Mand m ar-2009-2010
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Mand m ar-2009-2010 Mand m ar-2009-2010 Document Transcript

  • MAHINDRA & MAHINDRA LIMITEDCOMMITTEES OF THE BOARD BOARD OF DIRECTORS Keshub MahindraAudit Committee ChairmanDeepak S. Parekh Anand G. MahindraChairman Vice-Chairman & Managing DirectorNadir B. Godrej Deepak S. ParekhM. M. Murugappan A. K. NandaR. K. Kulkarni Nadir B. Godrej M. M. MurugappanShare Transfer and Shareholders/ Narayanan VaghulInvestors Grievance Committee A. S. GangulyKeshub Mahindra R. K. KulkarniChairman Anupam PuriAnand G. Mahindra Arun Kanti Dasgupta Nominee of Life Insurance Corporation of IndiaBharat Doshi Bharat DoshiA. K. Nanda Executive DirectorR. K. KulkarniRemuneration/Compensation Committee Narayan ShankarNarayanan Vaghul Company SecretaryChairman BankersKeshub Mahindra Bank of America N.A.Nadir B. Godrej Bank of BarodaM. M. Murugappan Bank of India Canara BankLoans & Investment Committee Central Bank of IndiaKeshub Mahindra HDFC Bank LimitedChairman Standard Chartered Bank State Bank of IndiaAnand G. Mahindra Union Bank of IndiaBharat Doshi AuditorsA. K. Nanda Deloitte Haskins & SellsR. K. Kulkarni 12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate, Worli, Mumbai 400 018.Research & Development Committee AdvocatesA. S. GangulyChairman Khaitan & Co., One Indiabulls Centre,Anand G. Mahindra 13th Floor, 841, Senapati Bapat Marg,Nadir B. Godrej Elphinstone Road, Mumbai 400 013.M. M. Murugappan Registered OfficeBharat Doshi Gateway Building, Apollo Bunder, Mumbai 400 001. 1
  • GROUP EXECUTIVE BOARDAnand G. Mahindra Ramesh IyerVice-Chairman & Managing Director Managing Director - Mahindra & Mahindra Financial Services LimitedBharat DoshiExecutive Director and Group Chief Financial Officer Rajesh Jejurikar Chief Executive - Automotive Division (Automotive Sector)Rajeev DubeyPresident (HR, After-Market & Corporate Services) Sanjay Kalra Chief Executive Officer - Tech Mahindra LimitedPawan GoenkaPresident (Automotive & Farm Equipment Sectors) Harsh Kumar Managing Director - Mahindra Intertrade LimitedHemant LuthraPresident (Systems & Technologies Sector) Romesh Kaul Global Chief Executive Officer - Gears Business, Systech SectorAnoop MathurPresident (Two-Wheeler Sector) Bishwambhar Mishra Chief Executive Officer - Swaraj Division (Farm Equipment Sector)Uday Y. PhadkePresident (Finance, Legal & Financial Services Sector) Gautam Nagwekar Chief Executive - Mahindra Division (Farm Equipment Sector)Ulhas N. YargopPresident (Information Technology Sector) V. S. Parthasarathy Executive Vice President - Finance, M&A and Group CIOAnita ArjundasManaging Director - Mahindra Lifespace Developers Limited & Ramesh RamanathanCEO Real Estate Sector Managing Director - Mahindra Holidays & Resorts India Limited & CEO Hospitality SectorZhooben BhiwandiwalaExecutive Vice President & Managing Partner, Mahindra Partners Pravin Shah Chief Executive - International Operations (Automotive & FarmC. P. Gurnani Equipment Sectors)Chief Executive Officer - Mahindra Satyam Rajan WadheraRuzbeh Irani Chief Executive - Technology, Product Development andExecutive Vice President - Corporate Strategy & Chief Brand Officer Sourcing (Automotive & Farm Equipment Sectors) Contents Directors’ Report .................................................................................................................................................. 3 Management Discussion and Analysis .................................................................................................................. 27 Corporate Governance ......................................................................................................................................... 47 Sustainability ........................................................................................................................................................ 73 Accounts .............................................................................................................................................................. 79 Statement pursuant to Section 212 ..................................................................................................................... 129 Consolidated Accounts ......................................................................................................................................... 1332
  • MAHINDRA & MAHINDRA LIMITED 3
  • MAHINDRA & MAHINDRA LIMITEDDirectors’ ReportDear ShareholdersYour Directors present their Report together with the Inspite of the global financial crisis, India’s economic growthaudited accounts of your Company for the year ended is steadily gaining momentum, led by a very encouraging st re-bound in industrial activity during the year. The sharp31 March, 2010. increase in consumer durables and capital goods productionFinancial Highlights (Rs. in crores) this fiscal is particularly heartening as it indicates strengthening consumer and business confidence in the 2010 2009Gross Income 20595 14983 country.Less: Excise Duty on Sales 1794 1619 Agricultural GDP however, witnessed a decline this yearNet Income 18801 13364Profit before Depreciation, Interest, due to the severe drought experienced during the kharifExceptional items and Taxation 3155 1363 season. Food prices as a consequence, rose alarmingly andLess: Depreciation/Amortisation 371 292 food inflation in India has leapfrogged to challenging levels.Profit before Interest,Exceptional items and Taxation 2784 1071 In these challenging times, the Automotive and FarmLess: Interest (Net) 28 45 Divisions of your Company have clocked one of their bestProfit before Exceptionalitems and Taxation 2756 1026 performances reflecting in substantial growth in the netAdd: Exceptional items 91 10 income of the Company by 40.7% to Rs.18,801 crores inProfit before Taxation 2847 1036 the year under review from Rs.13,364 crores in the FinancialLess: Provision for Tax - Current Tax Year 2009. Consequent to this commendable performance,(including Fringe Benefit Tax) 749 58Less: Provision for Tax - Deferred Tax (Net) 10 141 the profit after tax of the Company for the current yearProfit for the year 2088 837 was Rs.2,088 crores as against Rs.837 crores for theAdd: Profit of Mahindra Holdings & previous year.Finance Limited for the period1st February, 2008 to 31st March, 2008 - 31 ProfitsBalance of profit for the year 2088 868Balance of profit for earlier years 3365 2775 The Profit for the year before Depreciation, Interest,Add: Amount transferred on Exceptional items and Taxation was Rs.3,154.59 crores asAmalgamation of Mahindra Holdings &Finance Limited - 160 against Rs.1,362.97 crores in the previous year, an increaseLess: Transfer to Debenture Redemption of 131.45%. Profit after tax was Rs.2,087.75 crores asReserve 31 30 against Rs.836.78 crores in the previous year clocking anProfits available for appropriation 5422 3773 increase of 149.50%. Your Company continues with itsLess: General Reserve 210 100 Credit of Income-tax on Proposed rigorous cost restructuring exercises and efficiency Dividend of previous year - (4) improvements which have resulted in significant savings Proposed Dividends 550 279 through value engineering, economising, optimisation of Income-tax on Proposed Dividends 74 33Balance carried forward 4588 3365 plant capacity utilisation and cost competitiveness in almost 5
  • all areas thereby enabling the Company to take full over the previous year’s volume of 1,53,654 vehiclesadvantage of the recovery in the economy. [includes 1,53,653 MUVs and 1 Light Commercial Vehicle (“LCV”)]. The domestic sales volume of 44,438 three-Dividend wheelers was lower by 0.2% as compared to the previousYour Directors are pleased to recommend a dividend of year’s volume of 44,533 three-wheelers.Rs.8.75 per Ordinary (Equity) Share and also a Special The Company’s domestic MUV sales volumes grew byDividend of Rs.0.75 per Ordinary (Equity) Share aggregating 39.4% as against the industry MUV sales growth of 26%.Rs.9.50 per Ordinary (Equity) Share of the face value of The Company strengthened its dominant position in theRs.5 each, payable to those Shareholders whose names domestic MUV segment by increasing its market share toappear in the Register of Members as on the Book Closure 63.3% over the previous year’s market share of 57.2%.Date. The Special Dividend is being recommended in thelight of the very successful listing of Mahindra Holidays & Xylo, which was launched in January, 2009 has been veryResorts India Limited Equity Shares on the Stock Exchanges. well accepted in the market. A total of 27,978 Xylos wereIn recognition of the impressive performance of the sold in the year under review.Company, a substantial increase is being made in the In a very competitive small 4-wheeler cargo segment (0.75proposed dividend as compared to the dividend of Rs.10 Ton), your Company has launched the Maxximo, a small 4per Equity Share paid in the previous year. Also the wheeler cargo vehicle, with 2-cylinder common rail engine,proposed dividend will be paid on a slightly enlarged capital in February, 2010. In the 0.5 Ton Truck load segment, yourbase of Rs.289.21 crores (as against Rs.278.82 crores in Company launched a compact Truck – Gio.the previous year). The equity dividend outgo for theFinancial Year 2009-10, inclusive of tax on distributed profits In the Overseas market, despite difficult economic(after reducing the tax on distributed profits of Rs.17.04 conditions, your Company registered superior growth.crores payable by the subsidiaries on the dividends During the year under review, your Company sold 10,567receivable from them during the current Financial Year) vehicles [including 1,323 vehicles sourced from Mahindrawould absorb a sum of Rs.623.75 crores (as against Navistar Automotives Limited (“MNAL”) and 922 three-Rs.312.06 crores comprising the dividend of Rs.10 per wheelers] in the Overseas market as compared to 8,501Equity Share of Rs.10 each paid for the previous year). vehicles [including 693 vehicles sourced from MNAL and 273 three-wheelers] in the previous year registering aAutomotive Division: growth of 24.3%.Your Company recorded total sales of 2,36,759 vehicles Spare parts sales for the year stood at Rs. 514.96 croresand 45,360 three-wheelers as compared to 1,61,882 (including Exports of Rs. 22.4 crores) as compared tovehicles and 44,806 three-wheelers in the previous year Rs. 362.75 crores (including Exports of Rs.27 crores) in theregistering a growth of 46.3% and 1.2% in vehicles sales previous year, registering a growth of 42%.and three-wheeler sales respectively. Farm Division:On the domestic sales front, your Company sold 2,27,114vehicles [includes 2,14,128 Multi Utility Vehicles (MUVs), Your Company’s Farm Division recorded sales of 1,75,1963,722 small 4 wheelers 0.75 Ton cargo and 9,264 mini 4 tractors as against 1,20,202 tractors sold in the previouswheelers 0.5 Ton cargo] registering a growth of 47.8% year, recording a significant growth of 45.8%. For the6
  • MAHINDRA & MAHINDRA LIMITEDprevious year figures, the Company has taken into business has been hived-off into a wholly owned subsidiaryconsideration, the merger of Punjab Tractors Limited with (Mahindra Defence Land Systems Private Limited – now styour Company, the appointed date of which was 1 August, rechristened as Defence Land Systems India Private Limited)2008. with effect from 1st July, 2009. Your Company has further signed a Joint Venture Agreement on 30th November, 2009After 3 years of plateauing of the domestic tractor industry with BAE Systems Plc. to form a 74:26 Joint Venture forand despite one of the worst South-West monsoons, this defence land systems products. Once this Joint Venture isyear saw a strong resurgence with the domestic industry operational, it would further expand its product base toclocking sales of 4,00,203 tractors registering a growth of include manufacture of artillery products and combat31.7% over the last year. Your Company outperformed the vehicles in technical assistance with BAE Systems Plc.industry with domestic sales of 1,66,359 tractors, a growthof 46.9% as compared to 1,13,269 tractors sold in the In the Naval Systems business, your Company currentlyprevious year. This has also helped gain market share which manufactures Sea Mines, Decoy Launchers and compositesnow stands at 41.4% as compared to 40.8% in the previous for various naval and other applications.Financial Year, thus completing 27 years of leadership in In the Special Services Group business, your Companythe Indian tractor industry. provides corporate risk management consultancy servicesWith the slow recovery in international markets, especially and assists organisations in maintaining their competitivein the US, tractor industry exports from India continued to edge by protecting Information, Physical and Personnelbe under strain. In contrast, your Company’s exports grew assets through implementing the security strategy27.5% to reach 8,837 tractors as compared to 6,933 encompassing people, process and technology. MSSG hastractors exported in the previous year. been integrated with the MDS Operating Group from 1st April, 2009 in order to synergise the efficiencies withBeyond Agriculture, in the Powergen space under the other businesses of MDS. During the year, this businessMahindra Powerol Brand, your Company sold 48,011 has expanded to Northern and Southern India as well asengines in this Financial Year, as against 52,350 engines in some international markets.the previous year. Your Company retained its leadershipposition in the genset market catering to the telecom space, Management Discussion and Analysis Reportwhile strengthening its presence in the retail segment. A detailed analysis of the Company’s performance isMahindra Defence Systems Division (MDS): discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.Your Company, through Mahindra Defence Systems (MDS)Operating Group, is engaged in three defence related Corporate Governancebusinesses – a) Land Systems b) Naval Systems and Your Company is committed to transparency in all itsc) Mahindra Special Services Group (“MSSG”). dealings and places high emphasis on business ethics. YourIn the Land Systems business, your Company provides Company received the Best Governed Company 2009armouring solutions for light combat vehicles and SUVs as Award from the Indian Merchants Chamber and the Asianwell as high mobility vehicles for defence, police and Centre for Corporate Governance and Sustainability. Duringparamilitary use. Pursuant to an approval accorded by the the year, CRISIL has re-affirmed the highest level rating, thShareholders by way of Postal Ballot on 4 April, 2009 this (Level 1) for Governance and Value Creation for the fourth 7
  • year in a row. This rating indicates that the capability of Consequent to the Stock-split, a new International Securitiesthe Company with respect to wealth creation for all its Identification Number (ISIN) INE101A01026 has beenstakeholders while adopting strong Corporate Governance created by the Depositories for the Company’s Equity Sharespractices is the highest. A Report on Corporate Governance of the face value of Rs.5 each.along with a Certificate from the Statutory Auditors of theCompany regarding the compliance of conditions of FinanceCorporate Governance as stipulated under Clause 49 of Despite prolonged global challenges, the Indian economythe Listing Agreement forms part of the Annual Report. showed signs of recovery in most of the Sectors in theShare Capital Financial Year 2009-10. The risk appetite returned toIncrease in Share Capital financial markets as equities and debt raising gainedDuring the year under review, your Company allotted: momentum on the back of abundant liquidity. Even though things looked to be on an upswing, Corporates still faced1) 10,00,000 Ordinary (Equity) Shares of Rs.10 each to the task of sustaining growth amidst volatilities as well as the Trustees of Mahindra & Mahindra Employees’ Stock surging inflation. Option Trust; and2) 93,95,974 Ordinary (Equity) Shares of Rs.10 each to During the year, keeping in mind the volatile times, your Golboot Holdings Limited upon compulsory conversion Company continued to focus on managing cash efficiently. of 93,95,974 Fully and Compulsorily Convertible Even while financing its ongoing modernisation and growth Debentures. initiatives, it was ensured that your Company had abundantSub-division (“Stock-split”) of Face Value of liquidity. Your Company did not need to tap the capitalEquity Shares market and in fact used its strong liquidity at its disposalPursuant to the approval received from the Members of to repay foreign currency loans aggregating USD 94.5the Company by way of Postal Ballot on 11th March, 2010, million without the need for refinancing.your Company has on 31st March, 2010, upon sub-division, As was reported in the previous year’s Director’s Report,issued 2 (Two) Ordinary (Equity) Shares of Rs.5 each fully your Company had, in July, 2008, issued 9.25% p.a.paid-up in the Equity Share Capital of the Company for Unsecured Fully and Compulsorily Convertible Debenturesevery 1 (One) Ordinary (Equity) Share of the face value of (“FCD”), each FCD having a face value of Rs. 745 andRs.10 fully paid-up held by the Members in the Equity convertible into one Equity Share of Rs. 10 each in theShare Capital of the Company as on the Record Date i.e. Company at a price of Rs. 745 per Share. In January,30th March, 2010. 2010, in accordance with the terms of the issue, the FCDsPost allotment of Equity Shares and sub-division of Equity were converted into Equity Shares of the Company andShares as aforesaid, the issued, subscribed and paid-up your Company allotted 93,95,974 Ordinary (Equity) SharesShare Capital of the Company stands at Rs.289.21 crores of Rs.10 each, adding Rs. 700 crores to its Net Worth.comprising of 57,84,34,478 Ordinary (Equity) Shares ofRs.5 each fully paid-up and the Authorised Share Capital Your Company follows a prudent financial policy and aimsof the Company stands at Rs.625 crores comprising of to maintain optimum financial gearing at all times. The1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each and Company’s total Debt to Equity Ratio was 0.37 as at25,00,000 Unclassified Shares of Rs.100 each. 31st March, 2010.8
  • MAHINDRA & MAHINDRA LIMITEDYour Company has been rated by CRISIL, ICRA Limited Your Company’s move into the Aerospace segment is(ICRA) and Credit Analysis & Research Limited (CARE) for supported by a renewed demand for economical airits Banking facilities under Basel II norms. During the year, transportation around the world. The Company’sCRISIL reaffirmed its rating of “AA” and revised its rating investment in component capability addresses theoutlook to “AA/ Stable” from “AA/ Negative” for your growing needs of both the civil and defence marketsCompany’s Long Term Facilities under Basel II. During the and in particular the offset opportunities that haveyear, ICRA also reaffirmed its rating of “LAA+” for your triggered world wide interest in Indian Aerospace.Company and also revised its rating outlook from “LAA+/Negative” to “LAA+/Stable” and CARE has maintained a 2. Joint Venture with BAE Systems Plc.Long Term Rating of “CARE AA+”. Through various initiatives, your Company hadCRISIL, ICRA and CARE have all reaffirmed the highest positioned itself to play a major role in the Indianrating for your Company’s Short Term facilities. Your Defence Sector for the manufacture and integrationCompany’s Bankers continue to rate your Company as a of weapon systems and platforms. Your Company hadprime customer and extend facilities/services at prime rates. also been exploring opportunities for partnerships withAcquisitions and other matters companies with globally proven high end defence technologies. With this objective in mind, your1. Acquisition of Aerostaff Australia and Gippsland Company had evaluated various options and identified Aeronautics possibilities for forming separate Joint Ventures/alliances Your Company decided to make a foray into Aerospace with strategic partners. Sector with the intention of penetrating into global aerospace supply chain as a credible registered As mentioned earlier in this Report, your Company manufacturer of components and assemblies with the has entered into a Joint Venture with BAE Systems Plc. leading players in Aerospace and also to become small (“BAE”). BAE is a premier global defence, security and capacity aircraft manufacturer. To meet these goals, aerospace company delivering a full range of products your Company has made 2 acquisitions in Australia as and services for air, land and naval forces, as well as under: advanced electronics, security, information technology solutions and customer support services. Aerostaff Australia (“AA”) manufactures high-precision close-tolerance aircraft components and assemblies for large aerospace Original Equipment 3. Gear Vertical Manufacturers (“OEMs“). Mahindra Gears & Transmissions Private Limited Gippsland Aeronautics (“GA”) is an established brand (“MGTPL”) is a subsidiary of your Company. With a in general aviation and has delivered more than 200 view to derive optimum structuring and operational FAR 23 certified planes in 32 countries. benefits and unlock value in MGTPL, your Company NM5 is a 5-seater Aircraft designing and manufacturing divested 46.66% of the Equity Share Capital in MGTPL project which is being developed by your Company in favour of ICICI Venture Fund during the year. with Hindustan Aeronautics Limited. The NM5 initiative Subsequent to the divestment, the holding of your compliments the product portfolio of GA. Company in MGTPL stands at 53.34%.
  • 4. Demerger of Non Fruit Business of Mahindra shall stand cancelled. Upon the Scheme becoming Shubhlabh Services Limited into the Company effective, the Company shall issue and allot to the Shareholder of MSSL (other than the Company and Mahindra Shubhlabh Services Limited (“MSSL”), MHL) as on the Record Date 34,730 fully paid-up Equity a subsidiary of your Company, is in the business of Shares of Rs.5 each of the Company. Currently, the a) domestic sales and exports of fresh fruit products Scheme is in process of being filed with the Stock and b) production and distribution of Agri Inputs Exchanges and the Honourable High Court of namely Seeds, Seed Potato and Crop Care Products. Judicature at Bombay for approval. MSSL’s Fruits business is currently focused on exports of grapes to Europe. MSSL proposes to expand its 5. Mahindra Forgings Limited Qualified Institutional foray into other Fruits businesses. MSSL has till now Placement and issue of Warrants to the Company steadily developed a footprint in Agri Input business, Mahindra Forgings Limited (“MFL”), a subsidiary of which is strategically an important business to your the Company, raised capital by way of a Qualified Company, as it directly relates with the farmer and Institutional Placement (“QIP”) to Qualified Institutional Farm Tech Prosperity, essential for improving customer Buyers accompanied by a simultaneous issue of bonding, customer loyalty and market penetration of Warrants to your Company, in terms of Securities and your Company. Exchange Board of India (Issue of Capital and Disclosure In view of the Agri Inputs business being a high Requirements) Regulations, 2009. gestation business, MSSL now intends to streamline An amount of Rs.175 crores was raised through a QIP its operations and wants to focus only on the Fruits by issue and allotment of Equity Shares of the face Business and explore strategic options to grow this value of Rs.10 each at a price of Rs.107.75 per Equity business domestically and globally in terms of scale Share to Qualified Institutional Buyers. MFL has also and profitability and going forward, the Agri Inputs allotted 72,99,270 Warrants on a preferential basis to business would be demerged into your Company owing your Company wherein each Warrant entitles the to its strategic importance and funding resources Company to apply for and be allotted one Equity Share required for the same. of MFL of the face value of Rs.10 each at a price of To achieve the above objective, a Scheme of Rs.137 per share, in one or more tranches, at any Arrangement between MSSL and your Company and time after the date of allotment of Warrants but on or their respective Shareholders was announced by your before the expiry of 18 months from the date of th Company and MSSL on 30 March, 2010 which inter allotment of Warrants. The Company has made an alia envisages demerger of the Agri Inputs Business upfront payment of 25% of the aggregate price along with other common assets and liabilities (“Non amounting to approximately Rs.25 crores and has Fruit business”) of MSSL into the Company under the exercised its option to convert 30,00,000 Warrants provisions of sections 391 to 394 of the Companies into Equity Shares. The Company still has an option to Act, 1956. The Appointed Date of the Scheme would convert the balance 42,99,270 Warrants into Equity be 1st January, 2010 and pursuant to the Scheme, Shares by 3rd September, 2011. As a result of the Shares held by the Company and its wholly owned above, the Company’s shareholding in MFL stands at subsidiary, Mahindra Holdings Limited (“MHL”) in MSSL 50.68%.
  • MAHINDRA & MAHINDRA LIMITED6. Acquisition of Shareholding of Renault s.a.s. in Space, your Company subsequent to the year end Mahindra Renault Private Limited (“MRPL”) and take decided to acquire a majority stake in Reva Electric Car over of the business of MRPL as a going concern Company Private Limited (“Reva”). Established in 1994, Reva launched its first EV in 2001 under the ‘Reva’ The Company had entered into a Joint Venture with brand and further extended it to London in 2004 under Renault s.a.s. (“Renault”) for the manufacture and sale the ‘G-Wiz’ brand. With the help of its strong of the Logan sedan car principally for the Indian market engineering team and frugal mindset, it has developed in 2005. Mahindra Renault Private Limited (“MRPL”), a significant proprietary technology which has enabled subsidiary of the Company had commenced commercial it to create a fleet of EVs worldwide with over 3,000 production of the car badged as Mahindra Renault vehicles on the road in more than 20 countries Logan from February, 2007. including India, the United Kingdom and other The Company had been in discussions with Renault to countries in Europe. arrive at a long term solution to MRPL’s continuing This acquisition would help your Company to losses and subsequent to the year end, your Company compliment its other clean energy initiatives on Hybrid, signed a Framework Agreement with Renault to buyout Hydrogen and Bio-diesel which is an important element Renault’s Shares in MRPL which would result in MRPL in the sustainable mobility strategy of the Company. becoming a wholly owned subsidiary of your Company. Renault would continue to support the Stock Options Company and the Logan through a License Agreement On the recommendation of the Remuneration/ and supply of key components. Through this Compensation Committee of your Company, the Trustees Agreement, your Company would strive to ensure of the Mahindra & Mahindra Employees’ Stock Option continuity and build on the positive customer equity Trust have granted 4,01,770 Stock Options to Eligible that exists for the Logan in India. Employees during the year under review.7. Going Green – Acquisition of Reva Electric Car Details required to be provided under the Securities and Company Private Limited Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 Given the concerns about environment, tighter (“the Guidelines”) are set out in Annexure I to this Report. regulation on emission, debate on greenhouse gases and taxation on emission, the demand for electric- Mahindra & Mahindra Limited Employees Stock Option vehicles (“EV”) is projected to increase many fold. Most Scheme - 2010 global OEMs are working on EV programs and are at Your Company proposes to introduce a new Employee least 1 to 2 years away from commercial production. Stock Option Scheme known as ‘Mahindra & Mahindra Your Company is of the view that it should be focused Limited Employees Stock Option Scheme 2010’ (“New on developing EV capabilities that would assist it to Scheme”). The New Scheme will facilitate grant of Options be ready to exploit this opportunity. to the employees in the form of Stock Options and/ or Keeping in mind the above opportunity and with a Restricted Stock Units (“RSU’s”) and /or other instruments view to consolidate its presence in the Automotive (“Options”) exercisable into Equity Shares. It is proposed
  • that the Options can be exercised by the employees at a New Certificationsprice equal to or not less than the face value of the Equity The Sustainability Reporting System of your CompanyShares of the Company. The necessary Resolutions seeking provides a framework for environmental initiatives,consent of the Members are being sought as proposed in objectives & targets and helps in continually improving itsthe Notice convening the Annual General Meeting. Air, Water and Waste Management performance. All Plants of Automotive Division have been certified with amendedThe New Scheme has been formulated in accordance with standard for ISO 14001: 2004 & OHSAS 18001. Yourthe Guidelines and other applicable laws. Company’s commitment to environment stems from the Group’s abiding concern for the Stakeholders engagementIndustrial Relations in and around the society. Its nature of operations has aIndustrial Relations remained cordial and harmonious low impact on the environment due to implementation ofthroughout the year. As mentioned in the last year’s Environment Management System which provides a healthyDirectors’ Report, the workmen at the Nashik plant of the work environment to its employees and ensures conductAutomotive Division of the Company resorted to one illegal of environment friendly business.strike in May, 2009. The Management Discussion and Implementation of Occupational Health & SafetyAnalysis Report gives an overview of the developments in Management System Standard has re-enforced theHuman Resources/Industrial Relations during the year. Company’s commitment of Safety and Occupational Health to high levels. OHSAS 18001:2007 is the best existingSafety, Health and Environmental Performance safety practice which is implemented through the amended management system and all the Plants of the AutomotiveHealth and Safety Division have been certified during the year 2009-10. TheYour Company continues to demonstrate a strong individual operational Units of the Automotive Division i.e.commitment towards Safety, Occupational Health and Kandivli, Nashik, Igatpuri, Zaheerabad and Haridwar areEnvironment. Your Company has a well established Safety, also certified. The OHSAS system aims to eliminate orOccupational & Environmental Policy (SH&E). The objectives minimise risk to employees and other interested partiesand targets derived from the Policy are supported by who may be exposed to Occupational Safety risks associatedManagement Programs. with its activities. Occupational Health ExaminationThe Safety, Occupational Health & Environment of its Your Company’s Plants continued its commitment to improveemployees are embedded as core Organisational values of the well being of the employees. During the year 2009-10,the Company. The Policy inter alia covers and ensures safety all employees in Hazardous operations were medicallyof public, employees, plant and equipment, imparts training examined once in six months and other employees fromto all its employees as per training calendar, carries out Non-Hazardous operations were examined once in a year.statutory safety assurance and audits of its facilities as per Environmental Initiatives :legal requirements, conducts regular medical andoccupational check-up of its employees and promotes Air Pollution Managementeco-friendly activities. With a clear view on sustaining green business growth,
  • MAHINDRA & MAHINDRA LIMITEDthe need for clean environment was given a renewed focus. of the same. Your Company is conscious towardsBy incorporation of new technological upgradations, your environment and ensures environment friendly disposal ofCompany is now in the process of calculating carbon foot e-waste.print of Plants location wise and is taking adequate Greenbelt Developmentmeasures to mitigate the causes attributing to it. TheCompany also has a roadmap to reduce Green House Gas Your Company has community partners at each location(“GHG”) emissions by curtailing travel of its employees to for green belt development. Mahindra Hariyali was one ofclient locations for Meetings and discussions and this is the initiatives which was implemented at the Plants atachieved by promoting the use of Video Conferencing. Mumbai and Kanhe and at dealers & distributors acrossYour Company is constantly imbibing the major India. Your Company’s Plants at various locations haveenvironment sensitisation drives amongst its employees partnered with Non-Governmental Organisations andthrough various events such as celebrations of World various academic institutions all located in and aroundEnvironment Day, World Ozone Day alongwith active Mumbai, Nashik, Igatpuri, Zaheerabad and Haridwar.participation of employee’s families. Your Company has Corporate Social Responsibilityalso implemented ambient and work place air monitoring, From educating a girl child in Udaipur, providing healthcareincreased green zones, alongwith effluent treatment and to inaccessible areas in Uttarkhand, enabling sociallywaste monitoring. disadvantaged youth become self reliant in Pune, toWater and Waste Water Management planting a million trees in India, your Company’s Corporate Social Responsibility (“CSR”) initiatives continue to provideYour Company is committed towards resource conservation strategic interventions that help the Nation help itself.and has taken various initiatives to achieve waste reductionand resource conservation. Your Company has implemented At Mahindra we call it “Transform-nation”.various water management methods such as recycling and CSR continues to be an integral part of the vision of there-use of treated waste water in process. The Company Mahindra Group and this year too, the Company hashas also introduced rainwater harvesting and recharging pledged 1% of its Profit after Tax for CSR initiatives, largelywithin Plant premises and would extend it to other locations to benefit the socially and economically disadvantagedas well. sections of Society.Solid Waste Management Some of the major initiatives your Company has invested in are described below:Your Company’s Plants at Kandivli, Nashik, Igatpuri and Mahindra Pride Schools:Zaheerabad believe in responsible disposal of hazardousand non-hazardous waste. The generation of waste to a Mahindra Pride Schools (“MPS”) unique partnership modelgreater extent has been reduced at source and if adaptable, speeds its graduates’ integration into the workforce, whereit is recycled and reused. Your Company is aggressively they earn not only a salary but also the respect of theirworking towards minimising waste disposal costs and is family and peers. Since inception in March, 2007, 1,720executing various Management programmes at each students from socially disadvantaged communities havelocation such as vermiculture, bio-gas Plants to convert completed the 3 month course at MPS. MPS providesfood waste to manure/cooking gas towards minimisation these youth with livelihood training in sunshine industries 3
  • i.e. Hospitality, Customer Relationship Management, Gifting Cochlear Implants:Hardware & Networking and Call Centre Training. All By gifting the power of sound through the donation ofstudents are required to undergo mandatory courses in Cochlear Implants, the Mahindra Group has changed theEnglish, Life skills and computer applications. There has life and future of 60 profoundly hearing-impaired,been 100% placement of all students participating in the underprivileged children till date. Operations are performedplacement process. by Dr. Milind Kirtane, India’s leading ENT surgeon and hisNanhi Kali: Team. All beneficiaries are hearing impaired children below the age of 5, belonging to the lower socio-economic strataNanhi Kali, which supports the education of the of Society.disadvantaged girl child has been the flagship programmeof the K. C. Mahindra Education Trust. Nanhi Kali brings Bihar Rehabilitation Project:about a complete transformation, by allowing the girls to The river Kosi wreaked havoc in Bihar in 2008 with floodsattend school and learn with dignity. Nanhi Kali sponsorship causing incalculable loss of life and property besidesprovides not only academic support classes where concepts snatching away the livelihood of lakhs of people in theof Maths, Science and language are taught to the girls but State. Following the same, Mahindra Foundation andalso provides uniforms, school bags, shoes, etc. which free Mahindra Consulting Engineers Limited (“MACE”), aher family from hidden costs of education. The Mahindra subsidiary of the Company have entered into aGroup independently supports 11,000 girls across India. Memorandum of Understanding (“MOU”) with theWith support from thousands of individuals and Corporate Collector, Madhepura District, Bihar to support thedonors, Project Nanhi Kali now supports the education of rehabilitation and reconstruction activities in Pattori Gramover 54,000 underprivileged girl children, in poor urban, Panchayat, Singheswar Block, Madhepura District of Biharremote rural and conflict afflicted tribal communities across for those ravaged by the Kosi floods in 2008. Under the8 States of India. The goal of Nanhi Kali is to provide terms of the MOU, MACE would create the complete socialeducational support to 1,00,000 underprivileged girls by infrastructure in Pattori Gram Panchayat. This2011. comprehensive programme includes the construction ofMahindra All India Talent Scholarships (MAITS): permanent houses with provision of basic infrastructural facilities such as water supply and sanitation.Instituted in 1995, MAITS are awarded to students from Employee Social Options:lower socio-economic strata to enable them to pursue ajob oriented diploma course at a recognised Government Employee Social Options (“ESOPs”) is the uniquePolytechnic Institute in India. Approximately 500 programme at the Mahindra Group where each employeescholarships are given every year for students who undergo can do social work by volunteering in various CSR initiatives.a three year course. As a result in the last Financial Year, Till date, 31,317 employees have volunteered in various1,525 students all over India received financial support initiatives in their local communities. ESOPs were formallythrough MAITS. Till date, 4,772 students have been MAITS launched in 3 new locations of Mahindra Group – MahindraScholars. A survey of students who have graduated indicate Two Wheelers; Pune, Mahindra Two Wheelers; Pithampurthat they have got good jobs and the living standards and and Mahindra Retail; Bangalore.economic status of their families have improved. Some of the notable ESOPs initiatives this year were: 4
  • MAHINDRA & MAHINDRA LIMITED• The Lifeline Express in Wardha: This was jointly to appraise the Shareholders of the initiatives your Company sponsored and organised by the Farm Division and had taken in reporting its ‘Sustainability’ performance for Mahindra & Mahindra Financial Services Limited, a reviewing its commitments to the Environment and Society, subsidiary of the Company. The Project was held at while generating profits. Wardha and 1,153 surgeries were performed free of During the year under review, the 2nd Sustainability Report cost and 281 Hearing Aids were distributed. ESOPs for the year 2008-09 was published, in accordance with Volunteers spent 13,752 man hours in this activity the latest Guidelines of the internationally accepted Global and 30,575 man hours were spent by volunteers from Reporting Initiative or the GRI standards. Again this year, the Community, thus making it an ideal public-private this Report was externally assured by Ernst & Young and partnership initiative. rated with the highest level of A+ and GRI checked. This• Mahindra Hariyali : A Survey was conducted on the 2nd Report reflects that along with your Company’s business survival rate of trees planted in the Financial Year growth, the Company’s responsibility to its stakeholders 2008-09. According to the Survey, the survival rate has also grown, expanded and intensified. Your Company’s as on 31st May, 2009 of the trees planted during progression in this journey and its commitment to taking the abovementioned period is 79.49%. a more responsible and holistic approach to business is reflected by the facts that a) all commitments made in the• ESOPs AWARDS 2009: is an internal Company award first Report were satisfactorily met and b) a structured and was institutionalised in 2008 to appreciate and Sustainability road map over a 3 and 5 year time horizon promote healthy competition amongst employees and has been drawn, with clear targets for reducing locations. consumption of energy and water and reduction in GHGOther ESOPs activities also included other initiatives in emission and waste. Details of this Group Level Road MapEducation, Health, Environment and Social arenas bringing and further information on various environment relatedlong-lasting impact. 27 initiatives were conducted in initiatives taken by your Company which would help inEducation (such as distributing educational material, IT/ achieving the targets in the Road Map, have beenvocational training, infrastructure development) impacting elaborated elswhere in the Annual Report.24,664 lives. 54 Health initiatives such as medical camps, During the year under review, a Carbon foot-printingblood donation camps, Pulse Polio Campaigns, mobile exercise was undertaken to inventorise GHG emissions fromdispensaries, etc. reached out to over 14,573 people. HIV/ all the Company’s business operations under Scope I, II &AIDS awareness campaigns reached out to over 1,36,560 III emissions as per internationally accepted standards. Thispeople in Nashik. For taking care of the Environment, would enable your Company to baseline data on its1,14,862 trees were planted for Gap Filling in Financial emissions and undertake initiatives towards improvingYear 2009-10. 71 Social initiatives were conducted such as performance in this area. This would be reported in yourvisiting Old Age Homes, interacting with children, Company’s 3rd Sustainability Report, which would beconducting Shraamdan, etc. which reached out to over released shortly.78,003 people. Realising that the equation of business with Environment‘Sustainability’ Initiative and Society is undergoing a radical change, through itsIn the last year’s Directors’ Report, a beginning was made strategic approach of ‘ALTERNATIVE THINKING’ your 5
  • Company is committed to integrate sustainable (i) in the preparation of the annual accounts, thedevelopment for a sustainable business growth. For a applicable accounting standards have been followed;detailed information on the Annual Sustainability Reports (ii) they have, in the selection of the accounting policies,for the years 2007-08 to 2008-09 please log on to consulted the Statutory Auditors and these have beenwww.mahindra.com/sustainability. applied consistently and reasonable and prudentDirectors judgments and estimates have been made so as to give a true and fair view of the state of affairs of theMr. A. K. Nanda, Executive Director of the Company, after Company as at 31st March, 2010 and of the profit of37 illustrious years of service in the Mahindra Group of the Company for the year ended on that date;which 18 years were as an Executive Director decided to (iii) proper and sufficient care has been taken for thestep down from his executive position with effect from the maintenance of adequate accounting records inclose of 31st March, 2010. accordance with the provisions of the Companies Act,Considering his experience and expertise, Mr. A. K. Nanda 1956 for safeguarding the assets of the Company andwas appointed as an Additional Director of the Company for preventing and detecting fraud and otherwith effect from 1st April, 2010 at the Meeting of the irregularities;Board of Directors of the Company held on 30th March, (iv) the annual accounts have been prepared on a going2010. concern basis.The Board has placed on record its deep appreciation of Subsidiary CompaniesMr. Nanda’s immense contribution and valuable services The subsidiary companies of your Company continue toduring his long association with the Company and contribute to the overall growth of the Company. Majoracknowledged Mr. Nanda’s outstanding experience and subsidiaries such as Mahindra & Mahindra Financial Servicesexpertise in serving the Mahindra Group since 1973 Limited with a 61.96% growth in its consolidated profitsincluding his contribution as Executive Director of the and Mahindra Holidays & Resorts India Limited with aCompany from 1992 onwards. 46.86% growth in its consolidated profits deserve specialThe Company has received a Notice from a Member mention. The consolidated Group Profit for the year aftersignifying his intention to propose Mr. Nanda for the exceptional items, prior period adjustments and tax andoffice of Director at the forthcoming Annual General after deducting minority interests is Rs.2,478.56 crores asMeeting. against Rs.1,405.41 crores earned in the previous year.Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly During the year under review, Mahindra Metal One Steeland Mr. R. K. Kulkarni retire by rotation and, being eligible, Service Centre Limited, Raigad Industrial & Business Parkoffer themselves for re-appointment. Limited, Retail Initiative Holdings Limited, Mahindra Retail Private Limited, Mahindra Technologies Services Inc.,Directors’ Responsibility Statement Mahindra Punjab Tractors Private Limited, MahindraPursuant to section 217(2AA) of the Companies Act, 1956, EcoNova Private Limited, Mahindra Conveyor Systemsyour Directors, based on the representations received from Private Limited, Tech Mahindra (Nigeria) Limited, Techthe Operating Management, and after due enquiry, confirm Mahindra Bahrain Limited S.P.C. and BAH Hotelanlagenthat: AG became subsidiaries of your Company. 6
  • MAHINDRA & MAHINDRA LIMITEDDuring the year under review, Mahindra Hinoday Industries wholly owned subsidiaries of Mahindra Aerospace PrivateLimited, Metalcastello S.p.A., and Mahindra Technologies Limited which in turn is a subsidiary of your Company.Inc., ceased to be subsidiaries of the Company. Reva Electric Car Company Private Limited also became a subsidiary of your Company.Further, pursuant to an Agreement dated 10th May, 2005,signed between SBC International Inc. [now AT&T The Statement pursuant to section 212 of the CompaniesInternational Inc.] (“AT&T”), Mahindra and Mahindra Act, 1956 containing details of the Company’s subsidiariesLimited (“the Company”), British Telecommunications Plc., is attached.Mahindra-BT Investment Company (Mauritius) Limited The Consolidated Financial Statements of the Company(“MBTM”) and Tech Mahindra Limited (“Tech Mahindra”) and its subsidiaries, prepared in accordance withwhich entitled AT&T to exercise certain Options over Equity Accounting Standard AS21 form part of the Annual Report.Shares of Tech Mahindra on achieving certain Milestonesby Tech Mahindra at a pre-determined price, AT&T exercised In terms of the approval granted by the Central Governmentits Options and acquired 98,70,912 Equity Shares of Tech under section 212(8) of the Companies Act, 1956, copy ofMahindra, aggregating 8.07% of the paid-up Equity Share the Balance Sheet, Profit and Loss Account, Reports of theCapital of Tech Mahindra on 22nd March, 2010 from MBTM. Board of Directors and Auditors of the subsidiaries have not been attached to the Balance Sheet of the Company.Upon the exercise of Options by AT&T, the Shareholding The Company Secretary would make these documentsof the Company alongwith its subsidiary MBTM in Tech available upon receipt of request from any Member of theMahindra stands reduced to 44.01%, resulting in Tech Company interested in obtaining the same. However, asMahindra ceasing to be a subsidiary of the Company with directed by the Central Government, the financial data ofeffect from 22nd March, 2010. the subsidiaries have been separately furnished formingConsequently, the subsidiaries of Tech Mahindra viz. part of the Annual Report. The accounts of the individualMahindra Logisoft Business Solutions Limited, Tech subsidiary companies shall be uploaded on the Website ofMahindra (Americas) Inc., Tech Mahindra GmbH, Tech your Company. These documents would also be availableMahindra (Singapore) Pte. Limited, Tech Mahindra for inspection at the Head Office of the Company and at(Thailand) Limited, Tech Mahindra Foundation, PT Tech the Office of the respective subsidiary companies, duringMahindra Indonesia, CanvasM Technologies Limited, working hours upto the date of the Annual General Meeting.CanvasM (Americas) Inc., Tech Mahindra (Malaysia)SDN.BHD, Tech Mahindra (Beijing) IT Services Limited, Tech AuditorsMahindra (Nigeria) Limited, Tech Mahindra Bahrain Limited Messrs. Deloitte Haskins & Sells, Chartered Accountants,S.P.C. and Venturbay Consultants Private Limited also ceased retire as Auditors of the Company and have given theirto be subsidiaries of the Company with effect from consent for re-appointment. The Shareholders would be nd22 March, 2010. required to elect Auditors for the current year and fix their remuneration.Subsequent to the year end, Mahindra Metal One SteelService Centre Limited has changed its name to Mahindra As required under the provisions of section 224(1B) of theElectrical Steel Limited and Mahindra Aerospace Australia Companies Act, 1956, the Company has obtained a writtenPty. Limited and Aerostaff Australia Pty. Limited became Certificate from the above Auditors proposed to be 7
  • re-appointed to the effect that their re-appointment, if last few months, as indicated by the sharp rise in capitalmade, would be in conformity with the limits specified in goods production and a normal monsoon forecast for thethe said section. current year, the prognosis for growth in the current fiscal is positive.Public Deposits and Loans/Advances However, the rising cost of commodities and the supplyOut of the total 17,101 deposits of Rs.166.22 crores from constraints on certain critical components are a source ofthe Public and Shareholders as at 31st March, 2010, 205 considerable concern and your Company hopes to counterdeposits amounting to Rs.0.67 crores had matured and this through an intensive and continuous focus on costhad not been claimed as at the end of the Financial Year. controls, product innovation and customer delight.Since then, 93 of these deposits of the value of Rs.0.44crores have been claimed. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and OutgoThe particulars of loans/advances and investment in itsown shares by listed companies, their subsidiaries, Particulars required to be disclosed under the Companiesassociates, etc., required to be disclosed in the Annual (Disclosure of Particulars in the Report of Board of Directors)Accounts of the Company pursuant to Clause 32 of the Rules, 1988 are set out in Annexure II to this Report.Listing Agreement are furnished separately. Particulars of EmployeesCurrent Year The Company had 426 employees who were in receipt of st thDuring the period 1 April, 2010 to 28 May, 2010, 45,821 remuneration of not less than Rs.24,00,000 during thevehicles were despatched as against 34,797 vehicles during year ended 31st March, 2010 or not less than Rs.2,00,000the corresponding period in the previous year. During the per month during any part of the said year. However, assame period, 29,699 tractors were despatched as against per the provisions of section 219(1)(b)(iv) of the Companies24,536 tractors despatched during the corresponding Act, 1956, the Directors’ Report and Accounts are beingperiod in the previous year. sent to all the Shareholders of the Company excluding the Statement of particulars of employees. Any ShareholderEconomies in many parts of the world have started to interested in obtaining a copy of the Statement may writestabilise and recover either from recession or severe slow to the Company Secretary of the Company.down in the past two years. The Indian Economy hasdisplayed remarkable resilience over the course of thedownturn and is expected to grow strongly. The primarydriver of growth in the year under review was the IndustrialSector. The index of industrial production grew 10.1% on a For and on behalf of the Boardyear on year basis between April, 2009 to February, 2010as compared to the 3.1% growth registered in the same KESHUB MAHINDRA thperiod in the last fiscal. With investments picking up in the Mumbai, 29 May, 2010 Chairman 8
  • MAHINDRA & MAHINDRA LIMITEDANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010Information to be disclosed under the Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999:(a) Options 1,51,80,898 granted(b) The pricing 1st Tranche 2nd Tranche 3rd Tranche 4th Tranche 5th Tranche 6th Tranche 7th Tranche 8th Tranche 9th Tranche 10th Tranche formula Average Average Discount Discount Average Discount Discount Discount Discount Discount price price of 5.13% of 4.85% price of 5.02% of 4.89% of 4.97% of 5.03% of 4.97% preceding preceding on the on the preceding on the on the on the on the on the the the average average the average average average average average specified specified price price specified price price price price price date - 27th date - 30th preceding preceding date - 14th preceding preceding preceding preceding preceding September, May, the the September, the the the the the 2001 2003 specified specified 2005 specified specified specified specified specified date - 31st date - 30th date - 29th date - 13th date - 30th date - 4th date - 30th May, 2004 May, 2005 May, 2006 September, July, 2007 August, July, 2009 2006 2008 Average price - Average of the daily high and low of the prices for the Company’s Equity Shares quoted on Bombay Stock Exchange Limited during 15 days preceding the specified date. The specified date - Date on which the Remuneration/Compensation Committee decided to recommend to the Mahindra & Mahindra Employees’ Stock Option Trust (Trust), the grant of Options.(c) Options vested 82,90,283(d) Options exercised 45,88,703(e) The total number of 45,88,703 Equity Shares of Rs.10 each. These were transferred from the Trust to the Eligible shares arising as a Employees prior to sub-division of the Face Value of Equity Share from Rs.10 to Rs.5. result of exercise of option(f) Options lapsed 7,57,165(g) Variation of terms At the Sixty-first Annual General Meeting of the Company held on 30th July, 2007, the of options Mahindra & Mahindra Limited Employees Stock Option Scheme was amended to provide for recovery from Eligible Employees, the fringe benefit tax in respect of Options which are granted to or vested or exercised by the Eligible Employees on or after 1st April, 2007.(h) Money realised by Rs.79,24,98,738. This amount was received by the Trust. exercise of options(i) Total number 98,35,030 of options in force
  • (j) Employee-wise details of options granted to: (i) Senior managerial As per Statement attached personnel (ii) Any other employee who Names Options Names Options receives a grant in any granted granted one year of option during the during the amounting to 5% or more year ended year ended of option granted during 31st March, 31st March, that year 2004* 2005* Mr. Raghunath Murti 15,000 Mr. Pranab Datta 15,240 Mr. Hemant Luthra 15,240 Mr. Rajeev Dubey 15,000** Mr. Ramesh lyer 25,920 Mr. Allen Sequeira 10,160 - - Mr. Prince M. Augustin 5,080 * The Options granted stand augmented by an equal number of Options and the Exercise Price stands reduced to half on account of the 1:1 Bonus Issue made in September, 2005. ** Out of these, the Options granted and outstanding as of 30th March 2010, stands augmented by an equal number of Options and the Exercise Price stands reduced to half on account of the sub-division of the Face Value of Equity Share from Rs.10 to Rs.5. (iii) Identified employees who Nil were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant(k) Diluted Earnings Per Share Rs.35.61 (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 ‘Earnings per Share’(l) Where the company has The Company has calculated the employee compensation cost using the intrinsic calculated the employee value of stock options. Had the fair value method been used, in respect of stock compensation cost using the options granted on or after 30th June, 2003, the employee compensation cost intrinsic value of the stock would have been higher by Rs.26.44 crores, Profit after tax lower by Rs.26.44 options, the difference between crores and the basic and diluted earnings per share would have been lower by the employee compensation Rs.0.48 and Rs.0.44 respectively. cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed.
  • MAHINDRA & MAHINDRA LIMITED(m)Weighted-average exercise Options Grant Date Exercise price Fair value prices and weighted-average fair values of options shall be (Rs.) (Rs.) disclosed separately for options whose exercise price either 4th November, 2009 724.00 414.84 equals or exceeds or is less than the market price of the stock.(n) A description of the method The fair-value of the stock options granted on 4th November, 2009 have been and significant assumptions calculated using Black-Scholes Options pricing Formula and the significant used during the year to assumptions made in this regard are as follows: estimate the fair values of options, including the following weighted-average information: (i) risk-free interest rate, 6.41% (ii) expected life, 2.50 years (iii) expected volatility, 53.56% (iv) expected dividends, and 2.24% (v) the price of the underlying Rs.929.50 share in market at the time of option grant.STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010Name of Senior Managerial Options granted in Options granted in Options granted in Options granted in Options granted inPersons to whom Stock December, 2001* June, 2005** September, 2006 July, 2007 August, 2008Options have been grantedMr. Deepak S. Parekh 20,000 5,000 Nil Nil NilMr. Nadir B. Godrej 20,000 5,000 Nil Nil NilMr. M. M. Murugappan 20,000 5,000 Nil Nil NilMr. Narayanan Vaghul 20,000 5,000 Nil Nil NilDr. A. S. Ganguly 20,000 5,000 Nil Nil NilMr. R. K. Kulkarni 20,000 5,000 Nil Nil NilMr. Anupam Puri 20,000 ***5,000 Nil Nil NilMr. Bharat Doshi 1,00,000 ***10,000 ***11,345 ***8,362 ***29,039Mr. A. K. Nanda 1,00,000 10,000 ***11,345 ***8,362 ***24,890* All the above Options have been exercised.** The Options granted stands augmented by an equal number of Options and the Exercise Price stands reduced to half on account of the 1:1 Bonus Issue made in September, 2005.*** Out of these, the Options granted and outstanding as on 30th March 2010, stands augmented by an equal number of Options and the Exercise Price stands reduced to half on account of the sub-division of Face Value of Equity Share from Rs.10 to Rs.5.
  • ANNEXURE II TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF • Improving capacity utilisation of cylinderPARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) head washing units.RULES, 1988 AND FORMING PART OF THE DIRECTORS’ • Modifying furnace charging sequence.REPORT FOR THE YEAR ENDED 31ST MARCH, 2010 • Optimising temperature settings of airA) Conservation of Energy conditioners considering seasonal The Company has always been conscious of the need changes. for conservation of energy and has been steadily • Modification of Air Handling Ducts in making progress towards this end. Energy paint shop to optimise use of Air Blower conservation initiatives have been implemented at all power consumption. the plants and offices of the Company by undertaking numerous energy conservation projects. (iii) Initiatives Generating Awareness on Energy Consumption (a) During the year, the Company has taken the following initiatives for conservation of energy: • Display of sustainability posters at (i) Engineering Initiatives workplace. • Modification in equipments like oil • Idea generation campaign for electrical pumps and motors coupled with system energy saving. optimisations to reduce energy • Celebration of Energy Conservation Day consumption. on 14th December, 2009 followed by • Replacement of higher HP motor with Energy Conservation Week between 14th lower HP. December, 2009 to 21st December, 2009. • Installation of heat pumps, metal halide • Setting up of Stalls inside the Plant lamps instead of sodium and mercury premises for awareness of Energy vapor lamps. Efficient and Renewable Energy Products. • Installation of natural draft cooling • Reward and recognition for energy saving towers instead of induced draft cooling projects. systems. (b) Additional investments and proposals, if any, • Installation of capacitor banks, automatic being implemented for reduction of consumption timer circuits for lights and fans. of energy: • Installation of heat recovery system at • Waste heat recovery projects in paint shops. ED oven. • Improvement in efficiency of central air • Shift to LPG Heating from Electric Heating. conditioning units. (ii) Process Improvement • Explore application of efficient lighting (LED, Magnetic coupled). • Cycle time reduction of various manufacturing processes. • Use of renewable energy (Solar and Wind).
