Financial goal setting

Definition: Establishing short- or long-term objectives, usually incorporating deadlines and quantifiable measures

goal congruence business definition

Aligning the goals of two or more groups. Corporations often justify giving management generous stock options on the basis of aligning management goals with those of the firm's stockholders.

Hero MotoCorp, the world's largest two-wheeler maker, has signed a technology-sharing deal with US motorcycle firm Erik Buell Racing (EBR), a year after ending a 27-year-old pact with Japan's Honda Motors. Munjals-owned Hero MotoCorp will buy technology from EBR without sharing profits or ownership. After its December 2010 breakup with Honda, the Indian company had been scouting for new technology to compete better in the domestic two-wheeler segment where it holds 56% market share "It's a very flexible partnership where they will develop cutting-edge technology based on our needs and market demands," Hero MotoCorp managing director and CEO Pawan Munjal said, adding that the company will first develop bikes bigger than its top-end 225cc Karizma ZMR. EBR, a specialist in customised superbikes, is already working on some of Hero MotoCorp's products and will develop new bikes and scooters that are likely to hit the market in 2013. Hero does not intend to launch 1,000cc and above superbikes immediately and will gradually move up the value chain. Hero MotoCorp, earlier known as Hero Honda, competes with Bajaj, TVS, Honda and Yamaha in the domestic two-wheeler segment, which is forecast to grow 10%-12% in the next fiscal year. It had grown into the world's largest-selling bike brand on the back of technology from the Japanese automaker, with which it was sharing equity and paying royalty on every product. Honda, which operates its own subsidiary in India, is currently Hero's closest rival in the domestic market. Hero, one of largest business houses in India, posted its highest quarterly profit at Rs 613 crore in the quarter ended December 31. The company, which is reported to have cash reserves of more than Rs 4,000 crore, plans to enlarge its R&D setup at Daruhera into a full-fledged design and engineering centre with EBR's help. "We are open to all options as we move into being a diversified automotive company," Munjal said.

EBR has already developed a hybrid scooter concept, Leap, which was showcased by Hero at the Auto Expo in New Delhi earlier this year. "We are already customising technologies for Hero MotoCorp using the frugal Indian engineering expertise that would be available for developing different kinds of two wheelers," EBR chairman Eric Buell said, adding, "After Leap, we plan to bring in some bikes that would have a global appeal and can be locally manufactured." Separately, Hero also announced plans to enter motorcycle racing by sponsoring two teams-Hero and AMSOIL Hero-in the AMA Pro Racing National Guard Superbikes Championship in the USA. "As a company to nurture sporting talent, we intend to develop a full-fledged team for racing and would gradually develop teams from India," Munjal said.

The 50-share Nifty index is expected to open higher on Tuesday tracking positive Asian markets. Investors will also keep a close eye on shares of Here MotoCorp Ltd which reported its December sales figure post market hours. The two-wheeler maker reported sales of 5,40,276 units in December, 2011, registering a jump of 7.8 per cent over year-ago period. Stocks of two-wheeler manufacturers such as Here Moto Corp slipped 5-10% in trade on Monday on account of poor auto sales numbers for the month of December. It was slow and steady start for the year 2012 as markets eventually closed positive after remaining flat-to-negative for most part of the day on Monday. "Today taking cue from global markets, we are likely to open with a gap-up. The Nifty future short term averages suggest that any move above 4685 on the Nifty could be an indication of rising momentum," The 50-share Nifty index is expected to open higher on Tuesday tracking positive Asian markets. Investors will also keep a close eye on shares of Here MotoCorp Ltd which reported its December sales figure post market hours. The two-wheeler maker reported sales of 5,40,276 units in December, 2011, registering a jump of 7.8 per cent over year-ago period. Stocks of two-wheeler manufacturers such as Bajaj Auto, TVS Motors and Here Moto Corp slipped 5-10% in trade on Monday on account of poor auto sales numbers for the month of December.

It was slow and steady start for the year 2012 as markets eventually closed positive after remaining flat-to-negative for most part of the day on Monday. "Today taking cue from global markets, we are likely to open with a gap-up. The Nifty future short term averages suggest that any move above 4685 on the Nifty could be an indication of rising momentum,"

DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956: 1. that in the preparation of the annual accounts for the year ended March 31,2011, the applicable accounting standards have been followed; 2. that appropriate accounting policies have been selected and applied consistently and judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2011 and of the profit of the Company for the financial year ended March 31,2011; 3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that the annual accounts for the year ended March 31,2011 have been prepared on a going concern basis. Definition of

profit center
business unit responsible for own costs and profits a person, unit, or department within an organization that is considered separately when calculating profit. Profit centers are used as part of management control systems. They operate with a degree of autonomy with regard to marketing and pricing, and have responsibility for their own costs, revenues, and profits. Hero MotoCorp, the world`s largest two-wheeler manufacturer, has posted a net profit of Rs 6.13 billion for the quarter ended December 31, 2011 as compared to Rs 4.29 billion for the quarter ended December 31, 2010, representing an increase of 42.89%.

