Hero Motors Limited says older allotment records are untraceable

Hero Motors Limited says certain corporate and secretarial records for older equity and preference-share allotments are not traceable. The company nevertheless states that every security issuance since incorporation complied with the applicable Companies Act, while its paid-up equity capital before the offer was Rs 382.787005 crore, represented by 382,787,005 equity shares.

What older allotment records are untraceable at Hero Motors?

Hero Motors says corporate and secretarial records relating to specified historical allotments cannot be traced. The equity-share history places this qualification against the September 29, 2007 and November 23, 2010 allotments, while the preference-share history applies it to the July 26, 2006 reduction and the November 23, 2011 preferential allotment. The disclosure does not identify the number or type of documents that are unavailable.

The company directs readers to a risk factor that says it cannot assure that no legal proceedings or regulatory actions will be initiated in the future in relation to the missing corporate records. Hero Motors does not report a current proceeding, regulatory order, penalty or quantified financial exposure arising from the records issue as of the Red Herring Prospectus date.

The qualification does not cover every entry in the capital-history tables. Hero Motors records equity allotments from April 30, 1998 through September 4, 2026, and preference-share transactions from September 28, 2004 through September 4, 2026. The filing separately identifies the specific entries carrying the note on untraceable records.

Why could missing allotment records matter for Hero Motors?

Hero Motors says missing historical records may result in future legal proceedings or regulatory action that could affect its financial condition and reputation. The records concern corporate actions including share allotments, preferential allotments and capital reductions, but the filing does not say that an authority has challenged the legality of any flagged transaction.

The equity transactions marked in the table changed the company’s paid-up capital. On September 29, 2007, Hero Motors allotted 22,785,484 equity shares for cash at Rs 62 per share, taking cumulative equity shares to 30,122,133 and paid-up equity capital to Rs 30.1221328 crore. On November 23, 2010, it allotted 4,475,000 equity shares to Hero Cycles Limited at Rs 80 per share, taking cumulative equity shares to 34,597,133 and capital to Rs 34.597133 crore.

The preference-share record also includes a capital reduction and a later preferential issue. Hero Motors reduced 49,500,000 preference shares on July 26, 2006 under a Delhi High Court-approved scheme of capital reduction, leaving no preference shares then outstanding. On November 23, 2011, it allotted 49,500,000 6% non-cumulative convertible redeemable preference shares to Hero Cycles Limited at Rs 16 per share.

How did Hero Motors' capital base change over time?

Hero Motors’ capital base moved from court-approved reductions to substantial later equity issuances and a 2022 scheme of arrangement. The largest equity reduction shown occurred on July 26, 2006, when 53,103,493 equity shares were reduced following a Delhi High Court order dated May 12, 2006. The order was issued on July 12, 2006 and registered with the Registrar of Companies, National Capital Territory of Delhi and Haryana on July 26, 2006.

After that reduction, Hero Motors had 7,336,649 equity shares and paid-up equity capital of Rs 7.3366488 crore. The filing notes that the Rs 2 difference between the number of shares multiplied by the Rs 10 face value and reported capital resulted from rounding fractional shares. By December 19, 2022, a National Company Law Tribunal, Chandigarh Bench-approved scheme had increased cumulative equity shares to 353,578,380 and paid-up capital to Rs 353.57838 crore.

The increase from Rs 353.57838 crore in December 2022 to Rs 382.787005 crore before the offer reflects subsequent employee stock-option allotments and the September 2026 conversion of compulsorily convertible preference shares, or CCPS. CCPS are preference shares that must convert into equity under their terms. Hero Motors reported no outstanding preference shares as of the Red Herring Prospectus date.

Does Hero Motors say its share issuances complied with company law?

Hero Motors states that all issuances of its securities from incorporation until the filing date complied with the Companies Act, 1956 and the Companies Act, 2013, as applicable. This is the company’s stated compliance position and is disclosed separately from the warning that records for particular historical transactions are not traceable.

The filing does not state that the compliance declaration removes the risk associated with unavailable records. Instead, Hero Motors says future proceedings or regulatory action concerning the missing records cannot be ruled out. For that risk not to materialise, no legal or regulatory challenge would need to arise from the historical transactions for which the underlying records are unavailable.

Hero Motors also identifies two equity issuances under schemes of arrangement. The September 24, 2004 issue of 35,000,000 equity shares followed a scheme involving Majestic Auto Limited, approved by the High Court of Punjab and Haryana on November 7, 2003 and the Delhi High Court on July 22, 2004. A second scheme, sanctioned by the National Company Law Tribunal, Chandigarh Bench on November 4, 2022, resulted in the December 19, 2022 allotment of 318,981,247 equity shares to shareholders of Hero Cycles Limited.

What does Hero Motors' latest capital structure show?

Hero Motors had 382,787,005 issued, subscribed and paid-up equity shares with a face value of Rs 10 each before the offer. Its authorised capital consisted of 580,000,000 equity shares and 99,500,000 CCPS, equivalent to aggregate authorised share capital of Rs 679.5 crore. The securities premium account before the offer was Rs 604.1297957 crore, which is separate from face-value share capital.

Recent equity additions included exercises under ESOP 2022, the company’s employee stock-option plan. Amit Gupta received 2,000,000 shares on May 8, 2024, 1,806,111 shares on July 16, 2024, 951,528 shares on May 5, 2025 and 951,528 shares on May 29, 2026, each at Rs 10 per share. On September 4, 2026, ESOP 2022 exercises added 2,527,517 shares at Rs 69.14 per share, including 1,500,000 shares for Amit Gupta and 1,000,000 shares for Keshav Misra.

The September 4, 2026 capital changes also included conversion of 20,971,941 CCPS into equity shares on a 1:1 basis. South Asia Growth Investment LLC received 20,908,283 equity shares and South Asia EBT Trust received 63,658 equity shares through that conversion. The CCPS had been allotted on December 20, 2022 at Rs 69.14 per share, and their conversion reduced outstanding preference shares to zero.

Conclusion

Hero Motors has disclosed an evidentiary gap affecting particular older equity and preference-share actions, rather than its entire capital history. The company’s declaration that all security issuances complied with applicable company law stands alongside, rather than replaces, the risk that missing corporate and secretarial records could prompt future legal or regulatory action.

The next disclosed matter to watch is Hero Motors’ compliance with conditions attached to a Securities and Exchange Board of India exemption granted on May 2, 2025 for statutory lock-in relating to 95 equity shares. The company says a failure to comply with those conditions may lead to non-compliance with the exemption, while the outcome of any future matter involving the missing historical records remains unresolved.