  • MAHINDRA & MAHINDRA LIMITED (c) Impact of the measures at (a) & (b) above for for the Maxximo to give the pick-up segment reduction of energy consumption and users a car like driving comfort. consequent impact on the cost of production of Your Company has been working on developing goods: the Scorpio Pick-UP for the US market and in the The measures taken have resulted in lower energy process, has developed/attained significant consumption. In the Automotive Division, the capabilities in the field of emission, safety, security Specific Power consumption per equivalent vehicle and on board diagnostics. The Company has improved by 15% over the previous year. For the confidence of complying to the latest FMVSS same period, the Farm Equipment Sector achieved legislations for model year 2010 and further years. an improvement of 3.21% per equivalent tractor. In the area of sustainable mobility, the Company developed a Micro Hybrid application on the The work done by your Company has received Pick-UP. This was launched on the new Bolero recognition in the form of a number of National Maxi Truck and was received very well by the and State level awards. customers.B) Technology Absorption During the year under review, your Company’s Research & Development: Automotive Division applied for 24 Patents and 8 Design Registrations. 1. Areas in which Research & Development is carried out: Moving on to the Farm Equipment Sector, in the During the year under review, the Automotive domestic market, the Farm Division, during the Division focused technology development efforts year under review, developed and launched the in core areas of engine technology, safety, value “Yuvraj 215”, a 15HP tractor, to meet the needs engineering through the use of modern of the small and marginal farmers. The entire manufacturing processes, alternate material and existing range of tractors, i.e. Bhoomiputra, developing capabilities in automotive electronics. Sarpanch and the flagship Arjun range were The Farm Equipment Sector too, focused on upgraded, offering better fuel efficiency, stability improvement in engine technology and new and comfort. In the same period, the Swaraj product development. Division developed and launched the Swaraj 843 2. Benefits derived as a result of the above efforts: XM (Xtra Mileage) tractor, the 1st new product from the Swaraj stable after its merger with the Some significant achievements for the year under review include the C2 CRDe engine with DOHC Company. which was launched on the Maxximo. The engine In the international space, in the US market, the delivers higher power and better fuel efficiency, Compact series of tractors were launched across thus delivering significant customer benefit and the country, offering advanced features like competitive advantage to your Company. Your Hydrostatic Transmission, allowing the product to Company also developed its first in-house be easily operated by all in the household. Your Gasoline Engine which was launched on the Company developed an Integrated Cabin, which Scorpio targeting the overseas markets. was also introduced in the US market. In China, In the area of Suspension, a hydro-formed frame the 125 HP tractor was launched, significantly and front independent suspension was developed expanding your Company’s tractor range. 3
  • In the case of Mahindra Powerol, the product 4. Expenditure on R&D range was increased to 320 kVA, at the higher The Company spent Rs.664.86 crores (including end. At the lower end, the 5kVA genset has been Rs.390.72 crores on capital expenditure) on developed and introduced. In AppliTrac, the Research and Development work during the year tracked type self propelled harvester was developed which was approximately 3.23% of the total and introduced in the southern rice belt. turnover. Keeping in view the future technology Technology Absorption, adaptation and innovation: requirements, your Company’s tractor engines are compliant with the upcoming BS (Trem) IIIA 1. Efforts, in brief, made towards technology norms in India and has also undertaken a absorption, adaption and innovation programme to meet the challenging Tier-IV The Company has continued its endeavor to emission norms of USA. absorb advanced technologies for its product range to meet the requirements of a globally During the year in India, the Farm Equipment Sector filed 12 New Patents and 2 New Design competitive market. All of the Company’s Registration applications. Vehicles, Engines and Tractors are compliant with the prevalent regulatory norms in India and also 3. Future plan of action in the countries to which they are exported. The Your Company continues its focus on developing Company has also undertaken programs for new products and technologies to meet the ever development of vehicles which would run on growing customer needs, regulatory alternate fuels like CNG, Bio-diesel, Hydrogen and requirements, competitive pressures and to Electric traction. prepare for the future. Sustainable mobility 2. Benefits derived as a result of the above efforts solutions are a key focus area and your Company • Compliance with new emission norms will continue to aggressively pursue technology introduced in India with effect from 1st April, development in this area. Some of the key thrust 2010. areas in this direction are weight reduction, fuel efficiency improvement and development of • Build a knowledge base for the Company. alternative fuel powertrains. Further, safety related • Launch of Bolero Maxi Truck, Gio, Maxximo technologies are another key area of focus for and Yuvraj. your Company. • Introduction of Micro Hybrid Technology on On the Farm Equipment side, your Company a Pick-UP. remains committed to improving farm • Development of C2 CRDe engine with DOHC. productivity through a variety of product (Tractors • Development of Electric Version of Maxximo. and Implements) and non-product initiatives. The focus will be on delivering new technology to • Development of Integrated Cabin for Tractor. the customer for a multi-fold farm output. • Emphasis on value analysis/value engineering Product upgrades, new products and implements and innovative cost reduction ideas to cut will be focus areas. down costs.4
  • MAHINDRA & MAHINDRA LIMITED3. Imported Technology for the last 5 years Sr. No. Technology Imported Year of Import Status 1. Development of Air Bags on utility vehicle 2005 In the process of Absorption 2. Development of cruise control on utility vehicle 2005 Technology Absorbed 3. Fatigue Lab and track design for MRV, Chennai 2005 In the process of Absorption 4. Sandwich material for noise absorption 2005 Technology Absorbed 5. Development of Nano-Technology for IP etc. 2005 Technology Absorbed 6. Climate control (Heated and Cooled) seats 2005 In the process of Absorption 7. Bio-Diesel and Gas based engine 2005 Technology Absorbed 8. Transmission Design of Compact Tractor 2006 Technology Absorbed 9. Development of Integrated Cabin for Tractor 2006 Technology Absorbed 10. Hydrophilic Nano coated Feature 2007 In the process of Absorption 11. Automatic Transmission for SUV 2007 Technology Absorbed 12. Transmission for new SUV 2007 In the process of Absorption 13. New Generation system for Brakes for SUV 2007 In the process of Absorption 14. New Electricals & Electronics Features 2007 In the process of Absorption 15. CNG engines for LCV 2007 Technology Absorbed 16. Common Rail Diesel on Light commercial vehicle 2007 Technology Absorbed 17. Next generation Common rail adaptation 2007 Technology Absorbed 18. Hydrogen ICE 2007 Technology Absorbed 19. Fuel Cell Vehicle Development 2007 In the process of Absorption 20. 2nd Generation Biofuels (Biomass to Liquid/Gas to Liquid) 2007 In the process of Absorption 21. Hybrid Vehicles 2008 In the process of Absorption 22. Transmission Upgrade 2008 In the process of Absorption 23. Electricals & Electronics Update 2008 Technology Absorbed 24. Design for New Tractor Transmission 2008 In the process of Absorption 25. Start Stop Micro Hybrid 2009 Technology Absorbed 26. New Generation Engine Management System 2009 In the process of Absorption 27. CNG Engines for Pickups/3 Wheelers 2009 Technology Absorbed 28. Electronic Programs for Safety, Stability & Steering Control 2009 Technology Absorbed 29. CAN Based Networking 2009 Technology Absorbed 30. New Airbag Program 2009 In the process of Absorption 31. Advanced Materials Technologies 2009 Technology Absorbed 32. Development of components using alternate 2010 In the process of Absorption materials and advanced manufacturing processes 33. Engine upgrades and Emission improvement technologies 2010 In the process of Absorption 34. New transmissions for compact vehicles and Utility vehicles 2010 In the process of Absorption 35. Technology for NVH management 2010 In the process of Absorption 36. Electrical and electronic technologies in the areas of 2010 In the process of Absorption safety, infotainment and convenience 37. Alternate fuel technologies 2010 In the process of Absorption 38. New suspension system for improved comfort 2010 In the process of Absorption 39. Development of digital service interface 2010 In the process of Absorption 40. Agri Implements Technology transfer 2010 In the process of AbsorptionC) Foreign Exchange Earnings and Outgo The Company continues to strive to improve its export earnings. Further details in respect of exports are set out elsewhere in the Annual Report. The information on foreign exchange earnings and outgo is furnished in the Notes on Accounts. For and on behalf of the Board KESHUB MAHINDRAMumbai, 29th May, 2010 Chairman 5
  • Particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries,associates, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Clause 32of the Listing Agreement.Loans and advances in nature of loans to subsidiaries: (Rupees in crores) Name of the Company Balances as on Maximum outstanding 31st March, 2010 during the year Mahindra & Mahindra Financial Services Limited 0.00 15.00 Mahindra Intertrade Limited 0.00 0.15 (including loans where there is no interest) (0.15) Bristlecone India Limited 8.03 8.03 Mahindra Gujarat Tractor Limited 1.00 1.00 Mahindra Shubhlabh Services Limited 0.00 2.00 NBS International Limited 2.00 2.00 Mahindra Forgings Limited 0.00 100.50 Bristlecone Limited 72.45 72.45 Mahindra Overseas Investment Company (Mauritius) Limited 86.86 86.86 Mahindra Engineering & Chemical Products Limited 68.53 68.53 Mahindra Two Wheelers Limited 41.00 46.00 Mahindra Vehicle Manufacturers Limited 230.00 230.00 Mahindra Castings Limited 0.00 38.00 Mahindra Holdings Limited 25.00 25.00 Mahindra Automotive Australia Pty. Ltd. 4.51 4.51 Mahindra Logistics Limited 0.00 22.84 Mahindra USA Inc. 0.00 7.20Loans and advances in the nature of loans to firms/companies in which Directors are Interested: (Rupees in crores) Name of the Company Balances as on Maximum outstanding 31st March, 2010 during the year Infrastructure Development & Finance Company Limited 0.00 15.00Except as indicated above, the Company has not made any loans and advances in the nature of loans to associates orloans and advances in the nature of loans where there is no repayment schedule or repayment beyond seven years or nointerest or interest below section 372A of the Companies Act, 1956. 6
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  • MAHINDRA & MAHINDRA LIMITEDManagement Discussion & AnalysisManagement Discussion & Analysis Industry overview and trendsMahindra & Mahindra Limited ("M&M") or ("Mahindra") is Indian economic growth recovered strongly and relativelythe flagship Company of the US$ 7.1 billion Mahindra faster from the effects of the global financial crisis. TheGroup which consists of 105 companies and has businesses Government responded quickly to the crisis with a largelarge and small in almost every continent of the world. The stimulus package including reduction in indirect taxes anddifferent Sectors of the Mahindra Group cover a wide other fiscal and monetary measures to boost demand. As aspectrum of industries from Tractors to Information result, industrial growth made rapid strides, registering aTechnology, from Automobiles and Two Wheelers to double digit increase in the second half of Financial YearAirplanes, from Financial services and Holidays to Defence 2010, as compared to nearly zero growth in the comparableand Infrastructure. An investor in M&M has the benefit of period of Financial Year 2009.the Group’s involvement in all these Industries. However, given the poor monsoon and rise in globalPositive sentiment and a renewed confidence in the India commodity prices, inflation has risen sharply since November,growth story replaced the fear and uncertainty prevalent in 2009. Containing inflation is likely to remain a key challengethe past year. Your Company used the crisis to reboot and for the Government and policymakers in the near term.reinvent itself and to reignite its dreams. It took thechallenges head on and surged ahead with aspiration, Indian Automotive Sectorinspiration and motivation. The Automotive Sector The global Automobile Industry was one of the worstcontributed to the revival of The Indian Auto Industry with affected by the financial crisis. Global Automobile productionthe Mahindra Xylo, which was launched at the height of declined by 13.5% in the year 2009, after a 3.7% declinethe recession and which went on to become an immensely in the year 2008 (Source: OICA). Recognising the importancesuccessful vehicle. The Farm Equipment Sector crowned 27 of the Automobile Industry to their economies andyears of market leadership, with M&M becoming the single employment, many Governments in developed andlargest tractor Company in the world by volume. emerging markets responded with measures to boostIndustry Structure demand for Automobiles, especially through providing incentives for scrapping old vehicles (also known as "cashThe domestic Automotive Industry comprises of Multi Utility for clunker" Schemes) and by reducing taxes.Vehicles ("MUVs"), which includes soft tops, hard tops andpick-ups, Light Commercial Vehicles ("LCVs"), three wheelers Helped by the Indian Governments stimulus packageand C-segment cars. (primarily comprising a 6% point reduction in excise duty)The domestic Tractor Industry is traditionally segmented by and multiple new product launches by manufacturers, thehorsepower into the low horsepower of 20 hp - 30 hp Indian Automobile Industry registered a healthy growth ofsegment, the middle segment of 30-40 hp and the higher 27.9% in Financial Year 2010 as compared to a decline ofsegment of above 40 hp. 4.8% in Financial Year 2009.
  • Domestic industry sales F-08 F-09 F-10 F-09 F-10 Passenger vehicles 15,49,882 15,52,703 19,49,776 0.2% 25.6% Cars 12,03,733 12,20,475 15,26,787 1.4% 25.1% *A1: Mini 69,553 49,383 63,378 -29.0% 28.3% A2: Compact 8,59,197 8,85,639 11,28,272 3.1% 27.4% A3: Mid-size 2,25,725 2,41,683 2,76,071 7.1% 14.2% A4: Executive 42,195 33,638 46,346 -20.3% 37.8% A5: Premium 6,201 9,093 11,455 46.6% 26.0% A6: Luxury 862 1,093 1,265 26.8% 15.7% MPVs 1,00,865 1,06,607 1,50,256 5.7% 40.9% UVs 2,45,284 2,25,621 2,72,733 -8.0% 20.0% Commercial vehicles 4,88,088 3,84,194 5,31,395 -21.3% 38.3% LCVs 2,15,912 2,00,699 2,86,337 -7.0% 42.7% Passenger 27,832 26,952 34,421 -3.2% 27.7% Goods 1,88,080 1,73,747 2,51,916 -7.6% 45.0% M&HCVs 2,74,582 1,83,495 2,45,058 -33.2% 33.6% Passenger 38,647 34,892 43,081 -9.7% 23.5% Goods 2,35,935 1,48,603 2,01,977 -37.0% 35.9% 3 Wheelers 3,64,781 3,49,727 4,40,368 -4.1% 25.9% Passenger 2,34,774 2,68,463 3,49,662 14.3% 30.2% Goods 1,30,007 81,264 90,706 -37.5% 11.6% 2 Wheelers 96,54,435 74,37,619 93,71,231 -23.0% 26.0% Scooters 10,50,109 11,48,007 14,62,507 9.3% 27.4% Motorcycles 57,68,342 58,31,953 73,41,139 1.1% 25.9% Mopeds 4,13,759 4,31,214 5,64,584 4.2% 30.9% Electric 17,068 26,445 3,001 54.9% -88.7%Source: Society of Indian Automobile Manufacturers* Classification of A1, A2 etc as per Society of Indian Automobile Manufacturers3
  • MAHINDRA & MAHINDRA LIMITEDWithin the overall Automobile Industry, the performance of growth was 34.4%. Most of the growth in M&HCV salesdifferent segments varied significantly during the year. came in the second half of the fiscal, partly due to a sharp rebound in industrial growth and partly due to aThe passenger car segment, which comprises of 78% of very low base in the corresponding period of the previouspersonal vehicles, reported a healthy growth of 25.2%, led year.by the A2 segment which grew 27.4%. The A4, A5 and A6segments grew in average of 36-68% indicating the rising Indian Tractor Industryincome levels, wealth and aspirations of the Indianconsumers. Industry 400203 450000 400000 318328 302241 303921 350000 262621 300000 226114 250000 175465 200000 160056 150000 100000 2005-06 2007-08 2010-11 2009-10 2006-07 2003-04 2004-05 2008-09 The Indian Tractor Industry, the worlds largest, grew by 31.7% this year to touch 4,00,203 Tractors, compared with 3,03,921 Tractors sold in the corresponding period last year.The Utility Vehicle ("UV") segment, in which your Company This growth, despite a weak monsoon and a badly-affectedparticipates as a significant player, registered a growth of Kharif crop this year, is because the dynamics of the rural21.0% as compared to a decline of 7.6% in Financial Year economy has undergone some fundamental changes in2009. This growth was driven by increasing prosperity, recent times. The Government has enhanced its supportdevelopment of infrastructure and growth in road travel. for the Agriculture Sector with increased levels of creditInterestingly, over 40% of the growth in UV industry volumes and better minimum support prices. Increased rural outlayswas contributed by Mahindra Xylo. including those under initiatives like the National RuralThe commercial vehicle industry registered a growth of Employment Guarantee Scheme ("NREGS") have helped38.8% during the year. The LCV market showed an increase improve rural incomes. New employment avenues haveof 42.7% during the year. This was primarily driven by the emerged and on an average, farm incomes now contributesmall commercial vehicle segment (of less than 1 tonne to less than half of rural incomes. All this has resulted inpayload), which grew by 47% (Source: M&M analysis). higher rural liquidity, ensuring strong demand, despite theMedium and Heavy commercial vehicle (M&HCV) segment poor monsoon. 3
  • Your Companys Performance imposed by a stagnant market and declining customer spend, Mahindra broke new ground. New vehicles wereAutomotive Sector - Leading the Industry launched, a state-of-the-art factory was inaugurated, evenFinancial Year 2010 was an epochal year for your Companys as your Companys ever popular vehicles, the Scorpio andAutomotive Sector. Spurred to rise above the challenges Bolero continued to show good growth in sales volumes: Growth M&M Domestic sales F-08 F-09 F-10 F-09 F-10 Passenger Vehicles 1,29,849 1,19,799 1,56,058 -7.7% 30.3% Cars 25,907 13,423 5,332 -48.2% -60.3% UVs 1,03,942 1,06,376 1,50,726 2.3% 41.7% Light commercial vehicles 55,222 55,881 86,217 1.2% 54.3% 3 Wheelers 33,927 44,533 44,438 31.3% -0.2% 2 Wheelers N/A 3,014 70,008 N/A 2,222.8%Notes: Data as per classification of Society of Indian Automobile Manufacturers. Includes sales of subsidiaries. Two wheeler sales for F-09 are for the period January 2009-March 2009.• During the Financial Year 2010, your Company, along with Bolero was the 9th largest selling passenger vehicle in its Joint Venture subsidiaries Mahindra Navistar Automotives the country. All other vehicles but one, on the list of top Limited (‘‘MNAL’’) and Mahindra Renault Private Limited 10 selling vehicles were small cars. Further, the Bolero (‘‘MRPL’’), sold a total of 2,86,713 vehicles in the domestic was ranked No. 1 in the SUV/MPV category in TNS. market, a growth of 30.0% over the previous year.• The Companys domestic UV sales volumes increased • In Financial Year 2010, your Companys overall LCV 41.7% to 1,50,058 units, as against a growth of 20.0% sales were 86,217 units, a growth of 54.3% as for industry UV sales. As a result, your Company further compared with a growth of 42.7% for the industry. strengthened its domination of the domestic UV sub- Your Company is the second largest player in the LCV segment, increasing its market share to 55.3% over segment with a market share of nearly 30.0%. (Source: the previous years market share of 47.1% (Source: SIAM Data). SIAM Data).• The Scorpio, Bolero and Xylo continued to lead the Indian market, increasing Mahindras already dominant marketshare. Scorpio won the Autobild Technology Award for its micro-• The Bolero occupied the numero uno slot for the fourth hybrid technology. During the year, the Xylo won consecutive year, selling more than 70,000 vehicles three important awards - MUV of the Year from NDTV during the year. Profit Car and Bike Awards 2009; UV of the Year from• In LCVs, M&M has a presence in < 3.5T GVW segment CNBC TV 18 Overdrive Awards 2009 and (small commercial vehicles and pick-ups), while its MPV of the year from ZigWheels Car and Bike subsidiary MNAL has a presence in the 3.5-7.5MT GVW Awards 2009. segment.3
  • MAHINDRA & MAHINDRA LIMITED• In the passenger car segment, the Logan sold 5,332 in terms of performance units, a decline of 60.3% over the previous year as and features that is much compared to a growth of 14.2% for the A3-segment. superior to what was hitherto available in the• The Company recently announced a restructuring of its market. Joint Venture with Renault s.a.s. France, which it hopes • In March, 2009 a refreshed will augment sales. version of the Scorpio,New products - Inspiration on roads called the "MightyAt Mahindra, the customer is king, and their satisfaction is Muscular Scorpio" wasthe source of the Companys motivation. Keeping customer launched, which led tofocus in view, the Automotive Sector launched new products more than 20% growth inin Financial Year 2010, which met with encouraging sales of the brand duringresponse in the market, on the basis of which your Company the year.is ramping up production to meet market demand. • Mahindra Navistar AutomotivesThree new products were launched in the < 3.5T GVW Limited ("MNAL") (a subsidiary ofsegment. your Company) is developing products to address the full range• Mahindra was the first of the commercial vehicle market, Company to introduce micro- some of which were displayed hybrid technology in the LCV at the Auto Expo in January, segment in the Bolero Maxi- 2010 to wide acclaim from media and customers. The truck (BMT), which now commercial launch is expected in the short term. MNAL accounts for more than 30% of BMT volumes. is expected to have a full range of M&HCVs in the next• The Company also 3-4 years. launched Indias first New Infrastructure - Aspiring to reach greater heights compact truck, the Gio, with a 0.5T payload, Your Company is positive on the future of the Indian with car-like interiors Automotive Industry and is continuing with its expansion and an attractive price plans. To meet increased customer requirements, the first point. By offering phase of a brand new manufacturing facility at Chakan, attractive finance schemes, the Company expects the near Pune in Maharashtra, was commissioned in December, Gio to provide self-employment opportunities to rural 2009. This state-of-the-art plant is owned and operated by and semi-urban youth. Mahindra Vehicle Manufacturers Limited ("MVML"), a wholly owned subsidiary of your Company.• Mahindra launched the Maxximo, a technologically- advanced compact truck with a 0.85T payload. It In another path breaking initiative, Mahindra commenced features the worlds first 2-cylinder 4-valve common partial operations at its brand new research and rail engine. The Maxximo offers a price-value proposition development facility - Mahindra Research Valley, MRV at 33
  • Chennai. The facility will be expanded further over the next Farm Equipment Sector - The route to the numero unofew years and will create a world class R&D infrastructure positionfor product development, testing and validation. The Financial year ended 31st March, 2010The Chakan Plant has the capability to manufacture the was a landmark year for the business. YourCompanys range of new generation UVs as well as Company became the worlds largest tractorcommercial application vehicles. It will also manufacture Company, in terms of the number ofCommercial Vehicles for MNAL. tractors sold, fulfilling a long cherished dream. Mahindra Tractors is an iconic brand and enjoys aOverseas operations - Expanding frontiers strong following in the India rural heartland.In the Global markets, while the overall economic conditions M&M Domestic sales F-08 F-09 F-10 F-09 F-10have improved from the nadir of Financial Year 2009, theystill remain challenging. The Companys overseas automotive Tractors 99,042 1,20,202 1,75,196 21.4% 45.8%operations recovered in the second half of last year with Domestic 90,509 1,13,269 1,66,359 25.2% 46.9%export sales growing nearly 24% to 10,567 units as Exports 8,533 6,933 8,837 -18.8% 27.5%compared to 8,501 units in the previous year. • In this period, your Company sold 1,66,359 tractorsAutomotive Sector: Overseas volumes under its Mahindra and Swaraj brands as against 1,13,269 tractors sold in the previous year, a 46.9% increase. 7,560 • This resulted in the market share going up to 41.4% 6,128 from 40.8% last year and marked the completion of 27 years of leadership of the Farm Equipment Sector in 3,007 the Indian Tractor Market. 2,373 • The above volumes included the sale of more than 1,00,000 Mahindra branded tractors in the domestic H1F09 H1F10 H2F09 H2F10 tractor market in a single financial year, the 1st Tractor Company in the country to achieve this distinction.To build on the New Products - Inspired by IndiaCompanys heritage and • Yuvraj 215 - A revolutionary 15 HP Tractor for thebuild its brand in small and marginal farmer, launched in Gujarat.overseas markets, your • 843 XM - The firstCompany launched a Tractor to be launchednew product, Mahindra under the SwarajThar. The product has brand after the mergerreceived good response in targeted markets. of the erstwhile PunjabIn addition to the above, your Company sold 1,000 Logan Tractors Limited withcars in overseas markets through MRPL. the Company.34
  • MAHINDRA & MAHINDRA LIMITED• Arjun, Sarpanch, • Exports grew 27.5% this year to touch 8,837 tractors Bhoomiputra range - as compared to 6,933 tractors exported last year, Upgraded versions outperforming exports registered by the Indian tractor launched, enhancing value industry which de-grew 6.5% at 36,394 tractors. for the customer. • China is the second largest tractor market in the worldInternational launches with a rapidly growing Chinese market, fuelled by increased Government subsidies focussed onUnited States agricultural mechanisation. MYYTCL has been• Launch of the first hi-tech Integrated Cabin Tractor successfully operationalised and has delivered 32% with both air-conditioning and heating in the US, the increase in domestic volumes in the first year of first from a tractor that is Made in India. operations. The two Joint Ventures of your Company• The Compact series of Tractors, another first from an in China together account for the sale of around Indian Tractor Company, was launched nation-wide. 30,000 tractors. These products have been very well received in that • In the US, the tractor industry continued to face the country. brunt of the economic down turn, which impacted the sale of tractors by Mahindra USA, Inc.ChinaIn China, the inauguration of the Joint Venture Company Beyond Agriculture - New growth engines - Mahindraviz. Mahindra Yeuda (Yancheng) Tractor Company Limited Powerol("MYYTCL") in April, 2009 was accompanied by the launch Mahindra is a Company on the move. Having been theof the 125HP tractor, thus expanding your Companys leading tractor maker for close to three decades now, theproduct portfolio range up to 125HP. Company has diversified in otherOverseas Operations - Global Reach spheres such as power generators.• Mahindra Tractors exported tractors to more than 35 A leading player in the powergen countries across the world. space, Mahindra Powerol sold 48,011 engines in this financial year, as against 52,350 engines in the last year. Mahindra Powerol has made a foray in the new area of Tele Infra Mahindra Powerol is the largest manufacturer of gensets in the country and has retained its leadership position in the Powergen space for telecom, with nearly 42% market share. 35
  • Management ("TIM"). This is a business where your Company Opportunities and threatswill manage telecom towers by providing the entire range The Automotive Sectorof services required, including diesel filling, preventivemaintenance, security and surveillance while ensuring world The current low level of vehicle ownership in India is 14 perclass uptime levels. The business has already contracted 1,000 people as compared with the world average of 120more than 7,000 sites for its services. per 1,000 which implies a huge opportunity for growth of the Automobile Industry. Indias Automotive Sector isMahindra Powerol has notched impressive growth in the expected to be one of the fastest growing in the worldretail space in Financial Year 2010. It also tested an engine over the next several years. However, the Company facesfor rice mill application, which was successfully introduced increasing competition from the presence of a large numberin the market. of automotive companies in the country.Mahindra Powerol has expanded its genset product range The Automobile Industry is also a key contributor into 320 kVA at the higher end and introduced a new 5kVA economic growth. The Indian Governments AutomotiveDG at the lower end. Perhaps the most significant product Mission Plan 2016 (AMP 2016) envisages a doubling ofintroduction for the retail segment from the Mahindra Automotive Industrys share of the Indian economy by 2016.Powerol stable has been the digital home UPS. With sales However, stricter emission norms and an increased focusof over 7,000 numbers this year, this product is poised to on public transportation may discourage use of automobilestake Mahindra into every home. as a means of personal transport.The Quality Way - Inspiring success The increased investments in infrastructure and theStrict adherence to quality is the abiding culture at consequent growth in industrial activity will lead to increasedMahindra Tractors, across its businesses and activities. goods movement, resulting in a growing demand forWinning the most coveted International Quality accolades commercial vehicles. The Companys subsidiary, MNAL issuch as the Deming Prize and the Japan Quality Medal set to launch a range of medium and heavy commercialhas inspired it to continue on the exalted path. The Farm vehicles over the next few years. This will ensure theEquipment Sector ("FES") has continued on the Total Quality Companys participation in this large and important segmentManagement ("TQM") path with its own Assessment Model of the Indian Automotive Industry.- the Mahindra Excellence Model. To further strengthen The Farm Equipment Sectorits manufacturing capability, the Sector is pursuing thepath of Total Productive Maintenance ("TPM") under the • The improvement in rural liquidity and increase inguidance of Japan Institute of Plant Maintenance. The non-agri component of rural incomes is a strongrich TQM experience of FES is now being horizontally positive since demand will have lesser sensitivity to adeployed in the Swaraj Division to accelerate the single deficient monsoon as compared to earlierimplementation of best practices. The Sector is relentlessly periods.pursuing its goal of business excellence and is taking this • Food security and rural development remain high onculture across to other businesses in your Company as the Government agenda, with the Union Budget forwell. 2010-2011 showing an increase in agri credit outlay36
  • MAHINDRA & MAHINDRA LIMITED by 15% to Rs.3.75 lakh crores; interest subvention on Your Company has the will to achieve and go where no crop loans and various initiatives for rural development other has gone before, to travel the road less travelled and also have enhanced outlays. This, coupled with create its own pathways on its continued journey to success significantly low levels of mechanisation in Indian farms and excellence. compared to the global average, indicates that there is Risks and Concerns significant growth potential for agricultural mechanisation in the country. Your Company is well The Automotive Sector poised to leverage this opportunity. The Company may Competition face increased competition from other tractor Given that the Indian Automobile Industry is expected to manufacturers. be one of the fastest growing markets in the world, many• Amongst your Companys newly launched products, global players are significantly expanding their presence in the Yuvraj 215 has the potential to grow significant India. There is a concern that this will result in an ever volumes in the upcoming period by creating an increasing level of competition and intense pressure on the entirely new category and catering to a large group profit margins of all participants. of customers who had no affordable option thus Increased competition will lead to more frequent product far. launches in all industry segments and raise customerYour Company will use every opportunity to leverage synergy expectations in terms of performance, quality andboth within the Sector as well as with other Mahindra technology, leading to higher costs. Your Company viewscompanies to create and improve channel efficiencies, all of this as an opportunity and a challenge.develop cutting edge technologies and introduce a Regulationscontinuous pipeline of product upgradations and newproduct introductions. Your Companys strategy to make Stringent regulatory norms are being introduced touse of low cost manufacturing and sourcing bases in India safeguard the environment, especially in the area ofand abroad will enhance its cost competitiveness. emissions. Many of these measures are likely to result in an increase in costs which cannot always be passed on toHaving achieved Global Leadership, your Company will customers through price increases in a highly competitivecontinue to focus on expanding international volumes. With market environment.the 2 Joint Ventures in China, your Company is well poised In India, there is a large differential in taxes levied on smallto participate in the growth in China, one of the fastest cars and larger vehicles. With the resulting lower price taggrowing tractor markets, fuelled by huge Government for small cars, many customers may opt to postpone largesubsidies for mechanisation. Similarly, with the US market car purchases or buy a small car, which could impact theslowly emerging out of a recession, your Company expects growth of UVs and the large car segment.the business to resume its growth path. Fuel prices and alternate fuelsPerhaps the biggest opportunity will emerge as the FESgears up to bring about Farm Tech Prosperity. The Fuel prices are an important element of the overall cost ofpossibilities are endless in this area. ownership for vehicles and tractors. Almost all of the 37
  • Companys UV models are diesel powered. Diesel is priced Also, growing urbanisation and vehicle population is leadinglower than petrol. Any to growing pollution, congestion and shortage of parkingreduction in the price spaces in cities. These trends would likely discourage thedifferential between petrol use of automobiles as a means of personal transport,and diesel may increase though, given the aspirations of Indian consumers, it maythe demand for petrol UVs not have a significant impact on the demand for personalat the expense of diesel vehicles.UVs and will bedisadvantageous to the Financial market conditionsCompany. Availability of credit and affordable interest rates areThere is also a growing customer trend, as well as promotion important facilitators for automobile and tractor sales.by the Government, for vehicles powered by CNG, LPG and Any adverse change in these factors would impactelectric batteries, as well as hybrid powertrains. To mitigate demand. However, several strategic tie-ups with multiplethis risk, the Company has developed products powered by banks and financing companies alleviates this concern toalternate energy such as CNG and electricity to provide some extent.lower polluting products. The Company has also developed For overseas operations, which are a key thrust area for theprototypes of a hybrid Scorpio and hydrogen powered three- Company, rupee appreciation could be a risk for both thewheeler as well as a bio-diesel powered Scorpio and Bolero, Sectors. However, M&M, as a practice, is taking appropriatebio-diesel tractors and Gensets. steps to hedge currency exposure, thus limiting the impactAlternate modes of transportation of risk.While the thrust by the Government on development of New projectsurban infrastructure would lead to overall economicdevelopment and improve living standards, it is also likely To maintain and extend its competitive advantage, theto provide Company has created significant new capacity at its newalternate manufacturing plant at Chakan and is simultaneously investingmodes of in an aggressive new product development programme.transport for Success of the new product launches and attaining optimald a i l y and planned capacity utilisation of the new facility wouldcommuting have an important bearing on the future profitability.such as BusRapid Transit To mitigate the associated risks, your Company is taking great care in building new products around the customersS y s t e m("BRTS"), needs and plans to bring in the incremental capacity fromMetrorail, this new plant in phases.monorails, etc.38
  • MAHINDRA & MAHINDRA LIMITEDFarm Equipment Sector StrategyCompetition Automotive Sector: Expanding the addressable marketThe Indian domestic tractor market, the worlds largest, has Your Company is investing significant resources in developingseen a round of consolidation in the last few years, which its capacity and capabilities to grow its participation as aincludes the coming together of TAFE and Eicher and the full range player in the Indian automobile industry.acquisition of Punjab Tractors Limited by your Company. • Entry into new segments - In addition to sports utilityHaving recorded a significant growth of over 30% in this vehicles, pick-up trucks, light commercial vehicles andfinancial year, the market is expected to see more three-wheelers, your Company has recently entered intocompetition among the existing domestic and international the Multi Purpose Vehicle segment (through the Xylo),players. the mini-truck segment (through the Maxximo) andIncreased competition will lead to more frequent product the compact-truck segment (through the Gio). Thelaunches in all industry segments and raise customer Company, through its subsidiary MNAL, will enter intoexpectations in terms of performance, quality and the medium and heavy commercial vehicle segment intechnology, leading to higher costs. Your Company views the near term as well. This will not only provide theall of this as an opportunity and a challenge. Company with a much larger addressable market but will also provide multiple avenues for growth and de-Regulations and alternative fuels risk the business from dependence on a single segment.Stringent regulatory norms are being introduced to • New products - The Company is refreshing and growingsafeguard the environment, especially in the areas of its product portfolio to grow its sales volumes andemissions. Your Company is ahead of the curve, in terms of defend its market position. As part of the Companystechnology readiness, to meet the changes in norms. In aggressive product plan, it is planned to launch aaddition, in the area of alternative fuels, your Companys number of new products and multiple variants in theproducts both in tractors and gensets are compatible with next three years. This includes a new global Sportsbio-fuels, ensuring the customer can use such fuels, Utility Vehicle platform to be launched in the nearwhenever their commercial availability improves. future.Raw Materials • Technology upgradation and R&D - The Company is investing in upgrading the technology and quality ofAfter a year of decline in raw material prices, Financial Year its products. An important initiative in this area is the2011 is expected to see a firming of prices in the new research facility being set up at Mahindra Researchinternational market. While this is an area of concern and Valley (MRV) in Chennai, which will provide world-will put pressure on margins, your Company will continue class R&D infrastructure. Further, the impending launchto focus on cost re-engineering to minimise the impact of of the Companys products in the US, the mostthis development. advanced automobile market, will help the Company keep abreast of technological trends. The Company plans to harness its frugal engineering capabilities to 3
  • achieve its technology and new product development Yuvraj 215 has received the Golden Peacock Award, 2010 objectives at a globally competitive cost. in the Innovative Product/Services category, which has recognised the game changing nature of Yuvraj 215.• Overseas markets and partnerships - The Company plans to increase its focus on developing overseas HP tractor at an unbeatable price for small and marginal markets through new products and brand building. farmers - your Companys contribution towards inclusive During Financial Year 2011, the Company plans to growth in the country. This technological marvel meets the enter the US market with a pick-up. The Company needs of over 80% of Indias farming populace, whose also continues to actively search for overseas partners land holding is less than 5 acres, and for whom a Rs.2.5 to supplement and strengthen its domestic market in lakhs tractor is simply unaffordable. both the Sectors. Mahindra ApplitracFarm Equipment Sector: Aspiring for Farm Tech Prosperity Research suggests that increasing rural affluence, multipleGoing beyond just being a tractor company, FES aspires to sources of income in rural India and the success of socialmake a difference in the lives of farmers by delivering FarmTech Prosperity, both in the Indian context, as well as on aglobal scale, in the immediate and distant future.The Companys customers - the source of inspirationAt Mahindra, the Company undertakes research to identifythe needs of both its existing and potential customers inorder to fulfil their aspirations. These findings inspire theCompany to follow the road less travelled. In the past year,FES took many steps along the road, to improve the livesof its customers. programmes like NREGS are combining to make farm labourYuvraj 215 scarce and expensive. Also, the productivity levels are very low on Indian farms, far lower than the global average.There is wealth at the bottom of the pyramid. Research This is the inspiration for the AppliTrac brand, which offersshowed that the lower income farmer is still forced to rely the Indian farmer, complete mechanisation solutions for aon manual labour and range of crops, helping him deal with labour shortage andbullocks to till his land. also enhance productivity.With this insight, yourCompany took upon Mahindra Samriddhiitself the challenge of Farmer prosperity is the inspiration that has motivated FEScreating a suitable to intensify Mahindra Samriddhi, which is focused onsolution at a suitable increasing crop productivity. This initiative includes soil andprice. FES launched water testing labs, productivity demo farms, agri-clinics andthe Yuvraj 215, a 15 counselling centres. It brings the best of agricultural know-4
  • MAHINDRA & MAHINDRA LIMITEDhow within reach of the farmer and helps him increase Going forward, the success of the Group will depend onfarm productivity. individuals and teams that are able to create value for the organisation. The levers of organisation structure and design,In the Financial Year ended 31st March, 2010, 75 Samriddhi reward and recognition, talent acquisition, communicationcentres were operational across the country. Samriddhi is and performance management system are important andmotivated by your Companys desire to help millions of are aligned. Leadership development, succession planningfarmers across the country get more out of soil, ensuring and employee engagement demanded extra focus this year,that there is and will be enough food to feed Indias growing given the prevalent economic situation.population. To showcase HR practices in various businesses andOutlook encourage best practice sharing, the HR Best Practice Award was instituted.In the long term, the Indian economy is projected to growrapidly and demand conditions are expected to remain The Talent Management process of the Group gave impetusstrong. However, in the near term, there are challenges in to leadership development programmes with a focus onterms of higher commodity prices, rising inflation and creating synergy between Satyam Computer Services Limited,appreciation of the rupee which will have a bearing on Tech Mahindra Limited and the other businesses of thedemand and profitability. Group. Continuing with leadership developmentBoth the Automotive and Farm Equipment Sectors with programmes, this year a partnership was forged with thetheir updated product portfolios and their exploration of Centre for Creative Leadership, USA in line with the saidglobal horizons, will strive to maintain their leadership purpose.position in their respective markets. Simultaneously, your A cross-functional team of more than 150 HR,Company will continue its focus on achieving cost leadership business and IT professionals worked together forthrough focused cost optimisation, value engineering, harnessing the power of IT through Parivartan -improved efficiency measures like supply chain management, Project Harmony, whose basic objective is to create a Onecountrywide connectivity of all its suppliers and dealers and Mahindra experience by synergising and creating bestexploiting synergies between its Sectors. practices in 24 HR processes across the Group. 17,000Material Developments in Human Resources/ Officers across 29 Group companies spread over 156Industrial Relations for Automotive and Farm locations experienced this power when the system wentEquipment Sectors live.This year, HR in the Mahindra Group continued on its Your Company continued with its initiative of employerstrategic purpose of focusing on the HR Triple Bottom-line branding through “The War Room”, event which seesby creating a culture of sustained business out performance, participation from the countrys leading Business Schools.extreme care for all stakeholders, starting with customers The impact of this initiative was significant and there was aand employees, and strengthening the core values of the marked increase in the number of participating teams thisGroup. year. 4
  • Industrial Relations remained cordial and harmonious during Discussion on Financial Performance with respectthe year for both the Sectors, apart from a brief illegal to Operational Performancetool-down strike by workers at the Nashik Automotive Plant. OverviewHowever, the loss in production was compensated and theCompany did not suffer any major loss. Various training The financial statements have been prepared inprogrammes were organised at all Plants for developing compliance with the requirements of the Companies Act,personal, interpersonal and technical skills of the Companys 1956 and Generally Accepted Accounting Principlesworkmen. These training programs covered a wide range ("GAAP") in India.of topics e.g. Positive Attitude, Stress Management, The Groups consolidated financial statements have beenCreativity, Team Effectiveness, Safety and Environment, prepared in compliance with the standard AS 21 onQuality Tools, TPM, Dexterity and Technical training. The Consolidation of Accounts and presented in a separateworkmen wholeheartedly participated in all training section. The Company has provided segment reporting onprogrammes and in many cases on a holiday or after a consolidated basis as per standard AS 17 on segmentworking hours. reporting. This information appears along with the consolidated accounts.Workmen at all locations are involved in drivingimprovement activities. Financial Information Fixed Assets:The permanent employee strength of the Company as on31st March, 2010 was 14,355. As at 31st March, 2010 the Gross Block of Fixed Assets and Capital Work in Progress was Rs.6,240.49 crores asInternal Control Systems compared to Rs.5,540.62 crores as at 31st March, 2009. During the year, the Company incurred capital expenditureThe Company maintains adequate internal control systems, of Rs.946.31 crores (previous year Rs.855.12 crores). Thewhich provide, among other things, reasonable assurance major items of capital expenditure were on New Productof recording the transactions of its operations in all material Development like the Maximmo, Capacity Enhancement andrespects and of providing protection against significant Research & Development including on the Companysmisuse or loss of Company assets. The Company uses an research facility in Chennai. This included the purchase ofEnterprise Resource Planning ("ERP") package, which Intangible assets aggregating Rs.225.28 crores (previousenhances the internal control mechanism. The Company year Rs.170.35 crores).has a strong and independent internal audit function. The Inventories:Chief Internal Auditor reports directly to the Chairman ofthe Board. Professionally qualified, technical and financial Particulars 31st March, 31st March,personnel of the internal audit function conduct periodic 2010 2009audits to ensure that the Companys internal control systems Raw materials and boughtare adequate and are complied with. out components as a % of consumption 4.23% 4.46% Finished goods as a % of gross sales 2.48% 3.31%4
  • MAHINDRA & MAHINDRA LIMITEDThe reduction in inventory levels is due to the Companys 31st March, 2010 as compared to 7.09% for the previouscontinued focus on supply chain management and better year. The Company has been able to achieve thisplanning and control. improvement in its debtors level due to its proactive emphasis on collections.Sundry Debtors:Sundry debtors amount to Rs.1,258.08 crores as Loan Funds:at 31 st March, 2010, as compared with The loans funds have decreased from Rs.4,052.76 crores in stRs.1,043.65 crores as at 31 March, 2009. While in absolute the previous year to Rs.2,880.15 crores in the current year.terms the debtors have gone up, as a The decrease is primarily on account of the conversion ofpercentage of gross sales and income from operations the Fully and Compulsorily Convertible Debentures intodebtors are lower at 6.17% for the year ended Equity Shares and the repayment of secured Foreign Currency Loans from Banks.RESULTS OF OPERATIONSIncome: (Rs. crores) Particulars Finanical Year - 2010 Finanical Year - 2009 Inc./(Dec.) Amount % Amount % % Gross Sales 19,832.06 106.61 14,268.41 108.97 38.99 Income from Operations 564.06 3.03 444.62 3.40 26.86 Gross Sales & Income from Operations 20,396.12 109.64 14,713.03 112.37 38.63 Less : Excise Duty on Sales 1,794.01 9.64 1,619.35 12.37 10.79 Net Sales & Income from Operations 18,602.11 100.00 13,093.68 100.00 42.07 Other Income 199.35 1.07 270.34 2.06 (26.26)Net Sales, Income from Operations and Other Income: year. The tractor business growth was fuelled by a strong increase in sales in both the domestic and exportThe net sales and income from operations of the markets.Company grew by 42% over the previous year on agrowth of 44% in the automotive business and 40% Other income during Financial Year 2010 at Rs.199.35 croresin the Companys tractor business. This growth in the fell by 26% as compared to the previous year amount ofAutomotive Sector was driven by the robust Rs.270.34 crores due to lower dividend income fromgrowth in domestic UV volumes by 39%, increased exports subsidiaries and lower profit from the sale of investmentsand the launch of the GIO and the Maximmo in the current in the current year. 43
  • Expenditure: (Rs. crores) Particulars Financial Year 2010 Financial Year 2009 Inc./(Dec.) Amount % to Net Sales Amount % to Net Sales % and Income and Income from from Operations Operations Raw materials, Finished and Semi-finished Products 12,332.92 66.30 9,274.23 70.83 32.98 Personnel expenses 1,198.47 6.44 1,024.61 7.83 16.97 Interest, commitment and finance charges 27.81 0.15 45.26 0.35 (38.56) Depreciation/Amortisation 370.78 1.99 291.51 2.23 27.19 Other expenses 2,115.48 11.37 1,702.21 13.00 24.28 Total Expenditure 16,045.46 86.26 12,337.82 94.23 30.05The total expenditure during the year as a percentage of Net sales/Income from Operations is 86.26% as compared to94.23% in the previous year.Material Cost: of the Company as compared to an eight month charge in the previous year.For the year ended 31st March, 2010 material cost hasincreased by 33% which is much lower than increase in net Other Expenses:sales and income from operations due to increased volumesin the current year. Thus, as a percentage of net sales, Other expenses as a percentage of net sales and operatingmaterial cost shows a decrease over the previous year. This income shows a decrease over the previous year due to theis mainly due to the full benefit of the decrease in increased income in the current year. However, because ofcommodity prices in the second half of Financial Year 2009 the increase in volumes, the expenses in absolute terms areaccruing to the current year and the cost reduction initiatives higher due to increases in freight, power and fuel, warrantyof the Company. and marketing related expenses on incentives, advertisement, sales promotion, etc.Personnel Cost: Depreciation:Personnel cost has increased by 17% to Rs.1,198.47 croresfrom Rs.1,024.61 crores in the previous year. This is mainly The depreciation for the year ended 31st March, 2010 is atdue to increase in flexible manpower, officers annual Rs.370.78 crores as compared to Rs.291.51 crores in theincrements and impact of wage agreements signed during previous year due to the full impact in the current year ofthe year. Also the current year had the impact of full year capitalisation of Xylo related fixed assets and intangibles andcharge of the erstwhile Punjab Tractors Limited in the books due to fresh capitalisation of projects in the current year.44
  • MAHINDRA & MAHINDRA LIMITEDInterest (Net): in the current year from Rs.26,919.81 crores in FinancialThe interest expense of Rs.27.81 crores (net of interest Year 2009. The profit before exceptional items and tax forincome Rs.129.04 crores) for the year ended 31st March, the current year is Rs.3,779.73 crores as compared to2010 is lower than the interest expense of Rs.45.26 crores Rs.2,330.51 crores, registering an increase of 62.18% over(net of interest income Rs.134.12 crores) in the previous the previous year. While the Groups performance across allyear. This is due to the higher earnings from surplus funds its segments has registered an improvement, the Systechand interest on IT refund received during the current year segment faced challenges on account of the situationpartially offset by increased expense on account of increased prevailing in the European countries which are yet to returnfixed deposits and a longer period impact of fully and to normalcy post the global meltdown of 2009 whichcompulsorily convertible debentures in the current year. severely impacted the auto-components industry world over. During the year, there was an exceptional gain of Rs.264.56Exceptional Items: crores mainly arising from the sale of shares through anThe profit from Exceptional items during the year ended Initial Public Offering of Mahindra Holidays and Resorts st31 March, 2010 is Rs.90.75 crores as against Rs.10.27 India Limited, gains on account of deemed divestitures ofcrores in the last year. The profit in the current year is on the Companys holdings in group companies such asaccount of profit on sale of shares of Mahindra Holidays & Mahindra Forgings Limited, Tech Mahindra Limited andResorts India Limited offered as a part of that companys Mahindra Holidays & Resorts India Limited. The consolidatedInitial Public Offering, while in the previous year the Group Profit for the year after exceptional items, prior periodexceptional income was on account of surplus on transfer adjustments and tax and after deducting minority interestsof the Companys Logistics business to its wholly owned is Rs.2,478.56 crores as against Rs.1,405.41 crores earnedsubsidiary. last year, a growth of 76.36%.Provision for taxation: During the year, by virtue of exercise of options granted to AT&T,The provision for current tax, fringe benefit tax and deferred the shareholding of the Company alongwith Mahindra-BTtax for the year ended 31st March, 2010 as a percentage to Investment Company (Mauritius) Limited in Tech Mahindra Limitedprofit before tax is higher than the previous year, on account stands reduced to 44.01%, resulting in Tech Mahindra Limitedof the incremental profits during the year being subjected alongwith its subsidiary companies ceasing to be subsidiaries ofto tax at the maximum marginal rate of 33.99%. the Company with effect from 22nd March, 2010. Accordingly asConsolidated Financial Position of the M&M on 31st March, 2010, Tech Mahindra Limited is a Joint Venture ofGroup the Company. As on 31st March, 2010 the Group comprised of 90 Subsidiaries, 5 Joint Ventures and 10 Associates.The current year has witnessed a strong sales performancewhich has translated to healthy growth in both, revenues Tech Mahindra Limited, the Groups IT arm, registered aand profits of the Group. total income (Consolidated) of Rs.4,700.77 crores as against stThe Gross turnover for the year ended 31 March, 2010 of Rs.4,426.86 crores in Financial Year 2009 - an increase ofConsolidated Mahindra Group is Rs.33,790.10 crores as 6.19%. Its Net Profit, after share of minority interest, wasagainst Rs.28,991.99 crores for the previous year. The lower at Rs.700.42 crores during Financial Year 2010 asGroups net turnover grew by 17.71% to Rs.31,687.97 crores against Rs.1,014.37 crores in the previous year. 45
  • The Groups Finance company, Mahindra & Mahindra from Rs.219.70 crores in the previous year to Rs.355.82Financial Services Limited (Consolidated), witnessed a crores in the current year.revenue growth of 13.93% over the previous year. Having Mahindra Holidays & Resorts India Limited, during the yearput in place various initiatives towards improving cashflows, under review, continued to grow towards dominance inreducing interest costs through broad basing the borrowing the Holiday Segment with membership growing by 18.38%profile and establishing banking relationships, it reported a from 92,825 numbers to 1,09,884 numbers. The totaltotal income of Rs.1,595.60 crores during the current year income (Consolidated) grew by 17.90% from Rs. 442.12as compared to Rs.1,400.45 crores in the last year. With a crores to Rs. 521.28 crores. The profit after tax for the yearnetwork of 459 offices it is one of the leading NBFCs in registered an increase of 46.86% increasing from Rs.79.71financing of utility vehicles, tractors and cars. Its consolidated crores in Financial Year 2009 to Rs.117.06 crores in Financialprofit after tax for Financial Year 2010 grew by 61.96% Year 2010.Segment Results (before exceptional item):The results achieved by major business segments of the Group are given below: (Rupees Crores) Segments Financial Year 2010 Financial Year 2009 1. Automotive 1,260.64 257.72 2. Farm Equipment 1,406.66 667.85 3. Financial Services 524.21 333.91 4. Steel Trading & Processing 82.64 94.80 5. Infrastructure 121.72 80.00 6. Hospitality 158.01 93.66 7. IT Services 1,026.36 1,126.28 8. Systech (108.08) 23.86 9. Others (108.08) (46.71)DisclaimerCertain statements in the Management Discussion and Analysis describing the Companys objectives, projections,estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securitieslaws and regulations. Actual results could differ from those expressed or implied. Important factors that could makea difference to the Companys operations include raw material availability and prices, cyclical demand and pricing inthe Companys principal markets, changes in Government regulations, tax regimes, economic developments withinIndia and the countries in which the Company conducts business and other incidental factors.46
