Dear Shareholders,
I hope that you, your families and your loved ones are keeping safe and healthy.
Eleanor Roosevelt once said,
“If Life was predictable, it would cease to be life....”
The year 2020 will forever be etched in history as the time when the human race changed forever. No one could have predicted this turn of events that evolved into the coronavirus pandemic.
Yet, when the going gets tough, the tough get going. In the face of adversity, we at Hero MotoCorp worked diligently, planned and equipped ourselves to counter the situation we were in. I am proud to share with you that we honed our competencies to prepare ourselves for the future and have come out much stronger.
From taking preventive measures, caring for our communities, stakeholders, our associates in Hero and their families, and keeping a positive outlook to hitting the ground sprinting on re-opening, we have truly led the charge on every front!
NAVIGATING DYNAMICALLY THROUGH THE COVID-19 CRISIS
At Hero MotoCorp, we were amongst the very first to recognise the oncoming crisis as early as February 2020 and constitute a Business Continuity Task Force under my direct supervision. Keeping the safety and well-being of our people as our topmost priority, we halted operations at all our manufacturing plants, offices and other facilities across the globe. We instituted the Work-From-Home (WFH) policy on March 22, 2020, two days prior to the government enforced national lockdown in India.
With the Business Continuity Plan in place, Hero MotoCorp was among the first automotive companies in India to resume plant operations on May 4, 2020 in a gradual manner. This decision was based on strict policies and protocols that encompassed every possible measure to ensure the health and safety of everyone across all our offices, manufacturing plants and retail customer touch points.
Your Company’s strong and debt-free balance sheet enabled us to manage liquidity effectively and provide support to partners, ensuring financial viability of the entire ecosystem.
EFFECTIVE & CONSTANT COMMUNICATION
Communication has come to play an even more critical role at a time when almost the entire world has been working from home. Constant communication and personal engagement have proven to be the key to business continuity.
We at Hero MotoCorp have been communicating with all our diverse stakeholder groups in a meaningful and consistent manner, throughout the lockdown period and continue to do as I write to you. I have personally hosted more than three-dozen digital Town Halls so far – interacting with Company employees, dealers, supply chain partners, our global distributors, investors and various other stakeholders across the globe.
Through these Communications outreach, I have kept everyone’s morale high and spread positivity and optimism, which has helped us bounce back strongly as a cohesive unit.
BSVI EXHAUST EMISSION NORMS – LEADING THE WAY TOWARDS A SUSTAINABLE FUTURE
Hero MotoCorp has been at the forefront of driving sustainability and green measures through its planning, operations and its products. Working in line with this ethos, your Company became the first two-wheeler manufacturer in India to receive the BSVI certification as early as June of 2019.
Staying in top gear, it was your Company that launched India’s first BSVI motorcycle – the Splendor iSmart 110. As planned, we had a smooth transition of the BSIV products to the new BSVI emission norms.
I am happy to report that the response to our new range of BSVI products from our customers, dealers as well as enthusiasts has been overwhelming. The retail sales of BSVI vehicles after the lockdown was lifted, provide an extremely positive outlook. There is also tremendous excitement and anticipation for the newly launched Xtreme 160R.
Staying in top gear, it was your Company that launched India’s first BSVI motorcycle – the Splendor iSmart 110. As planned, we had a smooth transition of the BSIV products to the new BSVI emission norms.
Most importantly, your Company continues to remain debt free and maintains a strong balance sheet. Its reserves have now reached ` 14,096 crore (US$ 1,988 million). The financial strength of the Company augurs well and will help the Company to successfully navigate itself into the future despite these trying times.
FINANCIAL PERFORMANCE & BUSINESS OUTLOOK
Your Company delivered a robust financial performance despite the economic slowdown and the impact of COVID-19. Our Profit After Tax (PAT) grew by 7.3% in FY20. We continue to maintain an attractive and leading edge dividend policy by declaring an overall dividend of ` 90 per share for FY20.
Most importantly, your Company continues to remain debt free and maintains a strong balance sheet. Its reserves have now reached ` 14,096 crore (US$ 1,988 million). The financial strength of the Company augurs well and will help the Company to successfully navigate itself into the future despite these trying times.
The short-term business outlook remains uncertain due to the COVID-19 pandemic. However, the long-term story of India and that of the two-wheeler industry remains intact, strong and positive. There are ample growth opportunities in India, as well as in the global markets to grow our business to new heights. The continuous expansion of our geographic footprint over the past five years to more than 40 countries now creates a platform to build scale beyond India. Our investments in R&D over the past five years have been twice that of the other players in the industry. We will continue to invest in brands and R&D to sustain our growth in the future.
Most importantly, your Company continues to remain debt free and maintains a strong balance sheet. Its reserves have now reached ` 14,096 crore (US$ 1,988 million). The financial strength of the Company augurs well and will help the Company to successfully navigate itself into the future despite these trying times.
FORGING A PREMIUM CHARISMA
The product portfolio of your Company is well positioned to capitalise on this growth opportunity. We continue to remain a dominant leader with leading edge products in the Entry and Executive segment, while aggressively building our portfolio in the premium segment. Our recent market share improvement in premium scooters (125cc) is heartening and is a step in the right direction to win considerable market share in the scooter segment as well.