Total income has increased from Rs 52.23 billion for the quarter ended December 31, 2010 to Rs 61.07 billion for the quarter ended December 31, 2011, representing an increase of 16.93%. The company`s profit before tax for the period stood at Rs 7,237.9 million, while profit after tax (PAT) for the period stood at Rs 6,130.3 million. The company has recorded an EBIDTA margin of 15.63%. ``The company registered its highest ever quarterly volume of 15,89,286 two-wheelers in the third quarter this fiscal, fuelled by consistent half million-plus unit sales in all the three months of the quarter - 512,238 units in October, 536,772 units in November and 540,276 units in December,`` it said. ICICIdirect broking house said, ``The total operating income was slightly above our estimate at Rs 60.31 billion (I-direct estimate of Rs 59.60 billion) reflecting 16.9% YoY growth. The EBITDA margin came in at 15.6% (down 13 bps QoQ) indicative of raw material pressures due to currency depreciation. The reported PAT rose 42.9% YoY to Rs 6.13 billion (I-direct estimate of Rs 6.27 billion).`` Brijmohan Lall, chairman, Hero MotoCorp said, ``Last quarter has been particularly satisfying as we have set new benchmarks of excellence. This should help us realize our larger vision of building a truly global company with a strong Indian foundation. We are optimistic about the New year and will continue to provide the best of technology and products to our customers.`` Pawan Munjal, managing director & chief executive officer, Hero MotoCorp said, ``It is heartening to see that our sales have been in excess of half a million two-wheelers in every month of the quarter, thus further strengthening our leadership. We are well in line to meet our guidance for over six million unit sales in the fiscal 2012. ``In FY12 the industry has been facing constraints of rising fuel prices, high interest rates and a sharp rupee depreciation, leading to increased input costs impacting the margin. In these challenging times, while the domestic industry is witnessing a growth of 15%, we at Hero MotoCorp are growing faster than that. We have also seen a softening in commodity prices of late, which has, however, been off-set by the rupee depreciation. Therefore, while we expect market demand for two-wheelers to remain stable, a lot will depend on the overall economic and political scenario going forward.`` Hero MotoCorp also outlined its strategic plans for the year, unveiling a range of its new generation of two-wheelers -an al1 new 110cc Passion X Pro, a 110cc masculine scooter, Maestro, and a new 125cc bike, Ignitor to be launched in the Indian market over the next few months. Shares of the company gained Rs 43.6, or 2.35%, to trade at Rs 1,900.75. The total volume of shares traded was 167,318 at the BSE (3.45 p.m., Thursday).

BUSINESS PERFORMANCE During the yearyour Company notched 17.44% growth in sales, with volumes of 54,02,444 units compared to 46,00,130 units in 2009-10. In value terms total sales (net of excise duty) increased by 22.13% to Rs. 19,245.03 crores in 2010-11 from Rs. 15,758.18 crores in 2009-10. Your Company continued to lead the domestic motor cycle market with 54.6% market share. The Company successfully launched six new models including variants during the year under review. Total income of the Company grew by 22.18%, from Rs. 16,098.79 crores to Rs. 19,669.90 crores in 2010-11. The Company''s Profit After Tax (PAT) declined by 13.62% to Rs. 1,927.90 crores from Rs. 2,231.83 crores in the previous fiscal. The Company''s Earnings Before Interest Depreciation and Taxes (EBITDA) margins decreased from 17.45% in 2009-10 to 13.49% in 2010-11. Operating profit (PBT before other income) decreased from Rs. 2,575.48 crores in 2009-10 to Rs. 2,214.61 crores in 2010-11. The margin fell despite a healthy growth in the sales volume on account of higher prices of raw materials & components. During the year, the Company also retained, for the tenth year in a row, its position as the World''s No. 1 Two Wheeler Company. A detailed discussion on the business performance and future outlook has been given in the Management Discussion & Analysis. DIVIDEND Given the strong financial position, your Company declared and paid an Interim Dividend of 3500% i.e. Rs. 70 per Equity Share of the face value of Rs. 2 each, totaling Rs. 1,397.81 crores (exclusive of tax on Dividend). Your Directors are pleased to recommend a Final Dividend of 1750% i.e. Rs. 35 per Equity Share of the face value of Rs. 2 per share, aggregating to Rs. 698.91 crores (exclusive of tax on Dividend), for the financial year ended March 31, 2011 for your approval. The final dividend, if approved will be paid to the eligible members well within the stipulated period.