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  • MAHINDRA & MAHINDRA LIMITEDCorporate GovernanceYour Company is committed to transparency in all its Company. Mr. A. K. Nanda, Executive Director of thedealings and places high emphasis on business ethics. The Company, has resigned with effect from the close ofCompany believes that sound Corporate Governance is working hours on 31 st March, 2010 and has beencritical for enhancing and retaining investor trust and appointed as a Non-Executive Director on the Board ofyour Company always seeks to ensure that its performance Directors of the Company, with effect from 1st April, 2010.goals are met with integrity. The Company is of the view The Chairman and the Vice-Chairman & Managing Director,that good governance goes beyond good working results though Professional Directors in their individual capacities,and financial propriety and is a pre-requisite to attainment belong to the Company’s promoter group. The remainingof excellent performance in terms of stakeholder value Non-Executive Directors comprising of eight Independentcreation. Directors (including the Nominee Director) and one Non-Your Company practices a culture that is built on core Independent Non-Executive Director possess the requisitevalues and ethics. During the year ‘CRISIL’ has re-affirmed qualifications and experience in general corporatethe highest level rating “GVC Level 1” for Governance and management, finance, banking, insurance and other alliedValue Creation for the fourth year in a row. This has been fields which enable them to contribute effectively to thepossible through sustained efforts and commitment to the Company in their capacity as Directors of the Company.highest standards of corporate conduct. Your Company Apart from reimbursement of expenses incurred in thehas also received the “Best Governed Company 2009” discharge of their duties, the remuneration that theseAward from the ‘Indian Merchants Chamber and the Asian Directors would be entitled under the Companies Act, 1956Centre for Corporate Governance and Sustainability’. as Non-Executive Directors and the remuneration that aA Report on compliance with the Code of Corporate Director may receive for professional services rendered toGovernance as prescribed by the Securities and Exchange the Company through a firm in which he is a partner,Board of India and incorporated in the Listing Agreement none of these Directors has any other material pecuniaryis given below. relationships or transactions with the Company, its Promoters, its Directors, its Senior Management or itsI. Board of Directors Subsidiaries and Associates which in their judgment wouldThe composition of the Board is in conformity with Clause affect their independence. None of the Directors of the49 of the Listing Agreement, as amended from time to Company are inter-se related to each other.time. The Non–Executive Chairman of the Company is aPromoter and the number of Non-Executive Independent Professional fees for the year to Khaitan & Co., AdvocatesDirectors is more than one-half of the total number of & Solicitors, in which Mr. R. K. Kulkarni, Non-ExecutiveDirectors. The Board reviews and approves strategy and Director is a partner amounts to Rs.112.77 lakhs.oversees the actions and results of management to ensure The Senior Management have made disclosures to thethat the long term objectives of enhancing stakeholders’ Board confirming that there are no material, financial and/value are met. or commercial transactions between them and theThe Vice-Chairman & Managing Director alongwith Company which could have potential conflict of interestExecutive Directors are Whole-time Directors of your with the Company at large. 4
  • A. Composition of the Board given below. None of the Directors on the Board is a MemberCurrently, the Board comprises of twelve Directors. The names on more than 10 Committees and Chairman of more than 5and categories of Directors, the number of Directorships and Committees (as specified in Clause 49 of the ListingCommittee positions held by them in the companies are Agreement), across all the companies in which he is a Director: Directors Category Total Number of Committee Memberships, Chairmanships and Directorships of public companies* as on 31st March, 2010 Committee Committee Directorships $ Memberships+ Chairmanships+ NON-EXECUTIVE Mr. Keshub Mahindra Promoter 1 1 6 (Chairman) Mr. Deepak S. Parekh Independent 7 5 12 Mr. A. K. Nanda# Non-Independent 8 4 15 Mr. N. B. Godrej Independent 3 1 14 Mr. M. M. Murugappan Independent 5 4 8 Mr. Narayanan Vaghul Independent 2 1 5 Dr. A. S. Ganguly Independent 2 1 5 Mr. R. K. Kulkarni Independent 7 3 8 Mr. Anupam Puri Independent 2 - 5 Mr. Arun Kanti Dasgupta Independent 2 - 5 EXECUTIVE Mr. Anand G. Mahindra Promoter 1 - 13 (Vice-Chairman & Managing Director) Mr. Bharat Doshi Non-Independent 4 3 10 (Executive Director)# Resigned as the Executive Director and also as a Director of the Company with effect from the close of working hours on 31st March, 2010. He has been appointed as an Additional Director on the Board of Directors of the Company, with effect from 1st April, 2010.* Excludes private limited companies, foreign companies, companies registered under section 25 of the Companies Act, 1956 and government bodies.+ Committees considered are Audit Committee and Shareholders/Investors Grievance Committee, including that of Mahindra & Mahindra Limited.$ Excludes Alternate Directorships but includes Additional Directorships and Directorship in Mahindra & Mahindra Limited.5
  • MAHINDRA & MAHINDRA LIMITEDB. Board Procedure provisions and write-offs, corporate restructuring, Minutes of Meetings of the Audit and other Committees of theA detailed Agenda folder is sent to each Director in advance Board and information on recruitment of Officers just belowof Board and Committee Meetings. To enable the Board to the Board level, including the Company Secretary anddischarge its responsibilities effectively, the Vice-Chairman Compliance Officer.& Managing Director apprises the Board at every Meetingof the overall performance of the Company, followed by C. Number of Board Meetings, Attendance of thepresentations by the Sector Presidents. A detailed functional Directors at Meetings of the Board and at theReport is also placed at Board Meetings. The Board also Annual General Meetinginter alia reviews strategy and business plans, annual During the year 1st April, 2009 to 31st March, 2010, Sixoperating and capital expenditure budgets, investment and Board Meetings were held on the following dates – 9thexposure limits, compliance reports of all laws applicable April, 2009, 28th May, 2009, 30th July, 2009, 29th October,to the Company, as well as steps taken by the Company to 2009, 25th January, 2010 and 30th March, 2010. The gaprectify instances of non-compliances, review of major legal between two Meetings did not exceed four months. Theseissues, minutes of the Board Meetings of your Company’s Meetings were well attended. The Sixty-third Annualunlisted subsidiary companies, significant transactions and General Meeting (AGM) of the Company was held on 30tharrangements entered into by the unlisted subsidiary July, 2009.companies, adoption of quarterly/half-yearly/annual results,significant labour issues, transactions pertaining to The attendance of the Directors at these Meetings is aspurchase/disposal of property(ies), major accounting under: Directors Number of Board Attendance at the Meetings Attended AGM Mr. Keshub Mahindra 5+ Yes Mr. Anand G. Mahindra 6 Yes Mr. Deepak S. Parekh 4 Yes Mr. N. B. Godrej 6 Yes Mr. M. M. Murugappan 5+ Yes Mr. Bharat Doshi 6 Yes Mr. A. K. Nanda 6 Yes Mr. Narayanan Vaghul 6 Yes Dr. A. S. Ganguly 6 Yes Mr. R. K. Kulkarni 6 Yes Mr. Anupam Puri 5 Yes Mr. Arun Kanti Dasgupta 4 Yes+ In addition to five Board Meetings, Mr. Keshub Mahindra and Mr. M. M. Murugappan participated in one Board Meeting through teleconference. No sitting fees were paid for participation through teleconference. 5
  • D. Meetings of Independent Directors Manufacturing Company Limited, Indian Institute forThe Independent Directors of the Company meet before Human Settlements and Prudential Management & Servicesthe Board Meeting to examine various Corporate Private Limited.Governance issues, functioning of the Company and of He was also appointed by the Government of India tothe Group and other issues without the presence of Vice- serve on a number of Committees including the SacharChairman & Managing Director or Executive Directors or Commission on Company Law & MRTP; Central AdvisoryManagement Personnel. These Meetings are conducted in Council of Industries, etc.an informal and flexible manner to enable the Independent Mr. Mahindra is associated with several Committees. He isDirectors to discuss matters pertaining to the affairs of the a Member of Prime Ministers Council on Trade & Industry,Company and put forth their views and recommend their New Delhi, Apex Advisory Council - ASSOCHAM, Deputysuggestions to the Board. Chairman & Trustee - Employers Federation of India,E. Directors seeking appointment/re-appointment President of the Governing Council - University ofMr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly Pennsylvania Institute for the Advanced Study of India,and Mr. R. K. Kulkarni retire by rotation and, being eligible, New Delhi and Member of United World Collegeshave offered themselves for re-appointment. Mr. A. K. (International), U.K., amongst other companies.Nanda resigned as the Executive Director of the Company Mr. Mahindra was the President of Bombay Chamber ofand also as a Director of the Company with effect from Commerce & Industry, President of ASSOCHAM, Presidentthe close of working hours on 31st March, 2010. He was of Indo-American Society and Chairman of Indian Instituteappointed as an Additional Director of the Company with of Management, Ahmedabad.effect from 1st April, 2010 and will hold office upto the Mr. Mahindra has been recipient of prestigious awardsnext Annual General Meeting of the Company. including 1989 Business India - Businessman of the Year;Mr. Keshub Mahindra 1994 The Sir Jehangir Ghandy Medal for Industrial Peace -Mr. Keshub Mahindra, Chairman of Mahindra & Mahindra XLRI, Jamshedpur; 1998 IMC Diamond Jubilee EndowmentLimited, is a Graduate from Wharton, University of Trust Award; 2000 Dadabhai Naoroji International AwardPennsylvania, USA. After joining the Company as a Director for Excellence & Lifetime Achievement; 2003 All Indiain 1948, he became the Chairman in 1963. Management Association Lifetime Achievement Award forHe is a well-known philanthropist who redefined Corporate Management; 2006 Lakshya Business Visionary Award -Governance by effectively channelising funds into the social NITIE; 2007 Indian Business School (IBS) Kolkata Lifetimesector. Achievement Award presented by the Institute of CharteredMr. Keshub Mahindra is Chairman of Mahindra Ugine Steel Financial Analysts of India (ICFAI); 2007 Ernst & YoungCompany Limited, Chairman of the Board of Governors of Entrepreneur of the Year Lifetime Achievement Award; 2008Mahindra United World College of India, Vice-Chairman Society of Indian Automobile Manufacturers (SIAM) Awardof Housing Development Finance Corporation Limited, for Lifetime Contribution to the Automotive Industry; 2009Chairman of Kema Services (International) Private Limited, CNBC TV 18 India Business Leaders Lifetime AchievementChairman of Tech Mahindra Foundation, Chairman of Award 2008; 2009 ACMA Lifetime Achievement AwardMahindra Holdings Limited and Director of Bombay Burmah and very recently 2009 Economic Times LifetimeTrading Corporation Limited, The Bombay Dyeing & Achievement Award.5
  • MAHINDRA & MAHINDRA LIMITEDMr. Keshub Mahindra is a Member of the following Board Committees: Sr. No. Name of the Company Name of Committee Position held 1. Mahindra & Mahindra Limited Share Transfer and Shareholders/ Chairman Investors Grievance Committee Loans & Investment Committee Chairman Remuneration/Compensation Committee Member 2. Housing Development Finance Compensation Committee Chairman Corporation Limited 3. Bombay Dyeing & Manufacturing Remuneration Committee Chairman Company Limited 4. Bombay Burmah Trading Remuneration Committee Member Corporation LimitedMr. Keshub Mahindra holds 4,02,296 Ordinary (Equity) institutions on public policy. Mr. Anupam Puri spearheadedShares in the Company. the development of McKinsey’s India practice, oversaw the Asian and Latin American offices and was an electedMr. Anupam Puri Member of the Board.Mr. Anupam Puri holds a M. Phil in Economics from NuffieldCollege, Oxford University, 1969; an M.A. in Economics He is currently a Member of the Board at Dr. Reddy’sfrom Balliol College, Oxford University, 1967; and a B.A. in Laboratories Limited, Mahindra & Mahindra Limited,Economics from Delhi University, India, 1965. Mr. Puri was Mumbai Mantra Media Limited and Tech Mahindra Limiteda Management Consultant with McKinsey & Company from as well as Chairman of the Advisory Board of Corsair Capital.1970 to 2000. He worked globally with corporate clientsin several industries on strategy and organisational issues Mr. Anupam Puri is a Member of the following Boardand also served several Governments and multilateral Committees: Sr. No. Name of the Company Name of Committee Position held 1. Dr. Reddy’s Laboratories Limited Governance and Compensation Chairman Committee 2. Tech Mahindra Limited Audit Committee Member Compensation Committee Member 3. Mumbai Mantra Media Limited Audit Committee MemberMr. Anupam Puri does not hold any Share in the Company. 53
  • Dr. A. S. Ganguly from the University of Illinois, USA. Dr. Ganguly’s principal professional career spanned 35 years with Unilever Plc./Dr. Ganguly is currently the Chairman of Firstsource N.V. He was the Chairman of Hindustan Lever LimitedSolutions Limited (formerly ICICI OneSource Limited) and from 1980 to 1990 and a Member of the Unilever BoardABP Private Limited (Ananda Bazar Patrika Group) and has from 1990 to 1997, with responsibility for world-widebeen a Director on the Central Board of the Reserve Bank research and technology.of India, since November, 2000. (Dr. Ganguly has resignedfrom the RBI Board effective 18.11.2009). Dr. Ganguly During his career, he has served several public bodies, thealso currently serves as a Non-Executive Director of principal among them, as Member, Science Advisory CouncilMahindra & Mahindra Limited, Wipro Limited, Tata AIG to the Prime Minister of India (1985-89) and the UK AdvisoryLife Insurance Company Limited, Hemogenomics Private Board of Research Councils (1991-94). Dr. Ganguly is aLimited and a Director on the Advisory Board of Microsoft recipient of the Padma Bhushan, one of India’s highestCorporation (India) Private Limited and the Blackstone honours (1987); he was made an Hon. Professor by theGroup. Dr. Ganguly has been recently appointed a Director Chinese Academy of Science, Shanghai (1996). The Universityon the Board of Dr. Reddy’s Laboratories Limited. He is a of Illinois, College of Food and Nutrition selected Dr. GangulyMember of the Prime Minister’s Council on Trade and as their ‘Outstanding Alumnus’ in 1997 and he is theIndustry as well as the Investment Commission and the recipient of the International Alumni Award for ExceptionalIndia-USA CEO Council, set up by the Prime Minister of Achievement for the academic year 2003-2004, from theIndia and the President of the USA. He is also a Member University of Illinois. In 2006, Dr. Ganguly was awarded theof the Rajiv Gandhi Foundation and National Knowledge CBE (Hon) by the United Kingdom. In 2008, Dr. GangulyCommission to the Prime Minister. More recently, received the Economic Times Lifetime Achievement AwardDr. Ganguly was nominated to the Rajya Sabha and ‘sworn and more recently, he has been the recipient of the Padmain’ as a Member of Parliament on 30th November, 2009. Vibhushan, India’s second highest civilian award. Dr. GangulyDr Ganguly is a former Member of the Board of British has authored three books – “Industry &Airways Plc. (1996-2005). Liberalisation”(1994),”Strategic Manufacturing for Competitive Advantage” (1998) and “Business Driven R&D-Dr. Ganguly graduated with Distinction from the Bombay Managing Knowledge to Create Wealth” (1999), besidesUniversity and has obtained the M.S. and Ph.D. degrees several publications in Science, Technology and Management.Dr. Ganguly is a Member of the following Board Committees: Sr. No. Name of the Company Name of Committee Position held 1. Mahindra & Mahindra Limited Research & Development Committee Chairman 2. Tata AIG Life Insurance Company Limited Remuneration Committee Chairman Audit Committee Member 3. Firstsource Solutions Limited Compensation cum Chairman Board Governance Committee Investors /Shareholders’ Chairman Grievance Committee Investment Committee Member Committee for Issue of Securities Chairman (FCCB Committee) Strategy Committee Chairman 4. Wipro Limited Corporate Governance Committee Chairman 5. Microsoft Corporation India Private Limited Advisory Board ChairmanDr. Ganguly holds 1,00,000 Ordinary (Equity) Shares in the Company.54
  • MAHINDRA & MAHINDRA LIMITEDMr. R. K. Kulkarni obtaining regulatory approvals, Joint Venture and licensing,Mr. R. K. Kulkarni, B.Sc., LL.M, is a practicing Advocate shareholder agreements and arrangements, technology transfers, import of plant and equipment, etc., inand Solicitor and is a Senior Partner in Khaitan & Co., Infrastructure and Project Financing – such as advice andAdvocates & Solicitors. documentation relating to corporate financing, debt issues,He has immense experience in all aspects of Corporate including concession agreements, construction contracts,law; Mergers & Acquisitions – such as due diligence, operation & maintenance contracts, etc. He also hasstructuring documentation involving listed companies, considerable experience in litigation having handled writscross-border transactions in Capital Markets - such as advice and civic litigation. He advises a range of large Indian andand documentation relating to domestic IPOs and GDR/ multinational clients in various business Sectors, includingFCCB offerings of securities by Indian companies; in infrastructure, power, telecom, automobile, engineeringSecurities Law – such as insider trading, takeover-code, steel, cement, agriculture and agri-products, software andpublic offers, buyback of securities, etc., in Restructuring – information technology, retail services, etc.such as advice and documentation involving creditors He is on the Board of various companies viz. Mahindra &restructuring, sick companies, demergers, spin offs, sale of Mahindra Limited, Alternate Brand Solutions (India) Limited,assets, etc. in privatisation – such as advice and Elantas Beck India Limited, Caprihans India Limited,documentation in relation of privatisation of Government Entertainment Network (India) Limited, INEOS ABS (India)business and companies in India on behalf of several Limited, Tech Mahindra Limited, Shamrao Vithal Co-op Bankbidders, etc., in Foreign Investment, Joint Venture and Limited, R&P Management Communications Private LimitedForeign Collaboration – such as advice and documentation, and Venturbay Consultants Private Limited.Mr. R. K. Kulkarni is a Member of the following Board Committees: Sr. No. Name of the Company Name of Committee Position held 1. Mahindra & Mahindra Limited Audit Committee Member Share Transfer and Shareholders/ Member Investors Grievance Committee 2. Elantas Beck India Limited Audit Committee Chairman Shareholders’/Investor Chairman Grievance Committee 3. Caprihans India Limited Audit Committee Chairman 4. Entertainment Network (India) Limited Audit Committee Member Remuneration Committee Member 5. INEOS ABS (India) Limited Audit Committee Member Remuneration Committee Member 6. Tech Mahindra Limited Remuneration Committee ChairmanMr. Kulkarni holds 87,576 Ordinary (Equity) Shares in the Company. 55
  • Mr. A. K. Nanda Mahindra World City (Jaipur) Limited, Mumbai Mantra Media Limited and Union Bank of India. He is also on theMr. A. K. Nanda holds a Degree in Law from the University Advisory Boards of Barco Company Limited and Schneiderof Calcutta, is a fellow member of The Institute of Electric India Private Limited and elected as a Member ofChartered Accountants of India (FCA) and a fellow the Supervisory Board of BAH Hotelanlagen AG.member of The Institute of Company Secretaries of India Mr. Nanda is also the Chairman of CII Western Region,(FCS). Mr. Nanda has also participated in a Senior Executive Chairman Emeritus of the Indo-French Chamber ofProgramme at the London Business School. He joined the Commerce, Member of the Governing Boards of the CouncilMahindra Group in 1973. He has held several important of EU Chambers of Commerce in India and Bombay First.positions within the Group over the 37 years he was with He was the Chairman of CII National Committee on Waterthe Company. from April, 2007 to March, 2009.He was inducted to the Board of Mahindra & Mahindra Mr. Nanda has been honoured with an Award of “ChevalierLimited (M&M) in August, 1992 and resigned as Executive de la Legion d’Honneur” (Knight of the National Order ofDirector in March, 2010 to focus on the social sector and the Legion of Honour) by the President of the Frenchcreate a favourable ecosystem for senior citizens. He was Republic, Mr. Nicolas Sarkozy.immediately appointed as a Non-Executive Director ofM&M. Mr. Nanda has also been awarded with the “Real Estate Person of the Year” Award from GIREM LeadershipHe is currently the Chairman of Mahindra Holidays & Resorts Awards in India.India Limited, Mahindra Lifespace Developers Limited, Mr. Nanda has also been awarded with the “CA BusinessOwens Corning (India) Limited, Mahindra Consulting Achiever Award - Corporate” at The Institute of CharteredEngineers Limited, Mahindra Construction Company Accountants of India Award 2009 and “LifetimeLimited, Mahindra Infrastructure Developers Limited, Achievement Award” for his outstanding contribution toMahindra World City (Maharashtra) Limited, Knowledge the Hospitality Industry and the Service Sector by the GoldenTownship Limited, Vice-Chairman of Mahindra World City Star Awards 2010.Developers Limited and Director of Mahindra Water UtilitiesLimited, Mahindra Holidays and Resorts (USA) Inc., MHR Mr. A. K. Nanda is a Member of the following BoardHotel Management GmbH, Mahindra Holdings Limited, Committees:56
  • MAHINDRA & MAHINDRA LIMITED Sr. No. Name of the Company Name of Committee Position held 1. Mahindra & Mahindra Limited Share Transfer and Shareholders/ Member Investors Grievance Committee Loans & Investment Committee Member 2. Mahindra Holidays & Resorts India Limited Loans & Investment Committee Member Remuneration Committee Member Inventory Approval Committee Member IPO Committee Member Share Allotment/Transfer cum Chairman Investor Grievances Committee 3. Owens Corning (India) Limited Audit Committee Chairman Remuneration Committee Member 4. Mahindra Construction Company Limited Remuneration Committee Member 5. Mahindra Lifespace Developers Limited Investors’ Grievance and Shareholders’ Chairman Committee Loans & Investment Committee Chairman Remuneration Committee Member Share Allotment Committee Member 6. Mahindra Infrastructure Developers Limited Audit Committee Member 7. Mahindra World City (Jaipur) Limited Audit Committee Member Capital Issue Committee Member Land Lease Committee Member Loans & Investment Committee Member Remuneration Committee Chairman 8. Mahindra World City (Maharashtra) Limited Capital Issue Committee Member 9. Mahindra Holdings Limited Audit Committee Chairman 10. Mahindra World City Developers Limited Remuneration Committee Member 11. Union Bank of India Shareholders /Investors Grievance Member Committee Remuneration Committee MemberMr. A. K. Nanda holds 2,75,864 Ordinary (Equity) Shares in the Company. 57
  • F. Codes of Conduct (“Committee”) considers the performance of the Company, the current trends in the industry, theThe Board has laid down two separate Codes of Conduct qualification of the appointee(s), their experience, past(“Codes”), one for Board Members and other for Senior performance and other relevant factors. The Board/Management and Employees of the Company. These Codes Committee regularly keeps track of the market trendshave been posted on the Company’s website http:// in terms of compensation levels and practices inwww.mahindra.com. All Board Members and Senior relevant industries through participation in structuredManagement Personnel have affirmed compliance with these surveys. This information is used to review theCodes. A declaration signed by the Vice-Chairman & Managing Company’s remuneration policies.Director to this effect is enclosed at the end of this Report.G. CEO/CFO CertificationAs required under Clause 49 V of the Listing Agreementwith the Stock Exchanges, the Vice-Chairman & Managing B. Remuneration to Non-Executive Directors for theDirector and the Group Chief Financial Officer of the year ended 31st March, 2010Company have certified to the Board regarding the FinancialStatements for the year ended 31st March, 2010. The eligible Non-Executive Directors are paid commission upto a maximum of 1% of the net profitsII. Remuneration to Directors of the Company as specifically computed for thisA. Remuneration Policy purpose. A commission of Rs.144 lakhs has beenWhile deciding on the remuneration for Directors, the provided as payable to the eligible Non-ExecutiveBoard, Remuneration/ Compensation Committee Directors in the accounts of the year under review.During the year under review, the Non-Executive Directors were paid a commission of Rs.96 lakhs (provided in theaccounts for the year ended 31st March, 2009), distributed amongst the Directors as under: (Rs. in Lakhs) Directors Commission for the year ended 31st March, 2009, paid during the year under review Mr. Keshub Mahindra 32.00 Mr. Deepak S. Parekh 8.00 Mr. N. B. Godrej 8.00 Mr. M. M. Murugappan 8.00 Mr. Narayanan Vaghul 8.00 Dr. A. S. Ganguly 8.00 Mr. R. K. Kulkarni 8.00 Mr. Anupam Puri 8.00 Mr. Arun Kanti Dasgupta (Nominee of LIC) 8.00 ## The Commission is paid to the Nominating Financial Institution.58
  • MAHINDRA & MAHINDRA LIMITEDNon-Executive Directors are also paid a sitting fees of Rs.20,000* for every Meeting of the Board or Committee attended.The sitting fees paid to Non-Executive Directors for the year ended 31st March, 2010 alongwith their shareholdings are asunder: Directors Sitting Fees for the Board No. of Ordinary (Equity) and Committee Meetings Shares held as on paid during the year 31st March, 2010 ended 31st March, 2010 (Rs. in Lakhs) Mr. Keshub Mahindra 1.60 4,02,296 Mr. Deepak S. Parekh 1.70 1,12,180 Mr. N. B. Godrej 2.20 3,58,884 Mr. M. M. Murugappan 2.40 1,00,000 Mr. Narayanan Vaghul 1.80 1,00,000 Dr. A. S. Ganguly 1.00 1,00,000 Mr. R. K. Kulkarni 2.10 87,576 Mr. Anupam Puri 0.60 Nil Mr. Arun Kanti Dasgupta (Nominee of LIC) 0.50 ** Nil* The sitting fees payable to the Non-Executive Directors of the Company has been increased with effect from 1st November, 2009, from the existing limit of Rs.10,000 to Rs.20,000 for every Board Meeting or Board constituted Committee Meeting attended by them, excluding the Share Transfer and Shareholders / Investors Grievance Committee.** Sitting fees for Board Meetings were paid to LIC.35,000 Stock Options granted in June, 2005 to the Non- stands augmented by an equal number of Options andExecutive Directors which have vested in June, 2006 can Exercise Price stands reduced to half on account of Sub-be exercised in three tranches over a period of five years division of each Ordinary (Equity) Share of the Companyfrom the date of vesting at an Original Exercise Price of having a Face Value of Rs.10 each fully paid-up into 2Rs.454 per share. The Options granted stand augmented (Two) Ordinary (Equity) Shares of the Face Value of Rs.5by an equal number of Options and the Exercise Price each fully paid-up. Details of the Options granted to eachstands reduced to half on account of the 1:1 Bonus Issue of the Directors are given in the Statement attached tomade in September, 2005. Further, the number of Stock Annexure I to the Directors’ Report.Options granted and outstanding as on 30th March, 2010 5
  • C. Remuneration paid/payable to Managing/Executive subsequently approved by the Board of Directors and Director(s) (Whole-time Directors) for the year ended Shareholders at a General Meeting. 31st March, 2010:Remuneration to Whole-time Directors is fixed by the Following is the remuneration paid/payable to the Whole-Remuneration/ Compensation Committee which is time Directors during the year ended 31st March, 2010: (Rs. In Lakhs) Directors Salary Comm- Company’s Perquisites Total Contract No. of No. of No. of No. of ission Contribu- and Period Options Options Options Options tion to allowances granted granted in granted granted Funds* in June, September, in July, in August, 2005$ 2006 $$ 2007$$$ 2008$$$$ Mr. Anand G. 65.42 130.85 17.66 50.73 264.66 4th April, 2007 Nil Nil Nil Nil Mahindra to 3rd April, (Vice-Chairman & 2012 Managing Director) Mr. Bharat Doshi 59.33 89.00 16.02 19.46 183.81 28th August, 2007 10,000 11,345 8,362 29,039 (Executive Director) to 27th August, 2012 Mr. A. K. Nanda** 59.33 89.00 16.02 48.29 212.64 28th August, 2007 10,000 11,345 8,362 24,890 (Executive Director) to 27th August, 2012 * Aggregate of the Company’s contributions to Superannuation Fund, Provident Fund, Gratuity and Privilege Leave Encashment. ** Resigned as the Executive Director and also as a Director of the Company with effect from the close of working hours on 31st March, 2010. He has been appointed as an Additional Director on the Board of Directors of the Company, with effect from 1st April, 2010. Options granted on€ Vesting period Exercise period Exercise price€$ June, 2005 Already vested in June, 2006 Within five years from the Rs.454 per share# date of vesting$$ September, 2006 Four equal instalments in On the date of Vesting or Rs.616 per share September 2007, 2008, within five years 2009 and 2010 respectively from the date of Vesting$$$ July, 2007 Four equal instalments in On the date of Vesting or Rs.762 per share July, 2008, 2009, 2010 and within five years from the 2011 respectively date of Vesting$$$$ August, 2008 Four equal instalments in On the date of Vesting Rs.500 per share August 2009, 2010, 2011 or within five years from and 2012 respectively the date of Vesting# The Options granted stands augmented by an equal number of Options and the Exercise Price stands reduced to half on account of the 1:1 Bonus Issue made in September, 2005.€ Further, the number of Stock Options granted and outstanding as on 30th March, 2010 stands augmented by an equal number of Options and Exercise Price stands reduced to half on account of Sub-division of each Ordinary (Equity) Share of the Company having a Face Value of Rs.10 each fully paid-up into 2 (Two) Ordinary (Equity) Shares of the Face Value of Rs.5 each fully paid-up.Details of the Options granted including discount are given in the Statement attached to Annexure I to the Directors’Report.Notes:a) Notice period applicable to each of the Whole-time Directors – six months.b) Employee Stock Options and Commission are the only components of remuneration that are performance-linked. All other components are fixed.6
  • MAHINDRA & MAHINDRA LIMITEDIII. Risk Management the terms of reference. The Audit Committee has been granted powers as prescribed under Clause 49 II (C). TheYour Company has a well-defined risk management Meetings of the Audit Committee are also attended by theframework in place. The risk management framework Vice-Chairman & Managing Director, the Executive Directorsadopted by the Company is discussed in detail in the of the Company, the President-Finance, Legal and FinancialManagement Discussion and Analysis Chapter of this Services Sector, the Statutory Auditors, Chief Internal AuditorAnnual Report. Your Company has established procedures and the Company Secretary. The Chairman of the Auditto periodically place before the Board, the risk assessment Committee, Mr. Deepak S. Parekh was present at the 63rdand minimisation procedures being followed by the Annual General Meeting of the Company held on 30th July,Company and steps taken by it to mitigate these risks. 2009.IV. Committees of the Board The Committee met seven times during the year underA. Audit Committee review. The Committee Meetings were held on the following dates – 21st May, 2009, 28th May, 2009, 30th July, 2009,This Committee comprises solely of Independent Directors 29th October, 2009, 2nd December, 2009, 25th January, 2010viz. Mr. Deepak S. Parekh (Chairman of the Committee), and 30th March, 2010. The gap between two Meetings didMr. R. K. Kulkarni, Mr. N. B. Godrej and Mr. M. M. not exceed four months. The attendance at the MeetingsMurugappan. All the Members of the Committee possess is as under:strong accounting and financial management knowledge.The Company Secretary is the Secretary to the Committee. Members Number ofThe terms of reference of this Committee are very wide. Meetings attendedBesides having access to all the required information from Mr. Deepak S. Parekh (Chairman) 6within the Company, the Committee can obtain external Mr. R. K. Kulkarni 7professional advice whenever required. The Committee acts Mr. N. B. Godrej 6as a link between the Statutory and the Internal Auditors Mr. M. M. Murugappan 5+and the Board of Directors of the Company. It is authorisedto select and establish accounting policies, review reports + In addition to attending five Audit Committee Meetings,of the Statutory and the Internal Auditors and meet with Mr. M. M. Murugappan participated in one Meeting through teleconference. No sitting fee was paid forthem to discuss their findings, suggestions and otherrelated matters. The Committee is empowered to inter alia participation through teleconference.review the remuneration payable to the Statutory Auditors B. Remuneration/Compensation Committeeand to recommend a change in Auditors, if felt necessary. The role of the Remuneration/Compensation Committee isIt is also empowered to review Financial Statements and to review market practices and to decide on remunerationinvestments of unlisted subsidiary companies, Management packages applicable to the Vice-Chairman & ManagingDiscussion & Analysis, material individual transactions with Director, the Executive Directors and Senior Executives ofrelated parties not in normal course of business or which the Company. During the course of its review, theare not on an arm’s length basis. Generally all items listed Committee also decides on the commission of the Directorsin Clause 49 II (D) of the Listing Agreement are covered in and/or other incentives payable, taking into account the 6
  • individual’s performance as well as that of the Company. on the Committee. Mr. Narayan Shankar, CompanyThe Committee has formulated and administers the Secretary is the Compliance Officer of the Company.Mahindra & Mahindra Limited Employees’ Stock Option The Committee meets as and when required, to inter aliaScheme and also attends to such other matters as may be deal with matters relating to transfer of shares and monitorprescribed from time to time. redressal of complaints from Shareholders relating toThe scope of the Remuneration/Compensation Committee transfers, non-receipt of Balance Sheet, non-receipt ofis enhanced to include the function of a Nomination dividends declared, etc. With a view to expedite the processCommittee, which would, inter alia include of share transfers, necessary authority has been delegatedrecommendations for new appointment and removal of to approve the transfers of not more than 5,000 OrdinaryBoard Members, scrutinising nominations for Board (Equity) Shares per transfer, provided the transferee doesMembers with reference to their competencies, not hold one lakh or more Ordinary (Equity) Shares in thequalifications, experience, track record, integrity, etc., Company.assessment of the necessary and desirable competencies The Committee met two times during the year and allof Board Members, appointing, retaining and managing Members of the Committee attended the same. Duringthe necessary talent pool commensurate with the size and the year, 19 complaints were received from theoperations of the Company including Board Members, etc. Shareholders, all of which have been attended to/resolvedThe Committee comprises of a majority of Independent to date. As of date, there are no pending share transfersDirectors and includes the Chairman of the Company. pertaining to the year under review.Mr. Narayanan Vaghul is the Chairman of the Committee. D. Research & Development Committee (a voluntaryMr. Keshub Mahindra, Mr. N. B. Godrej and Mr. M. M. initiative of the Company)Murugappan are the other Members of the Committee. The Research & Development (R&D) Committee, which wasThe Committee met four times during the year under constituted by the Board in 1998, provides direction onreview. The attendance at the Meetings is as under: the R&D mission and strategy and key R&D and technologyMembers Number of issues. The Committee also reviews and makes Meetings attended recommendations on skills and competencies required andMr. Narayanan Vaghul (Chairman) 4 the structure and the process needed to ensure that theMr. Keshub Mahindra 3 R&D initiatives result in products that are in keeping withMr. N. B. Godrej 3 the business needs. Dr. A. S. Ganguly is the Chairman ofMr. M. M. Murugappan 4 the Committee. Mr. Anand G. Mahindra, Mr. N. B. Godrej,C. Share Transfer and Shareholders/Investors Mr. Bharat Doshi and Mr. M. M. Murugappan are the Grievance Committee other Members of the Committee.The Company’s Share Transfer and Shareholders/Investors E. Loans & Investment Committee (a voluntaryGrievance Committee functions under the Chairmanship initiative of the Company)of Mr. Keshub Mahindra, Chairman of the Board and a The Committee approves of the making of loans andNon-Executive Director. Mr. Anand G. Mahindra, Mr. R. K. investment, disinvestment, borrowing moneys and relatedKulkarni, Mr. Bharat Doshi and Mr. A. K. Nanda are also aspects of fund management in accordance with the6
  • MAHINDRA & MAHINDRA LIMITEDGuidelines prescribed by the Board. Mr. Keshub Mahindra C. Code for Prevention of Insider Trading Practicesis the Chairman of the Committee. Mr. Anand G. Mahindra, The Company has instituted a comprehensive Code ofMr. R. K. Kulkarni, Mr. Bharat Doshi and Mr. A. K. Nanda Conduct for Prevention of Insider Trading for its designatedare the other Members of the Committee. employees, in compliance with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,V. Subsidiary Companies 1992, as amended from time to time. The Code lays downClause 49 defines a “material non-listed Indian subsidiary” Guidelines, which advises them on procedures to beas an unlisted subsidiary, incorporated in India, whose followed and disclosures to be made, while dealing withturnover or net worth (i.e. paid-up capital and free reserves) shares of the Company, and cautioning them of theexceeds 20% of the consolidated turnover or net worth consequences of violations.respectively, of the listed holding company and its VII. Shareholder Informationsubsidiaries in the immediately preceding accounting year. 1. 64rd Annual General MeetingUnder this definition, the Company did not have any Date : 28th July, 2010“material non-listed Indian subsidiary” during the year under Time : 3:00 p.m.review. The Subsidiaries of the Company function Venue : Birla Matushri Sabhagar,independently, with an adequately empowered Board ofDirectors and sufficient resources. For more effective 19, Sir Vithaldas Thackersey Marggovernance, the Minutes of Board Meetings of Subsidiaries (New Marine Lines),of the Company are placed before the Board of Directors Mumbai - 400 020.of the Company for their review. 2. Dates of Book Closure Dates of Book Closure for Dividend will be fromVI. Disclosures 10th July, 2010 to 28th July, 2010, both days inclusive.A. Disclosure of transactions with Related Parties 3. Date of Dividend PaymentDuring the financial year 2009-10, there were no materially Date of payment of Dividend would be on or aftersignificant transactions entered into between the Company 29th July, 2010.and its promoters, Directors or the management, subsidiaries 4. Financial Year of the Companyor relatives, etc. that may have potential conflict with the The financial year covers the period from 1st Aprilinterests of the Company at large. Further details of related to 31st March.party transactions are presented in Note Number “29” in Financial Reporting for:Schedule XIV to Annual Accounts of the Annual Report. Quarter endingB. Disclosure of Accounting Treatment in preparation 30th June, 2010 - End July, 2010 of Financial Statements Half-year endingThe Company has followed the Accounting Standards laid 30th September, 2010 - End October, 2010down by The Companies (Accounting Standards) Rules, Quarter ending2006 in preparation of its financial statements. 31st December, 2010 - End January, 2011 63
  • Year ending Post allotment of Equity Shares and sub-division of Equity 31st March, 2011 - End May, 2011 Shares as aforesaid, the issued, subscribed and paid-up Share Capital of the Company stands at Rs.289.22 crores Note: The above dates are indicative. comprising of 57,84,34,478 Ordinary (Equity) Shares of5. Registered Office Rs.5 each fully paid-up (prior to Stock-split: 28,92,17,239 Mahindra & Mahindra Limited Equity Shares of Rs.10 each) and the Authorised Share Gateway Building, Capital of the Company stands at Rs.625 crores comprising Apollo Bunder, of 1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each Mumbai - 400 001. and 25,00,000 Unclassified Shares of Rs.100 each.6. Listing on Stock ExchangesThe Company’s Shares are listed on Bombay Stock Exchange 8. Stock CodeLimited (BSE) and National Stock Exchange of India Limited 1. Bombay Stock Exchange Limited (BSE) : 500520(NSE). The Global Depositary Receipts (GDRs) of theCompany are listed on the Luxembourg Stock Exchange 2. National Stock Exchange of India Limited (NSE):and are also admitted for trading on International Order M&MBook (IOB) of the London Stock Exchange. The US $200 3. Demat International Security Identification Numbermillion Zero Coupon Foreign Currency Convertible Bonds (ISIN) in NSDL and CDSL for Equity Shares:(FCCBs) due for redemption in 2011 are listed at SingaporeExchange Securities Trading Limited. The requisite listing INE101A01018 (Old – for Equity Shares offees have been paid in full to all these Stock Exchanges. Rs.10 each)7. Sub-division of Face Value of Equity Shares (Stock- INE101A01026 (New – for Equity Shares of split) Rs.5 each)Pursuant to the approval received from the Members of 4. Corporate Identity Number: ththe Company by way of Postal Ballot on 11 March, 2010, L65990MH1945PLC004558 stthe Company has on 31 March, 2010, upon sub-division, 5. FCCBs, Singapore Exchange Securities Tradingissued 2 (Two) Ordinary (Equity) Shares of Rs.5 each fully Limited (ISIN): XS0250972543paid-up in the Equity Share Capital of the Company forevery 1 (One) Ordinary (Equity) Share of the face value of 6. GDRs, Luxembourg Stock Exchange (ISIN):Rs.10 fully paid-up held by the Members in the Equity USY541641194Share Capital of the Company as on the Record Date i.e.30th March, 2010.64
  • MAHINDRA & MAHINDRA LIMITED9. Stock Performance The performance of the Company’s shares relative to the BSE Sensitive Index is given in the chart below: M&M on BSE BSE Sensex 1200 20000 18000 1000 16000 M&M on BSE BSE SENSEX 14000 800 12000 600 10000 8000 400 6000 4000 200 2000 0 0 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10* Closing Price on Last Trading day of the Month* The Share price became ex-date for sub-division with effect from 29th March, 2010. However, for a meaningful comparison, the closing price on the last trading day of March, 2010 has been doubled.The performance of the Company’s shares relative to the NSE Sensitive Index (S&P CNX Nifty Index) is given in the chartbelow: M&M on NSE NSE Nifty 1200 6000 1000 5000 M&M on NSE 800 4000 NSE NIFTY 600 3000 400 2000 200 1000 0 0 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10* Closing Price on Last Trading day of the Month* The Share price became ex-date for sub-division with effect from 29th March, 2010. However, for a meaningful comparison, the closing price on the last trading day of March, 2010 has been doubled. 65
  • 10. Stock Price Data: Equity Shares GDRs Bombay Stock National Stock Luxembourg Stock Exchange Limited Exchange of India Limited Exchange High Low High Low High Low Rs. Rs. Rs. Rs. US $ US $ April, 2009 503.00 377.50 504.55 377.50 9.74 7.73 May, 2009 700.00 486.75 698.00 484.60 14.50 10.00 June, 2009 824.00 669.05 829.00 660.15 17.07 14.03 July, 2009 892.00 643.30 889.80 644.10 17.93 13.80 August, 2009 942.70 735.20 943.95 734.00 19.51 15.20 September, 2009 909.80 809.00 910.00 808.00 18.53 16.63 October, 2009 981.00 865.00 981.40 866.00 21.05 18.65 November, 2009 1092.00 878.00 1091.00 879.00 23.04 18.87 December, 2009 1098.70 1005.00 1094.00 1005.00 23.26 21.54 January, 2010 1196.70 985.00 1199.00 987.75 26.10 21.75 February, 2010 1065.80 950.25 1065.50 950.00 22.86 20.52 March, 2010* 1154.00 535.45 1154.95 515.00 25.02 12.14* The Share price became ex-date for sub-division with effect from 29th March, 2010.11. Registrar and Transfer Agents Sharepro Services (India) Private Limited Unit: Mahindra & Mahindra Limited 13AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Off Andheri Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072. Telephone Nos.: +91-22-67720400/67720300 Fax: +91-22-28591568 email: sharepro@shareproservices.com The Registrar and Transfer Agents also have an office at: Sharepro Services (India) Private Limited 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021. Telephone Nos.: +91-22-22881568/69 Fax: +91-22-2282548466
  • MAHINDRA & MAHINDRA LIMITED12. Share Transfer System per transfer, provided the transferee does not hold one lakh or more Ordinary (Equity) Shares in the Company.Trading in Ordinary (Equity) Shares of the Company through Since, Mr. A. K. Nanda ceased to be an Executive Directorrecognized Stock Exchanges is permitted only in of the Company, Mr. Bharat Doshi, Executive Director anddematerialised form. Group Chief Financial Officer or Mr. Uday Y. Phadke, President – Finance, Legal and Financial Services Sector orShares sent for transfer in physical form are registered and Mr. Narayan Shankar, Company Secretary of the Companyreturned within a period of thirty days from the date of have now been severally authorised to approve the transfersreceipt of the documents, provided the documents are of not more than 5,000 Ordinary (Equity) Shares pervalid and complete in all respects. With a view to expedite transfer, provided the transferee does not hold one lakh orthe process of share transfers, Mr. A. K. Nanda, Executive more Ordinary (Equity) Shares in the Company. The ShareDirector as well as Mr. Narayan Shankar, Company Secretary Transfer and Shareholders/Investors Grievance Committeeof the Company were severally authorised to approve the meets as and when required to consider the other transfertransfers of not more than 5,000 Ordinary (Equity) Shares proposals and attend to Shareholder grievances.13. Distribution of Shareholding as on 31st March, 2010 Number of Shares held Number of Number of Percentage of Shareholders Shares held Shareholding 1 to 500 1,34,427 1,15,27,754 1.99 501 to 1000 8,391 61,57,823 1.06 1001 to 5000 7,794 1,62,32,135 2.81 5001 to 10000 944 66,46,410 1.15 10001 and above 1,132 53,78,70,356 92.99 Total 1,52,688 57,84,34,478 100.00 Shareholding Pattern as on 31st March, 2010: Sr. No. Category of Shareholders Total Holdings Holdings in Percentage 1. Promoters and Promoter Group 15,23,69,592 26.34 2. Mutual Funds/UTI 2,40,86,073 4.16 3. Banks, Financial Institutions, Insurance Companies, 12,01,02,772 20.76 Central and State Government 4. FIIs* 13,53,37,813 23.40 5. Foreign Bodies 1,87,91,948 3.25 6. Private Corporate Bodies 4,42,23,273 7.65 7. Indian Public 5,02,73,902 8.69 8. NRIs/ OCBs/ Foreign National ** 33,30,113 0.58 9. The Bank of New York Mellon (for GDR holders) 2,99,18,992 5.17 Grand Total 57,84,34,478 100.00 * FIIs category does not include Shareholding aggregating 135.23 lakhs Shares representing 2.34% of the paid-up share capital of the Company held by a FII, as the same is included under the category of Promoters and Promoter Group. ** NRIs category does not include Shareholding aggregating 7.32 lakhs Shares representing 0.12% of the paid-up share capital of the Company held by a NRI, as the same is included under the category of Promoters and Promoter Group. 67
  • 14. Dematerialisation of Shares 16. Plant Locations98.47% of the paid-up Equity Share Capital is held in a The Company’s manufacturing facilities are located atdematerialised form with National Securities Depository Kandivali, Nashik, Igatpuri, Nagpur, Zaheerabad, Jaipur,Limited and Central Depository Services (India) Limited as Rudrapur, Haridwar, Chakan and Mohali.on 31st March, 2010. The market lot of the share is one 17. Address for correspondenceshare, as the trading in the Equity Shares of the Company Shareholders may correspond with the Registrar andis permitted only in dematerialised form. Non-Promoters’ Transfer Agents at:holding is 73.66% and the stock is highly liquid. Sharepro Services (India) Private Limited Unit: Mahindra & Mahindra Limited15. Outstanding GDRs / ADRs / Warrants or any Convertible 13AB, Samhita Warehousing Complex,Instruments, Conversion date and likely impact on equity 2nd Floor, Sakinaka Telephone Exchange Lane,2,99,18,992 GDRs were outstanding as at 31st March, Off Andheri Kurla Road,2010. Since the underlying Ordinary (Equity) Shares Sakinaka, Andheri (East),represented by GDRs have been allotted in full, the Mumbai - 400 072.outstanding GDRs have no impact on the Equity of the Telephone Nos.: +91-22-67720400/67720300Company. Fax: +91-22-28591568 Email: sharepro@shareproservices.com2000 Zero Coupon Convertible Bonds (due 2011) of US$1,00,000 each (FCCBs) aggregating US$ 200 million issued on all matters relating to transfer/dematerialisation ofin April, 2006, may at the option of the Bondholder, be shares, payment of dividend and any other query relatingconverted into around 96,35,156 Equity Shares/GDRs each to Equity Shares or Debentures of the Company.GDR representing One Equity Share of the Company at an The Company has also designated investors@mahindra.cominitial conversion price of Rs.922.04 at any time between as an exclusive email ID for Investors for the purpose of7th May, 2006 and 7th March, 2011. registering complaints and the same has been displayed on the Company’s website.In the year 2008-2009, the Company had repurchased105 FCCBs aggregating US$ 1,05,00,000 at a discount Shareholders would have to correspond with the respectiveand the same have been cancelled upon repurchase. Till Depositary Participants for Shares held in demateraliseddate, no conversion of any FCCBs has taken place. form.Consequent to sub-division of each Ordinary (Equity) Share For all investor related matters, the Company Secretary &of the face value of Rs.10 fully paid-up in the Equity Share Compliance Officer can be contacted at:Capital of the Company into 2 Ordinary (Equity) Shares of Mahindra Towers, 5th Floor, Dr. G. M. Bhosale Marg,the face value of Rs.5 each fully paid-up, the initial Worli, Mumbai - 400 018.conversion price of Rs.922.04 was adjusted to Rs.461.02 Telephone Nos.: +91-22-24905624 & +91-22-24975074per share with effect from 31st March, 2010. Fax: +91-22-24900833As of date, FCCBs amounting to US$ 18,95,00,000 email: investors@mahindra.comconvertible into around 1,82,58,622 Equity Shares/GDRs The Company can also be visited at its website:are outstanding. http://www.mahindra.com68
  • MAHINDRA & MAHINDRA LIMITEDVIII. Other Disclosures1. Details of General Meetings and Special Resolutions passedAnnual General Meetings (AGM) held during the past 3 years and the Special Resolutions passed therein: Year Date Time Special Resolutions passed 2007 30th July, 2007 3.30 p.m. 1. Re-appointment of Mr. Anand G. Mahindra, Vice-Chairman & Managing Director for a period of 5 years with effect from 4th April, 2007. 2. Re-appointment of two Executive Directors of the Company viz. Mr. Bharat Doshi and Mr. A. K. Nanda for a period of 5 years with effect from 28th August, 2007. 3. Alteration of Article 3 of the Articles of Association of the Company. 4. Authority to the Board to recover from Eligible Employees, the fringe benefit tax in respect of Options which are granted to or vested or exercised by the Eligible Employees on or after 1st April, 2007. 2008 30th July, 2008 3.30 p.m. No Special Resolution was passed at the AGM. 2009 30th July, 2009 3.30 p.m. Change in place of keeping Registers and Index of Members and Debenture/ Bond Holders and copies of Annual Returns, etc.Extraordinary General Meetings held during the past 3 years: Year Date Time Special Resolution passed 2007 20th April, 2007 11.00 a.m. Making investments etc. in excess of the limits prescribed under section 372A of the Companies Act, 1956 upto an amount of Rs.1,500 crores.All the above Meetings were held at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New Marine Lines),Mumbai - 400 020, except the Annual General Meeting held on 30th July, 2009 which was convened at Y B ChavanCentre, General Jagannathrao Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai - 400 021. 6
  • Details of Resolutions passed through Postal Ballots durings the year 2009-10: Date of Board Description % of Valid Votes in Scrutinizer for Meeting favour of the conducting the Resolution Postal Ballot 25th January, 2010 1. Ordinary Resolution to sub-divide 99.99 each of the Ordinary (Equity) Share of the Face Value of Rs.10 into 2 Ordinary (Equity) Shares of the Face Value of Mr. Taizoon M. Khumri, Rs.5 each. Practising Company 2. Ordinary Resolution to amend Clause 99.90 Secretary, 5 of the Memorandum of Association Mumbai of the Company. 3. Special Resolution to amend Clause 3 99.90 of the Articles of Association of the Company.The procedure for Postal Ballot is as per section 192A of the Companies Act, 1956 and Rules made thereunder namelyCompanies (Passing of the Resolution by Postal Ballot) Rules, 2001.2. Details of non-compliance etc. The Company has been regularly posting information The Company has complied with all the requirements relating to its financial results and shareholding pattern of regulatory authorities. During the last three years, on Corporate Filing and Dissemination System (CDFS) there were no instances of non-compliance by the viz. www.corpfiling.co.in, the common platform Company and no penalty or strictures were imposed launched by BSE and NSE for electronic filing by listed on the Company by the Stock Exchanges or SEBI or companies. any statutory authority, on any matter related to the 4. Management Discussion and Analysis Report capital markets. Management Discussion and Analysis Report (MDA)3. Means of Communication has been attached to the Directors’ Report and forms The quarterly, half-yearly and yearly results are published part of this Annual Report. in Business Standard and Sakal which are national and local dailies respectively. These are not sent individually 5. Compliance with Mandatory requirements to the Shareholders. The Company’s results and official The Company has complied with all the mandatory news releases are displayed on the Company’s website requirements of Clause 49 of the Listing Agreement http://www.mahindra.com relating to Corporate Governance. Presentations are also made to international and 6. Compliance with Non-mandatory requirements national institutional investors and analysts which are a. Office of the Chairman also put up on the website of the Company. The Company has provided the Chairman7
  • MAHINDRA & MAHINDRA LIMITED (Non-Executive) with a full-fledged office, the prepared and disseminated for consideration and expenses of which are borne by the Company. adoption by Corporates and may be voluntarily adopted by public companies with the objective to enhance The Chairman is reimbursed all expenses incurred not only the economic value of the enterprise but also in the performance of his duties. the value for every stakeholder who has contributed in b. Remuneration Committee the success of the enterprise and set a global The Company has set up the Remuneration/ benchmark for good Corporate Governance. MCA after Compensation Committee long before application taking into account the experience of adoption of these of Clause 49 of Listing Agreement. Guidelines by Corporates and after consideration of c. Audit Qualifications the feedback received from them would review the During the year under review, there is no audit Guidelines for further improvements after a period of qualification in the Company’s financial statements. one year. The Company continues to adopt best practices to The Company has been a strong believer in good ensure regime of unqualified financial statements. Corporate Governance and has been adopting the best The Company has not adopted the other non- practices that have evolved over the last two decades. mandatory requirements as specified in Annexure I D of Clause 49. The Company is in substantial compliance with the7. Compliance with the Corporate Governance – Guidelines and it will always be the Company’s Voluntary Guidelines, 2009 endeavour to attain the best practices in Corporate In December, 2009 the Government of India, Ministry Governance. of Corporate Affairs (“MCA”) had issued Corporate Governance Voluntary Guidelines 2009 (“the Guidelines”). MCA has clarified that the Guidelines were Mumbai, 29th May, 2010. 7
  • DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENTToThe Members of Mahindra & Mahindra LimitedI, Anand G. Mahindra, Vice-Chairman & Managing Director of Mahindra & Mahindra Limited declare that all theMembers of the Board of Directors and Senior Management Personnel have affirmed compliance with the Code ofConduct for the year ended 31st March, 2010. Anand G. Mahindra thMumbai, 29 May, 2010 Vice-Chairman & Managing Director CERTIFICATEToThe Members of Mahindra & Mahindra LimitedWe have examined the compliance of conditions of Corporate Governance by Mahindra & Mahindra Limited, for the yearended on 31st March, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with stockexchanges in India.The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of theconditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements ofthe Company.In our opinion and to the best of our information and according to the explanations given to us, we certify that theCompany has complied with the conditions of the Corporate Governance as stipulated in the above mentioned ListingAgreement.We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted the affairs of the Company. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117364W) B.P. Shroff (Partner) thMumbai, 29 May, 2010 Membership Number: 343827
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  • Financial Position at a Glance (Rupees in crores) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Gross Fixed Assets 6240 5541 4203 3510 3065 2810 2559 2489 2417 2231Net Fixed Assets 3703 3214 2361 1871 1555 1475 1391 1466 1537 1483Investments 6398 5786 4215 2238 1669 1190 1111 862 800 710Foreign Currency Monetary ItemTranslation Difference AccountAsset/(Liability) (3) 18 - - - - - - - -Inventories 1189 1061 1084 878 879 760 500 457 469 553Debtors 1258 1044 1005 701 638 512 400 517 648 632Other Current Assets 3595 2959 1555 2169 1232 1028 625 640 616 529Misc. Expenditure not written off 4 13 14 18 18 24 10 40 - 224 Long-term 2801 3685 2187 1558 837 941 652 1072 1192 791Borrowings Short-term 79 368 400 78 46 111 78 68 185 344Current Liabilities and Provisions 5197 4798 3240 2666 2052 1760 1329 1095 1051 927Deferred Tax Liability/(Asset) (Net) 240 (18) 57 20 147 190 203 177 138 -Equity Capital 283 273 239 238 233 112 116 116 116 111Reserves 7544 4989 4111 3315 2676 1875 1659 1454 1388 1958Net Worth 7827 5262 4350 3553 2909 1987 1775 1570 1504 2069Book Value Per Share (Rupees) @138.03 192.12 180.87 147.98 *123.29 174.46 150.89 130.56 128.26 165.50@ Book value per share is shown after giving effect to the sub-division of each Ordinary (Equity) Share of the face value Rs. 10 each fully paid up into two Ordinary (Equity) Shares of Rs. 5 each fully paid up in March, 2010.* Book value per share is shown after giving effect to a 1:1 bonus issue in September, 2005. Book value per share is calculated after reducing Miscellaneous Expenditure not written off and Revaluation Reserve from Net worth.76
  • MAHINDRA & MAHINDRA LIMITEDSummary of Operations (Rupees in crores) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Income @ 20595 14983 13238 11558 9451 7804 6001 4597 3997 4353 Direct 12333 9274 7726 6828 5714 4603 3353 2500 2117 2359Materials Indirect 105 91 89 79 68 60 43 39 32 49Excise Duty (Net) 1807 1587 1584 1335 1136 1055 955 785 677 755Personnel 1198 1025 868 666 553 465 421 385 375 401Interest (Net) @ 28 45 24 (67) (18) (6) 52 87 83 62Depreciation (Net) 371 292 239 209 200 184 165 165 139 140Other Expenses 1997 1643 1474 1192 909 743 603 496 476 443Exceptional items(Income)/Expense (91) (10) (173) (122) (210) (14) (29) (57) 17 15Profit before tax for the year 2847 1036 1407 1439 1099 714 438 197 81 129Tax for the year - Current 749 58 279 366 285 215 63 12 3 8Deferred Tax Liability/(Asset) 10 141 25 (15) (43) (14) 26 39 (25) -Adj. pertaining to Prev. Years - ▲31 - 19 - - - - 6 -Balance profit 2088 868 1103 1069 857 513 349 146 97 121Dividends #+624 +312 +321 +325 +278 +172 +118 + 72 56 +67Equity Dividend (%) #190.00 100.00 115.00 115.00 100.00 130.00 90.00 55.00 50.00 55.00Earnings per Share (Rupees) * 37.97 15.92 23.12 22.58 19.04 11.52 7.51 3.14 2.16 2.73Vehicles produced ** (Units) 284516 201993 196956 169557 148213 148025 117670 87088 66256 63146Vehicles sold ** (Units) 282119 206688 195077 169679 147591 145024 117399 86890 65338 62927Tractors produced (Units) 173276 119098 98917 103847 87075 67115 50102 45183 54524 80261Tractors sold (Units) 175196 120202 99042 102531 85029 65390 49576 47028 58006 79237@ Interest income netted off in interest expense 129 89 63 87 45 36 25 29 33 51# Proposed Dividend.+ Including Income-tax on Proposed Dividend/Dividends.* Basic Earning per share is calculated on effective capital during the year and after giving effect to the sub-division of the Ordinary (Equity) Shares in March 2010, for all the periods above.** Including CKD packs.▲ Profit of Mahindra Holdings and Finance Limited for the period 1st February, 2008 to 31st March, 2008. 77
  • Financial Highlights PAT and Net Income (Rupees Crores) Earnings Per Share (Rs.) 2400 20000 48 18801 2088 18000 2100 40 37.97 16000 1800 13364 14000 32 1500 11672 12000 EPS (Rs.) Net Income PAT 10221 1200 10000 24 22.58 23.12 8327 1103 1068 8000 19.04 900 857 868 16 6000 15.92 600 4000 8 300 2000 0 0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Net Income Profit After Tax Net Segmental Revenue F-2010 Debt Equity Ratio 0.8 Others 0.7 Farm 0.4% Equipment 0.60 42.6% 0.6 0.56 0.5 Times 0.46 0.4 0.37 0.3 0.31 0.2 Automotive 57.0% 0.1 0.0 FY 2006 FY 2007 FY 2008 FY 2009 FY 201078
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  • MAHINDRA & MAHINDRA LIMITEDAuditors’ Report to the members of Mahindra & Mahindra Limited1. We have audited the attached Balance Sheet of Mahindra & (d) in our opinion, the Balance Sheet, the Profit and Loss Mahindra Limited as at 31st March, 2010, the Profit and Account and the Cash Flow Statement dealt with by this Loss Account and the Cash Flow Statement of the Company report are in compliance with the Accounting Standards for the year ended on that date, both annexed thereto. referred to in Section 211(3C) of the Companies Act, 1956; These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an (e) in our opinion and to the best of our information and opinion on these financial statements based on our audit. according to the explanations given to us, the said accounts give the information required by the Companies Act, 19562. We conducted our audit in accordance with the auditing in the manner so required and give a true and fair view in standards generally accepted in India. Those Standards conformity with the accounting principles generally accepted require that we plan and perform the audit to obtain in India: reasonable assurance about whether the financial statements are free of material misstatements. An audit includes (i) in the case of the Balance Sheet, of the state of affairs examining, on a test basis, evidence supporting the amounts of the Company as at 31st March, 2010; and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and (ii) in the case of the Profit and Loss Account, of the profit the significant estimates made by the Management, as well of the Company for the year ended on that date; and as evaluating the overall financial statement presentation. (iii) in the case of the Cash Flow Statement, of the cash We believe that our audit provides a reasonable basis for flows of the Company for the year ended on that date. our opinion.3. As required by the Companies (Auditor’s Report) Order, 2003 5. On the basis of the written representations received from (CARO) issued by the Central Government in terms of Section the Directors as on 31st March, 2010, and taken on record 227(4A) of the Companies Act, 1956, we enclose in the by the Board of Directors, we report that none of the Annexure a statement on the matters specified in paragraphs Directors is disqualified as on 31st March, 2010 from being 4 and 5 of the said Order. appointed as a director in terms of Section 274(1) (g) of the4. Further to our comments in the Annexure referred to in Companies Act, 1956. paragraph 3 above, we report as follows:(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; For DELOITTE HASKINS & SELLS Chartered Accountants(b) in our opinion, proper books of account as required by law (Registration No.117364W) have been kept by the Company so far as it appears from our examination of those books; B. P. Shroff(c) the Balance Sheet, the Profit and Loss Account and the Partner Cash Flow Statement dealt with by this report are in (Membership No.34382) agreement with the books of account; MUMBAI, 29th May, 2010 81
  • Annexure to the Auditors’ Report of Mahindra & Mahindra Limited for the year ended 31st March, 2010.(Referred to in paragraph (3) thereof)i. In respect of its fixed assets: (a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register (a) The Company has maintained proper records showing maintained under the said Section have been so entered. full particulars, including quantitative details and situation of the fixed assets. (b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, having regard to the (b) The fixed assets were physically verified during the year explanations that some of the items purchased are of by the Management in accordance with a regular special nature and suitable alternative sources are not programme of verification which, in our opinion, readily available for obtaining comparable quotations, provides for physical verification of all the fixed assets the transactions have been made at prices which are at reasonable intervals. According to the information prima facie reasonable having regard to the prevailing and explanation given to us, no material discrepancies market prices at the relevant time. were noticed on such verification. vi. In our opinion and according to the information and (c) The fixed assets disposed off during the year, in our explanations given to us, the Company has complied with opinion, do not constitute a substantial part of the the provisions of Sections 58A and 58AA or any other fixed assets of the Company and such disposal has, in relevant provisions of the Companies Act, 1956 and the our opinion, not affected the going concern status of Companies (Acceptance of Deposits) Rules, 1975 with regard the Company. to the deposits accepted from the public. According to theii. In respect of its inventory: information and explanations given to us, no order has been passed by the Company Law Board or the National (a) As explained to us, the inventories were physically Company Law Tribunal or the Reserve Bank of India or any verified during the year by the Management at Court or any other Tribunal. reasonable intervals. vii. In our opinion, the Company has an adequate internal audit (b) In our opinion and according to the information and system commensurate with the size and the nature of its explanation given to us, the procedures of physical business. verification of inventories followed by the Management were reasonable and adequate in relation to the size of viii. We have broadly reviewed the books of account maintained the Company and the nature of its business. by the Company pursuant to the rules made by the Central (c) In our opinion and according to the information and Government for the maintenance of cost records under explanations given to us, the Company has maintained Section 209(1) (d) of the Companies Act, 1956 in respect of proper records of its inventories and no material manufacture of motor vehicles and tractors and are of the discrepancies were noticed on physical verification. opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, notiii. The Company has neither granted nor taken any loans, made a detailed examination of the records with a view to secured or unsecured, to/from companies, firms or other determining whether they are accurate or complete. To the parties listed in the Register maintained under Section 301 best of our knowledge and according to the information of the Companies Act, 1956. and explanations given to us, the Central Government has not prescribed the maintenance of cost records for anyiv. In our opinion and according to the information and other product of the Company. explanations given to us, having regard to the explanations that some of the items purchased are of special nature and ix. According to the information and explanations given to us suitable alternative sources are not readily available for in respect of statutory dues: obtaining comparable quotations, there is an adequate (a) The Company has generally been regular in depositing internal control system commensurate with the size of the undisputed dues, including Provident Fund, Investor Company and the nature of its business with regard to Education and Protection Fund, Employees’ State purchases of inventory and fixed assets and the sale of Insurance, Income-tax, Sales Tax, Wealth Tax, Service goods and services. During the course of our audit, we Tax, Value Added Tax, Customs Duty, Excise Duty, Cess have not observed any major weakness in such internal and other material statutory dues applicable to it with control system. the appropriate authorities.v. In respect of contracts or arrangements entered in the (b) There were no undisputed amounts payable in respect Register maintained in pursuance of Section 301 of the of Income-tax, Wealth Tax, Customs Duty, Excise Duty, Companies Act, 1956, to the best of our knowledge and Cess and other material statutory dues in arrears as at belief and according to the information and explanations 31st March, 2010 for a period of more than six months given to us: from the date they became payable.82
  • MAHINDRA & MAHINDRA LIMITED(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service been deposited as on 31st March, 2010 on account of Tax, Customs Duty, Excise Duty and Cess which have not disputes are given below: Statute Nature of Forum where Period to Amount Dues Dispute is pending which the amount involved relates (Rs. in crores) Income-Tax Laws Income-Tax Appellate Authority – 2004-2007 8.12 Tribunal Level Appellate Authority – 1999-2008 5.99 Commissioner (Appeals) Sales Tax Laws Sales Tax High Court 1987-2008 181.87 Appellate Authority – Tribunal Level 1987-2007 0.39 Appellate Authority – Commissioner (Appeals) 1989-2010 24.71 Service Tax Laws Service Tax Appellate Authority – Tribunal Level 2007-2008 1.16 Appellate Authority – Commissioner 2002-2010 6.09 Excise Duty Laws Excise Duty Supreme Court 1991-1996 418.22 Appellate Authority – Tribunal Level 1987-2009 221.49 Appellate Authority – Commissioner 1994-2010 34.83 Customs Duty Laws Customs Duty Appellate Authority – Tribunal Level 1992-2001 6.31x. The Company does not have accumulated losses as at 31st the Balance Sheet, we report that funds raised on short March, 2010 and has not incurred cash losses during the term basis have not been used during the year for long financial year ended on that date and in the immediately term investments. preceding financial year. xviii. The Company has not made any preferential allotment ofxi. In our opinion and according to the information and shares to parties and companies covered in the register explanations given to us, the Company has not defaulted in maintained under Section 301 of the Companies Act, 1956, the repayment of dues to banks, financial institutions and during the year. debenture holders. xix. According to the information and explanations given to us,xii. In our opinion and according to the information and the Company has created security in respect of the explanations given to us, the Company has not granted any debentures issued in earlier years. loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xx. The Company has not raised any money by public issuexiii. The provisions of any special statute as specified under the during the year. clause (xiii) of the said Order are not applicable to the xxi. During the course of our examination of the books and Company. records of the Company, carried out in accordance with thexiv. In our opinion the Company is not dealing in or trading in generally accepted auditing practices in India, and according shares, securities, debentures and other investments. to the information and explanations given to us, we have Accordingly, the provisions of paragraph 4(xiv) of the Order neither come across any instance of significant fraud on or are not applicable to the Company. by the Company, noticed or reported during the year nor have we been informed of such case by the management.xv. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions, the terms and conditions, whereof, in our opinion are prejudicial to For DELOITTE HASKINS & SELLS the interest of the Company. Chartered Accountants (Registration No.117364W)xvi. In our opinion and according to the information and explanations given to us, the term loans have been applied B. P. Shroff for the purposes for which they were obtained. Partnerxvii. In our opinion and according to the information and (Membership No.34382) explanations given to us and on an overall examination of MUMBAI, 29th May, 2010 83
  • Balance Sheet as at 31st March, 2010 Rupees crores Schedule 2010 2009I. SOURCES OF FUNDS : SHAREHOLDERS’ FUNDS : Capital……………………… ................................................ I 282.95 272.62 Employee Stock Options Outstanding ................................. 8.01 6.55 Reserves and Surplus ........................................................... II 7,535.81 4,982.91 7,826.77 5,262.08 LOAN FUNDS : (a) Secured Loans .............................................................. III A 602.45 981.00 (b) Unsecured Loans .......................................................... III B 2,277.70 3,071.76 2,880.15 4,052.76 DEFERRED TAX LIABILITY (Net) [Note 22] ............................ 240.33 — FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ........................................................ 3.46 — Total .......... 10,950.71 9,314.84II. APPLICATION OF FUNDS : FIXED ASSETS : Gross Block .......................................................................... 5,276.29 4,893.89 Less : Depreciation .............................................................. 2,537.77 2,326.29 Net Block ............................................................................. IV 2,738.52 2,567.60 CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) ......................................................................... 964.20 646.73 3,702.72 3,214.33 INVESTMENTS ...................................................................... V 6,398.02 5,786.41 DEFERRED TAX ASSET (Net) [Note 22] ................................ — 18.27 FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ........................................................ — 18.11 CURRENT ASSETS, LOANS AND ADVANCES : (a) Inventories .................................................................... VI A 1,188.78 1,060.67 (b) Sundry Debtors ............................................................ VI B 1,258.08 1,043.65 (c) Cash and Bank Balances ............................................... VI C 1,743.23 1,574.43 (d) Other Current Assets .................................................... VI D 50.87 1.56 (e) Loans and Advances ..................................................... VI E 1,801.43 1,382.62 6,042.39 5,062.93 CURRENT LIABILITIES AND PROVISIONS : (a) Current Liabilities .......................................................... VII A 3,400.00 3,520.20 (b) Provisions ..................................................................... VII B 1,796.54 1,277.56 5,196.54 4,797.76 NET CURRENT ASSETS ......................................................... 845.85 265.17 MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) .............................................. VIII 4.12 12.55 Total .......... 10,950.71 9,314.84 NOTES ON ACCOUNTS ........................................................ XIVIn terms of our report attached }For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. GangulyB. P. Shroff A. P. Puri Directors Bharat Doshi Executive DirectorPartner N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company Secretary thMumbai, 29 May, 2010 Mumbai, 29th May, 201084
  • MAHINDRA & MAHINDRA LIMITEDProfit and Loss Account for the year ended 31st March, 2010 Rupees crores Schedule 2010 2009SALES - Traded and Manufactured Goods .............................................................. 19,832.06 14,268.41Less : Excise Duty on Sales (Net) ............................................................................. 1,794.01 1,619.35Net Sales ................................................................................................................. 18,038.05 12,649.06Income from Operations ......................................................................................... IX A 564.06 444.62Other Income .......................................................................................................... IX B 199.35 270.34Net Income .............................................................................................................. 18,801.46 13,364.02EXPENDITURE :Raw Materials, Finished and Semi-finished Products ............................................... X 12,332.92 9,274.23Excise Duty ............................................................................................................... 13.29 (32.30)Personnel ................................................................................................................. XI 1,198.47 1,024.61Interest, Commitment and Finance Charges (Net) ................................................... XII 27.81 45.26Depreciation/Amortisation [Note 5(c)(i)] .................................................................. 370.78 291.51Other Expenses ........................................................................................................ XIII 2,161.74 1,777.34 16,105.01 12,380.65Less : Cost of Manufactured Products Capitalised .................................................. 59.55 42.83 16,045.46 12,337.82Profit before exceptional items and taxation ........................................................... 2,756.00 1,026.20Add : Exceptional Items [Note 21] .......................................................................... 90.75 10.27Profit before taxation .............................................................................................. 2,846.75 1,036.47Less : Provision for Tax - Current Tax (including Fringe Benefit Tax) .................... 749.33 58.51 - Deferred Tax (Net) ......................................................... 9.67 141.18Profit for the year .................................................................................................... 2,087.75 836.78Add :Profit of Mahindra Holdings and Finance Limited for the period1st February, 2008 to 31st March, 2008 ................................................................ — 30.73Balance of Profit for the year .................................................................................. 2,087.75 867.51Balance of Profit for earlier years ............................................................................ 3,365.32 2,775.48Amount Transferred on Amalgamation of Mahindra Holdings and FinanceLimited [Note 23(a)] ................................................................................................ — 159.94Less : Transfer to Debenture Redemption Reserve (Net) .......................................... (30.95) (29.62) 3,334.37 2,905.80Total of Profit and Loss Account balances shown above ........................................ 5,422.12 3,773.31Less :General Reserve ....................................................................................................... 210.00 100.00Credit of Income-tax on Proposed Dividend of Previous Year ................................. — (4.07)Proposed Dividend ................................................................................................... 549.52 278.83Income-tax on Proposed Dividend ........................................................................... 74.23 33.23Balance for 2009-2010 and earlier years carried to Balance Sheet ......................... 4,588.37 3,365.32EARNINGS PER SHARE [Note 24] :(Face value Rs. 5/- per share) (Rupees)Basic ........................................................................................................................ 37.97 15.92Diluted ..................................................................................................................... 35.61 15.01NOTES ON ACCOUNTS ............................................................................................ XIVIn terms of our report attached }For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. GangulyB. P. Shroff A. P. Puri Directors Bharat Doshi Executive DirectorPartner N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company Secretary thMumbai, 29 May, 2010 Mumbai, 29th May, 2010 85
  • Cash Flow Statement for the year ended 31st March, 2010 Rupees crores 2010 2009A. CASH FLOW FROM OPERATING ACTIVITIES : Profit before exceptional items and taxation .......................................... 2,756.00 1,026.20 Adjustments for : Net Profit earned by Mahindra Holdings and Finance Limited from 1st February, 2008 to 31st March, 2008 ..... — 30.73 Taxes and other adjustments on above ........................................... — 11.01 — 41.74 Adjustments for : Depreciation/Amortisation .................................. 370.78 291.52 (Profit)/Loss on Exchange (Net) ....................................................... 14.25 6.30 Investment and Interest Income ...................................................... (261.80) (266.90) Interest, Commitment and Finance charges .................................... 156.85 134.12 Amortisation of Expenses ................................................................ 6.07 11.32 Profit on sale of investments (Net) .................................................. (10.40) (92.36) Loss on fixed assets sold/scrapped/written off (Net) ....................... 20.83 1.19 Excess of cost over fair value of current investments (Net) ............. (0.26) (1.57) 296.32 83.62 Operating Profit before Working Capital changes .................................. 3,052.32 1,151.56 Changes in : Trade and other receivables ............................................................. (458.69) (99.37) Inventories ....................................................................................... (133.84) 176.01 Trade and other payables ................................................................ 588.08 515.13 (4.45) 591.77 Miscellaneous Expenditure (to the extent not written off or adjusted) incurred during the year ........................................................................ — (11.73) Cash generated from operations ............................................................ 3,047.87 1,731.60 Income Taxes paid (Net of refunds) ........................................................ (711.38) (100.30) NET CASH FROM OPERATING ACTIVITIES ............................................... 2,336.49 1,631.30B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of fixed assets ......................................................................... (967.06) (929.74) Sale of fixed assets ................................................................................. 6.36 14.58 Purchase of investments ......................................................................... (19,022.10) (17,118.59) Sale of investments ................................................................................ 18,490.89 16,195.73 Interest received ..................................................................................... 100.74 79.87 Dividends received .................................................................................. 87.26 137.13 Inter corporate deposits (Net) ................................................................ (133.67) (319.98) Exceptional Items : Sales Proceeds (Net) on sale of Long Term Investments ......................... 92.14 — NET CASH USED IN INVESTING ACTIVITIES ............................................ (1,345.44) (1,941.00)86
  • MAHINDRA & MAHINDRA LIMITEDCash Flow Statement (Contd.) Rupees crores 2010 2009C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Issue of Share Capital (including Share Premium) .......... 72.40 — Proceeds from borrowings ..................................................................... 436.32 2,117.39 Repayments of borrowings (including premium on prepayments) ......... (743.98) (1,005.05) Dividends paid [including income tax on dividend Rs. 33.23 crores (2009 : Rs. 38.48 crores)] ...................................................................... (311.36) (320.26) Interest, Commitment and Finance charges paid ................................... (229.48) (95.17) Stamp Duty paid on shares issued on merger ....................................... (7.77) — NET CASH (USED IN)/FROM FINANCING ACTIVITIES .............................. (783.87) 696.91 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ............ 207.18 387.21 CASH AND CASH EQUIVALENTS [Note 1] : Opening Balance .................................................................................... 1,561.83 923.88 Cash and Bank Balance acquired pursuant to the Schemes of Amalgamation ........................................................................................ — 253.76 Cash and Bank Balance Transferred on transfer of Business .................. (18.20) (3.02) Closing Balance ...................................................................................... 1,750.81 1,561.83 See Notes attached.In terms of our report attached }For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. GangulyB. P. Shroff A. P. Puri Directors Bharat Doshi Executive DirectorPartner N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company SecretaryMumbai, 29th May, 2010 Mumbai, 29th May, 2010 87
  • Notes to the Cash Flow Statement for the year ended 31st March, 2010 Rupees crores 2010 20091 Cash and Bank Balances ......................................................................... 1,743.23 1,574.43 Unrealised (Gain)/Loss on foreign currency cash and cash equivalents .. 7.58 (12.60) Total cash and cash equivalents ............................................................. 1,750.81 1,561.832 During the year the Company formed Mahindra EcoNova Private Limited as a wholly owned subsidiary with an initial subscription of Rs. 0.01 crores.3 During the year the Company received on disposal of its subsidiaries Mahindra Logisoft Business Solutions Limited and Mahindra Steel Service Centre Limited Rs. 5.71 crores and Rs. 14.27 crores respectively.4 The Company transferred the Land Defence Systems business of Mahindra Defence Systems, a division of Mahindra & Mahindra Limited, to a wholly owned subsidiary in the current year with effect from 1st July, 2009. The value of the assets and liabilities of the business transferred are at the values indicated below : Fixed Assets (including Capital Work-in-Progress) .................................. 26.42 — Current Assets ........................................................................................ 33.43 — Current Liabilities and Provisions ............................................................ 32.47 — This transfer of the Land Defence Systems business of Mahindra Defence Systems division is a non-cash transaction.5 Previous year’s figures have been regrouped/restated wherever necessary.88
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE I Rupees crores 2010 2009Share Capital [Note 2] :Authorised :1,20,00,00,000 Ordinary (Equity) Shares of Rs. 5 each (2009 : 60,00,00,000 Ordinary (Equity) Shares of Rs. 10 each)…………… 600.00 600.00 25,00,000 Unclassified Shares of Rs. 100 each ............................................................ 25.00 25.00 Total ............................................................................................................ 625.00 625.00Issued and Subscribed : 57,84,34,478 Ordinary (Equity) Shares of Rs. 5 each fully paid up (2009 : 27,88,21,265 Ordinary (Equity) Shares of Rs. 10 each fully paid up) ............................... 289.21 278.82 289.21 278.82Less : 1,25,26,592 Ordinary (Equity) Shares of Rs. 5 each fully paid up (2009 : 62,05,306 Ordinary (Equity) Shares of Rs. 10 each fully paid up) issued to ESOP Trust but not allotted to employees ................................... 6.26 6.20Adjusted : Issued and Subscribed Share Capital ................................................................... 282.95 272.62#REF!SCHEDULE II Rupees crores 2009 Additions Deductions 2010Reserves and Surplus1 Capital Reserve 11.50 — — 11.50 11.50 — — 11.502 Securities Premium Account [Note 3(a)(i)] ...................... 493.79 784.79 6.59 1,271.99 527.13 10.86 44.20 493.79 Less : Premium on shares issued to ESOP Trust but not allotted to employees [Note 3(b)] ..................... 15.20 71.40 2.31 84.29 16.34 — 1.14 15.20 478.59 713.39 4.28 1,187.70 510.79 10.86 43.06 478.593 Revaluation Reserve [Note 3(a)(ii)] .................................. 12.09 — 0.42 11.67 12.47 — 0.38 12.094 General ReserveI ............................................................. 826.74 210.00 6.12 1,030.62 748.92 117.79 39.97• 826.74 Add : Bonus shares issued to ESOP Trust but not allotted to employees [Note 3(b)] ..................... 3.10 — 0.47 2.63 3.33 — 0.23 3.10 829.84 210.00 6.59 1,033.25 752.25 117.79 40.20 829.845 Debenture Redemption Reserve ...................................... 47.62 30.95 — 78.57 18.00 29.62 — 47.626 Investment Fluctuation Reserve [Note 23, 25 & 26] ...... 672.14 23.52 70.00 625.66 39.43 806.61 173.90 672.147 Hedging Reserve Account [Note 3(c)] ............................ (434.19) 433.28 — (0.91) (12.92) — 421.27 (434.19) 1,617.59 1,411.14 81.29 2,947.44 1,331.52 964.88 678.81 1,617.598 Balance for 2009-2010 and earlier years as per Profit and Loss Account ................................................. 4,588.37 3,365.32 Total ............................. 7,535.81 4,982.91 Transfer from Profit and Loss Account Rs. 210.00 crores (2009 : Rs. 100.00 crores). Amount utilised for expenses incurred on amalgamation of previous year Rs. 5.18 crores (Net of Tax of Rs. 2.59 crores) and impact of tax rate change on net debits to General Reserve Rs. 0.94 crores. Transfer from Profit and Loss Account Rs. 30.95 crores (2009 : Rs. 29.62 crores). Provisions no longer required written back. Amount transferred during the year on amalgamation Rs. 17.79 crores.• Adjustment on adoption of Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (Net of Tax of Rs. 20.58 crores). 89
  • SCHEDULE III Rupees crores 2010 2009Loan Funds [Note 4] :(A) Secured : (1) Debentures/Bonds ........................................................................... 600.01 600.01 (2) Foreign Currency Loans from Banks ................................................ — 124.29 (3) Loans and Advances on cash credit account from Banks ............... 2.44 3.00 (4) Short-term Foreign Currency Loans from Banks .............................. — 253.70 602.45 981.00(B) Unsecured : (1) Fixed Deposits ................................................................................. 166.22 30.85 (2) Short-term Loans from Banks ......................................................... — 80.00 (3) Other Loans : (a) From Financial Institutions ....................................................... 730.35 634.68 (b) Foreign Currency Loan from Banks .......................................... 501.35 625.65 (c) Zero Coupon Convertible Bonds .............................................. 850.85 961.52 (d) 9.25% Fully and Compulsorily Convertible Debentures ............ — 700.00 (e) From Others ............................................................................. 28.93 39.06 2,111.48 2,960.91 2,277.70 3,071.76 Total ............... 2,880.15 4,052.76SCHEDULE IVFixed Assets [Note 5] : Rupees croresDescription of Assets Cost/ Additions Deduc- Cost/Pro- Deprecia- Deprecia- Deductions Deprecia- Net Net Professional and tions fessional tion/Amor- tion/ and tion/ Balance Balance valuation adjust- and valuation tisation Amor- adjust- Amortisa- as at as at as at 31st ments adjust- as at 31st to 31st tisation ments tion 31st 31st March, during ments March, March, for 2009- of Depre- to 31st March, March, 2009 the year during 2010 2009 2010 ciation/ March, 2010 2009 the year Amorti- 2010 sationLand - Freehold ......................... 56.18 0.31 7.48 49.01 — — — — 49.01 56.18Land - Leasehold ....................... 61.28 1.97 — 63.25 2.98 0.67 — 3.65 59.60 58.30Buildings .................................... 638.61 45.52 12.94 671.19 153.86 19.59 4.37 169.08 502.11 484.75Plant and Machinery ................. 3,596.60 329.60 155.22 3,770.98 1,985.69 276.69 134.70 2,127.68 1,643.30 1,610.91Furniture and Fittings ................ 122.31 7.99 10.68 119.62 52.23 7.03 7.78 51.48 68.14 70.08Vehicles, Cycles, etc ................... 131.61 22.42 20.62 133.41 54.85 17.99 12.87 59.97 73.44 76.76Technical Knowhow ................... — 2.58 — 2.58 — 0.52 — 0.52 2.06 —Development Expenditure ......... 240.23 169.88 — 410.11 41.14 36.97 — 78.11 332.00 199.09Software Expenditure ................ 47.07 9.07 — 56.14 35.54 11.74 — 47.28 8.86 11.53 Total ............ 4,893.89 589.34 206.94 5,276.29 2,326.29 371.20 159.72 2,537.77 2,738.52 2,567.60 3,656.13 1,291.43 53.67 4,893.89 1,841.68 514.00 29.39 2,326.29 2,567.6090
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE VInvestments (At Cost, unless otherwise specified) : Rupees crores 2010 2009 Face Value Number Per Unit Note Long Term Current Long Term Current Rupees Shares (Non-trade and fully paid-up unless otherwise specified) : Unquoted : (a) In Subsidiary Companies : (i) Equity Shares : 53,98,462 10 Mahindra Engineering and Chemical Products Limited ............. 5.82 — 5.82 — 2,71,00,006 10 Mahindra Intertrade Limited [including 1,50,00,000 shares partly paid-up Rs. 3 per share] .................................................. 16.60 — 16.60 — — 10 Mahindra Steel Service Centre Limited ...................................... (c)(1) — — 6.38 —14,00,00,000 US$ 0.10 Mahindra USA Inc. .................................................................... (b)(c)(2) 66.37 — 44.30 — 16,83,218 10 Mahindra Gujarat Tractor Limited ............................................. 3.55 — 3.55 — 2,46,81,437 10 Mahindra Shubhlabh Services Limited ....................................... (b) 25.72 — 25.72 — 3,47,77,255 10 Mahindra First Choice Wheels Limited ...................................... 47.44 — 47.44 — — 10 Mahindra Logisoft Business Solutions Limited .......................... (c)(3) — — 5.78 — 42,22,250 US$ 0.001 Bristlecone Limited ..................................................................... 19.26 — 19.26 — 5,20,00,000 ZAR 1 Mahindra & Mahindra South Africa (Proprietary) Limited ......... (b)(c)(4) 28.54 — 17.24 — 81,26,218 10 Mahindra Engineering Services Limited…………………………. (b) 59.96 — 59.96 — 5,87,95,000 US$ 1 Mahindra Overseas Investment Company (Mauritius) Limited .. (b)(c)(5) 270.10 — 204.28 — 40,30,806 10 Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited) ............ (c)(6) 21.75 — 40.77 —10,16,24,232 10 Mahindra Renault Private Limited ............................................. (b) 154.38 — 154.38 —20,70,32,300 10 Mahindra Navistar Automotives Limited ................................... (b)(c)(7) 209.00 — 165.31 —58,50,00,000 10 Mahindra Vehicle Manufactures Limited ................................... (b)(c)(8) 585.00 — 485.00 — 2,14,40,052 10 Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited) ............................................................ (c)(9) 130.25 — 105.25 — 4,90,49,900 10 Mahindra Logistics Limited ........................................................ 49.05 — 49.05 — 8,41,50,000 10 Mahindra Navistar Engines Private Limited ............................... (c)(10) 84.15 — 21.17 — 1,05,50,000 10 Mahindra Aerospace Private Limited ......................................... (c)(11) 10.55 — 0.05 — 1,63,50,000 10 Mahindra First Choice Services Limited ..................................... (c)(12) 16.35 — 11.05 — 2,07,00,001 EURO 1 Mahindra Gears International Limited ....................................... 137.83 — 137.83 — 2,25,49,999 10 Mahindra Holdings Limited ....................................................... 22.55 — 22.55 — 5,10,000 10 Mahindra Consulting Engineers Limited .................................... 0.64 — 0.64 — — 10 Mahindra Holidays & Resorts India Limited (transferred to Quoted Subsidiary) ............................................ (c)(13) — — 30.25 — 50,490 10 NBS International Limited .......................................................... 5.07 — 5.07 —11,80,00,000 10 Mahindra Two Wheelers Limited ............................................... 118.00 — 118.00 — 7,00,000 AU$ 1 Mahindra Automotive Australia Pty. Ltd. .................................. 2.27 — 2.27 — 3,42,62,000 10 Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited) ................ (c)(14)&(15) 34.26 — — — 10,000 10 Mahindra EcoNova Private Limited ............................................ (c)(16) 0.01 — — — 70,00,000 US$ 0.001 (ii) Series’A’ Preference Shares : Bristlecone Limited ....................... 31.72 — 31.72 — 69,20,000 US$ 0.001 (iii) Series’B’ Preference Shares : Bristlecone Limited ....................... 15.12 — 15.12 — (iv) 10.50% Non Cumulative Redeemable Preference Shares : 10,00,000 100.00 Mahindra Lifespace Developers Limited .................................... 10.00 — 10.00 — 23,00,000 EURO 1 (v) Preference Shares : Mahindra Gears International Limited ....... 15.31 — 15.31 — (vi) Share Warrants Convertible into Equity Shares : 42,99,270 10 Mahindra Forgings Limited ........................................................ (c)(17) 14.72 — — — 2,211.34 — 1,877.12 — (b) In Other Companies : (i) Equity Shares : 312 100 Montreal Engineering International Limited .............................. * — * — 8,55,646 10 Machinery Manufacturers Corporation Limited ......................... (b) 0.94 — 0.94 — 1,00,000 10 Judricks (India) Private Limited .................................................. 0.10 — 0.10 — 35,000 10 Mahindra & Mahindra Contech Limited .................................... 0.04 — 0.04 — 75,000 10 NTTF Industries Limited ............................................................. 0.15 — 0.15 — 7,49,997 10 Officemartindia.com Limited ..................................................... 0.22 — 0.22 — 50,000 10 Indian NGOs.com Private Limited .............................................. 0.06 — 0.06 — 20,000 10 Sixth Sense Studios Private Limited ........................................... 0.02 — 0.02 — 2,85,000 10 Utility Engineers (India) Limited ................................................. 0.29 — 0.29 — 9,00,000 10 Mahindra Construction Company Limited ................................. 0.97 — 0.97 — 5,00,000 10 Business Standard Limited ......................................................... 0.09 — 0.09 — 13,10,000 10 Mahindra Sona Limited ............................................................. 1.64 — 1.64 — 75,00,000 10 New Tirupur Area Development Corporation Limited ............... 7.50 — 7.50 — 2,81,24,794 10 Owens Corning India Limited .................................................... 28.12 — 28.12 — 19,750 5 PSL Erickson Limited .................................................................. 0.01 — 0.01 — 4,98,000 10 Triton Overwater Transport Agency Limited .............................. 0.58 — 0.58 — Others ........................................................................................ (a) * — * —*denotes amounts less than Rs. 50,000 91
  • SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) : Rupees crores 2010 2009 Face Value Number Per Unit Note Long Term Current Long Term Current Rupees (ii) 4% Tax–free Cumulative Preference Shares : 2,296 100 Machinery Manufactures Corporation Limited .......................... (b) 0.02 — 0.02 — (iii) 11% Redeemable Preference Shares : 1,78,000 100 Sixth Sense Studios Private Limited ........................................... 1.78 — 1.78 — (iv) 10% Non–Cumulative Redeemable Participating Preference Shares : 5,40,000 100 Mahindra Construction Company Limited ................................. 5.40 — 5.40 — (v) 8% Non–Cumulative Redeemable Preferred Stock : 23,00,423 Prana Holdings Inc. USA ........................................................... 13.83 — 13.83 — 61.76 — 61.76 — Quoted : (a) In Subsidiary Companies : (i) Equity Shares : 2,08,46,126 10 Mahindra Lifespace Developers Limited .................................... 276.95 — 276.95 — 5,82,41,532 10 Mahindra & Mahindra Financial Services Limited ...................... 150.91 — 150.91 — — 10 Tech Mahindra Limited (transferred to Quoted Non Subsidiary) — — 191.81 — 4,45,26,339 10 Mahindra Forgings Limited ........................................................ (b)(c)(17) 795.25 — 754.14 — 1,64,66,789 10 Mahindra Ugine Steel Company Limited ................................... 49.26 — 49.26 — 6,99,85,642 10 Mahindra Holidays & Resorts India Limited (transferred from Unquoted Subsidiary) ................................................................ (b) 28.86 — — — 1,301.23 — 1,423.07 — (b) In Other Companies : (i) Equity Shares : 41,26,417 10 Swaraj Engines Limited .............................................................. 1.63 — 1.63 — 10,59,543 10 Swaraj Automotives Limited ...................................................... 12.45 — 12.45 — 13,41,203 10 Mahindra Composites Limited ................................................... 2.90 — 2.90 — 25 100 Jardine Henderson Limited ........................................................ * — * — 2,85,440 10 IDBI Bank Limited ...................................................................... 2.28 — 2.28 — 900 10 Power Trading Corporation of India Limited ............................. — * — * 5,37,76,252 10 Tech Mahindra Limited (transferred from Quoted Subsidiary) .. 191.81 — — — 211.07 * 19.26 * Shares : (Trade & fully paid-up unless otherwise specified) : Unquoted Others : (i) Equity Shares : 19,45,867 10 Wardha Power Company Limited [19,45,867 Class ‘A’ shares partly paid-up Re.1 per share] ...................................................................... (c)(18) 0.19 — — — (ii) 0.01% Class ‘A‘ Redeemable Preference Shares : 24,54,133 10 Wardha Power Company Limited ....................................................... (c)(18) 2.45 — — — 2.64 — — — Debentures/Bonds : (Non-trade & fully paid-up) : Unquoted : (a) In Subsidiary Companies : 25,00,000 100 2.00% Mahindra Holdings Limited ..................................................... 25.00 — 25.00 — (b) In Other Companies : 13 100 0.50% The East India Clinic Limited ................................................... * — * — 25.00 — 25.00 —* denotes amounts less than Rs. 50,00092
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) : Rupees crores 2010 2009 Face Value Number Per Unit Note Long Term Current Long Term Current Rupees Quoted : (a) In Subsidiary Companies : — 10,00,000 7.50% Mahindra & Mahindra Financial Services Limited ................... (d)(1) — — — 20.22 250 10,00,000 8.50% Mahindra & Mahindra Financial Services Limited ................... (d)(2) — 25.00 — — (b) In Other Companies : 18 10,00,000 7.00% Power Finance Corporation Limited (2011) Series XXII ........... — 1.80 — 1.80 — 10,00,000 7.99% Infrastructure Development Finance Company Limited ........... (d)(3) — — — 15.00 2,085 1,00,000 6.85% India Infrastructure Finance Company Limited ........................ (d)(4) — 20.95 — — 50 10,00,000 7.75% Rural Electrification Corporation Limited ................................. (d)(5) — 5.00 — — 500 1,00,000 6.70% Indian Railway Finance Corporation Limited ........................... (d)(6) — 5.00 — — 1,000 1,00,000 6.00% Indian Railway Finance Corporation Limited ........................... (d)(7) — 10.00 — — 1,000 1,00,000 6.30% Indian Railway Finance Corporation Limited ........................... (d)(8) — 10.00 — — — 77.75 — 37.02 25.00 77.75 25.00 37.02 Less : Excess of cost over fair value of current investments of Debentures/ Bonds ................................................................................................. — — — (0.35) 25.00 77.75 25.00 36.67 Other Investments : Trust Securities : Unquoted : — Sunrise Initiatives Trust ................................................................................. 88.37 — 51.33 — — M & M Benefit Trust .................................................................................... 1,459.77 — 1,459.77 — — Mahindra World Motor Driving School Trust ............................................... 0.01 — 0.01 — — M & M Fractional Entitlement Trust ............................................................. 0.01 — 0.01 — 1,548.16 — 1,511.12 — Government Securities : Unquoted : — 26,000^ 6 Years National Savings Certificates ........................................................... (e)(1) * — * — 1,548.16 — 1,511.12 — Quoted : — 1,92,70,000^ Government of India Securities .................................................................... (e)(2) — 1.91 — 1.91 — 1.91 — 1.91 1,548.16 1.91 1,511.12 1.91 Less : Excess of cost over fair value of current investments of Government Securities ........................................................................................... — * — — 1,548.16 1.91 1,511.12 1.91 ^ Total Face Value Units : Unquoted : 1,56,55,599 10 Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend ....... (f)(2) — 15.67 — 34.84 — 10 Birla Sun Life Mutual Fund - FTP Institutional Series AV Dividend .............. (f)(3) — — — 5.00 — 10 Birla Sun Life Mutual Fund - FTP Institutional Series AK Dividend .............. (f)(4) — — — 10.00 50,17,665 10 Birla Sun Life Mutual Fund - Dynamic Bond Fund Retail Plan Monthly Dividend ....................................................................................................... (f)(5) — 5.24 — — 1,00,00,271 10 Birla Sun Life Mutual Fund - BSL Floating Rate Fund Long Term Institutional Weekly Dividend ....................................................................... (f)(6) — 10.02 — — 46,93,285 10 Canara Robeco Mutual Fund - Liquid Super Institutional Daily Dividend Reinvestment Fund ....................................................................................... (f)(7) — 4.71 — —* denotes amounts less than Rs. 50,000 93
  • SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) : Rupees crores 2010 2009 Face Value Number Per Unit Note Long Term Current Long Term Current Rupees 1,64,32,073 10 Canara Robeco Mutual Fund - Treasury Advantage Super Institutional Daily Dividend Reinvestment ........................................................................ (f)(8) — 20.39 — — — 10 L & T Mutual Fund - Freedom Income STP Institutional Daily Dividend Reinvestment Plan (formerly known as DBS Chola Mutual Fund) ............... (f)(10) — — — 24.14 7,03,46,691 10 Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ....................................................................................................... (f)(12) — 70.47 — 50.30 49,94,768 10 Deutsche Mutual Fund - Short Maturity Fund Institutional Weekly Dividend Plan ............................................................................................... (f)(13) — 5.22 — — 2,52,409 1,000 DSP Black Rock Mutual Fund - Floating Rate Fund Institutional Plan Daily Dividend ....................................................................................................... (f)(15) — 25.26 — — — 10 Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ............. (f)(17) — — — 50.31 — 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional Daily Dividend .................................................................................................. (f)(19) — — — 5.08 1,71,51,007 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional Daily Dividend .............................................................................................. (f)(20) — 17.16 — 20.08 — 1,000 Franklin Templeton Mutual Fund - India Treasury Management Account Super Institutional Plan Daily Dividend ........................................................ (f)(21) — — — 10.00 — 10 Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super Institutional Plan Daily Dividend .................................................................. (f)(22) — — — 30.57 — 10 Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII Plan A Institutional Growth ..................................................................................... (f)(24) — — — 14.07 2,35,04,193 10 HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend Reinvestment Option .................................................................................... (f)(26) — 25.00 — 34.37 98,27,205 10 HDFC Mutual Fund - Cash Management Fund Treasury Advantage Plan Wholesale Daily Dividend Reinvestment ....................................................... (f)(27) — 9.86 — 16.14 1,71,51,909 10 HDFC Mutual Fund - Floating Rate Income Fund Short Term Plan Wholesale Option Dividend Reinvestment ................................................... (f)(28) — 17.29 — — 48,91,694 10 HDFC Mutual Fund - High Interest Fund Short Term Plan Dividend Option (f)(29) — 5.18 — — — 10 HSBC Mutual Fund - Floating Rate LT Institutional Option Weekly Dividend (f)(32) — — — 36.86 — 10 HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend Tenure 370 Days ...................................................................................................... (f)(33) — — — 15.92 — 10 IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ........... (f)(34) — — — 50.00 4,02,17,825 10 IDFC Mutual Fund - Money Manager Fund TP Super Institutional Plan C Daily Dividend .............................................................................................. (f)(35) — 40.22 — — 50,72,403 10 IDFC Mutual Fund - SSIF Short Term Plan B Fortnightly Dividend ............... (f)(36) — 5.10 — — 1,02,10,779 10 IDFC Mutual Fund - Money Manager Fund Investment Plan B Daily Dividend .................................................................................................. (f)(37) — 10.23 — — — 10 JM Financial Mutual Fund - Money Manager Fund Super Plus Plan Daily Dividend ....................................................................................................... (f)(38) — — — 25.06 59,51,879 10 JM Financial Mutual Fund - High Liquidity Fund Super Institutional Plan Daily Dividend ...................................................................................... (f)(39) — 5.96 — — 20,00,000 10 J P Morgan Mutual Fund - India Short Term Income Fund Weekly Dividend Reinvestment ................................................................................. (f)(41) — 2.00 — — — 10 Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily Dividend (f)(43) — — — 14.55 4,10,11,250 10 Kotak Mahindra Mutual Fund - Floater Long Term Daily Dividend ............. (f)(44) — 41.34 — 30.39 — 10 Kotak Mahindra Mutual Fund - FMP 14M Series 3 Institutional Dividend .. (f)(45) — — — 10.74 — 10 Kotak Mahindra Mutual Fund - FMP 15M Series 5 Institutional Dividend .. (f)(46) — — — 5.29 50,00,000 10 Kotak Mahindra Mutual Fund - Quarterly Interval Plan Series 2 Dividend .. (f)(47) — 5.00 — — — 10 LIC Mutual Fund - Income Plus Fund Daily Dividend Plan ........................... (f)(48) — — — 50.27 — 10 LIC Mutual Fund - Fixed Maturity Plan - Series 43 (13 Months) ................. (f)(49) — — — 10.00 7,43,91,791 10 LIC Mutual Fund - Savings Plus Fund Daily Dividend Plan .......................... (f)(51) — 74.39 — — 1,82,48,723 10 Principal Mutual Fund - Cash Management Fund Liquid Option Institutional Premium Plan Dividend Reinvestment Daily ............................. (f)(52) — 18.25 — 50.00 1,12,48,555 10 Principal Mutual Fund - Floating Rate Fund FMP Institutional Option Dividend Reinvestment Daily ........................................................................ (f)(53) — 11.26 — — 25,09,445 10 Prudential ICICI Mutual Fund - Institutional Liquid Plan Super Institutional Daily Dividend .............................................................................................. (f)(54) — 25.10 — 20.00 — 10 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend (f)(55) — — — 30.4694
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) : Rupees crores 2010 2009 Face Value Number Per Unit Note Long Term Current Long Term Current Rupees 17,34,030 100 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend .................................................................................................. (f)(56) — 18.33 — — 42,73,736 10 Prudential ICICI Mutual Fund - Institutional Short Term Plan Dividend Reinvestment Fortnightly .............................................................................. (f)(57) — 5.18 — — 2,01,73,102 10 Prudential ICICI Mutual Fund - Ultra Short Term Plan Super Premium Daily Dividend Reinvestment ........................................................................ (f)(58) — 20.22 — — — 10 Religare Mutual Fund - Liquid Fund Super Institutional Daily Dividend ...... (f)(59) — — — 5.50 2,59,57,208 10 Religare Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend (f)(60) — 26.00 — 19.62 5,97,00,423 10 SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ......... (f)(61) — 100.00 — 25.02 2,30,86,148 10 SBI Mutual Fund - Ultra Short Term Fund Institutional Plan Daily Dividend (f)(62) — 23.10 — — — 10 Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend . (f)(64) — — — 25.09 6,41,95,532 10 Tata Mutual Fund - Floater Fund Daily Dividend ......................................... (f)(65) — 64.43 — 20.23 — 1,000 Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ..... (f)(66) — — — 30.00 1,13,292 1,000 UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily Dividend Option Reinvestment ..................................................................... (f)(67) — 11.33 — 50.60 3,18,422 1,000 UTI Mutual Fund - Money Market Fund Daily Dividend Option Reinvestment ................................................................................................ (f)(68) — 31.95 — — 2,74,181 1,000 UTI Mutual Fund - Floating Rate Fund Short Term Plan Institutional Daily Dividend Plan ...................................................................................... (f)(69) — 27.44 — — 50,00,000 10 UTI Mutual Fund - Fixed Income Interval Fund Quarterly Interval Plan Series I Institutional Dividend Plan Reinvestment ........................................ (f)(70) — 5.00 — — 1,00,00,000 10 UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II Institutional Dividend Plan ........................................................................... (f)(71) — 10.00 — — — 813.30 — 830.50 Less : Excess of cost over fair value of current investments of Mutual Fund Units — (0.09) — — — 813.21 — 830.50 Certificate of Deposits : Unquoted :25,00,00,000 ^ State Bank of Travancore ........................................................................ (g)(1) — 24.82 — —25,00,00,000 ^ Central Bank of India .............................................................................. (g)(2) — 24.81 — —25,00,00,000 ^ State Bank of Hyderabad ........................................................................ (g)(3) — 24.82 — —70,00,00,000 ^ State Bank of Mysore .............................................................................. (g)(4) — 69.50 — — — 143.95 — — ^ Total Face Value 5,361.20 1,036.82 4,917.33 869.08 Total ........... 6,398.02 5,786.41 Cost (net of amounts written off) of Unquoted Investments .................... 4,806.15 4,305.50 Cost of Quoted Investments ...................................................................... 1,591.96 1,481.26 6,398.11 5,786.76 Less : Excess of cost over fair value of Current Investments (Net) ............ (0.09) (0.35) 6,398.02 5,786.41 Market Value of Quoted Investments ........................................................ 12,216.75 3,218.81 Notes: Face Value Per Unit Long Term Long Term Number Rupees Rupees Rupees (a) Shares (unquoted) in other companies : 21 100 # The United Spices Importers Limited (Equity “B” Shares) ................... 1 1 74 16,667 # Engineering & Metal Works, Tehran ................................................... 1 1 (Rials) Total ........... 2 2 # Written off to Re. 1 (b) Equity investments in these companies carry certain restrictions on transfer of shares in terms of funds raised by these companies from financial institutions/banks/or in terms of SEBI IPO for listing agreements. 95
  • SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :(c) The following are the movements in Shares during the year : Equity Shares Preference Share Warrants Shares Acquired Sold Acquired/ Acquired Sold/ (Redeemed/ Converted Sold) Nos. Nos. Nos. Nos. Nos. (1) Mahindra Steel Service Centre Limited .................................................. — 37,23,874 — — — (2) Mahindra USA Inc ................................................................................. 4,50,00,000@ — — — — (3) Mahindra Logisoft Business Solutions Limited ....................................... — 63,49,500 — — — (4) Mahindra & Mahindra South Africa (Proprietary) Limited ..................... 1,84,30,000 — — — — (5) Mahindra Overseas Investment Company (Mauritius) Limited .............. 1,40,25,000 — — — — (6) Mahindra Gears & Transmissions Private Limited .................................. — 35,26,094 — — — (7) Mahindra Navistar Automotives Limited ................................................ 4,36,91,700 — — — — (8) Mahindra Vehicle Manufacturers Limited .............................................. 10,00,00,000 — — — — (9) Mahindra Castings Limited………………………………………............... 49,52,450@ — — — — (10) Mahindra Navistar Engines Private Limited ............................................ 6,29,85,000@ — — — — (11) Mahindra Aerospace Private Limited ..................................................... 1,05,00,000 — — — — (12) Mahindra First Choice Services Limited ................................................. 53,00,000 — — — — (13) Mahindra Holidays & Resorts India Limited ........................................... — 33,69,191 — — — (14) Defence Land Systems India Private Limited .......................................... 68,82,150 — — — — (15) Defence Land Systems India Private Limited .......................................... 2,73,79,850# — — — — (16) Mahindra EcoNova Private Limited ........................................................ 10,000 — — — — (17) Mahindra Forgings Limited .................................................................... 30,00,000$ — — 72,99,270 30,00,000 (18) Wardha Power Company Limited .......................................................... 19,45,867 — 24,54,133 — — @ Subscribed to on rights basis. # Consideration other than Cash. $ Conversion of warrants into Equity.(d) The following are the movements in Debentures/Bonds during the year : Acquired Sold Matured Nos. Rs. Crores Nos. Nos. (1) Mahindra & Mahindra Financial Services Limited .................................. 7.50% — — — 200 (2) Mahindra & Mahindra Financial Services Limited .................................. 8.50% 250 25.00 — — (3) Infrastructure Development Finance Company Limited ......................... 7.99% — — — 150 (4) India Infrastructure Finance Company Limited ...................................... 6.85% 2,085 20.95 — — (5) Rural Electrification Corporation Limited ............................................... 7.75% 50 5.00 — — (6) Indian Railway Finance Corporation Limited ......................................... 6.70% 500 5.00 — — (7) Indian Railway Finance Corporation Limited ......................................... 6.00% 1,000 10.00 — — (8) Indian Railway Finance Corporation Limited ......................................... 6.30% 1,000 10.00 — —(e) Government Securities : (1) Face value of Rs. * crores (2009 : Rs. * crores) were lodged as security deposit. (2) Treasury Bills of the face value of Rs. 25.00 Crores (2009 : Nil) were purchased and of the face value of Rs. 25.00 Crores (2009 : Nil) sold during the year.(f) The following are the movements in Units during the year : Acquired Sold Nos. Rs. Crores Nos. (1) Birla Sun Life Mutual Fund - Cash Plus Institutional Premium Daily Dividend ............................ 98,86,38,498 990.57 98,86,38,498 (2) Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend ....................................... 46,72,55,635 467.57 48,64,19,235 (3) Birla Sun Life Mutual Fund - FTP Institutional Series AV Dividend .............................................. 3,83,424 0.38 53,83,424 (4) Birla Sun Life Mutual Fund - FTP Institutional Series AK Dividend .............................................. 9,06,852 0.91 1,09,06,852* denotes amount less than Rs. 50,00096
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :(f) The following are the movements in Units during the year : Acquired Sold Nos. Rs. Crores Nos. (5) Birla Sun Life Mutual Fund - Dynamic Bond Fund Retail Plan Monthly Dividend ....................... 50,17,665 5.24 — (6) Birla Sun Life Mutual Fund - BSL Floating Rate Fund Long Term Institutional Weekly Dividend ... 1,00,00,271 10.02 — (7) Canara Robeco Mutual Fund - Liquid Super Institutional Daily Dividend Reinvestment Fund .... 32,90,50,995 330.40 32,43,57,710 (8) Canara Robeco Mutual Fund - Treasury Advantage Super Institutional Daily Dividend Reinvestment ................................................................................................................................ 5,99,76,723 74.41 4,35,44,650 (9) L & T Mutual Fund - Liquid Institutional Daily Dividend Reinvestment Plan ............................... 5,13,79,110 51.96 5,13,79,110 (10) L & T Mutual Fund - Freedom Income STP Institutional Daily Dividend Reinvestment Plan ....... 2,65,51,053 26.96 5,03,22,742 (11) Deutsche Mutual Fund - Insta Cash Plus Fund Super Institutional Plan Daily Dividend .............. 93,80,71,958 940.92 93,80,71,958 (12) Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ............................. 37,56,06,173 376.28 35,54,87,714 (13) Deutsche Mutual Fund - Short Maturity Fund Institutional Weekly Dividend Plan ..................... 49,94,768 5.22 — (14) DSP Black Rock Mutual Fund - Cash Plus Institutional Daily Dividend ........................................ 99,998 10.00 99,998 (15) DSP Black Rock Mutual Fund - Floating Rate Fund Institutional Plan Daily Dividend ................. 2,52,409 25.26 — (16) DSP Black Rock Mutual Fund - Liquidity Fund Institutional Daily Dividend ................................. 2,65,051 26.51 2,65,051 (17) Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ............................................. 22,10,423 2.21 5,25,01,773 (18) Fidelity Mutual Fund - Cash Fund Super Institutional Daily Dividend ......................................... 18,19,29,043 183.20 18,19,29,043 (19) Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional Daily Dividend ........................ 48,260 0.05 51,23,218 (20) Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional Daily Dividend .............. 5,26,24,997 52.64 5,55,44,365 (21) Franklin Templeton Mutual Fund - India Treasury Management Account Super Institutional Plan Daily Dividend ...................................................................................................................... 78,46,296 785.16 79,46,229 (22) Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super Institutional Plan Daily Dividend ....................................................................................................................................... 30,03,38,162 300.69 33,08,74,759 (23) Franklin Templeton Mutual Fund - Ultra Short Bond Fund Institutional Plan Dividend .............. 4,50,48,136 45.10 4,50,48,136 (24) Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII Plan A Institutional Growth .. — — 1,40,65,033 (25) Franklin Templeton Mutual Fund - Ultra Short Bond Fund Retail Plan Daily Dividend ............... 5,01,841 0.50 5,01,841 (26) HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend Reinvestment Option .......................................................................................................................................... 99,47,05,915 1,058.01 1,00,35,16,030 (27) HDFC Mutual Fund - Cash Management Fund Treasury Advantage Plan Wholesale Daily Dividend Reinvestment ................................................................................................................. 16,47,54,932 165.27 17,10,17,674 (28) HDFC Mutual Fund - Floating Rate Income Fund Short Term Plan Wholesale Option Dividend Reinvestment ................................................................................................................................ 32,15,39,414 324.14 30,43,87,505 (29) HDFC Mutual Fund - High Interest Fund Short Term Plan Dividend Option ............................... 48,91,694 5.18 — (30) HDFC Mutual Fund - Liquid Fund Premium Plan Dividend Daily Reinvestment .......................... 14,79,83,470 181.42 14,79,83,470 (31) HSBC Mutual Fund - Cash Fund Institutional Plus Daily Dividend ............................................... 7,45,93,214 74.63 7,45,93,214 (32) HSBC Mutual Fund - Floating Rate LT Institutional Option Weekly Dividend .............................. 59,70,113 6.71 3,87,72,145 (33) HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend Tenure 370 Days ................... 3,87,722 0.39 1,63,12,060 (34) IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ........................................... 1,01,19,55,742 1,012.21 1,06,19,40,859 (35) IDFC Mutual Fund - Money Manager Fund TP Super Institutional Plan C Daily Dividend .......... 27,71,82,280 277.22 23,69,64,455 (36) IDFC Mutual Fund - SSIF Short Term Plan B Fortnightly Dividend ............................................... 50,72,403 5.10 — (37) IDFC Mutual Fund - Money Manager Fund Investment Plan B Daily Dividend ........................... 1,02,10,779 10.23 — (38) JM Financial Mutual Fund - Money Manager Fund Super Plus Plan Daily Dividend ................... 1,66,16,605 16.63 4,16,63,221 (39) JM Financial Mutual Fund - High Liquidity Fund Super Institutional Plan Daily Dividend .......... 3,09,12,096 30.96 2,49,60,217 (40) J P Morgan Mutual Fund - India Liquid Fund Super Institutional Daily Dividend Plan ............... 13,73,58,303 137.47 13,73,58,303 (41) J P Morgan Mutual Fund - India Short Term Income Fund Weekly Dividend Reinvestment ....... 20,00,000 2.00 — (42) J P Morgan Mutual Fund - Treasury Fund Super Institutional Daily Dividend Plan ..................... 4,96,13,661 49.66 4,96,13,661 (43) Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily Dividend ............................. 16,69,77,801 204.18 17,88,76,624 (44) Kotak Mahindra Mutual Fund - Floater Long Term Daily Dividend ............................................. 13,38,82,000 134.95 12,30,18,314 (45) Kotak Mahindra Mutual Fund - FMP 14M Series 3 Institutional Dividend .................................. 1,55,811 0.16 1,08,94,130 (46) Kotak Mahindra Mutual Fund - FMP 15M Series 5 Institutional Dividend .................................. 2,01,410 0.20 54,86,600 (47) Kotak Mahindra Mutual Fund - Quarterly Interval Plan Series 2 Dividend .................................. 50,00,000 5.00 — (48) LIC Mutual Fund - Income Plus Fund Daily Dividend Plan .......................................................... 7,16,37,026 71.64 12,19,06,783 (49) LIC Mutual Fund - Fixed Maturity Plan Series - 43 (13 Months) ................................................. 9,88,586 0.99 1,09,88,586 (50) LIC Mutual Fund - Liquid Fund Dividend Plan ............................................................................. 21,71,36,309 238.42 21,71,36,309 97
  • SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :(f) The following are the movements in Units during the year : Acquired Sold Nos. Rs. Crores Nos. (51) LIC Mutual Fund - Savings Plus Fund Daily Dividend Plan .......................................................... 19,42,93,108 194.29 11,99,01,317 (52) Principal Mutual Fund - Cash Management Fund Liquid Option Institutional Premium Plan Dividend Reinvestment Daily ........................................................................................................ 2,74,35,98,984 2,743.79 2,77,53,46,761 (53) Principal Mutual Fund - Floating Rate Fund FMP Institutional Option Dividend Reinvestment Daily ............................................................................................................................................. 62,37,68,587 624.54 61,25,20,032 (54) Prudential ICICI Mutual Fund - Institutional Liquid Plan Super Institutional Daily Dividend ....... 25,34,30,386 818.26 27,09,19,941 (55) Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend ........................... 16,56,33,324 175.13 19,44,37,457 (56) Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend ........................... 2,77,42,447 293.35 2,60,08,417 (57) Prudential ICICI Mutual Fund - Institutional Short Term Plan Dividend Reinvestment Fortnightly 42,73,736 5.18 — (58) Prudential ICICI Mutual Fund - Ultra Short Term Plan Super Premium Daily Dividend Reinvestment ................................................................................................................................ 2,01,73,102 20.22 — (59) Religare Mutual Fund - Liquid Fund Super Institutional Daily Dividend ...................................... 7,07,46,709 70.79 7,62,46,961 (60) Religare Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ............................... 1,33,53,027 13.37 69,89,028 (61) SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ......................................... 70,66,03,282 1,183.58 66,18,40,622 (62) SBI Mutual Fund - Ultra Short Term Fund Institutional Plan Daily Dividend ............................... 13,02,72,046 130.35 10,71,85,898 (63) Sundaram Mutual Fund - Liquid Plus Super Institutional Dividend Reinvestment Daily .............. 22,26,24,551 223.45 22,26,24,551 (64) Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend ................................. 1,04,38,43,608 1,053.79 1,06,86,95,339 (65) Tata Mutual Fund - Floater Fund Daily Dividend ......................................................................... 39,45,46,624 395.95 35,05,04,484 (66) Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ..................................... 50,75,789 565.71 53,44,963 (67) UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily Dividend Option Reinvestment ................................................................................................................................ 23,36,801 233.73 27,29,416 (68) UTI Mutual Fund - Money Market Fund Daily Dividend Option Reinvestment ........................... 57,10,120 572.76 53,91,698 (69) UTI Mutual Fund - Floating Rate Fund Short Term Plan Institutional Daily Dividend Plan………… 11,23,526 112.44 8,49,345 (70) UTI Mutual Fund - Fixed Income Interval Fund Quarterly Interval Plan Series I Institutional Dividend Plan Reinvestment ......................................................................................................... 50,00,000 5.00 — (71) UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II Institutional Dividend Plan .............................................................................................................................................. 1,00,00,000 10.00 — (72) UTI Mutual Fund - Liquid Cash Plan Institutional Daily Income Option ...................................... 10,14,986 103.47 10,14,986 (73) UTI Mutual Fund - Money Market Fund Daily Dividend Option ................................................. 5,70,22,369 87.85 5,70,22,369(g) The following are the movements in Certificate of Deposits during the year : Acquired Sold Matured Face Value Total Value Face Value Face Value Rs. Crores Rs. Crores Rs. Crores Rs. Crores (1) State Bank of Travancore ....................................................................... 25.00 24.82 — — (2) Central Bank of India ............................................................................. 25.00 24.81 — — (3) State Bank of Hyderabad ....................................................................... 25.00 24.82 — — (4) State Bank of Mysore ............................................................................ 70.00 69.50 — — (5) State Bank of Patiala .............................................................................. 10.00 9.99 — 10.0098
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE VI Rupees crores 2010 2009Current Assets, Loans and Advances :(A) Inventories (at cost or net realisable value whichever is lower) : (i) Finished Products produced and purchased for sale ........................... 491.38 471.81 (ii) Contracts and Work-in-Progress ........................................................... 75.03 88.87 (iii) Manufactured Components ................................................................. 73.89 55.93 (iv) Raw Materials and Bought-out Components ....................................... 494.50 391.01 (v) Property Development Activity - Work-in-Progress [including completed flats and premises Rs. 6.32 crores (2009 : Rs. 6.32 crores)] ...................................................................... 6.32 6.32 (vi) Stores and Spares ................................................................................. 23.47 23.56 (vii) Tools ..................................................................................................... 24.19 23.17 1,188.78 1,060.67(B) Sundry Debtors (Unsecured) : Outstanding over six months : Considered good ........................................ 101.42 125.74 : Considered doubtful ................................... 113.25 72.12 214.67 197.86 Other Debts : Considered good ........................................ 1,156.66 917.91 : Considered doubtful ................................... — — 1,156.66 917.91 1,371.33 1,115.77 Less : Provision for Doubtful Debts ............................................................. 113.25 72.12 1,258.08 1,043.65-(C) Cash and Bank Balances : Cash, cheques and stamps on hand ........................................................... 221.17 354.39 Balances with Scheduled Banks : (i) On Current Account ............................................................................. 242.47 275.65 (ii) On Fixed Deposit Account @ ............................................................... 1,268.06 938.73 (iii) On Margin Account ............................................................................. * 0.09 1,510.53 1,214.47 @ [includes balance of unutilised monies raised by issue : Rs. 48.46 crores (2009 : Rs. 53.95 crores)] Balances with Non-Scheduled Banks [Note 6] : On Current Account .................................................................................... 11.53 5.57 1,743.23 1,574.43(D) Other Current Assets : Interest accrued on Investments .................................................................. 3.38 1.42 Others .......................................................................................................... 47.49 0.14 50.87 1.56(E) Loans and Advances [Note 7] : (Unsecured, considered good unless otherwise stated) : Advances and Loans to subsidiaries : Considered good ......................................................................................... 561.63 402.93 Considered doubtful .................................................................................... 5.99 24.99 567.62 427.92 Less : Provision for Doubtful Advances and Loans ...................................... 5.99 24.99- 561.63 402.93-497Bills of exchange, considered doubtful ....................................................... 1.02 1.02 Less : Provision for Doubtful bills ................................................................ 1.02 1.02 — — Advances recoverable in cash or in kind or for value to be received : Considered good ......................................................................................... 946.70 757.11 Considered doubtful .................................................................................... 57.86 48.64 1,004.56 805.75 Less : Provision for Doubtful Advances ....................................................... 57.86 48.64- 946.70 757.11 Payments towards Income-tax and Surtax [Note 18(d)] .............................. 292.04 221.67 Balances - Customs, Port Trust, Excise, etc. ................................................. 1.06 0.91 1,801.43 1,382.62 Total..... 6,042.39 5,062.93 * denotes amounts less than Rs. 50,000 99
  • CMYK SCHEDULE VII Rupees crores 2010 2009 Current Liabilities and Provisions : (A) Current Liabilities # : Acceptances 107.25 106.26 Sundry Creditors : (i) Total outstanding dues of micro and small enterprises [Note 8]... 5.99 5.99 (ii) Total outstanding dues of creditors other than micro and small enterprises [including Rs. 209.21 crores (2009 : Rs. 162.51 crores) being advance payments for which value has still to be given]….. 3,080.85 3,206.19 (iii) Dues to Subsidiaries ........................................................................ 173.25 124.62 3,260.09 3,336.80 Dividend payable ............................................................................. 6.89 6.19 Balances on Directors’ Current Accounts ........................................ 3.10 2.21 Interest accrued but not due on loans ........................................... 22.67 68.74 3,400.00 3,520.20 # There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund. (B) Provisions : Proposed Dividend .................................................................................. 549.52 278.83 Provision for Tax on Proposed Dividend ................................................. 74.23 33.23 Provision for diminution in value of long term investments .................. 266.43 201.02 Proision for premium payable on redemption of convertible bonds ...... 238.49 269.51 Provision for compensated absences ...................................................... 274.58 245.76 Provision for taxation ............................................................................. 173.63 81.76 Provision Others [Note 9] ....................................................................... 219.66 167.45 1,796.54 1,277.56 Total………… 5,196.54 4,797.76 SCHEDULE VIII Rupees crores 2010 2009 Miscellaneous Expenditure (to the extent not written off or adjusted) : (a) Finance Charges ..................................................................................... 4.12 11.69 (b) Separation and Other Costs ................................................................... — 0.86 Total………… 4.12 12.55 100
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE IX Rupees crores 2010 2009Income from Operations and Other Income :(A) Income from Operations : Income from services rendered .............................................................. 343.83 272.45 Scrap Sales ............................................................................................. 70.14 63.73 Octroi Refund ......................................................................................... 72.49 44.90 Other Operating Income ........................................................................ 77.60 63.54 Total......... 564.06 444.62(B) Other Income : Dividends on Investments in subsidiaries - Gross. .................................. 83.29 131.83 Dividends on other Investments - Gross - Non Trade [Note 10(a)] ........ 49.47 46.21 Profit on sale of Investments (Net) [Note 10(b)] .................................... 10.40 53.22 Miscellaneous Income ............................................................................ 56.19 39.08 Total........ 199.35 270.34SCHEDULE X Rupees crores 2010 2009Raw Materials, Finished and Semi-Finished Products :(A) (Increase)/Decrease in Stock of Finished Goods, Work-in-Progress and Manufactured Components : Opening Stock : (i) Finished Products produced and purchased for sale ...................... 471.81 579.43 (ii) Contracts and Work-in-Progress ...................................................... 88.87 53.10 (iii) Manufactured Components ............................................................ 55.93 48.15 616.61 680.68 Add : Stock Taken Over on Amalgamation : (i) Finished Products produced and purchased for sale ...................... — 80.61 (ii) Contracts and Work-in-Progress ...................................................... — 11.61 — 92.22 Less : Closing Stock : (i) Finished Products produced and purchased for sale ...................... 491.38 471.81 (ii) Contracts and Work-in-Progress ...................................................... 75.03 88.87 (iii) Manufactured Components ............................................................ 73.89 55.93 640.30 616.61 (Increase)/Decrease in Stock ................................................................... (23.69) 156.29(B) Consumption of Raw Materials and Bought-out Components : Opening Stock ........................................................................................ 391.01 351.95 Add : Purchases [including outside processing charges Rs. 281.83 crores (2009 : Rs. 224.06 crores)] ................................................ 11,799.05 8,756.79 12,190.06 9,108.74 Add : Stock Taken Over on Amalgamation ............................................ — 54.06 Less : Closing Stock ................................................................................ 494.50 391.01 11,695.56 8,771.79(C) Purchases of Finished Products for sale ................................................. 661.05 346.15 Total........ 12,332.92 9,274.23 101
  • SCHEDULE XI Rupees crores 2010 2009Personnel :Salaries, Wages, Bonus, etc. .......................................................................... 988.10 822.36Contribution to Provident and other funds ................................................... 66.89 58.54Gratuity ........................................................................................................ 31.31 50.13Welfare ........................................................................................................ 112.17 93.58 Total........ 1,198.47 1,024.61SCHEDULE XII Rupees crores 2010 2009Interest, Commitment and Finance Charges :On Term Loans and Debentures 148.91 124.60On Others (Net) 7.94 9.52 156.85 134.12Less : Interest Income :(i) Interest on Government Securities, Debentures and Bonds - Gross [Note 10(c)] 4.68 4.76(ii) Interest - Others - Gross [Note 10(d)] 124.36 84.10 129.04 88.86 Total........ 27.81 45.26SCHEDULE XIII Rupees crores 2010 2009Other Expenses :Stores consumed 75.27 66.89Tools consumed 29.68 23.88Power and Fuel 120.97 98.69Rent including lease rentals 47.01 49.41Rates and Taxes 16.53 12.68Insurance 11.72 11.95Repairs and Maintenance [Note 11] : Buildings ................................................................................................. 22.56 17.88 Machinery ............................................................................................... 96.92 75.36 Others ..................................................................................................... 33.10 28.29 152.58 121.53Advertisement 139.78 96.49Commission on sales/contracts (Net) 70.54 47.91Discount allowed 4.80 7.45Freight outward 269.73 215.47Sales Promotion Expenses 317.17 208.02Miscellaneous Expenses [Note 12] 824.88 779.85Directors’ fees 0.14 0.09Donations and contributions [Note 27] 9.35 5.97Loss on Fixed Assets sold/scrapped/written off (Net) 20.83 1.19Excess of cost over fair value of Current Investments (Net) (0.26) (1.57)Provision for doubtful debts/advances (Net) [Note 25] 51.02 31.44 Total........ 2,161.74 1,777.34102
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE XIVNotes on Accounts for the year ended 31st March, 20101. Significant Accounting Policies : (A) Basis of Accounting : The financial statements are prepared in accordance with the generally accepted accounting principles in India and comply with the Accounting Standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 and the relevant provisions thereof. (B) Fixed Assets : (a) (i) Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets. When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account. (ii) Land and Buildings, had been revalued as at 31st October, 1984 at depreciated replacement values on the basis of a valuation made by a firm of Chartered Surveyors and Valuers. The indices, if any, used are not stated in the valuation. (b) (i) Leasehold land is amortised over the period of the lease. (ii) Depreciation on assets is calculated on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except for : (1) certain items of Plant and Machinery individually costing more than Rs. 5,000 - over their useful lives (2 years, 3 years, 5 years or 7 years, as the case may be) as determined by the Company. (2) Cars and Vehicles - at 15% of cost. (iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation of Land and Buildings, transferred from the Revaluation Reserve. (C) Intangible Assets : Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are consumed. (a) Technical Knowhow : The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of purchase of the technology. (b) Development Expenditure : The expenditure incurred on technical services and other project/product related expenses are amortised over the estimated period of benefit, not exceeding five years. (c) Software Expenditure : The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is incurred. (D) Investments : Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of investments. Current investments are valued at the lower of cost and fair value, determined by category of investment. (E) Inventories : Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Raw materials and bought out components are valued at the lower of cost or net realisable value. Cost is determined on the basis of the weighted average method. Finished goods produced and purchased for sale, manufactured components and work-in-progress are carried at cost or net realisable value whichever is lower. Excise duty is included in the value of finished goods inventory. Stores, spares and tools other than obsolete and slow moving items are carried at cost. Obsolete and slow moving items are valued at cost or estimated realisable value, whichever is lower. Long term contracts in progress are valued at cost. (F) Miscellaneous Expenditure (to the extent not written off or adjusted) : Expenditure carried forward under this head is being amortised as follows : (a) Finance Charges : The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback, conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year. 103
  • (b) Separation and Other Costs : Special Payments/Pensions under Voluntary Retirement Schemes. The liability is amortised by the year ended March, 2010 from the month in which the liability is incurred. (G) Foreign Exchange Transactions : Transactions in foreign currencies (other than firm commitments and highly probable forecast transactions) are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the year-end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be. Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets and the balance accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ and amortised over the balance term of the long term monetary item or 31st March, 2011 whichever is earlier. Any premium or discount arising at the inception of a forward exchange contract is recognised as income or expense over the life of the contract, except in the case where the contract is designated as a cash flow hedge. (H) Derivative Instruments and Hedge Accounting : The Company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecast transactions. The Company does not hold derivative financial instruments for speculative purposes. The Company has applied to such contracts the hedge accounting principles set out in Accounting Standard 30 ‘Financial Instruments : Recognition and Measurement’ (AS 30) by marking them to market. Changes in the fair value of the contracts that are designated and effective as hedges of future cash flows are recognised directly in Hedging Reserve Account and the ineffective portion is recognised immediately in the Profit and Loss Account. (I) Revenue Recognition : Sales of products and services are recognised when the products are shipped or services rendered including export benefits thereon. Dividend from investments are recognised in the Profit and Loss Account when the right to receive payment is established. (J) Government Grants : The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by the Company for its manufacturing unit located in a developing region. In view of the uncertainty in respect of the collection of these grants, such grants are accounted for as and when the disbursements are received. (K) Employee Benefits : Defined Contribution Plan/Defined Benefit Plan/Long term Compensated Absences. Company’s contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit and Loss Account. Contributions to Provident Fund are made to a Trust administered by the Company and are charged to Profit and Loss Account as incurred. The Company is liable for the contribution and any shortfall in interest between the amount of interest realised by the investment and the interest payable to members at the rate declared by the Government of India. Company’s liability towards gratuity, long term compensated absences, post retirement medical benefit and post retirement housing allowance schemes are determined by independent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation. (L) Borrowing Costs : All borrowing costs are charged to the Profit and Loss Account except : (a) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to get ready for their intended use, which are capitalised as part of the cost of such assets. (b) Expenses incurred on raising long term borrowings are amortised over the period of borrowings. On early buyback, conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year. (M) Redemption Premium : Premium payable on redemption of Bonds/Debentures is fully provided and charged to Securities Premium Account (Net of Tax) in the year of issue. (N) Product Warranty : In respect of warranties given by the Company on sale of certain products, the estimated costs of these warranties are accrued at the time of sale. The estimates for accounting of warranties are reviewed and revisions are made as required.104
  • MAHINDRA & MAHINDRA LIMITED (O) Leases : The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns, computer hardware, etc.). The leasing arrangements, which are not non-cancellable, range between eleven months and five years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent. (P) Taxes on Income : Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to 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. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future tax income will be available against which such deferred tax assets can be realised. (Q) Excise duty recovered on sales is included in “Sales – Traded and Manufactured Goods”. Excise duty in respect of Finished Goods manufactured is shown separately as an item of expense and included in valuation of finished goods produced.2. Share Capital : Issued and Subscribed Capital include : (a) 3,33,618 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,66,809 Ordinary (Equity) Shares of Rs. 10 each) allotted as fully paid-up pursuant to a contract without payment having been received in cash. (b) 34,12,15,008 Ordinary (Equity) Shares of Rs. 5 each (2009 : 17,06,07,504 Ordinary (Equity) Shares of Rs. 10 each) allotted as fully paid-up by way of Bonus Shares by capitalisation of Securities Premium Account and Reserves. (c) 25,13,124 Ordinary (Equity) Shares of Rs. 5 each (2009 : 12,56,562 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with the Union Bank of India Limited. Of these, 27,474 Ordinary (Equity) Shares of Rs. 5 each (2009 : 13,737 Ordinary (Equity) Shares of Rs. 10 each) were issued on conversion of 41,211 8% Bonds. (d) 25,96,404 Ordinary (Equity) Shares of Rs. 5 each (2009 : 12,98,202 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with International Tractor Company of India Limited without payment having been received in cash. (e) 3,76,332 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,88,166 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Mahindra Spicer Limited without payment having been received in cash. (f) 19,46,400 Ordinary (Equity) Shares of Rs. 5 each (2009 : 9,73,200 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Mahindra Nissan Allwyn Limited without payment having been received in cash. (g) 2,56,55,104 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,28,27,552 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Mahindra Holdings and Finance Limited without payment having been received in cash. (h) 4,05,03,800 Ordinary (Equity) Shares of Rs. 5 each (2009 : 2,02,51,900 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Punjab Tractors Limited without payment having been received in cash.3. Reserves and Surplus : Rupees crores 2010 2009 (a) Movements during the year : (i) Securities Premium Account : Additions, arising out of exercise of options ......................................................... 2.07 1.02 Additions, arising out of issue of Ordinary (Equity) Shares to M&M ESOP Trust .................................................................................................... 71.40 — Premium on conversion of Debentures and Bonds ................................................ 690.60 — Reversal of Premium on buyback of Zero Coupon Convertible Bonds [Net of Tax of Rs. Nil (2009 : Rs. 5.07 crores)] ...................................................... — 9.84 Reduction of provision for premium on redemption of Zero Coupon Convertible Bonds [Net of Tax of Rs. 10.30 crores (2009 : Rs. Nil)] .................... 20.72 — 784.79 10.86 Applied, in accordance with Section 78 of the Companies Act, 1956, towards : Writing-off of share and bonds/debenture issue expenses [Net of Tax of Rs. 0.47 crores (2009 : Rs. 0.54 crores)] ............................................................... 5.88 4.95 Effect of tax rate change on amounts debited to Securities Premium Account .... 0.71 — Increase of provision for premium on redemption of Zero Coupon Convertible Bonds [Net of Tax of Rs. Nil (2009 : Rs. 20.20 crores )] ........................................ — 39.25 6.59 44.20 (ii) Revaluation Reserve : Adjusted against depreciation for the year [Note 1(B)(b)(iii)] ................................ 0.41 0.38 Adjusted in respect of revalued Buildings demolished .......................................... 0.01 — 0.42 0.38 105
  • (b) The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires that shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Company has reduced the Share Capital by Rs. 3.63 crores (2009 : Rs. 3.10 crores), Securities Premium Account by Rs. 84.29 crores (2009 : Rs. 15.20 crores) for the 72,63,296 shares of Rs. 5 each (2009 : 31,02,653 shares of Rs. 10 each) held by the trust pending transfer to the eligible employees. The Share Capital of the Company has also been reduced and the General Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for the 52,63,296 bonus shares of Rs. 5 each (2009 : 31,02,653 bonus shares of Rs. 10 each) issued by the Company in September, 2005 to the trust but not yet transferred by the trust to the employees. The above monies which are treated as advance received from it, is included under current liabilities. (c) Consequent to the announcement issued by The Institute of Chartered Accountants of India dated 29th March, 2008 in respect of forward exchange contracts and currency and interest rate swaps, the Company has applied the Hedge Accounting principles set out in the Accounting Standard (AS) 30 ‘Financial Instruments : Recognition and Measurement’. Accordingly, such contracts are marked to market and the loss aggregating Rs. 0.91 crores (Net of Tax of Rs. 0.45 crores) [2009 : Rs. 434.19 crores (Net of Tax of Rs. 223.57 crores)] arising consequently on contracts that were designated and effective as hedges of future cash flows has been recognized directly in the Hedging Reserve Account.4. Loans : (a) Debentures are redeemable as follows : (i) Rs. 200.00 crores on 9th January, 2011. (ii) Rs. 400.00 crores in three equal instalments from 12th December, 2013. (iii) Rs. 0.01 crores of 12.50% Debentures and Zero Interest Bonds on receipt of balance amount due on allotment. (b) (i) Debentures of Rs. 600.01 crores are secured by a pari-passu charge on immovable properties of the Company both present and future, subject to certain exclusions and are also secured by pari-passu charge on the movable properties of the Company including movable machinery, machinery spares, tools and accessories, both present and future. (ii) Loans and Advances on cash credit accounts from the Company’s bankers are secured by a first charge on a pari-passu basis on the whole of the current assets of the Company namely inventories, book debts, outstanding monies, receivables, claims, etc. both present and future. (c) The following amounts are repayable/convertible by 31st March, 2011 : (i) Debenture holders ...................................................................... : Rs. 200.00 crores (2009 : Rs. 700.00 crores) (ii) Foreign currency loans from Banks : (a) Secured ............................................................................... : Rs. Nil (2009 : Rs. 253.70 crores) (b) Unsecured ........................................................................... : Rs. 175.86 crores (2009 : Rs. 101.48 crores) (iii) Fixed Deposit holders .................................................................... : Rs. 78.15 crores (2009 : Rs. 4.88 crores) (iv) Rupee Loans : (a) from banks ......................................................................... : Rs. Nil (2009 : Rs. 80.00 crores) (b) from financial institutions .................................................. : Rs. 2.60 crores (2009 : Rs. Nil) (c) from others ......................................................................... : Rs. 8.08 crores (2009 : Rs. 10.13 crores) The Company had issued during the year ended 31st March, 2007, Zero Coupon Foreign Currency Convertible Bonds (Bonds 2011) aggregating US$ 200 million, at par. The bond holders have an option to convert these bonds into Equity Shares with full voting rights or Global Depository Receipts (GDRs) determined at an initial conversion price of Rs. 461.02 per share of Rs. 5 each (2009 : Rs. 922.04 per share of Rs. 10 each) with fixed exchange rate of conversion of Rs. 44.42 = US$ 1, at any time on or after 7th May, 2006 upto 7th March, 2011. The Bonds 2011 may be redeemed, in whole but not in part, at the option of the Company at any time on or after 13th April, 2008 subject to satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the bonds fall due for redemption on 14th April, 2011 at 128.03 per cent of their principal amount. Bonds 2011 of the face value of US$ 10.50 million have been bought back and cancelled in the previous year. Upto 31st March, 2010, none of the Bonds 2011 have been converted into equity shares/GDRs. The net proceeds of Rs. 48.46 crores, unutilised as at 31st March, 2010, is disclosed under Cash and Bank balances. The Company’s 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCD’s) having face value of Rs. 745 per FCD issued during the year ended 31st March, 2009, were compulsorily converted on 27th January, 2010 into 93,95,974 Ordinary (Equity) Shares of Rs. 10 each [before sub-division of the Ordinary (Equity) Shares] of the Company at a premium of Rs. 735 per share. Consequent to the conversion the Share Capital and Securities Premium Account of the Company have increased by Rs. 9.40 crores and Rs. 690.60 crores respectively.106
  • MAHINDRA & MAHINDRA LIMITED5. (a) Buildings include Rs. * crores (2009 : Rs. * crores) being the value of shares in co-operative housing societies. (b) Additions to fixed assets and capital work-in-progress include : (i) Interest capitalised during the year Rs. 26.56 crores (2009 : Rs. 15.63 crores). (ii) Foreign exchange fluctuation capitalised during the year Rs. 117.79 crores credit (Net) [2009 : Rs. 172.97 crores debit (Net)]. (c) (i) The depreciation charge for the year excludes : (a) An amount of Rs. 0.41 crores (2009 : Rs. 0.38 crores), representing depreciation on the increase due to revaluation of Land and Buildings transferred from the Revaluation Reserve. (b) An amount of Rs. 0.01 crores (2009 : Rs. Nil), representing depreciation on revalued buildings demolished during the year. (ii) The net credit to the Profit and Loss Account consequent to the above adjustments to the Revaluation Reserve is Rs. 0.42 crores (2009 : Rs. 0.38 crores).6. Cash and Bank Balances include balances lying with non-scheduled banks : In Current Account Rupees crores Bank Tejarat, Bank of Australia Bank of China The Municipal The Ahmednagar Tehran Co-op. Bank Ltd. Merchant’s Co-op. Bank Ltd. Balance as at 31st March, 2010 ................ * 6.39 * 5.14 * Balance as at 31st March, 2009 ................ * 3.34 0.09 2.13 * Maximum balance during the year ........... * 11.91 0.59 5.68 * Maximum balance during the previous year * 9.51 1.47 3.23 *7. Loans and Advances include : (a) Fixed/Call deposits with/loans to limited companies Rs. 525.72 crores (2009 : Rs. 411.14 crores) including Rs. 519.23 crores (2009 : Rs. 404.65 crores) with/to subsidiaries. (b) Amounts paid towards joint development of property Rs. Nil (2009 : Rs.1.54 crores).8. Micro, Small and Medium enterprises have been identified by the Company on the basis of the information available. Total outstanding dues of Micro and Small enterprises, which are outstanding for more than the stipulated period are given below : Rupees crores 2010 2009 (a) Dues remaining unpaid as at 31st March Principal .............................................................................................................. 0.89 2.42 Interest on the above ......................................................................................... 0.07 0.05 (b) Interest paid in terms of Section 16 of the Act, along with the amount of payment made to the supplier beyond the appointed day during the year Principal paid beyond the appointed date ......................................................... 7.39 18.12 Interest paid in terms of Section 16 of the Act ................................................. — 0.03 (c) Amount of interest due and payable for the period of delay on payments made beyond the appointed day during the year ............................................. 0.11 0.15 (d) Further interest due and payable even in the succeeding years, until such date when the interest due as above are actually paid to the small enterprises ....... 0.32 0.13 (e) Amount of interest accrued and remaining unpaid as at 31st March ............... 0.50 0.329. (a) Provision - Others Rs. 219.66 crores (2009 : Rs. 167.45 crores) includes provision for contingencies Rs. 3.58 crores (2009 : Rs. 8.25 crores), provision for warranty Rs. 179.61 crores (2009 : Rs. 137.45 crores), provision for post retirement medical benefits Rs. 9.65 crores (2009 : Rs. 4.84 crores), provision for post retirement housing allowance Rs. 10.99 crores (2009 : Rs. Nil) and provision for diminution in value of certain assets substantially retired from active use Rs. 15.83 crores (2009 : Rs. 16.89 crores). Provision for contingencies is in respect of labour demands under negotiations at certain locations of the Company. Provision for warranties relates to warranty provision made in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under a free warranty period ranging from 6 months to 3 years. * denotes amounts less than Rs. 50,000 107
  • (b) The movement in provisions for warranty, contingency and retired assets is as follows : Rupees crores Warranty Contingency Retired assets 2010 2009 2010 2009 2010 2009 st Balance as at 1 April ................................................... 137.45 106.42 8.25 8.16 16.89 17.01 Add : On Amalgamation during the year ..................... — 0.25 — — — — Add : Provision made during the year .......................... 105.59 85.05 3.58 5.41 — — Less : Utilisation during the year ................................... 63.43 54.27 8.25 5.32 1.06 0.12 Balance as at 31st March ............................................... 179.61 137.45 3.58 8.25 15.83 16.8910. (a) Dividends on other investments include Rs. 45.56 crores (2009 : Rs. 44.89 crores) in respect of current investments and Rs. 3.91 crores (2009 : Rs. 1.32 crores) in respect of long term investments. (b) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 1.53 crores (2009 : Rs. 14.73 crores), and profit on disposal of long term investments (Net) Rs. 8.87 crores (2009 : Rs. 38.49 crores). (c) Interest on Government Securities, Debentures and Bonds includes tax deducted at source Rs. 0.05 crores (2009 : Rs. 0.11 crores) and comprise Rs. 0.50 crores (2009 : Rs. 0.50 crores) and Rs. 4.18 crores (2009 : Rs. 4.26 crores) in respect of long term and current investments respectively. (d) Interest received - others includes tax deducted at source Rs. 12.21 crores (2009 : Rs. 15.11 crores).11. Repairs and Maintenance includes machinery spares consumed Rs. 33.85 crores (2009 : Rs. 26.25 crores) but does not include items included under Consumption of Raw Materials and Bought-out Components and amounts charged to salaries and wages (amounts not ascertained).12. Miscellaneous Expenses include : (a) Amounts paid/payable to Auditors (Net of service tax where applicable) : Rupees crores Statutory Auditors Cost Auditors (i) Audit Fees ......................................................................................................................... 1.24 0.03 1.08 0.02 (ii) Company Law matters ...................................................................................................... * — * — (iii) Other Services ................................................................................................................... 0.66 — 0.63 — (iv) Reimbursement of expenses.............................................................. ............................. 0.01 — 0.05 — 1.91 0.03 1.76 0.02 (b) An amount of Rs. 1.44 crores (2009 : Rs. 0.96 crores) payable as commission to non-wholetime Directors – Note 13 and Schedule XV.13. Managerial remuneration for Directors included in the Profit and Loss Account is Rs. 8.19 crores (2009 : Rs. 6.29 crores) including Directors’ fees of Rs. 0.14 crores (2009 : Rs. 0.09 crores), perquisites Rs. 1.68 crores (2009 : Rs. 1.27 crores) and commission Rs. 4.53 crores (2009 : Rs. 3.16 crores) (See Schedule XV) and excluding charge for gratuity, provision for leave encashment and post retirement medical benefit as separate actuarial valuation figures are not available. The above perquisites include amortisation of Employees Stock Options amounting to Rs. 0.06 crores (2009 : Rs. 0.09 crores).14. Employee Benefits : General description of defined benefit plans : Gratuity The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund. * denotes amounts less than Rs. 50,000108
  • MAHINDRA & MAHINDRA LIMITEDPost retirement medicalThe Company provides post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto aspecified age through mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as wellas the amount of medical cover purchased is determined by the grade of the employee at the time of retirement.Post retirement housing allowanceThe Company operates a post retirement benefit scheme for a certain cadre of employees in which a monthly allowance determined on the basisof the last drawn basic salary at the time of retirement, is paid to the retiring employee in lieu of housing.Defined benefit plans – as per actuarial valuation on 31st March, 2010 Rupees Crores Funded Plan Unfunded Plans Gratuity Post retirement Post retirement medical housing allowance 2010 2009 2010 2009 2010 2009 I. Expense recognised in the Statement of Profit and Loss Account for the year ended 31st March 1. Current service cost 19.17 16.59 0.37 0.22 1.50 — 2. Interest cost 23.91 18.30 0.40 0.24 0.84 — 3. Expected return on plan assets (16.23) (18.16) — — — — 4. Actuarial (Gain)/Loss (7.69) 33.40 4.32 1.81 (1.77) — 5. Past service cost 12.15 — — — — — 6. Total expense included in Personnel (Schedules XI) 31.31 50.13 5.09 2.27 0.57 — 7. Actual return on plan assets 20.75 18.16 — — — — II. Net Asset/(Liability) recognised in the Balance Sheet as at 31st March 1. Present value of defined benefit obligation as at 31st March 334.20 300.61 9.65 4.84 10.99 — 2. Fair value of plan assets as at 31st March 266.10 206.14 — — — — st 3. Net Asset/(Liability) as at 31 March (68.10) (94.47) (9.65) (4.84) (10.99) — III. Change in the obligation during the year ended 31st March 1. Present value of defined benefit obligation at the beginning of the year 300.61 201.76 4.84 2.79 10.42 — 2. Addition on account of amalgamation — 40.90 — — — — 3. Current service cost 19.17 16.59 0.37 0.22 1.50 — 4. Interest cost 23.91 18.30 0.40 0.24 0.84 — 5. Actuarial (Gain)/Loss (3.17) 33.40 4.32 1.81 (1.77) — 6. Past service cost 12.15 — — — — — 7. Benefit payments (18.47) (10.34) (0.28) (0.22) — — 8. Present value of defined benefit obligation at the end of the year 334.20 300.61 9.65 4.84 10.99 — IV. Change in fair value of assets during the year ended 31st March 1. Fair value of plan assets at the beginning of the year 206.14 163.58 — — — — 2. Addition on account of amalgamation — 29.16 — — — — 3. Expected return on plan assets 16.23 18.16 — — — — 4. Actuarial Gain/(Loss) 4.52 — — — — — 5. Contributions by employer (including benefit payments recoverable) 57.68 5.58 0.28 0.22 — — 6. Benefit payments (18.47) (10.34) (0.28) (0.22) — — 7. Fair value of plan assets at the end of the year 266.10 206.14 — — — — 8. Actual return on plan assets 20.75 18.16 — — — — 109
  • Rupees Crores Funded Plan Unfunded Plans Gratuity Post retirement Post retirement medical housing allowance 2010 2009 2010 2009 2010 2009 V. The major categories of plan assets as a percentage of total plan Insurer managed funds 100% 100% — — — — VI. Actuarial assumptions 1. Discount rate 8.45% 7.75% 8.45% 7.75% 8.45% — 2. Expected rate of return on plan assets 7.50% 7.50% — — — — 3. Attrition rate 5.00% 5.00% 5.00% 5.00% — — 4. Medical premium inflation — — 5.00% 5.00% — — VII. Effect of one percentage point change in the One percentage point increase in One percentage point decrease assumed medical inflation rate medical inflation rates in medical inflation rates 2010 2009 2010 2009 1. Effect on the aggregate service and interest cost of post employment medical benefits 0.25 0.14 (0.20) (0.11) 2. Effect on the accumulated post employment medical benefits obligations 1.36 0.72 (1.10) (0.60) VIII. Experience Adjustments Period ended 2010 2009 2008 2007 Gratuity 1. Defined benefit obligation 334.20 300.61 201.76 184.43 2. Fair value of plan assets 266.10 206.14 163.58 127.04 3. Surplus/(Deficit) (68.10) (94.47) (38.18) (57.39) 4. Experience adjustment on plan liabilities [(Gain)/Loss] 7.93 5.87 4.55 — 5. Experience adjustment on plan assets [Gain/(Loss)] 4.44 — — — Post retirement medical 1. Defined benefit obligation 9.65 4.84 2.79 3.22 2. Plan assets — — — — 3. Surplus/(Deficit) (9.65) (4.84) (2.79) (3.22) 4. Experience adjustment on plan liabilities [(Gain)/Loss] 5.21 1.24 (0.55) 0.07 Post retirement housing allowance 1. Defined benefit obligation 10.99 — — — 2. Plan assets — — — — 3. Surplus/(Deficit) (10.99) — — — 4. Experience adjustment on plan liabilities [(Gain)/Loss] 0.15 — — — The Payment of Gratuity (Amendment) Bill 2010 amending the maximum gratuity payable under The Payment of Gratuity Act 1972 from Rs. 3.50 lakhs to Rs. 10.00 lakhs has been passed by both houses of Parliament in May, 2010 and will come into effect from a date to be notified by the Central Government. Since the said Bill has been substantively enacted, the Company has given effect to the same in valuing its actuarial liability for gratuity as at 31st March, 2010. Due to this change in the maximum limit under the Act, the profit after tax for the current year is lower by Rs. 8.02 crores. On account of defined contribution plans the Company’s contribution to Provident Fund and Superannuation Fund aggregating Rs. 66.15 crores (2009 : Rs. 57.78 crores) has been recognized in the statement of Profit and Loss Account under the head personnel. The post retirement housing allowance scheme of the Company for select cadre of employees has been introduced in the current year and the opening liability as at 1st April, 2009 of Rs. 10.42 crores has been recognized as an expense in the current year.110
  • MAHINDRA & MAHINDRA LIMITED The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the estimated term of obligation. The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.15. The Company has allotted 55,24,219 and 10,00,000 Ordinary (Equity) Shares of Rs. 10 each in the years ended 31st March, 2002 and 31st March, 2010 respectively to the Mahindra & Mahindra Employees’ Stock Option Trust set up by the Company. The trust holds these shares for the benefit of the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee. In respect of options granted prior to 29th September, 2006, the equity settled options vest one year from the date of the grant and are exercisable on specified dates in 3 tranches within a period of 5 years from the date of vesting. The number of options exercisable in each tranche is between the minimum of 100 and a maximum of 1/3rd of the options vested, except in case of the last date of exercise, where the employee can exercise all the options vested but not exercised till that date. Options granted on or after 29th September, 2006 vest in 4 equal instalments on the expiry of 12 Months, 24 Months, 36 Months and 48 Months from the date of grant. The options may be exercised on the date of vesting and on specified dates within 5 years from the date of vesting. Number of vested options exercisable on each specified date is subject to a minimum of 50 or number of options vested whichever is lower, except in case of the last date of exercise, where the employee can exercise all the options vested but not exercised till that date. The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method. Summary of Stock Options No. of stock options Weighted average exercise price (Rs.) Options outstanding on 1st April, 2009 56,15,921 556.55 Options granted during the year 4,01,770 724.00 Options forfeited/lapsed during the year 1,58,167 585.81 Options exercised during the year 9,42,009 413.71 Additional options pursuant to sub-division of shares 49,17,515 298.33 st Options outstanding on 31 March, 2010 98,35,030 298.33 st Options vested but not exercised on 31 March, 2010 35,38,627 300.57 Average share price on the date of exercise of the options are as under Date of exercise Average share price (Rs.) th 11 June, 2009 790.70 th 14 June, 2009 803.80 st 31 July, 2009 863.65 th 13 August, 2009 793.25 th 29 September, 2009 858.85 th 26 October, 2009 928.90 Information in respect of options outstanding as at 31st March, 2010. Range of exercise price Number of options Weighted average remaining life Rs. 107.50 - Rs. 113.50 5,29,662 1.14 yrs Rs. 180.50 35,484 1.57 yrs Rs. 308.00 – Rs. 310.00 12,47,066 3.86 yrs Rs. 381.00 29,91,922 4.80 yrs Rs. 250.00 42,69,056 6.11 yrs Rs. 362.00 7,61,840 7.09 yrs The fair value of options granted during the year on 4th November, 2009 is Rs. 414.84 per share. 111