During FY20, we have further strengthened our premium motorcycle portfolio with the launch of various new benchmark-setting products. The XPulse 200, launched during the Diwali festive season won the ‘Indian Motorcycle of the Year’ Award for 2019. It has also begun to create a tremendous fan base across our global markets.
With products such as Maestro Edge 125 – India’s first scooter with Fuel Injection, the XPulse 200 range, Xtreme 200S, the new Glamour, Super Splendor, Pleasure+ and the new generation Passion Pro, our entire portfolio is now younger, much more attractive and significantly diverse. With excellent product planning protocols in place and creative design and engineering capabilities, we are determined to have a strong presence in the premium segment with a robust portfolio of products over the next three to five years.
HERO WORLD 2020 – A GLIMPSE INTO THE FUTURE OF MOBILITY
In February 2020, we curated a unique event called the Hero World 2020 at our R&D facility - the Centre of Innovation and Technology (CIT) - in the northern Indian city of Jaipur. This event - attended by global media, investors, dealers from India, supply chain partners, our global distributors - unveiled the new Vision of Hero MotoCorp, to be the Future of Mobility. During this four-day long event, Hero MotoCorp showcased numerous products, future mobility solutions, new concepts and conducted training and design workshops, test rides of our new products and concepts during this event. This first-of-its-kind event reinforced Hero’s commitment to lead the way and “To Be The Future of Mobility.”
DIVERSITY & INCLUSION
Enhancing Diversity and Inclusion (D&I) is a key focus area for the organisation. I am driving this agenda, considering my personal passion and commitment for this cause.
As a result of this concerted effort, the number of women in our workforce crossed an important milestone of 1,000 in FY20.
In line with our D&I Vision, we have adopted an integrated approach that includes mentoring programmes to increase and retain workforce diversity within the organisation, recruitment initiatives, education, training and career development.
To promote a culture of diversity and inclusivity, we hold a number of Gender Sensitisation Workshops and D&I Talk series for our employees, where external thought leaders and eminent achievers are invited to speak on global best practices.
GLOBAL OUTREACH
Despite the sluggish economic activity around the world during the year, we continued to collaborate with our partners to keep growing our global footprint. With the appointment of a new distributor in Peru, we have now expanded our global footprint to more than 40 countries in FY20, up from just four countries in FY12.
We have been following a market-specific strategy to further enhance our presence in markets in specific geographies. For example, we plan to build on the momentum we have already gained in the Asian and Latin American markets by launching new models in the 150-160cc category.
Having grown in double digit in Africa during FY20, we are sharpening our focus among the ‘Boda-Boda’ (local two-wheeler taxi) riders.
In Bangladesh and Nepal, we are deepening our financing network across markets and strengthening the momentum. Increasing ‘digitalisation’ is also helping us drive sales in several of our global markets across the globe, including Bangladesh, Nepal, Colombia, and the Central American and Caribbean (CAC) countries.
ENHANCING DIGITALISATION
The Digital Ecosystem of the Company is an important area that we continue to focus on. Hero Connect - our CRM initiative - was extended to Authorised Representatives of Dealers (ARDs), thereby ensuring that our entire channel is now using the same platform for all their processes. This has resulted in consistent business experience across channel partners. We also set up a ‘Plant Utility Cockpit’ to give a ‘Bird’s eye view’ of all utilities operations. During the year, we created a dedicated team to work on Industry 4.0 with an objective of making our manufacturing faster, much more efficient and customer-centric.
“The future depends on what we do in the present.”
- M K Gandhi
CARING, COMPASSIONATE & RESPONSIBLE
As a caring organisation, your Company has always gone beyond the immediate call of business to contribute towards making our planet a better place.
At Hero MotoCorp, we continue to play a critical role in achieving the Sustainable Development Goals (SDGs) through appropriate business practices and focused investments. Our Corporate Social Responsibility (CSR) framework is designed to make the maximum measurable impact through multiple social interventions.
Our continuous commitment towards CSR is evident from our CSR spends in the past five years (2015-2020), which is much more than the specified amount of 2% of Net Profit.
We at Hero MotoCorp – along with the other Hero Group companies – have committed a corpus of ` 100 crore (US$ 14 million) towards COVID-19 relief efforts in India.
In addition, we have rolled out an extensive relief effort and exercise that includes providing lakh of nutritious meals to the needy and the manufacture and distribution of sanitisers and protective face masks to the public. Through the ingenuity of our engineers, we have also developed a first-responder mobile ambulance that will be in service in the rural areas.
CREATE, COLLABORATE, INSPIRE!
Our world is going through a period that will define the lives of future generations. Human endeavour and resolve are being tested as we begin to overcome the ongoing pandemic. Together, we will emerge much wiser, stronger and better prepared for any challenges that we will be faced with in the future.
At Hero MotoCorp we are laying the foundation of our journey into the future.
We are on the cusp of creating yet another world record, a historic milestone of 100 million motorcycles and scooters in cumulative sales in FY21. The milestone of 100 million is not just a number – it also demonstrates the faith and trust that our customers around the world have placed in Hero!
However, we are not resting on our laurels. In keeping with our Vision and Mission, we are also stepping-up our efforts towards developing mobility solutions for the future through a collaborative approach. Our teams are constantly working on new business models, new vehicle concepts and alternative mobility solutions, keeping Hero MotoCorp ahead of the curve.
I seek your support and best wishes for our journey ahead and the upcoming milestones…
Stay safe. Stay upbeat.
Best regards,
Pawan Munjal