TRANSFER TO GENERAL RESERVE Reaffirming the financial strength of the Company, a sum of Rs. 192.79 crores has been transferred to the General Reserve of the Company for the financial year 2010-11. MATERIAL CHANGES AND COMMITMENTS No material changes and commitments affecting the financial position of the Company have occurred between April 1, 2011 and the date on which this Report has been signed. PROMOTER GROUP REALIGNMENT AND IMPLICATIONS During the year, the Indian Promoter Group of the Company, which comprised of Hero Investments Private Limited (HIPL), Bahadur Chand Investment Private Limited (BCIPL) and Hero Cycles Limited (Hero Cycles), re-aligned the shareholding in the Company, following a family agreement. As a result. Hero Cycles transferred its shareholding in the Company to HIPL on May 28,2010. As a result of these transactions, the Indian Promoter Group of the Company now comprises of HIPL and BCIPL owned and controlled entirely by the Munjal Family headed by Mr. Brijmohan Lall Munjal, Chairman of the Company. Also, during the year, the Indian Promoter Group and Honda Motor Co. Ltd., Japan (Honda) entered into a Share Transfer Agreement (the Agreement) on January 22, 2011. As per the terms of the Agreement, Honda had agreed to transfer its entire shareholding of 26% in the Company to the Indian Promoter Group, bringing an end to the joint venture between the two promoter groups of the Company. The acquisition was completed on March 22, 2011 and the shares held by Honda were transferred to the Indian Joint Venture partner. In addition to the Agreement, the Indian Promoter Group and Honda also entered into a License Agreement on January 1,2011. As per this Agreement, Honda has given to the Company, the right and license to manufacture, assemble, sell and distribute certain products and their service parts under their Intellectual Property Rights. The amount to be paid by the Company for licenses involve: Rs. 1,928.37 crores for manufacture, assembly, selling and distribution and Rs. 550.96 crores for exports. The amounts have been capitalised as Intangible Assets (along with applicable cess and duty), based on the

probability that the future economic benefits attributable to these assets will flow to the Company. This is because w.e.f. January 1, 2011 the Company''s liability to pay ongoing royalty for all existing/modified products/parts would cease. These Intangible Assets have been amortised over a period of 42 months up to June 30,2014. Accordingly, liability payable up to March 31, 2011 has been included under current liabilities and the balance has been disclosed as Defer payment credits. CHANGE OF NAME During the current financial year, in view of the separation of the joint venture partners, your Company had started the process of change of name of the Company from Hero Honda Motors Limited to Hero MotoCorp Limited. The new name was approved by the members of the Company in their Extra-ordinary General Meeting held on June 17, 2011 and subsequently fresh certificate of incorporation consequent to change of name dated July 28, 2011 has been received by the Company. Also, the new Corporate Identity (new Corporate Logo) was adopted by the Board of Directors of the Company on August 17,2011 for all future practical purposes. BOARD OF DIRECTORS Appointment/re-appointment During the year under review, Mr. Toshiaki Nakagawa was re-appointed as the Jt. Managing Director w.e.f. February 1, 2011 for a further period of 6 (six) months. Also, Mr. Paul Edgerley was appointed as Non-Executive Director of the Company w.e.f. May 4, 2011. The Board extends its warm welcome to Mr. Edgerley on the Board and wishes him a successful tenure with the Company. In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Mr. Pradeep Dinodia, Gen. (Retd.) V.P. Malik, Mr. Brijmohan Lall Munjal and Mr. Sunil Kant Munjal will retire by rotation at the ensuing Annual General Meeting and being eligible.offerthemselvesfor re-appointment. The present term of appointment of Mr. Brijmohan Lall Munjal, Chairman and Director in the Whole-time employment of the Company has expired on August 2, 2011. Further the term of the appointment of Mr. Pawan Munjal, Managing Director & CEO will come to an end on September 30,

2011. The Board has, on the recommendation of Remuneration Committee and subject to your approval in the general meeting and such other approvals, if any, has re-appointed them for a further period of 5 (five) years respectively. The Board has also appointed Mr. Sunil Kant Munjal as the Jt. Managing Director of the Company for a term of 5 (five) years effective August 17,2011. Brief resume/details of the Directors, who are to be appointed/ re-appointed as mentioned herein above have been furnished alongwith the Explanatory Statement to the Notice of the ensuing Annual General Meeting. The Board recommends their re-appointment/appointment at the ensuing Annual General Meeting. Resignations Mr. Om Prakash Munjal resigned from the Board w.e.f July 29, 2010 and Mr. Toshiaki Nakagawa and Mr. Sumihisa Fukuda resigned from the Company w.e.f. March 22,2011 in view of the abovestated changes in the promoter group. Further, Mr. Yuji Shiga and Ms. Shobhana Bhartia resigned from the Board of the Company w.e.f. April 13,2011. Thereafter Mr. Toshiyuki Inuma, who was appointed as a Non-Executive Director of the Company w.e.f. April 13, 2011 and Mr. Takashi Nagai resigned from the Board of the Company w.e.f. August 8,2011. The Board appreciates and expresses gratitude for the valuable contribution made by all the outgoing Directors during their fruitful tenure as the Directors of the Company. DIRECTORS'' RESPONSIBILITY STATEMENT To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956: 1. that in the preparation of the annual accounts for the year ended March 31,2011, the applicable accounting standards have been followed; 2. that appropriate accounting policies have been selected and applied

