTEE

Mr. Satoshi Matsuzawa REMUNERATION COMMITTEE

Gen. (Retd.) V. P. Malik Member

ANNUAL REPORT 2009-10

Dr. Anand C Burman

SENIOR MANAGEMENT TEAM

Anil Dua Sr.Vice President - Sales,

Vikram Kasbekar Head-Operations and Supply Chain

Dr.Anadi S. Pande vice President - HRM, Corporate

Vijay Sethi Vice President - Information Systems

Hero Honda is a joint venture, set up in 1984

■EC" Creating relationship Creating and

Three, globally benchmarked, state of the art

HERO HONDA MOTORS UMmSD ANNUAL REPORT 2009-10

Twenty20 and team

ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMITED

28.1% increase Sales [Nos.]

to Rs. 16,099 crores

5500% dividend '

market (Rs. Crores)

Network of 4500 plus customer touch points

NDTV Profit Business Leadership Lifetime

Economic Times Corporate Excellence Awards

Mr. Anil Dua -Sr.Vice President Sales,

Mr. Vijay Sethi -Vice President - Information

CAUTIONARY STATEMENT : Statements In this management discussion and

HERO HONDA MOORS LIMITED ANNUAl REPORT 2009-10

As 2009-10 progressed, India nonchalantly brushed

INDUSTRY AND SEGMENT ANALYSIS

After growing tepidly at 5 percent in 2008-09 the two

Sales grew by 24% this financial year, and crossed 10 million

Exports Performance Performance and durability of the Company's products have

The strong peformance came on the back of successful

Profitability Raw Material Costs

Key Indicators Of Profitability 76.40%

40.00% 50.00% 60.00% 70.00% 80.00% 90.00%

■■'''''■sn 14.10% OPBT = OPERATING PROFIT

RISKS AND OUTLOOK

r*~ •■; ; <

three plants. Flexible production techniques

mm quality standards despite of increase in production.

The highlight of the year was a doubling of Hero Honda's

ANNUAL REPORT 2009-10 HERO HONDA MOTORS LIMITED

At the moment, there is a network of more than 2000 rural sales

HERO HONDA MOTORS LIMITED ANNUAL REPORT 2009-10

lit RAL MARKETING