  • The fair value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows : Grant dated 4-Nov-09 Risk free interest rate 6.41% Expected life 2.50 Years Expected volatility 53.56% Expected dividend yield 2.24% Exercise price (Rs.) 724.00 Stock price (Rs.) 929.50 In respect of Options granted under the Employee Stock Option plan, in accordance with guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares. Consequently, salaries, wages, bonus, etc. includes Rs. 3.54 crores (2009 : Rs. 3.57 crores) being the amortisation of deferred employee compensation, after adjusting for reversals on account of options lapsed. Had the Company adopted fair value method in respect of options granted on or after 1st April, 2005, the employee compensation cost would have been higher by Rs. 26.44 crores, Profit after tax lower by Rs. 26.44 crores and the basic and diluted earning per share would have been lower by Rs. 0.48 & Rs. 0.44 respectively.16. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March, 2010 is Rs. 781.83 crores (2009 : Rs. 756.32 crores).17. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) by its order dated 7th December, 2009 has rejected the Company’s appeal against the order dated 30th March, 2005 passed by the Commissioner of Central Excise (Adjudication), Navi Mumbai confirming the demand made on the Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of Company’s Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as 10-seater attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles could not be classified as 10-seater as they did not fulfil the requirement of 10-seater vehicles, as provided under the Motor Vehicles Act, 1988 (MVA) and Maharashtra Motor Vehicles Rules, 1989 (MMVR) and as such attracted a higher rate of excise duty. In earlier collateral proceedings on this issue, the CESTAT had by an Order dated 19th July, 2005 settled the controversy in the Company’s favour. The CESTAT had accepted the Company’s submission that MVA and MMVR could not be referred to for determining the classification for the purpose of levy of excise duty and rejected the Department’s appeal against the Order of the Collector, Central Excise classifying the Commander range of vehicles as 10-seater. The Department’s appeal against the CESTAT Order dated 19th July, 2005 is pending before the Supreme Court of India but the operation of the Order has not been stayed. The Company has filed an appeal against the aforesaid order dated 7th December, 2009 inter alia, on the grounds that the MVA and MMVR cannot be referred to for the purpose of determining the excise classification, as has been repeatedly held by various judicial fora, including the Supreme Court and particularly by CESTAT vide its order dated 19th July, 2005 in the Company’s own case referred to above. Without prejudice to the grounds raised in the appeal, the Company has paid an amount of Rs. 40.00 crores in January, 2010. Pending admission of the Company’s appeal, the Supreme Court has passed an interim order staying the recovery of the balance amount till further orders. In another case relating to Armada range of vehicles manufactured during the years 1992 to 1996, by the Company at its Nashik facility, the Commissioner of Central Excise, Nashik passed an order dated 20th March, 2006 confirming a demand of Rs. 24.75 crores, on the same grounds as adopted for Commander range of vehicles. The CESTAT has given an unconditional stay against this order, which is yet to be finally heard by the Tribunal. The Company strongly believes, based on legal advise it has received, that the CESTAT order dated 7th December, 2009 which is under appeal in the Supreme Court is not sustainable in law and hence the Company has a very good chance of succeeding in the matter. As such, the Company does not expect any liability on this account. However, in view of the CESTAT order, the Company has reflected the above amount aggregating Rs. 328.86 crores and the interest of Rs. 168.05 crores accrued on the same upto 31st March, 2010, as a Contingent Liability in the Accounts and the same is included in the amounts disclosed under Note 18 (b)(i).18. Contingent Liability : (a) Guarantees given by the Company : Rupees crores Amount of guarantees Outstanding amounts against the guarantees 2010 2009 2010 2009 For employees 1.05 1.05 * * For other companies 327.61 168.46 286.91 163.67 * denotes amounts less than Rs. 50,000112
  • MAHINDRA & MAHINDRA LIMITED (b) Claims against the Company not acknowledged as debts comprise of : (i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company relating to issues of applicability and classification aggregating Rs. 968.22 crores (Net of Tax : Rs. 698.04 crores) [2009 : Rs. 386.32 crores (Net of Tax : Rs. 274.20 crores)]. (ii) Other matters (excluding claims where amounts are not ascertainable) : Rs. 17.78 crores (Net of Tax : Rs. 12.41 crores) [2009 : Rs. 17.37 crores (Net of Tax : Rs. 12.14 crores)]. (iii) Claims on capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores). (c) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2009 : Rs. 10.50 crores). (d) Taxation matters : (i) Demands against the Company not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which the Company is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed : - Income-tax : Rs. 181.07 crores (2009 : Rs. 168.25 crores). (ii) Items in respect of which the Company has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed : - Income-tax matters : Rs. 70.58 crores (2009 : Rs. 58.63 crores). - Surtax matters : Rs. 0.13 crores (2009 : Rs. 0.13 crores). (e) Bills discounted not matured Rs. Nil (2009 : Rs. 59.55 crores).19. Research and Development expenditure : (a) In recognised Research and Development units : (i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate Rs. 248.25 crores (2009 : Rs. 220.09 crores) [excluding depreciation and amortisation of Rs. 81.03 crores (2009 : Rs. 56.19 crores)]. (ii) Development Expenditure incurred during the year Rs. 131.28 crores (2009 : Rs. 128.94 crores). (iii) Capitalisation of assets Rs. 41.64 crores (2009 : Rs. 15.64 crores). (b) In other units : (i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate Rs. 25.89 crores (2009 : Rs. 18.69 crores) [excluding depreciation and amortisation of Rs. 2.25 crores (2009 : Rs. 1.50 crores)]. (ii) Development Expenditure incurred during the year Rs. 38.59 crores (2009 : Rs. 7.50 crores). (iii) Capitalisation of assets Rs. 4.34 crores (2009 : Rs. 3.56 crores).20. The net difference in foreign exchange loss debited to the Profit and Loss Account is Rs. 113.48 crores (2009 : Rs. 237.20 crores).21. Exceptional items of Rs. 90.75 crores (2009 : Rs. 10.27 crores) comprise of : (a) Profit on sale of certain long term investments Rs. 90.75 crores (2009 : Rs. Nil). (b) Surplus on transfer of Logistics business Rs. Nil (2009 : Rs. 10.27 crores).22. The components of Deferred Tax Liability and Assets as at 31st March, 2010 are as under : Rupees crores 2010 2009 Deferred Tax Liability : (i) On fiscal allowances on fixed assets 296.12 322.06 (ii) Others 126.38 71.32 422.50 393.38 Deferred Tax Assets : (i) On Provision for compensated absences 86.41 78.62 (ii) On Provision for doubtful debts/advances 36.54 27.33 (iii) On Premium on redemption of Zero Coupon Convertible Bonds 18.10 40.08 (iv) On Provision for employee benefits 13.69 17.61 (v) Loss on mark to market of forward contracts 0.45 223.57 (vi) Others 26.98 24.44 182.17 411.65 Net Deferred Tax (Asset)/Liability 240.33 (18.27) 113
  • 23. Scheme of Amalgamations : (a) In the previous year, pursuant to the Scheme of Amalgamation (the scheme) as approved by the shareholders of the Company and subsequently sanctioned by the Honourable High Court of Bombay on 18th July, 2008, the entire business and all the assets and liabilities, duties and obligations of Mahindra Holdings and Finance Limited (MHFL) (an erstwhile wholly owned subsidiary of the Company) were transferred to and vested in the Company, with effect from 1st February, 2008. The excess of the value of the net assets of MHFL over the face value of the shares allotted, the face value of the shares cancelled and the amount of General Reserve and Profit and Loss Account of MHFL transferred to the Company was credited to the existing Investment Fluctuation Reserve Account. (b) In the previous year, pursuant to the Scheme of Amalgamation (the scheme) as approved by the shareholders of the Company and subsequently sanctioned by the Honourable High Court of Bombay and the Honourable High Court of Punjab & Haryana on 9th January, 2009 and 16th January, 2009 respectively, the entire business and all the assets and liabilities, duties and obligations of Punjab Tractors Limited (PTL) (an erstwhile subsidiary of the Company) were transferred to and vested in the Company, with effect from 1st August, 2008. The excess of the value of the net assets of PTL over the face value of the shares allotted was credited to the existing Investment Fluctuation Reserve Account. (c) Accordingly, the figures for the current year are not strictly comparable with that of the previous year.24. Earnings per Share : 2010 2009 Amount used as the numerator – Balance of profit (Rupees crores) ............................................... 2087.75 867.51 Effect on earnings of convertible bonds/debentures (Gain)/Loss (Rupees crores) ............................ 32.64 17.29 Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. 2120.39 884.80 Weighted average number of equity shares used in computing basic earnings per share ............. 54,98,38,769 54,50,45,894 Effect of potential Ordinary (Equity) Shares on conversion of bonds/debentures ........................... 4,56,31,897 4,44,38,826 Weighted average number of equity shares used in computing diluted earnings per share .......... 59,54,70,666 58,94,84,720 Basic Earnings per share (Rs.) (Face value of Rs. 5 per share) .......................................................... 37.97 15.92 Diluted Earnings per share (Rs.) ........................................................................................................ 35.61 15.01 In the computation of earnings per share for the periods above, the Company has given effect to the sub-division in March, 2010 of the Company’s Ordinary (Equity) Share of Rs. 10 each into 2 Ordinary (Equity) Shares of Rs. 5 each.25. Provision for doubtful debts and advances for the year comprises : Rupees crores 2010 2009 Provision for doubtful debts and advances made during the year (Net) [including Rs. Nil (2009 : Rs. 19.52 crores) pursuant to the schemes of arrangement/amalgamation approved by the Hon’ble High Courts] ............................................................................................. 51.02 50.96 Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of arrangement/amalgamation .................................................................................................... — 19.52 Total .............................................................................................................................................. 51.02 31.4426. Provision for diminution in the value of long term investments for the year comprises : Rupees crores 2010 2009 Provision for diminution in value of investments, made during the year (Net) [including provision of Rs. 70.00 crores (2009 : Rs. 154.38 crores) pursuant to the schemes of arrangement/amalgamation approved by the Hon’ble High Courts] ............................ 70.00 154.38 Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of arrangement/amalgamation .................................................................................................... 70.00 154.38 Total .................................................................................................................................................. — —114
  • MAHINDRA & MAHINDRA LIMITED27. Donations and contributions include contributions to : (a) Indian National Congress : Rs. 1.00 crore (2009 : Rs. Nil) (b) Bhartiya Janata Party : Rs. 1.00 crore (2009 : Rs. Nil) (c) Shiv Sena : Rs. 0.50 crores (2009 : Rs. Nil) (d) Nationalist Congress Party : Rs. 0.50 crores (2009 : Rs. Nil) (e) Bihar Pradesh Janata Dal (United) : Rs. 0.25 crores (2009 : Rs. Nil)28. The outstanding derivative instruments as on 31st March, 2010 : The Company has taken foreign exchange contracts amounting to US$ 54.80 crores comprising Forward Contracts US$ 32.10 crores (2009 : US$ 60.30 crores), Range Forwards US$ 7.20 crores (2009 : US$ 10.20 crores) and US$ 15.50 crores (2009 : US$ 33.20 crores) of derivative structures in the form of ‘strips’. The foreign currency exposures not hedged by derivative instrument or otherwise as on 31st March, 2010 are – Receivables of ZAR 4.67 crores, EUR 0.58 crores, AUD 0.39 crores, GBP 0.27 crores, NZD 0.02 crores, CHF * crores and Payables of JPY 2.20 crores, US$ 1.33 crores, SEK 0.03 crores, SAR 0.01 crores, SGD * crores (2009 : Receivables of AUD 0.38 crores, RMB 0.01 crores, SEK * crores and Payables of US$ 2.71 crores, EUR 0.03 crores, GBP * crores, CHF * crores, JPY 2.38 crores, ZAR * crores, SAR 0.04 crores, SGD * crores, DKK * crores, NZD * crores ). The Company has outstanding borrowings of JPY 1,126.44 crores (2009 : JPY 1,126.44 crores and US$ 9.45 crores) as Foreign Currency Borrowings. The borrowing of JPY 450.24 crores (2009 : JPY 450.24 crores) has been completely hedged using cross currency swap structure fixing the liability into a full fledged rupee liability. The borrowing of JPY 676.20 crores (2009 : JPY 676.20 crores) has been fixed to a US$ liability using a cross currency swap structure. The borrowing of US$ Nil (2009 : US$ 2.00 crores) has been hedged using a forward cover. The Company had made an issue of US$ 20.00 crores in the form of Foreign Currency Convertible Bonds in April, 2006. Out of this issue, Bonds of value US$ 18.95 crores (2009 : US$ 18.95 crores) are outstanding and have not been hedged. * denotes amounts less than 50,000 of respective currency.29. Related Party Disclosure : (a) Related parties where control exist : (i) Subsidiaries : Sl. No. Name of the Company Sl. No. Name of the Company 1. Mahindra Engineering and Chemical Products Limited 30. Bristlecone Limited 2. Mahindra Logisoft Business Solutions Limited 31. Bristlecone Inc. (upto 22nd March, 2010) 32. Bristlecone (UK) Limited 3. Mahindra First Choice Wheels Limited 33. Bristlecone India Limited 4. Mahindra USA Inc. 34. Bristlecone (Singapore) Pte. Limited 5. Mahindra Gujarat Tractor Limited 35. Bristlecone GmbH 6. Mahindra (China) Tractor Company Limited 36. Mahindra Renault Private Limited 7. Mahindra Shubhlabh Services Limited 37. Mahindra Navistar Automotives Limited 8. Mahindra & Mahindra South Africa (Proprietary) Limited 38. Stokes Group Limited 9. Mahindra Europe s.r.l. 39. Jensand Limited 10. Mahindra Engineering Services Limited 40. Stokes Forgings Limited 11. Mahindra Gears & Transmissions Private Limited (formerly 41. Stokes Forgings Dudley Limited known as Mahindra SAR Transmission Private Limited) 42. Mahindra Engineering Services (Europe) Limited 12. Mahindra Overseas Investment Company (Mauritius) Limited 43. Mahindra Engineering GmbH (formerly known as Plexion 13. Mahindra-BT Investment Company (Mauritius) Limited Technologies GmbH) 14. Mahindra Intertrade Limited 44. Mahindra Technologies Inc. (upto 10th March, 2010) 15. Mahindra Steel Service Centre Limited 45. Mahindra Lifespace Developers Limited 16. Mahindra Middleeast Electrical Steel Service Centre (FZC) 46. Mahindra World City (Jaipur) Limited 17. Mahindra Consulting Engineers Limited 47. Mahindra World City Developers Limited 18. Mahindra Holidays & Resorts India Limited 48. Mahindra Infrastructure Developers Limited 19. Mahindra Holidays and Resorts USA Inc. 49. Mahindra Integrated Township Limited 20. NBS International Limited 50. Mahindra World City (Maharashtra) Limited 21. Mahindra Ugine Steel Company Limited 51. PT Tech Mahindra Indonesia (upto 22nd March, 2010) 22. Mahindra & Mahindra Financial Services Limited 52. Mahindra Forgings International Limited 23. Mahindra Insurance Brokers Limited 53. CanvasM Technologies Limited (upto 22nd March, 2010) 24. Tech Mahindra Limited (upto 22nd March, 2010) 54. CanvasM (Americas) Inc. (upto 22nd March, 2010) 25. Tech Mahindra (Americas) Inc. (upto 22nd March, 2010) 55. Mahindra Forgings Europe AG 26. Tech Mahindra GmbH (upto 22nd March, 2010) 56. Gesenkschmiede Schneider GmbH 27. Tech Mahindra (Singapore) Pte. Limited 57. JECO-Jellinghaus GmbH (upto 22nd March, 2010) 58. Falkenroth Umformtechnik GmbH 28. Tech Mahindra (Thailand) Limited (upto 22nd March, 2010) 59. Mahindra Vehicle Manufacturers Limited 29. Tech Mahindra Foundation (upto 22nd March, 2010) 60. Schöneweiss & Co. GmbH 115
  • Sl. No. Name of the Company Sl. No. Name of the Company 61. MHR Hotel Management GmbH 87. Engines Engineering s.r.l. 62. Mahindra Forgings Limited 88. EFF Engineering s.r.l. 63. Mahindra Rural Housing Finance Limited 89. ID-EE s.r.l. 64. Mahindra Hotels and Residences India Limited 90. Mahindra Business & Consulting Services Private Limited 65. Mahindra Forgings Global Limited (formerly known as Mahindra IT Consulting Private Limited) 66. Bristlecone (Malaysia) SDN.BHD 91. Mahindra Automotive Australia Pty. Ltd. 67. Tech Mahindra (Malaysia) SDN.BHD (upto 22nd March, 2010) 92. Mahindra Two Wheelers Limited 68. Mahindra Castings Limited (formerly known as Mahindra 93. Mahindra United Football Club Private Limited Castings Private Limited) 94. Defence Land Systems India Private Limited (formerly known 69. Knowledge Township Limited (formerly known as Mahindra as Mahindra Defence Land Systems Private Limited) Knowledge City Limited) 95. Mahindra Yeuda (Yancheng) Tractor Company Limited 70. Mahindra Holdings Limited 96. Venturbay Consultants Private Limited (upto 22nd March, 71. Mahindra Logistics Limited 2010) 72. Tech Mahindra (Beijing) IT Services Limited 97. Mahindra Metal One Steel Service Centre Limited (upto 22nd March, 2010) (w.e.f. 11th June, 2009) 73. Mahindra Navistar Engines Private Limited 98. Raigad Industrial & Business Park Limited 74. Mahindra Residential Developers Limited (w.e.f. 18th June, 2009) 75. Mahindra Graphic Research Design s.r.l. 99. Retail Initiative Holdings Limited (w.e.f. 1st July, 2009) 76. Mahindra Aerospace Private Limited 100. Mahindra Retail Private Limited (w.e.f. 1st July, 2009) 77. Heritage Bird (M) SDN.BHD 101. Mahindra Technologies Services Inc. (w.e.f. 4th June, 2009) 78. Mahindra First Choice Services Limited 102. Tech Mahindra (Nigeria) Limited 79. Mahindra Bebanco Developers Limited (from 18th August, 2009 to 22nd March, 2010) 80. Mahindra Gears Global Limited 103. Mahindra Punjab Tractors Private Limited 81. Mahindra Gears Cyprus Limited (w.e.f. 9th October, 2009) 82. Mahindra Gears International Limited 104. Tech Mahindra Bahrain Limited S.P.C. 83. Metalcastello s.r.l. (formerly known as (w.e.f. 3rd November, 2009 & upto 22nd March, 2010) Mahindra Metalcastello s.r.l.) 105. Mahindra EcoNova Private Limited (w.e.f. 2nd January, 2010) 84. Industrial Township (Maharashtra) Limited (formerly known 106. Mahindra Conveyor Systems Private Limited as Mahindra Industrial Township Limited) (w.e.f. 4th January, 2010) 85. Metalcastello S.p.A (upto 31st December, 2009) 107. BAH Hotelanlagen AG (w.e.f. 11th January, 2010) 86. Crest Geartech Private Limited(b) Other parties with whom transactions have taken place during the year. (i) Associates : Sl. No. Name of the Company Sl. No. Name of the Company 1. Mahindra Composites Limited 5. Swaraj Automotives Limited 2. Mahindra Construction Company Limited 6. Swaraj Engines Limited 3. Owens Cornings (India) Limited 7. Mahindra Water Utilities Limited 4. Satyam Computer Services Limited (from 5th May, 2009 to 22nd March, 2010) (ii) Joint Venture : Sl. No. Name of the Company 1. Mahindra Sona Limited 2. Tech Mahindra Limited (w.e.f 23rd March, 2010) (iii) Key Management Personnel : Vice Chairman and Managing Director ................................... Mr. Anand Mahindra Executive Directors ................................................................... Mr. B.N. Doshi Mr. A.K. Nanda (iv) Welfare Funds : Sl. No. Name of the Fund 1. Mahindra World School Education Trust 2. M&M Benefit Trust 3. M&M Employee’s Welfare Fund 4. M&M Employee’s Farm Equipment Sector Employee’s Welfare Fund116
  • MAHINDRA & MAHINDRA LIMITED(c) The related party transactions are as under : Rupees croresSl. No. Nature of Transactions Subsidiaries Associate Joint Key Management Welfare Companies Ventures Personnel Funds1. Purchases : Goods .............................................................. 9,65.63 3,08.90 84.60 — — (6,58.26) (1,58.49) (66.72) (—) (—) Fixed Assets ..................................................... 14.34 — — — — (7.41) (—) (—) (—) (—) Services ............................................................ 6,25.67 0.04 — — — (3,34.45) (—) (—) (—) (—)2. Sales : Goods .............................................................. 5,41.53 1.31 — — — (4,09.72) (1.22) (—) (—) (—) Fixed Assets ..................................................... 2.10 — — — — (8.19) (0.16) (—) (—) (—) Services ............................................................ 1,03.93 0.55 0.05 — — (1,25.00) (4.96) (0.05) (—) (—)3. Investments : Purchase/Subscribed ........................................ 4,34.66 — — — — (10,04.39) (—) (—) (—) (0.01) Sales/Redemption ............................................ 39.99 — — — — (28.75) (—) (—) (—) (—)4. Deputation of Personnel : From Related Parties ........................................ 0.23 — — — — (1.59) (—) (—) (—) (—) To Related Parties ............................................ 10.98 4.15 — — — (17.35) (0.52) (—) (—) (—)5. Write off of Receivables .................................. 2.20 — — — — (—) (—) (—) (—) (—)6. Write Back of Provision for doubtful debts/advances ................................................ 19.52 — — — — (—) (—) (—) (—) (—)7. Provision for doubtful debts/advances ............ — — — — 10.00 (19.52) (—) (—) (—) (—)8. Managerial Remuneration ............................... — — — 6.56 — (—) (—) (—) (5.15) (—)9. Stock Options .................................................. — — — 0.05 — (—) (—) (—) (0.07) (—)10. Finance : Inter Corporate Deposits given ........................ 4,22.24 — — — — (6,19.59) (—) (—) (—) (—) Inter Corporate Deposits refunded by parties . 2,88.41 — — — — (2,99.61) (—) (—) (—) (—) Inter Corporate Deposits taken ....................... — — — — — (5.00) (—) (—) (—) (—) 117
  • Rupees crores Sl. No. Nature of Transactions Subsidiaries Associate Joint Key Management Welfare Companies Ventures Personnel Funds Inter Corporate Deposits refunded to parties . — — — — — (5.00) (—) (—) (—) (—) Interest received .............................................. 54.31 0.46 — — — (24.19) (1.85) (—) (—) (—) Interest Paid ..................................................... 0.44 — — — — (1.47) (—) (—) (—) (—) Dividend received ............................................ 83.29 2.60 1.31 — — (1,31.83) (0.28) (0.98) (—) (—) Security Deposits Paid ..................................... 0.81 — — — — (—) (—) (—) (—) (—) Security Deposits Refunded ............................. 0.66 — — — — (—) (—) (—) (—) (—) 11. Issue of Ordinary (Equity) Shares .................... — — — — — (—) (—) (—) (—) (14,59.76) 12. Dividends Distributed ...................................... — — — 0.45 26.86 (—) (—) (—) (0.52) (1.05) 13. Guarantees & Collaterals given ....................... 1,67.99 — — — — (1,19.58) (—) (—) (—) (—) 14. Other Transactions : Other Income .................................................. 9.64 0.29 — — 25.91 (10.88) (0.28) (—) (—) (—) Other Expenses ................................................ 20.60 — — — — (17.71) (—) (—) (—) (—) Reimbursements received from parties ........... 1,10.16 1.04 0.03 — — (2,01.55) (0.02) (0.03) (—) (—) Reimbursements made to parties .................... 87.44 0.02 — — — (1,29.43) (0.02) (—) (—) (—) Advance Given ................................................. 8.49 — — — 7.00 (5.74) (—) (—) (—) (15.00) Advance Received ............................................ 1.00 — — — — (—) (—) (—) (—) (—) 15. Outstandings : Payable ............................................................ 1,73.25 1.36 7.61 3.10 — (1,24.62) (3.26) (11.20) (2.21) (—) Receivable ........................................................ 3,49.13 2.72 0.01 — 22.00 (1,38.46) (12.31) (0.01) (—) (15.00) Debenture issued by parties ............................ 50.00 — — — — (45.00) (—) (—) (—) (—) Inter Corporate Deposits given ........................ 5,14.72 4.59 — — — (4,00.78) (4.59) (—) (—) (—) Guarantees & Collaterals given ....................... 2,86.91 — — — — (1,63.67) (—) (—) (—) (—) Security Deposit Paid ....................................... 5.79 — — — — (5.03) (—) (—) (—) (—) Security Deposit Received ................................ 1.85 — — — — (2.51) (—) (—) (—) (—) 16. Provision for doubtful debts/advances ............ 5.99 6.69 — — 10.00 (25.51) (6.69) (—) (—) (—) Previous year’s figures are given in brackets.118
  • MAHINDRA & MAHINDRA LIMITEDThe significant related party transactions are as under : Rupees crores Sl. Associate No. Nature of Transactions Subsidiaries Amount Companies Amount Joint Ventures Amount 1. Purchase – Goods Mahindra Intertrade 1,60.19 Swaraj Engines 2,94.63 Mahindra Sona 84.60 Limited (1,24.93) Limited (1,50.60) Limited (66.72) Mahindra Ugine Steel 3,84.61 Company Limited (3,08.92) Mahindra Forgings 1,11.14 Limited (77.32) Mahindra Vehicle 1,08.60 Manufacturers Limited (—)2. Purchase – Services Mahindra Logistics 5,13.81 Satyam Computer 0.04 Limited (2,37.42) Services Limited (—) Mahindra Engineering — Services Limited (44.05)3. Sale – Goods Mahindra USA Inc. 1,35.45 Swaraj Engines 1.31 (1,05.37) Limited (1.22) Mahindra Navistar 1,48.28 Automotives Limited (92.61) Mahindra & Mahindra 65.76 South Africa (58.22) (Proprietary) Limited NBS International Limited 79.12 (64.89)4. Sale – Services Mahindra Navistar 43.90 Owens Corning 0.47 Mahindra 0.05 Automotives Limited (34.37) (India) Limited (3.21) Sona Limited (0.05) Mahindra Renault 44.38 Satyam Computer 0.07 Private Limited (76.27) Services Limited (—) Swaraj Engines — Limited (1.43)5. Investments – Purchase Mahindra Navistar 43.69 Automotives Limited (1,12.97) Mahindra Vehicle 1,00.00 Manufacturers Limited (3,60.20) Mahindra Overseas 65.82 Investment Company (1,09.43) (Mauritius) Limited Mahindra Forgings 55.83 Limited (—) Mahindra Navistar 62.98 Engines Private Limited (—) Mahindra Gears — International Limited (1,53.14) Mahindra Two — Wheelers Limited (1,17.99) 119
  • Rupees crores Sl. Associate No. Nature of Transactions Subsidiaries Amount Companies Amount Joint Ventures Amount 6. Investments – Sale Tech Mahindra Limited 5.71 (—) Mahindra Intertrade Limited 14.27 (—) 7. Investments – Mahindra & Mahindra 20.00 Redemption Financial Services Limited (10.00) Mahindra Intertrade Limited — (18.75) 8. Advances Given Mahindra Integrated 5.39 Township Limited (—) Defence Land Systems 2.73 India Private Limited (—) Mahindra Ugine — Steel Company Limited (2.13) Mahindra Automotive — Australia Pty. Ltd. (3.57) 9. Inter Corporate Deposits Mahindra Overseas 62.38 given Investment Company (—) (Mauritius) Limited Mahindra Forgings 56.50 Limited (—) Mahindra Vehicle 2,05.00 Manufacturers Limited (1,00.00) Mahindra Two Wheelers — Limited (1,02.00) Mahindra & Mahindra — Financial Services Limited (1,85.00)10. Inter Corporate Deposits Mahindra Forgings 1,00.50 refunded by parties Limited (—) Mahindra Vehicle 75.00 Manufacturers Limited (—) Mahindra Castings Limited 38.00 (—) Mahindra & Mahindra — Financial Services Limited (1,70.00) Mahindra Engineering — Services Limited (40.00) Mahindra Two — Wheelers Limited (67.00)11. Guarantees given Mahindra USA Inc. 94.42 (—) Mahindra Forgings 73.57 Limited (—) Mahindra Renault — Private Limited (1,19.58)Previous year’s figures are given in brackets.120
  • MAHINDRA & MAHINDRA LIMITED30. Joint Venture Disclosure (i) Jointly Controlled Entities by the Company : Name of the Entity Country of Incorporation % Holding a) Tech Mahindra Limited (w.e.f. 23rd March, 2010) India 43.99 % b) Mahindra Sona Limited India 29.77 % c) PSL Erickson Limited India 18.06 % (ii) Interests in the Assets, Liabilities, Income and Expenses with respect to Jointly Controlled Entities. Rupees crores 2010 2009 I ASSETS 1 Fixed Assets ...................................................................................................... 415.17 8.03 2 Investments………………………………………………………................ ....... . 1,326.13 0.05 3 Current Assets, Loans and Advances (a) Inventories ............................................................................................... 7.26 4.59 (b) Sundry Debtors ........................................................................................ 469.43 10.22 (c) Cash and Bank Balances .......................................................................... 100.83 3.40 (d) Loans and Advances ................................................................................ 297.02 1.23 4 Deferred Tax – Net ........................................................................................... 12.14 0.25 II LIABILITIES 1 Loan Funds (a) Secured Loans .......................................................................................... 330.24 0.82 (b) Unsecured Loans ..................................................................................... 271.51 — 2 Current Liabilities and Provisions (a) Liabilities .................................................................................................. 267.61 6.14 (b) Provisions ................................................................................................. 124.78 1.62 3 Deferred Revenue ............................................................................................. 337.71 — III INCOME 1 Sales ................................................................................................................. 109.61 44.57 2 Other Income ................................................................................................... 4.60 2.21 IV EXPENSES 1 Raw Materials, Finished and Semi Finished Products ...................................... 34.65 26.73 2 Excise Duties .................................................................................................... 3.83 4.09 3 Manufacturing, Selling Expenses, etc. ............................................................. 54.11 9.34 4 Depreciation/Amortisation ............................................................................... 2.69 0.76 5 Provision for Taxation ...................................................................................... 4.85 2.20 V OTHER MATTERS 1 Contingent Liabilities ....................................................................................... 59.50 3.90 2 Capital Commitments ...................................................................................... 118.01 0.2931. Additional information pursuant to the provisions of paragraphs 3(i)(a) and (ii), 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 - See Schedule XVI. Previous year’s figures are indicated below the current year’s figures.32. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XVII.33. Previous year’s figures have been regrouped/restated wherever necessary. 121
  • SCHEDULE XVComputation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st March, 2010 Rupees crores 2010 2009Profit before Taxation as per Profit and Loss Account ..................................................... 2,846.75 1,036.47Add : Profit of Mahindra Holdings and Finance Limited for the period 1st February, 2008 to 31st March, 2008 ........................................ — 41.74 : Depreciation/Amortisation charged in the Accounts ............................................ 370.78 291.51 : Directors’ Remuneration including Directors’ fees ................................................ 8.19 6.29 : Provision for doubtful debts and advances (Net) ................................................. 51.02 31.44 : Loss on sale, etc. of Fixed Assets (Net) ................................................................. 20.83 1.19 : Net reduction in the fair value of current investments ......................................... (0.26) (1.57) 450.56 370.60 3,297.31 1,407.07Less : Depreciation under Section 350 of the Companies Act, 1956 ............................ 290.09 233.97 : Amortisation of Intangibles ................................................................................... 49.23 31.14 : Profit on sale of Investments (Net) ....................................................................... 101.15 53.22 : Loss on sale of Assets as per Section 349 of the Companies Act, 1956 (Net) .... 2.80 2.22 : Surplus on transfer of Logistics Division ............................................................... — 10.27 443.27 330.82 Total...... 2,854.04 1,076.25 Commission payable to the wholetime Directors restricted to ............................. 3.09 2.20 Commission payable to the non-wholetime Directors restricted to ..................... 1.44 0.96122
  • SCHEDULE XVI Additional Information pursuant to the Provisions of Paragraphs 3 (i)(a) and (ii), 4C and 4D, of Part II of Schedule VI to the Companies Act, 1956. (A) PARTICULARS IN RESPECT OF GOODS MANUFACTURED : Sl. No. Class of Goods Unit of Licenced Installed Actual Opening Stock Closing Stock Sales Measurement Capacity per Capacity Production annum per annum [Notes (ii) [Note (i)] [Note (i)] & (iii)(a)] Quantity Value Quantity Value Quantity Value Rupees crores Rupees crores Rupees crores 1. a. On Road Automobiles having four or more wheels such as light, medium and heavy commercial vehicles, jeep type vehicles and passenger cars covered under sub heading (5) of Heading (7) of First Schedule Nos. 3,60,000 3,04,000 2,33,533 2,937 108.11 4,365 155.98 2,31,703 10,721.10 2,76,000 2,50,000 1,58,715 5,826 256.52 2,937 108.11 1,61,189 7,646.72 b. Three Wheelers Nos. 66,000 60,000 45,717 1,205 13.89 1,525 15.14 45,360 530.15 1,11,000 72,000 43,278 2,753 29.28 1,205 13.89 44,806 517.68 2. a. Agricultural Tractors [Note (iv) below] Nos. 2,29,000 2,33,000 1,71,550 8,671 232.77 6,963 191.11 1,73,217 6,408.61 2,14,000 2,33,000 1,17,847 9,438 254.16 8,671 232.77 1,18,565 4,333.56 b. Tractor Skids These are 1,726 23 1.66 98 4.27 1,647 92.06 manufactured 1,251 168 6.61 23 1.66 1,386 65.35 against spare capacity under 2(a) 3. Manufactured and Purchased Parts and Accessories for sale [Notes (iii)(a) and (b) below] Nos. These are 4,91,260 - 91.53 - 90.01 - 888.16 manufactured 4,27,952 - 94.97 - 91.53 - 621.08 against spare capacity under 1 and 2 above 4. Internal Combustion Piston Engines Nos. 1,75,000 1,75,000 1,68,683 1,361 10.08 1,225 9.49 11,179 106.66 1,75,000 1,50,000 1,18,036 1,162 8.15 1,361 10.08 9,034 89.25 5. Diesel Genset Nos. 24,000 Assembly 21,751 159 2.96 114 1.83 21,796 451.78 24,000 at 3rd Party 26,227 115 2.04 159 2.96 26,183 592.15 Locations 6. Engines Nos. These are 26,144 385 2.17 903 3.43 25,626 246.15 manufactured 25,904 439 2.79 385 2.17 25,958 248.41 against spare capacity under 2(a) 7. Forklifts Nos. 300 300 110 6 0.41 2 0.13 113 8.24 300 300 46 7 0.51 6 0.41 46 3.52 8. Harvester Combines Nos. 300 300 324 1 0.11 23 2.73 302 42.41 300 300 136 2 0.25 1 0.11 137 16.47 9. Others 0.03 0.17 10.04 0.01 0.03 4.42 10. Export benefits 18.97 26.99 Total ........ 19,524.33 14,165.60 Notes : (i) (a) The installed capacity has been certified by President/Chief Executives, which the auditors have relied on without verification as this is a technical matter. (b) The licensed capacities include/represent, as the case may be, registrations granted and Industrial Entrepreneur Memorandum filed with, and duly acknowledged by, the Government pursuant to the schemes of de-licensing [Also see note (iv) below]. (c) Within the overall licensed capacity in item 1 above, the Company is permitted to manufacture for outside sale 10,000 petrol/diesel engines and 4,000 tonnes grey iron castings. (d) Bullet proof work and fabrication on base vehicles has been carried out at third party facilities. Nil (2009 : 110) Vehicles were produced and sold using such third party facilities and are included in item (A) 1(a). (e) The installed capacity mentioned against item no. (A) 1(a) above includes 48,000 (2009 : 48,000) for production of vehicles for third parties. (ii) Actual Production includes production for captive consumption. (iii) (a) The actual production disclosed against manufactured components/sub-assemblies/steel blanks is the number of such components transferred during the year to the Marketing Unit/Spare Parts Stores for sale or sold otherwise. (b) The Opening and Closing Stocks and Sales of goods shown under item 3 above consist of manufactured and purchased parts. The bifurcation of stocks/sales into manufactured and bought-out parts is not practicable. (iv) Licenced capacity in respect of Agricultural Tractor includes a Letter of Intent from the Government of India for expansion of the manufacturing capacity from 25,000 to 60,000 tractors at Mumbai subject to fulfillment of conditions mentioned therein; an Industrial Licence will be issued on fulfillment of the conditions mentioned in the Letter of Intent. MAHINDRA & MAHINDRA LIMITED123
  • SCHEDULE XVI (Contd.)(B) PARTICULARS IN RESPECT OF GOODS TRADED : Purchases Opening Stock Closing Stock SalesSl. Unit ofNo. Class of Goods Measurement Quantity Value Quantity Value Quantity Value Quantity Value Rupees Rupees Rupees Rupees crores crores crores crores1. Tractors .............................................. Nos. 317 9.00 50 1.75 35 1.24 332 12.47 269 7.29 36 1.13 50 1.75 251 8.902. Agricultural Implements .................... Nos. 10,168 57.35 436 5.98 865 9.41 9,739 69.34 6,178 41.47 2,230 3.62 436 5.98 7,972 50.323. Four Wheelers ................................... Nos. 5,272 151.40 — — 211 5.01 5,056 149.16 693 27.41 — — — — 693 31.204. Bought-out Spares for Resale [Note (iii)(b) to item “A”] ................... 375.64 — — — 263.96 — — —5. Diesel Genset & Genset Engines ....... Nos. 1,523 18.61 68 0.34 166 1.33 589 17.93 277 3.09 — — 68 0.34 209 3.166. Others ............................................... 49.05 0.02 0.10 58.83 2.93 — 0.02 9.23 Total ............... 661.05 8.09 17.09 307.73 346.15 4.75 8.09 102.81 Note (iv) to item (A).(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED :Sl. Unit of ValueNo. Description Measurement Quantity Rupees crores }1. Steel Items (Sheets, Tubes, etc.) Nos. 1,13,459 89,522 274.13 Metric Tonnes 48,042 191.00 32,2902. Aluminium Sections and Other Aluminium Items Kgs. 38,801 0.47 10,339 0.143. Other Metals (Steel Shots, Lead, Tin, etc.) Metric Tonnes 120 0.45 } 119 0.564. Paints Nos. 8,75,017 7,49,035 Metres 2,58,903 1,83,583 96.11 Kgs. 26,35,185 72.85 19,36,747 Litres 47,30,889 35,76,7885. Steel Scrap Metric Tonnes 8,891 17.24 7,898 19.83124
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE XVI (Contd.)(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED (Contd.) : MATERIALSSl. Unit of ValueNo. Description Measurement Quantity Rupees crores6. Pig Iron ....................................................................................................................... Metric Tonnes 11,157 23.64 } 8,880 25.427. Miscellaneous Foundry Materials ................................................................................ Nos. 19,28,687 15,45,939 Metric Tonnes 14,396 16.59 12,585 16.32 Litres 4,42,660 3,36,8448. Other Materials (Direct Stores, Patterns, Oils, etc.) ..................................................... Not practicable to *102.76 give quantitative details *78.199. Tyres and Tubes ........................................................................................................... Nos. *35,45,832 *664.70 *27,31,682 *473.9010. Components other than Tyres and Tubes (including processing charges) .................. *10,091.32 *7,593.0811. Material handling and transportation charges, etc. incurred on the above items not separately allocable ..................................................................................... 408.15 300.50 Total..... 11,695.56 8,771.79* Includes items used for other than production, amounts not ascertained.Notes :(i) The consumption in value has been ascertained on the basis of opening stock plus purchases less closing stock and includes the adjustment of excesses and shortages as ascertained on physical count and write-off of obsolete and unserviceable raw materials and components.(ii) The consumption in value shown against item 10 is a balancing figure based on the total consumption shown in the Profit and Loss Account.(D) VALUE OF IMPORTS ON C.I.F. BASIS ACCOUNTED FOR DURING THE YEAR : Rupees crores 2010 2009 1. Raw Materials ..................................................................................................... 1.17 0.65 2. Components, Spare Parts, etc. ............................................................................ 225.86 153.81 3. Capital Goods ..................................................................................................... 98.61 81.48 4. Items imported for Resale ................................................................................... 27.01 13.77 Total ...... 352.65 249.71Notes :(i) Credits, if any, recoverable in respect of short landings, etc. are not considered.(ii) The value of imports shown above includes : (a) Imports on C&F basis as per suppliers’ invoices Rs. 12.55 crores (2009 : Rs.4.82 crores) (b) Imports on ‘cost’ basis Rs. 203.09 crores (2009 : Rs. 163.52 crores) 125
  • SCHEDULE XVI (Contd.)(E) EXPENDITURE IN FOREIGN CURRENCIES (SUBJECT TO DEDUCTION OF TAX WHERE APPLICABLE) : Rupees crores 2010 20091. Professional and Consultancy Fees [including Rs. 0.89 crores (2009 : Rs. 6.35 crores) capitalised] 34.82 43.352. Commission on Exports .................................................................................................................... 1.21 0.843. Interest & Commitment charges ....................................................................................................... 42.85 55.314. Others ............................................................................................................................................... 69.68 70.32 Total..... 148.56 169.82Notes :(1) Fee for use of technology, development expenditure and software expenditure [refer to in Note 1 (C)] : (a) written off during the year Rs. 9.17 crores (2009 : Rs. 8.91 crores); and (b) amount remitted during the year Rs. 76.18 crores (2009 : Rs. 59.81 crores) net of tax deducted at source of Rs. 5.92 crores (2009 : Rs. 6.11 crores) are not included in the above figures.(F) REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDENDS TO NON-RESIDENT SHAREHOLDERS : Number of Amount remitted Dividend relating to Shareholders Equity shares 2010 : 1 120 * Year ended 31st March, 2009 2009 : 1 120 * Year ended 31st March, 2008(G) EARNINGS IN FOREIGN EXCHANGE : Rupees crores 2010 20091. Export of goods on F.O.B. basis .................................................................................. 719.37 632.362. Interest ........................................................................................................................ 9.60 14.743. Others (freight, etc.) ................................................................................................... 32.47 44.15 Total..... 761.44 691.25Notes :F.O.B. value of exports includes local sales which qualify for export benefits and for which payment is receivable in foreign currency and local/exportsales under rupee credit which qualify for export benefits.(H) VALUE OF IMPORTED AND INDIGENOUS CONSUMPTION : ^Raw Materials and Components Rupees crores % 1. Imported .......................................................................................................... 177.61 1.52 121.97 1.39 2. Indigenously obtained ..................................................................................... 11,517.95 98.48 8,649.82 98.61 Total..... 11,695.56 100.00 8,771.79 100.00^ Includes items used for other than production, amount not ascertained.Notes :(1) Items purchased through canalising agencies have been considered as imported.(2) See Note (i) to item (C).(3) In giving the above information the Company has taken the view that spares and components as referred to in paragraph 4 (D)(c) of Part II of Schedule VI covers only such items as go directly into production. * denotes amounts less than Rs. 50,000126
  • MAHINDRA & MAHINDRA LIMITEDSCHEDULE XVIIADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.Balance Sheet Abstract & Company’s General Business Profile :I. Registration Details : Registration No. 4 5 5 8 State Code 1 1 Balance Sheet Date 3 1 0 3 2 0 1 0 Date Month YearII. Capital raised during the Year (Amount in Rs. Thousands) : Public Issue Rights Issue N I L N I L Bonus Issue Private Placement N I L 1 0 0 0 0III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) : Total Liabilities including Shareholders’ Funds Total Assets 1 6 3 2 9 4 2 2 4 1 6 3 2 9 4 2 2 4 Sources of Funds : Paid-up Capital Reserves & Surplus 2 8 2 9 5 3 9 7 5 4 3 8 2 8 3 Secured Loans Unsecured Loans 6 0 2 4 4 9 7 2 2 7 7 7 0 1 1 Deferred Tax Liability (Net) Foreign Currency Monetary Item Translation Difference Account 2 4 0 3 2 6 6 3 4 5 5 8 Application of Funds : Net Fixed Assets Foreign Currency Monetary Item Translation Difference Account 3 7 0 2 7 1 8 1 — Investments Deferred Tax Asset (Net) 6 3 9 8 0 1 5 1 — Miscellaneous Expenditure Net Current Assets 4 1 1 8 1 8 4 5 8 6 4 1IV. Performance of Company (Amount in Rs. Thousands) : Turnover (Sales & Other Income)★ Total Expenditure 2 0 8 1 5 2 5 3 5 1 7 9 6 8 5 0 5 6 + - Profit/Loss Before Tax + - Profit/Loss After Tax 2 8 4 6 7 4 7 9 2 0 8 7 7 4 7 9 Earnings per Share in Rupees ▲ Basic Diluted Dividend Rate % 37.97 35.61 1 9 0 (Refer Note 24) 127
  • SCHEDULE XVII (Contd.)V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) : Item Code No. (ITC Code) 8 7 0 1 Product Description Tractors Item Code No. (ITC Code) 8 7 0 2 Product Description Motor Vehicles for the transport of more than six persons, excluding the driver Item Code No. (ITC Code) 8 7 0 3 Product Description Other motor vehicles principally designed for the transport of persons★ after considering interest income and exceptional items.▲ computed on the basis of, the weighted average number of shares outstanding during the year. Signatures to Schedules I to XVII M. M. Murugappan Keshub Mahindra Chairman } N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. Ganguly A. P. Puri Directors Bharat Doshi Executive Director N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company Secretary Mumbai, 29th May, 2010128
  • MAHINDRA & MAHINDRA LIMITEDStatement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies Number of The net aggregate of profits/(losses) of the Shares in the Subsidiary Companies so far as they concern the members of Subsidiary Mahindra & Mahindra Limited Company held by Mahindra & Mahindra For Current Financial Year For Previous Financial Years Name of the Subsidiary Companies Limited at the Dealt with in Not dealt Dealt with in Not dealt financial year the accounts with in the the accounts with in the ending date of Mahindra & accounts of of Mahindra & accounts of Mahindra Mahindra & Mahindra Mahindra & Limited for Mahindra Limited for Mahindra the year Limited for the year Limited for st st Equity Extent ended 31 the year ended 31 the year of March, 2010 ended 31st March, 2010 ended 31st holding March, 2010 March, 2010 Nos. % Rupees crores Rupees crores Rupees crores Rupees crores Mahindra Engineering and Chemical Products Limited 53,98,462 100.00% - 6.53 1.89 72.43 • Retail Initiative Holdings Limited ......................... - 100.00% - (0.02) - - 7 Mahindra Retail Private Limited .......................... - 78.91% - (25.43) - - • Mahindra Conveyor Systems Private Limited ...... - 100.00% * - - Mahindra Intertrade Limited ................................... 2,71,00,006 100.00% - 51.07 12.45 115.95 @ Mahindra MiddleEast Electrical Steel Service Centre (FZC) ........................................................ - 90.00% - 3.14 - 15.54 @ Mahindra Steel Service Centre Limited ........... … - 61.00% - 2.20 0.52 9.51 @ Mahindra Metal One Steel Service Centre Limited - 100.00% - (0.12) - - Mahindra Consulting Engineers Limited ................. 5,10,000 51.00% - 0.49 0.18 1.15 Mahindra Holidays and Resorts India Limited ........ 6,99,85,642 #83.09% - 97.91 22.01 140.63 + MHR Hotel Management GmbH ......................... - #62.32% - 0.07 - (0.02) + Mahindra Holidays & Resorts USA Inc ................ - #83.09% - 0.71 - (0.28) + Mahindra Hotels and Residences India Limited .. - #83.09% - * - (0.01) + Heritage Bird (M) SDN.BHD ................................ - #83.09% - (0.12) - (0.09) + BAH Hotelanlagen AG ......................................... - #82.20% - 0.69 - - NBS International Limited ....................................... 50,490 100.00% - (0.18) - 0.63 Mahindra Ugine Steel Company Limited ................ 1,64,66,789 50.69% - 2.36 - 84.41 Mahindra Holdings Limited .................................... 2,25,49,999 100.00% - 6.02 - (1.12) E Mahindra United Football Club Private Limited .. - 100.00% - * - * E Mahindra Punjab Tractors Private Limited ........... - 100.00% - * - - Mahindra Lifespace Developers Limited .................. 2,08,46,126 51.08% - 40.55 6.26 55.80 p Mahindra Infrastructure Developers Limited ....... - 40.87% - 0.11 - 0.21 p Mahindra World City Developers Limited ........... - 42.21% - 4.62 - 14.58 p Mahindra World City (Jaipur) Limited ................. - 37.80% - 2.98 - 0.81 p Mahindra Integrated Township Limited .............. - 48.74% - (2.16) - (0.09) a Mahindra Residential Developers Limited ........... - 24.85% - (0.95) - (0.16) p Mahindra World City (Maharashtra) Limited ...... - 51.08% - * - (0.04) p Knowledge Township Limited (formerly known as Mahindra Knowledge City Limited) ..................... - 51.08% - (0.01) - (0.19) p Mahindra Bebanco Developers Limited ............... - 35.76% - * - (0.11) p Raigad Industrial & Business Park Limited .......... - 51.08 - (0.03) - - * denotes amounts less than Rs. 50,000 129
  • Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies Number of The net aggregate of profits/(losses) of the Shares in the Subsidiary Companies so far as they concern the members of Subsidiary Mahindra & Mahindra Limited Company held by Mahindra & Mahindra For Current Financial Year For Previous Financial Years Name of the Subsidiary Companies Limited at the Dealt with in Not dealt Dealt with in Not dealt financial year the accounts with in the the accounts with in the ending date of Mahindra & accounts of of Mahindra & accounts of Mahindra Mahindra & Mahindra Mahindra & Limited for Mahindra Limited for Mahindra the year Limited for the year Limited for Equity Extent ended 31st the year ended 31st the year of March, 2010 ended 31st March, 2010 ended 31st holding March, 2010 March, 2010 Nos. % Rupees crores Rupees crores Rupees crores Rupees crores p Industrial Township (Maharashtra) Limited (formerly known as Mahindra Industrial Township Limited) . - 51.08% - (0.02) - (0.03) Mahindra & Mahindra Financial Services Limited ... 5,82,41,532 #60.10% - 205.97 32.03 363.29 y Mahindra Insurance Brokers Limited ................... - #60.10% - 6.65 - 5.89 y Mahindra Rural Housing Finance Limited ........... - #52.59% - 1.15 - (0.73) y Mahindra Business & Consulting Services Private Limited (formerly known as Mahindra IT Consulting Private Limited) ................................. - #60.10% - 0.08 - * Bristlecone Limited .................................................. 42,22,250 81.97% - (5.92) - (10.57) D Bristlecone Inc ..................................................... - 81.97% - (10.59) - (28.75) D Bristlecone India Limited ..................................... - 81.97% - 0.51 - 12.31 % Bristlecone (Singapore) Pte. Limited ................... - 81.97% - (1.51) - (2.18) % Bristlecone GmbH ............................................... - 81.97% - 0.03 - (0.04) D Bristlecone UK Limited ........................................ - 81.97% - (2.84) - (11.09) D Bristlecone (Malaysia) SDN.BHD .......................... - 81.97% - (0.17) - 0.67 Mahindra First Choice Wheels Limited ................... 3,47,77,255 #53.31% - (4.65) - (34.60) Mahindra USA Inc. ................................................. 14,00,00,000 100.00% - (38.16) - (8.90) Mahindra Gujarat Tractor Limited ........................... 16,83,218 60.00% - 1.81 - (16.87) Mahindra Shubhlabh Services Limited .................... 2,46,81,437 83.05% - 0.45 - (21.98) Mahindra & Mahindra South Africa (Proprietary) Limited .................................................................... 5,20,00,000 100.00% - 1.62 - (15.50) Mahindra Overseas Investment Company (Mauritius) Limited .................................................................... 5,87,95,000 100.00% - (3.26) - (4.78) v Mahindra (China) Tractor Company Limited ....... - 85.90% - (12.11) - (55.58) v Mahindra-BT Investment Company (Mauritius) Limited ................................................................ - 57.00% - 42.61 - 7.47 v Mahindra Europe s.r.l. ......................................... - 80.00% - 0.58 - 2.20 v Mahindra Graphic Research Design s.r.l ............. - 100.00% - (5.05) - (2.48) v Mahindra Yeuda (Yancheng) Tractor Company Limited ................................................................ - 51.00% - (5.65) - (1.44) Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited) ....................................................... 40,30,806 53.34% - 0.71 0.76 1.24 * denotes amounts less than Rs. 50,000130
  • MAHINDRA & MAHINDRA LIMITEDStatement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies Number of The net aggregate of profits/(losses) of the Shares in the Subsidiary Companies so far as they concern the members of Subsidiary Mahindra & Mahindra Limited Company held by Mahindra & Mahindra For Current Financial Year For Previous Financial Years Name of the Subsidiary Companies Limited at the Dealt with in Not dealt Dealt with in Not dealt financial year the accounts with in the the accounts with in the ending date of Mahindra & accounts of of Mahindra & accounts of Mahindra Mahindra & Mahindra Mahindra & Limited for Mahindra Limited for Mahindra the year Limited for the year Limited for Equity Extent ended 31st the year ended 31st the year of March, 2010 ended 31st March, 2010 ended 31st holding March, 2010 March, 2010 Nos. % Rupees crores Rupees crores Rupees crores Rupees crores Mahindra Engineering Services Limited .................. 81,26,218 100.00% - 28.26 5.85 55.18 x Mahindra Engineering Services (Europe) Limited - 100.00% - 0.18 - 6.54 x Mahindra Engineering GmbH (formerly known as Plexion Technologies GmbH) .......................... - 100.00% - (0.79) - (0.28) x Mahindra Technologies Services Inc .................... - 100.00% - 0.35 - - x Engines Engineering s.r.l ...................................... - 70.00% - (2.48) - (1.05) ¥ EFF Engineering s.r.l ............................................ - 35.70% - * - 0.02 ¥ ID-EE s.r.l ............................................................. - 49.00% - (0.04) - (0.09) Mahindra Forgings Limited ..................................... 4,45,26,339 50.68% - (48.02) - (28.17) £ Stokes Group Limited ............................................ - 50.64% - (15.93) - (27.77) 5 Stokes Forgings Dudley Limited ........................... - 50.64% - - - 0.62 5 Jensand Limited ................................................... - 50.64% - - - (0.27) 5 Stokes Forgings Limited ....................................... - 50.64% - - - (4.14) £ Mahindra Forgings Global Limited ........................ - 50.68% - (0.06) - (1.88) ## Schöneweiss & Co. GmbH ................................. - 50.68% - (19.72) - 10.91 £ Mahindra Forgings International Limited .............. - 50.68% - (9.05) - (11.88) u Mahindra Forgings Europe AG ............................ - 50.68% - 11.63 - 8.92 c Gesenkschmiede Schneider GmbH ....................... - 50.68% - (29.53) - 3.39 c JECO-Jellinghaus GmbH ....................................... - 50.68% - (6.88) - 2.92 c Falkenroth Umformtechnik GmbH ....................... - 50.68% - (8.18) - 2.57 Mahindra Renault Private Limited ........................... 10,16,24,232 51.00% - (41.58) - (296.11) Mahindra Navistar Automotives Limited ................. 20,70,32,300 51.00% - (13.09) - (16.90) Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited) ........................ 2,14,40,052 64.94% - (3.62) - (34.03) Mahindra Vehicle Manufacturers Limited ............... 58,50,00,000 100.00% - (19.43) - (8.89) Mahindra Logistics Limited ..................................... 4,90,49,900 100.00% - (2.84) 1.34 2.89 Mahindra Navistar Engines Private Limited ............. 8,41,50,000 51.00% - (7.18) - (3.70) Mahindra Aerospace Private Limited ...................... 1,05,50,000 100.00% - (0.89) - (0.38) Mahindra First Choice Services Limited ................... 1,63,50,000 100.00% - (6.18) - (5.86) Mahindra Gears International Limited .................... 2,07,00,001 100.00% - (0.11) - (0.11) w Mahindra Gears Global Limited ........................... - 53.34% - (0.08) - (0.08) 3 Mahindra Gears Cyprus Limited ........................... - 53.34% - (0.10) - (0.38) © Metal Castello S.p.A ............................................. - 51.00% - (28.81) - 6.81 § Crest Geartech Private Limited ............................. - 51.00% - 0.16 - 0.13 * denotes amounts less than Rs. 50,000 131
  • Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies Number of The net aggregate of profits/(losses) of the Shares in the Subsidiary Companies so far as they concern the members of Subsidiary Mahindra & Mahindra Limited Company held by Mahindra & Mahindra For Current Financial Year For Previous Financial Years Name of the Subsidiary Companies Limited at the Dealt with in Not dealt Dealt with in Not dealt financial year the accounts with in the the accounts with in the ending date of Mahindra & accounts of of Mahindra & accounts of Mahindra Mahindra & Mahindra Mahindra & Limited for Mahindra Limited for Mahindra the year Limited for the year Limited for Equity Extent ended 31st the year ended 31st the year of March, 2010 ended 31st March, 2010 ended 31st holding March, 2010 March, 2010 Nos. % Rupees crores Rupees crores Rupees crores Rupees crores Mahindra Automotive Australia Pty. Ltd. ................ 7,00,000 80.00% - (3.24) - (1.87) Mahindra Two Wheelers Limited ............................ 11,80,00,000 80.00% - (77.53) - (18.00) Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited) .......................................... 3,42,62,000 100.00% - (0.07) - - Mahindra EcoNova Private Limited ......................... 10,000 100.00% - * - -* denotes amounts less than Rs. 50,000# after considering shares issued to its ESOP Trust but not allotted to its employees.• a subsidiary of Mahindra Engineering and Chemical Products Limited7 a subsidiary of Retail Initiative Holdings Limited@ a subsidiary of Mahindra Intertrade Limited+ a subsidiary of Mahindra Holidays & Resorts India LimitedE a subsidiary of Mahindra Holdings Limitedp a subsidiary of Mahindra Lifespace Developers Limiteda a subsidiary of Mahindra Integrated Township Limitedy a subsidiary of Mahindra & Mahindra Financial Services LimitedD a subsidiary of Bristlecone Limited% a subsidiary of Bristlecone India Limitedv a subsidiary of Mahindra Overseas Investment Company (Mauritius) Limitedx a subsidiary of Mahindra Engineering Services Limited¥ a subsidiary of Engines Engineering s.r.l.£ a subsidiary of Mahindra Forgings Limited5 a subsidiary of Stokes Group Limited## a subsidiary of Mahindra Forgings Global Limitedu a subsidiary of Mahindra Forgings International Limitedc a subsidiary of Mahindra Forgings Europe AGw a subsidiary of Mahindra Gears International Limited3 a subsidiary of Mahindra Gears Global Limited© a subsidiary of Mahindra Gears Cyprus Limited§ a subsidiary of Metal Castello S.p.ANote :The financial year of all subsidiaries ended on 31st March, 2010, except for Mahindra Yueda (Yancheng) Tractor Company Limited whose financial yearis 1st January, 2009 to 31st December, 2009 and Mahindra EcoNova Private Limited and Mahindra Conveyor Systems Private Limited whose firstfinancial years would be from 2nd January, 2010 to 31st March, 2011 and 4th January, 2010 to 31st March, 2011, respectively. } M. M. Murugappan Keshub Mahindra Chairman N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. Ganguly A. P. Puri Directors Bharat Doshi Executive Director N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company Secretary Mumbai, 29th May, 2010132
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) 33
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  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)Auditors’ Report to the Board of Directors of Mahindra & Mahindra Limited1. We have audited the attached Consolidated Balance Sheet 4. Without qualifying our opinion, we draw attention to note of Mahindra & Mahindra Limited, its subsidiaries and jointly 4 of Schedule XV to the financial statements. As indicated controlled entities (the Group) as at 31st March, 2010, the therein the Consolidated Financial Statements do not include Consolidated Profit and Loss Account and the Consolidated Satyam Computer Services Limited and its subsidiaries, in Cash Flow Statement of the Group for the year ended on accordance with the approval of the Securities and Exchange that date, both annexed thereto. The Consolidated Financial Board of India, and the impact of post acquisition profit or Statements include investments in associates accounted on loss of Satyam Computer Services Limited and its subsidiaries the equity method in accordance with Accounting Standard are not considered in these financial statements. 23 (Accounting for Investments in Associates in Consolidated 5. We report that the Consolidated Financial Statements have Financial Statements) and the jointly controlled entities been prepared by the Company in accordance with the accounted in accordance with Accounting Standard 27 requirements of Accounting Standard 21 (Consolidated (Financial Reporting of Interests in Joint Ventures) as notified Financial Statements), Accounting Standard 23 (Accounting under the Companies (Accounting Standards) Rules, 2006. for Investment in Associates in Consolidated Financial These financial statements are the responsibility of the Statements) and Accounting Standard 27 (Financial Company’s Management and have been prepared on the Reporting of Interests in Joint Ventures) as notified under basis of the separate financial statements and other financial the Companies (Accounting Standards) Rules, 2006. information regarding components. Our responsibility is to express an opinion on these Consolidated Financial 6. Based on our audit and on consideration of the separate Statements based on our audit. audit reports on individual financial statements of the Company, its aforesaid subsidiaries, joint ventures and2. We conducted our audit in accordance with the auditing associates and to the best of our information and according standards generally accepted in India. Those Standards to the explanations given to us, in our opinion, the require that we plan and perform the audit to obtain Consolidated Financial Statements give a true and fair view reasonable assurance about whether the financial statements in conformity with the accounting principles generally are free of material misstatements. An audit includes accepted in India : examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit (i) in the case of the Consolidated Balance Sheet, of the also includes assessing the accounting principles used and state of affairs of the Group as at 31st March, 2010; the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. (ii) in the case of the Consolidated Profit and Loss Account, We believe that our audit provides a reasonable basis for of the profit of the Group for the year ended on that our opinion. date; and3. We did not audit the financial statements of certain (iii) in the case of the Consolidated Cash Flow Statement, subsidiaries and joint ventures, whose financial statements of the cash flows of the Group for the year ended on reflect total assets of Rs.13,902.30 crores as at 31st March, that date. 2010, total revenues of Rs. 5,628.43 crores and net cash inflows amounting to Rs. 4.67 crores for the year ended on For Deloitte Haskins & Sells that date as considered in the Consolidated Financial Chartered Accountants Statements. These financial statements have been audited by other auditors whose reports have been furnished to us B.P. Shroff and our opinion in so far as it relates to the amounts (Partner) included in respect of these subsidiaries and joint ventures Membership Number: 34382 is based solely on the reports of the other auditors. Mumbai, 29th May, 2010 35
  • Consolidated Balance Sheet as at 31st March, 2010 Rupees crores Schedule 2010 2009I. SOURCES OF FUNDS : SHAREHOLDERS’ FUNDS : Capital ................................................................................................................... I 282.95 272.62 Employee Stock Options Outstanding ................................................................... 8.01 6.55 Reserves and Surplus ............................................................................................. II 9,897.31 6,790.76 10,188.27 7,069.93 MINORITY INTEREST .............................................................................................. 2,462.35 3,029.79 LOAN FUNDS : (a) Secured Loans ................................................................................................ III A 8,972.45 7,724.71 (b) Unsecured Loans ............................................................................................ III B 4,513.40 4,465.60 13,485.85 12,190.31 DEFERRED TAX LIABILITY (Net) [Note 17] .............................................................. 48.21 — FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ..... 1.94 — DEFERRED INCOME : Advance towards Club Mahindra members’ facilities ........................................... 804.07 635.89 Total ........... 26,990.69 22,925.92II. APPLICATION OF FUNDS : FIXED ASSETS : ...................................................................................................... IV Gross Block ............................................................................................................ 14,204.00 13,042.35 Less : Depreciation ................................................................................................ 5,333.76 5,341.02 Net Block ............................................................................................................... 8,870.24 7,701.33 CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) .......................... 1,967.69 1,751.73 10,837.93 9,453.06 Less : Provision for impairment ............................................................................. 317.60 311.25 10,520.33 9,141.81 INVESTMENTS ........................................................................................................ V 4,805.25 3,381.26 DEFERRED TAX ASSETS (Net) [Note 17] ................................................................ — 188.40 FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ..... — 18.44 CURRENT ASSETS, LOANS AND ADVANCES : (a) Inventories ...................................................................................................... VI A 3,548.99 3,271.46 (b) Sundry Debtors .............................................................................................. VI B 3,207.17 3,470.79 (c) Cash and Bank Balances ................................................................................. VI C 2,737.12 2,967.51 (d) Other Current Assets ...................................................................................... VI D 51.94 3.19 (e) Loans and Advances ....................................................................................... VI E 10,771.00 8,861.91 20,316.22 18,574.86 LESS : CURRENT LIABILITIES AND PROVISIONS : (a) Current Liabilities ............................................................................................ VII A 6,717.61 6,779.96 (b) Provisions ....................................................................................................... VII B 1,938.08 1,615.75 8,655.69 8,395.71 NET CURRENT ASSETS ........................................................................................... 11,660.53 10,179.15 MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) ........................................................................................................... VIII 4.58 16.86 Total ........... 26,990.69 22,925.92 NOTES ON ACCOUNTS .......................................................................................... XVPer our report attachedFor Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman }Chartered Accountants N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. Ganguly DirectorsB. P. Shroff A. P. Puri Bharat Doshi Executive DirectorPartner N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company SecretaryMumbai, 29th May, 2010 Mumbai, 29th May, 2010 36
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)Consolidated Profit and Loss Account for the year ended 31st March, 2010 Rupees crores Schedule 2010 2009SALES ............................................................................................................................ 25,300.78 21,058.63Less : Excise Duty on Sales ........................................................................................... 2,102.13 2,072.18Net Sales ....................................................................................................................... 23,198.65 18,986.45Income from Operations .............................................................................................. IX 8,369.89 7,769.90Other Income ............................................................................................................... X 119.43 163.46 31,687.97 26,919.81EXPENDITURE :Raw Materials, Finished and Semi-finished Products .................................................... XI 15,267.91 13,063.79Personnel ...................................................................................................................... XII 4,582.55 4,274.86Interest, Commitment and Finance Charges (Net) ........................................................ XIII 979.83 750.16Depreciation/Amortisation [Note 8] .............................................................................. 873.52 749.33Other Expenses ............................................................................................................. XIV 6,337.02 5,858.96 28,040.83 24,697.10Less : Cost of Manufactured/Purchased Products capitalised ....................................... 132.59 107.80 27,908.24 24,589.30Profit before exceptional item and taxation ................................................................. 3,779.73 2,330.51Add : Exceptional Items [Note 18] ............................................................................... 250.23 (76.39)Profit before taxation ................................................................................................... 4,029.96 2,254.12(Add) / Less : Provision for Tax - Current Tax including Fringe Benefit Tax .................. 1,240.12 506.92 - Deferred Tax (Net) .................................................... (85.92) 35.25Profit for the year before prior year adjustments ......................................................... 2,875.76 1,711.95Less : Adjustments pertaining to previous year [Note 19] ........................................... 4.27 6.36Balance of profit for 2009-2010 before share of profit/loss of Associates andMinority Interests .......................................................................................................... 2,871.49 1,705.59Add : Share of Profit of Associates for the year .......................................................... 19.63 11.27Profit before Minority Interests ..................................................................................... 2,891.12 1,716.86Minority Share in Profits for 2009-2010 ...................................................................... 412.56 311.45Net Profit ...................................................................................................................... 2,478.56 1,405.41Balance of profit for earlier years ................................................................................. 4,642.70 3,873.20Less : Adjustment on account of Mergers .................................................................... — 43.91Less : Transfer to Debenture Redemption Reserve (Net) ............................................... (116.10) (29.62) 4,526.60 3,799.67Total of Profit and Loss Account balances shown above ............................................. 7,005.16 5,205.08Deduct : Statutory Reserve ............................................................................................ 43.09 26.62 General Reserve (Net) ..................................................................................... 286.88 180.05 Capital Redemption Reserve ........................................................................... — 18.75 Income Tax on Dividends ............................................................................... 15.38 24.90 Proposed Dividend on Equity Shares .............................................................. 549.52 278.83 Income Tax on Proposed Dividend ................................................................. 74.23 33.23Balance for 2009-2010 and earlier years carried to Balance Sheet .............................. 6,036.06 4,642.70EARNINGS PER SHARE : [Note 23](Face value Rs.5/- per share) (Rupees)Basic ............................................................................................................................. 45.08 25.79Diluted .......................................................................................................................... 42.17 24.14NOTES ON ACCOUNTS ................................................................................................. XVPer our report attached }For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. Ganguly DirectorsB. P. Shroff A. P. Puri Bharat Doshi Executive DirectorPartner N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company SecretaryMumbai, 29th May, 2010 Mumbai, 29th May, 2010 37
  • Consolidated Cash Flow Statement for the year ended 31st March, 2010 Rupees crores 2010 2009A. CASH FLOW FROM OPERATING ACTIVITIES : Profit before exceptional item, taxation and adjustments pertaining to previous years .............................................................................................. 3,779.73 2,330.51 Adjustments for : Depreciation/Amortisation ........................................................................... 873.52 749.33 Profit on Exchange (Net) ............................................................................. 0.08 (5.58) Investment and Interest Income [Excluding Rs. 25.91 crores (2009 : Rs. 13.42 crores) in respect of financial enterprises consolidated] ...... (183.70) (195.25) Interest, Commitment and Finance charges [Excluding Rs. 500.34 crores (2009 : Rs. 495.05 crores) in respect of financial enterprises consolidated] 620.23 362.84 Amortisation of Expenses ............................................................................ 9.93 15.81 Profit on sale of Investments (Net) .............................................................. (13.98) (47.78) Loss on fixed assets sold/scrapped/written off (Net) (Excluding Rs. 0.05 crores in respect of Prior Period Item) ......................... 17.83 6.04 Provision for diminution in value of long term investments (Net) .............. 8.75 0.24 Increase of cost over fair value of current investments (Net) ...................... (0.25) (1.93) 1,332.41 883.72 Operating Profit before Working Capital changes ....................................... 5,112.14 3,214.23 Changes in : Deferred income – advances towards membership fees ........ 168.18 157.94 Trade and other receivables ................................................... (1,452.88) 85.05 Loans against Assets * ........................................................... (1,351.38) (185.28) Inventories ............................................................................. (278.34) 177.94 Trade and other payables ...................................................... 1,766.90 690.40 (1,147.52) 926.05 Exceptional Items ......................................................................................... (2.19) — Miscellaneous Expenditure (to the extent not written off or adjusted) incurred during the year ............................................................................. — (21.44) Cash generated/(used) from operations ...................................................... 3,962.43 4,118.84 Income Taxes paid (Net of refunds including for prior years) ..................... (1,163.67) (717.34) NET CASH FROM OPERATING ACTIVITIES .................................................... 2,798.76 3,401.50 * In respect of financial enterprises consolidated.B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of fixed assets .............................................................................. (2,699.86) (2,941.33) Sale of fixed assets ...................................................................................... 145.51 81.73 Purchase of investments .............................................................................. (23,823.11) (20,149.02) Sale of investments ..................................................................................... 20,869.23 19,692.81 Interest received .......................................................................................... 160.17 79.52 Dividends received ....................................................................................... 8.30 35.88 Inter corporate deposits (Net) ..................................................................... (35.54) 14.88 Purchase consideration paid on acquisition of interest in subsidiaries ....... (32.16) (562.95) Sales Proceeds/subscription (Net) received on divesture of interest in subsidiaries 681.65 305.14 NET CASH USED IN INVESTING ACTIVITIES ................................................. (4,725.81) (3,443.34) 38
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)Consolidated Cash Flow Statement (contd.) Rupees crores 2010 2009C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from issue of Share Capital .......................................................... 72.40 — Proceeds from borrowings .......................................................................... 61,183.93 57,271.36 Repayments of borrowings (including premium on repayment) ................. (58,322.46) (55,364.19) Dividends paid ............................................................................................. (367.13) (371.78) Interest, Commitment and Finance charges paid ........................................ (716.14) (328.81) Stamp duty paid on shares issued to PTL Shareholders .............................. (7.77) — NET CASH FROM FINANCING ACTIVITIES .................................................... 1,842.83 1,206.58 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) (84.22) 1,164.74 CASH AND CASH EQUIVALENTS [Note (a)] Opening Balance ......................................................................................... 2,953.07 1,785.67 Cash & Bank Balance Acquired on Acquisition of Subsidiaries ................... 1.43 4.37 Cash & Bank Balance on Disposal of Subsidiary .......................................... (122.92) (1.71) Closing Balance ........................................................................................... 2,747.36 2,953.07Per our report attached }For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director A. S. Ganguly DirectorsB. P. Shroff A. P. Puri Bharat Doshi Executive DirectorPartner N. B. Godrej A. K. Dasgupta Deepak S. Parekh Narayan Shankar Company SecretaryMumbai, 29th May, 2010 Mumbai, 29th May, 2010Notes to the Consolidated Cash Flow Statement for the year ended 31st March, 2010 Rupees crores 2010 2009(a) Cash and Bank Balances .............................................................................. 2,737.12 2,967.51 Unrealised (Net) translation (gain)/loss on foreign currency cash and cash equivalents .................................................................................................. 10.24 (14.44) Total cash and cash equivalents .................................................................. 2,747.36 2,953.07(b) The following non-cash transactions do not form part of Cash Flow : (i) Arising out of the agreement between Mahindra-BT Investment Company (Mauritius) Ltd. (MBTICM), a subsidiary of the Company and AT&T for sale of shares of Tech Mahindra Ltd. (TML) by MBTICM to AT&T, resulting in TML alongwith its subsidiary companies ceasing to be subsidiaries of the Company. (ii) Arising out of the scheme of arrangement for the merger of Mahindra Hinoday Industries Limited with Mahindra Castings Private Limited. (iii) Arising out of the scheme of arrangement for the merger of Metalcastello S.p.A. with Mahindra Metalcastello S.r.l.(c) Previous year’s figures have been regrouped/restated wherever necessary. 3
  • CMYK SCHEDULE I Rupees crores 2010 2009 Share Capital : Authorised : 1,20,00,00,000 Ordinary (Equity) Shares of Rs. 5 each [2009 : 60,00,00,000 Ordinary (Equity) Shares of Rs. 10 each] 600.00 600.00 25,00,000 Unclassified Shares of Rs.100 each ........................................ 25.00 25.00 Total .......... 625.00 625.00 Issued and Subscribed : 57,84,34,478 Ordinary (Equity) Shares of Rs. 5 each fully paid up [2009 : 27,88,21,265 Ordinary (Equity) Shares of Rs. 10 each fully paid up] ......................................................................... 289.21 278.82 289.21 278.82 Less : 1,25,26,592 Ordinary (Equity) Shares of Rs. 5 each fully paid up [2009 : 62,05,306 Ordinary (Equity) Shares of Rs.10 each fully paid up] issued to ESOP Trust but not allotted to employees ............................................................ 6.26 6.20 Adjusted : Issued and Subscribed Share Capital ................................................ 282.95 272.62 SCHEDULE II Rupees crores 2009 Additions / Deductions 2010 Adjustments Reserves and Surplus : 1 Capital Reserve .................................................................... 23.54 — — 23.54 23.48 0.08 0.02 23.54 2 Capital Reserve on consolidation ......................................... 139.01 0.31 — 139.32 138.55 0.46 — 139.01 3 Securities Premium Account ................................................ 545.66 784.79 6.59 1,323.86 579.03 10.95 44.32 545.66 Less : Premium on shares issued to ESOP Trust but not allotted to employees [Note 5] ............................................ 15.20 71.40 2.31 84.29 16.34 — 1.14 15.20 530.46 713.39 4.28 1,239.57 562.69 10.95 43.18 530.46 4 Revaluation Reserve ............................................................. 12.09 — 0.42 11.67 12.47 — 0.38 12.09 5 General Reserve ................................................................... 1,047.71 336.38# 6.12o 1,377.97 971.84 180.05# 104.18** 1,047.71 Add : Bonus shares issued to ESOP Trust but not allotted to employees [Note 5] ......................................................... 3.10 — 0.47 2.63 3.33 — 0.23 3.10 1,050.81 336.38 6.59 1,380.60 975.17 180.05 104.41 1,050.81 6 Debenture Redemption Reserve ........................................... 47.86 116.10$ 0.11 163.85 18.24 29.62$ — 47.86 7 Investment Fluctuation Reserve ........................................... 682.84 4.52 70.00 617.36 30.61 806.61 154.38 682.84 8 Capital Redemption Reserve ................................................ 68.75 — *** — 68.75 50.00 18.75 — 68.75 9 Special Reserve (As per Section 45 IC of the RBI Act) ......... 129.91 43.09 0.09 172.91 194.51 26.62 91.22 129.91 10 Hedging Reserve Account [Note 6] ..................................... (479.90) 559.92 — 80.02 28.78 — 508.68 (479.90) 11 Foreign Exchange Fluctuation Reserve ................................. (57.31) 20.97 — (36.34) 14.00 — 71.31 (57.31) 2,148.06 1,794.68 81.49 3,861.25† 2,048.50 1,073.14 973.58 2,148.06† † [including Group Share in Joint Ventures Rs. 401.02 crores (2009 : Rs. 3.21 crores)] 140
  • CMYK MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) SCHEDULE II (contd.) Rupees crores 2010 12 Balance for 2009-2010 and earlier years as per Profit and Loss Account ....................................................................... 5,060.66 4,614.63 Group Share in Joint Ventures ............................................ 975.40 28.07 Total .............................................. 9,897.31 6,790.76 # Transfer from Profit and Loss Account Rs. 286.88 crores (2009 : Rs. 180.05 crores) # Addition include adjustments pertaining to earlier periods in respect of Minority Interest amounting to Rs. 49.39 crores ***Transfer of Rs. NIL crores (2009 : Rs. 18.75 crores) from Profit and Loss Account $ Transfer from Profit and Loss Account Rs. 116.10 crores (2009 : Rs. 29.62 crores) Provisions no longer required written back o Amount utilised for expenses incurred on amalgamation of previous year Rs. 5.18 crores (Net of Tax of Rs. 2.59 crores) and impact of tax rate change on net debits to General Reserve Rs. 0.94 crores ** Adjustment on adoption of Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 - Net of Tax of Rs. 21.03 crores SCHEDULE III Rupees crores 2010 2009 Loan Funds : (A) Secured : [Note 7] (1) Debentures/Bonds ................................................................................ 2,330.20 2,880.86 (2) Foreign Currency Loans from Banks ..................................................... 1,047.27 1,133.97 (3) Rupee Loans : (a) From Financial Institutions ............................................................ 44.25 41.92 (b) From Banks ................................................................................... 4,561.72 2,648.08 (c) From Others .................................................................................. 148.00 56.00 4,753.97 2,746.00 (4) Loans and Advances on cash credit account from Banks .................... 510.76 709.36 (5) Short-term Foreign Currency Loans from Banks ................................... — 253.70 8,642.20 7,723.89 Group Share in Joint Ventures .................................................................... 330.25 0.82 Total ................................................. 8,972.45 7,724.71 (B) Unsecured : (1) Fixed Deposits ...................................................................................... 671.68 103.26 (2) Short-term Loans : (a) From Banks ................................................................................... 456.91 658.12 (b) From Others .................................................................................. 261.20 213.84 718.11 871.96 (3) Other Loans : (a) From Financial Institutions ............................................................ 841.43 688.67 (b) Foreign Currency Loans from Banks .............................................. 501.35 625.65 (c) Zero Coupon Convertible Bonds ................................................... 850.86 961.52 (d) Debentures/Bonds ......................................................................... 290.00 321.00 (e) 9.25% Fully and Compulsorily Convertible Debentures ................. — 700.00 (f) From Government of Gujarat ........................................................ 10.31 9.85 (g) From Banks ................................................................................... 318.38 137.81 (h) From Others .................................................................................. 39.76 45.88 2,852.09 3,490.38 4,241.88 4,465.60 Group Share in Joint Ventures .................................................................... 271.52 — Total ................................................. 4,513.40 4,465.60 Total ................................................. 13,485.85 12,190.31 141
  • 4 SCHEDULE IV Fixed Assets : Rupees crores Description of Assets Cost/ Additions Deductions Cost/Pro- Depreciation/ Depreciation/ Deductions Depreciation/ Net Balance Impairment Net Balance Net Balance Professional and and fessional Amortisation Amortisation and adjust- Amortisation before for 2009- after after valuation adjustments adjustments valuation to 31st for 2009- ments of to 31st Impairment 2010 $ Impairment Impairment as at 31st during the during as at 31st March, 2010 # Depreciation/ March, as at 31st as at 31st as at 31st March, year # the year March, 2009 Amortisation 2010 March, March, March, 2009 2010 2010 2010 2009 A: Assets on Lease Plant and Machinery ................ 74.11 0.26 — 74.37 35.88 6.14 — 42.02 32.35 — 32.35 38.23 Vehicles .................................... 2.45 — 0.74 1.71 0.83 0.07 0.49 0.41 1.30 — 1.30 1.62 Sub Total A .............................. 76.56 0.26 0.74 76.08 36.71 6.21 0.49 42.43 33.65 — 33.65 39.85 B: Owned Assets Land - Freehold ........................ 192.64 49.26 20.39 221.51 0.25 0.38 — 0.63 220.88 — 220.88 192.39 Land - Leasehold ...................... 399.39 107.99 49.60 457.78 8.20 5.86 2.32 11.74 446.04 — 446.04 391.19 Buildings - Freehold ................. 1,831.86 541.49 456.07 1,917.28 474.72 67.98 142.98 399.72 1,517.56 — 1,517.56 1,357.14 Buildings - Leasehold ............... 54.73 39.02 64.64 29.11 22.93 18.50 32.63 8.80 20.31 — 20.31 31.80 Plant and Machinery ................ 7,401.94 1,368.75 1,008.10 7,762.59 4,144.75 602.57 757.16 3,990.16 3,772.43 258.83 3,513.60 3,017.59 Furniture and Fittings ............... 621.99 93.98 221.81 494.16 344.02 69.93 146.01 267.94 226.22 1.72 224.50 276.27 Vehicles, Cycles, etc. ................ 211.06 39.10 34.91 215.25 98.31 28.89 28.17 99.03 116.22 — 116.22 112.75 Technical Knowhow ................. 110.03 58.73 0.60 168.16 44.98 7.74 2.35 50.37 117.79 55.57 62.22 9.48 Development Expenditure ........ 379.49 223.81 0.59 602.71 44.97 39.22 0.15 84.04 518.67 0.75 517.92 333.77 Software Expenditure ............... 173.52 51.99 8.31 217.20 92.85 32.00 10.19 114.66 102.54 0.73 101.81 80.42 Websites ................................... 3.50 0.24 — 3.74 3.47 0.01 — 3.48 0.26 — 0.26 0.03 Non-Compete Fees ................... 3.73 — — 3.73 0.24 0.40 — 0.64 3.09 — 3.09 3.49 Timeshare weeks ...................... 0.62 — — 0.62 0.43 0.06 — 0.49 0.13 — 0.13 0.19 Trademarks ............................... 24.97 — 8.51 16.46 9.12 0.71 1.39 8.44 8.02 — 8.02 15.85 Other Intangible ....................... 24.12 6.14 1.38 28.88 7.84 2.81 0.15 10.50 18.38 — 18.38 16.28 Goodwill + .............................. 1,519.58 53.56 96.26 1,476.88 — — — — 1,476.88 — 1,476.88 1,519.58 Sub Total B ............................... 12,953.17 2,634.06 1,971.17 13,616.06 5,297.08 877.06 1,123.50 5,050.64 8,565.42 317.60 8,247.82 7,358.22 C: Group Share in Joint Ventures ............... 12.62 499.30 0.06 511.86 7.23 233.49 * 0.03 240.69 271.17 — 271.17 5.39 TOTAL (A+B+C) ....................... 13,042.35 3,133.62 1,971.97 14,204.00 5,341.02 1,116.76 1,124.02 5,333.76 8,870.24 317.60 8,552.64 7,403.46 D: Capital Work-in-Progress and Advances [including Rs. 141.41 crores towards Group share in Joint Ventures (2009 : Rs. 1.35 crores)] ............. 1,967.69 — 1,967.69 1,738.35 Grand Total (A+B+C+D) ......... 13,042.35 3,133.62 1,971.97 14,204.00 5,341.02 1,116.76 1,124.02 5,333.76 10,837.93 317.60 10,520.33 9,141.81 10,690.36 3,483.87 1,131.88 13,042.35 4,219.02 1,163.49 41.49 5,341.02 9,453.06 311.25 9,141.81 + Goodwill arising on consolidation. # Refer Note 8 (b). * Rs. 233.47 crores is on account of Tech Mahindra Ltd as it has become a Joint Venture and on account of merger of subsidiaries during the year. $ Includes current charge of impairment (Net) Rs. 6.35 crores in Plant & Machinery and Software Expenditure.
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)SCHEDULE V Rupees crores 2010 2010 2009 2009 Long Term Current Long Term CurrentInvestments (At Cost unless otherwise specified) :Shares (Non-trade and fully paid-up) :Unquoted :(a) Equity Shares ....................................................................... 61.57 0.01 43.82 —(b) Equity Shares - Associates [Note 1(c) & Note 24] ............... 54.85 — 50.09 —(c) Preference Shares ................................................................ 43.20 — 34.52 — 159.62 0.01 128.43 —Quoted :(a) Equity Shares ....................................................................... 7.49 — 8.85 —(b) Equity Shares - Associates [Note 1(c) & Note 24] ............... 42.29 — 31.88 — 49.78 — 40.73 — 209.40 0.01 169.16 —Shares (Trade and fully paid-up, unless otherwise specified) :Unquoted :(a) Equity Shares ....................................................................... 8.82 — 6.17 —(b) Equity Shares partly paid-up ............................................... 0.19 — — —(c) Preference Shares ................................................................ 15.20 — 9.83 — 24.21 — 16.00 —Debentures/Bonds (Non-trade & fully paid-up) :(a) Unquoted ............................................................................ — — 33.25 —(b) Quoted ................................................................................ — 52.76 — 16.80 — 52.76 33.25 16.80Other Investments :Government Securities (including Treasury Bills) :(a) Unquoted ............................................................................ 0.01 — 0.01 —(b) Quoted ................................................................................ — 205.29 — 99.08 0.01 205.29 0.01 99.08Units :Unquoted ................................................................................... 1.15 1,291.57 — 1,535.37 1.15 1,291.57 — 1,535.37Trust Securities :Unquoted ................................................................................... 1,548.17 — 1,511.14 — 1,548.17 — 1,511.14 —Others :Unquoted ................................................................................... — 143.95 0.05 — — 143.95 0.05 — 1,782.94 1,693.58 1,729.61 1,651.25 Total ............... 3,476.52 3,380.86Group Share in Investments of Joint Ventures ........................... 1,329.88 0.44 Total ............... 4,806.40 3,381.30Cost (Net of amounts written off) of Unquoted Investments .... 4,498.57 3,224.69Cost/Carrying Value of Quoted Investments ............................... 307.83 156.61 4,806.40 3,381.30Less : Excess of cost over fair value of Current Investments (Net) 1.15 0.04 4,805.25 3,381.26Market value of Quoted Investments ......................................... 422.50 188.09 43
  • SCHEDULE VI Rupees crores 2010 2009Current Assets, Loans and Advances :(A) Inventories (at cost or net realisable value whichever is lower) : (i) Finished Products produced and purchased for sale ........................... 860.13 845.55 (ii) Contracts and Work-in-Progress ........................................................... 804.78 862.42 (iii) Manufactured Components ................................................................. 78.83 55.79 (iv) Raw Materials and Bought-out Components ....................................... 1,112.06 902.73 (v) Work-in-Progress – Property Development Activity and Long Term Contracts 576.33 498.36 (vi) Food, Beverages, Smokes and Operating Supplies ............................... 3.25 5.24 (vii) Stores and Spares ................................................................................. 65.75 58.20 (viii) Tools ..................................................................................................... 40.59 38.58 3,541.72 3,266.87 Group Share in Inventories of Joint Ventures .............................................. 7.27 4.59 Total .......... 3,548.99 3,271.46(B) Sundry Debtors : Unsecured unless otherwise stated : Outstanding over six months : Considered good ..................................... 292.77 427.23 : Considered doubtful ................................ 163.90 123.23 456.67 550.46 Other Debts : Considered good ................................................................. 2,662.42 3,122.19 : Considered doubtful ............................................................ 1.61 3.29 2,664.03 3,125.48 3,120.70 3,675.94 Less : Unmatured Finance Charges ............................................................. 128.27 94.02 Less : Provision for Doubtful Debts ............................................................. 162.88 131.11 2,829.55 3,450.81 Group Share in Debtors of Joint Ventures .................................................. 377.62 19.98 Total .......... 3,207.17 3,470.79(C) Cash and Bank Balances : Cash, cheques and stamps on hand ........................................................... 246.87 392.81 Balances with Banks : (i) On Current Account ............................................................................. 763.13 1,168.50 (ii) On Fixed Deposit Account .................................................................... 1,581.14 1,348.95 (iii) On Margin Account ............................................................................. 42.82 51.43 2,387.09 2,568.88 2,633.96 2,961.69 Group Share in Cash and Bank Balances of Joint Ventures ........................ 103.16 5.82 Total .......... 2,737.12 2,967.51 44
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)SCHEDULE VI (contd.) Rupees crores 2010 2009(D) Other Current Assets : Interest accrued on Investments .................................................................. 4.38 2.94 Others .......................................................................................................... 47.49 0.14 51.87 3.08 Group Share in Other Current Assets of Joint Ventures .............................. 0.07 0.11 Total .......... 51.94 3.19(E) Loans and Advances : (Unsecured, considered good unless otherwise stated) : Bills of exchange, considered good ............................................................. 47.81 14.26 Bills of exchange, considered doubtful ....................................................... 1.02 1.02 48.83 15.28 Less : Provision for Doubtful Debts ............................................................. 1.02 1.02 47.81 14.26 Advances recoverable in cash or in kind or for value to be received : Considered good ......................................................................................... 2,108.39 1,774.59 Considered doubtful .................................................................................... 88.80 79.74 2,197.19 1,854.33 Less : Provision for Doubtful Advances ....................................................... 85.50 74.91 2,111.69 1,779.42 Loans against assets/Retained Interest in Securitised Assets (Secured) : Considered good ......................................................................................... 7,969.76 6,319.22 Considered doubtful .................................................................................... 411.66 678.79 8,381.42 6,998.01 Less : Provision for Doubtful Advances ....................................................... 411.66 379.63 7,969.76 6,618.38 Payments towards Income Tax and Surtax (Net of provisions) .................... 273.27 336.57 Balances - Customs, Port Trust, Excise, etc. ................................................. 71.63 112.53 10,474.16 8,861.16 Group Share in Loans and Advances of Joint Ventures .............................. 296.84 0.75 Total .......... 10,771.00 8,861.91 Total .......... 20,316.22 18,574.86 45
  • SCHEDULE VII Rupees crores 2010 2009Current Liabilities and Provisions :(A) Current Liabilities : Acceptances ................................................................................................. 349.89 354.71 Sundry Creditors : (i) Total outstanding dues of micro and small enterprises ....................... 24.21 6.76 (ii) Total outstanding dues of creditors other than micro and small enterprises 4,544.01 5,097.73 4,568.22 5,104.49 Dividend payable ......................................................................................... 0.34 6.19 Balances on Directors’ Current Accounts .................................................... 3.10 2.21 Interest accrued but not due on loans ........................................................ 151.48 210.10 Deposits/Advances received against hire purchase/lease agreements .......... 112.80 53.87 Other current liabilities ................................................................................ 1,023.21 1,039.09 6,209.04 6,770.66 Group Share in Current Liabilities of Joint Ventures ................................... 508.57 9.30 Total .......... 6,717.61 6,779.96(B) Provisions : Proposed Dividends ..................................................................................... 549.52 278.83 Provision for Tax on Proposed Dividends ..................................................... 74.23 33.23 Provision for diminution in value of long term investments ....................... 93.34 28.35 Provision for premium payable on redemption of convertible bonds ......... 238.49 269.51 Provision for compensated absences ........................................................... 334.72 466.92 Provision for Estimated Loss/Expenses on Securitisation ............................. 202.67 137.62 Provision : Others [Note 14] ........................................................................ 341.99 400.45 1,834.96 1,614.91 Group Share in Provisions of Joint Ventures ............................................... 103.12 0.84 Total .......... 1,938.08 1,615.75 Total .......... 8,655.69 8,395.71SCHEDULE VIII Rupees crores 2010 2009Miscellaneous Expenditure(to the extent not written off or adjusted) : (a) Finance Charges ................................................................................... 4.12 15.38 (b) Separation and other costs .................................................................. — 0.86 (c) Others .................................................................................................. 0.46 0.62 Total .......... 4.58 16.86 46
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)SCHEDULE IX Rupees crores 2010 2009Income from Operations : Income from services rendered ................................................................... 6,028.05 5,718.51 Income from Loan, Retained Interest in securitised assets and securitisation 1,534.90 1,373.41 Income from long term contracts ............................................................... 321.16 159.57 Hire Purchase income, Lease income and other rentals .............................. 83.49 167.50 Miscellaneous Income ................................................................................. 394.97 342.45 8,362.57 7,761.44 Group Share in Joint Ventures .................................................................... 7.32 8.46 Total .......... 8,369.89 7,769.90SCHEDULE X Rupees crores 2010 2009Other Income : Profit on sale of Investments (Net) [Note 20 (b)] ........................................ 13.98 47.78 Dividends on other Investments [Note 20 (a)] ............................................ 68.87 100.94 Miscellaneous Income ................................................................................. 36.53 14.69 119.38 163.41 Group Share in Joint Ventures .................................................................... 0.05 0.05 Total .......... 119.43 163.46SCHEDULE XI Rupees crores 2010 2009Raw Materials, Finished and Semi-Finished Products :(A) (Increase)/Decrease in Stock of Finished Goods, Work-in-Progress and Manufactured Components : Opening Stock : (i) Finished Products produced and purchased for sale ........................... 845.55 1,013.20 (ii) Contracts and Work-in-Progress ........................................................... 862.42 730.01 (iii) Manufactured Components ................................................................. 55.79 48.10 1,763.76 1,791.31 Add : Stock taken over on acquisition (i) Finished Products produced and purchased for sale ........................... 6.67 1.79 (ii) Contracts and Work-in-Progress ........................................................... — 149.73 6.67 151.52 Less : Closing Stock : (i) Finished Products produced and purchased for sale ........................... 860.13 845.55 (ii) Contracts and Work-in-Progress ........................................................... 804.78 862.42 (iii) Manufactured Components ................................................................. 78.83 55.79 1,743.74 1,763.76 (Increase)/Decrease in Stock ........................................................................ 26.69 179.07(B) Consumption of Raw Materials and Bought-out Components : Opening Stock ............................................................................................. 902.73 1,029.39 Add : Purchases ........................................................................................... 14,338.40 11,801.58 15,241.13 12,830.97 Add : Stock taken over on acquisition ........................................................ — 7.52 Less : Closing Stock ..................................................................................... 1,112.06 902.73 14,129.07 11,935.76(C) Purchases of Finished Products for sale ...................................................... 1,079.88 922.23 15,235.64 13,037.06 Group Share in Joint Ventures .................................................................... 32.27 26.73 Total .......... 15,267.91 13,063.79 47
  • SCHEDULE XII Rupees crores 2010 2009Personnel : Salaries, Wages, Bonus, etc. ........................................................................ 4,024.00 3,736.92 Contribution to Provident and other funds ................................................. 255.65 262.58 Welfare ........................................................................................................ 294.56 269.09 4,574.21 4,268.59 Group Share in Joint Ventures .................................................................... 8.34 6.27 Total .......... 4,582.55 4,274.86SCHEDULE XIII Rupees crores 2010 2009Interest, Commitment and Finance Charges : On Term Loans and Debentures .................................................................. 905.36 730.91 On Others (Net) ........................................................................................... 188.93 105.68 Finance charges ........................................................................................... 26.21 21.17 1,120.50 857.76 Group Share in Joint Ventures .................................................................... 0.07 0.13 Total .......... 1,120.57 857.89 Less : Interest Income : Interest on Government Securities, Debentures and Bonds - Gross .. 3.43 2.83 Interest - Others - Gross .................................................................... 136.94 104.60 140.37 107.43 Group Share in Joint Ventures .................................................................... 0.37 0.30 Total .......... 140.74 107.73 979.83 750.16 48
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)SCHEDULE XIV Rupees crores 2010 2009Other Expenses : Stores consumed ......................................................................................... 194.09 181.57 Tools consumed ........................................................................................... 58.90 68.87 Power and Fuel ............................................................................................ 510.77 471.40 Rent including lease rentals ......................................................................... 241.08 240.23 Rates and Taxes ........................................................................................... 70.40 5.37 Insurance ..................................................................................................... 58.19 57.49 Repairs and Maintenance : Buildings ............................................................................................... 30.72 29.55 Machinery ............................................................................................. 172.83 191.82 Others .................................................................................................. 80.05 66.94 283.60 288.31 Postage, Telephone and Communication .................................................... 130.92 131.07 Software Charges ........................................................................................ 100.21 68.15 Legal and Professional Charges ................................................................... 192.76 200.30 Advertisement .............................................................................................. 254.57 203.98 Commission on sales/contracts (Net) ........................................................... 169.50 132.53 Discount allowed ......................................................................................... 102.90 72.87 Freight outward ........................................................................................... 873.87 718.36 Sales Promotion Expenses ........................................................................... 439.08 351.51 Travelling Expenses ...................................................................................... 458.58 487.15 Cost of Projects, Property etc. ..................................................................... 247.72 145.88 Subcontracting Charges .............................................................................. 873.93 770.21 Miscellaneous Expenses ............................................................................... 930.30 1,070.01 Amortisation of Expenses ............................................................................ 1.68 1.19 Directors’ Fees ............................................................................................. 0.14 0.09 Donations and Contributions ...................................................................... 18.75 16.89 Loss on Fixed Assets sold/scrapped/written off (Net) .................................. 17.88 6.04 Provision for diminution in value of Long Term Investments (Net) ............. 8.75 0.24 Net Increase of cost over fair value of Current Investments ....................... (0.25) (1.93) Provision for doubtful debts/advances (Net) ............................................... 91.26 165.68 6,329.58 5,853.46 Group Share in Joint Ventures .................................................................... 7.44 5.50 Total .......... 6,337.02 5,858.96 4
  • SCHEDULE XVNotes on the Consolidated Accounts for the year ended 31st March, 20101. The Consolidated Financial Statements relate to Mahindra & Mahindra Limited (M&M, the Company) and its subsidiaries, joint ventures and associates. The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) “Consolidated Financial Statements”, Accounting Standard 23 (AS 23) “Accounting for Investment in Associates in Consolidated Financial Statements” and Accounting Standard 27 (AS 27) “Financial Reporting of Interests in Joint Ventures” notified by the Companies (Accounting Standard) Rules, 2006. The Consolidated Financial Statements have been prepared on the following basis : (a) Investments in Subsidiaries : i) The Financial Statements of the Company and its subsidiary companies have been combined on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses. Intra group balances, intra group transactions and unrealised profits or losses have been fully eliminated. ii) The difference between the costs of investment in the subsidiaries over the Company’s portion of equity of the subsidiary is recognised in the financial statements as Goodwill or Capital Reserve. iii) The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as of date of disposal is recognised in the Profit and Loss Account as profit or loss on disposal of investment in subsidiary. iv) Minority Interest in the net assets of consolidated subsidiaries consists of : a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and b) the minorities’ share of movements in equity since the date the parent subsidiary relationship comes into existence. v) The Financial Statements of the subsidiaries are drawn up to 31st March, 2010. The subsidiaries (which along with Mahindra & Mahindra Limited, the parent, constitute the group) considered in the presentation of these Consolidated Financial Statements are : Proportion of Proportion of voting Country of ownership interest power where different Name of the Subsidiary Company Incorporation as at as at as at as at 31-03-2010 31-03-2009 31-03-2010 31-03-2009 Indian Subsidiaries Mahindra First Choice Wheels Limited * India 54.83% 54.83% — — Mahindra Life Space Developers Limited India 51.08% 51.08% — — Mahindra Consulting Engineers Limited India 51.00% 51.00% — — Tech Mahindra Limited [upto 22nd March, 2010 – refer note 3 (iii)] India — 48.83% — 52.33% Bristlecone India Limited India 81.97% 82.05% 100.00% 100.00% Mahindra Engineering and Chemical Products Limited India 100.00% 100.00% — — Mahindra Gujarat Tractor Limited India 60.00% 60.00% — — Mahindra Holidays and Resorts India Limited * India 84.03% 95.29% — — Mahindra Infrastructure Developers Limited India 40.87% 40.87% 80.00% 80.00% Mahindra Intertrade Limited India 100.00% 100.00% — — Mahindra Logisoft Business Solutions Limited [upto 22nd March, 2010 – refer note 3 (iii)] India — 100.00% — — Mahindra & Mahindra Financial Services Limited * India 60.68% 60.85% — — Mahindra Steel Service Centre Limited India 61.00% 61.00% — — Mahindra Shubhlabh Services Limited India 83.05% 83.05% — — NBS International Limited India 100.00% 100.00% — — Mahindra Insurance Brokers Limited India 60.68% 60.85% 100.00% 100.00% Mahindra Engineering Services Limited India 100.00% 100.00% — — Mahindra World City Developers Limited India 42.21% 42.21% 82.62% 82.62% 5
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) Proportion of Proportion of voting Country of ownership interest power where differentName of the Subsidiary Company Incorporation as at as at as at as at 31-03-2010 31-03-2009 31-03-2010 31-03-2009Mahindra Gears & Transmissions Private Limited(formerly known as Mahindra SAR TransmissionPrivate Limited) India 53.34% 100.00% — —Mahindra Navistar Automotives Limited India 51.00% 51.00% — —Mahindra World City (Maharashtra) Limited India 51.08% 51.08% 100.00% 100.00%Mahindra Renault Private Limited India 51.00% 51.00% — —Mahindra Ugine Steel Company Limited India 50.69% 50.69% — —Mahindra World City (Jaipur) Limited India 37.80% 37.80% 74.00% 74.00%CanvasM Technologies Limited[upto 22nd March, 2010 – refer note 3 (iii)] India — 39.11% — 80.10%Mahindra Hinoday Industries Limited *[upto 31st March, 2009 – refer note 3 (iv)] India — 64.88% — 99.81%Mahindra Integrated Township Limited India 48.74% 48.77% 99.92% 100.00%Mahindra Vehicle Manufacturers Limited India 100.00% 100.00% — —Mahindra Castings Limited(formerly known as Mahindra Castings Private Limited) India 64.94% 65.00% — —Mahindra Forgings Limited India 50.68% 60.56% — —Mahindra Hotels and Residences India Limited India 84.02% 95.28% 99.99% 99.99%Knowledge Township Limited(formerly known as Mahindra Knowledge City Limited) India 51.08% 51.08% 100.00% 100.00%Mahindra Holdings Limited India 100.00% 100.00% — —Mahindra Logistics Limited India 100.00% 100.00% — —Mahindra Rural Housing Finance Limited India 53.09% 53.25% 87.50% 87.50%Mahindra Residential Developers Limited India 24.85% 24.87% 51.00% 51.00%Mahindra Aerospace Private Limited India 100.00% 100.00% — —Mahindra First Choice Services Limited India 100.00% 100.00% — —Mahindra Navistar Engines Private Limited India 51.00% 51.00% — —Mahindra Bebanco Developers Limited India 35.76% 35.76% 70.00% 70.00%Industrial Township (Maharashtra) Limited(formerly known as Mahindra Industrial Township Limited) India 51.08% 51.08% 100.00% 100.00%Crest Geartech Limited India 51.00% 51.00% 100.00% 100.00%Mahindra Business & Consulting Services Private Limited(formerly known as Mahindra IT Consulting Private Limited) India 60.68% 82.05% 100.00% 100.00%Mahindra Two Wheelers Limited India 80.00% 80.00% — —Mahindra United Football Club Private Limited India 100.00% 100.00% — —Defence Land Systems India Private Limited(formerly known as Mahindra Defence Land SystemsPrivate Limited) India 100.00% 100.00% — —Venturbay Consultants Private Limited[upto 22nd March, 2010 – refer note 3 (iii)] India — 48.83% — 100.00%Mahindra Metal One Steel Service Centre Limited(w.e.f. 11th June, 2009) India 100.00% — — —Raigad Industrial & Business Park Limited(w.e.f. 18th June, 2009) India 51.08% — 100.00% — 5
  • Proportion of Proportion of voting Country of ownership interest power where different Name of the Subsidiary Company Incorporation as at as at as at as at 31-03-2010 31-03-2009 31-03-2010 31-03-2009 Retail Initiative Holdings Limited (w.e.f. 1st July, 2009) India 100.00% — — — Mahindra Retail Private Limited (w.e.f. 1st July, 2009) India 78.91% — — — Mahindra Punjab Tractors Private Limited (w.e.f. 9th October, 2009) India 100.00% — — — Mahindra EcoNova Private Limited (w.e.f. 2nd January, 2010) India 100.00% — — — Mahindra Conveyor Systems Private Limited (w.e.f. 4th January, 2010) India 100.00% — — — Foreign Subsidiaries Mahindra Automotive Australia Pty. Limited Australia 80.00% 80.00% — — Bristlecone Limited Cayman Islands 81.97% 82.05% — — Mahindra (China) Tractor Company Limited China 85.90% 84.87% — — Tech Mahindra (Beijing) IT Services Limited [upto 22nd March, 2010 – refer note 3 (iii)] China — 48.83% — 100.00% Mahindra Yueda (Yancheng) Tractor Company Limited China 51.00% 51.00% — — Mahindra Gears Cyprus Limited Cyprus 53.34% 53.34% 100.00% 100.00% Tech Mahindra GmbH [upto 22nd March, 2010 – refer note 3 (iii)] Germany — 48.83% — 100.00% Bristlecone GmbH Germany 81.97% 82.05% 100.00% 100.00% Mahindra Engineering GmbH (formerly known as Plexion Technologies GmbH) Germany 100.00% 100.00% — — Mahindra Forgings Europe AG Germany 50.68% 60.56% 100.00% 100.00% Gesenkschmiede Schneider GmbH Germany 50.68% 60.56% 100.00% 100.00% JECO-Jellinghaus GmbH Germany 50.68% 60.56% 100.00% 100.00% Falkenroth Umformtechnik GmbH Germany 50.68% 60.56% 100.00% 100.00% Schöneweiss & Co. GmbH ** Germany 50.68% 60.56% 97.28% 97.28% MHR Hotel Management GmbH Germany 63.02% 71.47% 75.00% 75.00% PT Tech Mahindra Indonesia [upto 22nd March, 2010 – refer note 3 (iii)] Indonesia — 48.83% — 100.00% Mahindra Europe S.r.l. Italy 80.00% 80.00% — — Mahindra Graphic Research Design S.r.l. Italy 100.00% 100.00% — — Metalcastello S.p.A. (formerly known as Mahindra Metalcastello S.r.l.- name changed pursuant to merger of Metalcastello S.p.A w.e.f. 31st December, 2009) Italy 51.00% 51.00% 95.61% 95.61% st Metalcastello S.p.A. (upto 31 December, 2009) Italy — 51.00% — 100.00% Engines Engineering S.r.l. Italy 70.00% 70.00% — — EFF Engineering S.r.l. Italy 35.70% 35.70% 51.00% 51.00% ID-EE S.r.l. Italy 49.00% 49.00% 70.00% 70.00% Bristlecone (Malaysia) SDN. BHD. Malaysia 81.97% 82.05% 100.00% 100.00% Tech Mahindra (Malaysia) SDN. BHD. [upto 22nd March, 2010 – refer note 3 (iii)] Malaysia — 48.83% — 100.00% Heritage Bird (M) SDN. BHD. Malaysia 84.03% 95.29% 100.00% 100.00% Mahindra Overseas Investment Company (Mauritius) Limited Mauritius 100.00% 100.00% — —5