consistently and judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2011 and of the profit of the Company for the financial year ended March 31,2011; 3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that the annual accounts for the year ended March 31,2011 have been prepared on a going concern basis. MANAGEMENT DISCUSSION & ANALYSIS REPORT A detailed chapter on, ''Management Discussion and Analysis'' (MDA), pursuant to Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility (CSR) is an integral part of the Company ethos. The Company supports the Raman Kant Munjal Foundation, which in turn runs a school and a hospital. The Foundation also conducts various outreach programs in the villages around the Company''s factories. These programs are conducted in partnership with leading NGOs, and over the years, there have been significant spinoffs. CORPORATE GOVERNANCE At Hero MotoCorp, it is our firm belief that the essence of Corporate Governance lies in the phrase ''Your Company''. It is ''Your'' Company because it belongs to you - the shareholders. The Chairman and Directors are ''Your'' fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximises ''Your'' long-term value. Your Company is committed to benchmarking itself with global standards for providing good Corporate Governance. It has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with. The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website of the Company www.heromotocorp.com. A Report on Corporate Governance along

with the Auditors'' Certificate on its compliance is annexed hereto as Annexure-1. INTERNAL CONTROL SYSTEMS The Company has a proper and adequate system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and those transactions are authorised, recorded and reported correctly. An extensive programme of internal audits and management reviews supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down forthis purpose.The internal control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets. The Company also has an Audit Committee, comprising four Non-Executive & Independent and professionally qualified Directors, who interact with the Statutory Auditors, Internal Auditors, Cost Auditors and Auditees in dealing with matters within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and internal controls. During the year under review, the Committee met 4 (four) times. AUDIT COMMITTEE RECOMMENDATION During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need forthe disclosure of the same in this Report. RISK MANAGEMENT SYSTEM Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for risk assessment and its minimisation. It ensures that all the Risks are timely defined and mitigated in accordance with the well structured Risk Management Process. The Audit Committee and Board reviews periodically the Risk Management Process. RATINGS The rating agency ICRA Limited, has reviewed and reaffirmed the rating assigned to the Company for its Non-convertible Debenture Programme as LAAA [pronounced L triple A] indicating the highest credit quality and A1 [pronounced A one Plus] for its Non-fund based facilities and

LAAA [pronounced L triple A] to Fund based facilities indicating the highest credit quality rating carrying lowest credit risk. ICRA also has LRAAA [pronounced L R triple A] issuer rating assigned for the Company. The rating agency CRISIL, during the year under review, assigned the bank loan ratings of A A A/Stable and P1 to the Cash Credit Limit & Letter of Credit Limit Facility respectively to the Company. FIXED DEPOSITS During the year under review, the Company has not accepted any deposit under Section 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975. AUDITORS M/s. A. F. Ferguson & Co., Chartered Accountants, New Delhi, Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible. offer themselves for re-appointment. The Company has received a certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 224(1 B) of the Companies Act, 1956. The Board recommends their re-appointment. AUDITORS'' REPORT The observations of Auditors in their report, read with the relevant notes to accounts are self explanatory and therefore do not require further explanation. COST AUDITORS The Board has re-appointed M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the financial year 2011-12 and the necessary application for obtaining the requisite approval has been filed with the Central Government. The Cost Auditors'' Report for 2010-11 will be forwarded to the Central Government in pursuance of the provisions of the Companies Act, 1956. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information required under Section 217(1)(e) of the Companies Act,

1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as Annexure- II and forms an integral part of this Report. LISTING The shares of your Company are presently listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). PERSONNEL As on March 31, 2011 the total number of employees on the records of the Company were 5,257. Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, co-operation and support have enabled the Company to cross new milestones on a continual basis. A detailed note is given in the chapter People Approach (Human Resource Management) of Management Discussion & Analysis, which forms part of this Annual Report. PARTICULARS OF EMPLOYEES Information of Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 forms an integral part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders of the Company excluding the statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of such statement may write to the Sr. G.M. Legal & Company Secretary at the Registered Office of the Company. ACKNOWLEDGEMENT It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, State Government(s), Financial Institution(s), Bank(s), Customers, Dealers, Vendors and Ancillary Undertakings. The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by the promoter companies and for the encouragement and

assurance, which our former collaborator has given for the growth and development of the Company. The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.