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) Proportion of Proportion of voting Country of ownership interest power where different Name of the Subsidiary Company Incorporation as at as at as at as at 31-03-2010 31-03-2009 31-03-2010 31-03-2009 Mahindra-BT Investment Company (Mauritius) Limited Mauritius 57.00% 57.00% — — Mahindra Forgings International Limited Mauritius 50.68% 60.56% 100.00% 100.00% Mahindra Forgings Global Limited Mauritius 50.68% 60.56% 100.00% 100.00% Mahindra Gears International Limited Mauritius 100.00% 100.00% — — Mahindra Gears Global Limited Mauritius 53.34% 53.34% — — Mahindra Middleeast Electrical Steel Service Centre (FZC) Sharjah 90.00% 90.00% — — Tech Mahindra (Singapore) Pte. Limited [upto 22nd March, 2010 – refer note 3 (iii)] Singapore — 48.83% — 100.00% Bristlecone (Singapore) Pte. Limited Singapore 81.97% 82.05% 100.00% 100.00% Mahindra & Mahindra South Africa (Proprietary) Limited South Africa 100.00% 90.73% — — Tech Mahindra (Thailand) Limited [upto 22nd March, 2010 – refer note 3 (iii)] Thailand — 48.83% — 100.00% Bristlecone UK Limited U.K. 81.97% 82.05% 100.00% 100.00% Stokes Group Limited U.K. 50.64% 60.43% 99.92% 99.78% Stokes Forgings Dudley Limited U.K. 50.64% 60.43% 100.00% 100.00% Jensand Limited U.K. 50.64% 60.43% 100.00% 100.00% Stokes Forgings Limited U.K. 50.64% 60.43% 100.00% 100.00% Mahindra Engineering Services (Europe) Limited U.K. 100.00% 100.00% — — Tech Mahindra (Americas) Inc. [upto 22nd March, 2010 – refer note 3(iii)] U.S.A. — 48.83% — 100.00% Mahindra USA Inc. U.S.A. 100.00% 100.00% — — Bristlecone Inc. U.S.A. 81.97% 82.05% 100.00% 100.00% Mahindra Holidays and Resorts USA Inc. U.S.A. 84.03% 95.29% 100.00% 100.00% Mahindra Technologies Inc.(upto 10th March, 2010) U.S.A. — 100.00% — — CanvasM (Americas) Inc. [upto 22nd March, 2010 – refer note 3 (iii)] U.S.A. — 39.11% — 100.00% th Mahindra Technologies Services Inc. (w.e.f. 4 June, 2009) U.S.A. 100.00% — — — Tech Mahindra (Nigeria) Limited [w.e.f. 18th August, 2009 & upto 22nd March, 2010 – refer note 3 (iii)] Nigeria — — — — Tech Mahindra Bahrain Limited S.P.C. [w.e.f. 3rd November, 2009 & upto 22nd March, 2010 – refer note 3 (iii)] Bahrain — — — — BAH Hotelanlagen AG (w.e.f. 11th January, 2010) Austria 83.13% — 98.93% —* excluding shares issued to ESOP Trust but not allotted to employees as per the Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India.** includes fundamental economic rights and administrative rights (including but not limited to voting rights, information rights and right to participate in shareholders meetings) in respect of 2.72% shares.Note : Tech Mahindra Foundation is not consolidated as a subsidiary as it can apply its income for charitable objects only and cannot pay dividend or transfer funds to its parent. Further, with effect from 23rd March, 2010 Tech Mahindra Limited & all its subsidiaries cease to be a subsidiary of the Company. 53
  • (b) Interests in Joint Ventures The Group’s interests in jointly controlled entities of the Group are : Name of the Entity Country of Percentage of Percentage of Incorporation ownership ownership interest interest as at 31-03-2010 as at 31-03-2009 a) Mahindra Sona Limited India 29.77% 29.77% b) PSL Erickson Limited India 18.06% 18.06% c) Mahindra Water Utilities Limited $ India 50.00% 50.00% d) Mahindra Inframan Water Utilities Private Limited $ India 50.00% 50.00% e) Tech Mahindra Limited [w.e.f. 23rd March, 2010 - refer note 3 (iii)] India 43.99% — Interest in Joint Ventures is accounted for using Proportionate Consolidation Method. $ Shareholding is through a subsidiary, Mahindra Infrastructure Developers Limited. The financial statements of all the Joint Ventures are drawn upto 31st March, 2010. (c) Investment in Associates The Group’s Associates are : Name of the Entity Country of Percentage of Percentage of Incorporation ownership ownership interest interest as at 31-03-2010 as at 31-03-2009 Owens Corning (India) Limited India 21.50% 21.50% Mahindra Construction Company Limited India 43.83% 43.83% Officemartindia.com Limited India 50.00% 50.00% Rathna Bhoomi Enterprises Private Limited India 20.43% 20.43% Kota Farm Services Limited India 37.37% 37.37% Mriyalguda Farm Solution Limited India 37.37% 37.37% Mega One Stop Farm Services Limited India 37.37% 37.37% Mahindra Composites Limited India 30.56% 30.56% Swaraj Automotives Limited India 44.19% 44.19% Swaraj Engines Limited India 33.22% 33.22% Eco Engines (upto 15th January, 2010) Russia — 29.75% Satyam Computer Services Limited (w.e.f. 5th May, 2009 and upto 22nd March, 2010 – refer note 4) India — — st The financial statements of all the Associates are drawn up to 31 March, 2010.2. Accounting Policies : (A) Basis of Accounting : The financial statements are prepared in accordance with the generally accepted accounting principles in India and comply with the Accounting Standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 and the relevant provisions thereof. (B) Fixed Assets : (a) (i) Fixed Assets are carried at cost less depreciation except as stated in (iii) below. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the asset is ready for use. (ii) When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account. (iii) Land and Buildings, of the parent company had been revalued as at 31st October, 1984 at depreciated replacement values on the basis of a valuation made by a firm of Chartered Surveyors and Valuers. The indices, if any, used are not stated in the valuation. 54
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) (b) (i) Leasehold land is amortised over the period of the lease. (ii) Depreciation on fixed assets is provided on straight line method over its useful life estimated by management or on the basis of depreciation rates prescribed under respective local laws. (iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation of Land and Buildings, transferred from the Revaluation Reserve.(C) Intangible Assets : All Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are consumed. (a) Technical Knowhow : The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of purchase of the technology. (b) Development Expenditure : The expenditure incurred on technical services and other project related expenses are amortised on the completion of the development work over the estimated period of benefit not exceeding five years. (c) Software Expenditure : The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is incurred. (d) Websites : The expenditure incurred is amortised over the estimated period of benefit, not exceeding five years. (e) Timeshare Weeks : Intangible assets representing ‘timeshare weeks’ are amortised over a period of ten years. (f) Trademarks : The expenditure incurred is amortised over the estimated period of benefit, not exceeding ten years. (g) Non-Compete Fees : Non-compete payments are amortised equally over the estimated period of benefit, not exceeding ten years.(D) Investments : All long term investments, other than in Associates, are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary, in the value of investments. Current investments are valued at the lower of cost and fair value, determined by category of investment. Investments in Associates are accounted using the equity method.(E) Inventories : Inventories are stated at cost or net realisable value, whichever is lower. Cost is arrived at on a weighted average method and includes, where appropriate, manufacturing overheads and excise duty. Cost of the inventory, includes interest, where appropriate, for long term projects.(F) Miscellaneous Expenditure (to the extent not written off or adjusted) : Expenditure carried forward under this head is amortised as follows : (a) Finance Charges : The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback, conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year. (b) Separation and Other Costs : Special Payments/Pensions under Voluntary Retirement Schemes. The liability is amortised by the year ending March, 2010 from the month in which the liability is incurred.(G) Foreign Exchange Transactions : Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the year-end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be. 55
  • Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets and the balance accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ and amortised over the balance term of the long term monetary item or 31st March, 2011 whichever is earlier. Any premium or discount arising at the inception of a forward exchange contract is recognised as income or expense over the life of the contract, except in the case where the contract is designated as a cash flow hedge. (H) Derivative Instruments and Hedge Accounting : The Company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecast transactions. The Company does not hold derivative financial instruments for speculative purposes. The Company has applied to such contracts the hedge accounting principles set out in Accounting Standard (AS) 30 “Financial Instruments : Recognition and Measurement” by marking them to market. Changes in the fair value of the contracts that are designated and effective as hedges of future cash flows are recognised directly in Hedging Reserve Account and the ineffective portion is recognised immediately in the Profit and Loss Account. (I) Revenue Recognition : (a) Sales of products and services are recognised when the products are shipped or services rendered. Income from long term contracts and sale of property (concerning property development activity) is, accounted for on percentage of completion basis. [Refer paragraph (J) below] (b) Dividends from investments are recognised in the Profit and Loss Account when the right to receive payment is established. (J) Long Term Contracts and Property Development Activity : Income on long term contracts and property development activity is accounted on the percentage of completion basis which necessarily involves technical estimates of the percentage of completion of each contract/activity, and costs to completion of the contract/activity, on the basis of which profits/losses are accounted. Such estimates, made by the management and certified to the auditors, have been relied upon by them, as these are of a technical nature. Project management fees receivable on fixed period contracts are accounted over the tenure of the contract/agreement. Where the management fee is linked to the input costs, revenue is recognised as a proportion of the work completed based on progress claim submitted. Where the management fees are linked to the revenue generation from the project, revenue is recognised on the percentage of completion basis. (K) Income from Lease/Hire Purchase : Finance earnings on lease transactions are calculated by applying the interest rate implicit in the lease, to the investment in the leased assets, as reduced by the net present value of the lease instalments falling due. Income from hire purchase contracts entered prior to 1st April, 2001 is accounted for on equated basis in accordance with the terms of the contract (except in some cases in which it is accounted for by applying the interest rate implicit in such contracts). For hire purchase transactions entered on or after 1st April, 2001 the income is accounted for by applying the interest rate implicit in such contracts. (L) Government Grants : The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by the Company for its manufacturing unit located in a developing region. In view of the uncertainty in respect of the collection of these grants, such grants are accounted for as and when the disbursements are received. (M) Timeshare Business : The activity of selling Timeshare and providing holiday facilities to members for a specified period each year, over a number of years, for which membership fee is collected either in full up front, or on a deferred payment basis. Upto 30th September, 2005 out of the total membership fee, relevant portion reasonably attributable towards cost required to market Timeshare, which is assessed and revised periodically, is recognised as Timeshare income in the year in which the purchaser of Timeshare becomes a member and the balance representing ‘Advance towards members’ facilities’ is being recognised as Timeshare income equally over a period for which holiday facilities are provided commencing from the year in which the member is entitled to benefits of membership under the scheme. With effect from 1st October, 2005 in accordance with the new membership rules, admission fee, which is non-refundable, is recognised as income on admission of a member. Entitlement fee, which entitles the Timeshare member for the Timeshare facilities over the membership usage period, is recognised as income equally over the usage period.56
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)(N) Employee Benefits : Defined Contribution Plan/Defined Benefit Plan/Long term compensated absences. Group’s contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit and Loss Account. Contributions to Provident Fund are made to a Trust administered by the Group and are charged to Profit and Loss Account as incurred. The Company is liable for the contribution and any shortfall in interest between the amount of interest realised by the investment and the interest payable to members at the rate declared by the Government of India. Group’s liability towards gratuity, long term compensated absences and post retirement medical benefit schemes are determined by independent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.(O) Borrowing Costs : All borrowing costs are charged to the Profit and Loss Account other than : (a) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to get ready for their intended use. These are capitalised as part of the cost of such assets. (b) Expenses incurred on raising long term borrowings which are amortised over the period of borrowings. On early buyback, conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year.(P) Redemption Premium : Premium payable on redemption of Bonds/Debentures is fully provided and charged to Securities Premium Account (Net of Tax) in the year of issue.(Q) Product Warranty : In respect of warranties on sale of certain products, the estimated costs of these warranties are accrued at the time of sale. The estimates for accounting of warranties are reviewed and revisions are made as required.(R) Leases : The Group’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns, etc.). The leasing arrangements which are not non-cancellable range between eleven months and three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as Rent including lease rentals.(S) Segment Reporting : The accounting policies adopted for segment reporting are in line with the accounting policies of the Group. Segments are identified having regard to the dominant source and nature of risks and returns and internal organisation and management structure. Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment. Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income/expenses. Inter-segment transfers are at prices which are generally market led.(T) Taxes on Income : Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to 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. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future tax income will be available against which such deferred tax assets can be realised.(U) Income from Securitisation and Assignment : Securitised assets are derecognised as the contractual rights therein are transferred to the special purpose vehicle or buyers as the case may be. On derecognition, the difference between book value of the securitised asset and consideration received as reduced by the estimated provision for loss/expense and incidental expenses related to the transaction is recognised as gain or loss arising on securitisation. In case of assignment of receivables the assets are derecognised as all the rights, titles, future receivables and interest thereof are assigned to the purchaser. On derecognising, the difference between book value of the receivables assigned and consideration received as reduced by the estimated provision for loss/expense and incidental expenses related to the transaction is recognised as gain or loss arising on assignment. 57
  • 3. Changes in Group Structure : During the year ended 31st March, 2010, the following changes in Group structure have taken place and the same have been appropriately dealt with in the Consolidated Financial Statements. i. Mahindra Holidays & Resorts India Limited (MHRIL) : During the current year Mahindra Holidays & Resorts India Limited (MHRIL), a subsidiary of the Company, had come out with an IPO which was accompanied by a simultaneous offer for sale of its’ shares held by M&M. This has resulted in a dilution of M&M’s holding in MHRIL from 95.29% to 84.03%. While in the standalone accounts, M&M had reported a profit on this transaction of Rs.90.75 crores, in the consolidated accounts of the Company, a deemed divestiture gain of Rs.112.55 crores has been accounted for as an exceptional item. ii. Mahindra Forgings Limited (MFL) : During the current year Mahindra Forgings Limited (MFL), a subsidiary of the Company, had issued and allotted fresh equity shares to Qualified Institutional Buyers (QIBs). Further M&M also opted to convert the preferential warrants issued by MFL to the Company. As a consequence of this the Group’s holding in MFL has reduced from 60.56% to 50.68%. These changes have collectively resulted in a deemed divestiture gain of Rs.12.89 crores which has been reflected as an exceptional item in the consolidated accounts. iii. Tech Mahindra Limited (TML) : M&M and Mahindra-BT Investment Company (Mauritius) Limited (MBTICM), a subsidiary of the Company, were effectively holding 48.62% in the equity of Tech Mahindra Limited (TML). MBTICM had entered into an option agreement whereby it had granted AT&T an option to acquire its investment in TML at a fixed price of US$ 3.5022 per share. Pursuant to the same, AT&T has exercised its Options and acquired 98,70,912 equity shares of TML on 22nd March, 2010 from MBTICM. At the year end the effective shareholding of the Company alongwith MBTICM in TML stands reduced to 43.99%, resulting in TML alongwith its subsidiary companies ceasing to be Subsidiaries of the Company with effect from 22nd March, 2010. For the purposes of the Balance Sheet as at 31st March, 2010, TML has, on a consolidated basis, been treated as a Joint Venture, in accordance with the provisions of Accounting Standard 27 dealing with Financial Reporting of Interests in Joint Venture. While the sale of shares has resulted in a gain of Rs.94.96 crores for MBTICM, the de-subsidiarisation of Tech Mahindra group has resulted in a deemed divestiture loss amounting to Rs. 45.21 crores and these have been reflected in the consolidated accounts as exceptional items. iv. Mahindra Hinoday Industries Limited (MHIL) : In accordance with a scheme of amalgamation sanctioned by the Hon’ble High Court of Judicature, Bombay vide its order dated 10th July, 2009 Mahindra Hinoday Industries Limited (MHIL), a subsidiary of Mahindra Castings Private Limited (MCPL), has merged with MCPL with effect from 1st April, 2008, the appointed date. In accordance with the Court Order, the assets and liabilities of MHIL have been transferred at their respective fair values. Since the merger was effective 1st April, 2008, the impact of accounting treatment in accordance with the Court Order, amounting to Rs.2.26 crores, has been accounted as a prior period item. v. Metalcastello S.p.A. (MMCS) : In accordance with a scheme of amalgamation sanctioned by The Ordinary Court Room, Italy vide its order dated 17th December, 2009, Metalcastello S.p.A., a subsidiary of Mahindra Metalcastello S.r.l. (MMCS), has merged with MMCS with effect from 1st April, 2009, the appointed date. vi. Mahindra Shubhlabh Services Limited (MSSL) : In terms of the proposed scheme of arrangement between Mahindra Shubhlabh Services Limited (MSSL), and the Company the scheme would be operative, pending statutory approvals, with effect from 1st January, 2010. The scheme proposes restructuring of the non-fruit business of MSSL as a result of which the non-fruit business would be transferred to the Company. Pending the approvals, the financial statements of MSSL, an existing subsidiary of the Company, have been considered in the Consolidated Financial Statements without considering the impact of the proposed scheme.4. The Consolidated Financial Statements of the Company do not include Satyam Computer Services Limited (SCSL) and its subsidiaries, as SCSL is in the process of restating its financials. The Company Law Board vide its order dated 15th April, 2009 has given extension of time till 30th June, 2010 to SCSL for filing of the documents with various statutory authorities. The Securities Exchange Board of India vide its letter dated 19th April, 2010 has approved the publishing of the Consolidated Financial Statements of the Company for the year ended 31st March, 2010 without including SCSL and its subsidiaries. Hence the impact of post acquisition profit/loss of SCSL on ‘Share of Profit of Associates for the year’, ‘Group Share in Investments of Joint Ventures’ and ‘Reserves and Surplus’ is not considered in the Consolidated Financial Statements of the Group for the current year.5. The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires that shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Company has reduced the Share Capital by Rs. 3.63 crores (2009 : Rs. 3.10 crores), Securities Premium by Rs. 84.29 crores (2009 : Rs. 15.20 crores) for the 72,63,296 shares of Rs. 5 each (2009 : 31,02,653 shares of Rs. 10 each) held by the trust pending transfer to the eligible employees. The Share Capital of the Company has also been reduced and the General Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for the 52,63,296 bonus shares of Rs. 5 each (2009 : 31,02, 653 shares of Rs. 10 each) issued by the Company in September, 2005 to the trust but not yet transferred by the trust to the employees. The above monies which are treated as advance received from it, is included under Current Liabilities.6. Consequent to the announcement issued by The Institute of Chartered Accountants of India dated 29 th March, 2008 in respect of forward exchange contracts and currency and interest rate swaps, the Company has applied the Hedge Accounting principles set out in the Accounting 58
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) Standard (AS) 30 “Financial Instruments : Recognition and Measurement”. Accordingly, such contracts are marked to market and the gain aggregating Rs. 80.02 crores (Net of Tax of Rs. 27.20 crores) [2009 : Loss of Rs. 479.90 crores (Net of Tax of Rs. 223.57 crores)] arising consequently on contracts that were designated and effective as hedges of future cash flows has been recognised directly in the Hedging Reserve Account.7. Loans : (a) Secured borrowings are secured by a pari-passu charge on immovable properties of the entities both present and future, subject to certain exclusions and are also secured by pari-passu charge on the movable properties of the Entities including movable machinery, machinery spares, tools and accessories, both present and future, subject to certain exclusions. (b) Loans and Advances from Banks are secured by a first charge on whole of the Current Assets namely inventories, certain book debts, outstanding monies, receivables, claims, etc. both present and future.8. (a) The depreciation charge for the year excludes : i) An amount of Rs. 0.42 crores (2009 : Rs. 0.38 crores), representing depreciation on the increase due to revaluation of Land and Buildings transferred from the Revaluation Reserve. ii) An amount of Rs. 6.71 crores (2009 : Rs. 4.08 crores), representing depreciation on assets used for development work. This expenditure is transferred to Development Expenditure and is appropriately amortised. (b) Additions to assets include assets taken over due to acquisition of subsidiaries : Rupees crores Description of Assets Cost Depreciation/ Amortisation Land - Leasehold ......................................................................................................................... 26.21 — Plant and Machinery ................................................................................................................... 6.12 0.59 Furniture and Fittings .................................................................................................................. 6.62 0.50 Vehicles, Cycles, etc. .................................................................................................................... 1.10 0.22 Software Expenditure .................................................................................................................. 3.11 0.80 Property – Leasehold ................................................................................................................... 6.98 0.53 Total ............................................................................................................................................ 50.14 2.649. During the year, Mahindra & Mahindra Financial Services Limited has without recourse assigned loan receivables of 31,628 (2009 : 32,083) contracts amounting to Rs. 1,044.61 crores (2009 : Rs. 1,036.23 crores) (including future interest receivable) for a consideration of Rs. 971.28 crores (2009 : Rs. 915.11 crores) and de-recognised the assets from the books. The income booked in respect of assignment of receivables includes certain amount towards cost of future servicing of the assigned pool and an appropriate amount has been provided towards expenditure for future services. On assignment of receivables income is booked at Rs. 190.58 crores (2009 : Rs. 151.95 crores) and provision for estimated loss/expenses of Rs. 80.51 crores (2009 : Rs. 54.27 crores). During the year provision in respect of securitisation of Rs. 15.46 crores (2009 : Rs. 7.67 crores) considered no longer necessary has been written back.10. The Company had issued during the year ended 31st March, 2007, Zero Coupon Foreign Currency Convertible Bonds (Bonds 2011) aggregating US$ 200 million, at par. The bond holders have an option to convert these bonds into Equity Shares with full voting rights or Global Depository Receipts (GDRs) determined at an initial conversion price of Rs. 461.02 per share of Rs. 5 each (2009 : Rs. 922.04 per share of Rs. 10 each) with fixed exchange rate of conversion of Rs. 44.42 = US$ 1, at any time on or after 7th May, 2006 upto 7th March, 2011. The Bonds 2011 may be redeemed, in whole but not in part, at the option of the Company at any time on or after 13th April, 2008 subject to satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the bonds fall due for redemption on 14th April, 2011 at 128.03 per cent of their principal amount. Bonds 2011 of the face value of US$ 10.50 million have been bought back and cancelled in the previous year. Upto 31st March, 2010, none of the Bonds 2011 have been converted into equity shares/GDRs. The net proceeds of Rs. 48.46 crores, unutilised as at 31st March, 2010, is disclosed under Cash and Bank balances. The Company’s 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCD’s) having face value of Rs. 745 per FCD issued during the year ended 31st March, 2009, were compulsorily converted on 27th January, 2010 into 93,95,974 Ordinary (Equity) shares of Rs. 10 each [before sub division of the Ordinary (Equity) Shares] of the Company at a premium of Rs. 735 per share. Consequent to the conversion the Share Capital and Securities Premium Account of the Company have increased by Rs. 9.40 crores and Rs. 690.60 crores respectively. 5
  • 11. Employee Defined Benefits : Defined benefit plans – as per Actuarial Valuation on 31st March, 2010 Rupees crores Funded Plan Unfunded Plans Gratuity Gratuity Post Retirement Post Retirement Medical Benefits Housing Allowance 2010 2009 2010 2009 2010 2009 2010 2009 A Expense recognised in the statement of Profit & Loss Account for the year ended 31st March 1 Current Service Cost 25.96 22.19 12.27 21.60 0.44 0.23 1.50 — 2 Interest Cost 26.96 20.57 9.00 10.59 0.41 0.25 0.84 — 3 Expected return on Plan Assets (18.66) (19.82) (0.10) (0.04) — — — — 4 Actuarial (Gains)/Losses (10.90) 35.86 (4.84) 8.21 4.32 1.80 (1.77) — 5 Past Service Cost 12.14 0.03 (0.02) 0.05 — — — — 6 Settlement Cost — — — — — — — — 7 Payments on account of employee transferred (0.22) (0.04) (0.07) — — — — — 8 Effect of the limit in Para 59(b) of the revised AS 15 0.08 (0.01) — — — — — — 9 Total expense recognised in Personnel (Sch XII) 35.36 58.78 16.24 40.41 5.17 2.28 0.57 — B. Net Asset/(Liability) recognised in the Balance Sheet as at 31st March 1 Present Value of Defined Benefit Obligation as at 31st March 378.12 337.58 162.51 116.27 9.88 4.99 10.99 — 2 Fair value of Plan Assets as at 31st March 305.04 230.08 0.05 0.21 — — — — 3 Amount not recognised as an asset (0.21) (3.92) — 39.65 — — — — 4 Funded status [Surplus/(Deficit)] (72.87) (103.58) (162.46) (155.71) (9.88) (4.99) (10.99) — 5 Net Asset/(Liability) as at 31st March (72.87) (103.58) (162.46) (155.71) (9.88) (4.99) (10.99) — C. Change in the obligations during the year ended 31st March 1 Present Value of Defined Benefit Obligation at the beginning of the year 341.72 278.71 95.95 32.04 5.00 2.95 10.42 — 2 Adjustment to the opening balance/Exchange rate variation (0.17) — 57.06 — — — — — 3 Obligations arising on account of acquisitions during the year — (3.08) 2.42 0.68 — — — — 4 Current Service Cost 25.96 22.19 12.27 61.24 0.44 0.23 1.50 — 5 Interest Cost 26.96 20.58 9.01 10.59 0.41 0.25 0.84 — 6 Actuarial (Gains)/Losses (6.15) 35.86 (4.78) 8.16 4.32 1.80 (1.77) — 7 Liabilities settled on sale of business 0.28 — — (3.12) — — — — 8 Benefits paid (22.62) (12.54) (9.40) (13.70) (0.29) (0.23) — — 9 Past Service Cost 12.14 — (0.02) 0.06 — — — — 10 Present Value of Defined Benefit Obligation at the end of the year 378.12 341.72 162.51 95.95 9.88 5.00 10.99 — 6
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) Rupees crores Funded Plan Unfunded Plans Gratuity Gratuity Post Retirement Post Retirement Medical Benefits Housing Allowance 2010 2009 2010 2009 2010 2009 2010 2009D. Change in the fair value of plan assets during the year ended 31st March 1 Fair value of Plan Assets at the beginning of the year 239.13 217.95 — — — — — — 2 Adjustment to the opening balance/Exchange rate variation (4.21) — — — — — — — 3 Fair value of Plan Assets arising on account of acquisitions during the year 1.01 (0.16) — — — — — — 4 Expected return on Plan Assets 18.17 20.03 — — — — — — 5 Actuarial Gains/(Losses) 7.26 0.27 — — — — — — 6 Contributions by employer 66.30 10.59 0.05 2.41 0.28 0.22 — — 7 Asset distributed on sale of business — 1.76 — — — — — — 8 Actual Benefits paid (22.62) (11.31) — (2.41) (0.28) (0.22) — — 9 Fair value of Plan Assets at the end of the year 305.04 239.13 0.05 — — — — — 10 Actual return on Plan Assets 22.24 17.38 — — — — — —E. Major category of Plan Assets as a percentage of total plan Insurer Managed Funds 97.96% 100.00% Others 2.04% 0.00%F. Actuarial Assumptions1 Discount Rate (Basis - prevailing 7.50 % - 7.50 % - 6.85 % - 7.50 % - 7.60 % - 7.50 % - market yields of govt. securities) 8.45 % 8.50 % 8.50 % 8.50 % 8.45 % 8.50 % 8.45%2 Expected Rate of return on 7.50 % - Plan Assets 7.07% 9.50 %3 In-service Mortality Indian Assured Lives Mortality (1994-96) Modified ultimate4 Turnover rate Age 21 to 5.00% Age 21 to Age 21 to 5.00% Age 21 to 30 - 10% 44 -25% 30 - 10% 30 - 10% Age 31 to Age 44 to Age 31 to Age 31 to 40 - 3% 59 - 10% 40 - 5% 40 - 5% Age 41 to Age 41 to Age 41 to 59 - 2% 50 - 3% 50 - 3% Age 51 Age 51 and and above - above - 2% 2%5 Medical Premium inflation 3.00%- 3.00%- 6.00% 6.00% 6
  • One percentage point increase in One percentage point decrease in medical inflation rate medical inflation rate G. Effect of one percentage point change in the assumed medical inflation rate Current Year Effect on the aggregate service and interest cost of Post Employment Medical benefits 0.25 (0.20) Effect on the accumulated Post Employment Medical benefit obligations 1.38 (1.11) Previous Year Effect on the aggregate service and interest cost of Post Employment Medical benefits 0.14 (0.16) Effect on the accumulated Post Employment Medical benefit obligations 0.46 (1.38) Rupees crores Period ended H. Experience Adjustments 2010 2009 2008 2007 Gratuity (Funded) Defined Benefit Obligation 378.12 341.72 278.71 204.46 Plan Assets 305.04 239.13 217.95 144.67 (Deficit)/Surplus (73.08) (102.59) (60.76) (59.79) Experience adjustments on Plan Liabilities 13.40 34.34 (3.36) — Experience adjustments on Plan Assets 4.92 0.02 — — Gratuity (Unfunded) Defined Benefit Obligation 162.51 95.95 52.75 32.05 Plan Assets 0.05 — — — (Deficit)/Surplus (162.46) (95.95) (52.75) (32.05) Experience adjustments on Plan Liabilities (0.26) 0.02 — — Post Retirement Medical Benefits (Unfunded) Defined Benefit Obligation 9.88 5.00 2.95 3.30 Plan Assets — — — — (Deficit)/Surplus (9.88) (5.00) (2.95) (3.30) Experience adjustments on Plan Liabilities 5.21 1.24 (0.49) 0.07 Post Retirement Housing Allowance (Unfunded) Defined Benefit Obligation 10.99 — — — Plan Assets — — — — (Deficit)/Surplus (10.99) — — — Experience adjustments on Plan Liabilities 0.15 — — — Basis used to determine expected rate of return on assets : Based on expectation of the average long term rate of return expected on investment of the fund, during the estimated term of obligation. The estimate of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.6
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)12. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) by its order dated 7th December, 2009 has rejected the Company’s appeal against the order dated 30th March, 2005 passed by the Commissioner of Central Excise (Adjudication), Navi Mumbai confirming the demand made on the Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of Company’s Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as 10-seater attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles could not be classified as 10-seaters as they did not fulfil the requirement of 10-seater vehicles, as provided under the Motor Vehicles Act, 1988 (MVA) and Maharashtra Motor Vehicles Rules, 1989 (MMVR) and as such attracted a higher rate of excise duty. In earlier collateral proceedings on this issue, the CESTAT had by an Order dated 19th July, 2005 settled the controversy in the Company’s favour. The CESTAT had accepted the Company’s submission that MVA and MMVR could not be referred to for determining the classification for the purpose of levy of excise duty and rejected the Department’s Appeal against the Order of the Collector, Central Excise classifying the Commander range of vehicles as 10-seaters. The Department’s appeal against the CESTAT Order dated 19th July, 2005 is pending before the Supreme Court of India but the operation of the Order has not been stayed. The Company has filed an appeal against the aforesaid order dated 7th December, 2009 inter alia, on the grounds that the MVA and MMVR cannot be referred to for the purpose of determining the excise classification, as has been repeatedly held by various judicial fora, including the Supreme Court and particularly by CESTAT vide its order dated 19th July, 2005 in the Company’s own case referred to above. Without prejudice to the grounds raised in the appeal, the Company has paid an amount of Rs. 40 crores in January, 2010. Pending admission of the Company’s appeal the Supreme Court has passed an interim order staying the recovery of the balance amount till further orders. In another case relating to Armada range of vehicles manufactured during the years 1992 to 1996, by the Company at its Nashik facility, the Commissioner of Central Excise, Nashik passed an order dated 20th March, 2006 confirming a demand of Rs. 24.75 crores, on the same grounds as adopted for Commander range of vehicles. The CESTAT has given an unconditional stay against this order, which is yet to be finally heard by the Tribunal. The Company strongly believes, based on legal advice it has received, that the CESTAT order dated 7th December, 2009 which is under appeal in the Supreme Court is not sustainable in law and hence the Company has a very good chance of succeeding in the matter. As such, the Company does not expect any liability on this account. However, in view of the CESTAT order, the Company has reflected the above amount aggregating Rs. 328.86 crores and the interest of Rs. 168.05 crores accrued on the same upto 31st March, 2010, as a Contingent Liability in the Accounts and the same is included in the amounts disclosed under Note 13 (b)(i).13. Contingent Liability : (a) Guarantees given : Rupees crores Outstanding amounts against the guarantees 2010 2009 For employees ................................................................................................................ 1.05 1.05 For other companies ...................................................................................................... 330.72 181.39 Others ............................................................................................................................ 2.42 105.85 Group share in Joint Ventures Rs. 25.29 crores (2009 : Rs. Nil) (b) Claims against the Companies not acknowledged as debts comprise of : (i) Excise Duty, Sales tax and Service tax claims disputed by the Companies relating to issues of applicability and classification aggregating Rs. 1,004.38 crores (Net of Tax : Rs. 726.63 crores) [2009 : Rs. 427.70 crores (Net of Tax : Rs. 280.02 crores)]. (ii) Other Matters (excluding claims where amounts are not ascertainable) : Rs. 94.04 crores (Net of Tax : Rs. 68.41 crores) [2009 : Rs. 104.68 crores (Net of Tax : Rs. 50.79 crores)]. (iii) On Capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores). (iv) Group Share in Joint Ventures Rs. 7.89 crores (Net of Tax : Rs. 7.75 crores) [2009 : Rs. 0.38 crores (Net of Tax : Rs. 0.38 crores)]. (c) Taxation matters : (i) Demands not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which the matters are in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed : - Income Tax : Rs. 409.78 crores (2009 : Rs. 368.52 crores) - Group Share in Joint Ventures : Rs. 22.57 crores (2009 : Rs. 0.29 crores) (ii) Items which have succeeded in appeal, but the Income Tax Department is pursuing/likely to pursue in appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed : - Income Tax matters : Rs. 70.58 crores (2009 : Rs. 58.63 crores) - Surtax matters : Rs. 0.13 crores (2009 : Rs. 0.13 crores) (d) Bills discounted not matured Rs. 31.40 crores (2009 : Rs. 91.31 crores). (e) Corporate undertaking on Securitisation/Assignment by Mahindra & Mahindra Financial Services Limited Rs. 626.25 crores (2009 : Rs. 458.20 crores). 63
  • 14. (a) Provision - Others Rs. 336.29 crores (2009 : Rs. 389.37 crores) includes provision for warranty Rs. 213.06 crores (2009 : Rs. 170.55 crores). This relates to warranty provision made in respect of sale of certain products, the estimated costs of which are accrued at the time of sale. The products are generally covered under a free warranty period ranging from six months to three years. (b) Provision for Contingencies Rs. 5.70 crores (2009 : Rs. 11.08 crores) is in respect of labour demands under negotiation at certain locations of the Company. The ultimate settlement is contingent on the conclusion of negotiations. (c) Provision for retired assets Rs. 15.83 crores (2009 : Rs. 16.89 crores) is in respect of diminution in value of certain assets substantially retired from active use. The movement in above provisions is as follows : Rupees crores Warranty Contingency Retired assets Provisions 2010 2009 2010 2009 2010 2009 st Balance as at 1 April .............................................................. 170.55 139.11 11.08 9.55 16.89 17.01 Add : On Amalgamation during the year ............................... 0.43 0.25 — — — — Add : Provision made during the year .................................... 128.40 120.33 4.77 6.85 — — Less : Utilisation/Reversal during the year ................................ 86.32 89.14 10.15 5.32 1.06 0.12 st Balance as at 31 March ......................................................... 213.06 170.55 5.70 11.08 15.83 16.89 Group Share in Joint Venture : Rs. 0.12 crores (2009 : Rs. 0.10 crores)15. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March, 2010 is Rs. 1,400.29 crores (2009 : Rs. 1,259.97 crores). Group Share in Joint Ventures : Rs. 118.01 crores (2009 : Rs. 0.29 crores).16. Research and Development expenditure debited to the Profit and Loss account, including certain expenditure based on allocations made aggregate Rs. 275.72 crores (2009 : Rs. 240.47 crores). Group Share in Joint Ventures : Rs. NIL (2009 : Rs. 0.03 crores).17. The components of Deferred Tax Liability and Assets as at 31st March, 2010 are as under : Rupees crores 2010 2009 Deferred Tax Liability : (i) On fiscal allowances on Fixed Assets ........................................................................................ 517.47 445.30 (ii) Others ....................................................................................................................................... 207.20 140.45 Group Share in Joint Ventures .................................................................................................. 0.22 0.50 724.89 586.25 Deferred Tax Assets : (i) Provision for Compensated absences ....................................................................................... 97.04 101.40 (ii) Provision for Doubtful Debts/Advances .................................................................................... 247.19 209.99 (iii) Unabsorbed depreciation carried forward # ............................................................................ 113.47 115.66 (iv) Premium on Redemption of Zero Coupon Convertible Bonds ................................................. 18.10 40.08 (v) Provision for Gratuity ................................................................................................................ 14.09 1.49 (vi) Provision for Post Retirement Medical Expenses ....................................................................... 0.02 17.61 (vii) Others ....................................................................................................................................... 174.50 287.54 Group Share in Joint Ventures .................................................................................................. 12.27 0.88 676.68 774.65 Net Deferred Tax Liability/(Assets) ..................................................................................................... 48.21 (188.40) # (considered, as there are compensatory timing differences the reversal of which, will result in sufficient future taxable income against which this can be realised). 64
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)18. Exceptional items of Rs. 250.23 crores (Credit) [2009 : Rs. 76.39 crores (Debit)], comprise of the following : Rupees crores 2010 2009 1. Profit on divesture of Long Term Investments (Net) ............................................................................ 264.56 83.18 2. Impairment of Assets ........................................................................................................................... (6.35) (311.25) 3. Transferred from Investment Fluctuation Account .............................................................................. — 154.38 4. Restructuring Cost ............................................................................................................................... (3.82) — 5. Amortisation of liability ....................................................................................................................... — (5.30) 6. Others .................................................................................................................................................. (4.16) 2.60 Total ................................................................... 250.23 (76.39) Figures in brackets signify charge to Profit and Loss account.19. Adjustments pertaining to previous years, net of current and deferred tax, comprise of the following : Rupees crores 2010 2009 1. (Excess)/Short provision of Income Tax in respect of previous years ................................................... 0.15 0.07 2. Other Adjustments ............................................................................................................................... 4.12 6.29 Total ................................................................... 4.27 6.3620. (a) Dividends on other investments Rs. 68.87 crores (2009 : Rs. 100.94 crores) includes Rs. 66.87 crores (2009 : Rs. 100.94 crores) in respect of current investments and Rs. 2.00 crores (2009 : Rs. Nil) in respect of long term investment. (b) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 3.68 crores (2009 : Rs. 12.53 crores), and profit on disposal of long term investments (Net) Rs. 10.30 crores (2009 : Rs. 35.25 crores).21. Work-in-progress – Property Development Activity and Long Term Contracts and Advances recoverable in cash or kind or for value to be received includes Rs. 68.73 crores (2009 : Rs. 68.73 crores) on account of certain projects, the commencement of which has been delayed pending resolution of certain matters including receipt of approvals and outcome of court cases.22. Related Party Disclosures : (a) Names of related parties where transactions have taken place during the year : Where Control exists : Sl. No. Name of the Company 1. Tech Mahindra Foundation [upto 22nd March, 2010 - refer note 3 (iii)] Associates : Sl. No. Name of the Company Sl. No. Name of the Company 1. Owens Corning (India) Limited 7. Mriyalguda Farm Solution Limited 2. Mahindra Construction Company Limited 8. Mega One Stop Farm Services Limited 3. Officemartindia.com Limited 9. Eco Engines (upto 15th January, 2010 on which date it got liquidated) 4. Rathna Bhoomi Enterprises Private Limited 10. Swaraj Automotives Limited 5. Mahindra Composites Limited 11. Swaraj Engines Limited 6. Kota Farm Services Limited 12. Satyam Computer Services Limited (w.e.f. 5th May, 2009 and upto 22nd March, 2010) – (refer note 4) Joint Ventures : Sl. No. Name of the Company Sl. No. Name of the Company 1. Mahindra Sona Limited 4. PSL Erickson Limited 2. Mahindra Water Utilities Limited 5. Tech Mahindra Limited [w.e.f. 23rd March, 2010 – refer note 3(iii)] 3. Mahindra Inframan Water Utilities Private Limited 65
  • Key Management Personnel : Vice Chairman and Managing Director ........................................... Mr. Anand Mahindra Executive Directors ........................................................................... Mr. B.N. Doshi Mr. A.K. Nanda Welfare Funds : Sl. No. Name of the Fund 1. Mahindra World School Education Trust 2. M&M Benefit Trust 3. M&M Employee’s Welfare Fund 4. M&M Employee’s Farm Equipment Sector Employee’s Welfare Fund 5. M&M Fractional Entitlements Trust(b) The related party transactions are as under : Rupees crores Sl. Nature of Transactions Subsidiary Associate Joint Key Welfare No. Companies Companies Ventures Management Funds # Personnel 1. Purchases : Goods ............................................................... — 308.91 89.55 — — (—) (236.22) (71.01) (—) (—) Fixed Assets ...................................................... — 0.22 — — — (—) (—) (—) (—) (—) Services ............................................................. — 16.81 — — — (—) (0.07) (—) (—) (—) 2. Sales : Goods ............................................................... — 8.22 3.21 — — (—) (1.73) (2.26) (—) (—) Fixed Assets ...................................................... — — — — — (—) (0.16) (—) (—) (—) Services ............................................................. — 2.17 0.99 — — (—) (6.38) (0.99) (—) (—) 3. Deputation of Personnel : To Related Parties ............................................. — 4.15 — — — (—) (0.52) (—) (—) (—) 4. Provisions for : Doubtful Debts/Advances during the year ....... — @ — — 10.00 (0.07)* (—) (—) (—) (—) Diminution in value of other assets written back — @ — — — (—) (0.04) (—) (—) (—) 5. Finance : Interest Received .............................................. — 0.46 — — — (—) (1.85) (—) (—) (—) Dividend Distributed ........................................ — — — — 26.86 (—) (—) (—) (—) (1.05) Dividend Received ............................................ — 2.60 1.31 — — (—) (2.52) (0.98) (—) (—) 66
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) Rupees crores Sl. Nature of Transactions Subsidiary Associate Joint Key Welfare No. Companies Companies Ventures Management Funds # Personnel 6. Other Transactions : Other Income ................................................... — 0.29 — — 25.92 (—) (7.18) (—) (—) (—) Other Expenses ................................................ 2.84* 0.67 — 0.01 — (8.45)* (0.01) (—) (—) (—) Reimbursements received from parties. ........... — 1.04 0.03 — — (—) (0.01) (0.03) (—) (—) Reimbursements made to parties .................... — 0.29 — — — (—) (0.03) (—) (—) (—) Advances given by group companies .............. — @ — — 7.00 (—) (@) (—) (—) (15.00) 7. Outstandings : Payables ............................................................ — 16.00 14.85 3.10 — (—) (30.94) (12.66) (2.20) (—) Receivables ....................................................... — 5.53 2.92 — 22.00 (—) (19.64) (1.18) (—) (15.00) Inter Corporate Deposits given ........................ — 4.59 — — — (—) (5.73) (—) (—) (—) 8. Provision for Diminution in value of other related assets ................................................... — 7.95 — — — (—) (7.65) (—) (—) (—) 9. Provision for Doubtful debts/advances ............ — 5.33 — — 10.00 (—) (5.33) (—) (—) (—) 10. Managerial Remuneration ................................ — — — 6.56 — (—) (—) (—) (5.16) (—) 11. Dividends .......................................................... — — — 0.45 — (—) (—) (—) (0.52) (—) 12. Stock Options ................................................... — — — 0.05 — (—) (—) (—) (0.07) (—) 13. Issue of Ordinary (Equity) Shares ..................... — — — — — (—) (—) (—) (—) (1,459.76) 14. Guarantees and Collaterals given. ................... — — 9.00 — — (—) (—) (9.00) (—) (—)Previous year’s figures are in brackets.@ denotes amounts less than Rs. 50,000.* Amount pertains to Tech Mahindra Foundation.# Transactions with Joint Ventures have been disclosed at full value. 67
  • Significant related party transactions are as under : Rupees crores Nature of Transactions Associate Companies Amount Joint Ventures# Amount 1 Purchases – Goods ................................. Swaraj Engines Ltd 294.63 Mahindra Sona Ltd 89.55 (225.72) (71.01) 2. Purchases – Fixed Assets ........................ Satyam Computer Services Ltd 0.22 (—) 3. Purchases – Services ............................... Swaraj Engines Ltd — (0.07) Satyam Computer Services Ltd 16.81 (—) 4. Sales – Goods ......................................... Swaraj Engines Ltd 8.22 Mahindra Sona Ltd 3.21 (1.71) (2.26) 5. Sales – Fixed Assets ................................ Swaraj Automotives Ltd — (0.16) 6. Sales – Services ....................................... Swaraj Engines Ltd — Mahindra Water Utilities Ltd 0.95 (2.38) (0.95) Swaraj Automotives Ltd 0.32 (0.78) Owens Corning (India) Ltd 0.47 (3.21) Satyam Computer Services Ltd 1.37 (—) 7. Deputation of Personnel .......................... Mahindra Composites Ltd 0.42 (0.52) Swaraj Automotives Ltd 0.49 (—) Swaraj Engines Ltd 3.25 (—) 8. Doubtful Debts/Advances ....................... Kota Farm Services Ltd @ (—) Mriyalguda Farm Solution Ltd @ (—) Mega One Stop Farm Services Ltd @ (—) 9. Interest Received ..................................... Owens Corning (India) Ltd 0.46 (1.85) 10.Write back of provision of doubtful debts/advances ........................................ Kota Farm Services Ltd — (0.04) Mriyalguda Farm Solutions Ltd @ (—) 68
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) Rupees croresNature of Transactions Associate Companies Amount Joint Ventures# Amount11. Dividend Received ................................. Swaraj Automotives Ltd 0.26 Mahindra Sona Ltd 1.31 (0.32) (0.98) Swaraj Engines Ltd 2.06 (2.06) Mahindra Composites Ltd 0.27 (—)12. Other Income ...................................... Owens Corning (India) Ltd — (6.89) Mahindra Composites Ltd 0.29 (—)13. Other Expenses ..................................... Mahindra Construction — Company Ltd (0.01) Satyam Computer Services Ltd 0.67 (—)14. Reimbursement Received from parties .. Owens Corning (India) Ltd 0.98 Mahindra Sona Ltd 0.03 (—) (0.03) Mahindra Water Utilities Ltd @ (—)15. Reimbursement made to parties ........... Mahindra Composites Ltd — (0.02) Swaraj Engines Ltd — (0.01) Satyam Computer Services Ltd 0.27 (—)16. Payables ................................................. Swaraj Engines Ltd 0.29 Mahindra Sona Ltd 8.70 (30.04) (12.66) Mahindra Composites Ltd 0.53 Tech Mahindra Ltd 6.15 (—) (—) Swaraj Automotives Ltd 0.53 (—)17. Receivables ............................................. Mahindra Construction 2.63 Mahindra Sona Ltd 0.55 Company Ltd (6.08) (—) Mriyalguda Farm Solution Ltd 0.54 Mahindra Water Utilities Ltd 1.84 (—) (1.17) Swaraj Engines Ltd 1.45 (—) Owens Corning (India) Ltd — (12.37)18. Guarantees given .................................. Mahindra Water Utilities Ltd 9.00 (9.00)19. Inter Corporate Deposits given Mahindra Construction 4.59 (outstanding) ........................................ Company Ltd (5.73)20. Provision for diminution in value Mahindra Construction 6.99 of other related assets .......................... Company Ltd (6.69) 6
  • Rupees crores Nature of Transactions Associate Companies Amount Joint Ventures # Amount 21. Provision for doubtful debts/advances .. Mriyalguda Farm Solutions Ltd 0.54 (—) Mahindra Construction Company Ltd 4.49 (4.49) Mega One Stop Farm Services Ltd — (0.54) 22. Advances given ...................................... Mriyalguda Farm Solution Ltd @ (—) Kota Farm Services Ltd @ (—) Mega One Stop Farm Services Ltd @ (—) Previous year’s figures are in brackets. @ denotes amounts less than Rs. 50,000. # Transactions with Joint Ventures have been disclosed at full value.23. Earnings per Share : 2010 2009 Amount used as the numerator – Net Profit (Rupees crores) .......................................................... 2,478.56 1,405.41 Effect on earnings of convertible bonds/debentures (Gain)/Loss (Rupees crores) ............................ 32.64 17.29 Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. 2,511.20 1,422.70 Weighted average number of equity shares used in computing basic earnings per share ............. 54,98,38,769 54,50,45,894 Effect of potential ordinary (equity) shares on conversion of bonds/debentures ............................ 4,56,31,897 4,44,38,826 Weighted average number of equity shares used in computing diluted earnings per share .......... 59,54,70,666 58,94,84,720 Basic Earnings per share (Rs.) (Face value of Rs. 5 per share) .......................................................... 45.08 25.79 Diluted Earnings per share (Rs.) (Face value of Rs. 5 per share) ...................................................... 42.17 24.14 In the computation of earnings per share for the periods above, the Company has given effect to the sub division of its Ordinary (Equity) Share of Rs.10 each into 2 Ordinary (Equity) Shares of Rs. 5 each in March, 2010.24. Investment in Associates : No. of Equity % of Cost of Goodwill/ Share in Carrying shares held Holding Investments (Capital accumulated Cost (Equity reserve) Profit/(Loss)/ Shares) Reserves (Nos.) (Rupees crores)Unquoted :Owens Corning (India) Limited ......................... 2,81,24,794 21.50% 28.12 (7.64) 26.73 54.85 2,81,24,794 21.50% 28.12 (7.64) 21.82 49.94Mahindra Construction Company Limited ........ 9,00,000 43.83% 0.97 — (0.97) — 9,00,000 43.83% 0.97 — (0.97) —Officemartindia.com Limited ............................. 7,49,997 50.00% 0.22 — (0.22) — 7,49,997 50.00% 0.22 — (0.22) —Rathna Bhoomi Enterprises Private Limited ....... 500 20.43% @ — @ — 500 20.43% @ — @ — 7
  • MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED) No. of Equity % of Cost of Goodwill/ Share in Carrying shares held Holding Investments (Capital accumulated Cost (Equity reserve) Profit/(Loss)/ Shares) Reserves (Nos.) (Rupees crores)Kota Farm Services Limited ................................ 2,73,420 37.37% 0.27 — (0.27) —......................................................................... 2,73,420 37.37% 0.27 — (0.27) —Mriyalguda Farm Solution Limited .................... 3,37,500 37.37% 0.34 — (0.34) —......................................................................... 3,37,500 37.37% 0.34 — (0.34) —Mega One Stop Farm Services Limited ............. 3,51,000 37.37% 0.35 0.03 (0.35) —......................................................................... 3,51,000 37.37% 0.35 0.03 (0.35) —Eco Engines (upto 15th January, 2010) ............. — — — — — — — — 0.15 — — 0.15 Total………... 54.85 50.09Quoted :Mahindra Composites Limited .......................... 13,41,203 30.56% 2.90 0.55 2.72 5.62 13,41,203 30.56% 2.90 0.55 2.33 5.23Swaraj Engines Limited ..................................... 41,26,417 33.22% 1.63 (1.36) 18.17 19.80 41,19,000 33.22% 1.63 (1.36) 9.17 10.80Swaraj Automotives Limited .............................. 10,59,543 44.19% 12.45 (1.99) 4.42 16.87 10,59,543 44.19% 12.45 (1.99) 3.40 15.85 Total………... 42.29 31.88 Total………... 97.14 81.97@ denotes amounts less than Rs. 50,000. 7
  • 25. Segment Information :7 Segment Report for the year ended 31st March, 2010. Primary Segment Disclosure - Business Segment Rupees crores Automotive Farm IT Services Financial Steel Trading Infrastructure Hospitality Systech Others Eliminations Consolidated Equipment Services and Processing Total REVENUE Gross External Revenue 13,076.11 9,083.10 4,824.51 1,570.32 632.50 415.14 499.43 2,681.21 910.27 - 33,692.59 9,986.24 6,850.11 4,654.26 1,389.56 728.06 339.37 406.09 3,821.14 664.32 - 28,839.15 Less : Excise Duty on Sales 1,800.07 89.80 - - 42.42 - - 134.74 35.10 - 2,102.13 1,662.84 136.36 - - 58.94 - - 196.20 17.84 - 2,072.18 Net External Revenue 11,276.04 8,993.30 4,824.51 1,570.32 590.08 415.14 499.43 2,546.47 875.17 - 31,590.46 8,323.40 6,713.75 4,654.26